OJarttfU ICaui §rl|onl Hibrarg KF1163.W2ri902''™''>''-'''"^ iHimn«S" °' "=^*^* °" insurance. 3 1924 019 359 425 The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924019359425 SELECTION OF CASES ON INSURANCE. BT EUGENE WAMBAUGH, LL.D., PKOFESSOK OF LAW IN HARVAED UNIVERSITY. CAMBRIDGE: THE HARVARD LAW REVIEW PUBLISHING ASSOCIATION. 1902. Copyright, 1898, 1899, 1900, 1901, 190S, By Eugene Wambaugh. PREFACE. This collection has been prepared for the purpose of enabling the careful student, whether he be beginner or practitioner, to ascertain from the original sources, by his own labor, what are the doctrines of Insurance; but although the collection assumes that the reader has already mastered the more elementary branches of law, experience as a teacher of Insurance suggests that it may be well to give four pieces of advice : first, that Insurance is not, as is sometimes hastily assumed, a mere application of Contracts and Agency, but is a separate subject, having peculiar doctrines of its own upon each of the topics used herein as titles to chap- ters, the peculiarities being due partly to the special purpose and dangers of the transaction and partly to the fact that the subject did not have its origin in England, but was of Continental birth and is a part of the Law Merchant ; second, that Marine, Fire, and Life Insurance are not separate sciences, but are simply the chief applications of one science, and that consequently it is impossible to understand one of these branches without studying the others ; third, that in deciding Insurance cases, rather more frequently tlian in deciding cases on other subjects, judges have been prone to use inartistic and inaccurate language, and that consequently it is important to ascertain exactly what was the problem presented, and exactly how it arose, and to lay stress upon what the court did and not merely upon what the judges said ; and fourth, that the solution of the questions presented in the reported cases or in one's daily practice may depend not upon general principles but upon the special words of the policy. The order of the chapters has been determined partly by theory and partly by experience in teaching ; but an instructor may find it advisable to change the order from year to year, for an occa- sional change appears to bring new and valuable views of the relation of topics and of the essential cohesiveness of the whole subject. IV PKEFACE. In reprinting cases, the arguments of counsel have usually been omitted. All other departures from the original reports have been explained in the notes, in order that the reader may see whether the cases have been so edited as to diminish their authority. The citations in the notes are not exhaustive, but have been selected because of supposed usefulness. Those marked " acc^' or " contra " are intended to start the reader towards ascertain- ing for himself whether the doctrines in the text are sustained by the weight of authority. Those marked " see " are believed to throw light upon those doctrines by discussion or by interest- ing application. Those marked " compare" are supposed to conflict, at first sight, with the doctrines in the text, but to be reconcilable with them by the taking of proper distinctions. At the end of many of the sections will be found lists for the use of persons wishing more than an elementary knowledge ; for in dealing with such a subject as Insurance it seems proper to keep in mind the wants both of the specialist and of the general practitioner, and in a book intended — as this is — for general use, it is quite impossible to print all the cases needed by the specialist. Parts of the collection have appeared from time to time throughout the last four years ; and now that the work is pub- lished in final form, the editor, knowing that there have been many omissions, both intentional and accidental, is reminded, as often in this long task, of a consoling sentiment attributed to Plato : " As it is the commendation of a good huntsman to find game in a wide wood, so it is no imputation if he hath not caught all." EUGENE WAMBAUGH. June 23, 1902. TABLE OF SUBJECTS. CHAPTER I. Introduction Pagb 1 CHAPTER II. INSURABLE INTEREST AS AFFECTING THE VALIDITY OF THE CONTRACT. Part I. Why an Interest is Requisite 4 Part IL Satisfying the Requirement op an Interest. Section I. Marine Insurance 24 Section II. Fire Insurance 67 Section III. Life Insurance 101 CHAPTER III. CONCEALMENT. Part L The General Theory 125 Part U. The Application of the Theory. Section I. Marine Insurance 136 Section II. Fire Insurance 169 Section III. Life Insurance 191 ' CHAPTER IV. REPRESENTATION. Section I. Marine Insurance 212 Section II. Fire Insurance 247 Section III. Life Insurance 284 VI TABLE OF SUBJECTS. Section I. Section II. Section III. CHAPTER y. WARRANTY. Page Marine Insurance 304 Fire Insurance , . . . 325 Life Insurance 389 CHAPTER VI. OTHER CAUSES OF INVALIDITY. Section I. Marine Insurance. (A) Deviation 430 (5) Unseaworthiness 469 (C) Illegality of Voyage ........ 498 Section II. Fire Insurance. (A) Illegality of Business 512 (fi) Conditions prohibiting the Keeping of Certain Things 523 (C) Conditions prohibiting Increase of Hazard 546 (D) Conditions prohibiting Vacancy and the LIKE 561 (E) Conditions as to Ownership at the Incep- tion of the Contract 579 (F) Conditions prohibiting Alienation. (a) Alienation; sale; conveyance; transfer . 599 (b) Sale, transfer, or change in title or possession 610 (c) Change in interest, title, or possession . . 625 Section III. Life Insurance 640 CHAPTER VIL THE PERIL. Section I. Marine Insurance. (A) The Kind of Peril insured against ... 659 (B) The Connection between Peril and Loss. 697 Section II. Fire Insurance. (A) The Kind of Peril insured against . . . 715 (B) The Connection between Peril and Loss . 729 Section IH. Life Insurance. (A) Death 760 (S) Accident 783 Section I. CHAPTER VIII. THE AMOUNT OF RECOVERY. Marine Insurance. (A) General Principles, especially as to Partial Losses 798 TABLE OF SUBJECTS. VU Paob (B) Valued Policies 815 (C) Total Losses, Actual and Constructive . 829 Section II. Fire Insurance. (^4) General Principles as to Both Open and Valued Policies j . . 858 (B) Limited Interests 884 Section III. Life Insurance 927 CHAPTER IX. SUBROGATION. Section I. Marine Insurance 937 Section II. Fire Insurance 961 Section III. Life Insurance 992 Section I. Section II. Section III. CHAPTER X. CONDITIONS APPLICABLE AFTER LOSS. Marine Insurance 966 Fire Insurance 1001 Life Insurance 1023 CHAPTER XI. WAIVER AND ESTOPPEL. Section I. Marine Insurance 1027 Section II. Fire Insurance. (A) As to Conditions applicable after Loss . 1037 (B) As to Defences arising before Loss. (a) The insurer's conduct after the issuing of the policy and after the arising of the defence 1043 (b) The insurer's conduct after the issuing of the policy and at or before the arisiny of the defence 1064 (c) The insurer's conduct at or before the issu- ing of the policy and at or before the arising of the defence 1071 Section in. Life Insurance 1089 Section I. Section II. Section III. CHAPTER XII. ASSIGNEES AND BENEFICIARIES. Marine Insurance 1110 Fire Insurance. (A) Assignees 1115 (B) Beneficiaries 1134 Life Insurance. (A) Assignees 1142 (B) Beneficiaries 1154 Vlll TABLE OF SUBJECTS. APPENDIX. SOME FORMS USED IN THE UNITED STATES. Pass Section I. Marine Insurance. (A) A Policy on Cargo 1171 (B) Some Clauses in the Margin of Policies ON Vessels 1174 Section II. Fire Insurance. (A) The Massachusetts Standard Policy . . 1176 (B) The Standard Fire Insurance Policy of THE State of New York. (a) Policy 1179 (b) Forms on the Back of the Policy . . . 1184 (c) Some permissible Clauses or Riders . . . 1184 Section III. Life Insurance 1187 INDEX 1195 TABLE OF CASES. [In addition to the cases reprinted in tlie text, this Table inclades the cases summarized or quoted in the foot-notes.] Page Accident Ins. Co. v. Crandal . . . 786 ^tna F. Ins. Co. ». Tyler .... 890 ^tna Ins. Co. v. Grube .... 345, n. V. People's Bank .... 1010, n. ^tna L. Ins. Co. v. France . . . 410 Agricultural Ins. Co. v. Bemiller . 1009, n. V. Montague 91 Alexander v. Continental Ins. Co. 1070, n. Amazon Ins. Co. v. Steamboat Iron Mountain , 941 American Central Ins. Co. v. Roth- child 1008, n. Amicable Society v. BoUand . . . 760 Amick V. Butler 1161 Amory v. Oilman 9 Amsinck v. American Ins. Co. . . 60 Anderson v. Edie 101 V. Fitzgerald 391 Angler v. Western Assur. Co. . . 558 Armour v. Transatlantic F. Ins. Co. 277 Asfar V. Blundell . . . 168, n., 846, n. Ashley v. Ashley 1142 Atherton v. Brown 1027 Atkinson v. Abbott 500, n. Atlantic Ins. Co. v. Storrow . . . 938 Aurora F. Ins. Co. v. Eddy ... 358 Austin V. Drewe 715 Balow V. Teutonia Farmers' Mut. F. Ins. Co ! Barclay v. Cousins 26- Bardwell o. Conway Mut. F. Ins. Co 883, n. Barker w. Janson 818, u. Barker v. Phoenix Ins. Co. . . . 999, n. Barnard v. Faber 384 Barnes v. London, Edinburgh, and Glasgow L. Ins. Co 123 V. Union Mut. Ins. Co. . . . 610 Barrett v. Union Mut. F. Ins. Co. . 1071 Barry u. Hamburg-Bremen F. Ins. Co 618 Batchelder v. Queen Ins. Co, . . 1074, n. Bates V. Hewitt 148 Baxter v. New England Ins. Co. . 234 Bean v. Stupart 307 Beatson v. Ha worth 436 Behn v. Burness 324, u. Bennett v. St. Paul F. & M. Ins. Co. 1075, n. Bevin v. Connecticut Mut. L. Ins. Co. 929 Biccard o. Shepherd 488 Bigelow u. Berkshire L. Ins. Co. . . 770 BiUings v. Accident Ins. Co. . . . 772 Bize V. Fletcher 216 Blaauwpot v. Da Costa .... 937, n. Blackburn v. Vigors 161 Blackenhagen v. London Assur. Co. (1 Camp. 454) 442 V. London Assur. Co. (1 Camp. 455, n.) 443, n. Blackhurst v. Cockell 316 Blackwell v. Ins. Co 605 Blake v. Exchange Mut. Ins. Co. . 1040 Boardman v. Merrimack Mut. F. Ins. Co 512 Bondrett v. Hentigg 697 Borradaile v. Hunter 762 Bowden v. Vaughan 225 Box V. Provincial Ins. Co 80, n. Bradlie v. Maryland Ins. Co. . . . 847 Brady v. Northwestern Ins. Co. . . 747 Braunstein v. Accidental Death Ins. Co 1025, n. Briggs V. Merchant Traders Ship Loan and Ins. Assn 51 Brinley v. National Ins. Co. . . . 871 Brown v. Cotton and Woolen Mfrs. Mut. Ins. Co 608 V. Tayleur 457 Brownlie v. Campbell .... 168, n. Bruce v. Jones 823 Bryant v. Ocean Ins. Co. . . . 239 Buell V. Connecticut Mut. L. Ins. Co. 404 Bufe V. Turner 169 Burbank v. Rockingham Mut. F. Ins. Co 635, n. Burges v. Wickhara 469. n. Burgess v. Equitable M. Ins. Co. . 463 Burleigh v. Gebhard F. Ins. Co. . . 373 Burnard v. Rodocanachi .... 946 TABLE OF CASES. Page Burritt v. Saratoga County Mut. F. Ins. Co 178, 209, n., 337, n. Burt V. Union Central L. Ins. Co. 761, n. Byrnes v. National Ins. Co. . . . 807 Campbell v. American F. Ins. Co. 185, n. V. New England Mut. L. Ins. Co. 1 14 Carpenter v. American Ins. Co. . . 261 V, Providence Washington Ins. Co 915, n. Carter v. Boehm 125 Castellain v. Preston 974 Chisholm v. National Capitol L. Ins. Co 116 Cliitty V. Selwyn 452, n. Cliristie v. Secretan 409, n. Cincinnati Ins. Co. v. Duffield . . . 852 Citizens' F. Ins., S. & L. Co. v. Doll 1039, n. Citizens' Ins. Co. ». Glasgow . . 681, n. u. Hoffman 281 City F. Ins. Co. v. Corlies .... 729 Clapliam r. Cologan 318 Clark V. Inhabitants of Blything . 962 V. Manufacturers' Ins. Co. . . 181 Clay F. & M. Ins. Co. v. Huron S. & L. Mfg. Co 680 Clement K. Insurance Co 1106 Cobb V. Ins. Co. of North America 1064 Coffin ti. Nevfburyport M. Ins. Co. 452, n. Cogswell V. Chubb 322 CoUingridge v. Royal Exchange Assur. Corp 987, n. Collins V. Charlestown Mut. F. Ins. Co. 265 V. St. Paul F. & M. Ins. Co. . . 696 Columbia Ins. Co. v. Lawrence (10 Pet. 507) 247 Columbian Ins. Co. v. Catlett 65, n., 462, n. V. Lawrence (2 Pet.25) 68, n., 248, n. Commonwealth Ins. C. v. Sennett . 874 Connecticut Mut. L. Ins. Co. v. N. Y. & N. H. Railroad Co 992 Connecticut Mut. L. Ins. Co. v. Schaefer 118, n., 936, n. Continental Ins. Co. w. Munns . .1129 Converse v. Citizens Mut. Ins. Co. . 70 Copeland v. New England M. Ins. Co 678, n. Cornell «. Hope Ins. Co 1009, n. Cousins V. Nantes 5, n. Craufurd v. Hunter 7, n. Creed v. Sun F. Office 87, n. Crocker v. People's Mut. F. Ins. Co. 351 CuUen V. Butler 667 Cumberland Bone Co. t. Andes Ins. Co 78 Cumberland V. M. P. Co. v. Douglas 350, n. Cummings v. Cheshire County Mut. F. Ins. Co 1124 Currier v. Continental L. Ins. Co. . 122. Dakin v. Liverpool, L. & G. Ins. Co. 685 Dalby v. India and London L. Assur. Co. 108,932 Pago Darrell v. Tibbitts 979, n. Davenport v. New England Mut. F. Ins. Co 264 De Costa v. Scandret 136 DeHahn v. Hartley 314 Dennlson v. Thomaston Mut. Ins. Co 253 Dennistoun v. Lillie 230 Depaba v. Ludlow . .• 5 Dickson v. Equitable F. Assur. Co. . 267 Dixon V. Sadler 475 Dobson V. Sotlieby 523 Dolliver v. St. Joseph F. & M. Ins. Co. (128 Mass. 315) 589 V. St. Joseph F. & M. Ins. Co. (131 Mass. 39) 370 DoUoff V. German-American Ins. Co. 1015 V. Phoenix Ins. Co 1015 Dupreau v. Hibernia Ins. Co. . . . 594 Dutilh V. GatlifE 836 Eden v. Parkison 310 Edwards v. Footner 224 Elton V. Brogden 431 Equitable F. Ins. Co. v. Quinn . . 877 Excelsior F. Ins. Co. v. Royal Ins. Co 911 Farmers' and Merchants' Ins. Co. v. Jensen 623 Farmers' Mut. F. Ins. Co. v. Fogel- man 274 Farmers' Mut. Ins. Co. u. New Hol- land Turnpike Co 96 Faust V, American F. Ins. Co. . . . 540 Fidelity and Casualty Co. v. Johnson 791 Fillis V. Brutton 220 First Congregational Oliurch v. Hol- yoke Mut. F. Ins. Co. ... 552, n. First National Bank v. Ins. Co. of Nortli America 361 Fitzlierbert v. Mather 221 Fletcher v. Commonwealth Ins. Co. 170 Flinn v. Headlam 237 V. Tobin 239, a. Fogg V. Middlesex Mut. F. Ins. Co 1119 Foley V. Manufacturers and Builders' F. Ins. Co 924 Folsom V. Merchants' Mut. M. Ins. Co 54 Forbes v Aspinall 819 V. Wilson 470 Forshaw v. Chabert 472 Foster a. Wilmer 431 Fowler v. Mtna. F. Ins. Co. (6 Cow. 678) 332 V. iEtna F. Ins. Co. (7 Wend. 270) 333,n. Fox V. Black 432 Franklin F. Ins. Co. v. Vaughan . 270 Frisbie v. Fayette Mut. Ins. Co. . . 353 Frost V. Saratoga Mut. Ins. Co. . . 1043 Furtado v. Eodgers 661 TABLE OF CASES. XI Gardiner v. Smith 834 Garrett v. rrovincial Ins. Co. . . . 355 Garver v. Hawkeye Ins. Co. . . 597, n. General Interest Ins. Co. c. Ruggles 140 General Mut. Ins. Co. v. Slierwood 707 German- American Ins. Co. v. Norris 1010, n. GermaniaF. Ins. Co. v. Home Ins. Co. 621 Gibb V. Philadelphia F. Ins. Co. . . Gid Gibson v. Small 478 Gilligan v. Commercial Ins. Co. 1009, u. Glutting V. Metropolitan L. Ins. Co. 409, n. Goddard v. Bast Texas F. Ins. Co. . 376 V. Garrett 4 Godin V. London Assur. Co. . . 803, n. Godsall V. Boldero 927 Grant v. Parkinson 818, n. Gray v. Germania F. Ins. Co. . . . 1086 Green v. Young 430 Greenleaf v. St. Louis Ins. Co. . . 460 Grosvenor v. Atlantic F. Ins. Co. . 1134 Hagedorn o. Oliverson 38 Haighi). DelaCour 822 Halford v. Kymer 104 Hall V. Railroad Companies . . . 972 Hamilton v. Mendes 829 V. Pandorf 666, n. Hammond v. American Mut. L. Ins. Co 641 u. Keid 449 Hancox u. Fishing Ins. Co. . . 31, n. Hanover F. Ins. Co. v. Brown . 613, n. Harley v. Heist 1158 Harmony F. & M. Ins. Co. v. Hazle- hurst 244 Harper v. Albany Mut. Ins. Co. . . 530 Harrington v. Fitchburg Mutual F. Ins. Co 274, n. Harris v. Eagle F. Co 858 Harrison v. Pepper 919, n. Hart V. Citizens' Ins. Co 1018 V. Western Railroad Corp. . . 962 Hartford Protection Ins. Co. v. Har- mer 185, n. Hartley v. Buggin 434 Hathaway v. Orient Ins. Co. . . . 1137 V. State Ins. Co 615 Hazard v. New England Ins. Co. 660, n. Heebner v. Eagle Ins. Co. . . . 852, n. Henshaw v. Mutual Safety Ins. Co. 66, n. Heron v. Phoenix Mut. F. Ins. Co. 539, n. Herrman v. Adriatic F. Ins. Co. . . 570 V. Merchants' Ins. Co. . . ■ 668 Heuer i'. Northwestern Nat. Ins. Co. 739, n. Hibbert v. Martin ^^%?i Hide V. Bruce ^1° Higginson v. Dall *l Hill w. Secretan 25 Hine w. Wood worth 635, n. Hobbs V. Hannam 37 Hoffman v. ^tna F. Ins. Co. . . . 602 i;. Western M. & F. Ins. Co. . 869 Page Hogg V. Horner 437 Home F. Ins. Co. v. Hammang . 1010, n. Home Protection v. Avery .... 1068 Hone II. Mutual Safety Ins. Co. . . 896 Hore V. Whitmore 306 Hosford V. Germania F. Ins. Co. . . 381 Howard v. Albany Ins. Co. . . 58, n. V. Lancashire Ins. Co. ... 92 Ho.xie V. Pacific Mut. Ins. Co. . . 491 Hubbard v. Glover 226 Huguenin v. Rayley 191 Hunter v. Potts 666 Hynds v. Schenectady County Mut. Ins. Co 528 Illinois Mut. F. Ins. Co. v. Andes Ins. Co 908 Imperial F. Ins. Co. v. Coos County 558, n. Insurance Companies v. Thompson 87 Insurance Co. v. Baring 53, n. V. Stinson 920 V. Updegraff 899 .: V. Wilkinson 1091 Insurance Co. of North America «. McDowell 273, n. lonides v. Pender 167, n. Irwin V. Williar 17, n. JefEery v. Legender 304 Jeffries v. Life Ins. Co 401 Johnson v. American Ins. Co. . . 1061 V. Berkshire Mut. F. Ins. Co. . 719 V. Phoenix Ins. Co. ... 1009, n. V. Sutton 501 Judge V. Connecticut F. Ins. Co. . 620 Kane v. Hlbernia Ins. Co 721 Keefer v. Phoenix Ins. Co. . . . 904, n. Keith V. Quincy Mut. F. Ins. Co. . 562 Kelly V. Croton Ins. Co 620 V. Home Ins. Co 520 V. Sun Fire Office .... 1009, n. V. Worcester Mut. F. Ins. Co. . 618 KennistonK.Merrimack County Mut. Ins. Co 717 Kent V. Bird 7, n. Kentucky & Louisville Mut. Ins. Co. V. Southard 341 Kenyon v. Berthon 310 Kernoclian v. New York Bowery F. Ins. Co 915, n. Kettell V. Wiggin 446 King V. State Mut. F. Ins. Co. . . 965 Klein v. Insurance Co 653 Knecht v. Mutual L. Ins. Co. . . 413 Knickerbocker Ins. Co. v. Gould . . 1010 Knight V. Mutual L. Ins. Co. . . . 415 Ky te V. Commercial Union Assur. Co. 654 Lampasas Hotel and Park Co. o. Phoenix Ins. Co 635 xu TABLE OF CASES. Lane v. Maine Mut. F. Ins. Co. . . 599 Lane v. St. Paul F. & M. Ins. Co. 1010, n. Lang u. Eagle Ins. Co 1010, n. Lapham v. Atlas Ins. Co 453 Lappin v. Charter Oak F. & M. Ins. Co 635, n. Lasher v. St. Joseph F. & M. Ins. Co. 588 Laurent v. Chatham F. Ins. Co. . . 884 Law ;;. London Indisputable L. Pol- icy Co 935, n. Lawrence v. Ocean Ins. Co. . . 999, n. Leadbetter w. Etna Ins. Co. . . 1009, n. LeCras v. Hughes 24 Lemon v. Phoenix Mut. L. Ins. Co. . 1154 Lenox v. United Ins. Co 996 Lethulier's Case 806 Levabre v. Wilson 432, n. Lewis V. Eagle Ins. Co 242 V. Rucker 798 Life Ins. Co. v. Terry 766 Lilly V. Ewer 305, n. Lindenau v. Desborough .... 193 Lindsey v. Union Mut. F. Ins. Co. 346, II. Locke V. North American Ins. Co. . 137 Logan V. Commercial Union Ins. Co. 1009, n. London and Lancashire F. Ins. Co. V. Fischer 543 London Assurance v. Mansel . . . 199 London Assur. Co. v. Sainsbury . 962, n. Loomis V. Eagle L. & Health Ins. Co Ill Lord!). Dall 101 Loud V. Citizens' Mut. Ins. Co. . . 547 Love V. Harvey 16, n. Lovell V. McMillan 660, n. Loy V. Home Ins. Co 611 Lowry v. Bourdieu . . . . . . 7, n. Jjucena v. Craufurd . 7, n., 26, n., 30, n. Lynch v. Dalzell 1115 Lynn Gas and Electric Co. v. Meriden F. Ins. Co 764 Lyon V. Commercial Ins. Co. . . . 176 McDonald v. Black 31, n. Macdowall v. Eraser 218 McFarland v. St. Paul F. & M. Ins. Co 537 McGivney v. Phoenix F. Ins. Co. . 67 McLanahan v. Universal Ins. Co. 470, u. McMasters v. Westchester County Mut. Ins. Co 1037 Magnus w. Buttemer 686 Manhattan L. Ins. Co. v. Buck . . 646 Marine Ins. Co. v. Tucker . . . 431, n. Marks v. Hamilton 68 Mason v. Harvey 1005 V. Sainsbury 951 Matthewson v. Royal Ins. Co. . . 80 Mayer v. Mutual L. Ins. Co. . . . 1102 Mead v. Northwestern Ins. Co. . . 524 Merchants' M. Ins. Co. v. Rumsey . 62 Merchants' Mut. Ins. Co. v. Sweet 679, n. Merrett v. Farmers' Ins. Co. . . . 916 Page Merriam v. Middlesex Mut. F, Ins. Co 546 Merry v. Prince 31 Mers V. Franklin Ins. Co 583 Meyers v. Schumann 23, n. Mickey v. Burlington Ins. Co. . . 363 Millaudon v. New Orleans Ins. Co. 738, n. Miller v. Amazon Ins Co 592 Mitchell V. St. Paul German F. Ins. Co 878, n. Moens v. Heyworth 167, n. Montoya v. London Assur. Co. . . 704 Moore v. Phcenix Ins. Co 575 ^ Morrell v. Trenton Mut. L. & F; Ins. Co 107 Mount V. Larkins 453, n. Mutual L. Ins. Co v. Allen .... 1147 V. Simpson 424 National Filtering Oil Co. v. Citizens' Ins. Co 93 National Bank v. Ins. Co 366 Nelson v. Salvador 319 Neptune Ins. Co. v. Robinson . . . 146 Newby v. Reed 803 Newcastle F. Ins. Co. v. Macmorran 326 New York Bowery F. Ins. Co. v. New York F. Ins. Co 172 New York L. Ins. Co. u. Sej-ms . . 645 V. Statham 645 Niagara F. Ins. Co. v. De Grafi . . 515 Nieolet v. Ins. Co 861 Nightingale v. State Mut. L. Ins. Co. 640 North British Ins. Co. v. Lloyd . 167, n. North of England I. S. Ins. Assn. v. Armstrong 953, n. North of England Oil-Cake Co. ii. Archangel Maritime Ins. Co. 1113, n. Northwestern Travellers' Assn. v. London Guar, and Ace. Co. . 797, n. Oakman v. Dorchester Mut. F. Ins. Co 71 Ocean Ins. Co. v. PoUeys . . . 510, n. Odiorne v. New England Mut. M. Ins. Co 1028, n. Ogden V. Bast River Ins. Co. . . . 879 Oliver v. Cowley 469 O'Niel V. Buffalo F. Ins. Co. . . . 346 Palmer v. Marshall 450 Parmeter v. Cousins 471 Paterson t). Harris 689, n. Pawson V, Barnevelt 310 V. Ewer 212 V. Snell 212 y W^atson 212 Pelzerw. St. Pau'lP. &M. Ins.'Co. '. 188 V. Savannah F. & M. Ins. Co. . 188 Penn Mut. L. Ins. Co. v. Mechanics' S. B. & T. Co 205 Pennsylvania F. Ins. Co. ii. Kittle . 1060 Perrin's Admr. v. Protection Ins. Co. 680 TABLE OF CASES. xni Peters v. Plicenix Ins. Co. . . . 678, n. V. Warren Ins. Co 697 Philips V. Baillie 324, n. Phoenix Ins. Co. v. Asbury .... 623 V. Erie & Western Trans. Co. . 956 Phoenix L. Ins. Co. v. Raddin . . 204, a. Pitney v. Glens Falls lus. Co. . 1086, n. Planche v. Fletcher 498 Plumb V. Cattaraugus County Mut. Ins. Co 1075 PoUeys V. Ocean Ins. Co 506 Poss V. Western Assur. Co. . . 566, n. Potts r. Bell 502 Powles V. Innes Ill] Pritchet v. Ins. Co. of North America 16, n. Proudfoot V. Montefiore 156 Providence Washington Ins. Co. ■/. Adler 693 Provident L. Ins. Co. v. Fennell . . 299 Putnam v. Mercantile M. Ins. Co. . 48 Quebec M. Ins. Co. u. Commercial Bank 1036, u. Raine v. Bell 440 Randal v. Cockran 937 Rawlins v. Desborough 196 Rawls V. American Mut. L. Ins. Co. 115, n. Rayner v. Preston 985, n. Reaper City Ins. Co. o. Brennan . . 579 Redford v. Mutual F. Ins. Co. . 273, n. Redman v. London 445 Reed v. Cole 58, n. Reserve Mut. Ins. Co. v. Kane . . 117 Rhind v. Wilkinson 47, n. Rice V. New England M. Ins. Co. . 235 Richards v. Protection Ins. Co. . 340, n. Richardson v. German Ins. Co. . 635, n. V. Maine F. & M. Ins. Co. . 504, n. Ritter v. Mutual L. Ins. Co. . . . 775 Rivaz V. Gerussi 168, n. Robert v. New England Mut. L. Ins. Co 657, n. Roehner v. Knickerbocker L. Ins. Co 652, n. Rohl V. Parr 659 Rohrbach v. Germania F. Ins. Co. . 81 Rombach v. Piedmont and Arling- ton L. Ins. Co 119 Ross V. Bradshaw 389 Roumage v. Mechanics F. Ins. Co. 1009 n. Roux II. Salvador 840 Ruggles V. General Interest Ins. Co 140, n. Ruse V. Mutual Benefit !>. Ins. Co. . 17 Ryan v. World Mut. L Ins. Co. . 1097 Ryder v. Phoenix Ins. Co 810 Sadler v. Dixon 477, n. Sadlers' Co. v. Badcock ... 5, n., 1118 Sansom v. Ball T J 0& Sawyer v. Coasters' Mut. Ins. Co. 220, n., 320 Page Schneider v. Provident L. Ins. Co. . 784 V. United States L. Ins. Co. . 1167 Schwarzbach v. Ohio Valley Protec- tive Union 285, n. Scott V. Quebec F. Assur. Co. . . 331 V. Thompson 438 Scripture v. Lowell Mut. F. Ins. Co. 732 Seagrave v. Union M. Ins. Co. . 51, n. Seaman v. Fonereau 136 Seller v. Economic L. Assn. . . . 779 Shaw V. Mtna. Ins. Co. . . . 59 Shawe v. Felton 815 Sherwood v. Agricultural Ins. Co. 635, n. Sibbald v. Hill 227 Sillem V. Thornton 348, n. Silloway v. Neptune Ins. Co. 60, n., 1028 Simpson v. Thomson 944 Sinclair v. Maritime Passengers' Assur. Co 783 Smith V. Scott 665 V. Surridge 470, n. Snyder v. Farmers' Ins. & Loan Co. 335 Soye V. Merchants' Ins. Co. . . . 561 Stackpole v. Simon 285 Starbuck v. New England M. Ins. Co. 676 State Ins. Co. v. Taylor .... 881 Stillwell V. Staples 907, n. Stoner v. Line 121, n. Stout V. City F. Ins. Co. ... 349, n. Strong V. Manufacturers' Ins. Co. . 889 Stupetski V. Transatlantic F. Ins. Co 567 Sun Fire Office v. Clark . . . 638, n. Sutherland v. Pratt 42 Taylor v. Mtna. L. Ins. Co. . . . 1023 V. Dunbar 690 Tebbetts v. Hamilton Mut. Ins. Co. 356 Thames and Mersey M. Ins. Co. v. Hamilton 681, n. Thebaud v. Great Western Ins. Co. 1031 Thompson v. Hopper .... 477, n. V. Insurance Co 652, n. V. Whitmore 663 Thomson v. Weems 417 Tidmarsh u. Washington F. & M. Ins. Co 470, n. Tilton V. Hamilton F. Ins. Co. . . 739 Townsend v. Northwestern Ins. Co. 550 Trade Ins. Co. v. BarraclifE . . 918, n. Traill v. Baring 294 Trask u. Hartford & New Haven Railroad Co 970 Trenton Mut. L. & F. Ins. Co. y one partner in his own name could not be made to embrace the interest of the other partner, notwithstanding it was written hy the agent with full knowl- edge of the facts. The reason is the one above assigned : it is not competent to write an insurance where an insurable interest is wanting, whether the facts are known or not. The difficulty is inherent in the case, and is beyond the reach of waiver. It is proper to say in this connection that under our statute the hus- band has no control whatever over his wife's property ; so that the 1 The passages omitted, here and near the end of the opinion, dealt with points for- eign to waiver, and upon one of these points found that the lower court had committed error. — Ed. 92 HOWARD V. THE LANCASHIRE INS. CO. [CHAP. II. question arises here precisely as it would had the silver been owned by a stranger.^ . . . The judgment must be reversed with costs and a new trial ordered. HOWARD, Appellant, v. THE LANCASHmE INS. CO., Respondents. Supreme Court op Canada, 1885. 11 Can. S. C. 92. This was an appeal from a judgment of the Supreme Court of Nova Scotia, 5 Russell & Geldert, 172, making absolute a rule nisi for a new trial.2 On 5 Aug., 1875, the Lancashire Insurance Company issued in favor of Howard & Son a fire insurance policj' on a stock of dry goods and general merchandise. The amount insured was $2,000. Howard & Son were represented in the transaction by their general manager, Jenkins. The application stated that one Strong owned the stock and that Howard & Son were mortgagees. Strong was the owner, and was indebted to Howard & Son, and had authorized Howard & Son to take out this insurance as security ; but Howard & Son had no mortgage or other lien at the time of taking out the policy. On 20 Dec, 1875, Strong made an assignment under the insolvent act of 1875. On 21 Jan., 1876, a deed of composition and discharge was executed by his creditors ; and, on the same daj', the official assignee executed the stat- utorj' transfer of the insolvent estate to Jenkins, the assignee chosen by the creditors. On 5 May, 1876, Strong's discharge was conSrmed bj' the court, and on 15 May Jenkins executed the statutory transfer of the estate to him. Meanwhile, on 8 March, 1876, Strong executed to Jenkins a bill of sale, containing a proviso that Jenkins would execute a reassignment if, on* demand, Strong should pay $4,000, and that until default Strong should retain possession. This bill of sale, as was con- tended at the trial, was taken by Jenkins as the agent of Howard & Son. It was released by Jenkins on 12 Jan., 1877; and, on the same daj', Strong executed an absolute bill of sale to Henry Howard, of Howard & Son. The property was destroyed by fire on 31 March, 1877. The policy had been renewed on 5 Aug., 1876, bj' the issue of a receipt acknowledging paj'ment of the premium on the policy, " which is hereby renewed and continued in force for one year." 1 On the question whether a husband can procure insurance on his wife's property, see Clarke v. Firemen's Ins. Co., 18 La. 431 (1841) ; Harris v. York Mutual Ins. Co., 50 Pa. 341 (1865); American Central Ins. Co. v. McLanathan, 11 Kans. 533 (1873) ; Trade Ins. Co. i'. Barracliff, 45 N. J. L. (16 Vroom), 543 (1883) ; Clark v. Dwelling House Ins. Co., 81 Me. 373 (1889) ; Traders' Ins. Co. o. Newman, 120 Ind. 554 (1889). —Ed. 2 The statement has been rewritten upon the basis of the facts detailed in 5 Eussell &Geldert, 172. — Ed. PAET II., SECT. II.J NATIONAL OIL CO. V. CITIZENS' INS. CO. 93 A condition of the original policy said : " Insurances, original or re- newed, shall be considered as made under the original representation, in so far as it maj- not be varied hy a new representation in writing, ■which, in all cases, it shall be incumbent on the part}- insured to make, when the risk has been changed, either within itself or hy the surround- ing or adjacent buildings." Another condition said : " If the inter- est in property to be insured be a leasehold, trustee, mortgagee, or reversionary interest, or other interest not absolute, it must be so represented to the company, and expressed in the policy in writing, otherwise the insurance shall be void." Howard & Son having brought action upon the policy, the defendant company pleaded numerous pleas, to the effect that there was no insur- able interest in the plaintiffs and that the proofs of loss were defective.^ The cause was tried before Smith, J., who found a verdict in the plaintiffs' favor for S2,000, the full amount claimed. G-ormuUy, for the appellant. When Strong gave the bill of sale to Jenkins he was in possession of the goods, and his discharge by the court made the mortgage of the eighth of March valid. On the fifth of August a new premium was paid, and I contend that each payment of premium is a new contract It was not intended to make a change in the policy, but to continue a binding contract of insurance. I am going to contend that a party need not have an interest in the property at the time of effecting the insurance ; it is sufBcient if he has such interest at the time of the loss. Tremaine for the respondents was not called on. Ritchie, C. J. I do not think this is an arguable case at all. I think that before a man can recover on a policy of insurance he must have an insurable interest in the propertj' when he effects the insur- ance. The renewal was merelj- a continuance of the original insurance and not a new policy. This appeal must be dismissed. Appeal dismissed, with costs. THE NATIONAL FILTERING OIL CO., Respondent, v. THE CITIZENS' INS. CO., Appellant. CorET OF Appeals, New Toek, 1887. 106 N. Y. 53.5. Appeal from judgment of the General Term of the Supreme Court, in the first judicial department, entered upon an order made January 16, 1887, which affirmed a judgment in favor of plaintiff entered upon a decision of the court on trial without a jury. The action was upon a policy of fire insurance, the substance of which and the material facts are stated in the opinion. ^ The facts as to proofs of loss have been omitted. — Ed. 94 NATIONAL OIL CO. V. CITIZENS* INS. CO. [CHAP. IL G. A. Clement, for appellant. -F. H. Coudert and -Paul .Fuller, for respondent. Finch, J. The insurance which forms the subject of this litigation was of an unusual character, and presents a question for the solution of which we have no admitted precedent. It was an insurance upon the oil reducing and filtering works of Ellis & Co., and for the protection of specified royalties, payable by that fii'm to the plaintiff as compensa- tion for an exclusive license to use in their business a certain patent which belonged to and was controlled bj' the plaintiff company. The policy, by its terms, insured that company " on rojalties payable to insured from the business of John Ellis & Co., carried on in premises situate in Brooklyn, on block bounded by Sullivan, Walcott and Ferris Streets and Buttermilk channel," and then proceeded with a more specific statement, thus : " Whereas, the above named firm of John Ellis & Co., by virtue of an agreement with the assured, are bound to pay to them royalties for the privilege of using their patent, which roy- alties are guaranteed to amount to $250 a month ; now, therefore, the conditions of this insurance arc that, in case the premises occupied as above by said Ellis & Co. shall be damaged bj- fire so as to cause a diminution of said roj'alties, this company will make good to the insured the amount of such diminution during the restoration of said premises to their producing eapacit3- immediately preceding said fire. In case of the destruction b3' fire of said premises, then this company shall paj' the full amount insured." That full amount was §1,000.^ . . . We are first to ascertain what loss was insured against. The de- fendant companj' contends that the risk it assumed extended no further than diminution of ro^'alties below the guaranteed minimum, and, since there never was such diminution, that the judgment rendered was erroneous. But such is not the pi'oper construction of the policy. That insured the royalties payable under the contract ; not merely the guaranteed proportion, but the royalties stipulated ; that is, the whole of them. Dp to the minimum amount they depended upon the financial responsibilit}' of Ellis & Co. , for to that extent they were paj-able in any event, and the risk was on the licensees. But bej"ond that they depended upon the running capacity of the works, and the amount of oil they could put upon the market, and which could be sold. The phrase " said royalties" in the polic}' refers to the royalties payable by force of the agreement, and to the whole of them, and is not restricted or narrowed bj' the descriptive statement that they — that is, the rojal- ties insured — were guaranteed to be not less than $250 a month. Whatever they should prove to be they were insured against a diminu- tion caused b3' fire at the works, and not merely a minimum proportion guaranteed part of them. But these royalties, it is argued, were not capable of supporting an insurance, and the policy was a wager policy. It is quite true that, 1 The passages omitted did not deal with insurable interest. — Ed. PART n., SECT. II.j NATIOXAL OIL CO. V. CITIZENS' INS. CO- 95 bej-ond the guaranteed minimum, the}- were contingent and dependent upon the condition of the market, and even, possibly, upon the will or choice of Ellis & Co., in the reasonable control of their business. Tliat firm was not bound to pa}' except upon oil manufactured and sold, and might limit both, or be compelled by the market to limit both to a pro- duction yielding no roj-alties bej-ond the guaranteed minimum ; and so, it is said, the plaintiff had no fixed or definite right to ro3-alties bej'ond such minimum, no assurance of their existence, no power to compel or demand their being, and could not be said to have lost what it neither had, nor the absolute right to possess. But a further fact in the case establishes more definitely the plaintiff's risk and loss, and the direct causative connection between that loss and the fire which injured the works. The license held by Ellis & Co. to use the plaintiff's patent, was an exclusive one, and the earning power of that patent was thus narrowed to the business of Ellis & Co. If the latter did not continue their business, and so preserve the fruitfulness of the patent, by reason of some fault of their own, or from a cause for which the}- were respon- sible, the exclusive character of the license ended, and the patentees were at liberty to transfer the right to others, and thus secure the profits of their invention. But if the business of Ellis & Co. was less- ened or restricted because of a fire which should destroy or impair their works, the exclusive right given them was to continue ; the patentees could not license others, and must necessarily bear the loss of their diminished royalties. Tliis was the one business risk involved in their contract. Against all others they could provide, but this one they were compelled to bear by the terms of their agreement. Against that risk they insured. It had a direct and necessary connection with the safety of the structures burned. A fire destroying them destroyed the royalties pro tanto, because the efficient cause of their loss, and so was established the needed connection between the premises insured and the royalties dependent upon their safety and measuring the loss result- ing from their destruction. The policy was, therefore, not a mere wager, and the royalties could be protected by an insurance against the fire risk which threatened them. The authorities in this State go far enough in their general principles to cover the case in hand. (Herkimer v. Eice, 27 N. Y. 163 ; Spring- field F. & M. Ins. Co. V. Allen, 43 id. 389 ; Eohrbach r. Germania Fire Ins. Co., 62 id. 47.) They decide that an interest, legal or equit- able, in the property burned, is not necessary to support an insurance upon it ; that it is enough if the assured is so situated as to be liable to loss if it be destroyed by the peril insured against ; that such an interest in property connected with its safety and situation as will cause the insured to sustain a direct loss from its destruction is an insurable interest ; that if there be a right in or against the property which some court will enforce upon the property, a right so closely connected with it and so much dependent for value upon the continued existence of it alone, as that a loss of the property will cause pecuniary damage to 96 farmers' mutual ins. CO. v. turnpike CO. [chap. II. the holder of the right against it, he has an insurable interest. The plaintiff brought its case within these principles. A loss measured by the diminution of its royalties was the inevitable result to it of a fire in the works of Ellis & Co. It could not substitute a new license and must await the repairs necessary to a renewal of the business. By its contract it became so situated relative to the buildings insured, that it had ^ direct pecuniary interest in their safety from accidental fire. That interest it could, as it did, insure. . . . Judgment affirmed. FARMERS' MUTUAL INSURANCE CO. v. NEW HOLLAND TURNPIKE CO. Supreme Court of Pennstlvania, 1888. 122 Pa. 37. Error to the Court of Common Pleas of Lancaster County.^ An action of covenant was brought upon a policy of insurance for $4,000 upon a bridge over Conestoga Creek, where the New Holland Turnpike Company's road crosses. The defendant pleaded covenants performed, absque hoc} The judge instructed the jnrj' that the turnpike company "has an equitable interest which may be insured ; " and he refused the defend- ant's request for an instruction that " it has not been proved . . . that the plaintiff had any insurable interest." The jury found for the plaintiff. Judgment being entered, the de- fendant took this writ, and assigned manj- errors, of which the second was the refusal to give the instruction requested by the defendant, and the third was the passage quoted from the charge. Mr. H. M. North (with him Mr. A. 0. Newpher), for the plaintiff in error. Mr. A. M. Frantz (with him Mr. S. H. Reynolds), for the defend- ant in ei;ror. Green, J.'^ . . . The more important question ... is whether the turnpike companj' had any insurable interest in the bridge. It is a novel question, but perhaps not difficult of solution. The basis, upon which the insurable interest is claimed to exist, is the fact that the turnpike company contributed $5,500 to the cost of erecting the bridge, being one-third its total cost, 816,500. If this contribution was com- pulsory — that is, legally compulsory — it would perhaps have to be admitted that an interest in the bridge, legal or equitable, would neces- sarily flow from it. For it cannot be supposed that the law would ^ The reporter's statement has been omitted. — Ed. ^ The omitted parts of the opinion sustained the insurer's contention that the lower court had committed other errors, and also quoted definitions of insurable interest. —Ed. PART II., SECT. II. J TAEMEES' MUT. INS. CO. V. TURNPIKE CO. 97 oblige anj- person or corporation to contribute directlj- to the cost of erecting a structure, without- conferring an interest in the structure which the law would recognize and enforce. While saying this, we do not of course refer to that kind of contribution which is accomplished b}- the payment of taxes. Such contribution is, of course, for public use, and confers no title or interest upon the tax-payer in structures which maj' be erected with public funds. But in this case there is no pretence of any compulsion upon the turnpike company. The evidence as to the payment of the money is barren of information except as to the mere fact of the payment. There is absolutely no testimony to prove why or upon what consid- eration, or for what purpose or reason, the turnpike company paid any part of the cost of erecting the bridge. It is not difficult to imagine a reason, since, as the companj-'s road crossed the stream over which the bridge was erected, it would be quite desirable for them to have a bridge over which persons using the road could travel. But while that might be a reason for the companj' building a bridge of its own, it was still the fact that the bridge was a public county bridge, free to all travel, built manj- years before hy a private person who transferred it to the count}', and hence the property of the countj- exclusivel}-. Being thus a free, public bridge, there could not possibly be anj' private estate or ownership in it. The turnpike company could charge no tolls for pass- ing over it. They could exercise no acts of ownership over it. They could not obstruct it nor take it down, even if to rebuild it, without the consent of the count}-, and perhaps not even with such consent, as it was a part of the public highway. In point of fact, while the turnpike company did contribute the third part of the cost of its erection, after the former bridge had fallen down, the county at that time paid the other two-thirds of the cost, and re- erected the bridge in discharge of its undoubted legal obligation to do so. And so, after its destruction by fire in 1882, it was again rebuilt by the county as a public county bridge in obedience to a general law of this Commonwealth, Act of May 5, 1876, P. L. 112, and the decree of this court: Myers o. Commonwealth, 110 Pa. 217. All this was done without any cost to this plaintiff, who now enjoys the use of the bridge in the same manner and to the same extent as before the fire. The only injury the plaintiff has sustained by the fire is in being de- prived of the use of the bridge, not as its own, but as a part of the public highway, during the period of the reconstruction of the bridge. But for that injury the defendant was not responsible in any sense, and it never assumed an obligation to make compensation for it. The county was legally charged with the duty of rebuilding, and however an argument might be made against the county for not performing its duty in that i-egard with promptness, it is perfectly manifest that the breach of that duty by the county conferred no right of action aganst the de- fendant insurance company. "What then remains to impose any liability upon the defendant? The bridge is restored without any expense to 7 98 BALOW V. farmers' MUT. fire ins. CO. [chap. II. the plaintiff. Every right which the plaintiff' enjoj-ed before the fire is enjoj'ecl since, so far as the bridge is concerned, without anj- additional cost to the plaintiff. It may be remarked in passing that the right of the plaintiff in the bridge is only the public and common right of its patrons as citizens, to use the bridge as a part of the public highwaj-. It is therefore not a right peculiar to the plaintiff in any sense. . . . There was clearly no interest in the bridge belonging to the turnpike company which could be recognized or enforced either at law or in equity. There could not be a.ny right of property of any kind, nor of possession, nor of custody. Even the use of it was not a use by the plaintiff in its corporate capacity, but a mere right of passage over it which belonged to all citizens in common. The money which was con- tributed to its construction by the plaintiff" was a mere gratuit3-, which it was not bound to give and which it could never recover. In such circumstances there was no interest or property in the bridge as a structure and hence no insurable interest capable of protection and enforcement. . . . Judgment reversed. SOPHIA BALOW v. TEUTONIA FARMERS' MUTUAL FIRE INS. CO. Supreme Court of Michigan, 1889. 77 Mich. 540. Error to Wayne. (Reillt, J.) Assumpsit. Defendant brings error. James H. Pound, for appellant. M. B. Breitenbach ( W. B. Jackson, of counsel), for plaintiff". Sherwood, C. J. The two important questions in this case were — 1. Did the plaintiff have an insurable interest in the property insured at the time the application was made for insurance ? 2. If she had, did that interest continue until the time of the fire by which it was destroyed ? ^ . . . The jury found for the plaintiff". . . . The defendant's counsel, after the evidence was closed, asked the court to instruct the jury to return a verdict for his client, under the pleadings and proofs in the case ; and the court refused the request. This raises the first question to be considered. Certain evidence ap- pears in the case, undisputed ; and, if it is suflflcient to dispose of the case, it will be unnecessar3' io go further with our discussion. Among the facts upon which there is no dispute upon this record are the following : That the plaintiff became a member of the company, for the purpose of insurance, in April, 1884 ; that, before effecting the in- surance in this case, the plaintiff conveyed by warranty deed the prop- erty in question to Ervin Palmer ; also made, at the same time, a 1 The omitted passages did not deal with insurable interest. — Ed. PART II., SECT. II. J BALOW V. FARMEKS' MUT. FIEE INS. CO. 99 contract with him, which contains an agreement on the part of Pahncr that he will tr_v and sell and dispose of the eighty acres of laud, including the insured property, and from the proceeds, provided a certain limit was reached, a portion was to go to the plaintiff; and she further cove- nanted that the sale, under Palmer's deed, was not to be construed con- ditional, in the following words : — '• It is hereby distinctly understood and agreed that the sale of said premises is absolute, and nothing herein contained shall be construed to make said sale conditional." That said insurance was effected October 22, 1884, and the deed to Palmer was made on August 6 preceding, as well as the said contract; that said deed to Palmer was duly recorded in the register's office in "Wayne Countj*, among the records of deeds, when the plaintiff took her insurance. That, the complainant claiming that she had some equitable interest in the propert}- insured, arising under the contract with Palmer, above referred to, and which, she claimed, furnished a proper basis for the insurance she obtained in the defendant company upon the property- in question, she and her husband, David Balow, tiled a bill of complaint against said Palmer and others on October 8, 1885, to enforce her claimed rights, and praying, among other things, that her said deed to Palmer might be decreed a mortgage, and her rights secured to her as mortgagor of the propert)', instead of grantor in fee. That said Palmer answered said bill faWy, denying the equity of the same ; that proofs were taken, and upon which, and the pleadings, the cause was heard in the Wa3'ne Circuit Court, in chancerj' ; and the circuit judge made a decree therein, dismissing the complainant's bill absolutelv, and which is still in force, it never having been appealed from, or in any way modified ; which decree was rendered previous to the destruction of the insured property' \>y fire, on April 19, 1886. It is claimed by counsel for the defendant that these undisputed facts show that the plaintiff, at the time the property burned, had no interest therein which would entitle her to recover ; and that the circuit judge should have given his request to charge as asked. We think the coun- sel is correct, and the ruling otherwise was error. The decision made in the chancery case conclusively shows the title to the insured propertj- passed to Palmer by the plaintiff's deed to him. The contract of August 6, 1884, entered into at the time the deed was made to Palmer, contains the following clause : — "In consideration of said deed, and the undertakings herein con- tained to be performed by said Palmer, it is herebj- agreed that said Palmer, whenever he sells said premises, — and he agrees that when- ever he can sell said premises for a fair price he will sell the same, — he will pay out of the proceeds of the premises the Miller mortgage, to whomsoever holds the same. And he is to retain in his hands sufficient to pay his said mortgages, and the indebtedness due him from said par- ties of the first part, or either of them. He is also to pay out of said 100 BALOW V. farmers' MUX. FIRE INS. CO. [CHAP. II. proceeds all liens, taxes, and other encumbrances on said premises. He is to paj', and said Palmer hereby agrees to paj-, to said Sophia Balow, out of the proceeds of said sale, the sum of two thousand (|2,000) dol- lars, if there shall be enough of said purchase price or proceeds remain- ing after paying the above amounts, including the mortgages of said Palmer ; and, if there shall not be $2,000 remaining of said proceeds after paj-ing said amounts above specifled, then said Palmer is to pay to said Sophia Balow what shall remain of said proceeds." This clause of the contract creates no more than a personal obligation on the part of Palmer, in a certain contingency, to pay to this plaintiff an amount of money which can only be determined in the future ; de- pending entirely upon the amount he ma3- receive in case of sale of the propertj- mentioned in the deed. It may be $1, or $2,000, or none at all. In no way is it, whatever may be the amount, made a charge upon the land, nor does it create an interest therein, in favor of the plaintiff, upon which she could obtain insurance. It is claimed by plaintiff's counsel that the contract was part of the consideration for the deed to Palmer, and for what was secured under it to plaintiff; that she had a vendor's lien upon the property sold; and this, coupled with the possession which she held at the time the buildings were burned, gave her an equitable interest in the property-, which was insurable. But this proposition cannot be maintained, under the undisputed facts in this case. A vendor's lien is always in the nature of a mortgage. The decree of the court in the chancer}- suit was to the effect that plaintiff had no such interest, and that she was not entitled to the possession of the property. But, independently of this, a vendor's lien must alwaj'S be for some certain amount, known to exist at the time the lien is created. In this case, it was not known that any amount would ever become due to the plaiutiff from Palmer under the contract by which she claims the lien. Certain it is that no indebtedness to her had been ascertained at the time this suit was brought ; neither does the record disclose that any amount has become due to her since. This claim to such lien is therefore unfounded. . . . The judgment, therefore, must be reversed, and a new trial granted.* 1 On the topic of this section, see also : — Carter v. Humboldt Fire Ins. Co., 12 Iowa, 287 (1861) ; Sawyer v. Dodge County Mutual Ins. Co., .37 Mich. 503 (1875) ; Holbrook v. St. Paul F. & M. Ins. Co., 25 Minn. 229 (1878) ; Walsh V. Fire Association, 127 Mass. 383 (1879) ; Clark V. Scottish Imperial Ins. Co., 4 Can. S. C. 192 (1879) ; Insurance Company v. Stinsou, 103 U. S. 25 (1880) ; Horsch V. Dwelling House Ins. Co., 77 Wis. 4 (1890) ; Planters and Merchants Ins. Co. v. Thurston, 93 Ala. 255 (1890) ; Berry v. American Central Ins. Co., 132 N. Y. 49 (1892) ; Home Ins. Co. v. Mendenhall, 164 HI. 458 (1897) ; Sun Ins. Office v. Merz, 64 N. J. L. (35 Vroom) 301 (1900). — Ed. PAKT IL, SECT. III.] LORD V. BALL. 101 SECTION III. Life Insurance. ANDERSON v. EDIE. Nisi Pkius, King's Bench, 1795. 2 Park Ins. (8th ed.) 914. In an action on a polic}' of insurance on the life of Lord Newhaven from the 1st December, 1792, to the 1st of December, 1793, the only question made b}- the defendant was as to the plaintiff's interest, which it was contended was not sufficient to take this case out of the statute 14 Geo. 3, c. 48. It appeared in evidence that Lord Newhaven was indebted to the plaintiff and a Mr. Mitchell in a large sum of monej", part of which debt had been assigned bj them to another person; the remainder, being more than the amount of the sum insured, was upon a settlement of accounts between the plaintiff and Mitchell, agreed by them to remain to the account of Mitchell only. Lord Kenton was of opinion that this debt was a sufficient interest, and said that it was singular that this question had never been directl}' decided before. That a creditor had certainly an interest in the life of his debtor ; the means by which he was to be satisfied may materially depend upon it, and at all events the death must in all cases in some degree lessen the securitj'. Verdict /or the plaintiff. LOED V. DALL. Supreme Judicial Court of Massachusetts, 1815. 12 Mass. 115. Assumpsit on a polic3' of assurance, made for $5,000, in favor of the plaintiff, upon the life of Jabez Lord, her brother, aged thirtj'-three years, bound on a voyage to South America, or any other place he might proceed to from Boston, commencing the risk on the 16th of December, 1809, at noon, and to continue until the 16th of July, 1810, at noon ; for a premium of seven per cent. The defendant underwrote the sum of $500. At the trial of the cause upon the general issue, at the last Novem- ber term, before the chief justice, it was proved that the said Jabez had died on the coast of Africa before the expiration of the time for which his life was insured, and not from any of the causes excepted from the risk.^ . . . 1 In reprinting the statement and the opinion, passages not bearing on insurable interest hare been omitted. The omitted passages dealt principally with the illegality of the voyage. — Ed. 102 LORD V. DALL. [CHAP. II. The objections made at the trial to the plaintiff's recovery were, — 1. That she had no insurable interest in the life of the said Jabez. But it being in evidence that she was a person of no propert}- at the time, depending altogether upon the said Jabez for her support and education, and he having for several 3'ears paid her board, provided her with clothing, and paid for her education, — all which he continued to do at the time the policy was effected, — this objection was overruled, but reserved for the consideration of the whole court. . . . The said Jabez Lord gave his note for the premium ; and there was no evidence that the plaintiff knew where the said Jabez was bound. If the court should be of opinion that the plaintiff had not an insur- able interest, or that the policy was void on account of the illegality of the voyage, the verdict returned for the plaintiff was to be set aside, and she was to become nonsuit ; otherwise judgment was to be rendered on the verdict. J'rescott and Hiibhard argued for the plaintiff, and Livermore and W. Sullivan, for the defendant. Parker, C. J., delivered the opinion of the court. It has been made a question in the argument, whether a polic3' of assurance upon a life is a contract which can be enforced bv the laws of this State : the law of England, as it is suggested, applicable to such contracts never having been adopted and practised upon in this country. It is true that no precedent has been produced from our own records of an action upon a policy of this nature. But whether this has hap- pened from the infrequency of disputes which have arisen, it being a subject of much less doubt and difficulty than marine insurances, or from the infrequency of such contracts, it is not possible for us to decide. By the common principles of law, however, all contracts fairlj' made, upon a valuable consideration, which infringe no law, and are not re- pugnant to the general polic}- of the laws, or to good morals, are ^'alid and ma}- be enforced, or damages recovered for the breach of them. It seems that these insurances are not favored in any of the commer- cial nations of Europe except England ; several of them having ex- pressly forbidden them, for what reasons, however, does not appear : unless the reason given in France is the prevailing one, viz. "that it is indecorous to set a price upon the life of man, and especially a freeman, which, as thej^ say, is above all price." It is not a little singular that such a reason should be advanced for prohibiting these policies in France, where freedom has never been known to exist, and that it never should have been thought of in England, which for several centuries has been the country of established and regulated liberty. This is a contract fairly made ; the premium is a sufficient consider- ation ; there is nothing on the face of it which leads to the violation of law ; nor anything objectionable on the score of polic}' or morals. It must, then, be valid to support an action, until something is shown by the party refusing to perform it in excuse of his non-performance. It is said that, being a contract of assurance, the law on the subject PART II., SECT. III.] LOED V. DALL. 103 of marine insurance is applicable to it ; and therefore unless the as- sured had an interest in the subject-matter insured, he is not entitled to his action. This position we agi'ee to ; for otherwise it would be a mere wager policy, which we think would be contrary- to the general polic}' of our laws, and therefore void. Had then the plaintiff an interest in the life of her brother which was insured? The report states the facts upon which that interest was supposed at the trial to exist. The plaintiff, a jouug female without property", was and had been for several jears supported and educated at the expense of her brother, who stood towards her in loco parentis. Nothing could show a stronger affection of a brother towards his sister than that he should be willing to give so large a sum to secure her against the con- tingenc}' of his death, which would otherwise have left her in absolute want. One per cent per month upon $5,000, taken on the life of a man of thirtj'-three }-ears of age, in good health at the time, was a sufficient indncement to the underwriter to take at least common chances, and proved the strong disposition of the brother to secure his sister against the melancholj- consequence to her of his death. In common under- standing no one would hesitate to sa}-, that in the life of such a brother the sister had an interest ; and few would limit that interest to the sum of five thousand dollars. But it is said the interest must be a pecuniary, legal interest, to make the contract valid ; one that can be noticed and protected bj- the law : such as the interest which a creditor has in the life of his debtor, a child in that of his parent, etc. The former case, indeed, of the creditor would have no room for doubt. But with respect to a child, for whose benefit a policy maj- be effected on the life of the parent, the interest, except the insurable one which may result from the legal obligation of the parent to save the child from public charity, is as precarious as that of a sister in the life of an affectionate brother. For if the brother may withdraw all support, so may the father, except as before stated. And yet a policy effected by a child upon the life of a father, who de- pended on some fund terminable by his death to support the child, would never be questioned ; although much more should be secured than the legal interest which the child had in the protection of his father. Indeed, we are well satisfied that the interest of the plaintiff in the life of her brother is of a nature to entitle her to insure it. Nor can it be easily discerned why the underwriters should make this a question after a loss has taken place, when it does not appear that any doubts existed when the contract was made ; although the same subject was then in their contemplation. . . . Perceiving nothing in this contract unfriendl}' to the morals or inter- ests of the community, and no knowledge of an illegal intention being imputed to the plaintiff, we see no reason for setting aside the verdict. Judgment will therefore be entered upon it.^ 1 Compare Lewis v. Phoenix Mut. L. Ins. Co., 39 Conn. 100 (1872). — Ed. 104 HALFORD V. KYMER. [cHAP. II. HALFORD V. KYMER and Othees. King's Bench, 1830. 10 B. & C. 724. This was an action of covenant on a policy of insurance, dated the 13th of Februarj-, 1826, whereby the directors of the Asylum Life In- surance Company agreed with tlae plaintiff to insure the life of Robert Bargrave Halford, the son of the plaintiff, in the sum of £5,000, for the term of two years, and covenanted that if Robert Bargrave Halford should die at any time within the term of two j-ears, to be computed from the day of the date of that policj-, the funds of the company should be liable to paj', within six calendar months after proof of the death of the said Robert Bargrave Halford within the said term of two years, unto the said Richard Halford, his executors, &c., the sum of £5, 000. Plea, first, that at the time of making the policy in the dec- laration mentioned, the plaintiff was not interested in the life of the said Robert Bargrave Halford. Secondly, that at the time of the death of the said Robert Bargrave Halford, the plaintiff was not interested in his life. At the trial, before Lord Tenterden, C. J., at the Middlesex sittings after last term, it appeared from the statement of the plaintiff's counsel, that by a settlement, dated the 18th of Ma3-, 1805, made on the marriage of the plaintiff with S. T. Bargrave, the sum of £8,000, and also the monej's to arise from the sale of certain freehold and lease- hold estates, were settled, after and subject to the trusts for the plain- tiff and his wife successively during their lives, in trust for the children or child of the said marriage, according to the appointment of the said plaintiff, and of his said wife, as therein mentioned ; and in default of appointment, if there should be but one child of the said marriage, then in trust for such child, to become a vested interest in such child, if a son, at the age of twenty-one years ; and if no child of the said mar- riage, or issue of such child, should become entitled to the vested inter- est in the said trust monej's, then upon such trusts as the said S. T. Bargrave should appoint ; and in default of her appointment, in trust for her next of kin, as if she had died intestate and unmarried." There was only one child of the marriage, namely, Robert Bargrave Hal- ford ; and the marriage of the plaintiff with the said S. T. Bargrave having been dissolved bj' act of Parliament, the plaintifi' married again, and effected the policy in question to provide against the death of his son, Robert Bargrave Halford, before he attained the age of twentj'- one. The said Robert Bargrave Halford did attain the age of twent}- one years on the 2d of June, 1827, and on the 5th of January, 1828, made his will, and thereby gave all his real and personal estate to the plaintiff, his father, and appointed him sole executor, and died on the 11th of January, 1828. The plaintiff, on the 17th of July, 1828, proved his son's will in the Prerogative Court of the Archbishop of Canterbury. Upon this statement of facts. Lord Tenterden was of opinion that the PAET II., SECT. III.] HALFORD V. KTMER. 105 plaintiff, not having anj' pecuniary interest in the life of his son at the time when he effected the policj-, the same was void b3' the Statute 14 Geo. III. c. 48, § 3, and he nonsuited the plaintiff, but reserved lib- ert}- to him to move to enter a verdict if the court should be of opinion that he had an insurable interest. F. Pollock now moved accordinglj'. It is quite clear that but for the Statute 14 Geo. III. c. 48, this polic}- would be available. That stat- ute, bj- § 1, enacts " that no insurance shall be made hj any person or persons on the life of any person or persons, or on any event or events whatsoever, wherein the person for whose use, benefit, or on whose account such polic}' shall be made, shall have no interest, or b}- waj- of gaming or wagering ; and that every insurance made contrary to the true intent and meaning thereof shall be null and void to all intents and purposes whatsoever." Now, the plaintiff clearly had an interest in the life of his son, for he might reasonablj- expect that the latter would reimburse him the expenses of his maintenance and education. This clearly was not a wagering policj' within the meaning of that clause. It is true that the third section enacts, " that in all cases where the assured hath interest in such life or lives, event or events, no greater sum shall be recovered or received from the insurer than tlie amount or value of the interest insured on such life or lives, or other event or events." It is clear that a man maj' effect an insurance on his own life, although he may have no pecuniary interest depending on it, and although his own income may be of the most ample kind, not de- pending on his own exertions, or on an\' contingenc}- ; and if that be so, upon what principle can it be said that he cannot have an insurable interest in the life of his son or his wife? If a man be deprived of the comfort, societ3', and assistance of his wife by the misconduct of an- other, he ma}' recover damages for that loss. So, if he be deprived of the services of his daughter b}- her seduction, or if he lose the assist- ance of an}- other member of his family by the wrongful act of another, he maj' maintain an action for damages. Surely, the law which gives a man a right of action for the wrongful act of another, b}' which he is deprived of the assistance of his wife, daughter, or servant, will not prevent him from protecting himself against that casualty which for- ever deprives him of that assistance. [Batlet, J. In Innes r. The Equitable Assurance Company (which was tried before Lord Kenj'on), the plaintiff had effected a policy on the life of his daughter. In order to show that he had an interest, he produced a paper, purporting to be a will, by which it appeared that he was entitled to the sum of £1,000 in the event of his daughter dying under the age of twenty-one. One Gardiner swore that he was a subscribing witness to the will, and that it was made at Glasgow, and that he was acquainted with the other subscribing witnesses ; but another of those witnesses stated that it was not made at Glasgow, but by a schoolmaster in the borough. Innes was tried, convicted, and executed for the forger}-, and Gardiner, who had sworn that the will was made at Glasgow, was convicted of 106 HALFOED V. KYMEE. [cHAP. II. perjury. Lord Tenterden, C. J. It was in effect admitted, in that case, that it was necessary to prove that the father had a pecuniary interest in the life of his daughter, otherwise there would have been no occasion to go into the question as to the will ; and unless it were a fact material in the case, the witness could not have been convicted of perjury.] That was only a nisi prius case. But a father has a legal interest in the life of his son sufficient to entitle him to insure. By the statute of Elizabeth, if a father become poor in his old age, and his son be capable of maintaining him, he is bound to do so. Now, why does a man insure the life of his debtor? Because the death of his debtor diminishes the chance of his being paid. So, if a son dies, the chance of the father being maintained in poverty and old age is diminished. [Batley, J. The parish is bound to maintain him, and it is indifferent to him whether he be maintained by the parish or his son. J The amount of maintenance which a parish must afford ma}', in many cases, be much less than that which a son would be ordered to pa^'. Besides, a father may have a claim on his son, when he has no claim on the parish. He may not be able to show his settlement in the parish from which he claims relief. In that case the life of his son would be of importance to him, as affording him the certainty of having a comfort- able provision. The word " interest " in the act of Parliament is not to be confined in construction to pecuniary interest, but maj- be taken to mean leffal interest ; and the third section, which allows the insured to recover to the amount or value of his interest, shows that the law would recognize an interest of any kind, provided a value can be set upon it. Lord Tenterden, C. J. I retain the opinion which I expressed at the trial, that the word interest in this statute means pecuniarj- interest. Baylet, J. It is enacted by the third section, " that no greater sum shall be recovered than the amount of the value of the interest of the insured in the life or lives." Now, what was the amount or value of the interest of the party insuring in this case? Not one farthing, cer- tainly. It tias been said that there are numerous instances in -which a father has effected an insurance on the life of his son. If a father, wishing to give his son some property to dispose of, make an insurance on his son's life in his (the son's) name, not for his (the father's) own benefit, but for the benefit of his son, there is no law to prevent his doing so ; but that is a transaction quite different from the present ; and if a notion prevails that such an insurance as the one in question is valid, the sooner it is corrected the better. Littledale and Paeke, J J., concurred. Hule refused. PART II., SECT. III.] MQKRELL V. TRENTON MUT., ETC. INS. CO. 107 CYEUS K. MOERELL v. TREXTON MUTUAL LIFE AND FIRE INS. CO. Supreme Judicial Court of Massachusetts, 1852. 10 Gush. 282. Action on a policy of life insurance, issued b}- the defendant com- pau}-, February 16, 1850, insuring tlie plaintiff, in tlie sum of $1,000, on the life of William C. Morrell, with leave to make a journey to California and back, and also to reside there. On the trial in this court, before Bigelow, J., it was proved or admitted, that said William C. Morrell died near Sacramento in the State of California, on the 12th of May, 1850 ; that due notice of his death was given, and pa5"ment demanded, before the action was com- menced. It appeared bj- the evidence of John H. Morrell (who with the said William C. composed the firm of Morrell and Compan}-), that prior to the issuing of said policy, it was agreed between the plaintiff and the said William C. that the latter should work in the California mines one j-ear, and that one fourth part of the proceeds of his labor there should belong to the plaintiff, and that, as a consideration therefor, the plaintiff was to labor for the said William C. in the store of Morrell and Com- pany, and that said arrangement was assented to by the other partner, John H. Morrell. It further appeared, that the plaintiff did in fact labor in said store for the said William C. IMorrell, b}' virtue of said agreement, till the news of the death of the said William C. was received, which was in July, 1850. It also appeared in evidence that, on the 22d da}- of January, 1849, the said firm of Morrell and Companj' purchased of the plaintifi"a stock of goods and gave him their note for $2,000, which note was unpaid, except one year's interest thereon, at the time of the death of the said William C, and at the trial of this suit. No adminis- trator of the estate of the said William C. Morrell was ever appointed, and the father of the said William C. was the only heir to his estate. It was agreed that the estate of the said William C. was more than sufficient to paj* all his debts and liabilities. On the 9th day of September, 1850, it was agreed between said John H. Morrell, and the father of the said William C, that the said John H. should take to himself all the propertj- of the said William C, and that he should assume and pa}- his debts, and should moreover pay his father the further sum of S300, and the plaintiff knew of, and did not object to, said arrangement. Upon these facts, the presiding judge ruled that the plaintifl" had an insurable interest in the life of the said William C, and was entitled to a verdict for the full amount insured. The verdict therefore being for the plaintifl!", the defendants alleged exceptions. A. M. Nelson, for the defendants. J. G. Abbott, for the plaintiff. 108 DALBY V. INDIA. AND LONDON L. ASSUE. CO. [CHAP. 11. Shaw, C. J. The court are of opinion that, upon the facts stated, the plaintiff had an interest such as is recognized as a good insurable interest in the life of the person on which this policy was made by the defendant company to the plaintiff. He held a promissory note signed bj- a firm, of which the said William C. Morrell was one of the partners, to an amount larger than the amount insured ; this was due and owing at the time the insurance was made ; at the death of the parlj' whose life was insured, and at the time of the trial. Each partner is a debtor in solido to the whole amount of a joint debt. It is no answer, we think, that the estate of the deceased was solvent, and that the other joint debtor might be able to pay it ; it was enough, we think, that by the contract of the defendants, made on a valuable consideration, they guaranteed to the plaintiff that if his debtor should die within the time, and the debt remained unpaid, they would pay the amount stipulated. Anderson v. Edie, cited in Park on Ins. 640 ; Tidswell v. Ankerstein, Peake's Cas. 151. But the court are strongly inclined to the opinion that the plaintiff had another interest in the life of the person, on whose life he was insured by the defendants. He had a subsisting contract with that person, made on a valuable consideration, bj- which he was to receive one quarter part of his earnings in the mines of California for one year. Such an interest cannot, from its nature, be valued or apportioned. It was an interest upon which the polic3' attached. By the loss of his life within the j'ear, the person whose life was insured lost the means of earning anything more, and the plaintiff was deprived of receiving his share of such earnings, to an uncertain and indefinite amount. Exceptions overruled.^ DALBY V. INDIA AND LONDON LIFE ASSURANCE CO. Exchequer Chamber, 1854. 15 C.B. 365. This was an action '^ on a policy effected bj- the plaintiff on January 9, 1847, for and on behalf of the directors of the Anchor Life Assurance Co., in the sum of £1,000, on the life of the Duke of Cambridge, for the whole term of his life. The pleadings and the facts are abstracted in the opinion of the court. The cause came on for trial before Cresvtell, J., when, a point being reserved for the opinion of the Court of Common Pleas involving a question as to the propriety of the decision in Godsall v. Boldero, 9 East, 72, it was, at the suggestion of that court, agreed that the facts 1 Acc: Connecticut Mut. L. Ins. Co. u. Luchs, 108 TJ. S. 498 (1883). — Ed. 2 The statement has been condensed. — Ed. PAET IL, SECT. III.] DALBY V. INDIA AXD LONDON L. ASSUK. CO. 109 should be stated for the opinion of the Court of Error in the shape of a bill of exceptions. According to the bill of exceptions, the judge directed the jurj- that there was no evidence that the Anchor Life Assurance Company was interested in the life of the Duke of Cambridge, in manner and form as the declaration had alleged ; and thereupon the jurj- gave their verdict for the defendants ; but the counsel for the plaintiff, before verdict, ex- cepted to the direction. Bramwell (with whom were S. Tindal Atkinson and F. J. Smith), for the plaintiff. "^ ChanneU, Serjt. (with whom were Partridge and Coxon), contra? Cur. adv. vult. Parke, B., now delivered the judgment of the court.' . . . It is an action on what is usually termed a policy of life assurance, brought by the plaintiff as a trustee for the Anchor Assurance Com- pany, on a policy for £1,000 ou 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 one 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 policj' with the defendants for £1,000 by waj- of counter-insurance. At the time this policy was subscribed by the defendants, the Anchor Company had unquestionably an insurable interest to the full amount. Afterwards, an arrangement was made between the office and Wright for the former to grant an annuity to Wright and his wife, in considera- tion of a sum of money, and of the delivei'y up of the four policies to be cancelled, 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 between 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 circum- stances, the assurance was void, and nothing could be recovered thereon. 1 In the midst of this argument. Aiderson, B., said : " The case of Godsall c. Bol- dero, 9 East, 72, starts with the palpable fallacy that it is a mere contract of in- demnity. In the case of a fire or marine insurance, the oflSce does not necessarily pay anjrthing. Life assurance is altogether different : every life must come to an end. In GodsaU V. Boldero, it happened to be the contract of a creditor." — Ed. 2 Parke, B., interrupted counsel thus : " You had better address yourself to the question whether or not an interest at the time of the contract is suiBcient." — Ed. ' The omitted passage stated how the case came before this court. — Ed. 110 DALBY V. INDIA AND LONDON L. ASSUE. CO. [CHAP. II. If the court had thought some interest at the time of the Duke's death was necessary to make the policy valid, the facts attending the keeping up of the policy would have undergone further discussion. There is the usual averment in the declaration, that, at the time of the making of the policj-, and thence until the death of the Duke, the Anchor Assurance Company was interested in the life of the Duke, and a plea that they were not interested modo et forma, — which traverse makes it unnecessarj- to prove more than the interest at the time of making the policy, if that interest was sufHcieut to make it valid in point of law. Lush v. Eussell, 5 Exch. 203. We are all of opinion that it was sufficient; and, but for the case of Godsall v. Boldero, 9 East, 72, should have felt no doubt upon the question. The contract commonly called life assurance, when properh' con- sidered, is a mere contract to pa}- a ceitain sum of money on the death of a person, in consideration of the due payment of a certain annuity for his life, — the amount of the annuity being calculated, in the first instance, according 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 indemnitj'. Policies of assurance against fire and against marine risks, are both properly contracts of indemnit}', — the insurer engaging to make good, within certain limited amounts, the losses sustained by the assured in their buildings, ships, and effects. Policies on maritime risks were afterwards used improperl}-, and made mere wagers on the happening of those perils. This practice was limited by the 19 Geo. 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 Geo. III., c. 48, as to insurances on lives, it is perfectly clear that all contracts for wager policies, and wagers which were not contrary to the policy' of the law, were legal contracts ; and so it is stated bj' 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 N. E. 269, without even a diflference 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 Company v. Magee, Cooke & Alcock, 182, that the insurance was legal at common law. The contract, therefore, in this case, to paj- a fixed sum of £1,000 on the death of the late Duke of Cambridge, would have been unquestion- ably legal at common law, if the plaintiff had had an interest thereon or not ; and the sole question is, whether this policy was rendered ille- gal and void by the provisions of the statute 14 Geo. III., c. 48. This depends upon its true construction. The statute recites that the making insurances on lives and other events wherein the assured shall have no interest hath introduced a PART II., SECT. III. J LOOMIS V. EAGLE LIFE, ETC. IXS. CO. Ill mischievous kind of gaming ; and, for the remedj' thereof, it enacts "that no insurance shall be made bj' anj- one on the life or lives of anj- person or persons, or on any other events whatsoever, wherein the person or persons for whose use and benefit, or on whose account, such polic.v shall be made, shall have no interest, or bj' way of gaming or wagering ; and that every assurance made contrar\- to the true intent and meaning hereof shall be null and void to all intents and purposes whatsoever." As the Anchor Assurance Companj- 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 paj- 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 provisions in the act. This contract is good at common law, and certainlj' not avoided by the first section of the 14 Geo. III. c. 48. This section, it is to be observed, does not provide for an}- particular amount of interest. According to it, if there was any interest, however small, the policy would not be avoided.^ . . . Judgment reversed and venire de novo? LOOMIS, Administeatok, v. EAGLE LIFE AND HEALTH INS. CO. SuPEEiiE Judicial Court of Massachusetts, 1856. 6 Gray, 396. AcTiox of contract upon a policj' of insurance, dated Februar}' 2, 1849, for seven j-ears, for the sum of $700 upon the life of Freedom Keith, a minor son of Bela M. Keith, the plaintiffs intestate, to whom this policj" was made. At the trial in the Court of Common Pleas at October term, 1853, before Mellex, J., there was evidence of the following facts : Freedom was twenty years of age on the 6th of January, 1849, and resided with his father in Manchester, Conn., and worked in a factor}' there; the father, with his other children, working in the same factory, and usually receiving the wages of all his children, which together with his own wages constituted the principal support of his family. On the 17th of February, 1849, Freedom sailed for California, having on the 8th of January pre^aous made an agreement in writing with Aaron Cook, in consideration of the sum of ^300 paid bj' Cook into the treasurj' of a trading and mining company, of which Freedom was a member, to devote his services to said companj' during its continuance, 1 The remainder of the opinion dealt with the amount of recovery. It will be found -post, p. 932. — Ed. " See Connecticut Mut. L. Ins. Co. v. Schaefer, 94 TJ. S. 457 (1876). — Ed. 112 LOOMIS V. EAGLE LIFE, ETC. INS. CO. [CHAP. IL and to pay half of his share of the profits to Cook ; and his father as- sented to this agreement, and relinquished any claim to his services, so far as Cook was concerned ; and supplied Freedom with an outfit out of his former earnings. On the 2d of February, 1849, Cook procured from the defendants a policy of insurance for $500 on Freedom's life. Freedom died on board of the ship on the 1st of December, 1849, soon after arriving in California.^ . . . The defendants contended that the plaintifTs intestate had no insur- able interest in the life of Freedom Keith. . . . But tiie judge ruled that upon the facts proved the intestate had an insurable interest to the amount of the policj', . . . and directed the jury to return a verdict for the full amount of the policy ; which they did ; and the defendants alleged exceptions. H. Yose and i. Norton, for the plaintiff. H. Morris, for the defendants. Shaw, C. J. . . . The ground principally relied on is, that the assured had no pecuniary interest in the life of his son at the time the policy was made, and no insurable interest at the time the loss occurred. We understand that the law of Connecticut (where the parties re- sided) is similar to that of Massachusetts, and that by the law of both States a father who supports, maintains, and educates a son, under twenty-one years of age and not emancipated, is entitled to the earn- ings of such son, and may maintain an action for them. Here, when the father had in terms i-elinquished his right to a share in the son's earnings, for a valuable stipulation on the other side, designed and in- tended to increase those earnings, by a necessary implication he re- served his right to the other share of those earnings. According to any, the strictest rule of construction, the assured in this case, we think, had a direct and pecuniarj- interest in the life of the cestui que vie, his son. It is argued, that the time which would remain after his probable arrival in California, before coming of age, would be so short that his earnings, if anything, would be very small. Supposing he was to have a passage of three or five months, he might still have five or six months to work in California ; and this being a contract dealing with chances and probabilities, and even possibilities, and to be con- strued as such, it may well be supposed that the parties had it in con- templation that, by working a few weeks or days in a gold mine, or by a lucky hit in a single da}', he might gain gold enough to make his share exceed the whole sum insured. But nearness or remoteness of this chance is immaterial ; the parties regulate that matter for them- selves in fixing the sum to be insured and the rate of premium. It seems to us therefore that, according to the rule relied on by the defend- ants, the assured in the present case had a direct and pecuniary interest in the life of the son, suflScient to enable him to maintain this action. 1 In the statement and the opinion, passages foreign to insurable interest have been omitted. — Ed. PART II., SECT. III.] LOOMIS V. EAGLE LIFE, ETC. INS. CO. 113 But, upon broader and larger grounds, we are of opinion that, inde- pendentl3- of the fact that the son was a minor, and the assured had a pecuniary interest in his earnings, the assured had an insurable interest sufficient to maintain this action. The case in this State must be governed by the rules and principles of the common law, there being no regulation of the subject by statute. This was distinctly stated as the ground of decision in the leading and principal case decided in this commonwealth.^ . . . In discussing the question in this commonwealth, we are to consider it solely as a question at common law, unaffected by the St. of 14 Geo. III. c. 48, passed about the time of the commencement of the Kevolu- tion, and never adopted in this State. AH therefore which it seems necessary to show, in order to take the case out of the objection of being a wager policy, is that the insured has some interest in the life of the cestui que vie ; that his temporal affairs, his just hopes and well- grounded expectations of support, of patronage, and advantage in life will be impaired ; so that the real purpose is not a wager, but to secure such advantages supposed to depend on the life of another ; such, we suppose, would be sufficient to prevent it from being regarded as a mere wager. Whatever may be the nature of such interest, and what- ever the amount insured, it can work no injury to the insurers, because the premium is proportioned to the amount ; and whether the insur- ance be to a large or small amount, the premium is computed to be a precise equivalent for the risk taken. Perhaps it would be difficult to lay down any general rule as to the nature and amount of interest ■which the assured must have. One thing maj' be taken as settled, that every man has an interest in his own life to auy amount in which he chooses to value it, and maj' insure it accordingly. "We cannot doubt that a parent has an interest in the life of a child, and, rice versa, a child in the life of a parent; not merely on the ground of a provision of law that parents and grandparents, children and grandchildren, are bound to support their lineal kindred when they may stand in need of relief, but upon considerations of strong morals, and the force of natural affection between near kindred, operating often more efficaciousl}' than those of positive law. In the case of Lord v. Dall, it was held that it might be inferred from particular circumstances.^ . . . Prima facie the plaintiff in the present case has an interest in the life of his son, the policy of insurance was a valid one, and the plaintiff is entitled to recover upon it. Exceptions overruled.^ 1 Here was^noted Lord v. Dall, ante, p. 101 (1815). — Ed. ■■' The omitted passage bore indirectly on insurable interest, but more directly on amonnt of recovery. — Ed. 3 Ace.: Mitchell v. Union L. Ins. Co., 45 Me. 104 (1858). — Ed. 114 CAMPBELL V. N. E. MUT. LIFE INS. CO. [CHAP. IL MAEGAEET CAMPBELL v. NEW ENGLAND MUTUAL LIFE INS. CO. Supreme Judicial Coukt of Massachusetts, 1867. 98 Mass. 381. Contract against a mutual insurance companj' on a policy of insur- ance made by them to Andrew Campbell upon his life, paj-able to him, his executors, administrators, and assigns, for the benefit of the plaintiff.-' . . . The declaration alleged . . . that the plaintiff was the wife of a brother of the deceased. . . . The answer . . . declared the defendants' ignorance whether the plaintiff was his brother's wife or the person to whom the policy was made payable ; and averred that she had not an insurable interest in his life ; and also that the policy was made upon the faith of an appli- cation therefor, signed by Andrew Campbell. . . . A trial . . . resulted in a verdict for the plaintiff, which was set aside as against evidence. At the second trial . . . before Wells, J., the plaintiff proved that she was the person named in the policy and for whose benefit it was made ; and rested her case ; whereupon the defendants asl^ed the judge to rule that in order to maintain her action she must prove an insurable interest in the life of her brother-in-law ; but he declined so to rule. . . . The judge . . . instructed the jury . . . " that an untrue statement innocently made, in regard to a latent disease of which the applicant was unconscious, would not avoid the polic}'.'' . . . The jury returned a verdict for the plaintiff ; and the defendants alleged exceptions. T. K. Lothrop and G. W. Baldwin, for the defendants. JI. G. Hutchins, for the plaintiff. Wells, J.'' The policj' in this case is upon the life of Andrew Campbell. It was made upon his application ; it issued to him as "the assured ; " the premium was paid b}- him ; and he thereby became a member of the defendant corporation. It is the interest of Andrew Campbell in his own life that supports the policy. The plaintiff did not, by virtue of the clause declaring the policy to be for her benefit, become the assured. She is merely the person designated by agreement of the parties to receive the proceeds of the policy upon the death of the assured. The contract (so long as it remains executory), the interest by which it is supported, and the relation of membership,' all continue the same as if no such clause were inserted. Fogg v. Middlesex Insur- ance Co., 10 Cush. 337, 346 ; Sanfo'rd v. Mechanics' Insurance Co., 12 1 In the statement and the opinion, many passages foreign to insurable interest have been omitted. — Ed. 2 Hoar and Fostek, JJ., did not sit in this case. — Rep. FART II., SECT. III.j CAMPBELL V. N. E. MUT. LIFE IXS. CO. 115 Cush. 541 ; Hale v. Mechanics' Insurance Co., 6 Gray, 169 ; Campbell V. Charter Oak Insurance Co., 10 Allen, 213 ; Forbes v. American In- surance Co., 15 Graj-, 249. It was not necessary therefore that the plaintiff should show that she had an interest in the life of Andrew Campbell, by which the policy could be supported as a policy to herself as the assured. The defendants raise no question as to lier right to bring this action, if the policy can be supported for her benefit.^ . . . The instruction "that an untrue statement innoceutl}' made, in regai I to a latent disease, of which the applicant was unconscious, would not avoid the policy," as a general statement of the law applicable to repre- sentations in insurance contracts, was incorrect. . . . As the instruction was in itself incori^ct, it seems to be necessary that the verdict should be set aside, and the Exception upon this single point is sustained. 1 In Eawls v. American Mutual L. Ins. Co., 27 X. Y. 282, 287 (1863), Weight, J., for the majority of the court, said : " The defendants, in form, contracted with Fish for an insurauce upon his life. In consideration of certain statements and representations made, and a premium of SI 17, to be paid annually, in advance, the defendants prom- ised and agreed with Fish, his heirs or other legal representatives, to pay the sura of S.1,000 to the plaintiff, within tw enty days after the proof of the death of Fish, pro- vided the policy should then be in force. If this is to be regarded and treated as a contract with Fish to insure his own life, then the question attempted to be raised on the motion for a nonsuit, viz., that the plaintiff had no insurable interest in the life of Fish, and, hence, that it was a gaming or wagering policy, cannot arise. If the con- tract is with the party whose life is insured, he may have the loss payable to his own representatives, or to his assignee or appointee ; and whichever be the form, his own interest is the same. It can only be by holding the policy in substance and legal effect, that of a creditor upon the life of his debtor, that an interest was necessary on the part of the plaintiff to support it. " I am inclined to regard the insurance as effected by the plaintiff on the life of Fish, although the policy, in form, purports to have been procured by the latter. The plaintiff applied for and obtained it as the creditor of Fish, to protect his interest as such creditor, in Fish's life. He took the initiatory steps for procuring the policy; the application stated it to be for his benefit ; he paid the original and all subsequent premiums; it was delivered to him, and he sues upon it as the party in interest, and as the only party connected with the policy who could maintain an action upon it. So far as the question of its validity is involved, it will, therefore, be treated as a contract, in substance, between the plaintiff and the defendants." And see Bloomington Jlut. Benefit Assn. v. Blue, 120 111. 121 (1887) ; Heinlein v. Imperial L. Ins. Co., 101 Mich. 250 (1894); and post, p. 117, u. 1. In Pennsylvania and Te.xas the law upon this point is peculiar, and possibly not finally settled. Gilbert ;.. Moose, 104 Pa. 74, 78 (188.3) ; Scott v. Dickson, 108 Pa. 6, 16 (1884) ; Mayher v. Manhattan L. Ins. Co., 87 Tex. 169 (1894J. — Ed. 116 CHISHOLM V. NATIONAL CAPITOL LIFE INS. CO. [CHAP. IL CHISHOLM, Respondent, v. NATIONAL CAPITOL LIFE INS. CO., Appellant. Supreme Court op Missouri, 1873. 52 Mo. 213. Appeal from St. Louis Circuit Court. Henderschott and Chandler, for appellant. Isaac T. Wise, for respondent. Wagner, J. The main ert-or assigned and relied upon for the rever- sal of this case is the action of the court in refusing to declare that the plaintiff had no such insurable interest in the life of the person insured as would entitle her to recover. The record shows that there was a contract of marriage existing be- tween plaintiff and Eobert Peel Clai-k, and that on the 17th day of July, 1869, the defendant made and delivered to plaintiff its policy of insur- ance whereby it insured the life of the said Clark for the term of his natural life, for the sum of $5,000. The policy was issued and delivered to plaintiff and made paj-able to her as the intended wife of Clark, she paying the annual premium of $90.20. The first premium was duly paid by her, and on the 12th day of January, 1870, whilst the policy was in full force, but before the contemplated marriage had been solemnized, Clark died. What interest or whether any is necessary in the life of the person insured to support the contract of insurance is left in some confusion by the adjudged cases, as the authorities are contradictor}-.^ In this State we have no statute on the subject covering the case, and as the policy is not void by the common law, it can only be declared so on the ground that it is against public policy. There is nothing to show that the contract was a mere wagering one, or that it is in any wise against or contrary to public policy. . . . The insurance was not a mere wagering contract, and therefore can- not be said to contravene any principle of public policy. The plaintiff had an interest in the life of Clark : a valid contract of marriage was subsisting between them. Had he lived, and violated the contract, she would have had her action for damages. Had he observed and kept the same, then as his wife she would have been entitled to support. In my opinion she had such an interest as was entirely sufficient to render the contract valid. The defence in this case is devoid of merit, and is not creditable to the defendant making it. There is no pretence that there was any concealment of facts at the time of making the contract. Upon the facts there was no hesitation in entering into the agreement, and obtaining the premium and issuing the policy. Had the defendant 1 Passages discussing authorities have been omitted. — Ed. PART II., SECT. III.J EESEKVE MUTUAL IXS. CO. V. KAXE. 117 been as willing to observe and fulfil its obligations as it was to receive premiums, then this ease would have never occupied the time of the courts. The judgment should be af33rmed.^ RESERVE MUTUAL INS. CO. v. KAXE. SrPREiiE Court of Pexnsylvaxia, 1876. 81 Pa. 154. Error to the District Court of Philadelphia. This was an action of debt, brought Ma}- 3, 1873, bj' James P. Kane against the Reserve Mutual Life Insurance Compan}-, on a policj- of insurance for 82,000, issued April 1, 1872, by the defendants to the plaintiff, on the life of his father, John Kane. The case was tried April 15, 1874, before Briggs, J. The plaintiff gave evidence of the death of John Kane on the 26th of June, 1872. The father had come from Ireland ; had lived in this coun- try two or three years ; plaintiff paid Si 20 for bringing his father and family to this country ; SoO had been repaid him b}' the mother ; the father intended to repay him, but had not ; the father was a laborer ; kept house from April to June, 1872 ; was fifty -five years old when he died ; left a widow, three sons, and a daughter ; the plaintiff paid through affection, but expected the father would have paid it had he lived ; the money paid by him brought over the father, mother, brothers, and sis- ter ; he expected the father would compel the brothers to pay their passage-money back. The defendants' points were, — 1. If the jury find from the evidence that the plaintiff was, at the exe- cution of the policy of life insurance, an adult son of John Kane, then as such he had no insurable interest in the father's life, and the verdict should be for the defendants.^ . . . The court refused the points, and directed the jury to render a ver- dict in favor of the plaintiff for the amount of said policj', — $2,000, less six months' premium unpaid, and for the interest, amounting to S2, 085.34. The jury so found. The defendants took a writ of error, and assigned the refusal of their points and the instruction of the court for error. H. 21. Dechert, for plaintiffs in error. D. C. Harrington, for defendant in error. Per Ctjeiam. By the 28th section of the Poor Law of June 13, 1876, the father and grandfather, and the mother and grandmother, and the children and grandchildren of everj* poor person not able to work, shall, at their own charge, being of suflScient abilitj', relieve and main- 1 See McCarthy!;. Supreme Lodge, 153 Mass. 314 (1891); Alexander «. Parkei; 144 111.355 (1893). — Ed. - Ifothing ultimately turned on the points omitted. — Ed. 118 RESERVE MUTUAL IXS. CO. V. KANE. [CHAP. II. tain such poor person, at such rate as the Court of Quarter Sessions of the proper county shall order and direct. Maintenance of a father or mother unable to work is, therefore, a legal liabilitj'. When we add to this the feelings of natural affection and the desire produced by these feelings to provide for the comforts of parents, the right to effect an insurance on the life of the parent, to carr}' out these purposes, ought not to be denied. It would be technical in the extreme to say that a son has no insurable interest in his father's life. Povertj* may overtake the father in his lifetime, and thus both father and mother be cast upon the son ; or if the father die before her, the necessity may fall at once upon the son. Why then should he not be permitted to make a provision, by insurance, to reimburse himself for his outlays, past or future? What injur}- is done to the insurance company? They receive the full premium, and the,)' know, in such case, from the very relationship of the parties, that the contract is not a mere gambling adventure, but is founded in the best feelings of our nature, and on a legal duty which may arise at any time. We are of opinion tliat the policj- is not void.' Judgment affirmed.^ 1 Contra: People's Mut. Benefit Society v. Templeton, 16 Iiid. App. 126 (1896). Compare Guardian Mut. L. Ins. Co. v. Hogan, 80 Dl. 35 (1875) ; Continental Life Ins. Co. i,. Volger, 89 Ind. 572 (1883). Ju Connecticut Mut. L. Ins. Co. v. Schaefer, 94 U. S. 457, 460 (1876), Beadley, J., for the court, said ; — " It is generally agreed that mere wager policies — that is, policies in irhich the in- sured party has no interest whatever in the matter insured, but only an interest in its loss or destruction — are void, as against public policy. This was the law of England prior to the Revolution of 1688. But after that period, a course of decisions grew up sustaining wager policies. The legislature finally interposed, and prohibited such in- surance: first, with regard to marine risks, by statute of 19 Geo. II. c. 37; and next, with regard to lives, by the statute of 14 Geo. III. c. 48. In this country, statutes to the same effect have been passed in some of the States ; but where they have not been, in most cases either the English statutes have been considered as operative, or the older common law has been followed. But precisely what interest is necessary, in order to take a policy out of the category of mere wager, has been the subject of much discassion. In marine and fire insurance the diiBculty is not so great, because there insurance is considered as strictly an indemnity. But in life insurance the loss can seldom be measured by pecuniary values. Still, an interest of some sort in the in- sured life must exist. A man cannot take out insurance on the life of a total stranger, nor on that of one who is not so connected with him as to make the continuance of the life a matter of some real interest to him. " It is well settled that a man has an insurable interest in his own life, and in that of his wife and children ; a woman in the life of her husband ; and the creditor in the life of his debtor. Indeed, it may be said generally that any reasonable expectation of pecuniary benefit or advantage from the continued life of another creates an insur- able interest in such life. And there is no doubt that a man may effect an insurance on his own life for the benefit of a relative or friend ; or two or more persons, on their joint lives, for the benefit of the survivor or survivors. The old tontines were based substantially on this principle, and their validity has never been called in question. "The essential thing is, that the policy shall be obtained in good faith, and not for the purpose of speculating upon the hazard of a life in which the insured has no interest." In AVarnock v. Davis, 104 U. S. 775, 779 (1881), Field, J., for the court, said: "It is not easy to define with precision what will in all cases constitute an insurable inter- PART II., SECT. III.] KO-MBACH V. PIEDMOXT, ETC. LIFE INS. CO. 119 ROMBACH V. PIEDMONT AND ARLINGTON LIFE INS. CO. Supreme Court of Louisiana, 1883. 35 La. Ann. 233. Appeal from the Third District Court for the Parish of Orleans. MOXROE, J. A. & W. Voorhies, for plaintiff and appellant. Singleton & Srowne, for defendant and appellee. The opinion of the court was delivered by Mannixg, J. The plaintiff insured the life of his mother-in-law in the defendant company in Februaiy, 18T3, for $2,000, the policy recit- ing that it is issued " for the sole use of her son-in-law, L. Rombach." His wife, the daughter of Eliza Geisler, had died leaving two children of tender years. Mrs. Geisler had insured her own life a month before in this company for the benefit of two of her own children, for the same sum as this policy. The agent of the company sought Rombach, and told him of the policy Mrs. Geisler had taken, and asked if he did not want to take another, to which Rombach answered approvingly, provided the con- sent of Mrs. Geisler was not necessarj-. He avowed his object to be the benefit of his only child, one of them having died. The agent assured him it was of no consequence whether she consented or not, provided he paid the premiums prompth". The first quarterly premium of S22.86 was paid on the spot. Mrs. Geisler soon heard of the matter, and on March 20 she wrote to the company expressing strong disapproval, and exhibiting bad feeling to her son-in-law, and demanding the cancellation of the policy. On the next da}' the agent, by direction of the compan}', offered to pay back the premium to Rombach and demanded the return of the polic}' for cancellation. Rombach refused to receive the monej", and denied the est, so as to take the contract ont of the class of wager policies. It may be stated generally, however, to be such an interest, arising from the relations of the party ob- taining the insurance, either as creditor of or surety for the assured, or from the ties of blood or marriage to him, as wiD justify a reasonable expectation of advantage or benefit from the continuance of his life. It is not necessary that the expectation of advantage or benefit should be always capable of pecuniary estimation ; for a parent has an insurable interest in the life of his child, and a child in the life of his parent, a husband in the life of his wife, and a wife in the life of her husband. The natural affection in cases of this kind is considered as more powerful — as operating more efficaciously — to protect the life of the insured than any other consideration. But in all cases there must be a reasonable ground, founded upon the relations of the parties to each other, either pecuniary or of blood or affinity, to expect some benefit or advan- tage from the continuance of the life of the assured. Otherwise the contract is a mere wager, by which the party talting the policy is directly interested in the early death of the assured. Such policies have a tendency to create a desire for the event. They are, therefore, independently of any statute on the subject, condemned, as being against public policy." — JEd. 120 EOMBACH V. PIEDMONT, ETC. LIFE INS. CO. [CHAP. II. companj's right to cancel the policy, whereupon the company cancelled it, and notified both Kombach and Mrs. Geisler thereof. Thereafter, Rombach on each quarter-day tendered the premium then payable on this policy to the company, until Mrs. Geisler's death in December, 1877, and tlie company refused to receive it. The defendant pleads in answer that the policy is void because ob- tained through false and fraudulent representations of Rombach, viz., that he applied personally to the company for the policj', requesting its issuance, and represented that his mother-in-law desired the policy to be taken by him. We do not believe that. Rombach's plain, unvar- nished statement is given already', and it is so perfectly in accord with the habit of insurance agents that it carries home conviction of its accuracj'. The additional defence is that the policy is " A'oid for want of interest and consideration — that there was no love and affection between the assured and the beneficiary," and that he had not " such interest as the law requires to maintain such a policy." The phraseology of this first quotation from the answer, as well as the interrogatories to all the witnesses, implies that the personal rela- tions of the parties — their affection or hatred — is conceived to be the test of insurable interest. They do not affect it all. Much time was wasted on both sides in exhibiting Mrs. Geisler's antipathy to her son- in-law at one time, and her reconciliation to him at another. The insurable interest in the life of another is a pecuniary interest. A policy of insurance, procured bj' one for his own benefit upon the life of another, the beneficiary being without interest in the continuance of the life insured, is against public policy and therefore void. It is thoroughly settled, because universally held, that a wife has an in- surable interest in the life of her husband, and although in that case especially it might be assumed that love and affection furnished a sufficient basis for it, the decisions do not place it on that ground, but rather on the support she is entitled to from him. The books formu- late the general principle somewhat in this wa^- : when the insurable interest arises, or is implied from relationship, it will be deemed to exist when the relationship is such that the insurer has a legal claim upon the insured for services or support. Even though such legal claim does not exist, yet where, from the personal relations of the two, and the kindness and good feeling displayed by the insured to the in- suree, the latter has a reasonable right to expect some pecuniary advan- tage from the continuance of the life of the former or to fear loss from his death, an insurable interest will be held to exist. Bliss' Life Ins., § 31 ; May's Life Ins., §§ 74, 106. It was said in Phenix Mut. Life Ins. Co. v. Bailey, 13 Wall. 616, " it is sufficient to show that the policy is not invalid, as a wager policy, if it appears that the relation of consanguinity or affinity was such ... as warrants the conclusion that the beneficiar3- had an interest, whether pecuniary, or arising from dependence, or natural affection, in the life PART II., SECT. III.J EOMBACH V. PIEDMONT, ETC. LIFE INS. CO. 121 of the person assured," but this is a dictum of Clifford, J., and is not in accord with the decisions generally-. A majoritj' of the reported cases will be found to be rested upon pecuniary considerations or expectations. Thus it has been held that a sister had an insurable interest in the life of her brother, where the fact was that she had been supported by him, Lord r. Dall, 12 Mass. 115, and a father in the life of his minor son, because entitled to his earnings, Mitchell v. Un. Life Co., 45 Maine, 104; but that he has none from mere relationship to a son, Hal- ford i\ Kymer, 10 Barn. & Cres. 724 ; nor does the mere relation of brother suffice to furnish an insurable interest, Lewis v. Phenix Co., 39 Conn. 100. It must be admitted that the courts are not in accord upon the kind or qualitj- of the insurable interest. Sometimes statutory law has in- tervened and prescribed in general terms what is insurable interest. We have no statute on the subject, and therefore are not hampered b^- special restrictions, but are at liberty to appl3' the general principles that underlie the whole system of insurance law. Rombach was in none of the categories of permissible insurers. He had no insurable interest in the life of his mother-in-law. Tliis is conceded bj' his counsel, but inasmuch as he is natural tutor to his child, who is the grandchild of Mrs. Geisler, it is claimed that " the relationship of plaintiff by aflinity to the deceased, and by blood to his own child, and the latter's relationship by blood, as a forced heir, to both his father and grandmother, does constitute a substantial insurable interest." This lengthened tie long drawn out is too attenuated to support a polic}' of insurance. Besides, the policy' on its face expresses that it is for his sole use. If he had died, and the policy was collectible, it would have enured to the benefit of his succession — to his creditors exclusive!}', if he had died insolvent. Judgment affirmed.''- 1 In Stoner v. Line, 16 Weekly Notes of Cases, 187 (S. C. Pa. 1885), there was this opinion per curiam : " The court correctly held that the son-in-law, in whose favor the policy was taken, had no insurable interest in the life of his mother-in-law. He was not a creditor of hers nor in any manner legally liable for her support or maintenance. Neither could inherit from the other. There was no consanguinity between them. The mere fact that he married her daughter gave him no such pecuniary interest in the preservation of her life as to permit him to effect a valid insurance thereon for his benefit. As to him it was purely a gambling contract." Ace: Stambaugh v. Blake, 15 Atl. E. 705 (S. C. Pa. 1888). — Ed. 122 CUERIER V. CONTINENTAL LIFE INS. CO. [CHAP. IL CURRIER V. CONTINENTAL LIFE INS. CO. Sdpeeme Court of Vermont, 1885. 57 Vt. 496. Assumpsit to recover upon a contract of life insurance, issued by the defendant upon the life of Sarah M. Currier for the benefit of the plain- tiff. Plea, the general issue, tender, and offset. Trial bj' jnr}', Sep- tember Term, 1883. Redfield, J., presiding. Verdict ordered for the plaintiff.^ . . . GJiarles W. Porter, for the defendant. S. 0. Shurtleff, for the plaintiff. Taft, J. After the testimony was closed, the defendant moved that a verdict be directed in its favor on the ground that the plaintiff had not proved an insurable interest in the life of his deceased wife, the said Sarah M. Currier. The motion was denied. Tlie defendant in- sists that the plaintiff had no insurable interest in the life of his wife, and that, therefore, the contract was against public policy and void. This objection would have come with more grace from the defendant, at the time it was asked to enter into the contract, and before the re- ceipt of nearly $3,000 of the plaintifTs money. As Parker, Ch. J., said in the leading case of Lord «. Dall, 12 Mass. 115, where a like objection was made : " Nor can it be easilj' discerned wh^' the under- writers should make this a question after a loss has taken place, when it does not appear that anj' doubts existed when the contract was made, although the same subject was then in their contemplation." Admitting that the rule as to the interest necessary to support a contract of life insurance is, that the interest must be a pecuniary one, we think that where no facts are shown in relation to the wife, the pre- sumption is, that the husband has an insurable pecuniary interest in her life. He is entitled to her services. There are many cases where she is the real support of her husband and familj', or, as is sometimes said, she is the " man of the house." In all ordinary cases the husband has a deep interest in the continued life of the wife. Cases may exist where the husband has no interest whatever in his wife's life. She may be a burden,— a hopeless maniac, or invalid ; and such facts may require the application of a different rule. There are none such in this case ; and we only hold that the presumption is, that the wife is a help- meet, and the husband has an interest of a pecuniary nature in her living.^ . . • Judgment affirmed. 1 The statement of facts has heen omitted. The premiums were paid by the plain- tiff; and from the report in 13 lus. L. J. 737, it is clear that the policy was taken out by him. — Ed. 2 The remainder of the opinion dealt with other topics. — Ed. PART II., SECT. III.] BAENES V. LONDON, ETC. LIFE INS. CO. 123 BARNES V. LONDON, EDINBURGH, AND GLASGOW LIFE INS. CO. Queen's Bench Division, 1891. '92, 1 Q. B. 864. Appeal from a decision of the judge of the Leeds Countj- Court. The action was brought to recover £21 10s., the amount of a policy of insurance effected b}- tlie plaintiff upon the life of her step-sister. The insurance was effected in November, 1889, when the child was ten j-ears old ; the child died in May, 1891. At the trial before the learned count}- court judge, the plaintiff stated in her evidence that she had promised the child's mother before she died that she would take care of the child, and help to maintain her, and no evidence was called to con- tradict this statement. It was also stated that after her mother's death the child lived near, but not with, the plaintiff. No objection was taken that the plaintiff had not in fact spent anj' money upon the child, or as to the amount (if any) expended by her ; and the learned judge held that the plaintiff had an insurable interest in the child's life, and wag entitled to recover the amount of the policy. Other points, including misrepresentation on the part of the plaintiff as to the state of the child's health and misrepresentation by the defendants' agent, were taken, and decided in favor of the plaintiff; but it is unnecessary in this report to state the facts upon these points, as the question of insur- able interest was the sole question of law raised upon the appeal. F. Dodd, for the defendants. No counsel appeared on behalf of the plaintiff. Lord Coleridge, C. J. I am of opinion that this appeal must be dismissed. The facts are simple. The person insured was a little girl of ten, and the plaintiff, who effected the insurance for her own benefit, was her step-sister ; the child had no mother, though her father was apparently alive ; this is, however, not clear upon the evidence. The evidence of the plaintiff was to the effect that she had promised her mother that she would maintain and keep the child ; and there was evidence that she had undertaken that burden. That was a duty not cast upon her by law, but was wholl}- self-imposed ; and in carrying out her undertaking the plaintiff might have had to pay for the education and maintenance of the child, possibly also for its burial. In that state of circumstances it is said that the plaintiff had no insurable interest in the child's life. Now, I agree that the insurable interest must be a pecuniary interest, and that the interest must be in existence at the time when the policy is effected ; that is perfectly clear upon the autho- rities. Is there such a pecuniary insurable interest here? I think there is. The expenses to which the plaintiff undertook to put herself for the maintenance of the child were, as I have said, not expenses which she was bound to incur ; and in my judgment the plaintiff un- doubtedly had an insurable interest in the child's life so far as to 124 BAENES V. LONDON, ETC. LIFE INS. CO. [cHAP. IL secure the repayment of the expenses incurred by her. I cannot find that anything has been said in any case to a contrary effect. Taking the ordinary course of business as the guide to determine the law, I should have thought that it was matter of common knowledge that obligations of this sort were obligations the repayment of which was habitually secured in this way. In my judgment the plaintiff had an insurable interest in the child's life, at least up to the amount of the payments actually made by her on the child's account. No point was taken before the county court as to whether any money had been paid by the plaintiff, or as to the amount, if any, paid by her. The ques- tion of amount is, therefore, not before us ; and on the point of law we must uphold the judgment of the county court judge. A. L, Smith, J. I am of the sarne opinion. No doubt the conten- tion of the defendants is correct, that unless the plaintiff had a pecuniary interest in the child's life at the time the contract of insurance was made, the policy would be void under the provisions of the statute. .1 think, however, that the plaintiff had such an interest. A man can insure the life of his debtor. For instance, suppose an agreement by a debtor to pay his creditor £1,000 by successive monthly instalments of £100, the creditor could insure his debtor's life, and at his death recover in an action on the policy against the insurance company. In the present case there is sufficient evidence of an undertaking on the plaintiffs part to incur expense in maintaining, bringing up, and per- haps in burying the child. This decision does not trench on the cases in which it has been held that a father has no insurable interest in the life of his son. There is an obligation in law on a father to maintain his son ; there is no such obligation here, but an undertaking to incur expense ; and I can see no reason why the plaintiff, having incurred and incurring such expense, has not a pecuniary insurable interest to the extent of each sum of money as it was successively expended by her for the child's benefit — of course, so long as the total amount does not exceed the amount of the policy. We have nothing to do with the question of amount expended, which point was not taken below ; the sole point is whether the plaintiil had anj' pecuniary interest at the date of the policy, and of that there was evidence. The appeal must be dismissed. Appeal dismissed?- 1 On the topic of this section, see also ; — Hebdon v. West, 3 B. & S. 579 (1863) ; Eawls V. American Mutual Life Ins. Co., 27 N. Y. 282, 288-289 (1863); Langdou v. Union Mutual Life Ins. Co., 14 Ted. R. 272 (U. S. C. C, E. D. Mich. 1882); U. B. Mutual Aid Soc. v. McDonald, 122 Pa. 824 (1888) ; Burton v. Connecticut Mut. L. Ins. Co., 119 Ind. 207 (1889); Trinity College v. Traveler's Ins. Co., 113 N. Car. 244 (1893) ; Carpenter v. U. S. Life Ins. Co., 161 Pa. 9 (1894). In examining decisions on life insurance, it must be borne in mind that in a few jurisdictions a beneficiary must have an insurable interest, and that an assignee must have it in still more. See ante, p. 115, u. 1, a.Mpost, Chap. XII., Sect. III. — Ed. PAKT Lj CARTER V. BOEHM. 125 CHAPTER III. CONCEALMENT. PART I. THE GENERAL THEORY. CAETER V. BOEHM. Kma's Bench, 1766. 3 Burr. 1905. This was an insurance cause upon a policy underwritten by Mr. Charles Boehm, of interest or no interest, without benefit of salvage. The insurance was made by the plaintiff for the benefit of his brother, Governor George Carter. It was tried before Lord Mansfield at Guildhall, and a verdict was found for the plaintiff by a special jury of merchants. On Saturday, the 19th of April last, Mr. Recorder {Eyre), on behalf of the defendant, moved for a new trial. His objection was, "That circumstances were not sufficiently disclosed." A rule was made to show cause ; and copies of letters and deposi- tions were ordered to be left with Lord Mansfield. N. B. Four other causes depended upon this. The counsel for the plaintiff, viz., Mr. Morton, Mr. Dunning, and Mr. Wallace, showed cause on Thursday, the first of this month. But first, — Lord Mansfield reported the evidence ; that it was an action on a policy of insurance for one year, v\z., from 16th of October, 1759, to 16th of October, 1760, for the benefit of the governor of Fort Marl- borough, George Carter, against the loss of Fort Marlborough, in the island of Sumatra, in the East Indies, by its being taken by a foreign enemy. The event happened ; the fort was taken by Count d'Estaigne within the year. The first witness was Cawthorne, the policy broker, who produced the memorandum given by the governor's brother (the plaintiff) to him; and the use made of these instructions was to show, "That the 126 CAETEK V. BOEHM. [CUAP. III. insurance was made for the benefit of Governor Carter, and to insure liim against the taking of the fort by a foreign enemy." Both sides had been long in chancery, and the chancery evidence on both sides was read at the trial. It was objected, on behalf of the defendant, to be a fraud, by con- cealment of circumstances which ought to have been disclosed ; and particularly the weakness of the fort, and the probability of its being attacked by the French, which concealment was offered to be proved by two letters. The first was a letter from the governor to his brother, Roger Carter, his trustee, the plaintiff in this cause ; the second was from the governor to the East India Company. The evidence in replj^ to this objection consisted of three depositions in chancery, setting forth that the governor had £20,000 in effects, and only insured £10,000 ; and that he was guilty of no fault in defending the fort. The first of these depositions was Captain Tryon's, which proved that this was not a fort proper, or designed to resist European ene- mies, but only calculated for defence against the natives of the island of Sumatra ; and also that the governor's office is not militarj-, but onlj' mercantile ; and that Fort Marlborough is onlj' a subordinate factory to Fort St. George. There was no evidence to the contrary', and a verdict was found for the plaintiff by a special jury. After his lordship had made his report, — The counsel for the plaintifi' proceeded to show cause against a new trial. They argued that there was no such concealment of circumstances (as the weakness of the fort, or the probability of the attack) as would amount to a fraud sufficient to vitiate this contract : all which circum- stances were universally known to ever}" merchant upon the exchange of London. And all these circumstances, they said, were full}" con- sidered by a special jur}- of merchants, who are the proper judges of them. And Mr. Dunning laid it down as a rule, " That the insured is only obliged to discover facts, not the ideas or speculations which he may entertain upon such facts." They said this insurance was in reality no more than a wager: " Whether the French would think it their interest to attack this fort, and if they should, whether they would be able to get a ship of war up the river or not." Sir Fletcher Norton and Mr. Recorder {Eyre) argued contra for the defendant (the under- writer) . They insisted that the insurer has a right to know as much as the insured himself knows. They alleged, too, that the broker is the sole agent of the insured. These are general, universal principles in all insurances. Then they proceeded to argue in support of the present objection. PAET I.] CAETER V. BOEHM. 127 The broker had, they said, on being cross-examined, owned that he did not believe tliat the insurer would have meddled with the insurance if he had seen these two letters. All the circumstances ought to be disclosed. This wager is not only " Whetlier the fort shall be attacked," but " Whether it shall be attacked and taken." Whatever really increases the risk ought to be disclosed. Then thev entered into the particulars which had been here kept concealed. And the}- insisted strongly that the plaintiff ought to have discovered the weakness and absolute indefensibility of the fort. In this case, as against the insurer, he was obliged to make such discov- evy, though he acted for the governor. Indeed, a governor ought not, in point of policy, to be permitted to insure at all ; but, if he is per- mitted to insure, or will insure, he ought to disclose all facts. It cannot be supposed that the insurer would have insured so low as £4 per cent if he had known of these letters. It is begging the question to say, " That a fort is not intended for defence against an enemj'." The supposition is absurd and ridiculous. It must be presumed that it was intended for that purpose ; and the presumption was " That the fort, the powder, the guns, etc., were in a good and proper condition." If they were not (and it is agreed that in fact they were not, and that the governor knew it) it ought to have been disclosed. But if he had disclosed this, he could not have got the insurance. Therefore this was a fraudulent concealment, and the under- writer is not liable. It does not follow that because he did not insure his whole propert}-, therefore it is good for what he has judged proper to insure. He might have his reasons for insuring only a part, and not the whole. Gw. adv. vult. Lord. Mansfield now delivered the resolution of the court. This is a motion for a new trial. In support of it the counsel for the defendant contend, " That some circumstances in the knowledge of Governor Carter, not having been mentioned at the time the policy was underwrote, amount to a conceal- ment, which ought, in law, to avoid the policj'." The counsel for the plaintiff insist, "That the not mentioning these particulars does not amount to a concealment which ought, in law, to avoid the policj', either as a fraud, or as varj'ing the contract." 1. It may be proper to say something in general of concealments which avoid a policy. 2. To state particularly the case now under consideration. 3. To examine whether the verdict which finds this policy good, although the particulars objected were not mentioned, is well founded. First. Insurance is a contract upon speculation. The special facts, upon which the contingent chance is to be com- puted, lie most commonly in the knowledge of the insured only ; the underwriter trusts to his representation, and proceeds upon confidence 128 CAETEE V. BOEHM. [CHAP. IIL that he does not keep back any circumstance in his knowledge to mis- lead the underwriter into a belief that the circumstance does not exist, and to induce him to estimate the risk as if it did not exist. The keeping back such circumstance is a fraud, and therefore the policy is void. Although the suppression should happen through mis- take, without anj- fraudulent intention, yet still the underwriter is de- ceived, and the policy is void, because the risk run is really different from the risk understood and intended to be run at the time of the agreement. The policy would equally be void against the underwriter if he con- cealed, as if he insured a ship on her voj-age which he privately knew to be arrived ; and an action would lie to recover the premium. The governing principle is applicable to all contracts and dealings. Good faith forbids either part}-, by concealing what he privately knows, to draw the other into a bargain from his ignorance of that fact, and his believing the contrary. But either party may be innocently silent as to grounds open to both to exercise their judgment upon. " Aliud est celare ; aliud, tacere ; neque enim id est celare quicquid reticeas ; sed cum quod tu scias, id ignorare emolumenti tui causa velis eos, quorum intersit id scire." This definition of concealment, restrained to the efficient motives and precise subject of any contract, will generally hold to make it void in favor of the party misled by his ignorance of the thing concealed. There are many matters as to which the insured may be innocently silent ; he need not mention what the underwriter knows, — scientia utrinrjue par pares contrakerUes facit. An underwriter cannot insist that the policy is void because the in- sured did not tell him what he actually knew, what way soever he came to the knowledge. The insured need not mention what the underwriter ought to know; ■what he takes upon himself the knowledge of, or what he waives being informed of. The underwriter needs not be told what lessens the risk agreed and understood to be run by the express terms of the policy. He needs not be told general topics of speculation, as, for instance, the under- writer is bound to know every cause which may occasion natural per- ils, as the difficulty of the voyage, the kind of seasons, the probability of lightning, hurricanes, earthquakes, etc. He is bound to know every cause which may occasion political perils, from the ruptures of states, from war, and the various operations of it. He is bound to know the probability of safety from the continuance or return of peace ; from the imbecility of the enemy through the weakness of their counsels, or their want of strength, etc. If an underwriter insures private ships of war by sea and on shore, from ports to ports, and places to places, anywhere, he neofls not be told the secret enterprises they are destined upon, because he knows some expedition must be in view ; and, from the nature of his contract. PART I.] CARTER V. BOEHM. 129 ■without being told, he waives the information. If he insures for three years, he needs not be told any circumstance to show it may be over in two ; or if he insures a voj-age, with liberty of deviation, he needs not be told what tends to shovy there will be no deviation. Men argue differentl}- from natural phenomena and political .Tppear- ances ; the}- have different capacities, different degrees of knowledge, and different intelligence. But the means of information and judging are open to both : each professes to act from his own skill and sagacity, and therefore neither needs to communicate to the other. The reason of the rule which obliges parties to disclose is to prevent fraud and to encourage good faith. It is adapted to such facts as var}- the nature of the contract, which one privatel}' knows, and the other is ignorant of and has no reason to suspect. The question, therefore, must alwaj's be " Whether there was, under all the circumstances at the time the policy was underwritten, a fair representation or a concealment, — fraudulent, if designed, or, though not designed, varying materially the object of the policy, and changing the risk understood to be run." This brings me, in the second place, to state the case now under consideration. The policy is against the loss of Fort Marlborough from being de- stroyed bj', taken by, or surrendered unto, an}' European enemy between the 1st of October, 1759, and 1st of October, 1760. It was underwritten on the 9th of May, 1760. The underwriter knew at the time that the policy was to indemnify to that amount Roger Carter, the governor of Fort Marlborough, in case the event insured against should happen. The governor's instruc- tions for the insurance, bearing date at Fort Marlborough, the 22d of September, 1759, were laid before the underwriter. Two actions upon this policy were tried before me in the year 1762. The defendants then knew of a letter written to the East India Companj', which the company offered to put into my hands, but would not deliver to the parties, because it contained some matters which thej' did not think proper to be made public. An objection occurred to me at the trial, " Whether a policj' against the loss of Fort Marlborough, for the benefit of the governor, was good," upon the principle which does not allow a sailor to insure his wages. But considering that this place, though called a fort, was really but a factory or settlement for trade, and that he, though called a gov- ernor, was really but a merchant, — considering, too, that the law al- lows the captain of a ship to insure goods which he has on board, or his share in the ship, if he be a part owner ; and the captain of a pri- vateer, if he be a part owner, to insure his share, — considering, too, that tlie objection did not lie upon any ground of justice in the mouth of the underwriter, who knew him to be the governor at the time he took the premium. And as, with regard to principles of public convenience, 130 CARTER V. BOEHM. [CHAP. III. the case so seldom happens (I never saw one before), any danger from the example is little to be apprehended, — I did not think myself war- ranted upon that point to nonsuit the plaintiff, especially, too, as the objection did not come from the bar. Though this point was mentioned, it was not insisted upon at the last trial ; nor has it been seriously argued, upon this motion, as suffi- cient alone to vacate the policy ; and if it had, we are all of opinion "That we are not warranted to say it is void upon this account." Upon the plaintiff's obtaining these two verdicts, the underwriters went into a court of equity, where they have had an opportunity to sift everything to the bottom, to get every discovery from the governor and his brother, and to examine any witnesses who were upon the spot. At last, after the fullest investigation of every kind, the present action came on to be tried at the sittings after last term. The plaintiff proved, without contradiction, that the place called Bencoolen, or Fort Marlborough, is a factory or settlement, but no military fort or fortress ; that it was not established for a place of arms or defence against the attacks of an European enemy, but merely for the purpose of trade and of defence against the natives ; that the fort was only intended and built with an intent to keep off the country blacks ; that the only security against European ships of war consisted in the difficult}' of the entrance and navigation of the river for want of proper pilots ; that the general state and condition of the said fort, and of the strength thereof, was in general well known by most persons conversant or acquainted with Indian ai!fairs, or the state of the com- pany's factories or settlements, and could not be kept secret or con- cealed from persons who should endeavor by proper inquiry to inform themselves ; that there were no apprehensions or intelligence of any attack by the French until they attacked Nattal in February, 1760 ; that on the 8th of February, 1760, there was no suspicion of any de- sign by the French ; that the governor then bought from the witness goods to the value of £4,000, and had goods to the value of above £20,000, and then dealt for £50,000 and upwards ; that on the 1st of April, 1760, the fort was attacked by a French man-of-war of sixty- four guns, and a frigate of twenty guns, under the Count D'Estaigne, brought in by Dutch pilots, unavoidably taken, and afterwards deliv- ered to the Dutch, and the prisoners sent to Batavia. On the part of the defendant. — After all the opportunities of in- quiry, no evidence was offered that the French ever had any design upon Fort Marlborough before the end of March, 1760, or that there was the least intelligence or alarm "That they might make the at- tempt," till the taking of Nattal in the year 1760. They did not offer to disprove the evidence that the governor had acted as in full security long after the month of September, 1759, and had turned his money into goods so late as the 8th of February, 1760. There was no attempt to show that he had not lost by the capture very considerably beyond the value of the insurance. PART I.J CARTER V. BOEHM. 131 But the defendant relied upon a letter, written to the East India Company, bearing date the 16th of September, 1759, which was sent to England by the " Pitt," Captain Wilson, who arrived in Maj-, 1760, together with the instructions for insuring ; and also a letter bearing date tlie 22d of September, 1759, sent to the plaintiff by the same con- veyance and at the same time (which letters his lordship repeated ^). They relied, too, upon the cross-examination of the broker who ne- gotiated the policy, " That, in his opinion, these letters ought to have been shown, or the contents disclosed ; and if they had, the policj' would not have been underwritten." The defendant's counsel contended at the trial, as they have done upon this motion, " That the polic}' was void." 1. Because the state and condition of the fort, mentioned in the gov- ernor's letter to the East India Corapanj', was not disclosed. 2. Because he did not disclose that the French, not being in a con- dition to relieve their friends upon the coast, were more likelj- to make an attack upon this settlement rather than remain idle. 3. That he had not disclosed his having received a letter of the 4th of February, 1759, from which it seemed that the French had a design to take this settlement by surprise the year before. They also contended that the opinion of the broker was almost decisive. The whole was laid before the jurj^, who found for the plaintiff. Thirdly, it remains to consider these objections, and to examine " Whether this verdict is well founded." To this purpose, it is necessarj' to consider the nature of the contract at the time it was entered into. The policy was signed in Ma}-, 1760. The contingency was, " Whether Fort Marlborough was or would be taken by an European enem}- between October, 1759, and October, 1760." The computation of the risk depended upon the chance, "Whether any European power would attack the place by sea." If they did, it was incapable of resistance. The underwriter at London in May, 1760, could judge much better of the probabilit}- of the contingency than Governor Carter could at Fort Marlborough in September, 1759. He knew the success of the operations of the war in Europe. He knew what naval force the Eng- 1 The former of them notifies to the East India Company, that the French hart, the preceding year, a design on foot to attempt taking that settlement by surprise ■ and that it was very probable they might revive that design. It confesses and repre- sents the weakness of the fort ; its being badly supplied with stores, arms, and am- munition; and the impracticability of maintaining it (in its then state) against an European enemy. The latter letter (to his brother) owns that he is "now more afraid than formerly that the French should attack and take the settlement ; for, as they cannot muster a force to relieve their friends at the coast, they may, rather than remain idle, pay us a visit. It seems they had such an intention last year." And therefore he desires his brother to get an insurance made upon his stock there. — Hep. 132 CARTER V. BOEHM. [CHAP. III. lish and French had sent to the East Indies. He knew, from a com- parison of that force, whether the sea was open to any such attempt by the French. He knew, or might know, everything which was known at Fort Marlborough in September, 1759, of the general state of affairs in the East Indies, or the particular condition of Fort Marlborough, by the ship which brought the orders for the insurance. He knew that ship must have brought many letters to the East India Company, and particularly from the governor. He knew what probability there was of the Dutch committing, or having committed, hostilities. Under these circumstances, and with this knowledge, he insures against the general contingency of the place being attacked by an European power. If there had been any design on foot, or any enterprise begun, in September, 1759, to the knowledge of the governor, it would have varied the risk understood by the underwriter; because, not being told of a particular design or attack then subsisting, he estimated the risk upon the foot of an uncertain operation which might or might not be attempted. But the governor had no notice of any design subsisting in September, 1759. There was no such design in fact; the attempt was made with- out premeditation, from the sudden opportunity of a favorable occasion, by the connivance and assistance of the Dutch, which tempted Count D'Estaigne to break his parol. These being the circumstances under which the contract was entered into, we shall be better able to judge of the objections upon the foot of concealment. Tlie first concealment is that he did not disclose the condition of the place. The underwriter knew the insurance was for the governor. He knew the governor must be acquainted with the state of the place. He knew the governor could not disclose it consistent with his duty. He knew the governor by insuring apprehended at least the possibility of an attack. With this knowledge, without asking a question, he underwrote. By so doing, he took the knowledge of the state of the place upon himself. It was a matter as to which he might be informed various ways ; it was not a matter within the pi'ivate knowledge of the gov- ernor only. But, not to rely upon that, the utmost which can be contended is, that the underwriter trusted to the fort being in the condition in which it ought to be : in like manner, as it is taken for granted that a ship insured is seaworthy. What is that condition? All the witnesses agree " That it was only to resist the natives, and not an European force." The policy insures against a total loss, taking for granted " That if the place was attacked it would be lost." The contingency, therefore, which the underwriter has insured against is, " Whether the place would be attacked by an European force," and PAET I.] CAETEE V. BOEHM. 133 not, " Whether it would be able to resist such an attack if the ships could get up the river." It was particularly left to the jurj- to consider "Whether this was the contingencj- in the contemplation of the parties ; " they have found that it vras. And we are all of opinion " That, in this respect, their conclusion is agreeable to the evidence." In this view, the state and condition of the place was material onlj' in case of a land attack b}' the natives. The second concealment is his not having disclosed that, from the French not being able to relieve their friends upon the coast, they might make them a visit. This is no part of the fact of the case ; it is mere speculation of the governor's from the general state of the war. The conjecture was dic- tated to him from his fears. It is a bold attempt for the conquered to attack the conqueror in his own dominions. The practicability of it in this case depended upon the English naval force in those seas, which the underwriter could better judge of at London in Maj', 1760, than the governor could at Fort Marlborough in September, 1759. The third concealment is that he did not disclose the letter from Mr. Winch, of the 4th of Februarj', 1759, mentioning the design of the French the year before. What the letter was, how he mentioned the design, or upon what authorit}' he mentioned it, or by whom the design was supposed to be imagined, does not appear. The defendant has had ever}- opportunit}' of discovery, and nothing has 'come out upon it, as to this letter, which he thinks makes for his purpose. The plaintiff offered to read the account Winch wrote to the East India Compau}', which was objected to, and therefore not read. The nature of that intelligence therefore is very doubtful. But, taking it in the strongest light, it is a report of a design to surprise the year before, but then dropped. This is a topic of mere general speculation, which made no part of the fact of the case upon which the insurance was to be made. It was said if a man insured a ship, knowing that two privateers were lying in her way, without mentioning that circumstance, it would be a fraud ; I agree it. But if he knew that two privateers had been there the year before, it would be no fraud not to mention that circum- stance, because it does not follow that they will cruise this year at the same time in the same place, or that they are in a condition to do it. If the circumstance of " this design laid aside" had been mentioned, it would have tended rather to lessen the risk than increase it ; for the design of a surprise which has transpired, and been laid aside, is less likely to be taken up again, especially by a vanquished enem}-. The jury considered the nature of the governor's silence as to these particulars ; thej' thought it innocent, and that omission to mention them did not varj' the contract. And we are all of opinion "That, in this respect, they judged extremely right." 134 CAETEE V. BOEHM. [CHAP. in. There is a silence, not objected to at the trial nor upon this motion, which might with as much reason have been objected to as the two last omissions, rather more. It appears, by the governor's letter to the plaintiff, " That he was principally apprehensive of a Dutch war." He certainly had what he thought good grounds for this apprehension. Count D'Estaigne being piloted by the Dutch, delivering the fort to the Dutch, and sending the prisoners to Batavia, is a confirmation of those grounds. And prob- ablj' the loss of the place was owing to the Dutch. The French could not have got up the river without Dutch pilots, and it is plain the whole was concerted with them. And yet, at the time of underwriting the policy, there was no intimation about the Dutch. The reason why the counsel have not objected to his not disclosing the grounds of this apprehension is, because it must have arisen from political speculation and general intelligence ; therefore thej' agree it is not necessary to communicate such things to an underwriter. Lastlj', great stress was laid upon the opinion of the broker. But we all think the jury ought not to pay the least regard to it. It is mere opinion, which is not evidence. It is opinion after an event. It is opinion without the least foundation from anj- previous precedent or usage. It is an opinion which, if rightly formed, could only be drawn from the same premises from which the court and jury were to determine the cause, and therefore it is improper and irrelevant in the mouth of a witness. There is no imputation upon the governor as to any intention of fraud. By the same convej-ance whicli 'brought his orders to insure, be wrote to the company everything which he knew or suspected ; he desired nothing to be kept a secret which he wrote either to them or his brother. His subsequent conduct, down to the 8th of February, 1760, showed that he thought the danger very improbable. The reason of the rule against concealments is to prevent fraud and encourage good faith. If the defendant's objections were to prevail in the present case, the rule would be turned into an instrument of fraud. The underwriter here, knowing the governor to be acquainted with the state of the place, knowing that he apprehended danger, and must have some ground for his apprehension, being told nothing of either, signed this policy without asking a question. If the objection " That he was not told " is sufHeient to vacate it, he took the premium, knowing the policy to be void, in order to gain, if the alternative turned out one way, and to make no satisfaction if it turned out the other; he drew the governor into a false confidence, "That, if the worst should happen, he had provided against total ruin," knowing at the same time "That the indemnity to which the governor trusted was void." There was not a word said to him of the affairs of India, or the state of the war there, or the condition of Fort Marlborough. If he thought PART I. J CARTER V. BOEHM. 135 that omission an objection at the time, he ought not to have signed the policy with a secret reserve in his own mind to malie it void : if he dis- pensed with the information, and did not think this silence an objection then, he cannot take it up now after the event. What has often been said of the statute of frauds maj', with more propriety, be applied to ever3' rule of law, drawn from principles of natural equity, to prevent fraud, "That it should never be so turned, construed, or used, as to protect, or be a means of, fraud." After the fullest deliberation, we are all clear that the verdict is well founded, and there ought not to be a new trial ; consequently, that the rule for that purpose ought to be discharged. Hule discharged. 136 SEAMAN V. FONEEEAU. [CHAP. III. PART n. THE APPLICATION OF THE THEORY. SECTION I. Marine Insurance. DE COSTA V. SCANDRET. Chajicert, Loed Macclesfield, C, 1723. 2 P. Wms. 170. One having a doubtful account of his ship that was at sea, viz. that a ship described like his was taken, insured her without giving any information to the insurers of what he had heard, either as to the hazard, or circumstances which might induce him to believe that his ship was in great danger, if not actually lost. The insurers bring a bill for an injunction, and to be relieved against the insurance as fraudulent. Lord Chancellor. The insured has not dealt fairly with the insurers in this case ; he ought to have disclosed to them what intel- ligence he had of the ship's being in danger, and which might induce him, at least, to fear that it was lost, though he had no certain account of it ; for if this had been discovered, it is impossible to think that the insurers would have insured the ship at so small a premium as they have done, but either would not have insured at all, or would have insisted on a larger premium, so that the concealing of this intelligence is a fraud. Wherefore decree the policy to be delivered up with costs, but the premium to be paid back, and allowed out of the costs. SEAMAN V. FONEEEAU. Nisi Prius, King's Bench, 1743. 2 Str. 1183. On 25th August, 1740, the defendant underwrote a policy from Carolina to Holland. It appeared the agent for the plaintiff had on 23d August received a letter from Cowes dated 21st August, wherein it is said, " The 12th of this month I was in company with the ship ' Davy ' (the ship in question), at twelve in the night lost sight of her all at once ; the captain spoke to me the day before that he was leaky, and PART IL, SECT. I.] LOCKE V. XOETH AMEEICAN INS. CO. 137 the next day we had a hard gale." The ship, however, continued her vojage till 19th August, when she was taken by the Spaniards ; and there was no pretence of any knowledge of the actual loss at the time of the insurance, but it was made in consequence of a letter received that day from the plaintiff abroad, dated 27th June before. Several brokers were examined, and proved that the agent ought to have disclosed the letter ; for either the defendant would not have underwrote, or insisted on a higher premium. And the Chief Jus- tice^ was of that opinion, and declared that as these are contracts upon chance, each part}- ought to know all the circumstances. And he thought it not material that the loss was not such an one as the letter imported ; for those things are to be considered in the situation of them at the time of the contract, and not to be judged of by subse- quent events ; ^ he therefore thought it a strong case for the defendant, and the jury found accordingly. LOCKE V. THE NORTH AMEEICAN INS. CO. Supreme Judiciai, Couet op Massachusetts, 1816. 13 Mass. 61. Thts was assumpsit on a polic}' of insurance, dated the 19th of February, 1813, by which the defendants cause the said "Joseph Locke, bj' John Barnard, to be assured $2,300 on property on the sloop ' General Greene,' at and from Boston to Albany." A total loss is averred by capture hy the public enemy on the 8th of March, 1813. The cause was tried upon the general issue, November term, 1814, before Jackson, J., when it appeared that the plaintiff, in Februar3-, 1813, was about purchasing a quantity of fish to be sent to Albanj' for sale, and applied to the said John Barnard for a loan of mone}', to en- able him to make the said purchase. It was thereupon agreed between the plaintiff and the said Barnard that the latter should advance about 82,300 for that purpose ; that the plaintiflf should purchase, in Boston, fish to that value, to be sent to Albany, and that the propert}- should be assigned to Barnard, and shipped in his name as securit}- for said loan. This sura, with interest, and the amount of the premium upon this policy, and Barnard's commission, were to be repaid him by the consignees at Albany ; and, in case of a loss, he was to receive the sum insured towards the same object. The assignment and insurance were to be merel}' a pledge or security for his debt ; and if he did not realize the whole amount from those 1 Sir TViLLiAM Lee. — Ed. 2 Ace. : Lynch v. Hamilton, .3 Taunt. 37 (1810) ; s. c. on error, sub nom. Lynch u. Dtmsford, 14 East, 494 (1811). In that case the rumor proved to be ujitrue. — Ed. 138 LOCKE V. NORTH AMERICAN INS. CO. [CHAP. III. sources, the plaintiff was to pay him the balance ; if the goods should produce at Albany more than sufficient for that purpose, the plaintiff was to receive the residue for his own use. In pursuance of this agreement, the plaintiff purchased fish to the amount of $2,315, and received that sum from Barnard to pay for it. He then shipped it on board the said vessel, and took from the master a bill of lading of the fish, as shipped by Barnard. This bill of lading was dated the 22d of February, 1813. The invoice, also, which accom- panied the goods, purported that they were shipped on the account and risk of Barnard. The plaintiff also made a bill of parcels of the fish, purporting to be an absolute sale thereof to Barnard, for the price above mentioned, with a receipt therefor.* . . . A verdict was taken by consent for the plaintiff for $2,566.88, sub- ject to the opinion of the court, on the facts appearing at the trial. . . . J. T. AusUn, for the defendants. Prescott, for the plaintiff. Parker, C. J. ... On the next question, which respects the insur- able interest in the plaintiff, we think there can be no doubt. The prop- erty was really his, although the legal control of it was in Barnard ; it was shipped on his account and risk ; and he merely owed a debt to Barnard, which this property was pledged to secure. His interest is the same as it would have been had the purchase been made in his own name, and the bill of lading in his favor, and he had then indorsed the bill of lading, and signed other papers necessary to transfer the prop- erty as a pledge to Barnard. It is not now to be disputed that several persons, having several in- terests in property, ma^' insure to the full value of that interest. There are numerous cases settling this point. But the great question is, whether one having an equitable interest in property, the legal title of which is in another, may make insurance upon the property generally, without rei:)resenting the interest he has, so that the underwriters may know the exact state of the subject-matter of their contract ; and whether, if such representation is not made, there is not a concealment of mate- rial facts, which will avoid the policy. It seems to us that, upon general principles, it would be right that such should be the law ; but we are to inquire what has been settled and practised upon, according to usages and judicial decisions, in order to ascertain the law of mercantile contracts. As the contingency of damage to property insured, which may justify an abandonment and a claim for a total loss, although the subject- matter of the contract remains entire, is too frequent not to enter into the contemplation of the contracting parties, it would seem that, when a man causes insurance upon property in which he has an interest, but not such a title as will authorize him to transfer it by abandonment, this fact ought to be made known, that the underwriter may determine 1 In the statement and the opinion passages foreign to concealment have been omitted. — Ed. PAET 11., SECT. I.] LOCKE V. NOKTH AMERICAN INS. CO. 139 whether he will take the risk under such circumstances or not. Still, we do not find that such representation has been deemed essential in England, in the several cases where insurance upon qualified property has been established, nor in this State, although se\eral cases have oc- curred which seemed necessarily to present such a question to the court. Livermore v. Xewburyport Insurance Company, 1 Mass. 264 ; Holbrook, Adm. V. Brown, 2 Mass. 288 ; Toppan v. Atkinson, id. 365 ; Oliver v. Green, 3 Mass. 133 ; Wolff et al. u. Horncastle, 1 B. & P. 316 ; Hill et al. V. Secretan, id. 315 ; Crawford e( al. v. Hunter, 8 D. & E. 13 ; Boehm et al. v. Bell, id. 154 ; Hibbert et al. v. Carter, 1 D. & E. 745 ; Thompson v. Taylor, 6 D. & E. 478 ; Grant i: Parkinson, Park, 267. Under these circumstances, we do not feel ourselves authorized to introduce what may be deemed a new principle, however useful it might have been, if early introduced into the law of insurance. We are satis- fied, as the law stands, that a bona fide equitable interest in propert}', of which the legal title is in another, may be insured under the general name of property, or by a description of the thing insured ; unless there should be a false aflSrmation or representation, or a concealment, after inquirj-, of the true state of the propertj'. We are the less disposed to depart from what appears to have been generally understood and received as the law and practice upon this subject, from a persuasion that underwriters can, in no event, be injured thereby. For the assured, when he cannot, by abandoning, transfer the legal title to the underwriters, will be confined to an actual indem- nity. Thus, if there should be salvage, which the person having the legal title to the propertj-, or those who may have insured it for him, shall claim as belonging to them, the underwriter for him, who has the equitable interest, will be holden to pay onlj- what is actuall}- lost ; the assured being in that case indemnified for the residue b}' the salvage, which is in fact received to his use, bj' the party to whom he is indebted. . . . We have before observed, that an actual, designed concealment of the nature of the interest insured would avoid the policj'. But we think that this cannot be considered as proved, with respect to this particular subject of insurance, without a direct false affirmation as to the nature of the property, or a refusal to answer trulj- upon inquiry. In most cases it is entirely immaterial to the underwriter ; and if it is important to him to know, he may always insist upon a satisfactory exhibition of title, or refuse to enter into the contract. Upon these grounds we are of opinion that the verdict is right ; and judgment must accordingl}- be entered upon it.^ 1 Joe- Bartlet u. Walter, 13 Mass. 267 (1816) ; "Wells v. Philadelphia Ins. Co., 9 S. & R. 103 (1822); Crowley v. Cohen, 3 B. & Ad. 478 (1832) ; Mackenzie u. Whit- worth, 1 Ex. D. 35 (C. A. 1875). And see Buck v. Chesapeake Ins. Co., 1 Pet. 151 (1828). — Ed. 140 GENERAL INTEREST INS. CO. V. KUGGLES. [CHAP. III. GENERAL INTEREST INS. CO., Plaintiffs in Error, v. RUGGLES, Defendant in Error. Supreme Court op the United States, 1827. 12 Wheat. 408. This cause was argued bj' Mr. Z>. S. Ogden and Mr. Wheaton, for the plaintiffs in error, and by Mr. Webster and Mr. JSliss, for the defendant in error. Mr. Justice Thompson delivered the opinion of the court. This is an action on a policy of insurance, bearing date the 9th of February, 1824, for $3,000, on the sloop " Harriet," lost or not lost, at and from Newport, Rhode Island, to, at, and from all ports and places to which she may proceed in the United States, during the term of six months, beginning on the 12th of January, 1824. And also $600 property on board said sloop, at and from Newport to Charleston or Savannah, or both. The sloop, whilst proceeding on her voyage, and within the term of six months, to wit, on the 19th of January, was wrecked on Cape Hatteras, and both vessel and cargo wholly lost. An abandonment was in due time made, and a total loss claimed. The case comes before this court upon a bill of exceptions taken to the directions given by the Circuit Court for the District of Massachu- setts to the jury upon the law of the case.^ 1 In the Circuit Court, where the case is reported sub nom. Ruggles u. General In- terest Ins. Co., 4 Mason, 74 (1825), Stoey, J., said: — " It is argued . . . that, after the loss, the master wilfully omitted to communi- cate intelligence of it to the owner, with the fraudulent design to enable him to make insurance, which conduct, although the owner be entirely innocent and unknow- ing of the act or intent of the master, and of the loss, avoided the policy bona fide made by the owner after the loss. " In support of this doctrine various cases are cited. . . . [Here were stated and distinguished these cases: Fitzherbert «. Mather, post, p. 221 (1785); Gladstone o. King, 1 M. & S. 35 (1813) ; Andrews v. Marine Ins. Co., 9 Johns. 32 (1812); Stewart V. Dunlop, 4 Bro. P. C. (Toml. ed.) 483 (1785).] " The principle contended for is new. If well founded, it must have often occurred. The general silence, therefore, is against it, but not decisive of its merits. Upon what grounds does It stand ? Not upon the ground of agency, for the master was not the agent as to the insurance. Not upon the ground of imputed knowledge or fraudu- lent concealment, for that is excluded by the argument. It must then be upon the ground that the act of the master binds the owner ; and that an omission of duty to his owner, by which third persons are prejudiced, destroys the rights of his owner, however innocent he may be. There is certainly no public policy or convenience in such a principle. The owner does not guaranty the fidelity of the master to all the world, or to the insurer in particular. On the contrary, the insurer sometimes insures against the misconduct of the master. In England it is generally so as to barratry, and in some cases as to negligence. For what reason should the law interfere between two innocent persons to change a loss, which, by contract, one has engaged to bear? " It is said that he who reposes the confidence in such a one should bear the loss. But underwriters, equally with owners, repose confidence in the masters. The master is the agent for all concerned. In case of loss, he acts for all concerned. In the case PART II., SECT. I.] GENEEAL INTEREST INS. CO. V. RUGGLES. 141 The loss, it will be seen, happened on the 19th of January, and the policy was not effected until the 9th of Februaiy. And the question upon the trial turned upon the legal effect and operation of the miscon- duct of the master after the loss occurred. It was proved that the master, immediately after the loss, for the purpose and with the design that the owner, not hearing of the loss of the vessel, might effect in- surance thereon, did express his intention not to write to the owner, and took measures to prevent the fact of the loss being known ; and that, by the conduct of the master in this particular, and in conse- quence of the measures adopted bj- him to suppress intelligence of the loss, knowledge thereof had not reached the parties at the time the policy was underwritten. Upon these facts the court instructed the jury that, although it was the dutj' of the master to give information of the loss to his owner as soon as he reasonably could, yet that, in the present case, when there had been an abandonment in due time for a loss reall}- total, if the owner at the time of procuring the insurance had no knowledge of the loss, but acted with entire good faith, he was not precluded from a recovery. Nor was the policy void by the omission of the master to communicate the information; or by his acts in suppressing intelli- gence of the loss, although such omission and acts were wilful, and resulted from the fraudulent design to enable the owner to make in- of an abandonment, he is retroactively the agent of the underwriter, from the time of the loss on which the abandonment is founded. What reason is there why owners, acting innocently, may not insure against bona fide losses of which the master with- holds the knowledge ■? " It is said it may encourage fraud. But this argument supposes too much. Most losses in this age mu.'st be public. The first port of arrival brings all out. The crew and officers, and other persons, are not hound to silence. In fact, but few cases of this defence have yet occurred. But suppose it to be so. If there may be frauds, may there not be also ruinous losses to innocent owners ? Is it a good public policy to endanger the interests of commerce by new implied warranties ? The under- writer can require a warranty, or except the master's acts, or require his negli- gence to be fatal. This vers- case shows how difficult it is to conceal the facts even in an obscure place. They were universally known in twenty days, and reported in a loose rumor in twelve days. " The court is called upon to lay down a new principle, to extend the present boundaries. But I see no analogies to lead me farther, and no public policy indis- pensablv requiring a stricter rule. If a fraudulent omission avoids the insurance, so would negligence {1 Maule & Selw.). I am ready to declare my opinion against the general principle, as argued by tiie defendant. But as the plaintiff has in his argu- ment restricted it to the facts of the present case, I do not wish to go beyond them. My opinion is, that in the present case, where there has been an abandonment in due time for a loss really total, if the owner, at the time of procuring the insurance, had no knowledge of the loss, but acted with entire good faith in procuring the insurance, he is not precluded from a recovery, nor is tlie policy void by the omission of the master to communicate intelligence of the loss, although such omission was wilful and with the fraudulent design to enable the owner to make insurance after . the total loss, the owner not being conusant of any such act or design at the time of such insurance. My opinion also is, that it was the duty of the master to give infor- mation of the loss to his owner as soon as he reasonably could, and that his omissiot was a plain departure from his duty." — Ed. 142 GENEEAL INTEREST INS. CO. V. EUGGLES. [CHAP. III. surance after the loss, — the owner himself not being conusant of such acts and design at the time of procuring the Insurance. And under this direction a verdict was found for the plaintiff for a total loss. The statement of the case admits fraudulent misconduct on the part of the master, by reason whereof the policy was effected before any knowledge of the loss reached the assured or the undei-writers ; but that the assured was entirely ignorant of this misconduct in the master, and tha,t on his part there was the most perfect good faith in procuring the policy. Here, then, is a loss thrown upon one of two innocent par- ties, and the question is by which is it to be borne. The determination of this question must depend in a great measure, if not entirely, upon the relation in which the master stood to the respective parties when this misconduct occurred. If the loss of the vessel had been occa- sioned by any misconduct of the master short of barratry whilst in the prosecution of the voj-age, and before the loss happened, or if at the time this misconduct is alleged against him he was the exclusive agent of the owner for any purposes connected with procuring the insurance, the owner must bear the loss. But if after the loss the agency of the master ceased, and was at an end, or if he in judgment of law became the agent of* the underwriters, his misconduct cannot be chargeable to the assured. The researches of counsel have not furnished the court with any ad- judged cases, either in the English or American courts, which seem to have decided this question. Some have been referred to which have been urged as having a strong bearing upon the point, but which, on examination, will be found distinguishable in some material facts and circumstances. The precise point, therefore, now before the court may be consid- ered new, but we apprehend is to be governed by the application of principles understood to be well settled in the law of insurance. It is important to understand with precision and accuracy the rela- tion in which the master stood to the owner of the vessel at the time when he was guilty of the fraud and misconduct imputed to him. It was after the loss occurred, and at a time when there had been a total destruction of the subject insured, over which the master's agency had extended. The case has been argued on the part of the underwriters as if the agency growing out of the relation of master and owner of the vessel existed at this time ; and that the assured was responsible for all con- sequences arising from the misconduct of the master ; and that the law would presume that whatever was known to the master must be consid- ered as impliedly known to the owner. These propositions may be true when applied to a state of facts properly admitting of such appli- cation, but cannot be true to the extent to which they have been urged in the present case. If the owner is presumed to know whatever is known to the master, there could be no valid policy effected upon a PART II., SECT. I.] GENERAL INTEREST INS. CO. V. RUGGLES. 143 vessel after she was, in point of fact, lost. Such loss must be known to the master ; and if it follows, as a legal conclusion, that it is known to the owner, the policj- would be void. Nor upon this doctrine could there ever be anj- insurance against barratrj-, or any other misconduct of the master ; for his own acts must necessaril^y be known to himself. And, indeed, the principle pressed thus far would render it impractica- ble ever to have any guaranty whatever against the fraud or misconduct of an agent any more than against that of the principal himself. The knowledge of the agent, therefore, with respect to the fact of loss, can- not affect the insurance ; nor could the knowledge of the owner himself, with respect to such loss, affect the insurance in all cases. Suppose the owner should himself be the master, or be on board, having left orders with an agent to procure insurance in a given time, unless he should hear from him, or have information of the arrival of the vessel at her port of destination, and the vessel should be lost the day before the policj- was underwritten, and at a distance that rendered it impossible that information thereof could reach the agent, would such a policj' be void? No one could certainly maintain such a proposition. And it is by no means an unfrequent practice to obtain insurance in this way. It is not therefore true, as a universal rule, that either the fact of loss, or the knowledge of such fact b^' the agent or the principal at the time the policy is procured, will vacate it. But such knowledge must be brought home to some of the parties or agents connected with the busi- ness of procuring the insurance ; and then the rule properly applies which puts the principal in place of the agent, and makes him respon- sible for his acts. There is, then, the relation of principal and agent in the subject-matter of the contract. But the master, in his character as master, has no authority to procure insurance, nor is he in any sense an agent for such purpose, or in any wa}' connected with it. There may, undoubtedlj-, be superadded to his powers and duties as master an agencj" in other matters, to effect insurance, or any other lawful business ; but in his appropriate character of master, the law considers him an agent onlj- for the navigation of the vessel, and in such matters as are connected with and incident to such employment. And when the books speak of the master's being agent of the owner, they are to be understood in this sense. He is not to be considered as the general agent of the owner for all purposes whatsoever that may have connec- tion with the voyage. He is a special agent for navigating the vessel, and can neither bind nor prejudice his principal b}- any act not coming properly within the scope and object of such emploj'ment. Unless the powers of agents are thus limited, no man could be safe in the trans- action of any business through the agency of another. The master, in his character as such, had certainly' no authoritj' to procure insurance. He could not bind the owner by such a contract ; and if he could not, why should his acts, totally unconnected with the business of procuring the insurance, render void a contract entered into in good faith in all parties having any concern in the transaction ? It is a genieral rule, 144 GENERAL INTEEEST INS. CO. V. EUGGLES. [CHAP. ITI. applicable to agencies of every description, that the agent cannot bind his principal, except in matters coming within the scope of his author- ity' ; and this rule applies particularly' to a master and owner of a ves- sel, and is construed with considerable strictness.^ . . . It is a little difficult to perceive how, in anj' legal sense, the relation of principal and agent could exist at the time when the misconduct of the master is alleged to have taken place. So far as he was agent for navigating the vessel, it had terminated b}' the absolute destruction of the subject. The agency would seem to have ceased from necessity. There was nothing upon which it could act. Had there not been a total loss of the vessel, there would have remained a duty and legal obligation on the part of the master to use his best exertions to save what he could from the wreck. But when the subject-matter of the agency becomes extinct, it is not easy to understand how in any just sense the agency can be said to survive. There might be a moral duty resting on the master to communicate information of the loss to his owner. But how could there have been any legal obligation binding upon him to do it? The information could neither benefit nor prejudice the owner. It is a general rule of law that, if an injury arises to a principal in consequence of the misconduct of his agent, an action may be sustained against him for the damage. Could an action in this case be sustained by the owner against the master for not giving him infor- mation of the loss ? And if not, it would seem to follow as a necessary consequence that the owner could not be prejudiced by his acts. But suppose the agency of the master not to have terminated, but that in judgment of law he was the agent of some one. The question recurs, whose agent was he? _ The answer cannot admit of a doubt. If agent at all, he was by operation of law the agent of the underwriters. The policy, taking the risk on the vessel and cargo, lost or not lost, although effected after the loss happened, related back ; and by the abandonment the underwriters were substituted in the place of the as- sured, and the master, although the agent of the owner until the loss occurred, became, upon the abandonment, the agent of the under- writers. The law upon this subject is well settled, where there is only a technical total loss, and any part of the subject insured remains. The interest in tlie salvage, whatever it may be, becomes transferred to the underwriters, and the agency is, of course, transferred with the sub- ject, and tlie agent thereafter becomes responsible to the underwriters for the faithful discharge of his trust. No action could be sustained against him by the assured for the proceeds, or any misconduct in the management thereof. This is not only the settled rule of law, but a contrary doctrine would involve the greatest absurdity. It would be placing the absolute interest in the property in one party, and making the agent accountable for its management to another. No action could be sustained by the assured, for the plain reason that he would have no interest in the subject of the agency. 1 Here was stated 'Boucher v. Lawson, Cas. temp. Hardwicke, 85 (1734). — Ed. PART II., SECT. I.] GENERAL INTEREST INS. CO. V. EUGGLES. 145 And if such would be the effect of an abandonment in case of a technical total loss, there can be no good reason assigned why the rule should not be applied to a loss really total, so far as to transfer what- ever agency could remain. So that whether the agency terminated by the total destruction of the subject, or was transferred by the abandon- ment to the underwriters, the misconduct of the master could not preju- dice tlie rights of the owner. The connection of principal and agent was dissolved, and thej" stood towards each other as mere strangers, so far as any legal responsibility could be in\olved in the conduct of the master. Such we apprehend to be the result of the application of well- settled principles of law to the facts and circumstances presented by the bill of exceptions, in the absence of anj' authority to govern the case.'- . . . It is no doubt true, with respect to policies of insurance, as well as to all other contracts, that the principal is responsible for the acts of his agent ; and that anj- misrepresentation, or material concealment by the agent, is equally' fatal to the contract as if it had been the act of the principal himself. But such responsibilit3' must of necessitj- be limited to cases where the agent acts within the scope of his authority. In the present case, the master was clothed with no authoritj- or agency in anj' manner connected with procuring insurance. The misconduct charged against him occurred, not whilst he was acting as master, but at a time when the relation of master and owner may well be consid- ered as dissolved from necessitj", by reason of a total destruction of the whole subject-matter of the agencj' ; and if not, the master, by the legal operation of the abandonment, became the agent of the underwriters, and was their agent at the time of his alleged misconduct. It is said that if this is a new question, the court should adopt such rule as is best calculated to preserve good faith in effecting policies of insurance. But it is by no means clear that this end would be best promoted by adopting the rule contended for on the part of the under- writers. Cases may very easily be supposed where negligence or mis- conduct in agents of underwriters, as to matters not immediately connected with effecting a policy, will still have a remote influence, which may have a tendency to prejudice the interest of the assured. Such cases, however, as well as those of the description now under consideration, will most likely be of rare occurrence, and nice and minute distinctions practically operate unfavorably on the business of insurance. If underwriters feel themselves exposed to fraudulent practices in such cases, the protection is in their own hands by not assuming any losses that may have happened prior to the date of the policy. It is considered a hazardous undertaking to insure, lost or not lost, and a proportionate premium is demanded, according to the circumstances 1 Here these cases were stated and distinguished : Fitzherbert v. Mather, 1 T. R. 12 (178.5) ; Stewart v. Dunlop, 4 Bro. P. C. (Toml. ed.) 483 (1785) ; Andrews v. Marine Ins. Co., 9 Johns. 32 (1812) ; and Gladstone v. King, 1 M. & S. 35 (1813). —Ed. 10 146 NEPTUNE INS. CO. V. ROBINSON. [CHAP. III. stated, to show the probability or improbability of the safety of the subject insured. Although no adjudged cases directly applicable to the one before us have been found, we do not consider this decision as establishing any new principle in the law of insurance, but as grounded on the application of principles already settled, to a new combination of circumstances. Judgment affirmed.^ NEPTUNE INS. CO. v. EOBINSON, Court of Appeals op Maryland, 1840. 11 G. & J. 256. Appeal from Baltimore County Court.'' This was an action of assumpsit, brought by the appellee against the appellant, on its policies of insurance, by which it undertook to assure the appellee, lost or not lost, at and from Richmond, Va. , to Portland, Me., $3,000 on the good schooner " Wildee," and $350 on her freight. The plaintiff declared for a total loss, and the defendant pleaded non assumpsit. The case was submitted to the county court on a statement of facts, in which the material points were these : — Benjamin Eobinson, the plaintiff, owner of the schooner " Wildee," effected the insurance with the defendant company on April 20, 1837. The schooner left Richmond on April 16. On April 17 the winds and currents drove her on Goods Rocks, whereby by the perils of the sea she was totally lost, notwithstanding all due efforts of the captain and crew to save her. On April 17 the captain addressed to the plaintiff a letter, which stated that the vessel had run on Goods Rocks and did not appear to be damaged, although the cargo no doubt was. This letter was de- livered at the post-office in Richmond in the afternoon of April 17. It arrived at the post-office in Baltimore on April 20, between three and four o'clock in the morning, and could have been had at the post-offlce, if applied for, at seven o'clock. The plaintiff was a resident of Balti- more. He was not a merchant, and he had no place of business other than his private dwelling. His letters were not taken to him by a letter- carrier, but were called for by him at the post-offlce or sent for thence by him. He did not call at the post-office until April 24, and then he received the letter of April 17. On April 19 he had called at the post- 1 See Patton v Janney, 2 Cranch C. C. 71 (1813) ; Clement v. Phenix Ins. Co., 6 Blatch. 481 (1869) ; Folsom v. Mercantile Mut. Ins. Co., 8 Blatch. 170 (1871). See also 1 Phillips on Ins. (.5th ed.), §§ 549, 564 ; 2 Duer on Mar. Ins., 418^21, 788-796 ; 1 Parsons on Mar. Ins., 455-458. — Ed. 2 The statement has been rewritten. — Ed. PAKT II., SECT. I.] NEPTUNE 1X3. CO. V. ROBINSON. 147 office, and had received a letter dated April 14, wherein the captain stated that the " Wildee" would probabh- sail on April 16 or 17. On April 20 the plaintilf applied for the insurance. The defendant com- pan^y's answer, stating terms, was given at two o'clock that afternoon ; and the terms were accepted before five o'clock. The information in the letter of April 17, if known to plaintiff, would have been material to the risk. If the court shall, on these stated facts, be of opinion that the plaintiff had notice, either actual or constructive, of the loss of the schooner " Wildee," or of the contents of said letter of April 17, pi-ior to the making of said insurance, or shall be of opinion that the plaintiff was guilty of such laches in not calling regularlj' for his letters at the post- office and receiving the intelligence of the loss communicated by said letter, as will vitiate said insurance, then, and in either case, their judg- ment must be for the defendant ; otherwise for the plaintiff, for the sum of §2,851.64, with interest from Aug. 14, 1837, and costs. The cpnnty court rendered judgment for the plaintiff, and the insur- ance company appealed to this court. jifayer, for the appellant. McMahon, for the appellee. Chambebs, J. The claim of the appellee upon this policy of insurance has been resisted, on the ground that under the circumstances of this case he is to be charged with notice of the loss prior to the insurance, or at least with such neglect as will vitiate the policj-. That the con- tents or existence of the letter of 17th April were known to him in fact is not alleged in the statement of facts, nor could it bj- any just inference be deduced therefrom, if indeed the court could make inferences of fact, which is certainlj- not the case. The statement in reference to this mat- ter is, that the appellee on the 19th of April applied at the post-office (where his letters remained till he called for them) and received the let- ter of 14th of April, and on the following day, the 20th, efl"ected the in- surance ; and that he did not call again at the post-office until 24th April, when he received the letter of 17th, informing him of the loss. It being, then, conceded that the facts stated do not prove actual knowl- edge of the letter of 17th of April, and consequenth- of the loss of the schooner, we are to decide whether tliey make a case from which the law will impute the consequences of knowledge, and implj' conceal- ment, suppression, or negligence on the part of the assured, to vitiate the polic3-. The principles advanced on the part of the appellant, on the authoii- ties cited, may all be admitted, and j-et we do not think the^- will furnish an affirmative answer to this question. That the assured acted with en- tire good faith, and without anj- design to impose upon himself a con- dition of ignorance, the facts afford sufficient evidence to prove. It is very true that in many instances negligence will be visited with the same penalty as wilful desire to do wrong. Thus, if a party, witli knowledge that his agent is in treaty for insurance, obtains information of « mate- rial fact, he is bound promptly to use the means of communicating it. 148 BATES V. HEWITT. [CHAP. IIL The impossibility of fixing a definite limit between prompt attention and unreasonable delay, and the difficulty of certainly ascertaining the motives and excuses for all intervening grades of despatch in perform- ing an admitted duty, make such a rule imperatively' necessary. When the principles of fair dealing, as well as the rules of law, require a fact to be communicated, if known, and time enough had elapsed within which to communicate it, and a means of conveying it had presented, it would be fatal to the rights of the party to require him to prove bad motives for the delay. Justice requires the same standard in this re- spect for the man of active industry as for the habitually indolent, and wisely says, what a man is thus obliged to do he must do promptly and diligently, or bear the consequences of his neglect. But we do not think the case before us is one where the party has neglected a duty. He was under no obligation to go to the post-offlce, nor had he, as far as the facts are disclosed, any cause to expect information. In point of fact, it was solel}' in consequence of the loss of the schooner that the captain did write. The principle relied on by the appellant is, that the assured is bound to use all accessible means of information, at the very last instant of time, to ascertain the condition of the property insured. We do not think this principle recognized bj- any adjudged case, and if carried out to its legitimate, indeed, necessary results, would embar- rass the whole doctrine of insurance with complicated and endless difficulties. We approve the opinion expressed by the countj' court of Baltimore, and aflBrm the judgment. Judgment affirmed. BATES V. HEWITT. Queen's Bench, 1867. L. R. 2 Q. B. .595. Declakation on a policy of marine insurance, for six calendar months, on the screw steamer, " Georgia," subscribed by the defend- ant for £100, claiming a total loss. Plea, that the defendant was induced to effect the insurance, and to subscribe the policy, by the wrongful and improper ioncealment, by the plaintiff and his agents, from the defendant of certain material information, then known to the plaintiff and his agents, and unknown to the defendant, and which ought to have been communicated to the defendant. Issue joined. At the trial before Cockbdrn, C. J., at the sittings in London, after Michaelmas Term, 1866, the following facts were proved: The plain- tiff is a shipowner at Liverpool, and the defendant is an underwriter at PART IL, SECT. I.] BATES V. HEWITT. 149 Llojd's. A vessel called the "Japan" was built at Dumbarton in 18G3. Shortly afterwards she was fitted out as a vessel of war, on behalf of the government of the Confederate States of America, and her name was changed to the " Georgia." For about a j-ear she was employed as a cruiser, and became Ycry notorious in this service ; but on the 2d of Maj-, 1864, she put into Liverpool, and was there dis- mantled ; this was a fact of general notorietj- at the time. She was put up to sale by public auction, and purchased by the plaintiff for £15,000. The plaintiif fitted her out as a merchant vessel, at an expense of =84,000 or £5,000 ; and chartered her on the 28th of Jul}', 1864, to the agent of the Portuguese government for a period of four months, to trade from Liverpool to Lisbon, and from thence to the Cape de Verde Islands and the Western Coast of Africa. On the 27th of Jul}-, 1864, the plaintiff wrote from Liverpool to Bradford & Co., insurance brokers, in London: — "At what rate can you do me the hull of the S.S. ' Georgia' for four months, chartered to proceed on the following voyages : — From Liverpool to Lisbon, and from thence to Cape de Verde, Principe, St. Thome, Benguela, Loando, Massamade, Ambriz, and return to Lisbon, calling at all ports as ordered." To which Bradford & Co. replied : — "We presume the 'Georgia' is the Confederate boat and the voyage the Portuguese mail service ; if so, we should think the four months would be from three to four guineas per cent, but it is rather a guess on our part. The company's steamers doing tliat work were insured at seven guineas the year, but there was a batch of them, whereas this is a single matter. We should be glad to secure you the best possible terms, and, if you send an order, please say all you can of the vessel's condition, and any particulars that may assist us." On the 1st of August, 1864, the plaintiff wrote to Bradford & Co.: " Annexed I beg to hand you particulars of the voyage of the ' Geor- gia ; ' if you can insure her at 3 J guineas per cent, for six months, please do so to the extent of £23,000. Captain Wittycombe, who is to command, has been master at times of nearly all my ships, and is at present overlooking her. " ' Georgia,' S. S. Built by Denny & Co., at Dumbarton, in 1863, 427 tons register, 200-horse power. Captain Wittycombe, — for and during the space of six calendar months, commencing on the 7th of August, 1864, at all times and in all places, and on all lawful service, Liverpool to Lisbon, there and thence to Cape de Verde, Principe, St. Thome, Benguela, Loando, Massamade, Ambriz, and back to Lisbon ^ Liverpool, calling at above-named places on the return voyage — ship valued at £23,000. " I think the underwriters know W. F. Wittycombe very well. He has been master in my ships for sixteen years, built many of them, and up to this moment has never cost underwriters on his ship a shilling. If not done, telegraph to me." 150 BATES V. HE'.VITT. [CHAP. III. Bradford & Co. telegraphed to the plaintiflf that they could not insure the " Georgia" at his limit, but could do so at four guineas. Eventu- ally thej' effected (amongst other policies) an insurance at Lloyd's, on the 6th of August, for £6,000, on the "Georgia" steamer, for six months from her sailing, at four guineas per cent., of which the defend- ant underwrote £100. It is customary for time policies effected at Llojd's to contain a memorandum that the insurance is free of capture and seizure, but this clause was omitted in the present policy. The letters of the 27th of July, and of the 1st of August, with the particulars, were shown to the defendant and the other underwriters at the time they underwrote the policy. The defendant stated, at the trial, that he knew that a vessel called the " Georgia" had been in the Confederate service as a war steamer, and that she had been sold at Liverpool ; but that these facts were not present to his mind at the time he underwrote the policj^, and that he did not know that he was asked to insure and was insuring the Con- federate "Georgia;" and had he known that the vessel in question was the "Georgia" which bad been in the Confederate service, he would not have insured her. He also admitted that he did not observe that the policy was not free of capture and seizure ; and he stated that Bradford & Co. were the brokers for a company who had steamers running to the Mediterranean, and being under the impression that he was insuiing one of these steamers, he did not give much attention to the plaintifTs letters and particulars. Tlie vessel sailed from Liverpool, upon her voyage, on the 8th of August, and was captured on the 15th by a frigate of the United States of America. The following is the statement furnished to the parties by the Chief Justice, of his direction, and the questions he left to the jury and their fiuding : — " I direct the jury : "1. That the fact of the 'Georgia' having been a Confederate war steamer was a material fact. "2. That that fact not having been communicated to the insurer, the verdict must be for the defendant, unless defendant knew the fact, or had the means of knowledge of which he ought to have availed him- self (this point, however, being subject to the leave reserved). "3. That it is immaterial that the defendant may have previously been aware that the Confederate steamer ' Georgia' was at Liverpool, so that if he had remembered it he would have known the vessel pro- posed to be insured was the same, if he had forgotten his former knowl- edge : as the knowledge must be not a past but a present one. " I leave to the jury : " 1. Whether the defendant had a present knowledge of the identity of the vessel. " 2. If not, whether taking the previous knowledge of defendant as to the Confederate ' Georgia ' being at Liverpool, and the particulars PART II., SECT. I.] BATES V. HEWITT. 151 disclosed bj' the slip and memorandum accompanying it, defendant by the exercise of ordinarj- intelligence and knowledge of his business, might have known that this was the Confederate ' Georgia.' " "Verdict: The jury are not satisfied that defendant was aware of the fact that the ' Georgia" proposed for insurance was the former Confederate cruiser; but their verdict is, that he had abundant means of identifying the ship at the time of underwriting the ship. " In answer to a question from me, the jury added that the means of knowledge referred to were to be found in the slip itself. On this find- ing I directed the verdict to be entered for defendant, subject to leave reserved." A rule was accordinglj- obtained to enter a verdict for the plaintiff, on the ground that on the finding of the jury the plaintifl" was entitled to have the verdict entered for him. A cross rule was obtained on behalf of the defendant for a new trial (in the event of this court, or a court of appeal, holding that the find- ing of the jury amounted to a verdict for the plaintifl'), on the ground that the verdict was against the evidence. James, Q. C, T. Jones, Q. C, and Sir G. Honyman, Q. C, for the defendant, showed cause against the rule to enter the verdict for the plaintiff. Mihcard, Q. C, and Potter, in support of the rule. CocKBURN, C. J.^ . . . I think what passed between the jury and myself must be taken to amount to a finding bj- the jury in the affirma- tive of the question I put to them, whether, taking the previous knowl- edge of the defendant as to the Confederate steamer " Georgia" being at Liverpool, and the particulars disclosed by the slip and memoran- dum, the defendant, hy the exercise of ordinary intelligence and knowledge of his business, might have known that this vessel was the Confederate steamer " Georgia." The jury did not, in fact, directly find the affirmative or the negative of the question, but they found that the defendant had abundant means of identifying the ship at the time of his underwriting the policy ; and, inasmuch as the abundant means might have been something extrinsic to the particulars communicated by the plaintiff to the defendant, I asked the jury whether they meant bj- their answer to say that, taking the previous knowledge and the particulars afforded by the plaintiff, the defendant had the means of knowledge, or whether they meant to say that, looking at the particu- lars, if he had made further inquiry he must have acquired a knowl- edge extrinsically ; and their answer amounts to this, coupling what was contained in the particulars supplied by the plaintiflf with the de- fendant's previous knowledge, he had abundant means of identifying the vessel as the Confederate steamer. Now the question is whether the finding of the jury entitles the plain- tiff to the verdict ; and I am of opinion that it does not. 1 After stating the case. — Ed. 152 BATES V. HEWITT. [CHAP. IIL No proposition of insurance law can be better established tlian this, viz., that the party proposing the insurance is bound to communicate to the insurer all matters which will enable him to determine the extent of the risk against which he undertakes to guarantee the assured. It is true, if matters are common to the knowledge of both parties, such matters need not be communicated. It is also true that when a fact is one of public notorietj', as of war, or where it is one which is matter of inference, and the materials for informing the judgment of the under- writer are common to botli, the party proposing the insurance is not bound to communicate what he is fully warranted in assuming the un- derwriter alreadj' knows. Short of these things, the part3' proposing the insurance is bound to make known to the insurer whatever is neces- sary and essential to enable him to determine what is the extent of the risk against which he undertakes to insure ; and I apprehend that, as to the matters which the party proposing the insurance is bound to communicate to the insurer, there is no answer to be made, except that the insurer had, at the time of entering upon the contract, knowledge of the particular fact. I do not mean to say that, if the insurer choose to neglect the information which he receives, he can take advantage of his wilful blindness or negligence ; if he shuts his ejes to the light, it is his own fault, — provided sufficient information, as far as the assured is concerned, has been placed at his disposal. If, indeed, the insurer knows the fact, the omission on the part of the assured to communicate it will not avail as a defence in an action for a loss ; not because the assured will have complied with the obligations which rested on him to communicate that which was material, but because it will not lie in the mouth of the underwriter to sa}- that a material fact was not communi- cated to him which he had present to his mind at the time he accepted the insurance ; the law will not lend itself to a defence ba.sed upon fraud ; it will not allow the underwriter to say, " I have taken the premium with the knowledge of the particular fact, but because the assured has not communicated it to me I will not make good the loss." Therefore, if the fact be known to the underwriter, he cannot avail himself of the circumstance that it was not communicated by the as- sured ; but putting that aside, it is the dutj- of the assured to make known to the insurer whatever is material with regard to the extent of the risk. It is admitted that a fact was not communicated to the underwriter in such a shape, or in such an abstract form, as that, independently of something extrinsic to the communication itself, it would afford him the necessary information. But it is said : " The underwriter had previous knowledge of the fact of the Confederate steamer ' Georgia ' being at Liverpool; he also knew she was there for the purpose of being dismantled and sold." We must, however, take it on the oath of the defendant, and the finding of the jury, that those facts were not present to the defendant's mind at the time he underwrote the policy. The case may be put in two ways : either, that if the previous knowl- PART II., SECT. I. J BATES V. HEWITT. 153 edge which the defendant had with reference to the vessel had been present to his mind, that with the particulars before him would have brought to his mind the fact that he was asked to insure the Confed- erate steamer " Georgia ; " or that if he bad carefullj- studied the par- ticulars stated in the memorandum, those particulars would have brought back to his mind the knowledge which had been previously present to it, which for the moment had been forgotten, and the com- bination of the knowledge thus resuscitated and revived with the par- ticulars contained in the memorandum would have led him to the conclusion that the vessel oflfered for insurance was the Confederate steamer. But the facts are to the contrarj' ; the previous knowledge that the defendant maj' have had was not present to his mind ; and what the defendant swore was that the particulars did not bring that knowledge back to his mind. The result was, as the jury have found, that at the time he underwrote the policy of insurance, the defendant did not know that the vessel was the Confederate steamer. I think that we should be sanctioning an encroachment on a most important principle, and one that is vital in keeping up the full and perfect faith which there ought to be ip contracts of marine insurance, if we were to hold that a party — who is under an obligation to com- municate the material conditions and facts which constitute the basis of the contract into which he invites another to enter — maj' speculate as to what ma}' or maj- not be in the mind of the underwriter, or as to| what may or maj' not be brought to his mind by the particulars dis-' closed to him b^- the assured, if those particulars fall short of the fact which the assured is bound to communicate. If we were to sanction such a course, especially in these days, when parties frequently forget the old rules of mercantile faith and honor which used to distinguish this country from any other, we should be lending ourselves to inno- vations of a dangerous and monstrous character, which I think we ought not to do. The rule we find established is this : that the person who proposes an insurance should communicate every fact which he is not entitled to assume to be in the knowledge of the other party ; and the assured is bound to communicate every fact to enable the insurer to ascertain the extent of the risk against which he undertakes to protect the assured. True, if it can be established that the insurer did know the fact, it will not lie in his mouth to saj-, the fact of which he had previous knowl- edge was not communicated ; if it can be established that the under- writer had knowledge of the fact, the assured would be protected against the fraud of the underwriter in seeking, under such circum- stances, to avoid the insurance. And it is also well-established law, that it is immaterial whether the omission to communicate a material fact arises from intention, or indifference, or a mistake, or from it not being present to the mind of the assured that the fact was one which it was material to make known. I think that there is every reason to believe that both parties imagined that the fact that the vessel had 154 BATES V. HEWITT. [CHAP. III. been a Confederate war steamer was not a material circumstance, and the plaintiff must be exonerated from any imputation of having wilfully and intentionally kept back that material fact ; because he had only a short time before bought the vessel for £15,000, and laid out £4,000 or £5,000 on her, and it is extremelj' improbable that he would have ex- pended this large sum of monej' on her if he had supposed she was a vessel liable to seizure bj' the United States Government. He probably thought that when she was bought by a British subject, and had a British flag flying aboard, she was safe from capture. That turned out to be a mistake ; and it is now admitted that the fact of her being thus exposed to the danger of seizure, was a material fact to be communi- cated, though the non-communication of it may have arisen from per- fect innocence on the part of the plaintiff, and from his thinking that it was not a material fact. It is clear that there was an obligation on the part of the plaintiff to communicate this fact ; it is clear that he did not communicate it ; that he had disclosed partial information, which, by possibilit}-, if it had brought back to the defendant's mind what had previously been known to him, would have led him to the knowledge that this was the Confederate steamer "Georgia;" or if, on the other hand, he had the knowledge present in his mind, he might have read the particulars communicated to him in a difl"erent light from that in which he read them. It is laid down as a general proposition, that the partj' proposing the insurance, if he has omitted a material fact, can only enforce the insurance which, from the omission to communicate the fact, would otherwise be avoided, in the event of the jury finding by their verdict that by means of what he did communi- cate coupled with any other fact that then might be present to the mind of the insurer, the latter knew at the time he granted the insurance the fact which it was the duty of the assured to communicate. Taking, therefore, the finding of the jury in the most favorable sense for the plaintiff, we think that the verdict entered for the defendant is right, and should not be disturbed, and that this rule should be discharged. Mellor, J. I am of the same opinion. I think the verdict entered for the defendant must stand. It is of the greatest importance to abide by the cardinal rules which have prevailed on this subject since the judgment delivered bj' Lord Mansfield in the case of Carter v. Boehm, 3 Burr. 1905 ; and it would be most dangerous, as it appears to me, to allow those well-established rules to be frittered away b}- the introduc- tion of doubtful equivalents. I cannot help thinking that to enable a person proposing an insurance to speculate upon the maximum or minimum of information he is bound to communicate, would be intro- ducing a most dangerous principle into the law of insurance.^ . . , So far as I know, the judgment of Lord Mansfield has never been 1 Here followed a statement of the principal case, and then qnotations from Carter u. Boehra, ante, p. 125 (1766). — Ed. PART II., SECT. I.J BATES V. HEWITT. 155 qualified or questioned. The only part of it upon -which any doubt has been raised is, as to the admissibility in evidence of the opinions of brokers, who are in the habit of negotiating policies of insurance, as to the materiality of facts not communicated.^ That judgment rests on a sound principle and has always been considered as laying down the ti'ue rules which govern the law of insurance. Shee, J. I am of the same opinion. The principle on which the law of concealment, as it relates to marine insurance, rests, is, that in bargaining for an insurance, the person proposing the insurance should take care that the underwriter is as well informed as he himself is of all those circumstances which would increase the risk which he offers to the underwriter. He is not bound to communicate things which are well known to both. He is not bound to communicate facts or circum- stances which are within the ordinary professional knowledge of an underwriter. He is not bound to communicate facts relating to the general course of a particular trade ; because all these things are supposed to be within the knowledge of the person carrjing on the business of insurance, and which, therefore, it is not necessary for him to be specially informed of. But the person proposing the insurance is bound to communicate to the person whom he asks to undertake the insurance everything within his knowledge, which is of a nature to increase the risk which the underwriter is asked to undertake. In this case, there was a fact especiall}' within the knowledge of plaintiff; viz., that this vessel had been a Confederate cruiser. The plaintiff did not know that that fact was of a nature to increase the risk : it was, however, of a nature to increase the risk, because the vessel was, from having been a Confederate cruiser, liable to seizure by the government of the United States ; that was a fact material to the risk, which the person proposing the insurance knew, and which the person to whom the insurance was proposed did not know. The parties, therefore, while they were considering what one would be willing to give for the protection which he desired, and what the other would be willing to take for giving him that protection, were not upon equal terms ; they had not an equal amount of knowledge ; and the reason that they had not an equal amount of knowledge was, that the plaintiff kept back a material fact which he well knew. It was argued bj' the plaintiff's counsel, that it is enough if the person to whom the insurance was proposed had the means of knowing the material fact. No authority was cited for that proposition. No doubt there are cases in which it has been held, where the underwriter has the means, by merelj' looking at lists which are hung up in the room where the insurance is effected, of ascertaining a particular fact, it is not necessary that it should be communicated. In Friere v. "Wood- house, Holt, N. P. 572, it was ruled that information contained in Lloyd's lists need not be communicated to the underwriter, as by fair 1 See the notes to Carter v. Boehm, 1 Sm. L. C. 4th ed. 422. — Eep. 156 PEOUDFOOT V. MONTEFIORE. [CHAP. III. inquiry and due diligence in his business he could have ascertained the facts thej' contained. But the facts of the present case are very differ- ent. The underwriter had no means of presently knowing the fact not communicated to him ; he might by possibility, if he had instituted inquiries, have found it out : but that he is not obliged to do. The person who proposed the insurance knew the fact, and it was a fact material to the estimate of the risk, and he ought to have communi- cated it. For these reasons, it appears to me that the plaintiff was guilty of concealment, and the verdict ought not to be disturbed. Rule discharged. PEOUDFOOT V. MONTEFIOEE. Queen's Bench, 1867. L. R. 2 Q. B. 511. Declaration against the defendant as chairman of the Alliance Marine Assurance Company, claiming damages from the company in respect of the company not having delivered to the plaintiff a policy of insurance on certain goods shipped on board a ship called the " Anne Duncan," pursuant to an agreement alleged by the plaintiff to have been entered into between the plaintiff and the companj', and in re- spect of the company not having paid the sum of money which the plaintiff alleged would have become due on such policy if the same had been so delivered. The third plea stated, in substance, that the alleged agreement was obtained from the company by the wrongful and improper concealment by the plaintiff from the company of certain facts and information which the plaintiff knew as to the ship having run ashore on or about the 23d of January, 1861, which matters so concealed were unknown to the company ; that the matters which were so wrongfully and improp- erl}' concealed were at the time of the making of the promise material to be known to the company, and material to the risks against which the company made the promise to indemnify the plaintiff. The cause was tried at the Liverpool summer assizes, 1861, before Crompton, J., when a verdict was found for the plaintiff. On the 27th of June, 1862, a rule for a new trial, obtained at the instance of the defendant, was made absolute. The cause was tried a second time at the Liverpool summer assizes, 1863, before Mellor, J. At the second trial it was agreed that the case should be left to the jury on the ques- tion, whether or not the plaintiff, before the instructions were given for the insurance and before it was effected, had actual knowledge of the ship or cargo having been lost, or of any misfortune having hap- pened to, or of anything being amiss with, the ship or cargo, or of the ship or cargo having sustained any \n]\xvy. The jury found for the plaintiff. A judge's order was made, before the jury returned their PART II., SECT. I.] PEOUDFOOT V. MONTEFIORE. 157 verdict, that, in the event of the juiy finding for the plaintiff, the ver- dict should be entered for the sum of £1,200, plus interest to the day of signing judgment, less the amount of the premium and salvage, and subject to a special case to be stated from the notes taken by Ckomp- TON, J., with the addition of the evidence of Rees taljen by Mellor, J., and the letters therein referred to. The court were to draw any infer- ences of fact thej' thought proper. The facts, so far as they are material, sufficiently appear from the judgment of the court. Jones, Q. C. (Temple, Q. C, with him), for the plaintiff. Cohen, for the defendant. Cur. adv. vult. CocKBURisr, C. J.^ . . . The agreement was for insurance on a cargo of madder, lost or not lost, shipped at Smyrna, on a voyage from Smyrna to Liverpool, on board the ship "Anne Duncan," for and on account of the plaintiff, and consigned to him by one T. B. Rees, of Smj-rna. The plaintiff, a merchant at Manchester and Liverpool, dealt largely in madders in the Smyrna market, and Rees, being resident at Smj-rna, was employed by him at a salary of £800 a j-ear to make purchases of madder on his account, and to ship and consign the cargoes to him. The cargo in question was purchased and shipped b}- Rees in the course of his emploj'ment as such agent. The ship, with the cargo on board, sailed from Smyrna on the 21st of January, 1861, but again brought up in the Gulf of Smjrna on the same day. She set sail again on the 23d, but was stranded in the course of that daj', and became a wreck. The cargo became a total loss. Intelligence of the stranding of the ship was communicated to Rees on the morning of the 24th. On the 26th, which was the first post da}-, he communicated bj' letter to the plaintiff the loss of the vessel ; and the fact that though the cargo had been got out, j-et, as the vessel had had twelve feet of water in the hold, the greater part of the cargo would be seriously damaged. Hav- ing communicated this information, the letter proceeds thus : "I hope to goodness j^ou are fully insured. On the 12th instant I forwarded you invoice and weights of the shipment by her, which gave you plenty of time to effect insurance. Lloyd's agents have telegraphed the dis- aster, which will reach London before my letter of the 19th instant, enclosing bill of lading.^ I did not dare telegraph to you, for when once j'ou had the intelligence in hand j'ou were prevented from insur- ing." On the 31st of Januar}- the plaintiff, after receipt of the letters from Rees of the 12th and 19th of January, but prior to the receipt of that of the 26th, gave instructions to effect the policy, and the slip was signed on the same day by the company's agent at Manchester. There was, therefore, no fraud or undue concealment by the plaintiff 1 After describing the nature of the action. — Ed. 2 The telegram was received, and the loss published in Lloyd's list of the 29th of January ; but neither the plaintiff nor the company's agent was aware of it. — Rep. 158 PEOUDFOOT V. MONTEFIOEE. [CHAP. III. of a material fact within his personal knowledge. On the other hand, it is clear that the fact of the loss of- the vessel and damage to the cargo might have been communicated to him by Kees by means of the telegraph, but was purposely kept back by the agent for the fraudulent purpose of enabling the plaintiff to insure. We think it clear, looking to the position of Eees as agent to purchase and ship the cargo for the plaintiff, that it was his dut^' to communicate to his principal the dis- aster which had happened to the cargo ; and, looking to the now gen- eral use of the electric telegraph, in matters of mercantile interest, between agents and their employers, we think it was the duty of the agent to communicate with his employers by this speedier means of communication. From the letter of the agent it appears that, but for the fraudulent motive for his silence, he would, in the ordinar}- course of his duty, have convej-ed the intelligence of the loss to his employer, and would have availed himself of the telegraph for that purpose. Upon the above facts, the question arises whetber the plaintiff, tlie assured, is so far affected by the knowledge of his agent of the loss of the vessel and damage to the cargo as that the fraud thus committed on the underwriter, through the intentional concealment of the agent, though innocently' committed so far as the plaintiff is concerned, will afford a defence to the underwriter on a claim to enforce the polic3'. Two cases decided in this court, one in the time of Lord Mansfield, the other in that of Lord Ellenborough, establish the affirmative of this proposition. In the case of Fitzherbert v. Mather, 1 T. B. 12, 16, wiiere an agent of the assured was employed to ship a cargo of oats, and to communicate the shipment to another agent who was employed to effect an assurance, an omission on the part of the former, who had written to announce the sailing of the ship, on the ship having after- wards got on shore, to communicate that fact, which he might have done by the same post, was held fatal to the insurance. Ashurst, J., observes : "On general principles of policy, the act of the agent ought to bind the principal ; because it must be taken for granted that the principal knows whatever the agent knows. And there is no hardship on the plaintiff ; for if the fact had been known, the policy could not have been effected." Buller, J., says : " Though the plaintiff be inno- cent, yet if he build his information on that of his agent, and his agent be guilty of a misrepresentation, the principal must suffer. It is the common question every day at Guildhall, when one of two innocent persons must suffer by the fraud or negligence of a third, which of the two gave credit. Here it appears that the plaintiff trusted Thomas (the agent), and he must therefore take the consequences." In the case of Gladstone v. King, 1 M. & S. 35, 38, which was an action on a policy on a ship, " lost or not lost," the master had omitted to communicate, when writing to his owners, the fact of the ship hav- ing been driven on a rock, — a fact as to which, on arriving at the port of discharge, he made a protest, detailing the accident, and stating that the sliip's bottom must have been chafed ; and the owners, in ignorance PAET II., SECT. I.] PKOUDFOOT V. MONTEFIOKE. 159 of the accident, had effected au insurance. On these facts it was held that the captain was bound to communicate the fact, and, for want of such communication, the antecedent damage was au implied exception from the insurance, and the plaintiffs could not recover the loss arising from the repairs rendered necessary by the accident. " If," says Lord Ellenborough, " the captain might be permitted to wink at these cir- cumstances without hazard to the owners, the latter would in all such cases instruct their captain to remain silent ; b3- which means the un- derwriter at the time of subscribing the policy would incur a certaint}- of being liable for an antecedent average loss. To prevent such a con- sequence, and considering that what is known to the agent is impliedlj' known to the principal, and that the captain knew, and might have actually communicated to the plaintiffs the cause of damage, so as to have apprised them of it before the time of effecting the policy, I think that no mischief wiU. ensue from holding in this case that the antece- dent damage was an implied exception out of the policy. If the prin- ciple be new, it is consistent with justice and convenience ; and there being no fraud imputed to the captain in the concealment will not alter the case." An eminent authorit}-, the late Mr. Justice Story, has, however, de- clined to be bound b3' these decisions. In a case (Ruggles v. General Interest Insurance Companj-, 4 Mason's Eep. 74) tried before him on a policy of insurance effected after a total loss, where the master had omitted to give intelligence of the loss to his owner, with the fraudulent design, of enabling him to make an insurance, and the insurance had been effected by the owner in ignorance of the loss, that learned judge held that, as the owner at the time of procuring the insurance had no knowledge of the loss, but acted with an entire good faith, he was not precluded from recovering, and that the policy was not rendered void by the omission of the master to communicate intelligence of the loss, although such omission was wilful and fraudulent. The case being taken to a court of error (12 Wheaton, 408), the latter upheld the de- cision ; not, indeed, on the grounds taken b}- Mr. Justice Story, but on the very unsatisfaetor3-, and, as we think, untenable ground, that by the total loss of the vessel the master had wholly ceased to be the agent of the owner, and had become the agent of the underwriters. From the language of the judgment, it ma}' be inferred that if the court had con- sidered that the relation of the master to his owners had not been inter- rupted by the loss of the vessel, they would not have upheld the decision appealed from. The ruling of Mr. Justice Story has been discussed by Mr. Duer in his admirable work on insurance, vol. ii. p. 418, and we think the reasoning of the learned writer fully establishes his conclusion as to the ruling having been erroneous. Notwithstanding the dissent of so eminent a jurist as Mr. Justice Story, we are of opinion that the cases of Fitzherbert v. Mather and Gladstone )'. King were well decided ; and that if an agent, whose duty it is in the ordinary course of business to communicate informaiiou to his principal as to the state of a ship 160 PROUDFOOT V. MONTEFIOEE. [CHAP. III. ' and cargo, omits to discharge such duty, and the owner, in the absence of information as to any fact material to be communicated to the under- writer, eflfects an insurance, such insurance will be void, on the ground of concealment or misrepresentation. The insurer is entitled to assume, as the basis of the contract between him and the assured, that the latter will communicate to him every material fact of which the assured has, or in the ordinary course of business ought to have, knowledge ; and that the latter will take the necessarj' measures, by the employment of competent and honest agents, to obtain, through the ordinary channels of intelligence in use in the mercantile world, all due information as to the subject-matter of the insurance. This condition is not complied with where, by the fraud or negligence of the agent, the party proposing the insurance is kept in ignorance of a material fact which ought to have been made known to the underwriter, and through such ignorance fails to disclose it. It has been said, indeed, that a party desiring to insure is entitled, on paying a corresponding premium, to insure on the terms of receiving compensation in the event of the subject-matter of the insurance being lost at the time of the insurance, and that he ought not to be deprived of the advantage, which he has paid to secure, hy the misconduct of his agent. But to this there are two answers : First, that as we have already pointed out, the implied condition on which the underwriter undertakes to insure — not only that every material fact which is, but also that every fact which ought to be, in the knowledge of the assured shall be made known to him — is not fulfilled; secondly, as was said b}- the court in Fitzherbert v. Mather, where a loss must fall on one of two innocent parties through the fraud or negligence of a third, it ought to be borne by the party by whom the person guilty of the fraud or negligence has been trusted or emploj-ed. By thus holding, we shall prevent the tendency to fraudulent con- cealment on the part of masters of vessels and agents at a distance, in matters on which they ought to communicate information to their prin- cipals, as also anj' tendency on the part of principals to encourage their servants and agents so to act. For these reasons our judgment must be for the defendant. Judgment for the defendant} I Compare Stribley v. Imperial Marine Ins. Co., 1 Q. B. D. 507 (1876). — Ed. PAUT II., SECT. I.] BLACKBURN, LOW, AND CO. V. VIGORS. 161 BLACKBUEN, LOW, & CO., Appellants, v. VIGORS, Respondent. House of Lords, 1887. 12 App. Gas. 531. Appeal from the Court of Appeal. The facts are stated in the judgments of Lord Eshee, M. R., and LiNDLET, L. J., 17 Q. B. D. 553.^ The following outline will suffice for this report. The appellants having brought an action against the respondent upon a policj- of re-insurance subscribed by him for £50, claiming for a total loss by perils of the sea, the substantial defence was that the defendant ■was induced to subscribe the policy by the wrongful concealment by the plaintiffs and their agents of certain material facts known to the plain- tiffs or their agents and unknown to the defendant. At the trial before Day, J., and a special jury, in July, 1885, the following facts were proved or admitted. The plaintiffs, underwriters and insurance brokers at Glasgow, had underwritten the steamship " State of Florida" for £1,500, the policy having been effected by the usual brokers for the ship, Rose, Murison, & Thomson, who were underwriters and insurance brokers in Glasgow. The ship had left New York on the 11th of April, 1884, bound for Glasgow, where she was due about the 24th or 25th. On the 30th the plaintiffs tried to re-insure through their London brokers, Roxburgh, Currie, and Co., but the terms asked were higher than the plaintiffs would give. On the next day, May 1st, the plaintiffs asked Rose, Murison, & Thomson to effect a re-insurance for £1,500 at fifteen guineas through Rose, Thomson, Young, & Co., the London agents of Rose, Murison, & Thomson. The latter telegraphed accordingly to Rose, Thomson, Young, & Co. After the telegram, and before any answer came, Murison, a member of the firm of Rose, Murison, & Thomson, became aware of certain facts concerning the ship which were material to the risk, but these facts were never communicated to the plaintiffs or to Roxburgh, Currie, & Co. After learning these facts. Rose, Murison, & Thomson received the following answer to their telegram: "Twenty guineas paj-ing freelj', and market very stiff; likely to advance before day is out." This answer they showed . to the plaintiffs, and then sent in the plaintiffs' names the following telegram to Rose, Thomson, Young, & Co. : " Paj' 20 guineas." The answer to this was sent direct to the plaintiffs, who ultimately re- 1 It there appears that the policy of re-insnrance was on the ship, " lost or not lost," that all parties knew the ship was overdue, that " a Mr. Murray gave Murison impor- tant information brought to Glasgow by another ship, . . . calculated to excite sus- picion of the loss of the ' Florida ' some days previously," and that the ship was in fact already lost. — Ed. U 162 BLACKBURN, LOW, AND CO. V. VIGORS. [CHAP. III. insured for £800 at 25 guineas through Kose, Thomson, Young, & Co. This was not the policy sued on. On the 2d of May the plaintiflFs, through Roxburgh, Currie, & Co., effected a policy of re-insurance for £700 at 30 guineas, lost or not lost. This was the policy sued on. The ship had in fact been lost some days before the plaintiffs tried to re-insure. It was admitted that the plaintiffs and Roxburgh, Currie, & Co. acted in good faith throughout. The jury having been discharged by consent, Dat, J., gave judgment for the plaintiffs for the amount claimed. The Court of Appeal (Lindley and Lopes, L. JJ., Lord Esher, M. R., dissenting) reversed this decision, and gave judgment for the defendant. Against this judgment the plaintiffs appealed. Sir C. Hussell, Q. C. , and Sbllams, for the appellants. Sir H. Webster, A. G., and J. Gorell Barnes, for the respondent. The House took time for consideration. Lord Halsburt, L. C. My Lords, in this case the plaintiffs sue upon a policy of marine insurance, and the only question arises upon the statement of defence that the defendant was induced to enter into the contract by concealment of material facts by the plaintiffs and their agents. The facts are not in dispute. Keither the plaintiffs nor the agent through whom the policy was effected had any knowledge of the mate- rial fact the concealment or non-disclosure of which is relied on as vitiating the policy ; but an agent, who did not effect the policy, at an earlier period received information admitted to be material, while he was acting as agent to effect an insurance for the plaintiffs, which he did not communicate. Da}-, J., before whom the case was decided without a jury, held that this did not affect the validity of the policy. A majority of the Court of Appeal reversed Day, J.'s judgment, and held that the non-disclosure was fatal to the plaintiffs' claim. So far as I can understand the judgment of the Court of Appeal, it is intended to lay down a principle that would not, I think, be con- tested ; but it applies that principle to a state of facts to which I think it is inapplicable. Lindley, L. J., says, I think correctly: "It is a condition of the contract that there is no misrepresentation or conceal- ment, either by the assured or by any one who ought, as a matter of business and fair dealing, to have stated or disclosed the facts to him or to the underwriter for him.'' 17 Q. B. D. 578. And Lopes, L. J., after stating the principle upon which the knowledge of the agent is the knowledge of the principal, explains it to mean that the principal is to be as responsible for any knowledge of a material fact acquired by his agent employed to obtain the insurance as if he had acquired it himself. 17 Q. B. D. 579. To the propositions thus stated I think no objection could be made ; but it is obvious that the words in the one judgment, PART II., SECT. I.J BLACKBTJEX, LOW, AND CO. V. YIGOES. 163 " agent emploj-ed to obtain the insurance," or in the other judgment, the words, " the underwriter," import thcat the particular contract obtained was, in the language of the statement of defence, a policy which the de- fendant was induced to subscribe bj- the wrongful concealment bj- the plaintiffs and their agents of certain facts then known to the plaintiffs or their agents, and unknown to the defendant, and which were mate- rial to the risk. I doubt very much whether the solution of the controversy as to what is the true principle upon which the contract of insurance is avoided by concealment or misrepresentation, whether by considering it fraudulent or as an implied term of the contract, helps one ver}- much in deciding the present case. If one were to adopt in terms the language of Lord EUenborough in Gladstone v. King, 1 M. & S. 35, I do not think it could justifj- the judgment of the majority of the Court of Appeal. In that case a policy lost or not lost was effected on the 25th of October. On the previous 25th of July the ship had run upon a rock. On the 5th of August the captain wrote to his owners, the plaintiffs ; they received his letter on the 5th of October. Whatever maj- be said of the logic of that case, which acquitted the captain of all ill intention, but decided upon the ground that otherwise owners might direct their captains to remain silent, and which upon a policy lost or not lost assumes any antecedent damage to have been an implied exception out of the policj', it does not proceed upon any such ground as the Court of Appeal ap- pear to rel}- on here. Lord EUenborough saj's : "No mischief will ensue " (a somewhat strange mode of enunciating a proposition of law) " from holding in this case that the antecedent damage was an implied exception out of the policy. If the principle be new, it is consistent with justice and convenience." Unfortunatel3', his Lordship does not state what is the principle which he apparentl}' admits to be new. I can quite understand that when a man comes for an insurance upon his ship he ma}- be expected to know both the then condition and the history of the ship he seeks to insure. If he takes means not to know, so as to be able to make contracts of insurance without the responsibilitj' of knowledge, this is fraud. But even without fraud, such as I think this would be, the owner of the ship cannot escape the necessity of being acquainted with his ship and its histor}- because he has committed to others — his captain, or his general agent for the management of his shipping business — the knowledge which the underwriter has a right to assume the owner possesses when he comes to insure his ship. With respect to agency so limited, I am not disposed to differ with tlie proposition laid down by Cockburn, C. J., in Proudfoot v. Montefiore, Law Eep. 2 Q. B. 511, 521. A part of the proposition is "that the in- surer is entitled to assume, as the basis of the contract between him and the assured, that the latter will communicate to him everj- material fact of which the assured has, or in the ordinarj' course of business ought to have, knowledge." I think these last are the cardinal words, and contemplate such an agency as I have described above. I am un- 164 BLACKBUKN, LOW, AND CO. V. VIGORS. [CHAP. IIL able, however, to see that the present case is governed by any such principle. A broker is employed to effect a particular insurance. "While so em- ployed he receives material information ; he does not effect the insurance, and he does not communicate the information. How is it possible to suggest that the insurer could rely upon the communication to the prin- cipal of everj' piece of information acquired by anj' agent through whom the assured has unsuccessfully endeavored to procure an insurance? I am unable to accept the criticism by the Master of the Rolls upon the proposition that the knowledge of the agent is the knowledge of the principal. When a person is the agent to know, his knowledge does bind the principal. But in this case I think the agency of the broker had ceased before the polic}' sued upon was effected. The principal him- self and the broker through whom the policy sued on was effected were both admitted to be unacquainted with any material fact which was not disclosed. I cannot but think that the somewhat vague use of the word " agent" leads to confusion. Some agents so far represent the principal that in all respects their acts and intentions and their knowl- edge may trul^' be said to be the acts, intentions, and knowledge of the principal. Other agents may have so limited and narrow an author- ity, both in fact and in the common understanding of their form of em- ployment, that it would be quite inaccurate to say that such an agent's knowledge or intentions are the knowledge or intentions of his prin- cipal ; and whether his acts are the acts of his principal depends upon the specific authority he has received. In Fitzherbert v. Mather, 1 T. R. 12, the consignor and shipper of the goods insured was the agent whose knowledge was in question. In Gladstone v. King, 1 M. & S. 35, the master of the ship was the agent ; and in Proudfoot v. Montefiore, Law Rep. 2 Q. B. 511, the agent was the accepted representative of the principal, in effect trading and acting for him in Smyrna, the owner himself carrying on business in Manchester. And though the decision in Ruggles v. General Insurance Co., 12 Wheaton, 408, before the Supreme Court of the United States, may not be ver}- satisfactory in what they held under the circumstances of that case to be the relation between the captain of the ship and his owners, the principle upon which that case was decided was the sup- posed termination of the agency between them. Where the employment of the agent is such that in respect of the particular matter in question he really does represent the principal, the formula that the knowledge of the agent is his knowledge is, I think, correct ; but it is obvious that that formula can onl^' be applied when the words " agent" and " principal" are limited in their application. To lay down as an abstract proposition of law that every agent, no matter how limited the scope of his agency, would bind every principal even by his acts, is obviously and upon the face of it absurd ; and yet it is by the fallacious use of the word "agent" that plausibility is given to reasoning which requires the assumption of some such proposition. PART 11., SECT. I.] BLACKBUEN, LOW, AND CO. V. VIGORS. 165 What, then, is the position of the broker in this case, whose knowledge, though not communicated, is held to be that of the principal ? He certainly is not employed to acquire such knowledge, nor can any insurer suppose that he has knowledge in the ordinary course of employment, like the captain of a ship, or the owner himself, as to the condition or history of the ship. In this particular case the knowledge was acquired, not because he was the agent of the assured, but from the accident that he was general agent for another person. The reason why, if he had effected the insurance, his knowledge, unless he com- municated it, would have been fatal to the policy, is because his agency was to effect an insurance, and the authority to make the contract drew with it all the necessary powers and responsibilities which are involved in such an employment ; but he had no general agency, — he had no other authority than the authority to make the particular conti'act, and his authority ended before the contract sued on was made. When it was made, no relation between him and the shipowner existed which made or continued him an agent for whose knowledge his former prin- cipal was responsible. There was no material fact known to any agent which was not disclosed at the point of time at which the contract was made ; there was no one possessed of knowledge whose dutj- it was to communicate such knowledge. For these reasons, I am of opinion that the judgment of the Court of Appeal should be reversed, and the judgment of Day, J., restored ; and I move 3'our Lordships accordingly'. Lord Watson. My Lords, this is a case of considerable nicety ; but I have ultimately come to the conclusion, for the reasons already stated by the Lord Chancellor, that the appeal ought to be allowed. It is, in my opinion, a condition precedent of everj- contract of marine insurance that the insured shall make a full disclosure of all facts ma- terially affecting the risk which are within his personal knowledge at the time when the contract is made. Where an insurance is effected through the medium of an agent, the ordinary rule of law applies, and non-disclosure of material facts, known to the agent only, wiU affect his principal and give the insurer good ground for avoiding the contract. In the case of insurance by a shipowner, it has been decided that he is affected by the knowledge of a class of agents other than those whom he employs to insure. In the ordinarj' course of business, the owner of a trading vessel employs a master and ship agents, whose special func- tion it is to keep their emplo3-er dulj- informed of all casualties encoun- tered by his ship, which would materially influence the judgment of an insurer. On that ground it has been ruled that the insurer must be held to have transacted in reliance upon the well-known usage of the shipping trade, and that he is consequently entitled to assume that ever}- circumstance material to the risk insured has been communicated to him, which ought in due course to have been made known to the shipowner before the insurance was effected. Accordingly, if a master or ship agent, whether wilfully or unintentionally, fail in their duty to 166 BLACKBURN, LOW, AND CO. V. VIGORS. [CHAP. IIL their emploj'er, their suppression of a material fact will, notwithstanding his ignorance of the fact, vitiate his contract. I do not think it necessary to notice in detail the authorities which bear on this point. I desire to say, however, that I have difficulty in comprehending the principle upon which the court, in Gladstone v. King, 1 M. & S. 35, and Stribley v. Imperial Marine Insurance Company, 1 Q. B. D. 507, held that the innocent non-communication of a material fact by an agent who was the alter ego of the shipowner merely created an exception from the policj'. In both these cases the court appears to me to have undertaken the somewhat perilous task of settling the terms of the contract which the insurer would have made for himself if the fact had been communicated to him. In the present case it is sought to extend the imputed knowledge of the insured to all facts which during the period of his emploj'ment be- came known to any agent, other than the agent effecting the policy in question, who was emplo3'ed at anytime, successfully or unsuccessful!}', to insure the whole or part of the same risk with that covered by the policy. This is a case of re-insurance ; but it is obvious that the prin- ciple, if admitted, would be equally applicable to the original contract. I am of opinion, with your Lordships, that the responsibility of an innocent insured for the non-communioation of facts which happen to be within the private knowledge of persons whom he merely employs to obtain an insurance upon a particular risk, ought not to be carried be- j-ond the person who actually makes the contract on his behalf. There is no authority whatever for enlarging his responsibilit}' beyond that limit, unless it is to be found in the decisions which relate to captains and ship agents ; and these do not appear to me to have any analogy to the case of agents employed to eflect a policy. There is a material difference in the relations of these two classes of agents to their em- ploi'er. The one class is specially employed for the purpose of com- municating to him the very facts which the law requires him to divulge to his insurer ; the other is employed, not to procure or furnish infor- mation concerning the ship, but to effect an insurance. There is also, as the Master of the Rolls pointed out, an important difference in the positions of those two classes with respect to the insurer. He is en- titled to contract, and does contract, on the basis that all material facts connected with the vessel insured, known to the agent employed for that purpose, have been by him communicated in due course to his principal. So, also, when an agent to insure is brought into contract with an insurer, the latter transacts on the footing that the agent has disclosed every material circumstance within his personal knowledge, whether it be known to his principal or not ; but it cannot be reasonably suggested that the insurer relies to any extent upon the private infor- mation possessed by persons of whose existence he presumably knows nothing. In the circumstances of this case, I have come to the conclusion that whilst it might be the moral duty of Mr. Murison to communicate to the appellants the information which he received on the forenoon of PART II., SECT. I.] BLACKBURN, LOW, AND CO. V. VIGORS. 167 the 1st of May, 1884, he was under no legal obligation to do so. There maj' be circumstances which impose upon agents in the position of Mr. Murison an express or implied duty to communicate their own in- formation to their principal ; but nothing of that sort occurs here. I must, in fairness to Mr. Murison, say that I can find no warrant for the inference of fact drawn by Lindley, L. J., that he purposely omitted to impart his knowledge to the appellants, in order that they might re- insure on more favorable terms. No such imputation was made at the trial ; and if it had been made, it ought to have been submitted to the jurj-, and their verdict taken upon it. I concur, therefore, in the judgment which has been moved.^ Order appealed from reversed;^ judgment of Day, J., re- stored; cause remitted to the Queen's liench Division. 1 Concurring opinions by Lord FitzGbeald and Lord Macnaghten have been omitted. — Ed. ^ Compare Blackburn v. Haslam, 21 Q. B. D. 144 (1888). In Moens v. Heyworth, 10 M. & W. 147, 157-158 (1842), an action for deceit in representing falsely the quality of goods sold, Pakke, B., said : " To give a right of action for that representation, it was, I think, essential to prove that ... it was made falsely, and for the improper purpose of inducing the plaintiffs to purchase the goods. ... I think it essential that there should be moral fraud, and, indeed, all the cases show that it is, though the word legal fraud is used. . . . The case of a policy of insurance does not appear to me to be analogous to the present ; those instruments are made upon an implied contract between the parties, that everything material known to the assured should be disclosed by them. That is the basis on which the contract proceeds ; and it is material to see that it is not obtained by means of untrue representation or concealment in any respect." In North British Ins. Co. . 2 8. c. in the Supreme Court, sub mm. Valton v. National Loan Fund Life Assur- ance Society, 22 Barb. 9 (1854). —Ed. 19 290 VALTON V. NATIONAL FUND LIFE ASSUR. CO. [CHAP. IV. ant for the insurance, was commenced hy Martin in the month of April, 1850. He represented that the life to be insured was that of his partner or a friend of his partner. On the 14th or 15th Ma^-, he pro- cured from Lacy the proper papers to go before the medical examiner of the company, and upon returning with them properly filled up gave the names of himself and Valton as the only persons who could be the private referees of the assured for the purpose of answering the inter- rogatories propounded according to the rules of the companj-. Shortly after he brought Schumacher to Lacj', who then for the first time learned that Schumacher was the person to be insured. Lacy expressed surprise that so large an insurance sliould be wanted upon the life of a person having the appearance of Schumacher, and stated to Martin that he had seen Schumacher sweeping the street with a green apron on in front of the store occupied bj- Martin and Valton, and had supposed him to be their porter. He stated that he would not take so large a risk on Schumacher's life if he was only their porter. Martin replied, "Oh, it is his way ; he is my partner, he likes to work." On Lacy's reiterating his disinclination to take the risk, and that he did not like the look of the thing, Martin said, "Oh, it is all right ; he is the moneyed man of the concern." The first premium on taking out the policy was handed to Lacy by Martin, as was also the subsequent one in August, which was receipted as having been paid by Schumacher. The plaintiffs had a verdict and judgment, which having been affirmed at general term in the third district, the defendant appealed to this court. Henry Nicholl, for the appellant. John K. Porter, for the respondents. Grover, J.^ . . . The defendants' motion to dismiss the complaint was properly denied. The grounds of the motion were that the articles of copartnership did not amount to an assignment of the policj- to Val- ton and Martin ; and that the policj', so far as the assignees were con- cerned, was a wager policy and void by statute, the plaintiffs showing no claim or debt against the deceased. By the articles of copartnership it was provided that in case of the death of Schumacher during its con- tinuance, unmarried, then the said policj' of insurance, and all benefit and advantage therefrom, and the money secu^-ed to be paid thereby, should become and be the absolute property of the said Gerhart Valton and Daniel Martin. This, in the happening of the contingency, vested the title to the policy absolutely in Valton and Martin as against the defendants, and under the Code authorized them to sue for the money payable thereon in their own names. The answer did not set up the defence that the policy was made in contravention of the statute against betting and gaming. This would be a sufficient answer to the last ground upon which the motion was based. There was nothing in the 1 The omitted passages held that no error appeared in the rulings as to certain points foreign to Insurance. — Ed. SECT. III.] VALTON V. NATIONAL FUND LIFE ASSUK. CO. 291 evidence authorizing the judge to hold that the policy was made in vio- lation of the statute, had the answer interposed that defence. The judge, among other things, charged the jury that if the insured untruly represented that he was a partner of the firm of Valton, Martin & Co., or that if he untruly represented that he was the moneyed man of the firm, and either or both of such untrue representations were mate- rial to the risk, then the policy was avoided and there could be no re- cover^-. That if Schumacher was dead in September, 1850, and his occupation that of a merchant at the time the proposals were signed, and the representations of his being a partner or the moneved man of the firm were either not untrue or not material to the risk, then the action was prima facie sustained. The defendants' counsel requested the court to charge the jury that if Schumacher himself, or by Martin in his behalf, represented to the agent of the defendants that Schumacher was a partner of the firm of Martin, Valton & Co., when in fact at that time he was not such partner, and if the defendants would not have issued the policy if the representation had not been made, then the policy was void and the plaintiffs could not recover. The judge de- clined so to charge, and the defendants' counsel excepted. The defend- ants' counsel also requested the judge to charge the jury that if they found that Schumacher himself, or by Martin in his behalf, represented to the agent of the defendants that Schumacher was the monej-ed man of the concern of Valton, Martin & Co., when in fact at that time he was not such, and that the defendants would not have issued the pohcy if the representations had not been made, then the policy is void and the plaintiffs cannot recover. The judge refused so to charge, and the de- fendants' counsel excepted. The charge of the judge was correct as far as given. If the representations were made and false, the falsitj- must have been known to Schumacher and Martin. The facts were within their knowledge, and the representations fraudulent. The requests to charge, considered in connection with the charge given, present the question whether fraudulent representations made hy tlie assured to the insurer upon his application for a policy, though not material to the rislr, yet material in the judgment of the insurer, and which induced him to take the risk, will avoid the policj'. This question has not been deter- mined by any adjudged case in this State, so far as I have been able to discover. The elementary writers hold that the policy maj- be avoided. (1 Arnould on Ins., § 189 : 2 Duer, 681, 682, 683 ; 3 Kent, 282.) In Sibbald v. Hill (2 Dow's Pari. R. 263), it was held that when the assured fraudulently represented to the underwriter that a prior insurance bj- another underwi'iter upon the same risk had been made at a less premium than it was in fact made, the policy' was vitiated. In this case it is obvious that the risk itself was not affected by the representations. Lord Eldon in his opinion says that it appeared to him settled law that if a person meaning to effect an insurance, exhibited a policy under- written by a person of skill and judgment, knowing that this would weigh with the other party and disarm the ordinary prudence exercised 292 VALTON V. NATIONAL LOAN FUND ASSUE. SOCIETY. [CHAP. IT. in the common transactions of life, and it turned out that this person had not in fact underwritten the policj', or had done so under such terms that he came under no obligation to pay, it appeared to him to be set- tled law that this would vitiate the policy. The courts in this country would saj- that this was a fraud ; not on the ground that the misi-epre- sentation affected the nature of the risk, but because it induced a con- fidence without which the party would not have acted. The principle of this case, when applied to the one under consideration, shows that the judge committed an error in refusing to charge as requested. It is clear that the circumstance of a party being engaged in commercial business, possessed of large means, might induce an insurer to make an insurance upon his life for a large amount, while were he a mere porter the risk would be rejected, although the chance of life would be as good in the latter situation as the former. Altliough the judgment must be reversed for this error, yet as there will probably' be another trial it is proper to add a few words upon an- other question presented by the case. The defendants' counsel requested the court to charge the jury that if Martin and Valton, or either of them, procured or paid for this policy for their or either of their benefit, though with the assent of Schumacher, then the policy was void, being a wager policj'. The judge refused so to charge, and the defendants excepted. It is unnecessary to determine whether previous to the statute making void all wagers, bets, &c. (1 R. S. 662), an insurance effected by a party upon the life of a person in which he had no interest, was valid. Since the statute, such contract would clearly be void. Upon the trial there was no proof but that Schumacher obtained the policy for his own benefit. If he so obtained it, he had the right to dispose of it as he saw fit, and it would be no defence against his assignees that they had no interest in his life. The judgment should be reversed, and a new trial ordered. Selden and Allen, Js. , took no part in the decision ; all the other judges concurring. Judgment reversed, and new trial ordered. VALTON V. NATIONAL LOAN FUND ASSURANCE SOCIETY. CoDRT OF Appeals of New York, 1864. 1 Keyes, 21.* Appeal from the Supreme Court. A new trial having been ordered as reported ante, p. 289, the second trial was before Mr. Justice Miller and a jury, in Febrnarj-, 1862. 1 8. c. suh nom. Valton v. National Loan Fund Life Assurance Society. 4 Abbott's App. Dec. 437 ; and, in the Supreme Court, 17 Abb. Pr. 268 (1863). The statement in the latter report has been used in framing the statement here given ; but matter not bearing on the point decided in the Court of Appeals has been omitted. The re- port in Keyes gives no statement. — Ed. SECT. III.J VALTON V. NATIONAL LOAN FUND ASSUK. SOCIETY. 293 Dr. Barent P. Staats, called as a witness on behalf of the defendants, testiflod that he was their local phj-sician in Albanj- in 1850 ; that he recollected the application for the insurance on Schumacher's life. Re- ferring to the certificate, he said it was the one given by him ; that on the morning of its date Martin called on him to know at what time he could examine his partner Schumacher. Witness appointed one o'clock of that daj-, at which time Martin called with Schumacher upon witness. Witness stated, that as his pay was graduated b}- the amount of insur- ance, witness asked him how much he was going to insure for. Schu- macher said it was $10,000. Witness replied to him, he must take off his coat or jacket, he must have a good indorser ; it was a large amount, and he must have a good indorser for so large an amount. Witness said he meant thereby he must have a more thorough ex- amination. Martin observed to witness he must not judge from appear- ances ; that Schumacher was the moneyed man of the concern. The witness testified that Schumacher was dressed verj- common, and looked like a laboring man. The certificate of the medical examiner consisted in answers to nine questions, all of which he was requested to answer miuutelj-. The last and ninth one was, " Opinion on the life." l^ "A decided opinion, recommending the acceptance or rejection, and of the pro- posal." To this latter question, Dr. Staats, the medical examiner, certified as follows : — " A good risk ; I recommend acceptance." The witness further tes- tified that he was accustomed to give an opinion on the whole case ; that opinion was required to be decided. The witness was then asked by defendants' counsel the three following questions: 1. "If it had not been for the representation that Schumacher was the mone3ed man of the concern, would you, from jour knowledge and observation of Schumacher, have recommended the acceptance of the proposal?" 2. "Did the representation in question produce any, and if any, what eflfect on j-our mind?" 3. "Did the said representation have anj- influence, and if anj-, what, upon 30ur subsequent action in making your certificate and report ? " These questions on being put to the witness were sevefallv objected to bj' plain tifl"s' counsel, and excluded by the court, and defendants' counsel excepted. The plaintiffs had a verdict and judgment, and the judgment was affirmed at general term in the third district. Thereupon the defendant company appealed to this court. MuLLiN, J. The object of a phj-sical examination of a person pro- posing to insure his life in an insurance companj', bj- a competent phj'- sician, is to ascertain whether he is laboring under, or is subject to, any diseases or defect which may have a tendency to shorten life. The inquiry involves an examination not only into the present state of the various organs and functions of the body, but into the tendency of those organs and functions to take on diseases as aflfected b}- habits of mind as well as of body, temperament, tendency to disease from hereditary 294 TRAILL v. BAKING. [CHAP. IV. causes, and the occupation and condition in life of the subject. Of two persons of the same age and present bodily health, the one may present a I'islc entirel3' safe and proper to be taken — the other unsafe and im- proper to be taken. It is impossible to affix limits to the subjects into which it is not only proper but necessary for an examining surgeon to inquire, in order to arrive at a conclusion upon which he can safely advise the acceptance or rejection of a risk. Whether I am right or wrong in these views, I entertain no doubt that in many cases a knowledge of the pecuniary circumstances of a person desiring to be insured is material to the risk as affecting, in some degree, the life ; and thej' are a legitimate subject of inquiry for the examining physician or surgeon. This inquiry maj- not be material in every case, but the surgeon alone can tell whether it was, or was not, so in a given case. It is therefore competent to ask him whether he made the inquirj', and what response was given, and how far he deemed such answer material in deciding to advise the taking of the risk. In such cases the verj' point of inquiry is, whether the pecuniarj- cir- cumstances were deemed b3' him material, and whether he would have advised the acceptance of the risk if it had not appeared that the person desiring to be insured was a man of means. This is the only inquiry by which the real importance of the inquiry and answers can be as- certained. For these reasons I think the learned justice who tried this cause erred in rejecting the question put to Dr. Staats, as to the effect upon his mind and action in respect to said application ; and the judgment should for this reason be reversed, and a new trial ordered, costs to abide the event.' Wright, J., expressed no opinion ; all the other judges concurred. TRAILL V. BARING. Court op Appeal in Chancery, 1864. 4 DeG., J. & S. 318. This was an appeal by the defendants from a decree of the Vice- Chancellor Sir John Stuart, whereby' his Honor directed a certain policy of reassurance for £1,000, granted bj- the Reliance Mutual Life Assur- ance Society to the Provident Clerks' Mutual Life Assurance Associa- tion on the life of one Mrs. Lydia Taylor, to be delivered up to be cancelled with ancillary relief, and ordered the appellants to pay the costs of the suit. 1 Compare Higbie ». Guardian Mutual Life Ins. Co., 53 N. Y. 603 (1873). — Ed. SECT. III.] TEAILL V. BARING. 295 The tase in the court below is reported in the 4th volume of Mr. Giffard's Reports, p. 485. The facts were as follows : — In 1838 the International Life Assurance Society assured the life of Lj'dia Taylor for a very large sum of money. In Maj-, 1861, they, in accordance with a common practice of the London assurance offices, reassured her life with the Provident Clerks' Mutual Life Assurance Association, hereinafter called the association, for £3,000 so as thereby to diminish their own risk. The rislv of the association to the International Life Assurance Society commenced on the 9th of May, 1861. On the 10th of May, 1861, Mr. Linford, the secretary of the associa- tion, called on the secretary of the Reliance Mutual Life Assurance Societj-, hereinafter called the societj', at the office of the societj-, and proposed on behalf of the association that the society should take part of their risk in L3-dia Ta3-lor's life by way of reassurance, alleging that another office, the Victoria office, had agreed to undertake that risk to the extent of £1,000 or more, but that the association would themselves retain £1,000 of it ; and proposing that the society should take the re- maining £1,000. He further stated that Lydia Taylor was alleged to be in her sixty-second year ; that no fresh medical examination could be had, but that from information which he had obtained the directors of the association were satisfied that the life was a first-class life, and that they had accepted the proposal and granted the assurance for £3,000 upon that footing. This verbal proposal of the secretary of the association was enter- tained and accepted on the same 10th of Maj-, 1861, b3- the secretary of the society in these words : " This office will join you in the risk on the life of Mrs. Lydia Taylor to the extent of £1,000." This acceptance was confirmed on the 14th of May, and notice given to the association on the following day. It was alleged that it was in reliance on the representations made by the secretary^ of the association that the association had confidence in the goodness of the life, and that they would retain £1,000 as their proportion of the risk under the assurance for £3,000 which they had granted on her life, that the proposal was accepted as a partnership risk by the society', who dispensed with the usual investigation or inquir)' into the age, health, or habits of Lydia Taylor. On the 18th of May, 1861, the society issued the policj' in question in the suit as of that date to the association, and the association paid to the society the sum of £79 13«. id. for the first year's premium on the reassurance. This sum was merely the amount of one-third of the premium charged b}' the association to the International Life Assurance Societj' for that society's £3,000 policy, and was not the sum which under ordinary circumstances would have been the society's premium on a £1,000 assurance of a first-class life of sixty-two. The risk on this policy commenced on the 18th of May, 1861. 296 TEAILL V. BARING. [CHAP. IT. On the 30th of Januarj^ 1862, Lj-dia Tajlor died suddenlj'. Notice of her death was not given to the society by the association until the 21st of May following. After her death the society discovered that the association, instead of retaining the £1,000 risk on her life which thej' had represented to the society they would retain, and in contravention of that representation, had on the loth of Maj-, 1861, assured by way of reassurance with the Victoria office the further sum of £1,000 in addition to the £1,000 in which they had already reassured in that office ; thus by reassurance getting rid of the whole of their liability in respect of the policy granted by them to the International office. No notice of this fact was given by the association to the societj' prior to the 18th of Maj-, 1861. The reason alleged by the defendants for this departure from the ear- lier representations of the secretary of the association was, that at a meeting of directors held on the 15th of May, 1861, remark was made upon the large amount of reassurance business transacted with the International Life Assurance Society during the week, and it was re- solved to retain no part of the risk of the present reassurance, the ease happening, as was remarked bj' a director present, to be the only one then before the meeting where no fresh medical evidence could be ob- tained, and the Victoria being willing to take £2,000 of the risk instead of £1,000. It was also alleged that the resolution was in no sense de- pendent on any want of confidence in the goodness of Lydia Taylor's life existing on the part of either the individual director or the meeting. After a correspondence between the secretaries and solicitors of the society and the association ensuing upon the announcement by the lat- ter to the former of Lydia Taylor's death, the society flnallj- refused to paj' the £1,000 assured with them by the association ; and the associa- tion consequentl}', in October, 1862, commenced an action on the policy against the plaintiffs in this suit. The societ}' was an imincorporated association, and the plaintiffs in this suit were those three of its directors wlio had signed the policy in question. The defendants in the suit were the trustees and secretary' of the association, a body registered by the registrar of friendly societies. The bill was filed in November, 1862, stating the facts of the case, alleging in effect that it was the custom and understanding with Lou- don assurance offices upon such reassurances as the present (in the absence of a special stipulation or statement to the contrary) that the office effecting the reassurance should itself retain a substantial portion of the risk covered by the original assurance', and for the office with which the reassurance was effected to dispense with the usual medical examination on their own behalf of the person whose life was assured, and with the usual inquiries as to his or her health and habits, and to rely on the retention by the office granting the original assurance of their fair portion of the risk as a guarantee of their good faith in reas- suring ; and alleging further, that the societj' would not have effected the reassurance if it had not been that the association were to retain SECT. III.] TEAILL V. BARING. 297 £1,000 of the £3,000 risk themselves ; and praying a declaration that the £1,000 policy of assurance of the 18th of May, 1861, was fraudu- lently obtained and ought to be set aside and delivered up to be can- celled ; and for an injunction to restrain the action and any other proceedings. It appeared that the Victoria office had reassured the whole of the £2,000 with knowledge that the association was retaining no part of the risk, and had paid the full £2,000 so assured by them. The general effect of the evidence in other respects sufficiently appear from the judgments of the Lords Justices and from Mr. Giffard's report of the case in the court below. Mr. Hacon and Mr. Dauney, for the respondents. Mr. Malins and Mr. E. K. Karsluke, for the appellants. Knight Beuce, L. J. It is in my judgment a just inference from the evidence in this cause that the society represented bj- the plaintiffs was induced to agree to grant, did agree to grant, and did grant the reas- surance polic}- in question, dated the 18th of Maj', 1861, on the faith and in consequence of a representation made to them on the part of the assured, the society represented by the defendants, that the defendants' society would retain and remain subject, to the extent of £1,000, to the liability upon the assurance for £3,000, as to £1,000, other jDart of which, the assurance in question was granted. It may be that until the 15th of May, 1861, the societj' represented by the defendants continued to intend to abide bj' that representation, but on the 15th of May, 1861, that intention was changed. The notion of retaining any portion of the liability to the £3,000 was abandoned and a different course was adopted. If that change of intention, if that abandonment, if that different course, if that intention of not retaining any portion of the risk, had been communicated to the society represented by the plaintiffs, as it ought to have been, without delay, all might have been well. But no such thing was done, and three days after this uncommunicated change of intention the assurance was allowed to be completed. That assurance should not have been allowed to be completed, without a full and clear communication that the intention represented to exist of retaining the liability under the £3,000 policj' to the extent of £1,000 had been abandoned. In my judgment the misrepresentation was material. The represen- tation is proved to have been an inducement, an important inducement, to the plaintiffs' societj- to accept the assurance, in the circumstances in which it was accepted, without more inquiry and more investigation than was then made. It appears to me, I repeat, that the plaintiffs are entitled to assert, and to be believed in asserting, that they woold not have acted as they have done if they had known, as they ought to have been informed by the society represented bj' the defendants of, the real facts. Accordingly, in my judgment the decree is right. The contract was 298 TKAILL V. BAEING. [CHAP. IT. obtained by means of an untrue representation, a representation posi- tively intended to be carried into effect at the time, but abandoned afterwards, and the abandonment not communicated.^ . . . TuHNEK, L. J. I agree. In disposing of the case I desire, in the first place, to absolve the de- fendants from all imputation of any intention of actual fraud ; actual fraud has not been imputed at the bar, and the circumstances of the case in mj' judgment entirely exclude that consideration. But that by no means disposes of the case ; for there are many states of circumstances in which there is technical fraud, in which transactions are fraudulent in the eyes of this court, or characterized by the desig- nation of fraud, although there may be no actual moral fraud. Tiie question reall3' here is whether this case does or does not fall within the range of those cases in which this court holds a transaction to be fraudulent, although it may not be morally so. The case has been dealt with by the defendants as if it were one of inaplied contract. I give no opinion whether or not that view of the case would be right if the question depended wholly on the custom of assurance offices. But the case does not in my view of it in any way depend upon that question. It depends in mj- judgment entirely upon the representations which were made and which induced the plaintiffs to accept the burthen of the reassurance in question. The question really is, whether, representations having been made that a liability would be retained on the part of the defendants, and that intention having been changed before the liability attached upon the plaintiffs — for there is no evidence in support of the contention at the bar to the contrary — there ought not to have been a communication of that change of intention to the plaintiffs before they undertook the liability for the £1,000 in question. I take it to be quite clear, that if a person makes a representation by which he induces another to take a particular course, and the circum- stances are afterwards altered to the knowledge of the party making the representation, but not to the knowledge of the party to whom the representation is made, and are so altered that the alteration of the cir- cumstances may affect the course of conduct which may be pursued by the party to whom the representation is made, it is the imperative duty of the part}- who has made the representation to communicate to the party to whom the representation has been made the alteration of those circumstances ; and that this court will not hold the party to whom the representation has been made bound unless such a communication has been made. Thiis, suppose a man agrees to execute a deed releasing his debtor upon certain terms on the assurance that another person, also a creditor of the debtor, has agreed to do the same, and the other creditor has in fact agreed to do so at the time but has afterwards withdrawn from the 1 Passages on costs and equitable jurisdiction have been omitted. — Ed. SECT. HI.] PROVIDENT LIFE INS. CO. V. FENXELL. 299 agreement, and the withdrawal is not communicated to the person who has agreed to give the release upon the faith of another creditor having agreed to do the same, although it is known to the person upon the faith of whose assurance he agreed to give the release ; and he executes the deed. This court would not hold him bound bj' the deed he had executed. Underbill v. Horwood, 10 Ves. 225, is a case in point on such a state of circumstances ; but, independently of cases, I adhere entirel3- and literally to the opinion expressed bj^ Lord Cranworth in the case of Eeynell v. Sprye, 1 DeG., M. & G. 660, and I think that the opinion is perfectlj- decisive upon a question of this description. It is said here that the change of circumstances was not such as could in any waj' have changed the course of the plaintiffs' conduct, and the evidence of witnesses has been rehed upon in support of that view. But the real question is not what the witnesses thought — not whether Sir. Ratray thought that those were circumstances which were so mate- rial as that they might change the intention of the plaintiffs — but what the plaintiffs themselves would have thought if the change of intention on the part of the defendants had been communicated to them, the plaintiffs. The argument, therefore, is entirely beside the question. Had this representation of what had occurred and of the change of in- tention on the part of the defendants been communicated to the plain- tiffs, it is impossible to say what course the plaintiffs would have pursued — whether thej- would or would not have accepted the policj'. They might have done so : but it is equally clear that they might not ; and we cannot saj- whether they would or would not : but it was to them that the communication should have been made, in order that they might exercise their option upon the subject.^ . . . In my judgment a case of equitable jurisdiction is well proved in this case ; the decree is right, and this appeal must be dismissed.^ PROVIDENT LIFE INSURANCE COMPANY v. FENNELL. Supreme Couet op Illinois, 1868. 49 111. 180. Appeal from the Superior Court of Chicago. The facts in this case sufficiently appear in the opinion. Mr. George H. Harding, for the appellant. Messrs. Hervey, Anthony, & Qalt, for the appellee. Mr. Justice Lawrence delivered the opinion of the court : This was a suit brought by Mary Fennell against the Provident Life Insurance Company, upon a policy issued upon the life of her deceased 1 The omitted passage dealt with equitable jurisdiction. — Ed. 2 Compare Prudential Assurance Co. v. Mtaa, Life Ins. Co., 23 Blatch. 223 (1885) ; g. c. 52 Conn. 576. — Ed. 300 VIVAE V. SUPREME LODGE KNIGHTS OF PYTHIAS. [CHAP. IT. husband. The plaintiff had a verdict and judgment and the defendant appealed. It is now urged for appellant, that the court erred in not permitting the defendant to give in evidence tlie application of deceased for the insurance, showing that his occupation at the time of the insurance was that of a switchman on a railwa}', and to prove in connection with this evidence that he was killed while performing the duties of a bralseman. The insurance was against death by accident. The evidence offered, if admitted, would have been immaterial. The representation Was merely that the occupation of the deceased was then that of a switchman, the truth of which is not denied, and did not amount to a covenant that he would do no act not connected with such occupation, or that he would not engage in any different occupation. N. E. M. & F. Ins. Co. v. Whitmore, 32 111. 223. The polic\' was not against accidents occur- ring in the course of his occupation, but against accidents generally, and provided expressly in what particular cases the company was not to be liable, but did not provide that it would not be liable for death occurring from a cause not connected with the occupation of the assured, or that he should not change his occupation. If the compan}' had de- sired to protect itself from all liabilitj-, except for accidents occurring in a particular occupation, it should have so expressl3' stipulated. That it did not understand its own policy as only covering so narrow a ground is evident from the fact that it did expressl}- guard itself against liability for death or injury incurred through war, riot, or invasion, or while the assured was in a state of intoxication, or from riding races, duelling, or flgliting. It is also objected that the court did not permit the compan}' to prove the premium had not been fully paid. The policy acknowledged the receipt of payment, and we have decided in a case not j-et reported that this statement of a policy could not be controverted. Judgment affirmed} VIVAR V. SUPREME LODGE OF KNIGHTS OF PYTHIAS. Supreme Coukt op New Jebset, 1890. 52 N. J. L. 455. On contract. For the rule, JE. Q. Keasbey. Contra, J. T- Dunn and J. H. Baches. Dixon, J. This suit was brought to recover the amount due on two certificates, in terms as follows : — " Certificate of membership. First class. $1,000. No. 6118. En- dowment Rank of the Order of Knights of Pythias. 1 Ace: Prudential Assurance Co. v. JEtna Life Ins. Co., 23 Blatch. 223 (1885); B. C. 52 Conn. 576. — Ed. SECT. III.] VIVAK V. SUPREME LODGE KNIGHTS OF PYTHIAS. 301 "This certifies that Brother Darius Vivar has received the Endow- ment Ranii of -the Order of Knights of Pythias in Section No. 311, and is a member in good standing in said Ranli. And in consideration of the representations and declarations made in his application, bearing date of Jane 24, 1879, wliich application is made a part of this con- tract, and the payment of the prescribed admission fee, and in con- sideration of the payment hereafter to said Endowment Rank of all assessments as required, and the full compliance with all the laws gov- erning this Rank, now in force or that may hereafter be enacted, and shall be in good standing under said laws, the said sum of one thousand dollars will be paid by the Supreme Lodge Knights of Pythias of the World, to Emily Louisa Vivar, his wife, as directed by said Brother in his application, or to such other person or persons as he may subse- quently direct, by will or otherwise, and entered upon the records of the Supreme Master of Exchequer, upon due notice and proof of death and good standing in the Rank at time of death, and the surrender of this certificate ; provided, however, that if at the time of the death of the said Brother Darius Vivar, there shall be less than one thousand members in this class, there shall only be paid a sum equal to one dollar for each member in good standing in this class. And it is understood and agreed that any violation of the within mentioned conditions, or the requirements of the laws in force governing this Rank, shall render this certificate, and all claims, null and void, and that the said Supreme Lodge shall not be liable for the above sum, or any part thereof. " In witness whereof, we have hereunto subscribed our names and affixed the seal of the Supreme Lodge Knights of Pythias of the World. " D. B. Woodruff, [l. s.j " Supreme Chancellor. "Joseph Dowdall, " Supreme Keejper of Jtecords and Seal. " Issued this 5th day of July, 1879," &c. The other certificate is in the same form, but in the second class, for $2,000. Darius Vivar died April 24th, 1882, and suit on these certificates was brought by Emily Louisa Vivar in July, 1888, on the trial of which action the learned justice directed a verdict for the plaintifl', and gave the defendant a rule to show cause why the verdict should not be set aside, which rule is now to be decided.^ . . . The next ground on which the defendant seeks a new trial is that although Vivar, in his application for membership in the Endowment Rank, in response to the question, " State definitely to whom you wish the benefit made paj-able and relationship to you," had answered, " To my wife, Emily Louisa Vivar," and although by the certificates sued on 1 In reprinting the opinion, passages hare heen omitted to the effect that the de- ceased was a member in good standing at the time of his death, that the statement of relationship was not a warranty, and that a beneficiary need not have an interest in the life insured. For some of the omitted passages, see post, p. 410, n., and ante, p. 23, n. — Ed. 302 VIVAE V. SUPEEME LODGE KNIGHTS OF PYTHIAS. [CHAP. IV. the sums insured were made pa3-able to " Emily Louisa Vivar, his wife," j-et the trial judge rejected evidence offered by the defendant to show that, before and at the time of the plaintiff's marriage to Vivar, he had a lawful wife living, and both he and the plaintiff knew it. . . . In order to invalidate a contract, a representation made during the negotiations must not only be wilfully untrue, but must also be material, or at least must appear to have been thought material by the party to whom it was made. To quote the language of Professor Parsons : "It is obvious that the fraud must be material to the contract or transaction which is to be avoided because of it, for if it relate to another matter, or to this only in a trivial or unimportant way, it affords no ground for the action of the court. It must therefore relate distincth'^ and directly to this contract, and must affect its very essence and substance. . . . Nor can we give a better rule for deciding the question (whether the fraud be material or not) than this : If the fraud be such that, had it not been practised, the contract would not have been made or the trans- action completed, then it is material to it ; but if it be shown or made probable that the same thing would have been done by the parties in the same waj-, if the fraud had not been practised, it cannot be deemed material." 2 Pars. Cont. 769. So in Anderson v. Fitzgerald, 4 H. L. Cas. 484, Lords Cranworth and St. Leonards both express the opinion that a wilfully false representation made in obtaining a policy of life insurance will not vitiate the contract, unless it be material or be deemed material by the insurer, or the policy declare that the mere falsitj- of the statement shall avoid the insurance. A similar view was announced in Valton V. The National Fund Life Ass., 20 N. Y.32, and in many other cases cited in notes to Carter v. Boehm, 1 Sm. Lead. Cas. *619, *641. Where the defence is, that a representation collateral to the contract was false and fraudulently' made, the gist of the defence is the fi-aud of the plaintiff, by which the insurer was misled and induced to make the contract of insurance. Franklin Fire Ins. Co. v. Martin, 11 Vroom, 568, 573. If the representation made, though known by the insured to be false, did not differ from the truth in any respect which was, either in fact or in the view of the insurer, material to the contract, then the falsehood did not mislead the insurer, or induce the contract, and should not be allowed to avoid it. Usually the materiality of a representation will be inferred from the fact that it was made pending the negotiations, in response to a specific inquiry by the insurer ; but this rule is not universal ; for the purpose of the inquiry must be considered, to see whether the information is sought to aid the insurer in fixing the terms on which he will contract, or with an entirely different object. Thus, if a mutual insurance com- pany should require its premiums to be paid within a definite time after the mailing of notice addressed to the residence of the insured, and with this rule in view should require every applicant for insurance to state his residence in his application, and an applicant should give as his residence, not the trath, but the place where he ordinarily received his SECT. III.] TIVAE V. SUPREME LODGE KNIGHTS OF PYTHIAS. 803 mail, it would seem absurd to hold that such circumstance could invali- date the contract. In the present case, the inquiry related merelj' to the paj-ee of the monej' for which the insurer was to become responsible, and b3- the ver3- terms of the contract subsequently made the insurer expressly left the designation of the payee to the absolute discretion of the insured, the language of the certificates being that the supreme lodge will pay tlie sum insured to "Emily Louisa Vivar, his wife, as directed by said Brother [Valvar] in his application, or to such other person or persons as he may subsequently direct, by will or otherwise." A similar power is given to the insured by Article IX. of the constitution of the rank. It seems manifest that a subject thus committed to the control of the insured was not material to the contract of the insurer, nor so regarded by the insurer, and that if Vivar had declared Emily Louisa Vivar to be not related to him, as the lodge now alleges the truth to have been, the contract would have been made on preciselj' the same terms as at present. While, therefore, the fact that the question was put might justify an in- ference that relationship between the payee and the member was thought material, yet the express terms of the certificates and the provisions of the constitution force the conclusion that it was not. In this respect the Endowment Rank of the Knights of Pythias differs from those benevolent societies which are organized for the benefit of members and their families solely, and with regard to which it has been properly held that the relationship of the paj-ee is material. Supreme Council Amer- ican Legion of Honor v. Green, 17 Atl. Rep. 1048 ; American Legion of Honor v. Smith, 18 Stew. Eq. 466. . . . Our conclusion is that the relationship of Vivar to the plaintiff was not material to the contract, either in fact or in contemplation of the insurer, and that, therefore, the falsity of Vivar's statement regarding it could not invalidate the insurance. The last reason urged for a new trial is that Vivar in his application misstated his age. There was, however, no testimony produced at the trial which would warrant a finding to that effect. On the whole, we think that justice was done by the verdict, and that the rule to set it aside should be discharged.* 1 On the topic of this section, see also : — Watson V. Mainwaring, 4 Taunt. 763 (1813) ; Morrison v. Muspratt, 12 Moo. 231 (1827) ; 8. c. 4 Bing. 60; Swete V. Fairlie, 6 C. & P. 1 (1833) ; Hartraan v. Keystone Ins. Co., 21 Pa. 466 (1853) ; Bridgman v. London Life Assurance Co., 44 U. C. Q. B. 536 (1879) ; Goucher v. Northwestern Traveling Men's Association, 20 Ted. Eep. 596 (1884) ; Ferine v. Grand Lodge of A. 0. U. W., 51 Minn. 224 (1892) ; Standard Life and Accident Ins. Co. v. Martin, 133 Ind. 376 (1892) ; Grand Lodge Ancient Order of United Workmen v. Belcham, 145 111. 308 (1893) ; Mutual Life Ins. Co. v. Thomson, 94 Ky. 253 (1893) ; Fidelity and Casualty Co. u. Alpert, 28 U. S. App. 393 (1895). — Ed. 304 JEFFERY V. LEGENDEK. [CHAP. V. CHAPTER V. WAERANTY. SECTION I. Marine Insurance.^ JEFFEEY V. LEGENDER. King's Bench, 1691. 3 Lev. 320.^ Assumpsit on a policy of assurance made in the usual form ; and in the conclusion of the policj* were the words usuall}' there inserted ; viz. , " Warranted to depart with convoj'." And the voj-age was to be from London to Naples ; and June 17 the ship departed from London with convoy; but the 19th of June the ship and the convoy were separated by tempest ; and the ship was by the tempest driven into Foj-, and the convoy into Torbay, ten leagues distant from Foj' ; and the ship and the convoy continued in the said several ports till March 1, when the wind changed, and so continued till March 3, which was time enough for the convoy to have arrived at the ship ; and that the ship sailed out of Foy to go to the convoj', but before she reached the convoy she was by another tempest drove seventy leagues out to sea, the convoy remaining all this time at Torbaj' ; and the ship being so out at sea was taken by pirates. And upon a special verdict finding the whole matter (on the issue non-assumpsit) the question was whether the insurer should be charged. And (1) it was agreed and admitted of both sides that by the custom of merchants those words " Warranted to depart with convoy " are the words of the assured, and not of the assurer, and by them the assured is to find the convoy ; (2) it was held by the Chief Justice (Holt) and the most part of the court that, although the words are only " to depart with convoy," yet they extend to sail with convoy throughout the whole voyage ; but (3) that this sepa- ration being by the tempest at the first, and the ship and the convoy never after meeting, and the ship sailing to meet with the convoy to go . 1 For the topics often treated as instances of implied warranty, see post, Chap. VI., Sect. I. — Ed. 2 B. c. sub nam. Jefferyes v. Legendra, 1 Shower, 320 ; sub nom. Jefferiea v. Legendra, Carthew, 216, 4 Mod. 68, and Holt, 465 j and sub nom. Jeffries v. Legandra, 2 Salk. 443. — Ed. SECT. I.] WOOLMER V. MUILMAN. 305 •with it the rest of the vo3-age, and being again driven away bj- tempest and taken by the pirates, though the convoy remained all this time at Torba3-, yet this was not such a neglect in the convoy as to discharge the insurer, who might have stayed at Foy till the convoy came to him, and therefore they gave judgment for the plaintiff.^ Thompson, King's Sergeant, for the plaintiff. Leuim, for the defendant. LETHULIER'S CASE. King's Bench, 1692. 2 Salk. 443. Action on a policy of insurance by the defendant at London, insur- ing a ship from thence to the East Indies, " warranted to depart with convoj"," and shows that the ship went from London to the Downs, and from thence with convoj-, and was lost. After a frivolous plea and demurrer, the case stood upon the declaration ; to which it was objected that here was a departure without convoy. JEt per Cur. The clause " warranted to depart with convoy" must be construed ac- cording to the usage among merchants, — i. e. from such place where convoj-s are to be had, as the Downs, &c.^ Holt, C. J., contra : We take notice of the laws of merchants that are general, not of those that are particular usages. It is no part of the law of merchants to take convoy in the Downs. Vide Yelv. 136. WOOLMER V. MUILMAN. King's Bench, 1763. 1 W. Bl. 427.' Action on a policy of insurance, dated Sept. 23, 1762, at and from North Bergen to London, at two guineas per cent. The ship, &c., ■" In Lilly v. Ewer, 1 Doug. 72 (1779), the underwriter agreed "to return £2 per cent if the ship sailed with convoy from Gibraltar, and arrived;" and Lord Mans- field, C. J., for the court, said : " On the words, I was strongly of opinion that the policy meant a departure with convoy intended for the voyage. The parties could not mean a departure with convoy which might be designed to separate from the ship in a minute or two ; though, when convoy for the whole of a voyage is clearly intended, an unforeseen separation is an accident to which the underwriter is liable ; for the meaning of such a warranty is not that the ship and convoy must continue and arrive together." — Ed. ^ Other cases on convoy are Gordon v. Morley, 2 Str. 1265 (1747-8) ; Hibbert «. Pigou, 3 Doug. 224 (1783) ; s. c. 2 Park Ins., 8th ed., 694 ; Philips v. Baillie, 3 Doug. 374 (1784) ; D'Eguino v. Bewieke, 2 H. Bl. 551 (1795) ; Cohen v. Hinckley, 1 Taunt. 249 (1808) ; Warwick ». Scott, 4 Camp. 62 (1814). — Ed. 3 8. C. 3 Burr. 1419. — Ed. 20 306 HOEE V. WHITMOIIE. [CHAP. V. were warranted to be neutral ship and property ; but in truth the plaintiflfs were British subjects, having interest on board to the amount of the sum insured. The ship foundered at sea ; and the defendant now refuses to pay the insurance, on account of the 4intrue fact war- ranted by the plaintiff. Wallace, for the plaintiff, insisted that this warranty was only meant to secure the insurers against the peril of enemies, and therefore was equivalent to a warranty free from capture ; and that the loss had not happened in such manner as to make the truth or falsehood of this warranty at all material. But b^- Lord Mansfield, C. J. : The point is too clear to be argued. There was a falsehood in respect to the condition of the thing insured ; therefore it was no contract. Judgment for defendant. HORE V. WHITMORE. King's Bench, 1778. 2 Cowp. 784. This came before the court upon a rule to show cause why the verdict given for the plaintiff in this case should not be vacated, and judgment entered for the defendant, as in case of a nonsuit. The dec- laration stated, that upon a policy of insurance on the ship "New West- moreland," at and from Jamaica to London, warranted to sail on or be- fore the 26th of July, 1776, free from capture, and from all restraints and detainments of kings, princes, and people of what nation, condition, or quality soever, the said ship was preparing and ready to sail, and would have sailed on the 25th of Jul}-, on her intended voj"age, if she Lad not been restrained by the order and command of Sir Basil Keith, the then governor of Jamaica, and detained beyond the day. That she afterwards sailed, and was captured, &c. Mr. Wallace, who showed cause, objected, that the usual clause against the detention of rulers and princes being inserted in this policy, the embargo by which the ship was prevented from sailing on the day mentioned in the warranty came expressly within the meaning of it ; and therefore excused the delay. Mr. Dunning, contra, contended that the loss of the ship could in no possible respect be connected with the embargo. That the warranty was positive and express, that the ship should depart on or before the day appointed, and therefore must be complied with. And of this opinion was the court. Accordingly, the rule for the nonsuit was made absolute. SECT. I.J BEAN V. STDPAKT. 307 BEAN V. STUPART. King's Bench, 1778. 1 Doug. 11. The plaintiff insured the ship called the " Martha," at and from Lon- don to Xew York, the voyage to commence from a daj' specified ; and on the margin of the policj' were written these words, "Eight nine- pounders with close quarters, six six-pounders on her upper decks, thirty seamen, besides passengers." The ship sailed from the Downs on the 1st of March, and was taken on the 10th by an American priva- teer, and was sent, with a prize-master on board, to make the port of Boston. On the 30th of May, the plaintiff brought this action against Stupart, an underwriter on the policy ; on which Stupart paid the premium into court, and pleaded the general issue. About the 6th of Jul}-, and before the trial, accounts were received that the ship had been retaken some time in May and carried into Halifax. The cause came on for trial before Lord Mansfield, and a special jury, at Guild- hall, at the sittings after Trinity- term, 18 Geo. 3. The defence set up was, that there were not thirty seamen on board the ship, according to the terms of the stipulation in the margin of the policy : and, in fact, it appeared upon the evidence that, to make up that number, the plaintiff reckoned the steward, cook, surgeon, some boys, and apprentices, and some persons described as men learning to be seamen ; and that only twenty-six persons had signed the ship's articles. It also appeared that there were seven or eight passengers on board. jBearcroft, of counsel for the defendant, contended that this was a warranty, not a representation, and that being so, it must be literallj' and strictly complied with. The seamen meant men trained to the occupation of manners, eitlier such as are called able-bodied, or at least ordinary seamen, in opposition to landmen, and could never include boys, or the steward, cook, and surgeon of a ship. That, at any rate, none but those who had signed the articles were to be considered as seamen, and then the number warranted was not complete. That, in the late case of Pawson against Ewer, 2 Cowp. 785, it had been determined that the strict words of a representation need not be fulfilled, provided the departure from them is not materially to the prejudice of the insur- ers, but that, in the case of a warranty, it is otherwise, that being a condition, and taken as part of the policy' ; and that the circumstance of the stipulation, in this instance, being written on the margin, made no sort of difference. He said the nature of the voyage, which was of a very dangerous sort, explained the condition ; and the real seamen must have been meant. He also argued (though but slightly) that, whatever might be the construction of the policy, the plaintiff was not entitled to recover as for a total loss, because the ship had been retaken, and had never been infra prcesidia hostium. Witnesses were exam- ined to explain what is generally understood by the word " seamen," 308 BEAN V. STUPAET. [CHAP. V. and it was either in proof, or admitted, tliat at the custom-house and Greenwich hospital boys are included in that word. Lord Mansfield observed, in summing up to the jury, that the import of words must be collected from the subject to which they are applied. That if, in the present case, the insured had stipulated for thirty seamen, besides boys and landmen, then it would have been clear that the terms had not been complied with ; but that, in this policj-, seamen were contrasted with passengers, and, in that sense, the word seemed to include boys as well as men : but he left the construction to the jury. The jury having found a verdict for the plaintiff as for a total loss, the defendant, in this term, obtained a rule to show cause why there should not be a new trial. On the day for showing cause. Lord Mansfield, after reporting the facts as above related, and that he had left the construction of the word " seamen" to the jury, observed that he himself had thought there was little doubt on the question, after what had passed in the cause of Paw- son V. Ewer. That the warranty might have been so worded as only to include able seamen (as if seamen had been opposed to landmen) ; but that, as expressed here, the contrast being with passengers, the whole of the crew or ship's company appeared to be meant. That this was the general maritime sense of the word. Bearcroft and Lee argued in support of the rule for a new trial. The}- observed that, although the Solicitor-General who had conducted the cause for the plaintiff had not opened the stipulation in tlie policv expressly' either as a warrant}-, or as a representation, but had insisted that it had been complied with, his Lordship had assumed it to be a war- ranty, as they said it certainh- was. That being a warranty, the case of Pawson V. Ewer did not apply. That the sense of the word " seamen " is well understood, and the distinction between seamen and landmen or boys as full}- established as that between clergymen and laymen. That a seaman is onh- such a person as is liable to be pressed. As to the question whether it was a total or an average loss, they cited the case of Hamilton v. Mendez, 2 Burr. 1198, and contended that the jury had never taken that point into their consideration. Lord Mansfield. The whole argument for the defendant turns upon begging the question. There is no doubt but that this is a warranty. Its being written on the margin makes no difference. Being a warrant}-, there is no doubt but that the underwriters would not be liable, if it were not complied with, because it is a condition on which the contract is founded. But the question is, whether, in this warranty, the word ' ' seamen " was used in the strict literal sense or not. If it was, the warranty has not been complied with. It is a matter of construction. Boys are reckoned seamen, not only at the custom-house, and Green- wich hospital, but in the distribution of prizes. I think the parties were not sanguine at the trial. The special jury, and the bystanders, were perfectly clear. They hardly seemed to think it a serious question in this SECT. I.J VEZIAN V. GRANT. 309 cause. There is scarcely now such a thing as a ship entirelj' manned with seamen strictly so called. Even on board the king's ships, thej- are satisfied with a few strict seamen, and able-bodied landmen make up the rest of the crew. I had no doubt of the sense of the word in this policy, and the jury decided it. With regard to the other question, it was stated as a forlorn hope ; but certainlj-, when the action was brought, there was no prospect of a recapture of the ship ; she was considered as totally lost in a remote part of the world. The report which afterwards pre- vailed of her being retaken, some months after the capture, was loose and general ; no circumstances known, no account of her situation nor of what part of the cargo might be saved. In short, there is no doubt but that it was a case where the owner might abandon. The rule discharged. VEZIAN V. GRANT. Nisi Prius, 1779. 2 Park. Ins. 8th ed. 670. On the 8th of December, 1777, a policy was underwritten by the de- fendant on goods in a French ship, " Le Compte de Trebon," "at and from Martinico to Havre de Grace, with liberty to touch at Guada- loupe ; warranted to sail after the 12th of January, and on or before the 1st of August, 1778." The insurance was made by the plaintiff on account of Jacques Horteloupe and Louis de Lamare of Havre de Grace, owners of the ship and cargo ; at which time it was not known whether she would load at Martinico or Guadaloupe, they having goods to come from both places ; the policy was therefore intended to cover the risk from both, or either of them. The ship, having finished her outward voyage at Martinico, sailed from thence on the 6th of Novem- ber, 1777, for Guadaloupe, where she took in her whole loading with- out returning to Martinico, which the captain intended to do had he not got a complete cargo at Guadaloupe ; from whence she sailed on the 26th of June, 1778, and was taken on the 3d of September. The plaintiff demanded payment of the loss from the underwriters, which being refused, he brought actions against them for the recovery thereof. This cause came on to be tried at Guildhall, before Mr. Justice Bcller, when the defendant's objections were that, according to the words of the policy, the voyage was to commence from Martinico, and not from Guadaloupe, and that the warranty of the time of sailing was not complied with, the ship having sailed from Martinico before the 12th of Januarj-, 1778, to wit, on the 6th of November, 1777. The jury, under the direction of the learned judge, were of that opinion, and accordingly found a verdict for the defendant. 310 * EDKN V. PAEKISON. [CHAP. T. PAWSON V. BARNEVELT. Nisi Pkids, coram Lord Mansfield, C. J., 1779. 1 Doug. 12, n. 4. The policj' was the same as in the case of Pawson v. Ewer.* The counsel for the defendant offered to produce witnesses to prove that a written memorandum enclosed was alwaj'S considered as part of the polic}'. But his Lordship said it was a mere question of law, and would not hear the evidence, but decided that a written paper did not become a strict warranty by being folded up in the policy.^ KENYON V. BERTHON. Nisi Prius, coram Lord Mansfield, C. J., 1779. 2 Park Ins. 8th ed. 665." Ix an action on a policj' of insurance it appeared that the following words were written transversely on the margin of the policj' : " In port, 20th Julj% 1776." In fact, the ship had sailed on the 18th of Julj'. The question was whether this marginal note was a warranty or a representation. Lord Mansfield. The question is whether the ship's being in port on the 20th is part of the condition of the instrument. When it is on the face of the instrument, it is a part of the policj- ; so that here, if the ship was not in port, it is no contract. As to its being only in the margin, that makes uo difference ; it is all part of the contract when it is once signed. And though the difference of two daj's may not make any material difference in the risk, yet as the condition has not been complied with, the underwriter is not liable. EDEN AND Another v. PARKISON. King's Bench, 1781. 2 Doug. 732. The plaintiffs insured the ship the " Yonge Herman Hiddinga " and her cargo, " at and from L'Orient to Rotterdam ; warranted a neutral ship and neutral property." The ship being captured in the course of her voyage by some English men-of-war, the plaintiffs brought this 1 Ante, p. 212. — Ed. ^ See Pawson v. Watson, ante, p. 212 (1778), and Bize u. Fletcher, ante, p. 216 (1779). — Ed. » s. c. 1 Doug. 12, n. (4). — Ed. SECT. I.] EDEN V. PAEKISON. 311 action against the defendant, one of the underwriters on the policy stating in their declaration that the defendant subscribed tlie policy on the 28th of November, 1780, and averring that the ship and cargo were at that time neutral property. The trial came on before Lord Mans- field at Guildliall, at the sittings after last Easter term, when a verdict was found for the plaintiffs, subject to the opinion of the court, on a case which set forth (as far as is material) as follows : — The ship in question sailed from L'Orient on the voyage insured on the 11th of December, 1780, having the insured cargo on board, and both the ship and cargo were neutral property at the time of the ship's departure from L'Orient, and so continued until the 20th of December, 1780, on which day, hostilities having commenced between the English and the Dutch, the Dutch ceased to be a neutral power, and the ship and cargo ceased to be neutral property. Thej- were taken on the 25th of December, 1 780, and condemned as lawful prize in the Admiralty Court on the 19th of February, 1781. Smith, for the plaintiffs. Soworth, for the defendant. For the plaintiffs it was contended that the warrant}- was complied with by the neutrality of the ship and cargo at the time when tlie vo}-- age commenced. It is a general principle laid down by Blackstone, J., in his Commentaries, "That a warranty can onlj' reach to things in being at the time of the warranty made, and not to things in future, — as that a horse is sound at the buj'ing him, not that he will be sound two years hence." 3 Bl. Comm^ 165. In the case of Wool- mer v. Muilman, 3 Burr. 1419, s. o. 1 W. Bl. 427, where the war- ranty was in the same words as here, the judgment of the court was for the defendant, because the ship and goods were not neu- tral from the first. There was no fraud upon the defendant in this case. The insurer is to inform him.self " of the probabilit}- of safety from the continuance of peace," as was laid down b}- Lord Mansfield in the case of Carter v. Boehra, 3 Burr. 1905, 1910 ; s. c. 1 W. Bl. 593, 594. If indeed the property had ceased to be neutral bj' the act of the party himself, the case would have been different. But he is not answerable for the consequences of a war breaking out during the voyage. To make him so, express words ought to have been used ; otherwise the construction is to be in the largest and most advantageous way for the insured, according to the principle of the decision in the case of Gordon v. Morle}', 2 Sir. 1265. The plaintiffs were ready to have proved at the trial that the premium at the time of this insurance would have been the same if the warranty had been " Dutch property " instead of " neutral property." For the defendant it was said that this was a new question, anj called for peculiar attention, as it would affect a great deal of property. It is certainly a question of construction upon the face of the policy ; but, both from the words and from the nature of the subject, it must be interpreted to mean a warranty coextensive with the voyage. It 312 EDEN V. PAEKISON. fCHAP. T. is admitted by the argument on the other side that, if the neutrality had ceased before the ship sailed, the underwriters would not have been liable. But what expression of intention is there that the warranty should not extend throughout ? There are no restraining words. The sense is the same as if the policy had run, ' ' warranted neutral ship and neutral property at L'Orient, and from L'Orient to Rotterdam." If the words were to be thought equivocal, j-et the nature of the thing speaks in favor of this construction. The merchant proposes to insure the ship and cargo. Upon this the underwriter requires a description of the subject-matter of the insurance. The merchant answers, "I warrant it neutral." This puts an end to all inquiry about the countrj-, whether Dutch, Swedish, Norwegian, &c. Surely, if it had been mentioned that the property was Dutch, the underwriters would have insisted on a much higher premium ; for there was at the time of the insurance an universal rumor of a war between this country and Holland. At the trial this was compared to the case of a warranty to carry a stipulated number of men, or so many guns. But those instances do not resemble tliis. If guns are thrown overboard to save the ship in a storm, that is a circumstance arising out of the very risk insured against, — viz. sea hazard ; and if some of the crew die, it cannot be supposed that the insured meant to undertake that men should be immortal. In the case of Lilly v. Ewer, 1 Doug. 72, the warranty was ' ' to sail with convoj' from Gibraltar ; " and because there were no restraining words it was held that the convoy must be for the whole voyage. Suppose there had been a voyage for tffo or three _years, — as to China, &c., — it cannot be thought that the underwriters would have been satisfied if the property happened to be neutral at the commencement of the risk, and without some large addition of premium would have taken the chance of war during so long a voyage upon themselves. It is the understanding of all persons conversant with the subject that, unless there be restraining words, the warranty extends to the whole duration of the voyage. The cases cited on the other side do not apply ; they prove principles which the defendant has no occasion to dispute. Lord Mansfield told /Smith he had no occasion to repl^-. Lord Mansfield. Many points have been gone into on both sides which are not necessary for the decision of this case. For instance, there is no doubt but you may warrant a future event. But the single question here is, What is the meaning of this policy ? I had not a par- ticle of doubt at the trial, and I know the jury had none ; but Mr. Lee pressed for a case, and I granted one out of respect to him. What is the case ? It is an insurance upon a ship and her cargo, at and from L'Orient to Rotterdam. The insured warrant them neutral ; and the defendant would have the court to add by construction, "And so shall continue during the whole voyage." The contract is not so. The insured tell the state of the ship and goods then, and the insurers take upon themselves all future events and risks from men of war, enemies, detentions of princes, &c. The parties themselves could not have SECT. I.] HIDE V. BEUCE. 313 changed the nature of the property ; but thej* did not mean to run the risk of war. If it made a difference what country the property belonged to, the underwriters should have inquired. The risk of future war is taken b}' the underwriter in every policy. Bj' an implied warrant}- evei'3' ship insured must be tight, stanch, and strong ; but it is sufH- cient if she is so at the time of her sailing. She maj- cease to be so in twenty-four hours after her departure, and j'etthe underwriter will con- tinue liable. The case of Lilly v. Ewer turns quite the other way. The decision there was that the ship must sail with convoj- according to the usage of the trade, — i. e. convoj' destined to go as far as usual in that voyage. The present is the clearest case that can be. The warrant}- is that things stand so at the time, not that thej' shall continue. WiLLEs and Ashhurst, JJ., of the same opinion. BuLLER, J. The case of Lilly v. Ewer is much against the defend- ant ; for it was not contended there that the ship must continue with the coivoy during the whole voyage. Thepostea to be delivered to the plaintiffs.^ HIDE V. BEUCE. King's Bench, 1783. 3 Doug. 213. This was an action upon a policy of insurance on goods, lost or not lost, at and from Leghorn to Gibraltar. There was a warrant}- in. the policy that the ship had twenty guns. It appeared in evidence that she had twentj' guns, but only twenty- five men, and that it required sixty men to man twentj- guns. It was contended for the defendant that the warranty implied that there should be a proportionable number of men. A verdict was given for the plaintiff; and a rule having been obtained for a new trial, Wallace, A. (?., and Lee, showed cause. There is no implied war- ranty as to men, nor could it be so intended, for the ship was in a foreign port, and the captain could not get as many men as he pleased. The construction contended for on the other side would make a war- ranty extend to implications. Cowper, contra. This was a warranty that the ship was a ship of the force of twenty guns. Was she a ship of that force ? It is not necessary to contend that this was a warranty of guns, and also a warranty of men ; but it was a warranty of the number of guns, and a representation that she had a reasonable quantity of men in proportion to the guns. For the purposes of fighting, twenty-five men were quite useless, for seventeen or eighteen would be necessary to work the ship ■while in action. Yet, in consequence of this warranty of force, she is 1 Ace. Tyson v. Gurney, 3 T. R. 477 (1789). — J:d. 314 DE HAHN V. HAETLEY. [cHAP. V. permitted to chase and go into danger, to take prizes, and to weaken herself still further. There has therefore been a misrepresentation by which the policj' is avoided. Lord Mansfield. A warranty makes a contingency, without which the contract is void. But a representation, if true, is not to have the same effect unless there is fraud. WiLLES, AsHHURST, and BcLLER, JJ., were of the same opinion. Hule discharged. DE HAHN V. HARTLEY. King's Bench, 1786. 1 T. E. 343. Tms was an action upon promises brought by the plaintiff (an under- writer) to recover back the amount of a loss which he had paid upon a policj' of insurance. Plea, the general issue. The cause was tried before Bullek, J., at the sittings after last Easter term at Guildhall, when the jury found a special verdict ; whioh stated. That the defendant on the 14th June, 1779, at London, gave to one Alexander Anderson, then being an insurance broker, certain instruc- tions in writing to cause an insurance to be made on a certain ship or vessel called the "Juno," which were in the words and figures follow- ing: "Please get £2000 insured on goods as interest may appear; slaves valued at £30 per head ; comwood, £40 per ton ; ivory, £20 per hundred weight; gum copal, £5 per ton; at and from Africa to her discharging port or ports in the British West Indies warranted copper sheathed and sailed from Liverpool with 14 six-pounders (exclusive of swivels, &c.), 50 hands or upwards, at 12, not exceeding 15 guineas. Juno — Beaver. S. Hartlej' and Company, June 14th, 1779." That the said Alexander Anderson, in consequence of the said written instructions from the said defendant on the said 14th June, 1779, at London aforesaid, &c., did cause a certain writing or policy of assurance to be made on the said ship or vessel called the ' ' Juno " in the words and figures following (reciting the policy), which was upon any kind of goods and merchandises, and also upon the body, tackle, apparel, &c., of and in the ship " Juno" at and from Africa to her port or ports of discharge in the British West Indies, at and after the rate of £15 per cent. The verdict, after reciting two memoranda, which are not material, then proceeded to state, that in the margin of the said policy were written the words and figures following, " Sailed from Liverpool with 14 six-pounders, swivels, small arms, and 50 hands or upwards, copper sheathed." That on the said 14th June, 1779, and not before, at London afore- SECT. I.] DE HAHN V. HARTLEY. 315 said, &c., the plaintiff underwrote the said policy for the sum of £200, and received a premium of £31 10s. Od. as the consideration thereof. That the said ship or vessel called the " Juno" sailed from Liverpool aforesaid on the 13th October, 1778, having then onlj- 46 hands on board her, and arrived at Beaumaris, in the isle of Anglesea, in six hours after her sailing from Liverpool as aforesaid, with the pilot from Liverpool on board her, who did pilot her to Beaumaris on her said V03age ; and that at Beaumaris aforesaid the said ship or vessel took in six hands more, and then had, and during the said voj-age until the capture thereof hereinafter mentioned continued to have, 52 hands on board her. That the said ship or vessel in the said voj-age from Liverpool afore- said to Beaumaris aforesaid, until and when she took in the said six additional hands, was equall}- safe as if she had had 50 hands on board her for that part of the said voj'age. That divers goods, wares, and merchandises, of the said defendant, of great value, were laden and put on board the said ship or vessel, and remained on board her until and at the time of the capture thereof hereinafter mentioned. And that on the 14th March, 1779, the said ship or vessel, while she remained on the coast of Africa, and before her sailing for her port of discharge in the British West India Islands, was, upon the high seas, with the said goods, wares, and merchandises on board her as aforesaid, met with by certain enemies of our lord the now king, and captured by them, &c., and thereby all the said goods, wares, and merchandises of the said defendant, so laden on board her as aforesaid, were wholly lost to him. That when the said plaintiff received an account of the said loss of the said ship or vessel, he paid to the said defendant the said sum of £200 so insured by him as aforesaid, not having then had anj' notice that the said ship or vessel had only 46 hands on board her when she sailed from Liverpool as aforesaid. But whether upon the whole matter, &c. Law, for the plaintiff, was stopped hy the court. Wood, for the defendant. Admitted, that a marginal note in a polic}' of insurance maj' be a warranty ; but contended that this was distinguishable from the case of Bean v. Stupart, 1 Doug. 11, and all the other cases on the subject. In the cases decided, it has alwaj's been a warranty of a fact relat- ing to the voyage insured ; but in the present case, that which is written in the margin has no relation whatever to the V03'age, for it relates merelj' to the force of the ship at Liverpool, before the voyage commenced, and is totally unconnected with the risk insured. The insurance is "at and from Africa to her port of discharge in the British West Indies ; " and the warranty is from Liverpool ; which is antecedent to the voyage insured, and is merely a representation of the state of the ship when she set out on her voyage from Liverpool. Then if it be only a representation, it is immaterial whether complied 316 BLACKHUKST V. COCKELL. [CHAP. V. with or not, because it is found bj- the verdict that the ship was equally safe with the number of hands she had on board, as if she had had the whole number contained in the warrantj-. The warrantj' then can onlj' relate to her being copper-sheathed : that part indeed was ex- tremely material, because otherwise the risk would have been consider- ably increased ; and that extended to the voj'age insured : but the other part of the marginal note was merely a representation, because the manner of sailing from Liverpool was unconnected with the risk insured. But even if the court should consider the whole as a warrant}-, it has been substantially complied with. Lord Mansfield, C. J. There is a material distinction between a warranty and a representation. A representation maj' be equitably and substantially answered ; but a warranty must be strictly complied with. Supposing a warranty to sail on the 1st of August, and the ship did not sail till the 2d, the warranty would not be complied with. A warranty in a policy of insurance is a condition or a contingencj', and unless that be performed, there is no contract. It is perfectly imma- terial for what purpose a warranty is introduced ; but being inserted, the contract does not exist unless it be literally complied with. Now, in the present case, the condition was the sailing of the ship with a certain number of men ; which not being complied with, the policy is void. AsHHUEST, J. The very meaning of a warranty is to preclude all questions whether it has been substantially complied with ; it must be literall}' so. BuLLER, J. It is impossible to divide the words written in the margin in the manner which has been attempted ; that that part of it which relates to the copper sheathing should be a warrahty, and not the remaining part. But the whole forms one entire contract, and must be complied with throughout. Judgment for the plaintiff} BLACKHURST v. COCKELL. King's Bench, 1789. 3 T. R. 360. This was an action on a policy of insurance on goods from the lading of them on board the ship at London to Liverpool "lost or not lost;" at the bottom of the policy was added " warranted well December 9th, 1784." At the trial at the last Guildhall sittings, before Lord Kenyon, it appeared that the defendant underwrote the policy between one and 1 In 2 T. R. 186, the reporter states that in Michaelmas Term, 1787, the judgment of the King's Bench in De Hahn t. Hartley was " unanimously affirmed in the Ex- chequer Chamber." — Ed. SECT. 1.] BLACKHUKST V. COCKELL. 317 three o'clock in the afternoon of that daj-, and that the ship was lost about eight o'clock the same morning. A nonsuit was entered, with libertj' for the plaintiff to move to enter the verdict for him, in case the court should be of opinion that he was entitled to recover on the above facts. A rule to that effect having been obtained ; Erskine and Lawes now showed cause against it. Though in general hy the words "lost or not lost" the underwriter is liable even though it should turn out that the ship was lost at the time of subscribing the policy, yet the latter words in this case were inserted in the policy for the express purpose of restraining their operation to the point of time when the policy was underwritten. And though the ship were safe on part of the day when she was warranted to be so, j-et she was lost before the time when the polic}' was subscribed ; and the daj' maj' be divided to answer the real ends of justice. Dyer, 345. Sir R. Howard's Case, Salk. 625. Roe v. Hersey, S Wils. 274 ; Morris v. Pugh and Harwood, 3 Burr. 1241 ; Combe v. Pitt, 3 Burr. 1434, and Pugh v. Robinson, mite, 1 vol. 116. But supposing the day not to be divisible in this instance, then the warrautj' extended to the ichole of the daj- ; and it was not complied with, so that either way the underwriter is not liable. Chamhre, in support of the rule, was stopped bj' the court. Lord Kentox, C. J. The single question is whether the warranty at the bottom of the policj' means warranted well at the time when the defendant subscribed it, or any time on that A&y. And we are all of opinion that, if the ship were well at any time of that day, it is suffi- cient ; and the underwriter is consequently liable. AsHHUHST, J. This is the only way of giving effect to all the words of the policy. The underwriter insured the goods on board the ship " lost or not lost ; " but the assured engaged that she was safe on some part of that day. BuLLEE, J. The nature of a warranty goes a great waj- to determine this question. It is a matter of indifference whether the thing war- ranted be or be not material ; but it must be literally complied with ; and if it be so, that is sufficient. Here the ship was warranted safe on the 9th of December, and there was great reason for inserting those words, because they protected the underwriter against all losses before that day ; to which he would otherwise have been liable, as the policy was on the goods from the lading of them on board the ship. Grose, J. If this were not the true construction of the warranty, one underwriter might be liable, and another not, though they both executed the same policy on the same day. Rule absolute. 318 CLAPHAM V. COLOGAN. [CHAP. V. CLAPHAM AND Another v. COLOGAN. Nisi Peius, coram Lord Ellenborough, C. J., 1813. 3 Camp. 382. This was an action on a policj- of insurance on goods. One count of the declaration stated tlie ship to be "the 'Three Sisters,' at and from Cadiz and Seville to Liverpool," and another count, "the ' Tres Hermanas,' or ' Three Sisters,' at and from Cadiz and Seville, both or either, to Liverpool." The policy was originally filled up "on the 'Three Sisters,' at and from Cadiz and Seville to Liverpool." After it had been signed b^' the underwriters, the broker inserted the words " Tres Hermanas or," and " both or either." Several of the underwriters put their initials to the alteration ; but the defendant refused to do so. When the broker effected the policy, he merely called the ship the " Three Sisters," with- out making any representation as to the country she belonged to. la point of fact, she was originally a Dane, and was purchased by the bankrupt, a merchant at Liverpool. While at Seville on the adventure in question, he changed her name to the " Tres Hermanas," manned her with a Spanish crew commanded b}' a Spanish captain, and put her under the Spanish flag. She was lost on the voyage home by the perils of the sea. On the part of the underwriters, it was sworn that if the ship, instead of being English, as her name in the policy denoted, had been known to be manned with Spanish seamen, and navigated as a Spaniard, it would have made a difference of two per cent in the premium. Lord Ellenborough, however, held, that under these circumstances the defendant was* liable. The mere calling the ship by an English name, he said, could not amount to a warranty or representation that she was English ; she might have been an American, or an English prize preserving her original name, or a ship built on the continent, whose name was translated into English. Suppose a ship were insured by the name of the " Mark Anthonj-," if there was no representation of her countrj', it would be too much to say, the policy would be void, should she turn out to be an Italian called "II Marco Antonio." If the premium would be governed by the ship's nationality-, the underwriters must ask for information ; they must not trust to the name. No harm, therefore, could be done by inserting the "Tres Hermanas" in the policy, that being a mere translation of the " Three Sisters." So the other alteration could not vitiate the policy, being in an immaterial part. Without the words " both or either," the ship had the option of going both to Cadiz and Seville or not as it might suit the exigencies of the adventure, so that if she went to both, she took them in their proper order ; and with the insertion, she still would have enjoyed the SECT. I.] NELSON V. SALVADOR. 319 libertj' under the same limitation. The legal operation of the instru- ment therefore is in no degree affected. Verdict for the plaintiffs?- Garrow, S. G. , Park, and Puller, for the plaintiffs. Park, Scarlett, and Campbell, for the defendant. NELSON AXD Others v. SALVADOR. Nisi Prics, 1829. Moo. & M. 309. Assumpsit on a policj' of insurance on sugars on board the ship " George" at and from Tobago, " warranted to sail on or before the 1st of August, 1827 ; " the time of sailing being afterwards altered by the substitution of the 10th of August for the 1st. F. Pollock, for the plaintiffs stated to the jury, that the ship was cleared outwards on the 9 th of August, that the whole of her cargo and all her passengers were on board on the morning of the 10th, and that on the afternoon of that day she prepared to leave the port. She was then moored by two anchors. One of them was weighed, some of the sails set, and the ship proceeded about thirty fathoms, by heaving in that quantity of the cable of the remaining anchor. When they were about to heave that anchor, the captain observed a very heavy swell setting into the ba}-, and feared to take his departure lest he should be lost in getting out. Nothing more therefore was done until the morning of the 11th, when the ship actually left the port. She was lost on her way home. The learned counsel said, that the point arising on these circumstances was quite a new one; and the question was. Whether such a warranty meant more than that the ship should be in condition, and ready to sail if the weather permitted? It cannot be required that she should actually sail, to the imminent hazard of the ship and crew ; and the undei'writers would have had little reason to be satisfied, if she had sailed to fulfil the warranty, and had been lost in getting out of the harbor. The circumstances opened were then proved. Sir J. /Scarlett, for the defendant. Does not your Lordship think the case is over? Lord Tenterden, C. J. I think so ; there is no sailing here. The warranty means that the ship shall be on her voyage on the given day. If the circumstances proved amounted to a compliance with it, the ship might be detained by bad weather for a fortnight or more without un- 1 Other cases on warranty of nationality are Mayne v. "Walter, 3 Doug. 79 (1782) ; Tyson o. Gnrney, 3 T. R. 477 (1789) ; Wilson v. Backhouse, Peake, Add. Caa. 119 (1797) ; Rich v. Parker, 7 T. R. 705 (1798) ; Le Mesurier v. Vaughan, 6 East, 382 (1805); Mackie v. feasants, 2 Binn. 363 (1810) ; Lewis v. Thatcher, 15 Mass. 431 (1819). — Ed. 320 SAWYER V. coasters' mutual ins. CO. [chap. v. mooring ; and in that case the risk might be materially altered. The plaintiflF must be nonsuited. His Lordship then turned to the jurj-, which was special, and said, — " I hope, gentlemen, you agree with me ; " and several of them imme- diately expressed their concurrence. Nonsuit} F. Pollock and R. V. Richards, for the plaintiffs. Sir James /Scarlett and Maule, for the defendant. SAWYER V. COASTERS' MUTUAL INSURANCE COMPANY. Supreme Judicial Court of Massachusetts, 1856. 6 Gray, 221. Assumpsit on a policy of insurance dated October 19th, 1847, on the brig " Sussex," for one 3-ear from the 24th of September, 1847, at noon. The grounds of defence relied on were, 1st, A breach of the warranty contained in this clause on the face of the policj' : ' ' Said vessel not allowed to carry grain in bulk across the Atlantic ; " 2d, False repre- sentations of the plaintiffs agent at the time of effecting the policy. The case was submitted to the decision of the court upon the deposi- tion of the plaintiff's agent, and the following facts: The "Sussex" sailed from New York on the 21st of August, 1847, with grain in bulk, bound to Ballisidore in the district of the port of Sligo, Ireland ; and on the 24th and 25th of September, while passing the bar, and entering the harbor of Ballisidore, grounded and received the injuries to recover for which this action was brought. The plaintiff's agent testified that on the 17th of September, 1847, he applied to the defendants' president in Boston for insurance on the " Sussex " from New York to Ballisidore, with a cargo of grain in bulk ; but he refused to issue a policy on the brig with her cargo on board, but said he would take her when clean of her cargo ; and so things remained until the plaintiff's agent saw her arrival reported, when he renewed the application, the president asked him whether she had ar- rived safe and was clean of her cargo, and he replied that she had, and the policy was thereupon filled out. R. Ghoate S J. M. Bell, for the plaintiff. 1. The clause, " not allowed to carry grain in bulk across the Atlantic," being a warranty, is to be construed literally. 1 Arnould on Ins. 581. When the policy 1 Other cases, on complying with a warranty as to sailing on a certain day, are Bond u. Nutt, 2 Cowp. 601 (1777) ; Earle v. Harris, 1 Dong. 357 (1780) ; Ridsdale v. Newnhara, 3 M. & S. 456 (1815); Moir u. Eoyal Exchange Assurance Co., 6 Taunt. 241 (1815) ; s. c. 1 Marsh. 570; Lang v. Anderson, 3 B. &. C. 495 (1824) ; s. o. 3 I). & K. 393 ; Pittegrew v. Pringle, 3B. & Ad. 514 (1832) ; Graham v. Barras, 5 B. & Ad. 1011 (1834) ; s. c. 3 N. &M. 125 ; Cockrane v. Fisher, 1 C, M. & R. 809 (Ex. Ch. 1835) ; s. C. sub nom. Eisher v. Cochran, 5 Tyr. 496. — Ed. SECT. I.] SAWTEE r. COASTEES' MUTUAL INS. CO. 321 took eflfect, tbe vessel was entering the harbor, having almost finished her voyage, and did not afterwards cross the Atlantic with grain in bulk. 2. The representation that the vessel had arrived was substantiall}' complied with, for she had entered the harbor ; and as it does not appear that it was known to be false, or that the risk was increased after arriving at the bar bj' the cargo of grain in bulk, or that the defendants would have refused the risk because the vessel had not cast anchor, the plaintiff is entitled to recover. 1 Arnould on Ins. 492, 520, 522, 523. C. W. Loring, for the defendants. 1. On the 24:th of September, 1847, the vessel was carrying grain in bulk on a voyage across the Atlantic, which had not j'et terminated, as she had not arrived at the' wharf. Taber v. Nye, 12 Pick. 1C5. Meigs v. Mutual Marine Ins. Co. 2 Cush. 439. The warranty on the face of the polic}' was broken by carrj'ing grain in bulk anj- part of a voj'age across the Atlantic. 1 Arnould on Ins. 581. 2. The misrepresentation of the plaintiff's agent, that the vessel had arrived safe and was clean of her cargo, avoided the polic}-. Bryant V. Ocean Ins. Co. 22 Pick. 203. 1 Arnould on Ins. 495. Fitzherbert V. Mather, 1 T. R. 12. Kemble v. Bowne, 2 Caines, 75. Macdowall v. Fraser, 1 Doug. 260. Metcalf, J. The misrepresentation of the condition of the vessel at the commencement of the risk avoids this policj'. She was represented as having safely arrived at Ballisidore, and having been clean of her cargo of grain in bulk, on the 24th of September, 1847. On that daj-, neither of these alleged facts existed. The defendants were led into error by this representation, and computed the risk on false grounds. And whenever this happens it is immaterial, as to the underwriters' liabilit}', whether the representation be made bj* the assured or by his agent, and whether it be intentionally false or false from mere mistake and misapprehension of facts. 3 Kent Com. (6th ed.) 282. Hughes on Ins. 347. 1 Phil. Ins. § 537. Bryant v. Ocean Ins. Co. 22 Pick. 203. In the present case, it is not suggested that the misrepresenta- tion was made designedlj*. And we need not express an opinion upon a point about which writers differ, namely, whether in such a case the policy is avoided on the ground of constructive or legal fraud, or on the ground that a positive representation as to a material fact is as essentially a part of the contract as a warranty is, and that its sub- stantial truth is as much a condition precedent to the insurer's liabilitj' as is the literal truth of a warrant}-. It is sufiBcient for this case that the policy is avoided by misrepresentation. We are also of opinion that the defendants' other ground of defence is well taken, that the policj' does not insure the vessel, if laden with grain in bulk, on a voj-age across the Atlantic. At the time of the loss for which this action is brought, the vessel was carrying grain in bulk on such a voyage. Plaintiff nonsuit, 21 322 COGSWELL V. CHUBB AND MYEKS. [CHAP. V. COGSWELL, Appellant, v. CHUBB and MYERS, Eespondents. Appellate Division, Supreme Coukt of New York, First Depart- ment, 1896. 1 N. Y. App. Div. 93. Appeal by the plaintiflf, William B. Cogswell, from a judgment of the Superior Court of the city of New York in favor of the defendants, entered in the office of the clerk of said court on the 18th da}' of May, 1895, upon the verdict of a jur}- rendered by direction of the court, and also from an order entered in the office of the clerk of said court on the 20th day of Maj', 1895, denying the plaintiff's motion for a new trial made upon the minutes. Moerett P. Wheeler, for the appellant. J. Ziungdon Ward, for the respondents. Patterson, J. The defendants in this action were underwriters on a policy of marine insurance on the steam j-acht " Fieseen," the prop- erty of the plaintiff. The insurance for the term of one year, begin- ning April 10, 1893, was for $21,000, at which sum the vessel was valued, and these defendants were hy the terms of the policy to paj' the one one-hundredth part of any loss or damage occasioned by any of the perils insured against. On the 9th of September, 1893, while in the lower New York bay and under way and in tow of another yacht, she came into collision with a steamship and was damaged to the ex- tent of about $16,000, and this action was brought to recover the one- hundredth part thereof. The trial resulted in a direction to the jurj' to find a verdict for the defendants, from the judgment entered upon which, and from an order denying a motion for a new trial, the plaintiff has appealed. A stipulation of the policy, written in between printed portions thereof, is in the following words: " Warranted to navigate only the inland waters of the United States and Canada, and not below the Thousand Islands." It appears in the record that on the 9th day of September, 1893, the " Fieseen," before the collision referred to, went out upon the high seas, beyond the Sandy Hook and Scotland lightships, and into the open waters of the Atlantic Ocean ; and that fact is set up as a breach of warrant}', avoiding the policy and pi'eventing a recovery thereon. There does not appear to be any doubt on the evidence that the ves- sel, on the ninth of September, had been on the open ocean, at least ten miles off from the Sandj- Hook lighthouse, to the southward and eastward, as testified by Captain Wicks of the " Electra," and she was south and southeast of the Scotland light. Captain Pressey of the "Vamoose" says the " Fieseen" raced with the boat commanded by him that day, and that the race began about two miles to the south and east of the Scotland light, and they ran about eighteen miles in vary- ing courses. The witness Bulin says the "Fieseen" ran about ten SECT. I.] COGSWELL V. CHUBB AND MYEKS. 323 miles east from the Scotland lightship. Mr. Stanwood swears she went about twelve miles east-northeast directlj- from Sandy Hook. The effect of the whole evidence is that the vessel went out of inland waters. Such waters are canals, lakes, streams, rivers, watercourses, inlets, bays, etc., and arms of the sea between projections of land. That ordinary and accepted signification of the words " inland waters" must be considered the sense in which the parties used them in their con- tract of insurance, unless hy agreement or understanding some other was assigned to them ; and there is notliing in the record to show that a different or wider meaning was intended to be given them. Going to the open ocean and then returning was a plain breach of the warranty, the consequence of which was to avoid the policj-, for, hard as the artificial rule ma}' be, it is too firmly settled to be questioned that the breach of an express warrant}', whether material to the risk or not, whether a loss happens through the breach or not, absolutel}' determines the policy and the assured forfeits his rights under it. (Chase v. Hamilton Ins. Co., 20 N. Y. 52; Stevens v. Commercial Mutual Ins. Co., 26 id. 397 ; Day v. Orient Mutual Ins. Co., 1 Daly, 13 ; Westfall v. Hudson River F. Ins. Co., 2 Duer, 490 ; 1 Phillips on Ins. 418, f 762.) It is claimed, however, on the part of the appellant, that the words " inland waters," as used in the policj", are not limited to their ordinary signification, but that a usage existed respecting the waters frequented b}" yachts, such as the " Fieseen," in view of which usage the policy was ■written, and that the warranty should be construed by that usage, and a broader meaning applied to the words, one that would include in the category of inland waters the roadstead outside of Sandy Hook and as far as the yacht went out upon the sea on the ninth of September. Evidence of usage to explain, or rather to give effect to, the meaning of the policy, is very commonl}' resorted to in cases of this character ; and as said by Mr. Phillips (1 Phillips on Ins. 73, f 119) : "The subject-matter of marine insurance and other written mercantile con- tracts makes it necessary to go out of the written instruments in order to interpret them, more frequently than in most other contracts." But before usage can be appealed to, there must be proof that there really is a usage ; something existing, and in connection with which the underwriter is assumed to have taken the risk. All that is in evidence on the subject is, that it is customar}' for manj' yachts and other craft of large and small dimensions, whenever an international 3'acht race takes place, to accompany the competing boats over an ocean course. This scarcely establishes a usage of the character to qualify an express warrant}'. International yacht races are of infre- quent occurrence. That yachts covered by insurance go upon the ocean to follow them does not appear. This policy was written April 11, 1893. It is not shown that an international yacht race was in con- templation for the year during which the policy was to run. Attending the yacht race at Newport, and the custom of yachts to assemble at 324 COGSWELL V. CHUBB AND MYEES. [CHAP. T. that port in the summer for the squadron races, does not establish a usage for the same reasons. All of this testimony is insuflScient to prove that the parties contracted for anj-thing other than what is ex- pressed in the plain and accepted meaning of the words of the warranty. The further contention is made that, the loss happening after the polic}' attached, and the breach of the warranty in no wise producing or contributing to the loss, but it being occasioned by independent causes, the plaintiff maj' recover, notwithstanding the breach. The learned counsel for the plaintiff admits that the Euglish authorities are against this view, as thej' ver3- decidedly are. The American cases of breaches of implied warranties of seaworthiness cited on the argument and in the appellant's brief do not establish a contrary rule affecting the express warranty contained in this policj'. We fail to see the pertinency of the argument made respecting lights carried by certain vessels, under the requirements of the navigation laws of the United States. That steamers plying between New York and Newport, and New York and Long Branch, and New York and Coney Island, carry the lights prescribed for vessels navigating inland waters in addition to those of ocean-going steamers is doubtless true ; but they are the same lights required of coastwise steamers ; and those plying between the places mentioned may be, and probably are, classed as such. The judgment and order appealed from must be affirmed, with costs. Van Bkoxt, P. J.jBaerett, Williams, and O'Brien, JJ., concurred. Judgment and order affirmed with costs} 1 In Philips V. Baillie, 3 Doug. 374, 378 (1784), Lord Mansfield, C. J., for the court, said : " The doctrine of warranty and representation applies only to policies, and confounds any other subject." In Behn v. Burness, 3 B. &. S. 751, 753 (Ex. Ch. 1863), Williams, J., for thecourt, said ; " The question in this case is, whether the statement in the charter-party, that the ship is ' now in the port of Amsterdam,' is a ' representation ' or a ' warranty,' using the latter word as synonymous with ' condition ; ' in which sense it has been for many years understood with respect to policies of insurance ^nd charter-parties." On the topic of this section, see also : — MuUer v. Thompson, 2 Camp. 610 (1811) ; Colby V. Hunter, Moo. & M. 81 (1827) ; s. c. 3 C. & P. 7 ; St. Louis Ins. Co. v. Glasgow, 8 Mo. 713 (1844) ; Grant v. Mtna. Ins. Co., 15 Moo. P. C. 516 (1862) ; s. c. 12 Lower Canada, 386; Grant v. Equitable P. Ins. Co., 14 Lower Canada, 493 (1864) ; Birrell v. Dryer, 7 App. Cas. 345 (1884) ; Eoddick v. ]idemnity Mutual Marine Ins. Co., '95, 2 Q. B. 380 (C. A.) ; General Ins. Co. v. Cory, '97, 1 Q. B. 335 (Commercial Court, 1896). — Ed. SECT. II.] NEWCASTLE FIEE INS. CO. V. MACMOERAN &, CO. 325 SECTION II. Fire Insurance. NEWCASTLE FIEE INS. CO., Appellants, v. MACMOREAN & CO., Eespondents. I House of Lords, 1815. 3 Dow, 255. Appeal from the Court of Session of Scotland, Second Division. Macmorran & Co., cotton and wool spinners, at Garschew, insured their premises with the Newcastle-upon-Tyne Fire Insurance Com- pany. The policy was dated April 16, 1805, and contained a re- ceipt for the premium, which was accounted for to the company by Hamilton, their agent at Glasgow, through whom the insurance had been effected. The policy was retained by Hamilton till Sept. 5, 1805, when it was delivered to the insured upon their paying the premium. The policy referred to certain printed proposals, a copy of which was, according to the practice of the office, always delivered to the person transacting the insurance, in which proposals it was stated that, where the persons insuring gave a description of the subject in order to its being insured at a lower premium, and that where there should be fraud or false swearing in stating the amount of the loss, the policy was to be of no force. Certain classes of buildings were likewise specified, according to the particulars of which the premium was to be lower or higher, and the premises in question were warranted to be of the first class, for which the lower premium only was charged. On December 7, 1805, the mill was burnt, and the insurers refusing to pay the sum claimed for the loss, the insured brought an action, regularly preceded by an arrestment ad Fund. Jur. before the Court of Session, conclud- ing for payment of £1647, and interest from December 7, 1805. A con- descendance having been ordered, the insurers stated two charges as the ground of their refusal to pay : first, that there was fraud and false swearing as to the amount of the loss ; second, that the fire was inten- tional. Upon proof it appeared that there was no foundation for this latter charge ; but it also appeared that, at the time of the date of the policy, the premises were of the second class, contrary to the warrant}'. In answer to this it was alleged that Hamilton, the agent of the New- castle Companj', had taken it for granted that the premises were of the first class, and made out the policy accordingly, without any represen- tation on the part of the insured, and that before the policy was deliv- ered, and the loss happened, the premises had been altered so as to bring them within the first class. It did not appear very distinctly in proof how the demand of £1647 was made up. The court below decerned 326 NEWCASTLE FIEE INS. CO. V. MACMOERAN & CO. [CHAP. V. against the insurers in terms of the libel, and from this decision the Newcastle Companj' appealed. Momilly and Richardson, for appellants. ParTc and Brougham, for respondents. July 8, 1815. Lord Eldon, C. This is an appeal by the Newcastle- upon-Tyne Fire Insurance Company, from a judgment of the Court of Session by which they were held liable in the payment of a sum of £1647 upon a policy of insurance, and the question is whether this judgment was right or not. The summons, which is in the nature of our declaration, stated that the Newcastle Company were indebted to the pursuers in a sum of £1647, in terms of a policy dated April 16, 1805 (your Lordships will note the date), aud concluded for payment accordingly. The policj' itself was in these terms : " Whereas Mr. Hugh M'Mor- ran and Co., &c. have paid the sum of £21 5s. Sd". to the societj- of the Newcastle-upon-Tyne Fire Office ; and do agree to pay or cause to be paid to the said society, at their office in Newcastle-upon-Tyne, the sum of £17 17s. on the 24th day of June, 1806, and the like sum of £17 17s. yearly on the 24th day of June, during the continuance of this policy, as a premium for the insurance from loss or damage bj- fire, of £50 on millwright's work, including all the standing and going gear in their mill, which is used as a cotton and woollen mill, situated at Gar- schew as aforesaid, being in their own occupation only, and stone built and slated ; £550 on clockmakers' work, carding and breaking engines, and all movable utensils in the second floor, occupied as a cotton mill ; £160 on stock of cotton in the same ; £600 on clockmakers' work, carding and breaking engines, and all movable utensils in the first floor, occupied as a woollen mill ; and £350 on stock of wool in the same ; " then followed this very material passage, " warranted that the above mill is conformable to the first class of cotton and woollen rates delivered herewith." The materiality of it consisted in this (though in one view whether it was material or not did not signify, if it was a condition precedent), that if it was of the second class, and not of the first, a larger premium ought to have been given. And then it goes on : " Now know all men by these presents, that from the day of the date hereof, until the said 24th da.v of June, 1806, and so from year to year so long as the said Hugh M'Morran and Co. shall duly paj-, &c., the sum of £17 17s., &c., and the same shall be accepted by the trustees or acting members of the said society for the time being, the stock and fund of the said society shall be subject and liable to pay, &c., all such damage and loss as the said Hugh M'Morran and Co. shall suffer by fire, not exceeding the sum of £1700, &c." And then followed at the bottom an entry of receipt of the government duty of £2, from April 16, 1805, up to June 24, 1806. Their Lordships would observe the materiality of that, as this instrument could never have been produced in court, if it were only on account of the revenue, save as a policy of April 16, 1805, on SECT. II.] NEWCASTLE FIRE INS. CO. V. MACMOREAN & CO. 327 which as a policy so dated the demand could have been made. But whether that was so or not, the demand was made on this policj'. On June 24, 1806, the premium must again be paid, and the dutj- to gov- ernment, and whether the demand was on the policy originallj' entered into, or on the renewed policy, it must be on a policy liable to such a duty, and of this date. In the appellants' case it is stated that the printed proposals formed part of the contract, and that, besides being referred to, a copy is always delivered to the party insuring ; and that it is there set out, among other things, that if any "person or persons shall insure his, her, or their houses, mills, &c., and shall cause the same to be described in the policy otherwise than as they really are, so as the same shall be insured at a lower premium than proposed in the table, such insurance shall be of no force." As to their so setting it out in their printed proposals, in the case of a warranty, it is unnecessary to consider that ; for if there is a warranty, the person warranting undertakes that the matter is such as he represents it ; and unless it be so, whether it arises from fraud, mistake, negligence of an agent, or otherwise, then the contract is not entered into ; there is in reality no contract. Then they further state that, by another article of these proposals, it is provided " that all persons insured by this society sustaining any loss or damage by fire, are forthwith to give notice thereof at their office in Newcastle, and as soon as possible after to deliver in as par- ticular an account of their loss or damage as the nature of the case will admit, and make proof of the same, by their oath or affirmation, accord- ing to the form practised in the said office, and by their books of accounts, or other proper vouchers, as shall be reasonably required." That they shall also procure a certificate, under the hands of the minis- ter, &c., and others, relative to the cause of the loss ; " and until such affidavit and certificate shall be made and produced, the loss-money shall not be paj-able ; and if there appear any fraud or false-swearing, such sufferers shall be excluded from all benefit by their policies." They further represent that in the second set of proposals for the insurance of cotton mills, &c., certain classes of buildings were speci- fied, according to the particulars of which the premium is at a lower or higher rate. Thus, class 1 comprehends " buildings of brick or stone, and covered with slate, tile, or metal, having stoves fixed in arches of brick or stone on the lower floors, with upright metal pipes carried to the whole height of the building, through brick flues or chimnej-s, or having common grates, or close or open metal stoves or coakles, standing at a distance of not more than one foot from the wall, on brick or stone hearths, sur- rounded with fixed fenders," I request your Lordships' particular atten- tion to the following words, " and not having more than two feet of pipe leading therefrom into the chimney, and in which, or in any build- ing adjoining thereto, although not communicating therewith, no dry- ing stove or singeing frame shall be placed." 328 NEWCASTLE TIKE INS. CO. V. MAGMORKAN & CO. [CHAP. V, Class 2 comprehends "buildings of brick or stone, and covered with slate, tile, or metal, which contain any singeing frame, or any stove or stoves, having metal pipes or flues, more than two feet in length, and in which, or in any building adjoining thereto, although not communi- cating therewith, no drying stove shall be placed." As I understand this, verj' possibly misunderstand it, but it is of no consequence in my view of the case whether I do so or not ; but as I understand it, the reason for requiring a higher premium for mills of the second class is that the greater length of the pipe increases the danger. If the pipe of the stove is a yard in length, for instance, the difference arises from this, that if the pipes be more than two feet, the danger is increased beyond what belongs to pipes of that length. But it is immaterial whether I misunderstand this or not ; for if the mill was warranted as being of the first class, it must be such as it is warranted to be, unless there is something to oust the warranty, other- wise there is no contract. Then this mill was burnt ; and, as generally happens in these cases, the insured were very anxious to get their money, and the others were not very ready to pay. An action was then brouglit to compel paj'- ment, to which defences were given in. As to that defence which was the most unwelcome to hear, viz., that the premises have been wilfully set on fire, it appeared that there was no ground for it ; and the Court of Session seem to have thought that there was no ground for the imputation of fraud and overvalue. It is not likely at any rate that the articles were undercharged ; and it was extremely difficult to make out a case of overvalue where the books and papers were all destroyed, and when the amount of these improvements, and the value of spinning- jennies, and such articles, were to be calculated. But though one can- not help believing that enough was charged, j-et it might be dangerous to say under the circumstances that that defence ought to -be sus- tained. But there was another very material point of defence stated, that this mill, which was warranted as being of the first class with a pipe of two feet, was in reality of the second class ; and that being of the second class, whether there was fraud or not, whether the misstatement on the part of the insured arose from fraud, or from mere error or inattention, or the mistake of an agent (unless they were misled by the agent of the Newcastle Company), or from whatever other cause, the contract never had effect. Then evidence was gone into as to whether the mill was of the first or second class. The Court of Session seems to have thought it im- material whether it was or not. But if the mill was warranted as of the first class, and was really of the second class, the judgment of the court below was clearly erroneous ; for it is a first principle in the law of insurance, on all occasions, that where a representation is material it must be complied with — if immaterial, that immateriality may be inquired into and shown ; but that if there is a warranty, it is part of SECT. II.] NEWCASTLE FIEE INS. CO. V. MACMOEEAN & CO. 329 the contract that the matter is such as it is represented to be. There- fore the materialitj- or immaterialitj- signifies nothing. The only ques- tion is as to the mere fact. It is proposed then that the matter should stand over for a day or two in order to examine the case again for the purpose of further inquiry as to that fact ; but my present impression is tiiat the mill was not such as it was warranted to be, and that there- fore all consideration of fraud or overvalue is out of the question, un- less it can be effectually answered that the insured were misled by the insurers, or their agent. Then they say that the misrepresentation was owing to the agent of the Newcastle Fire Company. I cannot saj', however, that they have made out that point, and it is denied on the other side, and may therefore be laid out of the question. Then they say further that there was no effectual policy till the premium was paid, and refer to the terms of the 4th article of the printed proposals, which declares "that no insurance is considered by this office to take place till the premium be actually paid b}' the insured, his, her, or their agent, or agents." The premium, they say, was not paid till a considerable time after the date of the policj', that the alter- ation was made which brought this mill within the description of the first class of mills before the premium was paid, and that the alteration had been communicated to the agent of the company. The company deny that any such communication was made, and even if it had been made it would have been still necessary to consider how far that cir- cumstance could alter the law as applicable to the case. But as the fact was denied, and there was no proof of it, that point may be con- sidered as out of the question. With respect to the effect of the article referred to, the appellants contend that it did not relate to the first policy, but to the renewals of policies. But in the present case it is not necessary to consider whether it related to the first policj' or any renewals of it, as they say that as between the respondents and them the premium had in point of fact been paid before the alteration took place, as the Scotch agent had accounted for it to his constituents, the Newcastle Company, before the period of the alteration, and it had therefore become a personal debt due to him from the Scotch Compan3\ That may be considered as an answer to the argument raised upon that ground. But suppose that were entirely out of the question, we must in this case as in all others proceed secundum allegata et probata, ac- cording to what is alleged and proved. If they could succeed at all on this summons, it must be on a policy or contract dated April 16, 1805, and when they have founded upon that only, they cannot afterwards in that action turn round and say, though we cannot succeed on that policy, we are entitled to recover on a subsequent contract. See how the contract would be varied. This was a bilateral contract of the date of April 16, 1805, from which period to June 24, 1806, the premium was acknowledged to have been paid ; and it was agreed that a certain premium should continue to be paid on June 24, de anno in annum. Can your Lordships convert that into a transaction commencing not in April, but in September, 1805 ? 330 NEWCASTLE FIKE INS. CO. V. MACMOKEAN y the certifi- cate of division. The insurers having put no question as to the nature or the amount of encumbrances, otherwise than by mortgage, can- not object that no information was given upon that subject. Phoenix Ins. Co. V. Eaddin, 120 U. S. 183. There was, therefore, no breach of warranty in not disclosing the lien for unpaid taxes, independently of the question whether such a lien was an encumbrance, within the mean- ing of this contract ; and this case does not require a decision of that question. As to smoking, the only question put in the application, and answered in the negative, is whether smoking is " allowed on the premises," — which looks only to the rule established upon the subject at the time of the application, and not to the question whether that rule may be kept or broken in the future. This appears by the language of the question, as well as by the circumstance that it is not, as other interrogatories as to existing precautions against fire are, followed up by compelling the assured to agree that they will continue to observe the same precau- tions. The jury having found that the assured forbade smoking in the 1 A passage foreign to warranty has been omitted. — Ed. 384 BAENAED V. FABEE. [CHAP. V. mill, the mere fact that other persons, or even one of the assured, did afterwards smoke there, was not sufllcient to avoid the polic}'. The two cases, cited by the defendants from the Illinois Reports, contain no adjudication to the contrary. The point decided in each was that smoking by workmen in the mill did not avoid the policy, and the remark of the judge delivering the opinion, that in such a case the assured undertakes that he will not himself do the act, was obiter dictum. Ins. Co. of North America v. McDowell, 50 Illinois, 120, 131 ; Aurora Ins. Co. v. Eddy, 55 Illinois, 213, 219. Judgment reversed, and case remanded to the Circuit Court, with directions to render judgment for the plaintiff s upon the special verdict.^ BARNARD v. FABER. Court of Appeal, 1892. '93, 1 Q. B. 340, Action upon a policy of insurance against flre. At the trial before "Wright, J., without a jury, it appeared that the plaintiff, having insured against loss or damage by flre the furniture and other eflfects in Barnard's Palace of Varieties and the Bell Tavern, Portsmouth, with the Union Assurance Society for sums amounting to £800, and with the Glasgow and London Insurance Company, Limited, for sums amounting to £700, effected a Lloyd's flre policy thereon for £1000 at 25s. per cent premium. The policy covered the whole of the furniture and effects as one interest, and contained the following clause : " Warranted to be on same rate, terms, and identical interest as Union Insurance Company £800, and Glasgow and London £700, and to fol- low their settlements. The North British and Mercantile have £2500, and London and Lancashire £2000 on building and fixtures." The policy was subscribed by the defendant and other underwriters. The property described in the policy having been destro3'ed or damaged by fire to the amount of £1500, the plaintiff brought this action against the defendant for payment of his proportion of the loss. The substantial defence to the action was that there had been a breach of the warranty in the Lloyd's policy, more especially with re- gard to the policy of the Union Company, inasmuch as the rate, terms, and interest in that policy were not "identical" with those in the Lloyd's policy, the rate or premium in the Union policy being Sis. 6c?. instead of 25s., and the "interest" insured being difl'erent, the sum insured by the Union policy being split up into separate sums on sepa- 1 Compare Glendale Woolen Co. v. Protection Ins. Co., 21 Conn. 19 (1851 ). See Gilliat v. Pawtucket Mntnal F. Ins. Co., 8 E. I. 282, 293-294 (1866) ; Aurora Fire Ins. Co. t<. Eddy, 55 DL 213 (1870). — Ed. SECT. II.J BARNARD V. FABER. 385 rate " interests," or, in other words, upon separate sets of chattels ; the wording of the policies being also different. The learned judge directed judgment to be entered for the plaintiff. The defendant appealed. 1892. Dec. 10. Finlay, Q. C, and T. W. Chitty, for the defendant. The expression " warranted " in the policj* subscribed by the defendant had the effect of making the clause in which it occurred a condition precedent to the existence of any obligation on the defendant's part ; and there was a breach of such condition which avoided the policy. [They cited Behn v. Burness, 3 B. & S. 751 ; Thomson v. Weems, 9 App. Cas. 671 ; Sillem v. Thornton, 3 E. & B. 868 ; Anderson v. Fitz- gerald, 4 H. L. C. 4:84 ; Newcastle, &c. Co. v. Macmorran, 3 Dow. 255, at p. 262.] Cohen, Q. C, and Wood HiM, for the plaintiff. The expression " warranted" had no greater effect than that of making the clause a collateral stipulation, the non-performance of which did not avoid the policy, but onlj- added something not necessarilj' involved in the con- tract itself, and gave rise to a right of action, counter-claim, set-off, or reduction in the amount payable. LiNDLET, L. J. I cannot agree with the view taken by the learned judge' of the construction of this document. The real question is, what is the object of the insertion of this clause of warranty ? The policj' is a fire policy on certain property at 25s. per cent. It is sub- scribed by the defendant and other underwriters, and we find this clause in it : "Warranted to be on same rate, terms, and identical interest as Union Insurance Company £800, and Glasgow and London £700, and to follow their settlements." Then two other companies have in- sured the buildings and fixtures. This is not a policy on buildings and fixtures, as I understand it. It appears to me that the clause can have onl3' one object, and that is this : "We will insure provided we are satisfied that the Union and the Glasgow have insured at the same rate, the same terms, and the same interest." I do not profess to understand what the word " terms " means : I suppose it means terms as to risk ; it cannot mean terms which are immaterial for the purpose of the contract. It seems to me that what was contemplated was the risk. What, I appre- hend, the underwriters mean is this : " Satisfy us that these two offices have insured the same risk, the same interest, at the same rate, and we will effect this insurance." I cannot myself think that the term "warranted" is important; for I should construe this policy in pre- cisely the same waj' whether the word was in or not. I do not think the policy is made plainer by the introduction of that word. I look upon part of the clause as a condition precedent. The insurance is " to be on the same rate, terms, and interest " as the two companies which are named. I regard that part as a condition precedent to the incurring of any liability at all. The remainder of the clause is a con- dition subsequent. 25 386 BAKNAEB V. FABEE. [CHAP. V. Now, unless the clause is so read, in what position would the under- writers find themselves ? They would then find that they had come under an obligation, and that they were thrown back upon a cross- action against the insured. Did either the plaintiff or the underwriters mean that? Was that the object of inserting such a clause? When you have a clause which is consistent with the ordinary habits of men if 3'ou interpret it one way, and which is utterly inconsistent with their ordinary habits if you interpret it another, I prefer the former inter- pretation, that is, supposing the language admits of a double inter- pretation. I cannot help thinking that the more one looks at this document, the more plainly it appears that the bargain entered into by the underwriters was this : " We will not insure except upon the terms that these two companies have done — upon the same rate, upon the same terms, whatever they may be, and on the same interest." I think, therefore, that the learned judge has arrived at a wrong decision, and that the defendant's contention is right. Judgment must, there- fore, be entered for the defendant, with costs both here and below. BowEN, L. J. I am entirely of the same opinion, and I confess that the matter appears to me to be quite clear. I do not mean to say that the words of this clause of warrantj' are happily chosen, but I think the true meaning of the clause is really transparent. The object of this clause is to have other companies or underwriters in the same boat as regards the particular interest and the risk to be covered ; and the clause is one which is intended unquestionably for the protection of the underwriters. When you have arrived at that, it seems to me j-ou have arrived at half the journey's end, because there can be no adequate protection to underwriters if you relegate them to a cross-action. The clause is intended to protect them against having to pay, not to give them a right to bring an action against the man insuring with them. But the way in which the clause is inserted seems to me to lead to precisely the same conclusion, and to guide one to the same end. The policy is one which, of course, is signed by the underwriters ; it is not signed by the person who is insuring with them ; and it is expressed in this way: "Warranted to be on same rate, terms, and identical interest as " the two other companies. Now, the words " warranted to be " must mean " guaranteed to be," or " promised to be ; " and this document, signed as it is by the underwriters, must mean : " It is a term of our promise that there shall be a guarantee or promise of the other side " ; and the guarantee or promise of the other side is then expressed. There are to be the same rate, the same terms, the identi- cal interest, as in the case of the two other companies. It is, therefore, a term of this policy that there should be this promise ; and if this promise is one which goes to the root of the whole engagement and transaction, then it becomes, according to the ordinary principles of ordinary law, a condition, — either a condition precedent, or, if the condition is one which cannot be construed as a condition precedent and must be a condition subsequent, then it becomes a condition sub- SECT. II.] BAENAED V. FABER. 387 sequent. That arises from the materiality of the promise which is as- sumed to be made, and the maliing of which is to be a term of the engagement or transaction into wliich the underwriter has entered. When' you have got as far as that, it is clear that it is the term as re- gards the risk which is material. A term as regards the risk must be a condition. Then let us look at what the particular words are — the " same rate and identical interest." The " same rate and identical interest " are, obviously, words so material to the transaction that we can only construe them as creating a condition precedent. With regard to the word " terms," it is not necessary' for us to decide, or to explain exactly what it means. I do not myself doubt that there is a limitation which can be put upon it — a limitation to be derived from the char- acter of the document, from the nature of the transaction, and from the nature of the stipulation itself, which reduces within defined and reason- able limits that which otherwise might be vague, impracticable, and illimitable. But when you regard the words which alone we have to look at for the purposes of this appeal, the " same rate and identical interest " as the insurance companies, I do not doubt for a moment that it is a condition without which the contract is not to be binding. D With regard to the words " to follow their settlements," that is a condition subsequent, as my brother has said. The true construction of the document is, in my opinion, that which I have stated ; and the opposite view is one which, to mj' mind, never could be adopted in business, for this reason, that I do not believe that there is an underwriter in the world of any substantial position who would put his hand to a policj- in which a term directl3- affecting the risk was to be enforced only by a cross-action brought on the part of the underwriter against the insured after the loss. The point turns on the materialitj' of this promise. It is because the promise is so material to the consideration of the risk that it seems to me to become a condition. A. L. Smith, L.J. I am of the same opinion, and have but little to add. My brother Wright evidently had considerable difficulties and doubts upon the point, and I think the decision at which he eventually arrived was wrong. The question is — whether this clause contains a promise which goes to the root of the transaction, or whether it is merely a collateral stipulation the non-performance of which did not avoid tlie defendant's obligation, but only gave him a cause of action. We must look to the business of the matter in construing this clause, and I quite agree with what has fallen from Lindley, L. J., that it is immaterial whether the word "warranted" is in the clause or not. For the purposes of my judgment I strike that word out. The question is, what is the promise? Now, to state it as shortly as I can, in my judgment there is an agree- ment in this policy between the underwriter and the assured that the underwriter shall insure provided that only the same risk which the other two offices have undertaken is placed upon him — the reason be- 388 BAKNARD V. FABEE. [CHAP. V. ing that he knows those offices, and the risk they have undertaken he is content to abide by. If, however, the other two offices have not undertaken the same risk as that underwritten by the defendant, then, it being a condition of this policy that those two offices shoulct have undertaken the same risk, there is no liability on the part of the under- writer if this is not so. I am of opinion that this clause constitutes a condition and not a collateral agreement, and that the defence is a good one. Appeal allowed.^ 1 On the topic of this section, see also : — Mayall v. Mitford, 6 Ad. & E. 670 (1837) ; Gates V. Madison County Mutual Ins. Co., 2 N. Y. 43 (1848) ; B. c. at a later stage, 5N. T. 469 (1851); Wilson V. Herkimer County Mutual Ins. Co., 6 N. Y. 53 (1851) ; Daniels v. Hudson River F. Ins. Co., 12 Cush. 416 (1853) ; Washington Mutual Ins. Co. v. Merchants and Manufacturers' Mutual Ins. Co., 5 Ohio St. 450 (1856); Ripley v. JEtna Ins. Co., 30 N. Y. 136 (1864) ; Carter v. Humboldt F. Ins. Co., 17 Iowa, 456 (1864) ; Poor 1). Humboldt Ins. Co., 125 Mass. 274 (1878) ; Wheeler v. Watertown F. Ins. Co., 131 Mass. 1 (1881) ; Martin v. State Ins. Co., 44 N. J. L. 485, 490-495 (1882) ; Bennett v. Agricultural Ins. Co., 51 Conn. 504 (1884); Kankin v. Amazon Ins. Co., 89 Cal. 203 (1891) ; Virginia F. & M. Ins. Co. v. Morgan, 90 Va. 290 (1893) ; King Brick Mfg. Co. v. Phoenix Ins. Co., 164 Mass. 291 (1895) ; Southern Ins. Co. v. Parker, 61 Ark. 207 (1895). Goldman v. North British Mercantile Ins. Co., 48 La. Ann. 223 (1896). — Ed. SECT. III.J KOSS V. BKADSHAW. 389 SECTION III. Ziife Insurance.^ ROSS V. BRADSHAW. Nisi Pkids, 1761. 2 Park Ins. (8th ed.) 933.^ In an action on a policy made on the life of Sir James Ross for one year from October, 1759, to October, 1760, warranted in good health at the time of making the policy ; the fact was, that Sir James had received a wound at the battle of La Feldt, in the j-ear 1747, in his loins, which had occasioned a partial relaxation or pais}', so that he could not retain his urine ov faeces, and which was not mentioned to the in- surer. Sir James died of a malignant fever within the time of the insurance. All the physicians and surgeons, who were examined for the plaintiff, swore that the wound had no sort of connection with the fever ; and that the want of retention was not a disorder, which short- ened life, but he might, notwithstanding that, have lived to the common age of man ; and the surgeons who opened him said that his intestines were all sound. There was one physician examined for the defendant, who said the want of retention was paralj'tic ; but being asked to ex- plain, he said it was only a local palsy, arising from the wound, but did not affect life ; but on the whole he did not look upon him as a good life. Lord Mansfield. The question of fraud cannot exist in this case. When a man makes insurance upon a life generally, without anj' rep- resentation of the state of the life insured, the insurer takes all the risk, unless there was some fraud in the person insuring, either by his sup- pressing some circumstances, which he knew, or by alleging what was false. But if the person insuring knew no more than the insurer, the latter takes the risk. In this case there is a warranty, and wherever that is the case it must at all events be proved, that the party was a good life, which makes the question on a warranty much larger than that on fraud. Here it is proved that there was no representation at all as to the state of life, nor any question asked about it, nor was it necessarj'. Where an insurance is upon a representation, every mate- rial circumstance should be mentioned, such as age, way of life, &c. But where there is a warranty, then nothing need be told ; but it must in general be proved, if litigated, that the life was, in fact, a good one, 1 In addition to warranties properly so called, here have been placed conditions expressly avoiding the contract because of misstatements in the application. — Ed. 2 s. c. 1 W. Bl. 312. — Ed. 390 WILLIS V. POOLE. [chap. V. and so it may he, though we have a particular infirmity. The only question is, ' ' Whether he was in a reasonable good state of health, and such a life as ought to be insured on common terms ? " The Jury, upon this direction, without going out of court, found a verdict for the plaintiff. WILLIS V. POOLE. Nisi Peius, 1780. 2 Park Ins. (8th ed.) 934. It was an action on a policy on the life of Sir Simeon Stuart, Bart., from the Ist of April, 1779, to the 1st of April, 1780, and during the life of Eliza Edgly Ewer. This policy contained a warranty that Sir Simeon was about fift^'-seven j'ears of age, and in good health on the 11th of May, 1779, and that Mrs. Ewer was about seventy-eight years of age. The defendant at the trial admitted, that Sir Simeon and Mrs. Ewer were of the respective ages mentioned in the warranty ; that he died before the 1st of April, 1780, and that she was living. Two questions were intended to have been made : 1st, As to the plaintiffs interest ; 2nd, On the warrant}- of health. The former was disposed of by the plaintiff having proved a judgment debt. As to the latter it appeared in evidence, that although Sir Simeon was troubled with spasms and cramps from violent fits of the gout, he was in as good health, when the policy was underwritten, as he had been for a long time before. It was also proved by the broker, who effected the policy, that the underwriters were told that Sir Simeon was subject to the gout. Dr. Heberden and other gentlemen of the faculty were ex- amined, who proved that spasms and convulsions were symptoms incident to the gout. Lord Mansfield. The imperfection of language is such that we liave not words for ever}' different idea ; and the real intention of par- ties must be found out bj' the subject-matter. By the present policy, the life is warranted, to some of the underwriters in health, to others in good health; and yet there was no difference intended in point of fact. Such a warranty can never mean that a man has not the seeds of disorder. We are all born with the seeds of mortality in us. A man, subject to the gout, is a life capable of being insured, if he has no sickness at the time to make it an unequal contract. There was a verdict for the plaintiff ?■ 1 Other cases on good health are : Grattan v. Metropolitan L. Ins. Co., 92 N. T. 274 (1883); Brown v. Metropolitan L. Ins. Co., 65 Mich. 306 (1887); Maine Benefit Assn. u. Parks, 81 Me. 79 (1888). — Ed. aCCT. III.j ANDERSON V. FITZGERALD. 391 ANDEESON, Plaintiff in Error, v. FITZGERALD, Defendant in Error. House of Lords, 1853. 4 H. L. C. 484.i This was a writ of error on a judgment of the Court of Exchequer Chamber in Ireland. The original action, brought by Anne Fitzgerald, administratrix of Patrick Fitzgerald, against Samuel Anderson, as one of the directors of the United Kingdom Life Assurance Companj', was assumpsit upon a life insurance polic3' of which the following are the only passages bearing on the questions taken to the higher courts : — " Whereas Patrick Fitzgerald, of Kilrush, in the county of Clare, Ireland, nurseryman, is desirous of making an assurance with the United Kingdom Life Assurance Company in the sum of £450 upon his own life, and hath warranted, and doth warrant, that his name, residence, and profession, business or occupation, is as above stated, and that his age will not exceed fifty-two j-ears on his next birthday, . . . and that he has a sound and good constitution, and is now in a good state of health. . . . " Know all men by these presents, that if the said Patrick Fitzgerald shall die . . . the funds and property of the said companj- shall be subject and liable to pay . . . unto his executors, administrators, or assigns the sum of £450 hereby assured. "Provided alwaj's that in case the said Patrick Fitzgerald shall die upon the high seas, ... or shall kill or destroy himself, or cause his own death, whether felo de se or otherwise, or die by duelling or b}'' the hand of justice, or if anything so warranted as aforesaid shall not be true, or if any circumstance material to this insurance shall not have been truly stated, or shall have been misrepresented or concealed, or shall not have been fuUy and fairly disclosed and communicated to the said company, or if any fraud shall have been practised upon said com- pany, or any false statements made to them in or about the obtaining or effecting of this insurance, this policy shall be null and void." The defendant pleaded non assumpsit and certain special pleas. At the trial it appeared that before obtaining the insurance Patrick Fitzgerald had signed a proposal containing twenty-seven questions and answers. The only passages bearing on the questions taken to the higher courts are these : — " 21st. — Did any of the party's near relations die of consumption or any other pulmonary complaint? — No. " 22nd. — Has the party's life been accepted or refused at any office ; 1 The statement has been rewritten, largely upon the basis of the report in the Irish Exchequer Chamber, 1 Irish Common Law, 251 (1851). — Ed. 392 ANDERSON V. FITZGERALD. [CHAP. V. and if accepted, was it at the usual premium or with what addition ? — No. . . . " I hereby agree that the particulars mentioned in the above pro- posal . . . shall form the basis of the contract between the assured and the company ; and if there be any fraudulent concealment or un- true allegation contained therein, or any circumstance material to this insurance shall not have been fully communicated to the said companj', or there shall be any fraud or misstatement, all money which shall have been paid on account of this insurance shall become forfeited, and the policy be void." There was evidence tending to show that several of the statements in the proposal were false ; amongst others the statement that the appli- cant had not been insured at any other oflBce, and the statement as to the health of the members of the family-, it being proved that two of the applicant's sisters had died of consumption at the ages of sixty- five and sixty-seven respectively-. The defendant's counsel called on the judge to direct the jurors that if, previous to the making of the policy, any false statement was made to the companj' in or about the obtaining or effecting of the said insur- ance, though the jury should believe that the same was not material to the insurance, they should find a verdict for the defendant. The de- fendant's counsel also called on the judge to direct the jurors to similar effect specifically with reference to the answers numbered 21 and 22 respectivel3-. The judge refused to give any of these instructions ; and he directed the jurymen that they " must not onl^- be satisfied that the various false statements relied on by the defendants were false in fact, and were made in and about effecting the policy, but also that such false statements were material to the insurance, before they could find their verdict for the defendant ; " and he gave similar instructions specifically as to answers 21 and 22 respectivel3'. Exceptions were taken to these charges and refusals to charge. These exceptions re- lated to the first issue ; and there were also exceptions relating to the other issues. The verdict was for the plaintiff. The exceptions were argued in the Court of Exchequer, when the Lord Chief Baron ex- pressed an opinion that they ought to be allowed, but Mr. Baron Eichards and Mr. Baron Lefroy being of a different opinion, judgment was ordered to be entered for the plaintiff. A writ of error was brought in the Court of Exchequer Chamber, where, by a majority of seven to three, the judgment of the court below was affirmed. The present writ of error was then brought. The judges were summoned, and Mr. Baron Parke, Mr. Baron Alderson, Mr. Justice Coleridge, Mr. Justice Wightman, Mr. Justice Erie, Mr. Justice Cresswell, Mr. Baron Piatt, Mr. Justice Talfourd, Mr. Justice Williams, Mr. Baron Martin, and Mr. Justice Crompton attended. Sir F. KeUy and Mr. Bovill, for the plaintiff in error. Mr. Napier and Mr. FitzgeraM, for the defendant in error. SECT, m.] ANDERSON V. FITZGERALD. 393 The Lord Chancellor,^ having stated the pleadings and evidence, said : ' . . . Now in order to get that information which shall enable the House satisfactorily to decide the whole of this case, I propose to put to the learned judges these two questions : — 1. "Was it necessarj' for the plaintiff in error to prove on the trial that the answers given by Fitzgerald to questions 21 and 22, contained in the particulars, dated Kilrush, 17th June, 1846, or either of them, were or was material as well as false? And secondly, 2. If it was necessarj' for the plaintiff in error to prove the mate- riality as well as the falsehood of the answers, or either of them, are the exceptions, so far as they relate to the ruling of the learned judge on the issues joined on the second and third pleas, or is either of them, sustainable? The judges asked time to consider the questions. Ordered. Mr. Baron Parke. Your Lordships have proposed two questions for the consideration of those of her Majesty's judges who heard the argu- ment of this case at j-our Lordships' bar.* . . . The answers referred to by your Lordships were given to two ques- tions put to the assured, Fitzgerald : the first, whether anj* of the partj-'s near relatives died of consumption or other pulmonar}- complaint ? and, secondly, whether the party's life had been accepted or refused at any other oflBce, and if accepted, whether at the usual premium, or with what addition? To both, the assured answered in the negative. At the end of the list of questions the assured subscribed a declaration to the effect that the particulars should form the basis of the contract be- tween the assured and the companj-, and that if there should be any fraudulent concealment or untrue allegation contained therein, or any circumstance material to the insurance should not have been fully com- municated to the company, or if there should be any fraud or misstate- ment, aU the money paid on account of the insurance should be forfeited, and the policj- should be void. The first question then submitted to us is. Whether it was necessarj' for the plaintiff in error to prove on the trial that the above answers, or either of them, were or was mateiial, as well as false ? We are all of opinion that it was not. This question does not appear to us to turn upon the well-known distinction between warranties and representations laid down bj- Lord Mansfield, nor upon the point whether the declaration above mentioned was either a part of the contract binding between the parties independ- ent of the polic}-, or meant to be referred to by it. The proviso is clearly a part of the express contract between the parties, and on the non-compliance with the condition stated in the proviso, the policy is unquestionably void. 1 Lord Cranwokth. — Ed. s The omitted passage stated the exceptions taken. — Ed. ' Here, and throughout the remainder of the case, the report has been abbreviated by omitting passages not essential to an understanding of the decision. — Ed. 394 ANDEESON V. FITZGEEALD. [CHAP. V. The case therefore resolves itself, in our view of it, as it does in that of most of the Irish judges, simplj into a question of the construction of the proviso itself ; and it is upon questions of that nature that differ- ent minds are apt to differ in their conclusions, however disposed to adopt the established rules for the construction of written instruments. By that proviso it is stipulated, first, that if the assured should die on the high seas (with certain exceptions), or should kill himself, or die b}' duelling, &c., or if anj-thing warranted as before mentioned (and there were several express warranties before stated) should not be true, or if any circumstance material to that insurance should not have been truly stated or should have been misrepresented or concealed, or should not have been fully and fairly disclosed and communicated to the company, the policy should be void. Thus far the condition applies onl}- to ma- terial matters ; but it proceeds to declare, obviously with a view of ex- tending the protection to the office still further, that if any fraud shall have been practised on the compan}', or any false statements made to the company in or about the obtaining or effecting of that insurance, the policj' shall be null and void. The latter words probably override the former, and the fraud, as well as the false statement, in order to avoid the policy, must be made in or about the obtaining or eflfecting of that insur- ance. These words, no doubt, must be understood not to include a false statement of matters to the disparagement of the applicant for insurance, and tending to render his life less insurable ; such a construction would be clearly absurd, and in no way reconcilable with the manifest object of the proviso. The words, however, will clearly include all frauds or false statements made in order to obtain the policy-, whether in matters ma- terial or not ; a consistent construction will thus be given to the whole. The proviso, in the first place, provides for the violation of the special matters mentioned in the commencement of it Next, it requires every material fact not to be misrepresented or concealed, but to be fully and fairly declared. But it goes further. In the anxiety of the com- pany to protect itself by every precaution, it prohibits any fraud or falsehood whatever to be used in obtaining the insurance. It includes all frauds for that purpose, though not made by concealment or mis- representation, by word or writing, of material facts, such as fraud in false personation, or in the disguise of the diseases of the applicant ; and, lastl3-, it prohibits every false statement whatever, whether in matters actually material or immaterial, and leaves no room for dis- pute whether the particular matter to which it related was material or not (which in the case of a dispute a jury would have to decide), leaving the company to determine entirely for itself what matters it deems mate- rial and what not. This seems to us to be the obvious ordinary sense of the words used, and there is no reason from the context to give any other than the ordinary sense to them, though they are to be construed as the words of the assurers, and most strongly against them if there is any am- biguity in them. There is no ambiguity in them in this respect A SECT. III.] ANDERSON V. FITZGEEALD. 395 doubt possibly may exist whether the word " false " is to be under- stood in the sense of false in point of fact, or morally false, though, I believe, most of us think that it is not to be limited to moral falsehood ; but there seems to us to be no doubt that if the statements are false, in whatever sense we understand that word, being used in effecting the in- surance, this proviso operates. There then appear to us to be only two questions for the jurj^ on this part of the policj- : Were the statements false ? Were they made in obtaining or effecting the policj' ? Whether they are material or not is not a necessarj- part of the inquiry-. It has seemed to two eminent members of the Irish Bench, Mr. Justice Moore and the then Lord Chief Justice Blackburne, that the materiality of the question was involved in the inquiry whether it was used by the assured to induce the company to effect the policy. We do not agree with that reasoning. It is true that the materialitj- of these statements may be sometimes evidence of the purpose with which they were made, and may tend to show that they wei-e made with the object of obtaining the policy, because if immaterial they would not be likelj- to efiect it ; but the materialitj' is not a necessary condition to bring them within the scope of the proviso, if it can be shown that the statements were made in obtaining the policy and for the purpose of effecting it ; and here the terms of the particulars and the subjoined declaration preclude all doubt upon that question ; for the truth of the answers is, in the strong- est terms, made essential to the validity of the policj'. We therefore answer your Lordships' first-question in the negative, notwithstanding the ability shown bj' the judges who have expressed their opinion, that the materiality of the answers was a necessary part of the proof. With respect to the second question proposed bj- your Lordships, we answer, that the exceptions, on the issue joined on the second and third pleas, are not sustained, and that on a formal ground. . . . The Lord Chaxcelloe. . . . The plea upon which the question arises is the old plea of non assumpsit, for I need hardlj* remind your Lordships that the " new rules" of pleading adopted in this countrj' do not extend to Ireland. Now, among the particulars constituting that paper which Fitzgerald signed, and which he agreed should be the basis of the contract between him and the companj-, there were two questions 'to which he was called upon to make an answer, aud which he did answer. . . . Striking out all the other articles from those particulars, the result therefore is, that Fitzgerald agrees that the basis of the contract between him and the company shall be that he trulj' represents to the company that none of his near relations died of consumption, or any other pulraonarj- com- plaint, and that his life had never been accepted or refused at anj' other office. . . . Although the learned Chief Justice Blackburne came to a conclusion different from that at which the learned judges now advising your Lord- ships have arrived, and in which I concur, and in which I am about to 396 ANDERSON V. FITZGERALD. [CHAP. T. propose to your Lordships to concur, yet T think he very distinctly states (and the other learned judges forming the majority concurred with him) the point on which the question turned. He saj's : " The plaintiff in error contends that it is suflBcient to ascertain, simply in the terms of the policy, that the false statement was made in or about obtaining it ; and that when this is done, the words of the condition are so compre- hensive and stringent, that the question is solved and the policy avoided, whether the statement was material or immaterial ; in other words, that we are to read the clause as if it had contained those verj' words. I ad- mit if this be the meaning of the words, — if this be so clearly expressed as not to admit of any other rational construction, — we must give them the operation contended for. But is this so ? It is obvious, that to maintain a defence founded upon this provision of the policy, proof must be made, — first, of the false statement of some matter of fact ; and, secondly, that it occurred on the occasion of effecting the policy. The judge and jury must inquire into both, and decide both." Up to this point I entirely concur with the learned judge ; he puts the case very distinctly and clearly. He then goes on thus : " What could an- swer this inquiry, or be said, with any propriety of language, to come within such terms, but a misstatement used by the assured to induce the company to contract, and how could it have done so if it had been utterlj' immaterial?" Now there, mj' Lords, I differ from the learned judge. The companj- stipulates this, that the assured shall con- tract with the company that he warrants certain things to be correct, and further stipulates that if he should make to the company any untrue statement in and about effecting the policj', such untrue state- ment shall avoid the policy ; and then the company says that it will not contract with him till he shall answer certain questions which are made the basis of the contract. Among those questions are these two : " Have an J' of j'our relations died of pulmonary complaints? Has an insurance on your life been accepted or refused at anj- other office?" The stipulation is, that if he shall not answer these questions accurately, the policy shall be void. That is the interpretation of the contract, which, taking together the policy and the particulars required to be subscribed, appears to me irresistible. The requirement is extremely reasonable. That we need not speculate on ; but the reason for mak- ing such a stipulatiorf is obvious, and is explained by this very case. "Whether certain statements are or are not material, where parties are entering into a contract of life assurance, is a matter upon which there must be a divided opinion. Nothing, therefore, can be more reason- able than that the parties entering into that contract should determine for themselves what they think to be material, and if they choose to do so, and to stipulate that unless the assured shall answer a certain ques- tion accurately, the policy or contract which they are entering into shall be void, it is perfectly open to them to do so, and his false answer will then avoid the policy. Now it appears to me, my Lords, that that is precisely what has been SECT. III.] ANDERSON V. FITZGERALD. 397 done here. The parties entering into the insurance have so stipulated. "The basis of our contract shall be your answering truly these two questions." There were a great many others ; but, putting those aside, they say the basis of the contract between us shall be that you shall answer truly those two questions, and if you do not answer them trulj-, the policy shall be void. But then, when the trial comes as to whether the plaintiff has made out his right under that policy, the ques- tion is, whether the direction to the jur}- ought not to have been, " You are to ascertain whether what was then stated was untrue, was false ; ■whatever interpretation may be given to the word ' false,' if it was false, there is no question as to whether it was material or not, tlie parties having stipulated that if it was false the policy shall be void." The question for the jury to decide was simpl}' whether it was false or not. In that narrow compass the whole case lies. The learned judges who decided that the direction actually given was good, proceeded upon the well-known rule of law, that there is a great distinction between that which amounts to what is called a warranty and that which is merely a representation inducing a party to enter into a contract. Thus, if a person effecting a policy of insurance says, " I warrant such and such things which are here stated," and that is part of the contract, then, whether they are material or not is quite unim- portant, — the party must adhere to his warranty, whether material or immaterial. But if the party makes no warranty at all, but simply makes a certain statement, if that statement has been made bond fide, unless it is material, it does not signify' whether it is false or not false. Indeed, whether made bond fide or not, if it is not material, the untruth is quite unimportant. If the man on entering into the policj' had said that he arrived at Dublin three days previously, whereas he had only arrived that morning, and such statement did not form part of the con- tract, then, though false, it would be quite immaterial. If there is no fraud in a representation of that sort, it is perfectly clear that it cannot affect the contract ; and even if material, but there is no fraud in it, and it forms no part of the contract, it cannot vitiate the right of the party to recover. There are several cases, which are collected together in the 1st Vol. of Douglas,^ in which this principle is well illustrated. But, my Lords, it appears to me that that principle has no application to a case where it is part of the contract, as it is here, that if a particular statement is untrue, then the contract shall be at an end. That distinction ap- pears to me to have been overlooked by the learned judges, and that oversight has been the ground of that which I must consider to be the erroneous conclusion at which they arrived. My Lords, it is within this narrow compass that the case lies. We had the advantage of the assistance of eleven of the learned judges of this country. They all took the same view of the case, and they were 1 Bean v. Stupart, Dongl. 11, and* the casea there collected in the notes; see also Dongl. 284. — Rep. 398 WILKINSON V. CONNECTICOT MUTUAL LIFE INS. CO. [CHAP. T. all of opinion that the learned judges in Ireland committed an error in supposing that the doctrine of representation, as distinguished from warranty, was applicable to the present case where the representation is itself included in the contract. Thej thought that the conclusion at which the learned judges in Ireland arrived was erroneous. My Lords, in that view of the case I entirely concur. I shall therefore think it my duty to move your Lordships that judgment be given for the plaintiff in error. Lord Bkougham. My Lords, I entirely agi-ee with my noble and learned friend, that this case really lies in a very narrow compass. It depends entirely upon the construction which we are to put upon these words in the polic3', " or any false statement made to them," the insur- ers, " in or about the obtaining or effecting of this insurance." . . . The truth of the statement, it being part of the contract, not its ma- teriality, was in issue. I am therefore of opinion, with my noble and learned friend, that in this case we ought to give judgment for the plaintiff in error. Lord St. Leonards. ... In some eases, and it is so in the present, the companies take care to go beyond the law, and to protect them- selves by a stipulation that a statement, which is not a warranty but a representation, if made contrary to the fact, shall avoid the policy. . . . I think that . . . the learned judge ought not to have told the jurors that their verdict ought to be for the plaintiff . . . unless they were of opinion that the statements were both false and material. . . . I entirely agree with the motion of my noble and learned friend as to what should be done in this case. Ordered and adjudged that the judgment given in the Court of Exchequer Chamber in Ireland . . . he . . . reversed ; and that the judgment given in the . , . Court of Mcchequer in Ireland he . . . reversed ; and that the verdict . . . he . . . vacated / . . . and . . . that the said Court of Exchequer in Ireland do award a venire facias de novo. . , .^ WILKINSON V. CONNECTICUT MUTUAL LIFE INS. CO. Supreme Court of Iowa, 1870. 30 Iowa, 119." Appeal from Lee District Court. The action was upon a policy insuring the life of Malinda Jane Wilkinson, the wife of the plaintiff. 1 Ace. : Miles v. Connecticut Mutual L. Ins. Co., 3 Gray, 580 (1854) ; Campbell v. New England Mutual L. Ins. Co., 98 Mass. 381, 401^06 (1869) ; Day v. Mutual Bene- fit L. Ins. Co., 1 McArthnr, 41 (1873) ; Foot v. ^tna L. Ins. Co., 61 N. Y. 571 (1875). See ConoTer «. Massachusetts Mutual L. Ins. Co., 3 Dillon, 217 (1874). — Ed. ^ The statement has been rewritten on the basis of facts contained in the opinion. In reprinting the opinion, the facts have been omitted, and bo have passages bearing on some points as to evidence. — Ed. SECT. III.] WILKINSON V. CONNECTICUT MUTUAL LIFE INS. CO. 399 The defendants pleaded the falsity of certain answers in the application, and fraud in obtaining the policy. The policy stated that it was issued " upon the faith of the statements in the application," with a stipulation that if they " shall be found in any respect untrue " the policy shall be void. Tlie main contest was upon the answer to the following question in the application signed by the plaintiff and his wife on Sept. 14, 1866. " 14. Has the party ever met with any accidental or serious personal injury; if so, what was it? — No." The defendant asked an instruc- tion that this answer was a warranty, and that if it was untrue, whether intentionally so or not, the jury must find for the defendant. The court refused, and gave instructions substantially that " it was the duty of plaintiff and wife to answer each and every question truthfull}', and if thej' did not do so on every material matter or question, then plaintiff cannot recover;" and again, "the answers to each and ever^' ques- tion in the application m,ust he substantially true, and any tJiisstate- ment of facts in the application upon any material matter inquired of, whether intentional or not, would avoid the policy." The jury were not required bj' the court or parties to return a general verdict. They were required to find specifically as to eight questions, the first five being asked at the request of the defendant, and the last three being asked on the court's own motion. Among the questions and findings were these : — " 3. Did Malinda Jane Wilkinson, prior to September 14, 1866, meet with any accidental personal injury? Ans. Yes. "4. Did Malinda Jane Wilkinson, prior to September 14, 1866, meet with any serious personal injury ? Ans. No. " 5. Did Malinda Jane Wilkinson, on or about the year 1862, fall at a considerable height from a tree, and was she sick for a time in conse- quence? Ans. Yes. "6. If the jury find that Malinda Jane Wilkinson did at any time meet with an accidental personal injurj- by falling from a tree or other- wise, as inquired of in questions Nos. 3, 4, and 5, they will answer fur- ther the following questions : — "Was that injury only temporary, and did it pass off soon? Ans. Yes. " 7. Was said injury (if any) to such an extent as to exert or cause any permanent disease or influence upon the subsequent health of the said Malinda Jane Wilkinson ? Ans. No. " 8. Was the injury the said Malinda Jane Wilkinson received from the fall from the tree (if she did so fall) simply temporary, and did it pass off entirely in a few daj's, without in any manner injuring her sub- sequent health or longevity? Ans. Yes." The defendant moved for judgment in its favor on the answers returned by the jury, claiming it on the answers 3 and 5, and insisting that the answers 6, 7, and 8 were immaterial. This motion was over- ruled, and judgment was rendered for the plaintiff. The defendant appealed. 400 "WILKINSON V. CONNECTICUT MUTUAL LIFE INS. CO. [CHAP. V. Cole, C. J. ... If the cause had been submitted to the jury for a general verdict upon these instructions, without more, and the}- had found for plaintiflF, it would be our clear duty to reverse. Under the terms of the policy in this case, the answers to the questions contained in the application became warranties, not that they were substantially true as to the material matters, but that thej' were true in everj' par- ticular, although, in the opinion of the jury, such particular, wherein they were untrue, maj- not have been material to the risk. See Angell on Fire and Life Insurance, § 140, et seq., and § 307 et seq. ; Everett V. Desborough, 5 Bing. 503 ; 3 Kent's Com. 288 ; Miles et al. v. Conn. Mut. Life Ins. Co., 3 Gray, 580 ; Stout v. The Fire Ins. Co. of New Haven, 12 Iowa, 383 ; and cases cited by appellant's counsel. . . . It will be observed that the jury found specific and independent facts, having no connection or relation whatever to anj- proposition of law, and hence no prejudice could have resulted to defendant by reason of the refusal to give proper, or the giving of improper, general instruc- tions to the jury, as before referred to. The single question presented is, whether the answers to the last three questions so neutralize and override the answers 3 and 5 as to entitle the plaintiff to a judgment? Without such last three answers, it is reasonably clear that the defend- ant would be entitled to judgment upon answers 3 and 5. In other words, the real question is upon the construction of question 14 in the application, to wit : Has the party ever met with any accidental or serious personal injury, and if so, what was it? The defendant claims that if the insured " ever met with any acci- dental . . . injury " that will bar a recover^-, because the application is a warranty that she never did. In this construction we do not concur. The language of the question is to have a reasonable construction, in view of the purposes for which the question was asked. It must have reference to such an accidental injury as probably would or might pos- sibly have influenced the subsequent health or longevity of the insured. It could not refer, and could not be understood, by anj- person reading the question for a personal answer to refer, to a simple burn upon the hand or arm, in infancy ; to a cut upon the thumb or finger, in youth ; to a stumble and falling, or the sprain of a joint, in a more advanced age. The idea is, that such a construction is to be put by the courts upon the language as an ordinary person of common understanding would put upon it when addressed to him for answer. The strict con- struction of hypercriticism of the language, whicli would make the word " any" an indefinite term, so as to include all injuries, even the most trifiing, would bring a just reproach upon the courts, the law, the defendant itself and its business. The language of the question must have a fair construction, and in the words of our statute (Rev. § 3994) " that sense is to prevail against either party in which he had reason to suppose the other understood it." This construction is not only in accord with reason and justice, but it has the support of the authorities in like cases. Thus, in Chattuck SECT, in.] JEFFRIES V. LIFE INSURANCE CO. 401 ' V. Shaw, 1 Mood}' & Rob. 498, where the insured declared that " he had not been afflicted with nor subject to fits," Lord Abinger, C. B., held this to mean, not that he never accidental!}- had had a fit, but^hat he was not a person hal)itually or constitutional!}- afflicted with fits ; a person liable to fits from some peculiarit}- of temperament, either natural or contracted from some cause during life. And the policj- was held not to be vitiated bj- the circumstance that, in consequence of a fall, the person whose life was insured had, several j-ears before the date of the polic}-, two epileptic fits within a short interval, which the jury were satisfied had never recurred.* . . . See also Watson v. Main- wairing, 4 Taunt. 763 ; Angell on Fire and Life Ins., § 310, et seq. In this case the defendant having admitted the policy, death, and proof of loss, it was not error to render judgment for plaintiff on the special verdict. . . . Affirmed."^ JEFFRIES V. LIFE INSURANCE CO. Sdpeeme Court of the United States, 1874. 22 Wall. 47.' Error to the Circuit Court for the Eastern District of Missouri. The action was brought by Jeffries, as administrator of Kennedy, upon a policy of insurance issued in pursuance of an application signed b}- Kenned}-. The policy said : — " This policy is issued by the company, and accepted by the insured and the holder thereof, on the following express conditions and agree- ments, which are part of this contract of insurance: 1st, That the statements and declarations made in the application for this policy, and on the faith of which it is issued, are in all respects true, and without the suppression of any fact relating to the health or circum- stances of the assured, affecting the interests of said company. . . . 6th, That in case of the violation of the foregoing conditions, or any of them, . . . this policy shall become null and void." The declaration contained the policy at large, and the plea recited the foregoing conditions and set forth the breaches of thejjfirst condition which are summarized in the opinion. A demurrer to the plea was overruled, and judgment was entered for the company. Thereupon this writ of error was taken. Messrs. T. W. B. Crews and J. S. Laurie, for the administrator, plaintiff in error. Messrs. A. M. Thayer and J. La Due, contra. 1 Here was stated Ross ». Bradshaw, ante, p. 231 (1761). — Ed. 2 See Insurance Co. v. Wilkinson, 13 Wall. 222 (1871) ; Home Mutual L. Assn. v. Gillespie, 110 Pa. 84 (1885); Bancroft v. Home Benefit Assn., 120 N.Y. 14 (1890); Standard L. & A. Ins. Co. v. Martin, 133 Ind. 376, 384-386 (1892). — Ed. * The statement has been rewritten. — Ed. 26 ' 402 JEFFRIES V. LIFE INSURANCE CO. [CHAP. V. Mr. Justice Hunt delivered the opinion of the court. The contention in opposition to the judgment is this : that the plea does not aver that the false statements made by the assured were ma- terial to the risk assumed. Is that averment necessary to make the plea a good one? It is contended, also, that the false answers in the present case were not to the injury of the company, that they presented the applicant's case in a less favorable light to himself than if he had answered truly. Thus, to the inquiry are you married or single, when he falsely an- swered that he was single, he made himself a less eligible candidate for insurances than if he had truly stated that he was a married man : that although he deceived the company, and caused it to enter into a con- tract that it did not intend to make, it was deceived to its advantage, and made a more favorable bargain than was supposed. This is bad morality and bad law. No one may do evil that good may come. No man is justified in the utterance of a falsehood. It is an equal offence in morals, whether committed for his own benefit or that of another. The fallacy of this position as a legal proposition will appear in what we shall presently- say of the contract made between the parties. We are to observe, first, the averment of the plea : That Kennedy, in and by his application for the policy of insurance, in answer to a question asked of him by the compan}-, whether he was " married or single"? made the false statement that he was '■'■single," knowing it to be untrue ; that in reply to a further question therein asked of him by the compan}-, whether " any application had been made to aiiy other compa'ny ? If so, when? " answered, " i\7b / " tvhereas, in fact, at the time of making such false statement, lie well knew that he had previously made application for such insurance, and been insured in the sum o/ 610,000 by another company. "We are to observe, secondlj-, the averment that the statements and declarations made in the application for said polic}', and on the faith of ■which it is issued, are in all respects true, and without the suppression of anj' fact relating to* the health or circumstances of the insured affect- ing the interests of the company. We are to observe, also, that other clause of the policy, in which it is declared that this policy is made by the company and accepted by the insured, upon the express condition and agreement that such state- ments and declarations are in all respects true. This applies to all and to each one of such statements. In other words, if the statements are not true, it is agreed that no policy is made by the company, and no policy is accepted by the insured. The proposition at the foundation of this point is this, that the state- ments and declarations made in the policy shall be true. This stipulation is not expressed to be made as to important or material statements only, or to those supposed to be material, but as to all statements. The statements need not come up to the degree of SECT. III.J JEFFEIES v. LIFE INSUKANCE CO. 403 warranties. They need not be representations even, if tliis term con- vej's an idea of an affirmation having any technical character. State- ments and declarations is the expression ; what the applicant states and what the applicant declares. Nothing can be more simple. If he makes any statement in the application, it must be true. If he makes any declaration in the application, it must be true. A faithful per- formance of this agreement is made an express condition to the exist- ence of a liabilitj' on the part of the company-. There is no place for the argument either that the false statement was not material to the risk, or that it was a positive advantage to the company to be deceived by it. It is the distinct agreement of the parties, that the company shall not be deceived to its injury or to its benefit. The right of an indi- vidual or a corporation to make an unwise bargain is as complete as that to make a wise bargain. The right to make contracts carries with it the right to determine what is prudent and wise, what is unwise and impi-udent, and upon that point the judgment of the individual is sub- ject to that of no other tribunal. The case in hand aflfords a good illustration of this principle. The company deems it wise and prudent that the applicant should inform them trul3' whether he has made any other application to have his life insured. So material does it deem this information, that it stipulates that its liability shall depend upon the truth of the answer. The same is true of its inquiry whether the partj' is married or single. The com- pany fixes this estimate of its importance. The applicant agrees that it is thus important by accepting this test. It would be a violation of the legal rights of the company to take from it its acknowledged power, thus to make its opinion the standard of what is material, and to leave that point to the determination of a jury. The jury may say, as the counsel here argues, that it is immaterial whether the applicant answers truly, if he answers one way, viz., that he is single, or that he has not made an application for insurance. Whether a question is material depends upon the question itself. The information received may be immaterial. But if under any circumstances it can produce a reply which will influence the action of the company, the question cannot be deemed immaterial. Insurance companies sometimes insist that indi- viduals largely insured upon their lives, who are embarrassed in their affairs, resort to self-destruction, being willing to end a wretched ex- istence if they can thereby bestow comfort upon their families. The juror would be likely to repudiate such a theory, on the ground that nothing can compensate a man for the loss of his life. The juror may be right and the company may be wrong. But the company has ex- pressly provided that their judgment, and not the judgment of the juror, shall govern. Their right thus to contract, and the duty of the court to give eflfect to such contracts, cannot be denied.^ . . . 1 Here the opinion stated Anderson v. Fitzgerald, ante, p. 391 (185.3), and cited Cazenove v. British Equitable Ass. Co., 6 C. B. >f. rf. 437 (1859), 8. c. aifirmed in the Exchequer Chamber, 6 Jur. N. s. 826 (1860). —Ed. 404 BUELL V. CONNECTICUT MUTUAL L. INS. CO. [CHAP. V. Many cases may be found which hold, that where false answers are made to inquiries which do not relate to the risk, the policy is not necessarily avoided unless they influenced the mind of the company, and that whether they are material is for the determination of the jury. But we know of no respectable authority which so holds, where it is ex- pressly covenanted as a condition of liability that the statements and declarations made in the application are true, and when the truth of such statements forms the basis of the contract. The counsel for the insured insists that policies of insurance are hedged about with so manj- qualifications and conditions, that ques- tions are propounded with so much ingenuitj' and in such detail, that they operate as a snare, and that justice is sacrificed to forms. We are not called upon to deny this statement. The present, however, is not such a case. The want of honesty was on the part of the appli- cant. The attempt was to deceive the company. It is a case, so far as we can discover, in which law and justice point to the same result, to wit, the exemption of the company. Judgment affirmed. Justices CtiFFOED and Miller dissenting. BUELL V. CONNECTICUT MUTUAL L. INS. CO. ClKCtJIT CODBT OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF Ohio, 1876. 2 Flippin, 9.i Heard on demurrer to second defence. The facts appear fully in the opinion. R. P. & H. C. Ranney, for demurrer. Bishop & Adams, contra. Walker, J. This suit is founded upon a policy of insurance upon the life of Jeptha C. Buell, for the benefit of his wife, the plaintiff. The defendant, as a second defence to the action, sets up in its answer that in the declaration made at the time of the application for insurance, among other things, the plaintiff says: "And I do hereby agree that the answers given to the following questions and the accom- panying statements, and this declaration shall be the basis and form part of the contract or policy between me and said company ; and if the same be not in all respects true and correctly stated, the said policy shall be void." That among the questions in said declaration above referred to, was the following question : " Has father, mother, brother, or sister of the party died, or been afflicted with consumption, or any disease of the lungs, or insanity? If so, state full particulars of each case." That 1 s. c. 5 Ins. L. J. 274, and 5 Bigelow's L. & A. Ins. Eep. 473. — Ed. SECT. III.] BUELL r. CONNECTICUT MUTUAL L. INS. CO. 405 the answer to the above question given bj- the plaintiff was as follows : '•No. Father died from exposure in water ; age 58. Mother living; age about 50.'' That the policy- issued upon said declaration and questions and answers, and sued upon, contains the following condi- tions, to wit: "And it is also understood and agreed to be the true intent and meaning hereof, that if the proposals, answers, and declara- tion made bj- the said Anna M. Buell, and bearing date the 19th day of March, 1866, and which are hereb}- made part and parcel of this policy as fully as if herein recited, and upon the faith of which this agreement is made, shall be found in any respect untrue, then, in such case, this polic}- shall be null and void." The defendant avers that the said answer above stated was not in all respects true and correctly stated, but was incorrect and untrue in this, the father of said Jeptha C. did not die at the age of 58, but he died before he was of the age of 30 years. Wherefore the defendant says said policy was and is void and of no effect, and said plaintiff is not entitled to recover any amount against the defendant. To tiiis answer the plaintiff files her demurrer, alleging as reason therefor that all of said statements and allegations are redundant and irrelevant, and constitute no defence to the plaintiff's action. The demurrer admits that the answer to the question as stated in respect to the age of the father at the time of his death was untrue and incorrect. That being the fact, does it constitute a defence to this action ? Statements in the application for insurance in the declaration, or answers to the questions are either warranties or representations. If warranties, then materialitj-, or want of materiality, as to the risk has nothing to do with the contract. The only question is, were they untrue, and if so the policy is void. But if representations, then to avoid the policy they must be substantially and materially untrue, or made for the purpose of fraud.^ . . . But I am referred to the case Jeffries, Administrator of Kennedy, deceased, v. Economical Life Ins. Co., 22 Wall. 47, recentl}' decided by the Supreme Court of the United States as decisive of the question made upon this demurrer. In that case there were two questions asked the insured: 1. Whether he was married or single? The answer to which was that he was single. 2. Had anj' application been made to any other company, and if so, when ? The answer to which was " No." The answers to both questions were alleged to be untrue. The court held that the answers to these questions constituted a part of the con- tract, and if untrue, whether they were material to the risk or not, would avoid the policy. The court did not seem to put this upon the ground alone that^ the answers constituted warranties, but that they formed a part of the contract and were expressly made so by the parties, and the court would not inquire as to the materiality, because the parties had themselves deemed them material. How did they become 1 Here were quoted Hartford Protection Ins. Co. v. Harmer, 2 Ohio St. 452, 464 (1853) ; and Campbell v. New England Mutual L. Ins. Co., 98 Mass. 381 (1867). — Ed. 406 BUELL V. CONNECTICUT MUTUAL L. INS. CO. [CHAP. V. material? It will be observed that both of these answers were direct responses to the questions, and that by the direct form of the questions tlie answers necessarily became a part of the contract. How is it in that respect in the case before us ? The falsity complained of in the answer consists onlj- in reference to the age at which the father died. This certainly was not inquired of in the question, unless we are to find it in that part of it which reads : " If so, state full particulars of each case." This part of the question was evidently intended to reach simply the particulars of the death, or affliction of the near relatives, to ascertain the character and nature of the disease — its extent, whether produced from recent causes or he- reditary in the familj', in order to determine whether Buell was a proper subject to insure. It is exceedingly doubtful whether the question is really definite enough to require the answer to state whether the father was dead at all, if he did not die of consumption, or disease of the lungs, or insanity. I think the question fairlj' means, not whether the father, etc., had died of any disease, or from any cause, but whether he had died of, or been afflicted with consumption, or any disease of the lungs, or insanity. This being the fair import of the question, ' ' No '' was a complete answer to it, and the remainder of the answer was uncalled for and not responsive to the question. But suppose that be so, defendant claims that it is nevertheless an answer of some sort and therefore an important part of the contract. The reply to that is, that the declaration which relates to the answers to questions to be made by plaintiff, and which it was agreed should be made part of the contract, must be construed to, and does mean, such answers as are responsive to the questions and such as may be called for by the defend- ant ; and that it does not cover such answers as may be volunteered and irrelevant, and that amount to mere representations. In the light of the cases in 98 Mass., and 2 O. S. R., T may be allowed to say that not all the statements in the application or writing are to be regarded as warranties, but some may be regarded as mere repre- sentations. I do not think the case of Jeffries v. Economical Insurance Company is at all at variance with this construction. In that case the questions directly called for the answers, and the asking and the answers constituted the mutual agreement of the parties. In this case the age of the father was not called for, and is only voluntarily given by the plaintiff, and the mutual agreement cannot arise as it did in that case, so as to say the parties themselves settled the question of materiality. I believe the true rule in relation to the question of what amounts to a warranty, or what amounts onl}- to representation, in the answers to questions in this class of applications, is : Where the answers are responsive to direct questions asked by the insurance company, they are to be regarded as warranties, and where they are not so responsive, but volunteered without being called for, they should be construed to be mere representations. The part of the answer in question in this SECT. III.] AMERICAN POPULAR LIFE INS. CO. V. DAY. 407 case in reference to the age of the father at death, being a mere repre- sentation, does not constitute a defence unless it appears to have been material as well as false. The demurrer is therefore sustained.^ AMERICAN POPULAR LIFE INSURANCE COMPANY, Plain- tiffs IN Ereoe, v. day, Executob, Defendant in Eerob. CotTET OF EeEOES AND APPEALS OF New Jerset, 1876. 39 N. J. L. 89. In error to the Supreme Court.'' For the plaintiffs in error, George E. Sibley, of New York, and T. JV. Mc Carter. For the defendant in error, W. J. Magie and Cortlandt Parker. The opinion of the court was delivered by The Chancelloe.' The defendant in error brought an action of assumpsit in the Supreme Court, on a policy of insurance issued by the plaintiffs in error to the testator, Frederick Day, upon his own life. The company pleaded the general issue and five special pleas, which latter were, on motion, stricken out. The trial of the issue resulted in a verdict against the company and judgment thereon. The company insist that the form of the action was erroneous ; that the order striking out the pleas was illegal, and that there was error in the exclusion, on the trial, of evidence offered in their behalf, and in the admission of evi- dence on behalf of the executor, and in the refusal of the judge to charge as requested by their counsel.* ... The errors assigned upon the striking out of the special pleas, and that assigned upon the refusal of the judge at the circuit to charge as requested by the company's counsel, may be considered together. The pleas were stricken out on the ground that the alleged misrepresenta- tions therein set up in avoidance of the liability of the company under the policy were not therein stated to have been material and intention- ally or fraudulently made, and the refusal to charge, just referred to, was on a request to charge that, under the terms of the policy and the application for insurance, the statements and representations made by the insured became part of the contract, and that their falsity was a defence to the action, whether the untruth was intentional or not. "When application was first made by the testator for the insurance, the 1 Ace. : Commercial Mutual Accident Co. v. Bates, 176 111. 194 (1898). —Ed. 2 The reporter's statement has been omitted. — Ed. 8 Hon. Theodore RuNTON. — Ed. * The omitted passage dealt with the form of action. — Ed. 408 AMERICAN POPULAR LIFE INS. CO. V. DAT. [CHAP. V. agent of the company through whom it was made wrote down in pencil, on a paper intended as a proposal for insurance, the testator's answers to certain printed questions thereon, relative to subjects on which the company deemed it proper, according to their regulations, to have an- swers in that connection. This paper was not signed by the testator. Afterwards, another like paper, containing like questions, with answers by the testator, and signed b}' him, was delivered to the company as an application for the insurance. Both these papers contained these words : " And I hereby further agree that the preceding answers given to the annexed questions, and the accompanying statements, together ■with the statements made to the examining pb^'sician, shall be the basis and form part of the contract or policy between me and the said companj', and if the same be not in all respects true and correctly stated, the said polic}' shall be void, according to the terras thereof." The policy declared that the insurance was " in consideration of the representations made " to the compan}', and of the premiums paid and to be paid. It further stated that it was issued and accepted by the in- sured upon certain express conditions therein stated, among which was the following: "Fraud or intentional misrepresentation vitiates the policj'." No reference, except as above stated, was made to the pro- posal or application, or either of them, or the matters therein contained, or to any statements or representations by the insured. The counsel of the company insist that the statements contained in the proposal and application were, by virtue of the agreement above quoted, therein con- tained made part of the policy, and that they were therefore in fact warranties or conditions, on the truth of which the liability of the com- pany was based, and that therefore the question of their materiality, or of the knowledge of the testator that they were untrue, or of his inten- tion in making them, was not involved. Whether the statements in question are warranties, or conditions, or representations merely, will depend on whether they in fact are incor- porated into the polic3'. " It is," said Lord Ellenborough, in Robertson V. French, 4 East, 130, 135, " a question of construction in every case, ■whether a policy is so worded as to make the accuracy of a bona fide statement a condition precedent, and the rules of construction are the same in policies as in other written contracts." " In order to make any statements binding as warranties," says Bunyon, " they must ap- pear upon the face of the instrument itself by which the contract of insurance is effected ; they must either be expressly set out or by in- ference incorporated in the policy. If thej' are not so, they are not warranties, but representations." Bunyon on Life Assur., 34. See also May on Ins., § 159.^ . . . When, in Pawson v. Watson, Cowp. 785, Lord Mansfield was asked, in behalf of the underwriters, " whether it was the opinion of the court that, to make written instructions valid and binding as a warranty, 1 Here -were stated Wheelton o. Hardisty, 8 E. & B. 232 (Ex. Ch. 1858), and An- derson V. Eitzgerald, ante, p. 391 (1853). — Ed. SECT. III.J AMERICAN POPULAR LIFE INS. CO. V. DAT. 409 they must be inserted in the policy," he answered that that was " most undoubtedly " the opinion of the court. To hold that the statements of the proposal and the application, not- withstanding the agreement therein above quoted, are not incorporated into the policy, and therefore are not wari-anties or conditions of in- surance, is but to apply the rule that where the parties to an agreement have reduced their contract to writing, that writing, at law, determines what the contract is, and evidence cannot be received to contradict, add to, subtract from, or vary the terms of the writing. The policy in this case is the agreement for insurance, and it must be held to contain the agreement, and all the agreement, of the parties to it. Though the proposal and application contain an agreement on the part of the in- sured that the answers to the questions annexed to them and the accompanying statements, together with the statements made to the examining phj-sician, shall be the basis and form part of the contract or policj- between the insured and the company, yet the policy does not directly or indirectl^^ so declare, and it will be assumed that all previous negotiations have been superseded, and that the policy alone expresses the contract of the parties. But it is urged on the part of the company that, inasmuch as the policy declares that the insurance is in consideration of the represen- tations made to the company in the application for the policy, this is sufficient to give the representations the character of conditions or war- ranties. It is to be observed that the policy refers to the representa- tions as representations only, giving them no higher or more important character. Almost all contracts of insurance are based on confidence in Tepresentations, in respect to the subject of the insurance, and the consequences of falsehood in those representations are well understood. The expression under consideration, therefore, has no particular sig- nificance. It cannot have the effect of changing the character of the representations in the application and elevating them to the importance of warranties or conditions of insurance. Campbell v. N. E. Mutual Ins. Co., 98 Mass. 381 ; Price v. Phoenix Mutual Life Ins. Co., 17 Minn. 497. There was no error in striking out the special pleas. Thej- were based on the erroneous assumption that the representations in the pro- posal and application were warranties or conditions of insurance. For the same reason, there was no error in the refusal to charge.* . . . There is no error in the record. The judgment of the Supreme Court should be affirmed." 1 Here followed pas.sages foreign to warranty. — Ed. = In Glutting v. Metropolitan L. Ins. Co., 50 N. J. L. 287 (1888), Dixon, J., for the conrt, said : — " The policy declared that the company became bound, in consideration of the rep- resentations and agreement in the application for the policy, that the application was a part of the contract, and that if the representations in the application were not true the policy should be void. " In the application Jacob Glutting, the applicant, declared and warranted that the representations and answers made therein were strictly and wholly true, that 410 ' .ETNA LIFE INS. CO. V. FRANCE. [CHAP. V. ^TNA LIFE INS. CO., Plaintiff in Eekor, v. FRANCE. Sdpkeme Coukt of the United States, 1876. 94 U. S. 561. Error to the Circuit Court of the United States for the Eastern Dis- trict of Pennsylvania. The facts are stated in the opinion of the court. Mr. Samuel C. Perkins, for the plaintiff in error. Mr. Nathan S. Sharpless, contra. they should form the basis and become part of the contract of insurance (if one were issued), and that any untrue answers should render the policy null and void. . . . " The legal effect of the foregoing stipulations was to render the statements in the application, with regard to the subject of insurance, warranties, and to annul the con- tract of insurance if any of those statements was shown to be untrue." In Vivar v. Supreme Lodge of Knights of Pythias, 52 N. J. L. 455, 465-466 (1890), s. c. ante, p. 300, Dixon, J., for the court (at the point where, ante, p. 302, line 4, an omission is indicated), said: — " The defendant, while admitting that the plaintiff is the person intended by the contract, yet insists that her being Vivar's lawful wife was made a condition of the obligation, that as a part of the contract Vivar warranted the existence of such relationship. " By the terms of the certificates the application forms part of the contract ; never- theless, tlie statements contained in it are not necessarily, for that reason, warranties. In order to have the force of a warranty, the statement must indeed constitute part of the contract ; but, whether even such a statement should be deemed a warranty, depends upon the just construction of the entire agreement. Courts do not favor warranties by construction, and hence parties will not be held to have entered into the contract of warranty, imless they clearly appear to have intended it. If the contract refers to statements contained in another paper for some other purpose than to give them the force and effect of warranties, — for instance, if it refers to them as ' rep- resentations,' — or if the purpose be doubtful, such reference will not convert the statements into warranties. Of themselves, statements in the application are mere representations, and they will not become conditions or warranties, unless the parties plainly evince an intention to make them snch, either by so denominating them or by declaring the validity of the contract to depend upon their literal truth. May, Ins., §§ 158-165; American Pop. Life Ins. Co. v. Day, 10 Vroom, 89. Even calling the statements warranties will not make them such, when other terms in the contract in- dicate a different understanding. Fitch v. American Pop. Life Ins. Co., 59 N. Y. 557 ; Anders v. Rnights of Honor, 22 "Vroom, 175. " Under these rules, the statements in the application now before us are not war- ranties. The certificates do not so designate them, but, on the contrary, style them ' representations,' and, in making them part of the contract, must be deemed to incor- porate them as representations. Nor is there in the contract any provision to the effect that, if they be false or untrue or inaccurate, the insurance will be void. The clause at the end of the certificates, ' that any violation of the within mentioned con- ditions . . . shall render the certificate, and all claims, null and void,' must be un- derstood as referring to matters which, by other parts of the contract, are made conditions and cannot of itself create a condition out of what had been before men- tioned as a representation only. The trial conrt, therefore, properly held that the statement concerning the relationship between Vivar and the plaintiff was not a warranty. " It remains however, to determine what effect it should have upon the contract if considered as a representation, untrue to the knowledge of the insured, for to that extent was the defendant's offer of proof." — Ed. SECT. III.] ^TNA LIFE INS. CO. V. FRANCE. 411 Mr. Justice Bradley delivered tlie opinion of the court. Tliis action was brouglit bj^ David France and Lucetta P., his wife, to recover the amount of a policj' of insurance for $10,000, issued hy the ^tna Life Insurance Company on the life of Andrew J. Chew, of Philadelphia, dated September 13, 1865, and paj'able to the said Lucetta, who was Chew's sister.-' . . . The policy, amongst other things, contained the following stipulation : "And it is also understood and agreed to be the true intent and meaning hereof, that if the proposal, answers, and declaration made by the said Andrew J. Chew, and bearing date the thirteenth day of September, 1865, and which are hereby made part and parcel of this policy as fully as if herein recited, and upon the faith of which this agreement is made, shall be found in anj^ respect false or fraudulent, then and in such case this policy shall be null and void." The trial resulted in a verdict and judgment for the plaintiffs. The defendant sued out this writ of error. Numerous exceptions were taken, on which errors are assigned here ; but thej' are all reducible to two heads, or grounds of defence, viz. : 1. Want of insurable interest in Lucetta P. France ; 2. Misrepresen- tation and breach of warranty as to the age and health of said Chew. It is insisted that the rulings and charge of the court below on these points were erroneous. . . . The other exceptions relate to alleged misrepresentations bj- Chew in the proposal for insurance. The policj' makes the proposal and the answers to the questions therein a part of the contract, and declares that if they shall be found in any respect false or fraudulent, the policy itself shall be void. Among the questions are the following, with the answers given to each respectivelj^ : — " ' 4. Place and date of birth of the party whose life is to be insured ? ' Ans. 'Born in New Jersey, in 1835.' '"5. Age and next birthday?' Ans. 'Thirty years, October 28, as near as I can recollect.' " ' 11. Has the party ever had any of the following diseases ; if so, how long and to what extent : pals}', spitting of blood, consumption, asthma, bronchitis, diseases of the lungs, . . . rupture, convulsions, etc. ? ' Ans. ' None.' "'12. Is the partv subject to habitual cough, dyspepsia, etc.?' Ans. 'No.' " ' 13. Has the party had, during the last seven years, any severe disease ? If so, state the particulars and the name of the attending physician.' Ans. 'No.'" The answers were followed by this qualification: "The above is as near correct as I remember." The defendant offered evidence tending to show that Chew, at the time of the application,would have been thirty-five or thirty-seven years old at his next birthday, instead of thirty, and that he was born October 1 In reprinting the opinion, passages foreign to warranty have been omitted. — Ed, 412 ^TNA LIFE INS. CO. V. FRANCE. [CHAP. V. 28, 1828 ; and that he had been ruptured from infancy, and so contin- ued up to the date of the application, and wore a truss ; and that he had had consumption or some disease of the lungs ; and that he was subject to habitual cough and dj'spepsia ; and had been attended by physicians for severe disease within seven years ; and that he Jjnew all of these matters at the time of the application. Counter evidence was given on the part of the plaintiffs. Among the proofs of death was an affidavit of the widow of Chew, stating that he was born October 28, 1828, which defendant relied on as to the point of age. Mrs. France denied all knowledge of the papers received by defendant as proof of loss, except her own affidavit ; and as to the alleged rupture, called, amongst others, Dr. Lewis, as an expert, and proposed to him the question, whether the existence of a reducible rupture in a subject of life assurance, in his opinion, appreciably increased the risk of the underwriters ? The ques- tion was objected to, but allowed. The defendant asked the court to charge, that if any of the answers were untrue, in whole or in part, the verdict must be for the defendant. The court charged that the truth or falsehood of the answers materially affected the risk, but added : — " But the answers here are qualified by the words appended at the foot of the application, ' The above is as near correct as I remember,' which are applicable to all the statements made by the assured. He must be understood, therefore, as stipulating only for the integrit}' and iipproximate accuracy of his answers, and not for their absolute verit}'. Without this qualification, substantial error in any of his answers would avoid the policj', irrespective of his motive, because he warranted their truth ; with it, the plaintiffs' right to recover will not be defeated, unless it appears that some one of the answers was consciously incorrect. " To avoid the policy, then, the jury must be satisfied that the an- swers, or some of them, were untrue in any respect materially affecting the risk, and that the assured knew of their incorrectness." And, in particular, as to Chew's representation of his age, the court charged, " that if he knew, or had reason to believe, that the year of his birth, as stated in the answer, did not correctly indicate his age, the policj' is void, and the plaintiffs are not entitled to recover." We think the qualification made by the court was entirely justified by the form in which the answers were given. If the company was not satisfied with the qualified answer of the applicant, they should have rejected his application. Having accepted it, they were bound by it. As to the diseases inquired about, the court charged substantially to the same effect ; namely, that the answers called for were material, and if untrue, and Chew knew or had reason to believe them so, the policy was void. As to the alleged rupture, in particular, the court said : — " If, however, it appears that the rupture had been completely re- duce^d, so that its effects had entirely passed away, and it had ceased to affect his health or impair his capacity to take fatiguing and pro- longed exercise, the jury will determine whether the answer is untrue SECT. III.] KHECHT V. MUTUAL LIFE IXS. CO. OF NEW YOKK. 413 as nearlj- as he could remember. On the other hand, if the rupture had not been cured, it is hardly presumable that he could have forgotten it at the time of the application ; and if the jury so find, it was his duty to disclose the fact that he had been afflicted with this disease, and his negative answer will avoid the policy." And so of the rest We think the charge was a fair one, and gave the defendant the full benefit of anj' falsity contained in the answers given by the applicant. Under the charge as given, we do not see how the e\-idence of the physician, even if irrelevant, could injure the defendant. Other points were raised, but it is unnecessary to discuss them. From a careful examination of the whole case, as presented, we are satisfied that there is no error in the record. Judgment affirmed} KXECHT V. MUTUAL LIFE INSURANCE CO. OF NEW YORK. SUPEEME COUKT OF PEXXSTLVAiaA, 1879. 90 Pa. 118. Ekeoe to the Court of Common Pleas of Northampton County.^ An amicable action of assumpsit was brought by the administrator of A. S. Knecht, upon a policy of life insurance written by the Mutual Life Insurance Companj', in 1868. A case was stated for the opinion of the court; and the court, Meters, P. J., having entered judgment for the defendant, the plaintiff took this writ. Edward J. Fox, for plaintiff in error. S. Green, for defendant in error. Paxson, J. It is not alleged that in his application for insurance the insured made any false representation of an existing fact. What he did declare was, " that he is not now afflicted with any disease or disorder, and that he does not now, nor will he, practise anj- pernicious habit that obviously tends to the shortening of life." The case stated sets forth, " That at the times of making the aforesaid application for insurance, the said Abram F. Fangboner was of correct and temperate habits ; that some years after the issuing of said policy he became ad- dicted to the use of intoxicating drinks, from the immoderate use pf which he was attacked with delirium tremens, from which he died." The policy issued in pursuance of said application contained this pro- vision : " If an}' of the statements or declarations made in the appli- cation for this policy, upon the faith of which this policy is issued, 1 Compare ^tna Life Ins. Co. v. France, 91 U. S. 510 (1875). See Fowkes v. Manchester and London L. Assurance and Loan Assn., 3 B. & S. 917 (1863); Washington L. Insurance Co. v. Haney, 10 Kan. 525 (1873); Fitch v. American Popular L. Ins. Co., 59 N. Y. 557 (1875). — Ed. 2 The reporter's statement has been omitted. — Ed. .414 KNECHT V. MUTUAL LIFE IXS. CO. OF NEW YORK. [CHAP. T. shall be found in any respect untrue, then and in every such case this policj- shall be null and void." It is unnecessary to discuss the ques- tion as to whether the declarations of the insured as to existing facts in his application constitute a warranty. The authorities are by no means uniform upon this point. Our own recent case of the Washing- ton Life Insurance Co. v. Schaible, 1 W. N. C. 369, holds that they do not constitute such warranty. Where, however, the policj' has been issued upon the faith of such representations, and they are false in point of fact, the better opinion seems to be that the policy is avoided. And this is so even where the false statement is to a matter not material to the risk : Jeffries v. The Life Insurance Co., 22 Wallace, 47. In such case the agreement is that if the statements are false, there is no insurance ; no policy- is made by the company, and no policy is accepted by the insured. In the case in hand the policy attached. There was nothing to avoid it ab initio. Were the mere declarations hy the in- sured in his application, as to his future intentions, and his failure to carry out his declarations, or to comply v^ith his intentions as to his future conduct, sufficient to work subsequent forfeiture of the policy ? In no part of the application did the assured covenant that he would not practise any pernicious habit. Kor did he promise, agree, or war- rant, not to do so. He declared thaX he would not. To declare is to. state, to assert, to publish, to utter, to announce, to announce clearly some opinion or resolution ; while to promise is to agree, " to pledge one's self, to engage, to assure or make sure, to pledge by contract." — Worcester. There is no clause in the policj- which provides that if the assured shall practise any pernicious habit tending to shorten life, the policy shall ipso facto become void. There is only the stipulation that, " if any of the statements or declarations made in the application . . . shall be found in any respect untrue, this policy shall be nuU and void." This evidently referred to a state of things existing at the time the policy was issued. As to such matters, as I have already said, there was no untrue statement. But the assured declared, as a matter of intention, that he would not practise anj- pernicious habit. Was this declaration of future intention false? There is no allegation, much less proof, that it was so. The assured might well have intended to adhere to his declaration in the most perfect good faith, yet in a moment of temptation have been overcome by this insidious enemy. In the ab- sence of any clause in the policj' avoiding it in case the assured should practise any such habit, and of anj' covenant or warranty on his part that he would not do so, we do not think his mere declaration to that effect in the application sufficient to avoid the policj'. The judgment is reversed, and judgment is now entered in favor of the plaintiff and against the defendant for the sum of $1500, with interest from June 26th, 1876.^ Tkdnket, J., dissented. 1 Contra : HolterhoS v. Mutual Benefit L. Ins. Co., 3 American Law Record, 272 (Cincinnati Superior Court, General Term, 1874), s. o. 3 Ins. L. J. 854, and 4 Bigelow'g SECT. III.] KNIGHT V. MUTUAL LIFE INS. CO. OE NEW YOKK. 415 KNIGHT V. MUTUAL LIFE INSUEANCE COMPANY OF NEW YORK. Supreme Court of Pennsylvania, 1881 . 9 Weekly Notes of Cases, 501. Error to the Common Pleas No. 4, of Philadelphia Count}'. Assumpsit by W. A. Knight against the above-named compan}', upon a paid-up policy for $3500 issued upon the life of W. P. Beatty. The material facts of this case were as follows : In 1866 W. P. Beatty insured his life in the defendant company for $10,000. Before the policy was issued, the applicant filed an application with the company, which contained, inter alia, the following questions : Are j'our habits of life correct and temperate ? Have the}' always been so ? Both these questions were answered in the affirmative. The following declaration, signed by the insured, was appended to the declaration as a part thereof : — " And it is hereby expressly stipulated and agreed that the above application and this declaration shall form the basis of the contract between the above-named persons and the said The Mutual Life In- surance Company of New York, and that if any misrepresentations or fraudulent and untrue answers have been made, or if anj' facts which should have been stated to the companj' have been suppressed therein, or if any violation of the covenants, conditions, or restrictions of the policy (should one be issued), shall occur, or any omission or neglect to pay any of the premiums on or before the days on which they shall fall due shall take place, that then in either- event the said policy shall become and be null and void, and all moneys which shall have been paid, and also all dividends which may have accrued thereon, shall be forfeited to the said companj' for its sole use and benefit. And tiie said William Penn Beatty further declares that he is not now afflicted with any diaease or disorder, and that he does not now nor will he practise any pernicious habit that obviously tends to the shortening of life." In 1871 Beatty allowed his policy to lapse, and on May 19, 1871, took from the company a new paid-up policy (the one in suit) for $3500. Before this policy issued, he signed a declaration, whereby he agreed that the said declaration and his application for the original policy should be part of his contract with the company. This declaration contained, inter cdia, the following terms : — " And I do hereby declare that the several answers given by me, or In my behalf, to the questions on pages 1, 2, and 3, of the original ap- h. & A. Ins Reports, 395 ; Schultz v. Mutual L. Ins. Co., 6 Fed. E. 672 (U. S. C. C, S. D.N. Y. 1881). See Supreme Council of Royal Templars v. Curd, 111 111. 284 (1884); and Com- mercial Mutual Accident Co. v. Bates, 176 lU. 194 (1898). — Ed. 416 KNIGHT V. MUTUAL LIFE INS. CO. OF NEW YORK. [cHAP. T. plication for a policy of life insurance, which was dated Feb. 21, 1866, and signed by the above-named, and which this is intended to replace, were true and correct when made ; and I guarantee that he does not and will not practise any bad or vicious habit that tends to the shorten- ing of life." ^ . . . Beatty subsequently failed and made an assignment, owing the plaintiff Knight a large sum. The policj' in suit was sold at public sale after due notice by the assignee, and bought b}' the plaintiff for $1510. On Feb. 9, 1878, Beatty died ; and, the company declining to pay the policy, this suit was brought. The defendant pleaded specially (1) that the insured had given false answers to the questions in his original application, and (2 and 3) that he had violated his declaration and guarantj- that he did not and would not practise any pernicious habit obviously tending to shorten life, wherefore, by the terms of the policy, it was null and void. The plain- tiff filed two replications to each plea, one traversing the fact of intemperance. . . . On the trial, before Elcock, J., . . . the court charged the jury, inter alia, as follows : The insured warranted that he would not con- tract any pernicious habit obviously tending to shorten life ; the guar- anty is the same as a warrantj- ; and if the jury believe that afterwards the insured practised the pernicious habit of intemperance, the policy became null and void. Verdict and judgment for defendant, whereupon the plaintiff took this writ, assigning for error, inter alia, . . . the charge of the court as above set forth. M D. McLoughlin (with him W. K. Shryock), for plaintiff in error. W. W. Porter (with him W. A. Porter), for defendants in error. The Court. . . . We agree in opinion with the learned judge below, that the word " guaranty " means "warrant," and in this respect the case is distinguishable from Knecht v. Ins. Co., 7 W. N. C. 297. Judgment affirmed.^ 1 In reprinting the statement and the opinion, passages dealing with estoppel have heen omitted. — Ed. 2 See Ballantyne v. Mutual L. Ins. Co., 17 Victorian L. E. 520 (1891). — Ed. SECT. III.] THOMSON V. WEEMS. 417 THOMSON, Appellant, v. WEEMS and Others, Respondents. House of Lords, 1884. 9 App. Cas. 671.^ Appeal from the Second Division of the Court of Session, Scotland." The question was whether the appellant, as manager of and as representing the Standard Life Assurance Company, was bound to pay to the respondents £1 ,500, the amount of a policy of insurance on the life of William Weems. The policj' was executed on Nov. 25, 1881. After reciting that William Weems, " having subscribed or caused to be subscribed and deposited at the oflBce of the said company in Edin- burgh a declaration, bearing date the 9th of November, 1881, which is hereby declared to be the basis of this assurance," the policy proceeded to promise the amount in question, with this proviso, among others : " Provided also, that if anything averred in the declaration hereinbe- fore referred to shall be untrue, this policy shall be void, and all moneys received by the said company in respect thereof shall belong to the said companj' for their own benefit." The declaration referred to was on a printed form, beginning thus: "The person whose life is proposed for assurance will also answer the following questions," and containing numerous printed questions and manuscript answers, among others these: "7. (1) Are j-ou temperate in your habits? (2) and have you always been strictly temperate ? — (1) Temperate. (2) Yes." The declaration closed thus : "I. . . do hereby declare that I am at present in good health, not being afflicted with any disease or dis- order tending to shorten life ; that the foregoing statements of my age, health, and other particulars are true ; . . . and that I have not with- held anj" circumstance tending to render an assurance of my life more than usually hazardous. And I ... do hereby agree that this declara- tion shall be the basis of the contract between me and the Standard Life Assurance Compan3- ; and that if any untrue averment has been made, or any information necessary to be made known to the company has been withheld, all sums which shall have been paid to the said company . . . shall be forfeited, and the assurance be absolutely' null and void," signed, " William Weems." Weems died on July 29, 1882. The company declined to pay. Thereupon the firm of J. & W. Weems, for whose behoof the policy had been entered into, and Alexander Wylie, the sole surviving partner, 1 s. c, s«6 nom. Standard Life Assurance Co. v. Weems, 11 Court of Session Cases, Fourth Series, 48 (House of Lords). — Ed. 2 The statement has been rewritten, chiefly with the aid of Lord Blackbukn's opinion. In the Second Division of the Court of Session, the case is reported, sub nom. Weems u. Standard Life Assurance Co., 11 Court of Session Cases, Fourth Series, 658 (1884). — Ed, 27 418 THOMSON V. WEEMS. [CHAP. V. and Eobert Eeid, to whom the policy had been assigned as security, brought an action. The defender stated, among other defences : " 3. The statements made, as above recited, by the said William Weems, were, at the time of their being made, and to his knowledge, false. In point of fact the said William Weems was at that time a person of intemperate habits, and he had been so for some time. His health was affected by said habits. His death, which occurred shortly after, was the result of them. ... 4. The false answers above set forth were made know- ingly and fraudulently by the said William Weems, in order to conceal the risks attaching to an insurance on his life from the corapanj', and induce them to grant him a policy, which they would not have done had they been aware of the true state of the facts." The pursuers made the following answer : " It is denied that the answers made by Mr. Weems . . . were false, or at least that thej' were made by him in the knowledge that they were false, and with a fraudu- lent intention." The Lord Ordinary, Lord Frasee, pronounced an interlocutor, finding, inter alia, "that the said William Weems did not make any untrue statements In the said declaration, and that therefore the policy is not void. Therefore decerns against the defender." The defender reclaimed, whereupon the Second Division of the Court of Session (Lord Eutherfued Clark dissenting) pronounced an interlocutor adhering to the Lord Ordinarj-'s decision. Against these interlocutors, an appeal was taken to the House of Lords. The Solicitor- General for Scotland (Asher, Q. C), and Webster, Q. C, contended that the decision of the court below was erroneous. The T^ord Advocate {Balfour, Q. C), and James JReid, for the respondents. Lord Blackburn. * ... I take it that what j'our Lordships have to do is to determine on the whole evidence whether the statement was or was not " untrue," within the meaning of that word, as used in the policy, and declaration incorporated in it I think that to a great degree depends on the construction of the whole contract. Those whose business it is to insure lives calculate on the average rate of mortalitj', and charge a premium which on that ordinar3- aver- age will prevent their being losers. There are some expressions used by the judges in the Court of Session in the case of Hutchison, Feb. 21, 1845 ; 7 Court Sess. Cas. 2nd Series, at p. 473, which would seem to lay it down, at least when it is the party's own life that is assured, that it is illegal, or at least so absurd that no one would make such a contract, to engage that if the life is such that the risk is of the ordinary kind, the insurer shall be bound, but that if there is a disease tending to shoi-ten life, such as to make it not the ordinary risk, the insurer shall not be bound, whether the assured knew it or not. I 1 After stating the case. — Ed. SECT. III. J THOMSON V. WEEMS. 419 cannot agree to this ; it seems to me a very reasonable stipulation on the part of the insurer, and that it is not at all absurd or improper on the part of the assured to assent to such being a term of the con- tract. It is seldom that a derangement of one important function can have gone so far as to amount to disease without some S3'mptoms having developed themselves, but the insurers have a right if they please to take a warranty against such disease, whether latent or not, and it has very long been the course of business to insert a warranty to that effect. If there was no more than a warrant}' to that effect, if it was dis- proved, the risk would never have attached, the premiums therefore would never have become due, and might, if paid, be recovered back as money paid without consideration. But it became usual, I do not know when, but at least for the last fifty years, to insert a term in the contract, that if the statements were untrue the premiums should be forfeited. That, no doubt, is a hard bargain for the assured if he has innocently warranted what was not accurate, but if he has warranted it, " un- truth," without anj' moral guilt, avoids the insurance ; and in Duckett V. Williams, 2 C. & M. 348, in 1834, it was held, on reasoning to my mind irresistible, that in a declaration substantially as far as regards this point the same as this, what was untrue so as to have the effect of avoiding the insurance was also untrue so as to cause the forfeiture of the premium.^ . . . It is competent to the contracting parties, if both agree to it and sufficiently express their intention so to agree, to make the actual existence of an3-thing a condition precedent to the inception of any contract ; and if they do so the non-existence of that thing is a good defence. And it is not of any importance whether the existence of that thing was or was not material ; the parties would not have made it a part of the contract if they had not thought it material, and they have a right to determine for themselves what they shall deem material. In policies of marine insurance I think it is settled by authority that anj' statement of a fact bearing upon the risk introduced into the written policy is, bj' whatever words and in whatever place, to be construed as a warranty, and, prima facie, at least that the compliance with that warranty is a condition precedent to the attaching of the risk. I think that on the balance of authority the general principles of insurance law apply to all insurances, whether marine, life, or fire ; see per Lord Eldon, C, in a Scotch appeal on a fire insurance. New- castle Fire Insurance Co. v. Macmorran & Co., July 10, 1815, 3 Dow. at p. 262. No question arises on that in the present case, but I do not think that this rule as to the construction of marine policies is also 1 Here followed comments on Anderson v. FitzGerald, ante, p. 391 (1853); Life Association v. Foster, 1 1 Court of Session Cases, Third Series, 351 (1 873) ; and Scottish Life Assurance Co. v. Buist, 4 Court of Session Cases, Fourth Series, 1076 (1877). — Ed. 420 THOMSON V. WEEMS. [CHAP. V. applicable to the construction of life policies. But I think when we look at the terms of this contract, and see that it is expressly said in the policj', as well as in the declaration itself, that the declaration shall be the basis of the policy-, that it is hardly possible to avoid the con- clusion that the truth of the particulars (which, I think, include his statement that he was of temperate habits) is warranted. The Lord Advocate argued very powerfully that the truth of that statement involved questions of degree and of opinion, and therefore could not, he argued, be warranted. But the most familiar instance of a warranty (implied in every voyage policy) is that of seaworthiness, involving in it questions of degree and opinion to quite as great an extent as a waiTanty of temperate habits. I think,- therefore, whilst I agree that the burthen is on the insurers, and that they must prove drinking carried on before the date of the declaration, 9th of Novem- ber, 1881, to such an extent as to amount to intemperance, and so often and continuously as to amount to habits of intemperance, they are not obliged to prove anything more. The object of the insurance company was to know that the life to be insured was not merely not rendered already diseased by drinking, but that his habits were so temperate that there was no unusual risk that he should become a drunkard, and they took the warranty that they might safely dispense with any further inquiry- on that point. I think, there- fore, that, such being the object of warranty, we must take into account the normal habits of people in the class and in the locality where the person assured lives. I think gentlemen in the last century drank habitually a great deal more than they do now, and I do not think a gentleman then would properly have been held to be of intem- perate habits (within the meaning of such a policy) though he drank so much habitually that, if a gentleman now did so, the insurers would reasonably dread that he would drink more ; and then he would not be held of temperate habits within the meaning of such a policy. And I think it is fair, so far as the evidence enables us, to take into account the normal habits of the town councillors of Johnstone ; the evidence does not satisfy me that they, as a general rule, drank as freely as the assured did. He, some months after the policy was made, was elected provost, and then he seems to have pulled up. That, as it was after the declaration, is only material as far as it throws light on what had been the case before. And, on the 29th of July, 1882, eight months after the policy was granted, he died. Now the cause of death was, in one sense, immaterial. If the policy was avoided, the insurance company would not have been liable though he had been killed in a railway accident, but that would have afforded no evidence as to the state of his habits. But the doctor who attended him in his last illness certified that the cause of his death was hepatitis, chronic, four months, congestion of the brain, four days. Dr. Colligan, who certified this, is himself dead ; that, according to the Scotch law of evidence, takes his statements out of the rule as to hearsay evidence, SECT. III.] THOxMSON V. WEEMS. 421 though, in weighing them, we must remember that he is not subject to cross-examination. Now chronic hepatitis is a disease of the liver, which is generallj-, in this climate, produced by excessive drinking over a considerable period ; and if it is established that the assured had, as early as March, 1882, really begun to suflfer from such a disease, it adds greatly to the force of that evidence which tends to show he had been in the habit of drinking too much for some time before November, 1881. I do not know that either class of evidence by itself would have in my mind satisfied the burthen, which was on the appellant ; taken together, they do. I must therefore advise your Lordships to reverse the inter- locutors complained of, with costs. Lord Watson.^ ... I entertain no doubt that, according to the law of Scotland, the declaration of the assured taken in connection with the policy itself, in his proposal to the company, constitutes an express warrant}- that the answer made by him to the seventh question was true. In other words, it is an express and essential condition of the contract, that the policy shall be null and void in the event of the averment by the assured as to his habits, implied in his answer to that question, proving to be false. The doctrine of warrant}', as applied to such stipulations in a contract of assurance, is the same in the law of Scotland as in that of England. I am aware that some Scotch judges have in times past objected to the use of the word " warranty " as having no definite significance in the law of Scotland ; but in order to show that such a remark is no longer well founded, I need only refer to the observations jgade b}' the Lord President (Inglis) and Lord Mure in Scottish Life Assurance Society v. Buist, 13 Jul}-, 1877 ; 4 Court Sess. Cas. 4th Series, at p. 1078, and to the opinion of the judges of the First Division in Life Association v. Foster, 31 Jan. 1873 ; 11 Court Sess. Cas. 3rd Series, p. 351. Notwithstanding that the warranty is express, there still remains for consideration what must be held to be the subject-matter of the war- ranty. That is a point to be determined in each case, according to the just construction of the question and answer taken per se and with- out reference to the warranty given. In the present case, the seventh question proceeds from the company, being printed on a form of proposal issued by them for the use of persons who may be desirous of effecting an assurance. The question must, in my opinion, be in- terpreted according to the ordinary and natural meaning of the words used, if that meaning be plain and unequivocal, and there be nothing in the context to qualify it. On the other hand, if the words used are ambiguous, they must be construed contra proferentes, and in favor of the assured. For my own part, I can discern no ambiguity in the language of question seven. I agree with Lord Rutherfurd Clark, that the import of the answer is precisely the same as if the deceased had affirmed : " first, that he was temperate in his habits ; and ^ After stating the case. — Ed. 422 THOMSON V. WEEMS. [CHAP. V. secondly, that he had alwaj-s been strictly so." In its plain and ordi- nary sense, that statement is an averment of fact and not a mere assertion of the opinion or belief entertained by the assured with regard to that fact. It then appears to me that whatever may be the import of the word "temperate" (which is a separate matter), the assured must be held to have warranted, not that the assertion was ' true according to his sincere conviction, but true in point of fact ; and consequently, that in order to establish a breach of warranty it is not necessary for the appellant to prove that the assertion was morally false. 1 . . . An ingenious argument was addressed to j-our Lordships by the respondents' counsel, for the purpose of showing that the seventh question, from its very nature, involved only matter of opinion and not of fact, and consequently that any reply to it must be treated as an expression of opinion, and not as an assertion of fact. It appeared to me that their argument, which turned upon a very fine-drawn dis- tinction between what were termed matters of pure fact and matters of opinion, had really no practical bearing upon the case before us. There are facts innumerable which can only be ascertained by the test of opinion, but they are not the less facts in a legal, whatever they may be in a metaphysical, sense. It appears to me to be in vain to contend that the character of a man's habits, temperate or intemper- ate, is matter of opinion and not of fact. The second branch of the fourth question in the proposal submitted by the deceased, furnishes an apt illustration of that which in the ordinary' sense is matter of mere opinion as distinguished from matter of fact. It rniis thus : " Do you consider yourself of a sound constitution ? " That is a query which obviously relates, not to the soundness of the assured's constitution, but to his own opinion on the subject ; and in that respect it presents a marked contrast to the terms of the seventh question.'^ . . . I believe it to be useless to attempt a precise definition of what con- stitutes " temperate habits," or " temperance," in the sense in which these expressions are ordinarily employed. Men differ so much in their capacity for imbibing strong drinks that quantity affords no test ; what one man might take without exceeding the bounds of moderation, another could not take without committing excess. In judging of a man's sobriety, his position in life, and the habits of the class to which he belongs must, in my opinion, alwaj's be taken into account ; because it is the custom of men, engaged in certain lines of business, to take what is called refreshment, without any imputation of excess, at times when a similar indulgence on the part of men not so engaged would 1 Here were discussed Scottish Life Assurance Co. v. Buist, 4 Court of SessioQ Cases, Fourth Series, 1076, 1078 (1877) ; and Anderson v. FitzGerald, ante, p. 391, (1853). — Ed. 2 Here were discussed Hutchison v. National Loan Fund, 7 Court of Session Cases, Second Series, 467 (184.5); Life Association v. Foster, 11 Court of Session Cases, Third Series, 351 (1873); and Insurance Company v. Foley, 105 U.S. 350 (1881). — Ed. SECT. III. J THOMSON V. WEEMS. 423 be, to say the least, suspicious. But I do not think that the habits of a particular locality ought to be takeu into account, or that a man, who would be generally regarded as of intemperate habits, ought to escape from that imputation because he is no worse than his neigh- bours. In the present case the evidence clearly establishes that the assured was a most able and estimable man ; but that circumstance is not of much weight, because able and estimable men are not neces- sarily exempt from social failings. I shall not dwell upon the details of the proof of the import of which I take very much the same view which is clearly and succinctly expressed in the opinion of Lord Ruther- furd Clai-k. It seems to me to be the fair result of the evidence, that the assured was in the habit of taking more drink than was good for him : that he was frequently aflfected with drink on occasions when all except himself were sober ; that his indulgence to excess had become so apparent that several of his friends remonstrated with him on the subject, and that instead of repudiating the charge, he admitted it and promised amendment. These facts appear to me to be fully proved, and they are, in my opinion, altogether inconsistent with the truth of the assertion that he was, on the 9th of November, 1881, of temperate habits, and had always been so."^ . . . Lord FiTzGrERALD. I also am of opinion that- the answers of the assured to the questions : " (1) Are you temperate in j-our habits, and (2) Have j'ou alwaj-s been strictly so? Answer — (1) Temper- ate; (2) Yes" — formed parts of the basis of the contract of assur- ance, and that the assured warranted those answers to be true. By " true " I mean true in fact without any qualification of judgment, opinion, or belief. I confine my observations to the very answers now before us. If untrue in fact, the policy is void, and the persons cannot recover. The law of Scotland is on this subject identical with that of England. The inquiry for your Lordships is whether the evidence is suflacient to satisfy you that the assured had been prior to the effecting this policy intemperate in his habits. "Temperate in habits" is a sentence to be interpreted, and though not to be taken in the Pythagorean sense of " total abstinence," yet seems to import abstemiousness, or at least moderation — " The rule of ' not too much,' By temperance taught." I am, my Lords, inclined to adopt a fair and liberal interpretation, having regard to the position of the individual, the habits of the loealitj-, and even the peculiarities of the local municipal authorities in adjourning to neighboring public-houses "to continue the debate," but notwithstanding all these allowances I am coerced to come to the conclusion that the evidence is sufficient to establish that the assured was not a person of temperate habits ; on the contrary, his habits of intemperance had been repeatedly observed at the town council and on 1 Comments on the evidence have been omitted. — Ed. 424 MUTUAL LIFE IXS. CO. V. SIMPSON. [CHAP. V. other public occasions. He has been shown at times to have been incapable of transacting business or taking care of himself. He was remonstrated with b}' friends, and does not seem to have denied the impeachment, and finally there is evidence that he was elected provost in the hope that the responsibilities of office might produce reformation of habit. The evidence for the defenders is not in mj- judgment dis- placed by the negative evidence led for the pursuers. The cause of death, too, is confirmation strongly of the assured having fallen into that fatal habit which produces "... all the kinds Of maladies that lead to death's grim care Wrought by intemperance." It was against this danger the insurers sought protection. My Lords, I entirely concur with the noble Lord opposite (Lord Watson) in his reasons and in his criticisms on the Scotch decisions. Interlocutors appealed from reversed ; cause remitted with instructions.^ MUTUAL LIFE INS. CO. v. SIMPSON. SuPEEME CotJET OF Texas, 1895. 88 Tex. 333. Ebeoe to Court of Civil Appeals for First District, in an appeal from Harris County. The opinion contains a sufficient statement. Ewing & Ring, for plaintiff in error. Hdker, JBotts, Baker & Lovett, for defendant in error. Axexandee, Special Associate Justice. This was a suit by Elizabeth K. Simpson against the plaintiff in error to recover on a life insurance policy, insuring the fife of her husband William Simpson, in the District Court of Harris County, in which she recovered judgment on a trial before a jury, which was, on appeal, aflSrmed by the Court of Civil Appeals ; and on application of the insurance company a writ of error has been granted. The insurance company defended on the ground, among others, that there was a breach of the warranties made by the assured, on the faith of which the policy was issued, and that it was thereby avoided. The record discloses, that preliminary to the insurance, and as a basis thereof, inquiry was made of the applicant for insurance, as follows : "Have you ever had any of the following diseases?" Then follow inquiries as to a variety of ailments, some of which are universally 1 Other cases on temperate habits are : Hartwell r. Alabama Gold L. Ins. Co., 33 La. Ann. 1353 (1881); Northwestern L. Ins. Co. r. Muskegon Bank, 122 U. S. 501 (1887) ; S.'Caa. L. Ins. Co. ». Darey, 123 C. S. 733 (1887) j Chambers v. Northwestern Mutual L. In3. Co., 64 Minn 495 (1896). —Ed. SECT. III. J MUTUAL LIFE INS. CO. V. SIMPSON. 425 known to be fatal, or likelj- to affect the duration of life, such as " con- sumption," " spitting or coughing of blood," " paralj-sis," " apoplexy," and " disease of the heart." There are also inquiries made as to certain other ph^-sieal disabilities, not necessarily or probablj' coming within the category above mentioned, such as " frequent or difficult urination," " dizziness," " palpitation of the heart," " shortness of breath," " head- aches — severe, protracted, or frequent." To the inquirj- as to the last mentioned the assured answered, " No." It is conceded that the answers were warranties, and if untrue, that the policy was avoided, without reference to their materiality as to the risk. The evidence shows, that for many months prior to the contract, at irregular intervals, but frequently, the assured had what is designated in the evidence as sick headache ; that it was severe, accompanied by vomitings and a pain in the region of the chest, which disability con- tinued from six to eighteen hours, but after sleep, which followed the vomitings, a normal condition existed. It also appears, that all of these spells were preceded by excessive work and fatigue and loss of sleep, which are assigned by the witness, plaintiff below, as the cause thereof. And it sufficiently appears that the assured was otherwise a man of robust health. The District Court charged the jurj- to find for plaintiff, " unless . . . the assured in his application and examination, upon which the policy was issued, touching his drinking wine, spirituous and malt liquors, and to what extent, and his former habit of drinking wine, spirituous and malt liquors, answered falsely ; or unless the}' believed that in such application, touching whether assured ever had diseases, such as headaches, severe, protracted, or frequent, and the particulars and duration of same ; and as to his being in perfect health, the said assured answered falsely, in which case you will find for defendant. But j'ou are charged, that temporary illness of assured in the course of every-day life, brought on by excessive exercise or overwork, is not embraced in said application, nor is an occasional drink of spirituous, vinous, or malt liquor embraced in the said application, but the answers in said application have reference to such diseases or ailments as indi- cate a vice in the constitution, or are so serious as to have some bearing on the general health, a7id such as, according to general under- standing, would be called a disease. "And you are charged, that the questions and answers respecting the drinking of spirituous, vinous, or malt liquors by assured, and former habits mentioned in said application, have no reference to an occasional drink taken, nor to occasional indulgences, unless such drinking was habitual." This charge is approved bj' the Court of Civil Appeals as a correct exposition of the law of the case. There is no complaint in the appli- cation for writ of error, that this charge is on the weight of the evidence. 426 MUTUAL LIFE INS. CO. V. SIMPSON. [CHAP. T. It is not deemed necessary to set out the charges requested and refused, or the assignments of error complaining of the charge and the refusal of charges. They are suflBcient to require a determination as to whether there was material error in the instructions of the court. Justice Ramsey and the writer agree, that the part of the charge which instructs the jury that the answers of the assured have reference to such diseases or ailments as indicate a vice in the constitution, or are so serious as to have some bearing on the general health and in the continuance of life, was a material error, prejudicial to defendant, for which the judgment of the Court of Civil Appeals should be reversed. We are not unmindful of the well-recognized rules as to the construc- tion of contracts of insurance — that forfeitures are not favored, that generally in cases where there is doubt or ambiguity, that construction should be adopted most favorable to the assured, the reasons for which are obvious, and need not be recounted. On the other hand, when the language of contracting parties is plain and unambiguous, and there is no reason for misunderstanding the purport thereof, effect must be given to it, enlarged or limited only by the nature of the subject to which it is applied. Said the United States Supreme Court, speaking by Justice Jackson, in the case of Insurance Company v. Coos, 151 United States (Co-op- erative Edition, book 38, page 235) : " It is settled by this court, that when an insurance contract is so drawn as to be ambiguous, as to require interpretation, or to be fairly susceptible of two different con- structions, that construction will be adopted which is most favorable to the assured. But the rule is equally well settled, that contracts of insurance, like other contracts, are to be construed according to the sense and meaning of the terms which the parties have used ; and if they are clear and unambiguous, their terms are to be taken and under- stood in their plain, ordinary, and popular sense." As said by the Court of Appeals of New York (Mack v. Insurance Companj-, 106 New York), as quoted bj' Judge Jackson : " It tends to bring the law itself into disrepute when, by astute and subtile distinctions, a plain case is attempted to be taken without the operation of a clear, reasonable, and material obligation of the contract." The charge of the court and the opinion of the Court of Civil Appeals virtually assume, that because the inquiry is about diseases, it is nec- essarily and alwa3's about diseases which either indicate a vice in the constitution or are so serious as to have some bearing on the general health and on the continuance of life ; and this, notwithstanding the specific inquiries may be as to physical disabilities or ailments which, according to common understanding, are diseases, but which neverthe- less are not understood to indicate the conditions enumerated in the charge. This seems to reverse a common rule of the construction of language. If it be true, that when an inquiry about diseases is made, it means only such as are mentioned in the charge, notwithstanding the specific iuquiiies are about ailments not usually indicating such condi- SECT. III.J MUTUAL LIFE INS. CO. V. SIMPSON. 427 tions, the well-established distiuetion between warranties and repre- sentations would be useless, for then there would be a breach of war- rant}- only when the matter warranted was both false and material to the risk. The word "disease" maj- include, and is often used to designate, ail- ments more or less trivial. Medical science, as expounded b}' its ex- perts, has not definitely determined all of the physical ailments which indicate a vice in the constitution, or have a direct tendency to shorten life. Through abundant caution the insurance company may, if it elects, inquire about any ailment, and take a warranty concerning it, lest it might affect the risk, although it cannot be known that it will. The length of this opinion precludes more than a brief reference to some of the cases cited by defendant in error, and discussed by the court below. In the Cushman case, 70 New York, 73, from the opinion in which the language of the charge under discussion seems to have been copied, it is noticeable that the court says, that " it must be generally true, that before an ailment can be called a disease it must be " such as is indicated in the language of the charge. The case was one upon con- flicting evidence as to whether assured had ever had disease of the liver, or any serious disease, and it was decided that the defendant was not entitled to have a nonsuit entered, and that whether there were such diseases was properly submitted to the jury ; and this is all that the case decides. In the case of Trefz, 104 United States, 197, the assured, to ques- tions about various diseases, answered, "Never sick ; " and it distinctly appears that he was never sick of any of the diseases inquired about. And notwithstanding an apparent disclaimer by the court, the case obviously was in part determined upon the fact that the assured was a foreigner, unfamiliar with the English language. In the case of Insurance Company v. Trust Companj-, 112 United States, 250, the inquiry was about an affection of the liver ; and we think it is distinguishable from an inquiry about " headaches, severe, frequent, or protracted." To avoid misconstruction, we state that we do not think, if the dis- , ability inquired about was not inherent, but was produced by extraor- dinary conditions, such as those described in the record, that the answer to the question should be held untrue. For the purpose which will appear, we state that the following further inquiries were made of tlie assured, to which his answers follow : " Do j-ou ever drink wines, spirits, or malt liquors?" " No." "To what extent? " " Not at all." " Former habit of drinking wines, spirits, or malt liquors ? " " Not at all." Justice Ramsey desires it stated, that in his opinion that part of the charge which instructs the jury that an occasional drink of liquor is not embraced in the application, and the questions and answers have no reference to an occasional indulgence, unless such drinking was 428 MUTUAL LIFE INS. CO. V. SIMPSON. [CHAP. V. habitual, was material error, for which the judgment should be reversed. He holds, that the questions must be considered together, and that the obvious purpose of the questions was to ascertain whether the assured, at the time or in the past, had been addicted to the use of intoxicating liquors, and the extent thereof; and that the charge precluded the jury from giving proper consideration of the evidence about the drinking of the assured ; and that the meaning of these questions and answers should have been submitted to the jury, unrestrained by these limita- tions in the charge. The writer is of the opinion, that since the question of former habit was properly submitted, and since there was no evidence of the falsity of tlie answers to the first two questions, if there was error in this part of the charge, it was harmless. It is not believed that the other complaints of error are well founded, nor is it considered necessary to discuss them. For the error first indicated, the judgment of the Court of Civil Appeals is reversed and the cause is remanded. Reversed and remanded. DISSENTING OPINION. Hume, Special Chief Justice. I am of opinion that this case was properly determined by the Court of Civil Appeals. Conceding all that is claimed as to the distinctive force of a warranty, it is still true, that the situation and purposes of parties to it must be considered, just as the3' are in cases of contracts in other forms. The purpose of a life insurance company is to secure risks on sound lives. It is interested in knowing that the applicant for insurance is not affected with infirmities that will hasten the event against which it insures. It inquires about his "diseases." I think, that according to common understanding a disease is an affliction that takes hold of its victim ; abides with him ; impairs or menaces his functional vitality ; and lessens the probabilities of the average duration of his life. The charge upon which the ease is reversed seems to me to be war- ranted by the evidence upon both points named in the opinion.^ ' Other cases on disease are : Life Ins Co. v. Francisco, 17 WaU. 672 (1873) ; World Mutual L. Ins. Co. v. Schultz, 73 111 586 (1874) ; Moulor v. American L. Ins. Co., Ill U. S. 335, 343-346 (1883) ; Connecticut Mutual L. Ins. Co. v. Union Trust Co., 112 U. S. 250, 257 (1884) ; Home Mutual L. Assn. v. Gillespie, 110 Pa. 84 (1885) ; Metropolitan L. Ins. Co. u. McTague, 49 N. J. L. 587 (1887) ; Manufacturers' Accident Indemnity Co. u. Dorgan, 16 XT. S. App. 290, 308-309 (1893). Cases on consulting a physician are: Everett v. Desborough, 5 Bing. 503 (1829); Metropolitan L. Ins. Co v. McTague, 49 N. J. L. 587 (1887) ; Cobb u. Covenant Mutual Benefit Assn 153 Mass. 176 (1891) ; Brady v. United L. Ins. Assn., 20 U. S. App. 337 (1894) ; Providence L. Ass. Society v. Rentlinger, 58 Arlt. 528 (1894) ; White V. Provident Savings L. Ass. Co., 163 Mass. 108 (1895) ; Plumb w. Penn Mutual L. Ins. Co., 108 Mich. 94 (1895). On the topic of this section, see also : — Vose V. Eagle Life and Health Ins. Co., 6 Cu.sh. 42 (1850); Wheelton v. Hardisty, 8 E. & B. 232 (Ex. Ch. 1858); SECT. III.J MUTUAL LIFE INS. CO. V. SIMPSON. 429 Miller v. Mutual Benefit L. Ins. Co., 31 Iowa, 216 (1871) ; Macdonald v. Law Union F. & L. Ins. Co.,L. R. 9 Q. B. 328 (1874) ; Dwight V. Germania L. Ins. Co., 103 N. Y. 341 (1886) ; Fidelity Mutual L. Assn. v. Ficklin, 74 Md. 172 (1891); White V. Provident Savings L. Ass. Society, 163 Mass. 108 (1895) ; Smith V. Baltimore and Ohio Railroad Co., 81 Md. 412 (1895) ; Connecticut Mutual L. Ins. Co. v. McWhirter, 44 U. S. App. 492, 502, 503 (1896), s. c. 73 Fed. E. 444, and 19 C. C. A. 519 ; Eeynolds v. Atlas Accident Ins. Co., 69 Minn. 93 (1897). — Ed. 430 GREEN V. YOUNG. [cHAP. VI. CHAPTER VI. OTHER CAUSES OF INVALIDITY. SECTION I. Marine Insurance. (A) Deviatiok. Quod tamen periculum intelligitur solum currere assecurator, pro illo itinere convenlo, et non pro alio, . . . nam si navis mutaverit iter, vel a via recta illius itineris deverterit, non tenelur amplius assecurator. . . . Si iter mutaverit ex aliqua justa, et necessaria causa, pula, ex causa refectionis illius navis, vel ad evitandam maris tempestatem, vel ne incideret in hostes ; siquidem in istis casibus, mutato itinere, tenetur assecurator. Koccus de Assecurationibus,^ notab. LII. (1655). GREEN V. YOUNG. King's Bench, 1702-3. 2 Salk. 444.= If after a policy of insurance a damage happens, and afterwards, in the same voj'age, a deviation ; 3'et the assured shall recover for what happened before the deviation ; for the policy is discharged from the time of the deviation only.' 1 Roccus haa been edited by Westerween (Amsterdam, 1708), and translated by Joseph Reed IngersoU (Phihidelphia, 1809). — Ed. 2 s. c. 2 Lord Raym. 840, according to which report Holt, C. X, " said, that if a policy of assurance be made to begin from the departure of the ship from England until, etc., and after the departure damage happens, etc., and then the sliip deviates; though the policy is discharged from the time of the deviation, yet for the damages sustained before the deriation, the insurers shall make satisfaction to the insured." — Ed. 8 Ace. .■ Hare v. Travis, 7 B. & C. 14 (1827). — Ed, SECT. 1.1 ELTON V. BEOGDEN. 431 FOSTER V. WILMER. King's Bench, 1745-6. 2 Str. 1249. Thk insurance was from Carolina to Lisbon and at and from thence to Bristol : it appeared, the captain had taken in salt, which he was to deliver at Falmouth, before he went to Bristol ; but the ship was taken in the direct road to both, and before she came to the point where she would turn off to Falmouth. And it was held, the insurer was liable ; for it is but an intention to deviate, and that was held not suffleient to discharge the underwriter.^ In the case of Carter v. The Royal Ex- change Assurance Company, where the insurance was from Honduras to London, and a consignment to Amsterdam, a loss happened before she came to the dividing point between the two voyages, which the insurer was held to pay for. ELTON V. BROGDEN." Nisi Peius, King's Bench, 1746-7. 2 Str. 1264. The ship ' ' Mediterranean " went out in the merchants' service with a letter of marque, and bound from Bristol to Newfoundland, insured by the defendant. In her voyage she took a prize, and returned with it to Bristol, and received back a proportionable part of the premium. Then another policy was made, and the ship set out, with express orders from the owners, that if they took another prize, they should put some hands on board such prize, and send her to Bristol, but the ship in question should proceed with the merchants' goods. Another prize was taken in the due course of the voyage, and the captain gave orders to some of the crew to carry the prize to Bristol, and designed to go on to Newfoundland ; but the crew opposed him, and insisted he should go back, though he acquainted them with the orders : upon 1 Ace: Henshaw v. Marine Ins. Co., 2 Caines, 274 (1805); Marine Ins. Co. v. Tucker, 3 Cranch, 357 (1806); Hare v. Travis, 7 B. & C. 14 (1827). See Hobart v. Norton, 8 Pick. 159 (1829), a shipping case. Compare Middlewood v. Blakes, 7 T. R. 162 (1797). In Marine Ins. Co. v. Tucker, supra, Johnson, J., said : " An intent to do an act can never amount to the commission of the act itself. That an intended deviation will not vitiate a policy, and that the vessel remains covered hy her insurance until she reaches the pomt of divergency and actually turns ofE from the due course of the voyage insured, is a doctrine well understood among mercantile men, and has uni- formly governed the decisions of the British courts from the case of Foster v. Wilmer to the present time." And Patekson, J., said : " Where the termini of a voyage are the same, an intention to touch at an intermediate port, though out of the direct course, and not mentioned in the policy, does not constitute a different voyage." — Ed. '^ s. c. 1 Beawes' Lex Mercatoria (6th ed.), 329. — Ed. 432 WOOLDEIDGE V. BOYDELL. [CHAP. VI. which he was forced to submit, and in his return his own ship was taken, but the prize got in safe. And now in an action against the insurers, it was insisted, that this was such a deviation as discharged them. But the court and jury held, that this was excused by the force upon the master, which he could not resist; and therefore fell within the excuse of necessit}', which had always been allowed. The plaintiffs counsel would have made barratry of it ; but the Chief Justice ' tiiought it did not amount to that, as the ship was not run away with in order to defraud the owners. So the plaintiff had a verdict for the sum insured." FOX V. BLACK. Nisi Prius, before Yates, J., 1767. Weskett on Insurance, 171.' The plaintiff was a shipper of goods in a vessel bound from Dart- mouth to Liverpool ; the ship sailed from Dartmouth, and put into Loo ; a place she of necessity must pass by in the course of her insured voy- age ; but as she had no liberty given her by the policy to go into Loo, and notwithstanding no accident befell her by going into or coming out of Loo (for she was lost after she got out to sea again) , yet her going into Loo was a deviation, and a verdict was found for the underwriter. WOOLDRIDGE v. BOYDELL. King's Bench, 1778. 1 Doug. 16. The ship " M0II3'," being insured " At and from Maryland to Cadiz," was taken in Chesapeake Bay, in the way to Europe. Upon this, the insured brought this action against the defendant, one of the under- writers on the policy. The trial came on at Guildhall, before Lord Mansfield, when a verdict was found for the defendant, and, a new trial being moved for, the material facts of the case appeared to be as 1 Sir William Lee. — Ed. 2 See Lawrence v. Sydebotham, 6 East, 45 (1805) ; Haven v. Holland, 2 Mason, 230 (1820). Compare Phelps v. Auldjo, 2 Camp. 1810 ; Wiggin v. Amory, 13 Mass. 118 (1816). In Levabre v. Wilson, 1 Doug. 284, 291 (1779), Lord Mansfield, C. J., for the court, said : " A deviation from necessity must be justified, both as to substance and manner. Nothing more must be done than what the necessity requires. The true objection to a deviation is not the increase of risk. ... It is that the party contract- ing has voluntarily substituted another voyage for that which has been insured." — Ed. 8 s. c. 2 Park Ins. 8th ed. 620. — Ed. SECT. I.J WOOLDKIDGE V. BOYDELL. 433 follows : The ship was cleared from Marj-land to Falmouth, and a bond given that all the enumerated goods were to be landed in Britain ; and all the other goods in the British dominions. An aflfldavit of the owner stated that the vessel was bound for Falmouth. The bills of lading were " to Falmouth and a Market." And there was no evidence whatever that she was destined for Cadiz. The place where she was taken, was in the course from Mar3laud both to Cadiz and Falmouth, before the dividing point. Manj' circumstances led to a suspicion that she was, in truth, neither designed for Falmouth nor Cadiz, but for the port of Boston, to supply the American armj- ; but there was not suffi- cient direct evidence of that fact. At the trial, Lord Mansfield told the jur3' that if they thought the V03'age intended was to Cadiz, thej' must find for the plaintiff. If, on the contrarj-, they should think there was no design of going to Cadiz, they must find for the defendant. The Solicitor- General, Dunning, and Davenport, argued for the new trial. They contended that this was like the cases of an intention to deviate where the capture had taken place before the deviation was carried into execution ; and they cited Foster v. Wilraer, 2 Str. 1249, Carter v. The Roj'al Exchange Assurance Companj-, cited in Foster v. Wilmer, and Rogers v. Rogers, a very late case in this court. They, besides, urged that by " a Market " in the bills of lading and in the in- structions to the broker (where that expression was used, but which I believe had not been read at the trial) , was meant Cadiz. And that " to Falmouth and a Market " might be considered as meaning to the market at Cadiz, first touching at Falmouth. (It appeared in evidence at the trial that the premium to insure a voyage from Maryland to Fal- mouth, and from thence to Cadiz, would have exceeded greatly what was paid in this case.) Ziee and Baldwin showed cause. They argued that here there had been no inception of the voyage insured, and therefore the case was very diflTerent from those cited by the counsel for the plaintiff. Lord Mansfield. The policy, on the face of it, is from Marj^land to Cadiz, and therefore purports to be direct a voyage to Cadiz. All contracts of insurance must be founded in truth, and the policies framed accordingly. When the insured intends a deviation from the direct voyage it is always provided for, and the indemnification adapted to it. There never was a man so foolish as to intend a devia- tion from the voyage described, when the insurance is made, because that would be paying without an indemnification. Deviations from the voyage insured arise from after-thoughts, after-interest, after-tempta- tion ; and the party who actually deviates from the vo^-age described, means to give up his policy. But a deviation merely intended, but never carried into eflfect, is as no deviation. In all the cases of that sort, the terminus a quo, and ad quern, were certain and the same. Here, was the voj'age ever intended for Cadiz ? There is not suflBcient evidence of the design to go to Boston for the court to go upon. But some of the papers say to Falmouth and a Market, some to Falmouth 28 434 HARTLEY V. BUGGIN. [CHAP. VI. onlj'. None mention Cadiz, nor was there any person in the ship who ever heard of any intention to go to that port. "A market" is not sjnonj'mous to " Cadiz ; " that expression might have meant Leghorn, Naples, England, &c. No man, upon the instructions, would have thought of getting the policy filled up to Cadiz. In short, that was never the voyage intended, and consequently is not what the under- writers meant to insure. WiLLES and Ashhuest, Justices, of the same opinion. BtJLLEE, .Justice. I am of the same opinion. I believe the law to be according to the authorities mentioned on the part of the plaintiff, but it does not apply here. This is a question of fact. Thei-e cannot be a deviation from what never existed. The weight of evidence is that the voyage was never designed for Cadiz. The rule discharged.^ HARTLEY v. BUGGIN. King's Bench, 1781, and Nisi Pkius, 1782. 3 Doug. SO.'' This was an action on a policy of insurance upon the ship " Blossom," at and from the coast of Africa to the West Indies, with liberty to exchange goods and slaves. The cause was tried at the last assizes at Lancaster, before Heath, J., and a verdict was found for the plaintiff, with which the learned judge reported himself satisfied. On a rule obtained to show cause whj- there should not be a new trial, it appeared that there had been a great deal of contradictory evi- dence, and many points started at the trial ; but the question now raised was, whether the plaintiff, by the use he made of the ship on the coast of Africa, and the delay he there occasioned, was not the cause of the loss ; that is, whether he did not make such use of her, during her stay on the coast, as amounted to a deviation. It appeared in evidence that this ship stayed on the coast from August to March ; that she was employed in receiving slaves on board, the produce of the cargoes of other ships, which were afterwards put on board other ships and sent to the West Indies ; that this is the emplo3-ment of what they call a factory ship, but that a regular factory ship is thatched and covered, and receives the slaves till a sufBcient number is collected to send away in other vessels ; but it did not appear that any slaves, the produce of the "Blossom's " own cargo, were sent away in other vessels. It appeared, however, that her stay there was seven months beyond the usual stay of ships in that trade. 1 See Tasker v. Cnnninghame, 1 Bligh, 87 (1819). Compare Heselton v. AUnutt, 1 M. & S. 45 (1813) ; Snow v. Columbian Ins. Co, 48 N. Y. 624 (1872). — Ed. 2 s. c. 2 Park Ins. 8th ed. 652. — Ed. SECT. I.] HARTLEY V. BUGGIN. 435 Wallace, A. G-., Z,ee, Davenport, and Wood, showed cause against the rule for a new trial. They contended that this use of the ship as a factory ship was not inconsistent with the object of the voyage. If the ship does nothing which increases her risk and prolongs her stay, or is inconsistent with the object of her voj-age, it is not a deviation. Here she parted with no slave, the produce of her own cargo, which ever was on board of her. Ships can only be supplied in turn, and whilst she is forced to wait there, she ma}' as well receive the slaves of the other ships as not. It is the course of the trade so to do. The definition of a factory ship is a floating warehouse, not her merely being thatched and covered. Arden and Dunning, contra, in support of the rule, were stopjjed by the court. Lord Mansfield. When different points are agitated at a trial, and a great deal of evidence is applied to each, and the counsel go out of a cause, it is not surprising that juries should have their attention dis- tracted from the principal point. The great advantage of a motion for a new trial is that after argument on the motion the cause goes down again winnowed from the chaff of the first trial. The single question in this case is whether there has not been what is equivalent to a devia- tion. It is not material, to constitute a deviation, that the risk should be increased. The vo3-age is to the coast of Africa, and thence to the West Indies, which includes an insurance on the ship while she stays and trades at Africa, and it is with liberty to exchange goods and slaves ; but that exchange is for the benefit of the ship, one slave for another. If a ship insured for a trade is turned into a factory ship, or a floating warehouse, the risk is diflerent ; it varies the stay, for while she is used as a warehouse no cargo is bought for her. The law being clear, how is the fact? The captain saj-s the vessel was not used as a factory ship ; but his evidence is much impeached. Indeed, he says that he was young in the trade, that he never saw a factor}' ship but once, and was not in her. He might have a salvo, because this vessel was not thatched, as factory ships usuall}' are ; but the question is, was she used as a factory ship? Without being thatched and roofed, she may have been put to that use. The fact is clear: the risk is different, and there must be a new trial. Rule absolute. This cause was again tried at the Lancaster Summer Assizes, 1782, before Eyre, B., and evidence was given that, since the establishment of agencies on the 'coast, it had been a custom with the plaintiff's ships to stay till others came, and that it was intended to go to the West Indies just before the accident happened ; that the putting the vessel ashore was to prepare her for the voyage ; that hy agencies the sailing of ships was much expedited ; and that she had not stayed an extraor- dinary time. Eyre, B., told the jury that there was no question of fact ; that it was clear the ship was employed as a factorj'. What the effect of that was afforded great room for argument. One side coa- 436 BEATSON V. HAWOKTH. [CHAP. VI. tended that it was usual and allowable in the course of trade ; the other side, that it varied the risk materiall3\ New modes of trade were ad- vantageous, and it was not for the interests of commerce to be cramped by underwriters. An assured was to conduct his trade his own wa}-, with this exception, that it does not materially vary the risk insured. Barter, for the facilitation of the voyage, was allowable without expi-ess stipulation. The question was, if the use made of the ship had the voyage for its object. The jury found a verdict for the defendant. BEATSON V. HAWOETH. King's Bench, 1796. 6 T. R. 531. This was an action on a policy on the ship " Bazil," " at and from Fisherrow to Gothenburgh, and back to Leith and Cockenzie," valued at £500, without further account to be given. At the trial before Lord Kenyon, at Guildhall, it appeared that the ship performed her voj-age outward to Gothenburgh, and having taken in goods both for Leith and Cockenzie in her return home in the spring of 1787, without going to Leith, first put into Cockenzie, where she was stranded and lost. It was given in evidence that Leith was a very safe and commodious har- bor, and Cockenzie a very small and insecure one, especially in the winter season. That the two places are about ten miles apart from each other ; but Cockenzie lies nearer to Gothenburgh than Leith, and it is about a mile and a half out of the way to put into Cockenzie in going from Gothenburgh to Leith. There did not appear to be any settled course of trade to regulate the track of the voyage in this re- spect, though the weight of the evidence was in favor of going first to Leith in point of prudence, owing to the insecurity of the harbor of Cockenzie in general ; for, by discharging the lading for Leith there in the first instance, the risk of going into the harbor of Cockenzie was thereby much lessened. Two objections were made at the trial on the part of the defendant, first, that as the ship went into Cockenzie be- fore she went to Leith, it was a deviation from the voyage described in the policy, which was to Leith and Cockenzie ; secondly, that this was a gaming policy within the statute 19 Geo. IL c. 37, being without proof of interest. Both points were reserved ; but the decision went wholly on the first. A verdict was agreed to be taken for the plaintiff, without prejudice to the defendant, subject to the opinion of the court upon the points of law, with libertj' to the defendant to move to enter a nonsuit, — a rule to that effect having been obtained. Gibbs now showed cause against it, saying that it had never been held necessary, where two ports of discharge are named in a policy, for the ship to go first to that which happens to be named first in the pol- SECT. I.] HOGG V. HORNEK. 437 icj-. Every underwriter must be taken to be cognizant of the nature of the voj-age which he insures, and of the course of trade which prevails iu it. He must be taken to know the relative situations of the several places from and to which the vessel is insured ; therefore here the de- fendant must have known that Cockenzie laj' between Gothenburgh and Leith, and that the vessel would naturall}' touch at Cockenzie first, there being no course of trade to regulate her voj-age otherwise, that being the shortest and most convenient track. Where a particular track is intended to be chalked out by the underwriter, the usual form of describing it is from A. to B., and from B. to C. The general mode of expression therefore adopted in this case, from A. to B. and C, shows that it was intended to leave it to the discretion of the captain ; and this is confirmed bj' the circumstance of there being no particular usage, but sometimes the one and sometimes the other is the first port of deliver}-, according to the convenience of the traders. The court were of opinion that, as the intended voyage was de- scribed in the policj', and as there was no regular and settled course known to all the traders, different from that so described, the ship de- viated bj' putting into Cockenzie first, and consequently' that the plain- tiflT could not recover.^ . . . Per curiam, JRule absolute.^ HOGG V. HORNER, Nisi Prius, 1797. 2 Park Ins. (8th ed.) 626. Where a ship was insured " at and from Lisbon to a port in Eng- land, with liberty to call at any one port in Portugal for any purpose whatever ; " and where the ship had sailed from Lisbon to Faro to complete her loading. Faro being a port to the southward of Lisbon, consequently lying directly out of the course of the voyage to England, Lord Kenton was of opinion that the liberty given by this policy must be restrained to a permission to call at some port to the northward of Lisbon, in the course of the vo3'age to England ; and that by going to the southward the assured had been guilty of a deviation.' 1 Here La whence, J., read a manuscript note of Clason v. Simmonds, tried at GnQdhall, before Lee, C.J. (1741). — Ed. 2 See Kane v. Columbian Ins. Co., 2 Johns. 264 (1807); Gairdner v. Senhouse, 3 Taunt. 16 (1810). Compare Bragg v. Anderson, 4 Taunt. 229 (1812). — Ed. 8 See Levabre v. Wilson, 1 Doug. 284 (1779). Compare Lambert v. Liddard, 5 Taunt. 480 (1814); s. c. 1 Marsh. 149; Metcalfe V. Parry, 4 Camp. 123 (1814). — Ed. 438 SCOTT V. THOMPSON. [CHAP. VL SCOTT ET AL. V. THOMPSON. Common Pleas, 1805. 1 B. & P. N. R. 181. This was an action on a policy of insurance, dated 1 6th September, 1801, at and from Liverpool to Amsterdam, against sea-risk and fire onl}', upon goods on board the ship or vessel, called the " Sophia Frederica," at three guineas and an half per cent. The defendant un- derwrote for £200, and the interest was averred to be in the plaintiffs. The action was brought to recover an average loss sustained by sea- damage. The cause came on to be tried the 21st day of December, 1804, before Chambre, J., and a special jury, when a verdict was found for the plaintiffs, by consent, for £200, to be reduced by a reference in respect to the amount, in case the court should be of opinion that the plaintiff was entitled to recover upon the following case. The defend- ant underwrote the policy in question for £200, and received the pre- mium. The ship was a neutral vessel, belonging to Dantzic; 154 cases of Havana sugar, at the value of £1,469 Is. lU., the property of the plaintiffs, were shipped at Liverpool for Amsterdam previous to the voyage, which were loaded under his Majesty's license for the voj'age, and were the subject of the insurance. On the 22d Septem- ber, 1801, the said vessel and cargo sailed from Liverpool upon the said voj'age, stanch, strong, in good order and condition, and well and sufficiently provided in all respects. About 10 a. m. on the 1st October, in the course of the said voj'age, the said vessel was boarded by his Majesty's brig " Raven," commanded by Captain James Saun- ders, who took possession of the " Sophia Frederica," and carried her, agaiust the will of the captain and crew, out of the course of her voyage to Amsterdam, into Falmouth, where she arrived about 12 at night, the same day, in possession of and under the direction of the officers of his Majesty's said ship the " Raven," who moored and detained her there until the 12th November, 1801. On the 12th No- vember she was released, and immediately proceeded from Falmouth for Amsterdam. On the 20th November, being off the coast of Hol- land, she was there detained bj' tempestuous weather until the 24th, during which time she sprung a leak, and on the 24th November she arrived at Amsterdam, and unloaded her cargo, which was found to have sustained sea-damage ; but it was admitted on the part of the plaintiff that no part of such sea-damage happened before her detention by the brig " Raven.'' "When the said vessel sailed from Liverpool she was furnished with all the proper documents for the said voyage, which were on board her at the time of the said detention. On the part of the defendant it was contended that the said ship, being so taken out of the course of her voyage to Amsterdam into Falmouth, was a deviation, and put an end to the insurance. The question for the opinion of the court was, Whether under the circumstances of this SECT. I.] SCOTT V. THOMPSON. 439 case the plaintiffs were entitled to recover? If the court should be of opinion that the said goods were covered by the insurance after the ship was so taken out of the course of her voj"age, a verdict was to be entered for the plaintiffs for such damages as the arbitrator should find due. If the court should be of opinion that the insurance was deter- mined by the above circumstance, then the verdict to be entered for defendant. It was agreed at the trial that, at the desire of either party, this case might be turned into a special verdict. Jiayley, Serjt., for the plaintiffs.^ Eest, Serjt., for the defendant. The opinion of the court was delivered by Sir James Mansfield, C. J., who, after stating the case, proceeded thus. For a short time I entertained a doubt whether on this limited policy the plaintiff was entitled to recover. That doubt arose from not having suflScientlj' attended to the circumstances of the case ; and the argument and authority cited have satisfied me that the plaintiff is entitled to recover. The only question is, Whether, as the ship was taken out of her course by the captain of the king's ship and detained at Falmouth, and the voyage was thereby made longer than it would otherwise have been, the underwriter is relieved from his obligation to indemnify the assured during the remainder of the voj'age? Nothing is more clear than the general principle that a deviation never puts an end to the insurance, unless it be the voluntarj' act of those who have the management of the ship. Here the state of the case excludes the idea of the deviation (as the going to Falmouth has been called) having been voluntary. The ship was carried there hy force, and without any consent of those who had the management of the ship. Deviation occasioned by force, and deviation occasioned by necessity, are the same ; for necessitj^ is force. It is no matter whether it be the want of repair, or any other immediate danger, which renders the deviation necessary. When the deviation is necessarj' and unavoidable, it has no effect on the obligation of the insurer. Three or four cases have been cited. The last of them, namel}-, Driscol v. Passmore, proceeded upon the same principles as that of Elton v. Brogden, in Strange, and both cases are distinguishable from this. In one of those cases there was a deviation, the ship having been carried back to Bristol ; and in the other, the ship was forced to return by the crew. Though at first it struck me that there was something like a difference between a lim- ited and a general policy, yet, on further consideration, I do not think that there is any difference. In the case of Elton v. Brogden, the court do not seem to have considered the act of the crew as amounting to barratry ; and indeed it would be difficult to make it appear that it was barratry. Assuming, then, that there was no barratry in that case, 1 The cases cited for the plaintiffs were Elton v. Brogden, ante, p. 431 (1746-47); Driscol V. Passmore, 1 B. & P. 200 (1798) ; and Driscol v. Bovil, 1 B. & P. 313 (1798). — Ed. 440 EAINE V. BELL. [CHAP. TL there is no ground for making a distinction between the present case and that of a general policy. Indeed, if the act of the crew in Elton v. Brogden had amounted to barratry, it could have made no diflference. It seemed to me at first that if a defendant in an action on a general policy of insurance should insist upon a deviation, it might be answered that such deviation was occasioned by barratry, which was another risk for which the underwriter would be liable on the policy. But that would be no answer, since it would amount to charging the under- writer under a declaration upon a sea-risk for barratry to which he could not be prepared to answer ; and he never could be liable, directly or indirectly, on a declaration which had only led him to defend him- self against a sea-risk. Considering this case, therefore, and the other cases which have been decided, I do not find anything like a real dis- tinction between the present insurance and the ordinary insurance, including all the risks which are inserted in the policies in general. We are, therefore, of opinion that the plaintiff is entitled to recover. Per curiam, Judgment for the plaintiff .^ The court gave leave to the defendant to turn the case into a special verdict. RAINE V. BELL. King's Bench, 1808. 9 East, 195. This was an action on a policy of insurance ' ' on the ship ' Rio Nova,' and freight, from her loading port or ports on the coast of Spain to London, with liberty to touch and stay at any port or place whatever, without being deemed a deviation." The plaintiff declared on a loss by the perils of the sea. It appeared in evidence at the trial at Guildhall, that by the long continuance of the voj'age from port to port in Spain, and the difficulty of obtaining provisions on the coast at that time, the ship's provisions had run ver\' short, and she was obliged to put into Gibraltar to lay in a sufficient stock before her departure for London. 1 Compare Lee v. Gray, 7 Mass. 349 (1811). On deviation for the purpose of repairing the ship, see Levabre v. Wilson, 1 Dong. 284 (1779). On deviation to escape capture, see Robinson v. Marine Ins. Co., 2 Johns. 89 (1806) ; Suydam ?;. Marine Ins. Co., 2 Johns. 138 (1807); Haven v. Holland, 2 Mason, 230 (1820) ; Riggin v. Patapsco Ins. Co., 7 H. & J. Md. 279 (1826) ; Bradley v. Nashville Ins. Co., 3 La. Ann. 708 (1848). On deviation because of sickness of crew or passengers, see WooH v. Claggett, 3 Esp. 2.57^(1800) ; Perkins v. Augusta Ins. & Banking Co., 10 Gray, 312, 318 (1855). On deviation to succor a vessel in distress, and the distinction between saving life and saving property, see Settle v. St. Louis Perpetual Ins. Co., 7 Mo. 379 (1842), and these shipping cases: Bond o. The Brig Cora, 2 "Wash. C. C. 80 (1807) ; A Box of Bullion, 1 Sprague, 57 (1843) ; Walsh v. Homer, 10 Mo. 6 (1846) ; Crocker v. Jackson, 1 Sprague, 141 (1847) ; Sturtevant ». The Bark George Nicholaus, Newberry's Adm. 449 (1853) ; Scaramanga v. Stamp, 5 C. P. D. 295 (C. A., 1880). — Ed. SECT. I.] EAINE V. BELL. 441 But it also appeared, that while the ship lay at Gibraltar for that pur- pose, the captain received on board some chests of dollars on freight : and some question was at first attempted to be made whether the true object of going there was not to take on board these dollars ; but the weight of the evidence was against this supposition : and finallj' Lord Ellenborough, C. J., left it to the jur}' to saj-, whether the going into Gibraltar were of necessitj- in order to obtain a proper stock of provi- sions ; and if so, whether the staj' there were longer than was necessary for that purpose ; telling them that if there were no necessity for going there or staying there so long for provisions the policy would be avoided. The jury however affirmed the necessit}' of the ship's touching and stay at Gibraltar in order to lay in her provisions : and the loss of the ship being proved to have happened bj- the perils of the sea off the coast of Cornwall in her homeward-bound voyage, thej' found a verdict for the plaintiff for the amount of the defendant's insurance. But a question of law was raised, whether the taking in the additional cargo of dollars at Gibraltar, which was said to be a breaking bulk in the course of the vo3'age at a place where there was no libertj- to trade, did not avoid the policj', as increasing or having a tendency to increase the risk of the un- derwriters bejond the terms of the policy : and this it was contended by the defendant to do, on the authority of Lord Kenton in Stitt v. Warden,-' and of Lord Ellenborough in Sheriff v. Potts.^ And in order to discuss this point, a rule nisi was obtained in the last term for setting aside the verdict, and for a new trial ; against which The Attorney- General, Park, and Dampier, now showed cause. . Garroio and Marryatt, contra. Lord Ellenborough, C. J. If the taking in the dollars at Gibraltar materially varied the risk of the underwriters, they would be discharged by it ; but that it did not vary the risk bj' occasioning any delaj' of the voyage was expressly found by the jurj- to whom the question was left, and who were of opinion that the whole period of the ship's stay there was covered by the necessity which originally induced the captain to go into Gibraltar. I have turned it in my mind whether the risk might not have been increased by the particular kind of cargo, namely, treasure, taken in there : if that were known at the time to an enemj-, it might hold out an additional temptation to him to seek for and attack the ship. But I do not know that a mere temptation of this sort has ever been held a sufficient ground to avoid a policy if the original act itself were lawful. This, it must be remembered, is the case of a policy on ship and freight : I reserve giving any opinion as to the operation of a change in the state of the cargo in the case of a policy on goods ; be- cause the taking in of other goods in the course of one entire voj-age, where it is not provided for, may be contended to constitute a different adventure from that on which the ship started with her original cargo. 1 Tried at the sittings after Michaelmas term, 38 Geo. Ill, at Guildhall, 2 Esp. Ni. Pri. Cas. 609, and Park on Ins. — Eep. 2 Sittings after Michaelmas term, 44 Geo. III. 5 Esp. Ni. Pri. Cas. 96. — Rep. 442 BLACKENHAGEN V. LONDON ASSURANCE CO. [CHAP. 71. But here no part of the original cargo was taken out, as in Stitt v. War- dell ; nor any narrower liberty reserved, as in Sheriff «. Potts, which might operate as a virtual exclusion of taking in other goods. But this case stands on its own ground : where some.thing has been superadded to the original cargo while the ship was delayed from necessity in a port into which she was obliged to go ; and the jury having negatived that any delay was occasioned b3' the taking in of the additional goods. His Lordship, after the other judges had delivered their opinions, added, that nothing said by the court would justify the taking in any cargo in the course of the vo3-age which would in any manner enhance the risk of the underwriters.^ Rule discharged.^ BLACKENHAGEN v. LONDON ASSURANCE COMPANY. Nisi Peius, King's Bench, 1808. 1 Camp. 454. This was an action of covenant on a policy of insurance on goods in the ship " William," at and from London to Reval. The loss vras laid in one count to be, bj' the perils of the sea ; in another, by capture. Plea, non infregit conventionem.' The ship sailed from the Nore on the loth of October, 1807, under convoj' of the "Forrester" sloop of war, for the Sound, and arrived there on the 27th of the same month. On the loth of November, she proceeded from thence towards Reval, under convoy of the " Garnet" sloop of war. Two days after, while they were proceeding ou the voy- age, the captain of the ' ' Garnet " received information that an embargo was laid on all British ships in the ports of Russia. In consequence, he ordered the " William" to put back, and on the 18th she returned to Copenhagen roads. She afterwards la}' off Gottenburgh six days, and might have entered that friendly port if the master had thought fit. But on the 30th of November she sailed with the fleet for England, under convo}' of the "Garnet" and the " Spitfire" sloops of war. The last time she was seen was on the 3d of December, in a heavy gale of wind ; and not having been heard of since, it was allowed that she had certainly perished on her voyage home. Lord Ellenboeough. This case will hardly bear to be stated. The underwriters were bound to indemnify the plaintiff for any loss that 1 Concurring opinions by Geose, Lawrescb, and Le Blanc, JJ., have been omitted. — Ed. 2 Ace. Urqnhart v. Barnard, 1 Tannt. 450 (1809), where the insurance was on goods; Laroche v. Oswin, 12 East, 131 (1810), where the insurance was on goods; Hnghes ». Union Ins. Co. 3 Wheat. 159 (1818), where the insurance was on ship and freight, and the cargo was unloaded while the ship was stopping at a port in order to avoid being captured. — Ed. 3 11 G. 1, c. 30, §43.— Rep. SECT. I.] WILLIAMS V. SHEE. 4A3 should happen on the voj'age from London to Reval. If, being unable to get to Reval, the ship had lingered in that quarter, or had necessarily returned with an intention of ultimately completing the original voj'age, a question of some nicety might have arisen. But by sailing back for England in the manner she did, the original voj'age was abandoned, and the underwriters were discharged. The master might deem this the most advisable course he could pursue for the benefit of those he represented ; but were the underwriters still to be liable on the policj', if it had been convenient for him to carry the ship to the Straits of Magellan? The case which I remember coming nearest this, was where a ship, being prevented by the ice from reaching her port of des- tination, took shelter for the winter in a place as near to it as she could safelj' go, and prosecuted her voyage the ensuing season. Here, had the ship been coming home, as the best means of getting finallj' to Reval, and there had been a possibilitj' of her being able to accomplish that object when the loss happened, she might still have been consid- ered in the course of the voyage insured ; but all thought of completing the original voj'age seems to have been abandoned on the 30th of No- vember, and there is no color for charging the underwriters with a loss which happened subsequently to her setting sail for England. Plaintiff nonsuited?- Garrow and PuUer, for the plaintiff. The Attorney- General, Carr, and Moore, for the defendant. WILLIAMS V. SHEE. Nisi Peius, King's Bench, 1813. 3 Camp. 469. This was an action on a policj' 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 whatsoever and wheresoever, and for all purposes whatsoever, particularlj' to land, load, and exchange goods, without being deemed a deviation." The vessel sailed from Portsmouth on the 25th of September, 1812, ■with a fleet for the "West Indies, under convoy of bis Majesty's ship "Narcissus." They arrived off Madeira on Saturdaj', the 17th of Octo- ber. The "Sir Sidnej' Smith" had taken in a quantity of goods for that island, which the captain had been ordered to land there, and for 1 The plaintiff afterwards bronght an action against the defendant on this policy, in the Court of Common Pleas, which was tried at the sittings after last Michaelmas Term. Sir James Mansfield, as well as Lord Ellenborough, clearly thought that the voyage was abandoned, by the ship sailing for England instead of putting into Gottenburgh. The jury, nevertheless, found a verdict for the plaintiff ; but in Hilary Terra following, the Court of Common Pleas set it aside and ordered a new trial. — Rep. See Parkin v. Tunno, 11 East 22 (1809) ; s. c. 2 Camp. 59, 62. — Ed. 444 WILLIAMS V. SHEE. [CHAP. VI. which wines were to be sent on board. He began to land tlie 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 " Nar- cissus," with the greatest part of the fleet, had sailed away the preceding day, and was then too far oflf 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 Sidney Smith" remained at Madeira till the 24th of October. She finally parted company with them oflf 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 board during the voyage. Garrow, A. G. , contended, that the underwriters were discharged on two grounds : 1st, The ship, by putting into Madeira and staj-ing be- hind there when the rest of the fleet had sailed, had been guilty of a deviation. 2dly, The captain had wilfully deserted the convoj', and as this was done with the privity of the owner of the goods, who was on board, the policy was vacated. J'ark, for the plaintiff, insisted, 1st, That the ship had a right to put into Madeira, and to stop there in the manner she had done, under the liberty given bj' the policy to touch and stay at all ports and places to land, load, and exchange goods. 2dh-, The captain could not be said wilfully to have deserted the convoy ; for he was anxious, if possible, to enjoy its protection ; and the convoy had rather deserted him. Lord Ellenborough. I am of opinion that the underwriters are dis- charged 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 wilful desertion of convoy within the meaning of the act, as the captain appears to have acted bona fide, and not to have been aware of the precise time when the convoy sailed away from Madeira. However, it is unnecessary to determine that point now ; for upon well-established principles the ship was guiltj' 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. Park and Barnewall, for the plaintiflf. Qarrow, A. G., and Ifolan, for the defendant. SECT. I.] REDMAN V. LONDON. 445 REDMAN V. LONDON. Nisi Prids and Common Pleas, 1813. 3 Camp. 503. This was an action on a polic}' of insurance, dated 8th January, 1813, on tlie ship " Sir Sidnej^ Smith," at and from London to Berbice. After the printed words in the poliej-, "beginning the adventure upon the said goods and merchandises, from the loading thereof aboard the said ship," there were inserted, in writing, the words " at sea.'' The only extraordinary libertj- given bj' the policj- was, " to join and sail with convoy, without being deemed a deviation." This policy was on the same ship and the same voj'age mentioned in Williams v. Shee, 3 Camp. 469, and exactly the same evidence was now given respecting the transactions at Madeira and the subsequent loss as upon the trial of that cause before Lord EUenborough. The broker, however, swore that when he effected the policy he showed the under- writers a letter, written bj' the captain at sea, when he was between Barbadoes and Berbice, stating that he had parted company with the convoy. £est, Serjt., for the defendant, read the foregoing note of Williams V. Shee, and insisted that the present case was much stronger in favor of the underwriters, as the policy here did not contain the liberty to land, load, and exchange goods, which was there relied upon. /Shepherd, Serjt., for the plaintiff, allowed that the ship had been guilty of a deviation at Madeira, but contended that the underwriters on this policy could not take advantage of it. This policy was only meant to take the ship up "at sea" from the date of the last letter from the captain, and to protect her during the remainder of the vo3'age to Berbice. For this purpose, the words "at sea" were introduced into the policj'. Their meaning might be a little equivocal on the face of the instrument, but became quite apparent when coupled with the letter shown to the underwriters ; therefore a deviation prior to that letter was equally immaterial as a deviation upon any former voyage. Best, Serjt., in repl}'. It is impossible to make " at sea" one of the termini of the adventure. The policy is "at and from London to Ber- bice," and the declaration accordingly avers that the ship was in good safety at London, and sailed from thence on the voyage in the policy of insurance mentioned. Had the ship sustained any secret damage at Madeira, the underwriters would unquestionably have been liable for an average loss. The date of a policy is wholly immaterial, if it be effected before the event is known to either party. The invariable rule is, that it attaches at the place where the risk is described to commence, and if not discharged by a deviation, protects the ship during the whole of the adventure. The captain's letter cannot be made a part of this policy, which does not refer to it, and the words " at sea," connected as they are with the loading of goods and merchandises, are wholly nonsensical. 446 KETTELL V. WIGGIN. [CHAP. TI. Mansfield, C. J. Whatever the intention of the parties might be, I see nothing in this polic3' to show that it was not to attach at London. I must therefore hold, that the underwriters were discharged by the deviation at Madeira. The plaintiff was nonsuited, and the nonsuit was afterwards confirmed b}' the Court of Common Pleas. jShejjherd, Seijt., and Marryat, for the plaintiff. Best, Yaughan, Seijts., and Campbell, for the defendant. KETTELL v. WIGGIN and Others. Supreme Judicial Court op Massachusetts, 1816. 13 Mass. 68. AsscMFsiT on a policy of insurance, subscribed by the defendants, upon the schooner "Pocahontas," and freight from Boston to Gibral- tar, and from thence to her port of discharge in the United States, with liberty to proceed to St. Ubes or the Cape de Verd Islands for salt. The vessel arrived in safet}- at Gibraltar, and from thence sailed for the Isle of Ma3-, one of the Cape de Verds, for a cargo of salt, where she arrived on the 12th of Maj', 1810. On her arrival there, there were seventeen vessels in the port, and it is the custom of the place for vessels to load in turn as they arrive. The " Pocahontas " could not have had her turn in less than four or five weeks, and she was short of provisions, of which and of water there was a scarcity at that place. The governor of the island proposed to the master to go with his vessel to St. Jago and Fuego, two other of the Cape de Verd Islands, and procure a cargo of provisions ; and engaged, that, if he would, he should be loaded with salt as soon as he should return, although his turn should not have arrived. The master agreed to this proposal, went to those islands, brought provisions for the governor, and was immediately permitted to take his cargo of salt; and he was thus enabled to load his vessel considerabl}' sooner than he would have been, if he had remained at the Isle of Mav for his turn. After taking in the cargo, the vessel sailed on the return voyage, and, being short of water and provisions, put into the port of Praya, in St. Jago (which is a place usually slopped at for provisions and water, on a voyage from the Isle of May to the United States), where she arrived on the 4th of June, and in the night of the 5th was attacked by banditti, carried off, and subsequently totally lost ; having been recovered bj' the master nineteen days after she was so piratically seized, but some time afterwards captured by a British vessel of war, libelled as prize, and condemned. The evidence was full and satisfactory, that provisions and water were scarce and difficult to be procured at the Isle of Ma}- ; and that it was the usage to touch at St. Jago, on the way home, for supplies. It SECT. I.] EETTELL V. WIGGIN. 447 was also proved, that it was usual for vessels to go from island to island, among the Cape de Verds, for salt or to complete their cargo. The Chief Justice, before whom the cause was tried, November term, 1814, instructed the juiy, that, if they believed the usage with respect to touching at St. Jago, on the way home from the Isle of May, and that there was a necessity for it, without any fault of the master, on account of provisions or water, the act would not be a deviation ; and further, if they were fully satisfied that the trip taken to St. Jago and Fuego, at the request of the governor, was for the pur- pose of expediting the loading of the vessel and the return home, without any intention on the part of the master to deviate from his voyage ; and that the voyage home was, in fact, expedited by tliat cir- cumstance ; and that the staj' at the Isle of May for her turn to load would have been hazardous, on account of the scarcity' of provisions and water ; they might consider that there was no deviation from the voyage, less time being consumed than would have been, had the vessel remained at the Isle of May. A verdict was returned for the plaintiff, and the defendants moved for a new trial, for misdirection to the jury, by the judge who sat at the trial. Selfridge, for the defendants. Hockicood, for the plaintiff. Pakkee, C. J. The touching at St. Jago, on the voyage home, was relied upon by the defendants as a deviation which destroj's the action. But, it being in evidence, that vessels from the Isle of May usually touch at St. Jago for supplies, which are not always to be obtained at the Isle of May, the touching there was justifiable, and no deviation. But the vessel went an intermediate voyage after her arrival at the Isle of May, under a contract with the governor of that island ; and the question is, whether that act is justifiable. The vessel is insured from Gibraltar to the United States, with libertj' to touch at St. Ubes or the Cape de Verd Islands for salt. Under this policy she might have sailed from one to another of those islands, and successively to all of them, for salt; but her arrival at any one of them, where salt was to be obtained, and where the cargo was intended to be taken on board, determined the voyage to those islands, and the vessel could not proceed from thence to another for the purpose of earning a freight, or for any other purpose, under the policj-. Now the Isle of May is one of the Cape de Verd Islands, at which the vessel might touch ; she did touch there, and it was determined to take on board a cargo there ; but she went thence to St. Jago and Fuego, not for the pur- pose of procuring salt, but on a contract with the governor, to get provisions for the island, and then returned to the Isle of Maj', to prosecute her homeward voj-age. This was undoubtedly a deviation, unless it can be shown to have been necessary for the safe prosecution of the voyage. Mere purposes of convenience will not excuse a devia- tion, nor will anything but actual necessity. 448 KETTELL V. WIGGIN. [CHAP. VI. It was contended, that this voj-age was necessary, because there was a scarcity- of provisions and water, and the crew of the vessel might have suffered. This, perhaps, would be a sufficient excuse, if the necessity, on which it is founded, did not arise from the negligence of the master; if it did, the owners cannot avail themselves of it, to excuse a deviation. The voyage from Gibraltar was to the United States, with libertj' to touch at the Cape de Verds. The vessel should have been sufBeiently found at Gibraltar, to enable her to stay and load at the Isle of May, without depending upon procuring provisions there. Indeed, the necessitj-, which is alleged, seems to prove that the ship was not seaworthj- at the time the policj' was to take effect. But it was confidently insisted, that, as the effect of this expedition, at the request of the governor, was to shorten the duration of the voj-- age, by enabling the master to obtain his cargo much sooner than he otherwise could, it ought to be considered as done for the benefit of all concerned, and not as amounting to a deviation. But masters have not a right to speculate, in this manner, upon the possible advantages of pursuing a route which does not belong to the voyage. They are to pursue the usual course, and let the consequences fall where the}' may. In this case the master probably thought he was advancing the interest of his employers, of the underwriters, and of all concerned, by getting his vessel loaded several weeks sooner than would have been his turn ; and yet it is almost certain, that his very success, in being able to commence his homeward voyage so soon, was the cause of the disaster which befell his vessel. Certainly, had he arrived at St. Jago a week later, he would have avoided the immediate cause of the loss. Notwithstanding it is established by the verdict, that the voyage was in fact expedited by the intermediate voyage to St. Jago and Fuego, we are of opinion that voj'age was, under the circumstances, an un- justifiable deviation. To test this, let us inquire whether the vessel was at the risk of the underwriters, from the Isle of Ma}' to Fuego and back. It was not within the terms of the policj' ; it was not necessarj', unless it had become so by the culpable neglect of the master. Had the vessel been lost upon that voyage, the underwriters could not have been held answerable. The policy, tlien, had ceased to protect the ves- sel ; and it is not possible that an^-thing subsequent should restore the obligation of the underwriters. We are all of opinion, that the verdict must be set aside and a Hew trial granted. SECT. I.] HAMMOND V. EEID. 449 HAMMOND V. REID. King's Bench, 1820. 4 B. & Aid. 72. Action on a policj' of insurance on the ship " Arabella," on a vo}'- age at and from Para to New York, during her stay there, and at and from thence to Para, with leave to call at all or any of the Windward and Leeward Islands and colonies on her passage to New Yorit, with leave to discharge, exchange, and take on board the whole or any part of any cargo or cargoes at any ports or places she might call at or pro- ceed to, particularly at all or any of the Windward and Leeward Islands, ■without being deemed any deviation from and without prejudice to the insurance The declaration stated the sailing of the vessel on the voy- age insured, and a loss by perils of the seas. Plea, general issue. At the trial, at the Lancaster Summer Assizes, 1819, before Baylet, J., a verdict was found for the plaintiff, subject to the opinion of the court on a case, which stated that the ship sailed from Para on the voyage insured with a cargo on board, bound for New York ; but with orders from the plaintiff, her owner, to proceed in the first instance to Bar- badoes, where the captain was directed to sell the cargo and receive other goods on board in e;schange for it, and proceed from thence to New York, after calling at the islands of St. Bartholomew and St. Thomas, two of the Leeward Islands, for the purposes after stated. When the vessel sailed from Para the plaintiff was there, and intended to proceed from thence in another vessel direct to New York, where he expected to meet a vessel, also belonging to himself, called the ' ' Alice," from Liverpool, which last-mentioned vessel he then proposed to load at New York with goods for the said islands of St. Bartholomew and St. Thomas, and directed the captain of the " Arabella," after finishing his trading at Barbadoes, to proceed to St. Bartholomew and St. Thomas, for the purpose of obtaining information in regard to the state of the market, and on other subjects at those islands, with the view of forming his opinion upon the speculation he proposed to enter into by the said ship " Alice " from New York to those islands. The " Ara- bella" arrived at Barbadoes on the 5th March, 1817, where she dis- charged her cargo, and received on board a quantity of sugar, witii which she sailed for New York on the 4th of April following, intending to call at St. Bartholomew's and St. Thomas's, two of the Leeward Islands, in her way to New York. In the course of this voyage, after having passed the islands of St. Bartholomew and St. Thomas, she was lost off Savannah. When the ship sailed from Barbadoes, on the 4th of April, her objects of trade were at an end, until she should arrive at New York, and she proceeded to the island of St. Bartholomew and St. Thomas only to obtain information for the purpose before stated. lAttledale, for the plaintiff, contended that the going to the islands of St. Bartholomew and St. Thomas was no deviation. Here is an 29 45Q PALMER V. MARSHALL. [CHAP. VL express leave given to touch at all or any of the Windward or Leeward Islands. Under that liberty the vessel liad a right to go to the islands in question. And, besides, the intelligence obtained there might prob- ably have some effect on her ultimate destination. F. Folloclc, contra, after citing Rucker v. Allnutt, 15 East, 278, and Langhorn v. Allnutt, 4 Taunt. 519, was stopped by the court. Abbott, C. J. This calling at the islands of St. Bartholomew and St. Thomas was for a purpose wholly unconnected with the voyage in question. If, as it was said, the intelligence to be obtained there would be likely to have altered the destination of the ship, the question would be different. But the contrary is expressly stated in the case ; for it is stated that it had reference to some new adventure to be subsequently undertaken in another vessel. I think, therefore, that this being a calling for a purpose entirel}' unconnected with the voyage was, not- withstanding the words in the policy, a deviation, and that the plaintiff is not entitled to recover. Per curiam, Judgment for the defendant.^ PALMER V. MARSHALL. Common Pleas, 1832. 8 Bing. 317. Policy of insurance effected January 28th, 1831, on the " Ruby" yacht of thirt3--seven tons, at and from Bristol to London. The yacht, which was lying in the float at Bristol at the date of the policj-, did not sail till the 17th of May, and was lost in the Channel three or four da3's after. In an action on the policj', the case having gone down to a new trial, ^ Park, J., at the Dorchester Assizes, nonsuited the plaintiff, on the ground of an implied deviation or variance of the risk, bv an unrea- sonable delaj- in the time of sailing. It having been agreed that the plaintiff should stand in the same position as if the question had gone to the jury with a strong direction on the part of the judge, Bompas, Serjt., now moved for a new trial, on the ground that the judge ought not to have nonsuited, or to have directed a jur}' that there had been a variance of the risk by unreasonable delaj'. There had, in fact, been no variance of the risk ; unless, indeed, to lessen it. The vessel was described in the policy as a yacht ; the underwriter was bound to be conversant with the usage as to different classes of vessels ; and if so, with usage as to yachts, which is, to sail only in the summer. As yachts do not go to sea in the winter, the delay from January to May was not unreasonable. And it is clear the risk was not varied, — which 1 Ace. : Solly V. "Whitmore, 5 B. & Aid. 4.5 (1821). See Eucker v. Allnutt, 15 East, 278 (1812). — Ed. " At earlier stages the case i.s reported in 8 Bing. 79 (1831) and 155 (1832). Ed. SECT. I. J PALMER V. MARSHALL. 451 is the real question, Mount v. Larkins, 8 Bingli. 195, — for the defend- ant would not have required a higher premium if May had been named for the time of sailing instead of January-. TiNDAL, C. J. This was an insurance on the " Ruby" j'acht, at and from Bristol to London. The policy bore date the 28th of Januarj', 1831, and the vessel remained in the float at Bristol from the date of the policy till the 17th of Mayj when she sailed on her voyage, and was shortly afterwards lost. A policy effected in these terms, and in this shape, implies that the voyage insured shall be very shortly commenced, or is, at all events, in the near contemplation of the parties ; and when we see that, in the present instance, the voyage was not commenced till the middle of May, we are bound to say that the delaj' was unrea- sonable unless it be accounted for. No doubt, whether there has been unreasonable delay or not, is properly a question for a jury ; and I take it up, therefore, as if it had been left to the jurj', with a strong direction that the delay here was unreasonable. What I have to consider, there- fore, is whether any facts have been stated by the plaintiff to account for this delay. I find none suggested, beyond the circumstance that this vessel was described as a yacht upon the policy, and that j'achts are usuallj- laid up in the winter. But if the plaintiff meant to rely on tliat, be should have taken a policy adapted to his purpose. He might have insured his vessel in port for a definite time and on the voyage to be commenced afterwards ; instead of that, he adopts a form of policy from which the underwriter must have understood that the vessel would sail within a reasonable time. Here the vessel lies by for more than three months, during which, in addition to the risk of the voyage, the underwriter is exposed to the risk of everj' accident which may happen in port. Where the delay is unexplained and so great as to fix it with the character of unreasonableness in the mind of every reasonable per- son, the strongest direction to the jury, and a verdict for the defendant, would be fully justified. Pakk, J. I am astonished at the argument which has been used to- daj". There never was so clear a case. The risk on a policj- at and from Bristol attaches at Bristol, and the language of the policy im- plies, that if the vessel be ready for sea, she shall sail without dela}', unless the delay be accounted for. Here the vessel was lying in the float ; and the circumstance of her being a yacht does not constitute any exception to the general rule. If the owner proposed that she should sail only in the summer, he should have insured accordinglj-, " in port and at sea." After the risk has attached, it lies on the as- sured to show why he did not sail ; and I offered to leave the question of dela}' to the jury, with a strong direction, when it was agreed that the plaintiff should be nonsuited, standing in the same position with respect to the present motion as if the point had been so left to the jury. How- ever, there is nothing in the case. The risk attached at Bristol ; and the plaintiff not having insured " in port and at sea," as he might have done, has given no reason for his delay in proceeding to sea. 452 PALMER V. MARSHALL. [CHAP. VI. Gaselee, J. I am of the same opinion. The j-acht being afloat at Bristol ought, according to the poliej', to have sailed without delay. Alderson, J. Upon a policy like this, a delay in sailing, in order to be justified, must be a delay incurred for the purpose of the voyage ; as in Langhorn v. Allnutt, 4 Taunt. 511, where it was necessary to wait for the purpose of procuring simulated papers, without which the voyage could not be performed ; or in Raine v. Bell, 9 East, 195, where the vessel waited for the purpose of taking in provisions. But here the vessel was afloat ; no reason connected with the voj-age is assigned for her remaining in port ; and the risk of the underwriter is materially changed. Instead of the risk of a voyage performed within a reason- able time after the 28th of Januar}-, the plaintiff has substituted the risk of h'ing in the port of Bristol more than three months, and a voyage at a different time. Rule refused.^ 1 See Smith v. Surridge, 4 Esp. 25 (1801); Grant v. King, 4 Esp. 175 (1802); Lawrence v. Sydebotham, 6 East, 45 (1805) ; Palmer v. Fenning, 9 Bing. 460 (1833) ; Phillips V. Irving, 7 M. & G. 125 (1844). In Chitty v. Selwyn, 2 Atk. 359 (1742), Lord Haedwioke, C, said: "When a ship is insured at and from a place, and it arrives at that place, as long as the ship is preparing for the voyage, upon v?hich it is insured, the insurer is liable; but if all thoughts of the voyage are laid aside, and the ship lies there five, six, or seven years, ■with the owner's privity, it shall never be said that the insurer is liable; for it would be very absurd to malie him suffer for the whim or caprice of the owner, who chooses to let the ship lie and rot there." In Coffin V. Newburyport M. Ins. Co., 9 Mass. 436, 447-449 (1812), Sedgwick, J., for the court, said : " A deviation is a voluntary departure, without necessity or rea- sonable cause, from the regular and usual course of the voyage insured. This dis- charges the underwriters from the time of the deviation. And any unnecessary delay during the course of the voyage, whether at sea or in port, is tantamount to a deviation, and followed by the same consequence. And the reason, on which these principles are founded, is that it is understood, as a part of the contract of insurance, that the voyage insured is to be prosecuted in the usual and ordinary route, and the business of it at- tended to, at least, with ordinary diligence. But an intention to deviate, however deliberately formed, is not a deviation. . . . The shortness of the time, or the distance of a deviation, malces no difference, as to its effect on the contract. Whether for one hour or one month or for one mile or one hundred miles, the consequence is the same. If it be voluntary and without necessity, it puts an end to the contract." In Columbian Ins. Co. v. Catlett, 12 Wheat. 383 (1827), where a policy insured goods on a ship at and from Alexandria to St. Thomas and two other ports in the West Indies and back to her port of discharge in the United States, Story, J., for the court, said : " The next question is, whether the delay at St. Thomas for seventy days was not so unreasonable as to constitute a deviation. Without question, any unrea- sonable delay in the ordinary progress of the voyage avoids the policy on this account. But what delay will constitute such a deviation depends upon the nature of the voyage and the usage of the trade. It may be a very justifiable delay, to wait in port and seU by retail, if that be the course of business, when such delay would be Inexcusable in a voyage requiring or authorizing no such delay. The parties, in entering into the contract of insurance, are always supposed to be governed in the premium by the ordi- nary length of the voyage and the course of the trade. That delay, therefore, which is necessary to accomplish the objects of the voyage according to the course of the trade, if bona fide made, cannot be admitted to avoid the insurance. In the present case it is proved, that the stay at St. Thomas was solely for the purpose of selling the cargo, and for no other cause. But, it is said, that a sale might have taken place at St. Thomas of the whole cargo, if the orders of the owner had not contained a SECT. I.] LAPHAM V. THE ATLAS INS. CO. 453 LAPHAM ET AL. V. THE ATLAS INSURANCE COMPANY. Supreme Judicial Court of Massachusetts, 1833. 24 Pick. 1. Assumpsit on a polioj' of insurance on tlie schooner " Edward" at and from Boston to port or ports in the West Indies, and at and thence to a port of discharge in the United States. Trial before Shaw, C. J. The vessel sailed from Boston to the port of Aux Caj-es in St. Do- mingo, thence to the port of Savannah in Georgia, and thence to Boston, and the loss alleged was occasioned by her striking the rocks and going ashore at Scituate, near the entrance of Boston harbor, on the passage from Savannah to Boston. It was in evidence, that when the vessel arrived at Aux Ca3es, the master, being unable to sell his outward and procure a homeward cargo in convenient time, determined to take in a cargo of logwood, and pro- ceed to Savannah for the purpose of disposing of it, and if he should do direction to the master limiting the sale at St. Thomas to the price of eight dollars, and that this limitation was the sole cause of the delay, and was unreasonable ; that the master ought, under the circumstances, to have sold at a lower price, or have immediately elected to go to another port. We are of a, different opinion. In almost every voyage undertaken of this nature, where different ports are to be visited for the purposes of trade, and to seek markets, it is almost universal for the owner to prescribe limits of price to the sales. Such limitations have never hitherto been sup- posed to vary the insurance, or the rights of the party under it. It cannot be, that the master, if entitled to go to a single port only, is bound to sell at whatever sacrifice, as soon as he arrives at that port, and within the period at which he may unload, and sell, and reload a return cargo. He must, from the very nature of the case, have a discretion on this subject. If he arrives at a bad market, he must have a right to wait a reasonable time for a rise of the market, to make suitable inquiries, and to try the effect of partial and limited sales. He is not bound to sell the whole cargo at once, whatever be the sacrifice, and thus frustrate the projected adventure. In short, he must exercise in this, as in all other cases, a sound discretion for the interest of all concerned ; and if it be fairly and reasonably exercised, it ought not to be deemed in- jurious to rights secured by the policy. It is as much the true interest of the owner to sell in a reasonable time, and with all proper despatch, as it is for the underwriters. To be sure, if the owner should limit the price to an extravagant sum, or the master should delay after aU reasonable expectations of a cliange of market were extinguished, such circumstances might properly be left to a jury to infer a delay amounting to a deviation. And here, again, as on the former point, it may be remarked, that every underwriter is presumed to know the ordinary course of the trade, and to regulate his proceedings accordingly." In Mount v. Larkins, 8 Bing. 108, 122 ri 831), Tindal, C. J., for the court, said: " It must he admitted that, if the policy had been effected upon this ship at and from Singapore, the ship then being at Singapore, unreasonable and unjustifiable delay at Singapore would have avoided the policy. Why, but because the voyage, commenced after an unreasonable interval of time, would have become a voyage at a different period of the year, at a more advanced age of- the ship, and, in short, a different voy- age than if it had been prosecuted with proper and ordinary diligence ; that is, the risk would have been altered from that which was intended by all parties when the policy was effected? " — Ed. 454 LAPHAM V. THE ATLAS INS. CO. [CHAP. VI. SO, then to return to Aux Caj-es and take on board the proceeds of his original outward cargo ; that the vessel sustained some damage in her sails, on her passage from Aux Cayes to Savannah ; that on her arrival at Savannah, the master, after inquiring the state of the market, and without discharging anj' part of his cargo or breaking bulk, determined to proceed to Boston ; and that after procuring some repairs and sup- plies, he sailed according!}-. Upon these facts it was contended b}- the defendants, that hy the true construction of the policy, the risk terminated at Savannah, and that for any loss happening afterwards they were not responsible. But the jury were instructed, that upon this policj' the port of desti- nation was not necessarilj' the port of discharge ; and that in case no part of the cargo was discharged at the port of destination, the vessel was protected bj' the policy in going from one port of the United States to another, if done in good faith, as a port of discharge ; and that if such was the case with the " Edward," the risk continued to the time when the loss happened. To these instructions the defendants excepted. It was further in evidence, that the vessel took on board, at Savan- nah, a deck-load of forty bales of cotton for Boston, on freight. There- upon it was contended, that as bj- the terms of the policj- no port of the United States was contemplated as a loading port, the taking of this cotton on board was, 1, an alteration of the risk ; or 2, an increase of the risk; or 3, that it occasioned a delaj- amounting to a deviation ; and that upon one or all of these grounds, the risk terminated at Savannah by taking the cotton. The jurj- were instructed, that the master had a right, without affect- ing the polic}', to stop a reasonable time at Savannah to obtain neces- sary repairs and supplies for the further prosecution of his voyage, and also to make full and extensive inquiries of the state of the market there, and form his judgment deliberatelj' whether he would discharge his cargo there or proceed to Boston, and that a delay for these pur- poses, pursued in good faith and with reasonable diligence, was not a deviation ; that the taking on board the deck-load of cotton was not such an alteration in the risk as would necessarilj" discharge the under- writers, and that it would not have this effect unless it in fact increased the risk, to the injurj' of the underwriters, or occasioned a delaj- in the voyage ; but that if it did in fact increase the risk, or if any delay was occasioned, either to procure the freight of cotton or to take it on board and secure it, the underwriters were discharged. In relation to the question, whether there was an increase of the risk, by taking a deck-load of cotton, several of the nautical witnesses had stated what in their opinion would be the advantages and disadvantages of that measure, considering the season of the year and other circum- stances; in relation to which the jury were instructed, that the question was, whether on the whole the risk was in fact increased by taking the deck-load, upon a balance of advantages and disadvantages ; and that it SECT. I.] LAPHAM V. THE ATLAS INS. CO. 455 did not vacate the policj-, although it did increase the risk in one partic- ular, if it diminished it in another in an equal or greater degree. To this instruction the defendants excepted. In the course of the examination of nautical witnesses upon the ques- tion, whether taking the deck-load of cotton increased the risk, either b}- rendering the vessel less stiff and less secure under a heavj' press of sail, or bj- preventing her from holding as good a wind and making as good a course on a lee shore, or bj- embarrassing the operations of the vessel and exposing the men to greater danger, or otherwise, the plain- tiffs proposed to ask the witnesses whether it was usual for certain spe- cies of vessels to carry a deck-load. This question was objected to by the defendants, on the ground that as the policy did not cover a voyage from Savannah to Boston, they were not bound bj' the usage, if one ex- isted. But it was ruled that to some purposes the evidence of general usage was admissible ; and upon this subject tiie jury were instructed, that if the V03'age insured had been from Savannah to Boston, the usage to take a deck-load, if proved, would have been conclusive on the underwriters, because they would be presumed to have made their con- tract in reference to the known usage of the voyage, and to have adjusted the premium accordingly ; that such usage therefore would of itself have little tendency to show that it did not increase the risk ; but that in the present case the risk to the vessel; of carrj'ing a deck-load or other freight from one port in the United States to another, was not contem- plated as part of the contract, nor covered bj* the premium, and it could be excused onl}' on the ground that it did not in fact increase the risk, and therefore the evidence of usage was not binding or conclusive; but that if the usage of carrying a deck-load upon this species of vessels, in various kinds of navigation, and in different seasons of the j'ear, was common and general, it might lead to a belief, in connection with the evidence of opinion, that it is considered among practical persons con- versant with navigation as no more dangerous to the vessel to carry goods on deck than under deck, and to this extent it was competent evidence, but no further. The questions whether the risk was increased by taking the cotton at Savannah, and whether the vessel was thereby delayed, were left to the jury upon the evidence produced on both sides. The jur3' found a verdict for the plaintiffs ; and upon inquiry being made, they stated that they were fully satisfied that the risk was not increased by taking the deck-load of cotton from Savannah to Boston. If, in the opinion of the whole court, the foregoing directions, or any one of them, were wrong, a new trial was to be granted ; otherwise judg- ment was to be rendered for the plaintiffs. Fletcher and Cooke, for the defendants. C. G. Loring, contra. Per curiam. The defendants contend that the voyage was termi- nated at Savannah ; and the first question to be considered is, whether 456 LAPHAM V. THE ATLAS INS. CO. [CHAP. VL that port was " a port of discharge in the United States," according to the true construction of the polic}-. And in determining the question we are aided by decisions of this court and of other courts, cited by the counsel for the plaintiffs. The authority upon which they princi- pally rely is the case of Coolidge v. Gthj, 8 Mass. 527. There, goods on board a vessel were insured from Boston to her port of discharge in Europe. The polic3' stated, that the vessel, though cleared for Ton- ningen, was intended for some port in Holland, or wherever else the master should deem proper, in case he could not get into Holland. The master entered the river Maese, but being informed that liis vessel and cargo, if discovered by the French guards, would be seized and con- fiscated, he left the river and went to Gottenburg, where he remained a few da\s, in order to ascertain at what port he might sell his cargo, and he then proceeded for a market in the Baltic, and was captured. It was made a question whether Gottenburg was not the port of discharge ; but it was held, that the master had a right to obtain advice, at his port of arrival, respecting the markets, and having informed himself, to pro- ceed elsewhere, and that the underwriters were answerable for the loss. The court there say, that if the master had broken bulk or begun to unlade at Gottenburg, that must have been deemed the port of dis- charge. It is difficult to distinguish between the case referred to and the one now before us. That case has never been questioned, we be- lieve, but it has been frequently discussed, and its principles adopted in other States. King v. Middletown Ins. Co., 1 Conn. 184 ; King v. Hartford Ins. Co., 1 Conn. 333 ; Sage v. Middletown Ins. Co. 1 Conn. 239. We think, then, upon the true construction of the policy now in question, that the voyage did not terminate at Savannah, and that the master had a right to proceed to another port, and that the loss is within the policy. It appears that while the vessel was at Savannah, the master took on board forty bales of cotton on freight ; and this, it is urged, released the defendants from their responsibility. But it has been settled by this court, that the mere fact of putting goods on board a vessel at a port where she has a right to touch, if it neither increase the risk nor occasion delay, does not discharge the underwriters. Thorndike v. Boardman, 4 Pick. 471 j Chase v. Eagle Ins. Co., 5 Pick. 51. The questions whether the risk was increased, and whether any dela}' was occasioned by procuring and taking on board the cotton, were rightly left to the jury, and they have found for the plaintiffs. The circumstance of carrying the cotton on deck, if it did not increase the risk, would not of itself avoid the policj'. Manj- witnesses were examined in regard to the effect of a deek-load, upon the safety of the vessel, and evidence was introduced that it was customary- for this spe- cies of vessels, in various kinds of navigation and at different seasons of the year, to caiTy goods on deck. This evidence was objected to by the defendants. The usage was not admitted in evidence for the pur- pose of giving a construction to the contract In that view it would SECT. I.] BEOWN V. TAYLEUR. 457 have been competent, if the contract had been made in reference to it. But it was introduced merely' as to the question, whether in point of fact the risls was or was not increased by taking the cotton on deck. It does not seem to have been very material, but we cannot perceive that it was altogether irrelevant. We are of opinion that it was not incompetent evidence. The defendants further objected, that the jury were instructed to con- sider, whether on the whole the risk was increased b^' taking the deck- load, upon a balance of advantages and disadvantages. We think the language of the instruction was incapable of being misunderstood by the jury, and that it was substantially right. The counsel for the de- fendants have animadverted upon the use of the word increased, and have argued that if the risk is changed, the underwriters are discharged. This view of the subject, however, is too limited, for any alteration in the cargo maj' be said to change the risk in some degree. But the real question was, whether the vessel was practically exposed to greater danger than if the cotton had not heetx taken on deck. Judgment on the verdict. BROWN AND Others v. TAYLEUR. King's Bench, 1835. 4 Ad. & E. 241. Assumpsit on a policy of insurance. On the trial before Lord Den- man, C. J., at the sittings in London after Trinity term, 1834, it appeared that the insurance was upon goods and merchandise, and also upon the bod^-, tackle, &c., of and in the ship " Penrith," " lost or not lost, at and from her port of lading in North America, to Liver- pool ; " beginning the adventure upon the goods from the loading thereof on board, &c. A total loss was proved ; but, upon the case for the plaintiffs. Sir James /Scarlett, for the defendant, contended that there had been a deviation. The evidence on this point was as follows : — The "Penrith" was launched at Cocagne, in the province of New Brunswick, at the end of June, 1828. Her burden was 510 tons. A few daj-s after she was afloat, she began to take in a cargo of timber at Cocagne, and she continued to do so for three weeks. The lower hold, which would contain from 400 to 500 tons, was loaded at Cocagne. During this time the vessel was described, in evidence, as lying "in the stream, inside of the Cocagne bar.'' On the 1st of August, she sailed from thence to Buktouche, described by different witnesses as five, and seven, miles distant, to complete her loading. She arrived there in a few hours. Cocagne and Buktouche are situate on different creeks of the same bay. Buktouche is not in the line of voyage from Cocagne to Liverpool. The " Penrith" lay off Buktouche three weeks 458 BROWN V. TAYLEUR. [CHAP. TI. to take in the residue of her cargo, and returned to Cocagne on the 22d of August to receive provisions, water, and wood, and to get the ship ready for sea ; but she took no additional cargo, unless (which was mentioned as doubtful) a few pieces of timber on the deck. She sailed for England on the 31st of August, and was lost on the vo3-age. Cocagne was spoken of bj' witnesses as a "harbor" and a "port," and Buktouche as a "port," but neither had a custom-house, tliough there were officers of customs at both places, and it appeared that both were within the jurisdiction of the custom-house of St. John, New- Brunswick. The "Penrith," though built at Cocagne, was registered at the port of St. John.^ The letter ordering the insurance was dated August 25th, 1828. The Lord Chief Justice gave leave to move to enter a nonsuit on the objection taken, and the plaintiffs had a verdict. In the following term a rule nisi was obtained for entering a nonsuit, or for a new trial upon grounds which it is unnecessary to notice, as the decision of the court did not turn upon them. Sir tT. Oamphell, Attornej^-General, Wightman, and Crompton now showed cause. Maule and Sir W. W. Follett, contra. Lord Denman, C. J. I think that the rule for a nonsuit must be absolute. It was clear, on the close of the evidence for the plaintiffs, that Cocagne and Buktouche were two distinct places, and two places at each of which there might be a lading. There was no technical meaning to be attached to the words "port of lading." If it could have been shown that the two places were in reality one, the plaintiffs should have produced evidence to that effect. My only doubt was, whether there should have been a nonsuit, or whether the defendant should have been called upon to give evidence on the subject ; but as the plaintiffs themselves have made out a ^nma/acw case of distinct- ness, I think the defendant is entitled to a nonsuit. Patteson, J. I am of the same opinion. We cannot construe the words " at and from her port of lading," as if they were "at and from her ports ; " the expression used points out one single place. Nor can we adopt the technical meaning which ma}- be ascribed to " port," as signifying all that is subject to one custom-house, or one port jurisdic- tion ; the result of which would be that a ship, under such a policy as this, might sail to every part of a district so situated. The cases which explain the meaning of the word " port," as here used, are not many. There is one,^ where a brigantine was insured to Barcelona, and at and from thence, and two other ports in Spain, to a port in 1 It appears, on reference to a map, that St. John is on one side, Cocagne and Buk- touche on the other, of the neck of land which joins New Brunswick to Nova Scotia. St. John is on the Bay of Fundy. Cocagne and Buktouche are in the Gulf of St. Law- rence, each at the mouth of a river. The distance from St. John to Cocagne by land appears to be about one hundred miles, in a direct line. — Rep. 2 The Sea Insurance Company of Scotland o. Gavin, 4 Bligh, n. s. 578 ; s. o. 2 Dow & Clark, 125. — Rep. SECT. I.] BEOWN V. TAYLEUE. 459 Great Britain ; and slie put into a place situate in tlie recess of a bay, having a custom-house and port captain, and having also warehouses and a jetty, with accommodation for small vessels only, there being, however, convenient anchorage for large ones in the roadstead ; and the ship having been lost in the roadstead, this was held to be a port within the meaning of the policy. Here, I think that "port" means the same as place, and that the vessel's place of loading must be one place. When she had once begun to take her cargo at Cocagne, that was her place of lading, and her removal afterwards to Buktouche was a deviation. The cases of insurance at and from Jamaica,'' and Grenada,'^ do not apply. There the words used would comprehend all places in the island. If the policies in those cases had said ' ' at and from her port of lading in Jamaica," or Grenada, the commencement of the voyage would have been restricted to one particular place. That the two places here are within the jurisdiction of a single custom-house, makes no difference. -If that entitled the ship to go from one to the other, she might also have gone to St. John. In construing the word "port" as the place of lading, I do not mean to say that, if a ship were at a particular quay on a river, as at Liverpool, and merely removed to another quay a mile or two off, that would be a deviation, because the vessel there would be all the time in one port and place ; but it is a deviation if she removes to a different town, a different place of habitation, and a point which might itself be her place of lading. As to the date of the letter, the policy would attach when the vessel began to load ; and if an unknown loss had happened before the writ- ing of the letter, it would be covered by the policj'. I think that there ought to be a nonsuit, because further evidence could not have altered the state of facts, or if it could, the plaintiffs should have offered it when a nonsuit was applied for. Williams, J. The word used in the policy is "port" of lading, in the singular number : we cannot construe that as ports. And the moment the taking in of the cargo was begun at Cocagne, that was to be considered as the port of lading designated. Had evidence been given that, for purposes of this kind, Cocagne and Buktouche formed in fact only one place, the case would have been different. But if, by means of the construction attempted, places at a distance from each other can be included under the term "port of lading," what rule of restriction can be laid down? May the places be fifty or a hundred miles apart? "Jamaica" and "Grenada," in the cases which have been referred to, signified the whole of those islands. It would have been a violence there to limit the meaning of the policy to a single port. Here, nothing warrants the extension insisted upon. Coleridge, J. There must be a nonsuit in this case, unless we are prepared to say that " port " is equivalent to " ports," or to " port or 1 Bond V. Nutt, 2 Cowp. 601 (1777); and Cruickshank o. Janson, 2 Taunt. 301 (1810). — Ed. 2 Warre i: MiUer, 4 B. & C. 538 (1825) ; s. c. 7 D. & R. 1. —Ed. 460 GEEENLEAF V. THE ST. LOUIS INS. CO. [CHAP. VL ports." The plaintiffs must contend that it is an aggregate term, com- prehending ever}' member of a port, together with the chief port itself. But I think we are not at liberty here to construe the word with refer- ence to custom-house regulations, but must consider it merelj' as indi- cating a place. Looking at it in this way, can we regard "port" as an aggregate term, comprehending a number of neighboring places? I think not, and for this reason among others, that it makes a difference in the risk whether a ship stays at one place to load, or goes on a rov- ing voj'age to pick up a cargo. It is important in these matters tliat parties should come to a plain understanding ; and if it is meant that a vessel should have the liberty of going to a number of places, though near each other, the part}' insuring had better express it so, than run a risk, at least, of deceiving the underwriters. Mule absolute for a nonsuit} GEEENLEAF and Others, Appellants, v. THE ST. LOUIS INSURANCE COMPANY, Respondent. Supreme Couet of Missocki, 1865. 37 Mo. 25. Appeal from the St. Louis Circuit Court. T. T. Oantt and J. S. Rankin, for appellants. Glover & Shepley, for respondent. Wagner, J. This was an action on a policy of insurance for five thousand dollars effected in the St. Louis Insurance Company on the hull of the steamer " A. McDowell." The insurance was for one year, beginning on the 4th day of April, 1862, and ending on the 4th day of April, 1863. The policy contained the following clause: "With permission to navigate the Mississippi and Ohio rivers and their tributaries, usually navigated by boats of her class, the Missouri, Arkansas, AVhite, Red, and Yazoo rivers excepted." At the trial the following facts were agreed upon by both parties : 1. That the policy described in the petition was executed by the insurance compan}'. 2. That on the 24th of May, 1862, the " McDowell " left St. Louis on a voyage to Leavenworth, Kansas, and returned to St. Louis on the 1st day of June, 1862. 3. That said voyage was undertaken entirely for the United States Government, the vessel having no freight except three hundred soldiers and two hundred mules and horses. I See National Traders Bank v. Ocean Ins. Co., 62 Me. 519 (1871) ; Fernandez v. Great Western Ins. Co., 48 N. Y 571 (1872) ; Heame v. Marine Ins. Co., 20 Wall. 488 (1874). — Ed. SECT. I.j GEEENLEAF V. THE ST. LOUIS INS. CO. 461 4. That full notice of her arrival and departure on this trip was given by advertisement in the "Daily Missouri Republican," a paper taken daily by the defendant. 5. That no damage was done to said vessel by said voyage, and that she returned in a good and seaworthy condition to the port of St. Louis. 6. That no other act of the plaintiffs, except said voyage, is set up by the defendant to defeat this action. 7. That before the "McDowell" went into the Missouri River on said voyage, the owners had a consultation about the expediency of obtaining insurance on said vessel in the Missouri River, during said voyage, but they finally concluded to take the risk themselves for that voyage. It is insisted, in support of the judgment of the court below, that the policy contained a warrantj' that the vessel should navigate none of the excepted streams ; and also that in going into the Missouri River the boat had been guilty of a deviation. If either of these positions be true, it is fatal to the appellants. Ever}- affirmation of a fact contained in a policy, in whatever terms expressed, will be construed as a warranty. (2 Duer on Ins., 644.) Designating a ship as of a certain nationality, describing her as con- taining a certain armament, or as being fitted out in a particular man- ner, will amount to a warranty that the vessel is of the national character ascribed to her, and that she has the armament or outfit described ; and whether these matters are material or immaterial, as regards the risk, will make no difference. The first question to be de- termined in interpreting the clause in the policy is to ascertain the true intention of the parties to the instrument ; and here it is to be consid- ered that the provision or exception being in writing, and being the especial words of the insurers, if there is any ambiguit}' or uncertaint}-, the construction must be most stronglj- against or unfavorable to them. (2 Par. on Marit. Law, 55.) From a careful perusal and examination of the exception, we are of opinion that it does not constitute a warrant}'. This was a time policy, and a policy on, time insures no specific voyage, but covers any voj'age within the prescribed time. It is of the nature of a policy on time that it limits the vessel to no geographi- cal track, and deviation is therefore not predicable of it. (Bradlie v. Md. Ins. Co., 12 Pet. 378; Union Ins. Co. v. Tyson, 3 Hill, 118; Keeler v. Fireman's Ins. Co., 3 Hill, 250.) In Yeaton v. Fry (5 Cranch, 335), the policy of insurance was for a specific sum on the brig " Richard," " at and from Tobago to one or more ports in the West Indies, and at and from thence to Norfolk," and the insurance was declared to be made against all risks, blockaded ports and Hispaniola excepted." The vessel sailed from Tobago to a blockaded port, but without a knowledge of the blockade, and was turned away, and afterwards, on her voyage back to Norfolk, was cap- tured by a French privateer. Chief Justice Marshall delivered the 462 GREENLEAF V. THE ST. LOUIS INS. CO. [CHAP. VI. opinion of tlie court, and held that the words, " all blockaded ports," &c., could not be construed as a warranty on the part of the insured, but were the words of the insurers, and must be considered as an ex- ception from the general risks of the polic}'. In a policj' of insurance on time containing the following clause, " excluding, during the term, all ports and places in Mexico and Texas, also the West Indies, from July 15 to October 15, 1839, each at noon," — and the vessel sailed from New York for and arrived at St. lago de Cuba within the excluded period, and was lost on her re- turn in December following, — it was decided that the underwriters were liable, the loss not happening within the excepted period, and the clause in the policy not being an exception or exclusion of voyages, but only a suspension of the risk during such time as the vessel should be at the excepted ports. (Palmer v. Warren Ins. Co., 1 Sto. 360.) Now, the " McDowell " made her trip in the Missouri River in the latter part of May, and was destroyed by fire in the subsequent Octo- ber. It is admitted that while prosecuting her voyage in the Missouri Eiver she received no damage or injury whatever that in an3" wise con- duced to her destruction. The permission in the clause is to navigate the Mississippi and Ohio rivers and their tributaries, excepting the Missouri and others, during the term of one year. The language here does not amount to a prohibition, or a condition, or a warranty. The words without the exception would embrace all the tributaries of the above-mentioned rivers. The exception has the effect of restraining or suspending the liabilit}' of the underwriters in a certain event. If the intention had been that the policy should be de- feated by making voyages on any of the excepted rivers, that intention would have been expressed. But. if there is any doubt about it, that exception being made by the parties for their own benefit to reheve themselves from a risk which they otherwise would have incurred, the doubt is to be resolved against them. The policy did not amount to a prohibition or warranty against navigating the excepted rivers, on the part of the assured, but to a suspension of the risk during the period the boat was so employed. This is not like the case of Stevens v. Conn. Mut. Ins. Co., 6 Duer, 694. There the policy of insurance, on which the action was founded, contained a warranty that the vessel insured should not use any port or ports in the Gulf of Mexico, and there was a plain breach of the warrant}- on the part of the assured. The judgment is reversed, and, as there is no disagreement about the facts, judgment will be entered in this court for the appellants.* Holmes, J., concurs; Lovelace, J., absent. 1 Ace : Wilkins v. Tohacco Ins. Co., 30 Ohio St. 317 (1876). See Ellery v. New England Ins. Co., 8 Pick. 14 (1829); Hennessey t). Manhattan F. Ins. Co., 28 Hun, 98 (1882). Compare Company of African Merchants v. British and Foreign M. Ins. Co., L. R 8 Ex. 154 (Ex. Ch., 1873). —Ed. SECT. I.j BUEGESS V. EQUITABLE MARINE INS. CO. 463 BURGESS V. EQUITABLE MARINE INS. CO. Supreme Judicial Court of Massachusetts, 1878. 126 Mass. 70. Contract on a policy of insurance, dated June 20, 1874, against perils of the seas, wherebj- the defendant company insured, "lost or not lost, B. A. Hathawaj", for Sylvanus W. Burgess, twentj-three hundred dollars, loss, if an}-, paj'able to S^-lvanus W. Burgess, on schooner ' Christie Johnstone ; ' eight hundred dollars on great gen- erals ; three hundred and fifty dollars on small generals ; three hun- dred and Mty dollars on advance to crew on board said schooner, at and from Plymouth to Banks, codfishing, and at and thence back to Plj-mouth ; risk to commence June 13, 1874, at noon." The rate of the premium was 3—4 per cent per month, the premium note given was for $114, and the vessel was valued at S2,500. The policy was in- dorsed " expires with voyage." Answer, a deviation. Trial in this court, before Grat, C. J., who reported the case for t"he consideration of the full court, in substance as follows : The plaintiflT introduced evidence tending to show the following facts : The vessel sailed from Plymouth on June 13, 1874, on a cod-fishing voyage to the Banks, in a seaworth}' condition, with four barrels of clam-bait, which was the usual quantity of bait taken by vessels of her class on such a voj'age. For several years past it has been the prac- tice of such vessels not to take enough bait to last for the entire trip, but to rely principallj' on catching squid on the Banks, and to use them for bait ; and for several years prior to 1874 squid have been plenty on the Banks, but in 1874 they were very scarce. After fishing on the Banks for three weeks, and having exhausted nearl}' all his bait, the master of the vessel, solely for the purpose of procuring bait, went to St. Peter's, the nearest practicable port where bait could be obtained, there procured bait, and then sailed from St. Peter's to the Banks, and resumed fishing. To reach the port of St. Peter's, the vessel sailed about one hundred and ten miles from the fishing-ground. She left the fishing-ground on Thursday, reached St. Peter's on Saturday ; and, having procured bait there, left St. Peter's on Tuesday following, and then sailed for another Bank, where she arrived and resumed her fishing on the next Thursdaj'. On August 6, 1874, while so fishing on the Banks, the vessel encountered a severe gale, sprung a leak, and wa^ totally lost, with all the property on board. The defendant requested the judge to rule that these facts amounted in law to a deviation. The judge declined so to rule, but ruled as follows : " If the vessel left Plymouth with the usual amount of bait for the kind of fishing in which she was to engage, and, by an unex- pected failure of bait of the kind ordinarily taken on the fishing-ground, 464 BURGESS V. EQUITABLE MARINE INS. CO. [CHAP. VI. it became necessary for her to go into port to procure bait, and she went to the nearest practicable port for that purpose, such going into port was not, as matter of law, a deviation." The defendant consented to a verdict for the plaintiff, subject to the opinion of the full court upon the question whether, as matter of law, there had been a deviation. If, in the opinion of the court, the going to St. Peter's for bait was a deviation which discharged the insurer, the verdict was to be set aside, and judgment entered for the defendant; otherwise, judgment for the plaintiff on the verdict. J. C. Dodge, for the defendant. J. Lathrop and A. Mason, for the plaintiff. Endicott, J. By the terms of the policj' the vessel was insured " at and from Plymouth to the Banks, cod-fishing, and at and thence back to Plymouth." This is a definite and distinct description of the con- templated voyage between two fixed termini. The Banks are named as the outward terminus, and while there engaged in cod-fishing, and until her return to Plj'mouth, the vessel was covered by the policj'. The language used is not open to the construction that it was the in- tention of the parties to insure her while prosecuting the adventure elsewhere, or doing what was necessary to make it successful outside and beyond the prescribed limits. A voyage is the sailing of a vessel from one port or place to another port or place, and the purpose for which it is to be conducted, whether as a trading, freighting, or fishing voyage, is often mentioned in policies of insurance. But this designa- tion cannot vary or extend the description, route, or termini of the voj'age, as named in the polic}', unless some usage, connected with the particular trade or adventure, is shown to exist. No evidence was offered of a usage in such voj'ages to leave the Banks and go into port for bait. So far as the evidence reported discloses any usage in that regard, it appears that for some years it had been the practice to carry out a limited amount of bait, and to relj- upon obtaining an additional supply on the Banks. Such being the practice to obtain bait on the Banks, when the supply taken out was exhausted, a departure from the Banks for that purpose could not have been contemplated by the parties in making the policy. We have, therefore, a definite descrip- tion of the voyage in the policy, and a usage that does not extend its provisions. The question decided in Friend v. Gloucester Ins. Co., 113 Mass. 326, arose upon a clause in a policy prohibiting a fishing vessel from sailing on a voyage east of Cape Sable after a certain date, and throws no light upon the construction to be given to the words of this policy. The decision in " The Ta^quin," 2 Lowell, 358, turned upon the construction of the shipping articles of seamen, and not of a polic3" of insurance. We are therefore of opinion that the vessel, by leaving the Banks and going to St. Peter's for bait, departed from the voyage described in the policy, and the only question to be determined is whether, in law, there has been a deviation which avoids the policy. SECT. I.J BURGESS V. EQUITABLE MAKINE INS. CO. 465 It may be stated in general terms that the assured is protected by his policy while the vessel pursues the usual and customary course of the voyage ; but any departure from the course, or delaj"^ in prosecut- ing it, without necessit}' or just cause, is a deviation, and discharges the insurer, because another voyage has been voluntarily substituted for that which was insured. Whether the degree or period of the risk is increased is unimportant, as the assured has no right to substitute a different risk. Whenever, therefore, there is a manifest departure from the course of the voyage, the assured must show that it was justified by the necessity of the case. Stocker v. Harris, 3 Mass. 409, 418 ; Brazier v. Clap, 5 Mass. 1 ; Coffin v. Newburyport Ins. Co., 9 Mass. 436, 449 ; Kettell v. Wiggin, 13 Mass. 68. In the case at bar, the alleged necessity arose from scarcity of bait. The plaintiff did not put on board, when the vessel sailed from Ply- mouth, enough for the entire trip. Squid had been plenty on the Banks during several j-ears prior to 1874, and the plaintiff relied upon catch- ing them there and using them for that purpose. They happened this season to be very scarce, and, after fishing three weeks and nearly ex- hausting his suppl}', the master sailed for St. Peter's, over one hundred miles distant, procured bait, and returned to the Banks after an absence of a week. It is to be observed that this so-called necessity did not arise from any peril insured against in the policy, or ordinarily insured against in policies of insurance, and did not involve the safetj' of the vessel, or of anj" property on board ; it had relation solely to the suc- cess of the fishing adventure, and in this the defendant had no interest, and had assumed no responsibility. We are of opinion that the claim of the plaintiti' cannot be sustained ; and that a necessity to justify the departure in this ease cannot be found in the fact that, without going to St. Peter's for bait, the voyage would have failed to be successful or profitable to the plaintiff. The strictness with which the courts have held the insured to the route named in the policj' is illustrated by the cases already cited, and b}' many others cited at the argument. Dodge v. Essex Ins. Co., 12 Gray, 65; Middlewood v. Blakes, 7 T. R. 162; Brown v. Tayleur, 4 A. & E. 241 ; Fernandez v. Great Western Ins. Co., 48 N. Y. 571 ; Merchants' Ins. Co. v. Algeo, 32 Penn. St. 330. But the question to be determined here is, what is the nature and extent of the necessity or just cause which will warrant a departure from the route. In this connection it may be well to refer to the necessities which clearlj" justify a departure. There is no deviation when the master is compelled by force either to depart from his route, or delay its prose- cution by the acts of his crew (Elton v. Brogden, 2 Str. 1264 ; Driscol V. Passmore, 1 B. & P. 200 ; Driscol v. Bovil, 1 B. & 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 com- 30 466 BURGESS V. EQUITABLE MARINE INS. CO. [CHAP. VI. plied 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 delaj' 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 disabled by sickness or reduced bj' casualties, or to avoid capture or to join convoy in time of war, there is no devi- ation. It is unnecessary to cite all the cases which fall within these exceptions ; many of those relied on by the plaintiff are clearly* within them. Dunlop *. 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 Folsom v. Merchants' Ins. Co., 38 Maine, 414. Nor is the departure from the route for the purpose of saving human life a deviation ; nor is a policy avoided when the ship goes out of her course to obtain necessary medical assistance for those lawfuUj- on board. Bond v. Brig Cora, 2 Wash. C. C. 80 ; Perkins v. Augusta Ins. Co., 10 Graj-, 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 protec- tion of property. In all other cases the necessitj' must be a real and imperative necessitj- affecting the vessel, such as actual force prevent- ing the master from exercising his will, peril of the sea, danger of capture, want of repair, disability of the crew, or unseaworthiness, occurring under such circumstances 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 delaj" 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 V03'age must at times be necessarilj- subject to extraordinary' perils of the sea, and contingencies bej"ond 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 vo3-age, 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 tlie time by the ship. The probability of such occurrences is well un- derstood ; they are known perils of the voyage, and enter into the ordi- nary contract of marine insurance. And when the master, compelled b3' the necessity, does that which is for the benefit of all concerned, the act is within the intention of the policj' 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 b^- implication to include them. See Greene v. Pacific Ins. Co., 9 Allen, 217, 219. In such a SECT. I.] BURGESS V. EQUITABLE MARINE INS. CO. 467 policj- as this, the necessities justifying a departure, in the absence of usage, from the route, and a visit to a port not named, are those which are caused hy some peril occurring in the prosecution of the voyage within the limits named in the policy, and not those which arise in the prosecution of the business for which the voyage was undertaken. It is true there is a class of cases much relied on bj' 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 delaj-, where the ship was at the port or place named or per- mitted in the policy. The permission in a policy to go to certain ports or places must always be construed in reference to the purpose of the voyage. Williams v. Shee, 3 Camp. 469 ; 1 Arnould on Ins., §§ 141, 142. Any dela}' for the prosecution of other business, or an}' 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. Irving, 7 Man. & Gr. 325. In other words, if the ship is at a place permitted, the dela}' shall not be a deviation, if it is necessary in the proper prosecution of the business of the voj-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 privilege, or to the duration of the insurance, and, in the absence of permission to do so in the pol- ic3', it cannot be implied. See Kettell v. Wiggin, 13 Mass. 68 ; Robert- son 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 bejond 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 she could be loaded, no one would say that her policy protected 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 thej- were drawn had failed, she could not go to another port for funds, and return for her cargo, and be protected b}- her policy. If fish had been scarce on the Banks in 468 BUEGESS V. EQUITABLE MARINE INS. CO. [CHAP. VI. 1874, it would hardly be contended that the vessel could have gone to other fisbing-grouuds 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 plaintiffs 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.' . •. . 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.^ 1 Here were discussed Greene v. Pacific Mutual Ins. Co., 9 Allen, 217 (1864), and Stocker v. Harris, 3 Mass. 409 (1807). — Ed. 2 See the authorities cited ante, p. 440, n. 1. On deviation in general, see also : — Bond V. Nutt, 2 Cowp. 60 (1777) ; Delany v. Stoddart, 1 T. R. 22 (1785) ; Way V. Modigliani, 2 T. R. 30 (1787) ; Driscol V. Bovil, 1 B. & P. 313 (1798) ; Brazier v. Clap, 5 Mass. 1 (1809) ; Clark V. United F. & M. Ins. Co., 7 Mass. 365 (1811) ; Oliver V. Maryland Ins. Co., 7 Cranch, 487 (1813) ; Inglis V. Vaux, 3 Camp. 437 (1813) ; Graham v. Commercial Ins. Co., 11 Johns. 352 (1814) ; Warre v. Miller, 4 B. & C. 538 (1825) ; s. c. 7 D. & R. 1 ; Bottomley v. Bovill, 5 B. & C. 210 (1826) ; Samuel v. Royal Exchange Assurance Co., 8 B. & C. 119 (1828) ; Hamilton v. Sheddon, 3 M. & W. 49 (1837) ; Lockett V. Merchants' Ins. Co., 10 Rob. La. 339 (1845) ; Parsons v. Manufacturers' Ins. Co., 16 Gray, 463 (1860); McCall V. Sun Mutual Ins. Co., 66 N. Y. 505 (1876) ; Snyder v. Atlantic Mutual Ins. Co., 95 N. Y. 196 (1884) ; Schroeder v. Schweizer, L. T. "V. Gesellschaft, 66 Cal. 295 (1885) ; Thehaud v. Great Western Ins. Co., 155 N. Y. 516 (1898). —Ed. SECT. I.] OLIVER V. COWLEY. 469 SECTION I. {continued). (B) Unseaworthiness. OLIVER V. COWLEY. Nisi Prids, 1765. 1 Park Ins. 8th ed. 470. An action was brought b}- an innocent shipper of goods (no p{irt owner of the ship) against the underwriter, and the polic}- was effected on goods in the '• Amy and Laetitia" at and from Montserrat to London. It appeared that the ship sailed the 26th of July, and the next day without any bad weather she was very leakj- and obliged to run for St. Thomas', one of the Virgin Islands, where she was unloaded, and the goods, being much damaged, were sold. It could not but be allowed on all sides, that the ship was not seaworthy to undertake the insured voyage ; and it was agreed and admitted \>y defendant that the shipper of the goods was a stranger to it when the goods were shipped. The plaintiff was nonsuited. Lord Mansfield saying, that the implied warranty could not be dispensed with in any case ; that it was a point of law, and if the plaintiff's counsel thought there was anj' ground to go upon he would save the points : but the plaintiff's counsel declined this, being satisfied the question was clear against them.^ 1 Compare Koebel u. Saunders, 17 C. B. n. s. 71 (1864). See Daniels v. Harris, L. R. IOC. P. 1 (1874). In Christie v. Secretan, 8 T. R. 192, 198 (1799), Lawkenoe, J., in speaking of "an implied warranty of seaworthiness," said : " The latter is implied from the nature of a contract of insurance. The consideration of an insurance is paid in order that the owner of a ship which is capable of performing her voyage may be indemnified against certain contingencies ; and it supposes the possibility of the underwriter gaining the premium : but if the ship be incapable of performing her voyage, there is no possibil- ity of the underwriter's gaining the premium ; and if the consideration fail, the obli- gation fails." In Surges v. Wickham, 3 B. & S. 669, 690-691 (1863), Blackburn, J., comment- ing upon the foregoing passage from Lawrence, J., said : " But nothing in that case depended on the question what were the elements to be taken into account in deter- mining what amounts to seaworthiness ; and the language of Lawrence, J., was not chosen with a view to express any opinion on that point And it seems clear that a mere capacity of performing the voyage, and earning the premium, is not suflBcient to constitute seaworthiness. As a matter of fact a vessel, though far from seaworthy, may, and often does, successfully perform her voyage, and so proves in one sense capable of performing it, whilst a seaworthy vessel may, and often does, perish without any extraordinary accident. We must, therefore, look for some other crite- rion to determine what constitutes seaworthiness," — Ed. 470 FORBES V. WILSON. [CHAP. TL FORBES AND Another v. WILSON. Nisi Prius, 1800. 1 Park Ins. 8th ed. 472. Where a policy of assurance was effected on the ship "Henrj'," " at and from Liverpool to the coast of Africa," it appeared that, at the time the policy was made, the ship was not in a condition to go to sea, but was, in fact, at the time undergoing very material repairs ; and it was contended by the underwriters that as the risli described was " at " as well as " from," if the ship was not seaworthj-, from whatever cause, when the policy was subscribed, it was void ; and that any repairs done aftei'wards, so as to make her completely seaworthy at the time of sailing, would not cure that defect. But Lord Kenton was of opinion that under the words " at and from " it is sufficient if the ship be seaworthy at the time of sailing, for, from the nature of the thing, the ship, while at the place, probably must be undergoing some repair.^ The plaintiffs had a verdict, and no motion was made to set it aside. 1 In Smith v. Sarridge, 4 Esp. 25 (Nisi Prius, 1801), Lord Kenton, C. J., said: "Tlie policy was at and from Pillaw. Such a policy, at and from a place, attached on the ship while she was undergoing repairs. It was not necessary that she should be seaworthy at the time of the insurance." In Hibbert v. Martin, 1 Park Ins. 8th ed. 473 (Nisi Prius, 1808), Lord En-EyBOR- OUGH, C. J., said as to Forbes v. Wilson : " I agree with the doctrine of that case : it is quite sufficient if the state of the ship be commensurate to her then risk. There may be a seaworthiness sufficient while in harbor ; and there is a state of seaworthiness for the voyage." In Tidmarsh v. Washington F. & M. Ins. Co., 4 Mason, 439 (1827), Stoet, J., charging the jury, said ; " The standard of seaworthiness has been gradually raised within the last thirty years, from a more perfect knowledge of shipbuilding, a more enlarged experience of maritime risks, and an increased skill in narigation. In many ports, sails and other equipments would now be deemed essential, which at an earlier period were not customary on the same voyages. There is also, as the testimony abundantly shows, a considerable diversity of opinion, among nautical and commer- cial men, as to what equipments are, or are not, necessary. Many prudent and cau- tious owners supply their vessels with spare sails and a proportionate quantity of spare rigging ; others do not do so, from a desire to economize, or from a different estimate of the chances of injury or loss during the same voyage. Of course, different men may weU therefore come to different conclusions from the same premises, on a point like this, from their own habits of life, and the general custom of the place to which they belong." In McLanahan v. Universal Ins. Co., 1 Pet. 170, 183-184 (1828), Stoet, J., for the court, said : "There is no doubt that every ship must, at the commencement of the voyage insured, possess all the qualities of seaworthiness, and be navigated by a com- petent master and crew. . . . The argument assumes that the ship ought not to have got under way, or proceeded into the offing, until the master and all the crew necessary, not for that act, but for the entire voyage, were on board. If the law weie so, we have no means of ascertaining what crew was actually on board at the time. . . . But we are far from being satisfied that the law has interposed any such positive rule as the argument supposes. Seaworthiness in port, or for temporary purposes, such as mere change of position in harbor, or proceeding out of port, or lying in the offing, may be SECT. I.] PAKMETER V. COUSINS. 471 PARMETER v. COUSINS. Nisi Prids, 1809. 2 Camp. 235. This was an action on a policy of insurance on ship and freiglit, val- ued at £1,200, at and from St. Michael's, or all or any of the Western Islands, to England. The ship met with very tempestuous weather on her outward vo3-age ; 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 anchor at St. Michael's ; and at any rate she had lain there twenty-four hours, so tliat the outward risk had completel3' expired. The objection of want of seaworthiness when properly considered was without any foundation. The ship, on her arrival at St. Michael's, was unfit to commence the homeward voy- age ; but this was unnecessary. It was enough if she was fit for the voj-age, when the voj'age commenced. One state of seaworthiness was required while she remained at, and another when she sailed from, the place. This distinction had been settled by Lord Kenyon, Forbes V. Wilson, Park, 299 n. Marsh, 155. Smith v. Surridge, 2 Esp. 25 S. P., and recognized by Lord EUenborough, Hibbert v. Martin, Sitt. after M. T. 1808. If it were not allowed, the policies on the homeward voj-age would in almost everj- 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 immediateh' to take in the homeward cargo. If, in this case, the policj- on the outward vo3'age had expired, and the policy on the homeward voj'age had not attached, how was the ship- owner to secure himself an indemnity 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. Michael's to England, be liable for a loss happening in the manner that has been described ? And one thing ; and seaworthiness for a whole voyage, quite another. A policj on a ship, at and from a port, will attach, although the ship be at the time undergoing extensive repairs in port, so as, in a general sense, for the purposes of the whole voyage, to be utterly unseaworthy. What is a competent crew for the voyage ; at what time such crew should be on board ; what is proper pilot ground ; what is the course and usage of trade in relation to the master and crew being on board, when the ship breaks ground for the voyage ; are questions of fact, dependent upon nautical testimony ; and are incapable of being solved by a court, withont assuming to itself the province of a jury, and judicially relying on its own skill in maritime affairs." — Ed. 472 FOESHAW V. CHABEKT. [CHAP. VI. I am clearly of opinion that they are not. To be sure, while the ship remains at the place, a state of repair and equipment may be sufficient, which would constitute unseaworthiness after the commencement of the voyage. But while in port, she must be in such a condition as to en- able 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 slie arrives at the outward port so shattered as to be a mere wreck, a policy on the homeward voyage never attaches. Such is the present case. I do not remember any one like it ; but the principles on which it must be decided are perfectly well established. Plaintiff nonsuited. Park and Mkhardson, for the plaintiff. The Attorney- General, Garrow, Scarlett, Barrow, and F. Pollock, for the defendant. FORSHAW V. CHABERT. Common Pleas, 1821. 3 B. & B. loS.^ Assumpsit on a policy of insurance on the ship " Hope" and goods, " at and from her port or ports of lading in Cuba, to Liverpool," with liberty " in that voyage to proceed and sail to, and touch and stay at, any ports or places whatsoever ; and with leave to discharge and take in at any ports or places she might touch at, without prejudice to that insurance." At the trial, before Dallas, C. J., at the London sittings after last Trinity Term, it appeared that, subsequently to the subscrip- tion of the policy hy the different underwriters, the words "with leave to call off Jamaica " had been inserted in the bod^' of it after the word "Liverpool." All the underwriters, except the defendant, on being applied to, sanctioned this interpolation by writing their initials in the margin of the policy opposite to the words inserted, and required no additional premium. The defendant, being ill and absent from London, was not applied to for this purpose. There were two counts in the declaration, on the policy in question, the first, setting out the policy, with the words interpolated ; the other, setting it out as it originally stood. The captain, having lost some of his outward-bound crew by sickness and desertion at Cuba, and finding it impossible there to engage ten men for Liverpool, sailed from Cuba with a crew composed of eight men engaged for Liverpool, and two for Montego Bay in Jamaica. He then proceeded to and touched at Montego Bay, for the sole purpose of landing the two men (who refused to proceed further), and of procuring others to supply their place. Having effected both these objects, he sailed from Montego Bay ; and the ship, while in the prosecution of her 1 s. c. 6 Moore, 369. — Ed. SECT. I.j FOKSHAW V. CHA.BEKT. 473 homeward voj'age, was lost. It was proved that ten men were a suffl- cient crew to navigate such a vessel as the. " Hope " to England, and that the captain had no fraudulent purpose in touching at Montego Baj'. Some of the witnesses said the touching at Jamaica increased the risk, and others denied tliis. It was objected, on the part of the defendant, that the alteration in the policj* was material, and rendered it void ; that the touching at Montego Baj- was a deviation ; and that the ship, having sailed from Cuba with an insufficient crew, was not seaworthy when she broke ground (eight men onlj' being there engaged for Eng- land). But the jury found a verdict for the plaintiff, and that the cap- tain put into Montego Baj' for a justifiable cause, even though there had been no alteration in the policy. Tadcly, Serjt., on a former day, having obtained a rule nisi to set aside this verdict, and instead thereof to enter a general verdict for the defendant, or to have a new trial, on the grounds of objection above stated. Hallock, Serjt., now showed cause against the rule. Taddy, in support of the rule. Dallas, C. J. This is an objection to which one feels disposed very reluctantly to yield, for it is an objection against the justice of the case. All the other underwriters were applied to for their consent to the alter ation of the polici', and gave that consent ; thereby saying for them- selves (of all persons the best qualified to form a judgment on the subject) that this alteration occasioned no increase of risk ; but, unfor- tunately for the assured, no such application was made, as far as this individual underwriter was concerned ; and though, undoubtedly, he would have been applied to if he had been in the waj-, and probably would have added his initials to the others, j'et, as he has not done so, he contends he is not bound. However, we must decide on legal grounds, and the question then will be, whether the ship was or was not seaworthy at the time of sailing? Here, it must be observed, that the voyage insured was not a voyage from London to Cuba and back again from Cuba to London, in other words, a voyage out and home, but a voyage from Cuba to Liverpool, and that the words added to the policj' were, " with leave to call off Jamaica," thereby showing that, in the opinion of the party who added them, liberty to touch at Jamaica was not within the terms of the original contract. Now it is clear that a ship must be seaworthy at the time when she sails ; the assured war- rants that, and whatever physical necessities may interpose, he is not allowed to deviate from the strict terms of his warrant}'. It is clear, too, that what was done hy the captain in the present case was done without fraud and for the best ; he went from Cuba to Montego Bay for the sole purpose of procuring more men : was he justified in doing this or not? If he had a sufficient crew for the voyage at Cuba, then this was an increase of risk ; he had no right to go circuitously ; and the touching at Montego Bay would thus be a deviation without necessitj'. Take it the other way, that he had ten men, a sufficient crew for the 474 FORSHAW V. CHABERT. [CHAP. VI. voyage, but onlj- eight of them engaged for Liverpool and two for Mon- tego Baj-, and that he weijt to Montego Baj' to procure two others to supply the places of those who were to leave him, then the ship was not seaworthy when she sailed from Cuba, because the captain ought then to have had ten men for Liverpool, and not eight for Liverpool and two for Montego Bay. Either the ship was not seaworthy at the time of sailing, or there has been a deviation. The jury found that the captain put in to Montego Bay for a justifiable cause, even though there had been no. alteration in the policy ; but I go on the circumstance that the ship had not a sufficient crew at the time she sailed, and that the insur- ance had no inception, because the ship was not seaworthy at the time of sailing. The only way in which the defendant could be liable, he having subscribed a policy without the words "with leave to call off Jamaica " (a policy by which the assured was bound to go direct from Cuba to Liverpool), would have been by a loss happening in that direct course ; so that a question would arise, whether the defendant could be liable in this case on his original contract, even though nothing had been done which could affect that contract : but here there is an alteration in the body of the policy.^ . . . First, then, the ship was not seaworthy at the time of sailing ; and, secondly', there has been a material alteration of the policy ; and on these grounds the defendant is entitled to have his rule made absolute. Park, J. It is with extreme reluctance that I agree in both points in the decision which has been pronounced, because the resistance in this case appears to be most unjust ; but whatever feelings may arise on the occasion, we must keep our minds free from prejudice, and de- cide according to law. . . . This, therefore, is clearly a material alter- ation. As to the other point, I am now of opinion, though I was not so when I came into court, that this vessel must be considered to have been not seaworthy. "Was she at the time she sailed seaworthy for her whole voj-age? She had ten men, a crew sufQcient in number, but only eight of them were engaged for the whole voyage ; and if the captain might start with so imperfect a crew, and might supply the deficiency, as he did afterwards, he might equally be entitled to make a vo3-age from port to port, instead of a voyage direct from Cuba to Liverpool. BuRROUGH, J. ... I am clearly of opinion that there has been a ma- terial alteration here. . . . As to the other point, the ship sailed, it is true, with ten men from Cuba, but eight of them only were engaged for Liverpool : can it be said, then, that she sailed with a proper crew for the whole voyage? The captain was bound to have a proper complement when he started ; and, as he failed in this, I am clearly of opinion that the ship was not seavvorthj'. Richardson, J. The first point to be considered is, whether there was in this case any valid contract on which the plaintiff could sue ; 1 In reprinting the opinions passages dealing with alteration have been omitted. — Ed. SECT. I.J DIXON V. SADLEK. 475 and I am bound b}- the decisions to be of opinion that there has been here a material alteration which has avoided the policy' as to the de- fendant. ... I give no opinion on the point whether, in this instance, the ship was seaworthy at the time of her sailing. Hule absolute. DIXON V. SADLER. Exchequer, 1839. 5 M. & "W. 405.^ Assumpsit on a policj' of insurance, dated Jan. 22, 1838, on the ship "John Cook," and cargo, at and from Jan. 17, 1838, until July 17, 1838, at noon, in port and at sea, at all times and in all places, being for the space of six calendar months. The pleadings and the procedure at the trial, before Parke, B., are sufficiently stated below. A verdict was entered for the defendants on the second issue, the learned judge giving the plaintiff liberty to move to enter a verdict on that issue. Alexander, having obtained a rule to enter a verdict accordinglj', or for judgment non obstante veredicto. Cresswell and S. Temple showed cause. Alexander and W. U. Watson, contra. Cur. adv. vult. The judgment of the court was now delivered by Parke, B. In this case the defendant, to a declaration upon a time policy for six months, stating a loss by perils of the seas, pleaded three pleas, on each of which issue was joined. On the first and third, the verdict was found for the plaintiff ; on the second, for the defendant. This plea stated, "that, though the vessel was lost by perils of the sea, yet that such loss was occasioned wholly by the wilful, wrongful, negligent, and improper conduct of the master and mariners of the ship, bj' wilfullj-, wrongfully, negligentlj', and improperlj- throwing overboard so much of the ballast that the vessel became unseaworth}^, and was lost by perils of the sea, which otherwise she would have safely encountered and overcome." On a motion for judgment non obstante veredicto, it occurred to the court to be questionable whether the plea was not at all events bad, inasmuch as the terms of it did not exclude the case of a loss by barratry, for which the underwriters would be clearly liable, and that on this declaration ; and, as the fact certainly was, that the crew were not guiltj' of barratry, it was very properly agreed that the plea should be amended bj' inserting the words, " but not barratrously," after the words, "negligently and improperly." And the plea, therefore, in its present shape, raises the question whether the underwriters are liable for the wilful but not barratrous act of the master and crew, in rendering the vessel unseaworthy before 1 The statement has been rewritten. — Ed. 476 DIXON V. SADLER. [CHAP. VT. the end of the voyage, by casting overboard a part of the ballast. The case was verj' fully and ablj- argued, during the course of the last and present term, before my brothers Alderson, Gurne}', Maule, and myself. We have considered it, and are of opinion that the plea is bad in substance, and that the plaintiff is entitled to judgment, notwithstand- ing the verdict. The question depends altogether upon the nature of the implied warranty as to seaworthiness, or mode of navigation, be- tween the assured and the underwriter, on a time policy. In the case of an insurance for a certain voyage, it is clearly established that there is an implied warranty that the vessel shall be seaworthj-, by which it is meant that she shall be in a fit state as to repairs, equipment, and crew, and in all other respects, to encounter the ordinary perils of the voyage insured, at the time of sailing upon it. If the assurance at- taches before the voyage commences, it is enough that the state of the ship be commensurate to the then risk, Annen v. Woodman, 3 Taunt. 30 ; Hibbert v. Martin, Park on Insurance, Vol. I. p. 299, n., 6th edition, and, if the voj'age be such as to require a different complement of men, or state of equipment, in different parts of it, as, if it were a voyage down a canal or river, and thence across to the open sea, it would be enough if the vessel were, at the commencement of each stage of the navigation, properly manned and equipped for it. But the assured makes no warranty to the underwriters that the vessel shall continue seaworthy, or that the master or crew shall do their duty during the voyage ; and their negligence or misconduct is no defence to an action on the policy, where the loss has been immediately occa- sioned by the perils insured against. This principle is now clearly established by the cases of Busk v. Royal Exchange Company, 2 B. & Aid. 72 ; Walker v. Maitland, 5 B. cfeAld. 171; Holdsworth v. Wise, 7 B. & Cr. 794; Bishop i;. Pentland, id. 219; and Shore v. Bentall, id. 798, note ; nor can an3- distinction be made between the omission by the master and crew to do an act which ought to be done, or the doing an act which ought not, in the course of the navigation. It matters not whether a fire which causes a loss be lighted improperly, or, after being properly lighted, be negligently attended ; whether the loss of an anchor, which renders the vessel unseaworthj*, be attribu- table to the omission to take proper care of it, or to the improper act of shipping it, or cutting it away ; nor could it make any difference whether any other part of the equipment were lost b^- mere neglect, or thrown away or destroyed, in the exercise of an improper discretion, by those on board. If there be any fault in the crew, whether of omission or commission, the assured is not to be responsible for its consequences. The only case which appears to be at variance with this principle is that of Law v. Hollingsworth,^ in which the fact of the pilot, who had been taken on board for the navigation of the river Thames, having quitted the vessel before he ought (under what circum- st^ances is not distinctly stated), appears to have been held to vitiate 1 7T. K. 160 (1797).— Ed. SECT. I.] DIXON V. SADLER. 477 the insurance. In this respect, we cannot help thinking that the case, although attempts were made to distinguish it in some of the decided cases, must be considered as having been overruled bj' the modern authorities above referred to ; and that the absence, from anj* cause to which the owner was not priv3-, of the master or any part of the crew, or of the pilot, who maj- be considered as a temporary master, after the}' had been on board, must be on the same footing as the absence, from a similar cause, of any part of the necessary stores or equipments originally put on board. The great principle established by the more recent decisions is, that if the vessel, crew, and equipments be originallj' sufficient, the assured has done all that he contracted to do, and is not responsible for the subsequent deficiency occasioned by any neglect or misconduct of the master or crew ; and this principle prevents many nice and difficult inquiries, and causes a more complete indemnity to the assured, which is the object of the contract of insur- ance. If the case, then, were that of a policy for a particular voyage, there would be no question as to the insufficiency of the plea ; and the onlj- remaining point is, whether the circumstance of this being a time polic}' makes a difference. There are not any cases in which the obli- gation of the assured in such a case, as to the seaworthiness or naviga- tion of the vessel, is settled ; but it may be safely laid down that it is not more extensive than in the case of an ordinarj' policy, and that, if there is no contract as to the conduct of the crew in the one case, there is none in the other. Here it is clear that no objection arises, on the ground of seaworthiness of the vessel, until that unseaworthiness was caused by the throwing overboard a part of the ballast, by the improper act of the master and crew ; and, as the assured is not re- sponsible for such improper act, we are of opinion that the plea is bad in substance, and the plaintiff entitled to our judgment. Jiide absolute to enter judgment for the plaintiff non obstante veredicto} ^ This judgment was affirmed in the Exchequer Chamber, sub nom. Sadler v. Dixon, 8 M. & W. 895 (1841), where Tindal, C. J., for the court, said: "No stress was laid, in the course of the argument before us, upon any distinction to be taken between the implied warranty on the part of the assured as to the seaworthiue.'is of the ship, in the case of a policy on a particular voyage, and of a time policy ; nor do we think any such distinction can be held to exist ; at all events, no distinction by which the obligation, on the part of the assured, in tljp case of a time policy, can be held to be increased or extended. . . . We think, upon the later authorities, the rule is established, that there is no implied warranty on the part of the assured for the continuance of the seaworthiness of the vessel, or for the performance of their duty by the master and crew during the whole course of the voyage." See Copeland v. New England M. Ins. Co., 2 Met. 432 (1841). In Thompson v. Hopper, 6 E. & B. 172, 181 (1856), Eele, J., in speaking of "the warranty of seaworthiness implied in a voyage policy," said : " When once fulfilled, so that the policy has attached, it is not always at an end. The case of a policy on ship at and from London on a whaling voyage to the North is almost too trite to be quoted ; the warranty is for four gradations : fit for dock in London ; fit for river to Gravesend ; fit for sea to Shetland ; then fit for whaling. The policy attaches if the ship is fit for dock ; but the warranty is broken if the other stages of fitness are not completed." — Ed. 478 GIBSON V. SMALL. [CHAP. TL GIBSON, Plaintiff in Error, v. SMALL and Others, Defend- ants IN Error. House of Lords, 1853. 4 H. L. C. 353. In this case an action had been brought in the Court of Queen's Bench by Small and Others v. Gibson, on a policy of insurance effected on the 27th of November, 1843, by them, as agents, for Antonio Hy- polite Gigual, on the ship "the 'Susan,' lost or not lost, in port or at sea, in all trades and services whatsoever and wheresoever, during the space of twelve calendar mouths, commencing on the said 25th daj' of September, 1843, and ending on the 24th daj' of September, in the j-ear 1844, both days included." Gibson pleaded four pleas, of which the second alone is material : " That the said ship or vessel, in the said declaration mentioned, was not, at the time of the commencement of the said risk in the said policy of assurance mentioned, nor at the mak- ing of the said insurance, nor on the said 25th day of September, in the j-ear of our Lord 1843, in the said declaration mentioned, seaworthy, or in a fit and proper condition safely to go to sea ; but, on the contrarj', was wholly unseaworthy ; " verification. Eeplication de injuria, and issue thereon. At the trial of the cause at the London Sittings after Trinity Term, 1848, it appeared that, about the beginning of September, 1843, the ship sailed from Madras for the Mauritius, with 288 coolies on board ; encountered very bad weather, and put into Trincomalee, which place the captain was ordered to quit or to go into quarantine, as the small- pox was reported to be on board his vessel. He preferred the former alternative, and determined to try to return to Madras, in order to get repaired. He encountered bad weather on the voj-age, and the vessel became still more damaged, but he arrived at Madras on the 25th of September; so that on the day on which the risk was to attach, the vessel was at sea, seriously injured, and endeavoring to make a port to get repaired. The necessary repairs could not be effected at Madras, and the captain therefore tried to reach Coringa, but met other misfor- tunes of a similar sort to those before experienced, and was obliged to put into Masulipatam. The coolies refused to stay on board any longer, the surveyors reported against the possibility of repairing the vessel, except at a very considerable expense, and finally it was sold, and the owners gave notice of abandonment. The jury returned a verdict for the defendant, finding " that the said ship or vessel in the said declaration mentioned was not, at the time of the commencement of the said risk in the said polic3' of insurance men- tioned, nor at the making of the said insurance, nor on the said 25th day of September, 1843, in the declaration mentioned, seaworthy, or in a fit and proper condition safely to go to sea, but, on the contrary thereof, was at those times, and each of them respectivelj-, wholly unseaworthy." SECT. I.j GIBSON V. SMALL. 479 A motion was afterwards made to enter judgment for the plaintiff, non obstante veredicto, but the rule was discharged and judgment given for the defendant.^ A writ of error was then brought in the Exchequer Chamber, where the judgment of the Court of Queen's Bench was re- versed, and judgment was given for the plaintiff non obstante veredicto.^ The case was then brought bj- writ of error to this House. The judges were summoned, and Lord Chief Baron Pollock, Mr. Baron Parke, Mr. Baron Alderson, Mr. Justice Maule, Mr. Justice Erie, Mr. Baron Piatt, Mr. Justice Williams, Mr. Justice Talfourd, and Mr. Baron Martin, attended. The Attorney-General (Sir F. Thesiger) and Mr. J. P. Wilde, for the plaintiff in error. Sir F. Kelly and Mr. Serjt. Shee (Mr. Unthank was with them), for the defendants in error. The Lord Chancellor^ proposed the following questions to the judges : — 1. Adverting to the record and proceedings in this case, is the polic}' subject to an implied condition or warranty that the ship was sea- worth^' ? 2. If 3'ea, then did the condition of seaworthiness mean that the ship was seaworthj' at the time it commenced the voj-age, or at the making of the insurance, or when the liability of the underwriters commenced, that is, on the 25th of September, 1843? 3. Are there any, and if any, what qualifications in regard to such seaworthiness in a case like this which would affect the rights of either party under the policy? 4. And, lastly, whether the plea is a valid plea in law in answer to the action ? Lord Chief Baron Pollock, on behalf of the judges, requested time to answer these questions. The request was acceded to.* ' Before Coleridge, Wightman, and Erle, JJ. Reported sub nom. Small i>. Gibson, 16 Q. B. 128 (1849). The opinion of the court, after a cur. adv. vult,v/3.s deliv- ered by Coleridge, J. There was no dissent. — Ed. 2 Before Maule, Cresswell, and Talfourd, JJ,, and Parke, Alderson, and Platt, BB. Reported sub nom. Small v. Gibson, 16 Q. B. 141 (1850). The opinion of the court, after a cur. adv. vult, was delivered by Pakkb, B. There was no dissent. — Ed. ^ Lord St. Leonards. — Ed. * The questions were proposed Dec. 10, 1852. The answers were delivered April 28, 1853. The case was decided June 3, 1853. The answers have been omitted on account of their length. All the questions were answered negatively by Martin, B., Talfourd, J., Platt, B., Maule, J., Alderson, B., Pakke, B., and Pollock, C. B. Two of these judges indicated what, in their opinion, would be the condition or warranty of seaworthiness if any such condition or warranty were to be implied in a time policy, Platt, B., say- ing that it would be " a condition or warranty of seaworthiness at the inception of any voyage concluded or begun during the term, and in which, during the term, the loss assured against might happen," and Alderson, B., saying that it would be " a war- ranty that in whatever situation or adventure the ship may be during the period insured, it shall, whenever it is in the owner's power by himself or his agents abroad 480 GIBSON v. SMALL. [CHAP. YI. Lord St. Leonaeds (having stated the nature of the case and the difference of opinion upon it among the judges in the courts below and in this House) said : — The opinion of the majority of the judges is that which I entertained at the close of the argument, and it has not been shaken by the arguments to make it so, be so fitted and repaired as to be able to withstand all the ordinary dangers to which it may, by that situation or in that adventure, from time to time be exposed." Williams and Eklb, JJ., answered the first and fourth questions affirmatively and the third question negatively ; and they agreed that Sept. 25, 1 843, was the date upon which the ship must be seaworthy, Williams, J., saying, " I am of opinion that the policy is subject to an implied condition of seaworthiness, such condition meaning that the ship was seaworthy when the liability of the underwriters commenced," and Eele, J., saying, "the condition of seaworthiness applied to the 25th of September," and " seaworthiness at any other time appears to me irrelevant." The answers contained these passages ; — Maktin, B. "It is an established rule of law that a written contract (subject to certain known exceptions) shall be taken to contain and express the entire contract between the parties. . . . " The terms of your Lordships' questions import that no such condition or warranty is expressed in the policy itself ; and there are not any words in it, except the words ' good ship,' from which such a warranty could possibly be implied. I am aware it has been said that these words authorize such an implication ; but the learned counsel for the plaintiff in error did not so contend ; and I think it clear that the word ' good,' as there used, is merely a description of the ship, and not a warrant of seaworthiness, which includes a proper supply of stores, the fitness and sufficiency of the master and crew, and several other matters to which the words ' good ship ' have no reference whatever ; and I think it may be stated with certainty that if such a warranty arises by implication, it must be by an implication of law, or one of that character, and not from any words in the policy. This was the argument on behalf of the plaintiff in error at your Lordships' bar, and it was contended that the seaworthiness of the ship was by legal implication a condition precedent to the contract attaching, and that it must be taken as agreed between the parties, that the subject-matter of the insurance was a seaworthy ship. There can be no doubt that such a case might fall within the exception as to written contracts before referred to, and that it might be alleged and proved as an addition to the written contract that such a warranty was understood and known to exist by all persons engaged in the business of underwriting. There is no such allegation or proof in the present case, which arises upon the question of a judgment non obstante veredicto (a proceeding substantially the same as a demurrer), on a plea in which no warranty is averred. I think, however, that if such an under- standing or custom had been long notoriously prevalent, and had been adopted and acted upon in courts of law, your Lordships would take judicial notice of it without requiring any averment or proof in the particular case, and act upon and apply it in precisely the same manner as a rule of law." Erle, J. " My answer to the first question of your Lordships is in the affirma- tive, that the policy was subject to a condition that the ship was seaworthy. It appears to me that this condition is involved in all contracts of marine insurance, it being necessarily the basis of the calculation on which the insurer relies in fixing the amount of the premium he is to receive. That amount depends on the degree of risk ; in other words, on the chance of the ship encountering the perils insured against with safety ; and unless it is given, that the ship is in some degree fit to meet those perils, the loss is certain. " As the word ' ship,' in common nse, may denote either a mere frame, or a ship with its apparatus ready for sea ; so, in marine policies, it may be construed to express either the mere structure of timber, or all that must be combined therewith to make it fit to perform service as a ship ; and its meaning in different policies may be made to SECT. I.J GIBSON V. SMALL. 481 of the two learned judges who supported the judgment of the Court of Queen's Bench. In a voyage polic}-, where the contract shows the nature vary according to the different nature of the services required of the ships insured thereby ; and the contract, so construed, contains the condition that the ship insured has the degree of fitness for the service it is engaged in, which is expressed by sea- worthiness ; it being now settled that the term ' seaworthy,' when used in reference to marine insurance, does not describe absolutely any of the states which a ship may pass through, from the repairs of the hull in a dock till it has reached the end of its voy- age, but expresses a relation between the state of the ship and the perils it has to meet in the situation it is in ; so that a ship, before setting out on a voyage, is seaworthy, if it is fit in the degree which a prudent owner uniusured would require to meet the perils of the service it is then engaged in, and would continue so during the voyage, unless it met with extraordinary damage. I have not found a definition of the word, but I gather its meaning, as above explained, from the decisions turning upon it. According to this view, the condition is derived from the construction of the words of the instrument. But whether it is said to be derived from this source, or from impli- cation of law, founded on the nature of the contract, I am of opinion that time policies are subject to it as well as voyage policies. If the question turns on the construction of the instrument, time policies may be taken to be identical with voyage policies in all the terms, except those relating to the measure of the duration of the insurance. This, in voyage policies, is measured by the motion of the ship : in time policies, by the motion of the earth. Each contract is for an indemnity, and each for a limited time ; and there seems no reason for holding that an alteration in the terms relating to the time should alter the effect of terms relating to the indemnity." Maule, J. : " It may be, perhaps, contended that in a time policy the assured does warrant that the ship is seaworthy at the commencement of every voyage which may be undertaken during the time for which the insurance is effected. . . . I am, however, of opinion, though with some hesitation, that there is no such warranty in such a policy as this, whatever might be the case in a policy differently worded. I think this policy resembles, in this respect, a policy on a ship on a voyage with leave to make intermediate voyages ; in which case there is no warranty of seaworthiness respecting the state of the ship at the commencement of the intermediate voyages, supposing it to have been seaworthy at the beginning of the whole adventure." Parke, B. : " The policy is a written instrument, which contains a number of express stipulations, but -none on the subject of seaworthiness ; for the notion that it was involved in the term ' good ship ' in policies is, I think, put an end to. . . . " If, then, there is any such warranty or condition, it mnst be added to the written policy, as an incident annexed to the contract ; and that, either by the usage of trade or by the common law of the land ; from the nature of the policy itself, there is no other way in which it can be added. " The custom of trade, which k a matter of evidence, may be used to annex inci- dents to all written contracts, commercial or agricultural, and others, which do not by their terms exclude it, upon the presumption that the parties have contracted with reference to such usage, if it is applicable. " This is explained in the case of Hutton v. WaAen, 1 M. & W. 475. But in this case there is no evidence stated on the record of such usage ; and none such can be supposed to exist, unless there is evidence of it. " Such a condition may, however, be annexed as a necessary incident by the com- mon law. , . . " In the common law of England . . . there is ample authority that a warranty or condition of seaworthiness at the commencement of the risk is implied in all voyage policies, whether it has been adopted originally from the law merchant, or implied from the very nature of the contract itself. So other conditions are implied ; as, not to deviate from the usual course of the voyage — to commence it in a reasonable time, — to disclose all material circumstances; and the non-performance of these condi- tions avoids the policy, whether it arises from fraudulent motives or not. . . . 31 482 GIBSON V. SMALL. [CHAP. VL of the adventure, from which the intent of the parties may be collected, the law implies a consideration of seaworthiness to perform the vo}"age. This has long been a settled rule ; but no such rule has ever prevailed in regard to time policies. There being no such rule, I think your Lord- " The only warranty, then, as to seaworthiness in a voyage policy, recognized by onr law, is, according to all the authorities, that the vessel was seaworthy at the com- mencement of the voyage. But it is equally clear that there is no satisfactory deci- sion, dictum of a judge, or authority of a text-writer, that there is any such warranty of seaworthiness at the commencement of the term in a time policy. . . . " If, however, precisely the same principle applied to both the case of a voyage and a time policy, if they were exactly analogous in this respect, less positive authority might be required ; and it might be thought that these, at best, slender authorities would be sufficient. Perhaps even without them such a condition might be implied, if the cases were similar ; but they certainly are not. In a voyage policy, the owner of a ship has, generally s[>eaking, the power to make the ship seaworthy at the commencement of the voyage. In the ordinary course of navigation he always does so for his own sake ; he is bound to do so for the safety of his crew, and for the safety of the cargo placed on board ; he contracts with every shipper of goods that he will do so. The shipper of goods has a right to expect a seaworthy ship, and may sue the shipowner if it is not. Hence, the usual course being that the assured can and may secure the seaworthiness of the ship, — either directly, if he is the owner, or indirectly, if he is the shipper, — it is by no means unreasonable to imply such a con- tract in a policy on a ship on a voyage, and so the law most clearly has implied it. " It may happen indeed, in some cases, from the want of proper materials, of skil- ful artisans, of proper docks in the port of outfit, of sufficient funds or credit, or from the hidden nature of defects, that the owner may not be able to fulfil the duty of making the ship seaworthy at the commencement of the voyage ; but the law cannot regard these exceptional cases. Ad ea quce frequentius accidunt jura adaptantur ; and it wisely, therefore, lays down a general rule, which is a most reasonable one in the vaist majority of voyage policies, that the assured impliedly contracts to do that which he ought to do on and before the commencement of the voyage ; that is, to make the ship seaworthy at the commencement of it, and in part, quoad hoc, in the preparation for it. The contract contained in the policy imposes on him no duties which were not incumbent on him before. But how different is in general the case of one who insures for a time ! He does not necessarily know the position of his vessel at the commence- ment of the term; if the term commences whilst the vessel is absent from a port, he cannot generally speaking, cause it thus to be repaired ; and no care or expense of himself or age;it could secure that object. The ship may have lost anchor, or sails, or rudder;' part of the crew may have deserted, or be dead of malignant fever. All these deficiencies, generally speaking, are such that no care or expense could have prevented or cured. How unreasonable, then, would it be for the law to hold that there was in every case added to a policy, which is silent on the subject, a condition which, in most cases, it would be impossible for the assured to fnlfiH " These considerations render a time policy essentially different from one on a ship. They are powerful arguments against implying a condition of seaworthiness by a party who generally has it not in his power to fulfil it ; nor is it satisfactory to say that the condition ought to be implied in all cases where it actually is in the power of the party to fulfil ft, for the law usually acts by general rules, and the maxim which I have quoted is clearly applicable. . . . "I therefore come to the conclusion, from these premises, that there is not, in the case of a time policy, an implied warranty or condition that the vessel must be sea- worthy at the commencement of the term insured. ... I am equally clear that there is no implied warranty or condition that the ship insured shall be seaworthy at the date of insurance. . . . And, indeed, the expression in this policy, 'lost or not lost,' which means lost or not lost when the policy was effected, totally excludes all idea of an implied warranty or condition that the ship was then seaworthy." — Ed. SECT. I.J GIBSON V. SMALL. 483 ships cannot imply a condition in this case, where there is nothing on the face of the contract to warrant it. Assuming the ship to be on a voyage when the time insured in a time policy begins, all analogy fails between the case of a voyage policj' and a time policj' ; and the ver}' argument in this case proves that sea- worthiness is not an implied condition in a time policj', warranted by custom and allowed by law. In such a policy neither partj' can be supposed to know the state of the ship when the risk commenced, and therefore it will be unreasonable to imply a condition of seaworthiness at that period. In the case of a policj' for a voyage the condition im- plied is, that the vessel is seaworthj' at the commencement of the voj'- age, not that it shall continue so. If, therefore, a time policj' effected upon a ship, then on a voyage, should be held to be subject to an implied condition in analogj' to the otlier case, it would seem to follow that the underwriter who undertook to indemnify the assured for the period named must take the risk of the state in which the ship is from the beginning of that period, if the ship should be then at sea. A voyage policy would cover the voj'age, and any unseaworthiness during the voj'age could not affect the policj'. A time policj' effected during the voyage, for a period beginning while the ship is on the voyage, should, I think, at all events, be held to cast the risk on the underwriter just as he must have borne it at the period in question under a voj'age policy. The analogy could not be carried further, if even the time contract declared that the ship was then on a particular voj'age. If the assured was guiltj' of anj' fraud or concealment, that would of itself avoid the policy, and therefore the condition contended for in time policies is not necessarv to guard against fraud or concealment. If the ship had been lost after the commencement of the risk, viz. the 25th of September, 1843, though that was before the date of the con- tract, the underwriter would have been liable bj' the terms of his con- tract. It is clear, therefore, that no condition of seaworthiness at the date of the contract can be implied. Such a condition, therefore, if to be implied, could, in this case, onlj' be implied at the commencement of the voyage ; but there was no allegation as to anj' unseaworthiness at the commencement of this particular voyage, and courts of justice must act upon a rule general in its application. If, however, a ship was about to sail upon a particular voyage, and a time policj' was effected, instead of a policy on the intended voyage, as at present advised, I think that a condition could be implied that the ship was seaworthy at the commencement of the voyage. But that is not this case. Anj' supposed difficulty on the part of underwriters may readilj' be obviated by the insertion in time policies of an express war- rantj' of seaworthiness at the commencement of the risk. I do not trouble j'our Lordships with the state of the pleadings, because it is admitted that the contention of the plaintiff in error cannot be main- tained unless there is an implied condition in every policy for time, like that in this case, wherever the ship may be, that it was seaworthj' at the commencement of the risk or the date of the policj'. No such condition 4S4 GIBSON V. SMALL. [CHAP. VL can, I think, be implied ; and therefore I advise j^our Lordships to afflnn the judgment of the Court of Exchequer Chamber. Lord Campbell. My Lords, I entii-ely agree in the opinion of my noble and learned friend who presided on the woolsack when this case was argued at 3"our Lordships' bar, that the defendant in error is enti- tled to our judgment. The allegations in the plea of want of seaworthi- ness, although proved to the satisfaction of the jury, do not appear to me to constitute a defence to the action. I do not proceed upon the literal meaning of the word "seaworthy" which was contended for. Without regard to its literal or primary meaning, I assume it to be now used and understood to state that the ship is in a condition, in all respects, to render it reasonably safe where it happens to be at any particular time referred to, whether in a dock, in a harbor, in a river, or traversing the ocean. The question raised by this record is, whether upon a policy of insur- ance on a ship for time, in the form of that set out in this declaration, there is an implied condition that when the policj' ought to attach and the risk to commence the ship shall be seaworth3', that is-to sa^', in a proper state of repair and equipment with reference to the situation in which it may then happen to be ? It is incumbent on the underwriter, who here denies his liability, to show that in every time policy there is such a condition ; for neither the declaration nor the plea discloses an}' facts from which the condition is to be implied in this case, if it is not to be implied universally. Tliere is no custom or usage of trade respecting time policies, which we can take notice of, which affirms the existence of such an implied condition ; and after an examination of all the authorities which have been cited on the subject, I think it quite clear that there is none to guide us to declare that such an implied condition does exist. The two decisions mainly relied upon, of Sadler v. Dixon, 5 M. & W. 405, and 8 id. 895, and Hollingworth v. Brodrick, 7 Ad. & E. 40, have no appli- cation to the question of seaworthiness under a time policy at the com- mencement of the risk ; and some casual expressions which ma}- have dropped in those cases from learned judges, when this question was not at all under their consideration, are entitled to no weight Nor do the American or Continental Jurists, on the present occasion, afford us any aid. The underwriter is therefore driven to contend, that because in poli- cies on ship " from," or " at and from" a specified port to another spe- cified port, or back to the port of outfit (commonly called " voj-age policies"), there certainly is such an implied condition, the same condi- tion is to be implied in policies from a particular day to a particular day (commonly called " time policies"), without reference to the local situation of the ship when the risk commences or terminates. With regard to voyage policies, we have usage and authority estab- lishing the implied condition as certainly as any point of insurance law. These being wanting as to the extension of the doctrine to time policies, the reasoning must be, that as far as this condition is concerned, the SECT. I.J GIBSON V. SMALL. 485 contract by time policies rests on the same principles, and that no distinction can be made between them. The condition may have been implied in voyage policies from considering tliat probably both the con- tracting parties contemplated the state of the ship when the risk is to begin, that this state must be supposed to be known to the shipowner, that he has it in his pov?er to put the ship into good repair before tiie voyage begins ; that to prevent fraud, and to guard the safety of the crew and the cargo, this obligation ought to be cast upon him before he can be entitled to any indemnity in case of loss ; and, above all, that this implied condition in voyage policies is essentially conducive to the ob- ject of marine insurance, by enabling the shipowner, on payment of an adequate premium, and acting with honesty and securing reasonable diligence, to be sure of full indemnitj' in case the ship should be lost or damaged during the voyage insured ; but time policies are usualh' ef- fected when the ship is at a distance, the risk being very likely to com- mence when it is actually at sea. Under those circumstances, is it at all likely that either party would contract with reference to the actual state of the ship at that time with respect to repairs and equipments ? The shipowner probably knows as little upon this subject as the underwriter. An}- information which he has received tending to show that the ship is in extraordinary peril he is bound to disclose, or the insurance effected by him is void ; but is it reasonable to suppose that he enters into a warranty or submits to a condition which ma}' avoid the polic}- with respect to a state of facts of which he can know nothing? We must further consider that this condition, in many cases, he may have no power to perform. Above all, if this condition was implied in time policies, their object might often be defeated, and the shipowner, acting with all diligence, and with the most perfect good faith, might altogether lose the indemnit}- for which he had bargained. Take as an example this policj-, which is on the ship " Susan," from the 25th of September, 1843, to the 24th of September, 1844. This vessel maj' have been employed on the South Sea fishery. It may have sailed from an island in the beginning of September, 1843, in all respects in a seaworth}- state ; but before the 25th da}- of that month ma}- have encountered a gale of wind in which the sails may have been carried away, and other damage may have been sustained, and the master may have died of a malignant fever ; but the ship touches at another island on the 26th of September, is completely re-equipped, takes on board a new master of competent skill, and prosecutes the adventure. Afterwards, and before the 24th of Sep- tember, 1844, the ship may be crushed between two icebergs. For any- thing that appears on tlie record, such may have been the history of the " Susan ; " and these facts are consistent with all the allegations in the declaration and in the plea. On this hypothesis the owner could not be indemnified, because the ship was not seaworthy when the risk was to commence ; namely, on the 25th of September, 1843. If there is a con- dition — an implied condition — that the ship must then be seaworthy, the policy neither attached then nor at any subsequent time, and the 486 GIBSON V. SMALL. [CUAP. VI. owner's onlj' remed}- would be to recover back the premium he had paid to the underwriters. Thus your Lordships are called upon to im- ply a condition which the parties could not have contemplated, which the assured had no power to perform, and which would effectually defeat the object of the contract. If the loss is caused by any cul- pable negligence of the shipowner, that may be a defence to the un- derwriter ; but if the shipowner acts with good faith and reasonable diligence, it is surely much more according to the principles of insur- ance laws, and of common sense, that the risk of the ship not being seaworthy when the liability of the underwriter ought to begin, should be cast upon him, who can easily' indemnifj' himself by demanding an adequate premium for undertaking it. The onlj' consideration pointed out for extending the implied condi- tion of seaworthiness to time policies, which made an}' impression upon me, is that it does extend to voyage policies on goods, although the assured can have no control over the repairs or equipment of the ship. But between the assured on goods and the underwriter there is the shipowner, who must be considered the agent of the assured, and he does undertake that the ship shall be tight, stanch, and strong, and every way fitted for the .voyage. If this undertaking is broken, the merchant has no i-emedy against the underwriter, but he obtains a full indemnity by suing the shipowner, and thus, either with the shipowner or the underwriter, the merchant is secure ; so that the implied condi- tion in his policy in no respect interferes with the object of insurance, or with the interests of commerce. If your Lordships shall be pleased, on the motion of my noble and learned friend, to affirm the judgment of the Court of Exchequer Chamber in this case, it will be definitively established that, by the law of England, in a time policy such as this, no special circumstances being stated in the declaration or the plea respecting the situation or employment of the ship, there is not an implied condition that the ship should be seaworthy on the da}- when the policy ought to attach. The other questions which were debated at the bar, and which were propounded to her Majest3''s judges, must be open for judicial consid- eration when they arise ; but as j'our Lordships considered it expedient, for general information and for the advantage of the commercial world, that opinions should be given upon this very important subject, although they would not be binding, I think it right to say that, after great delib- eration, I agree with those judges who think that in a time policy there is no implied condition whatever as to seaworthiness. I never for a moment could concur in the notion that there was an implied warranty that the ship was seaworthy when it sailed on the voyage during which the policy attached. To lay down such a rule would, I think, be a very arbitrary and capricious proceeding, and being wholly unsanctioned by usage or by judicial authority, would be legislating instead of declar- ing the law. I likewise think that it would be very inexpedient legis- lation, as constant disputes would arise in construing the rule ; for in fishing adventures, and where ships are emplo3-ed for years in trading SECT. I.] GIBSON V. SMALL. 487 in distant regions from port to port, the instances in which time policiefi are chiefly resorted to, there would be infinite difficulty in determin- ing what was the commencement of the voyage during which the policy attaches. There would be a similar difficulty as to the terminus ad quern, in considering what the ^■oyage truly is for which the ship must be fit. I have hesitated more upon the question whether, when a time policy is effected upon an outward-bound ship lying in a British port where the owner tesides, a condition of seaworthiness is to be implied. This might be an exception to the general rule, that in time policies there is no implied warrant3' of seaworthiness, and it is free from some strong objections to the condition of seaworthiness being implied where the risk is to commence abroad. But in addition to the objection that as yet there has been no instance of an implied condition of seaworthiness in any time policy, and that the general rule is against such a condition, this would be a gratuitous and judge-made exception to the rule. I think it more expedient that the rule should remain without anj- excep- tion, and, as at present advised, I should decide against the implied condition in all cases of time policies. There is a broad distinction which may alwaj-s be observed between time policies and voyage poli- cies ; but when you come to subdivide time policies into such where the ship is in a British port and where the ship is abroad, and still more if the residence of the shipowner is to be inquired into and regarded, there would be a great danger of confusion being occasioned by the attempted classification. It is most desirable that in commercial trans- actions there should be plain rules to go b}', without qualification or exception. Marine insurance has been found most beneficial, as hith- erto regulated, and I am afraid of injuring it by new refinements. I should be glad, therefore, that it should be understood, according to my present impression of the law, that there is in all vo3'age policies, but that there is not in any time policies, framed in the usual terms, a condition of seawortliiness implied. This rule, I believe, is adapted to the great bulk of the transactions of navigation and commerce, and when anj- case occurs to which it is not adapted, this may be easily provided for by express stipulation. M}- observations upon this last point I offer with the greatest diffidence, after what has fallen from my noble and learned friend, for whose opinion, on all subjects within the whole range of the law of England, I entertain the most sincere re- spect. I am glad to think that one important question of insurance law is now finally settled. Judgment of the Exchequer Chamber affirmed} 1 Ace. . Jones v. Insurance Co., 2 Wall. Jr. 278 (1852) ; Capen v. Washington Ins. Co., 12 Cash. 517 (18.53) ; Maey r. Mutual M. Ins. Co , 12 Gray, 497 (1859). Contra : Hoxie v. Home Ins. Co , 32 Conn. 21 (1864). See Thompson v. Hopper, 6 E. & B. 172 (1856) ; Fawcns v. Sarsfield, 6 E. & B. 192 (1856) ; Dudgeon v. Pembroke, 2 App. Cas. 284 (1877). — Ed. 488 BICCAED V. SHEPHERD. [CHAP. VI. BICCARD AND Others, Trdstees op the Commercial Marine and Fire Assurance Company, Appellants, v. SHEPHERD axd Others, Trustees of the Namaqua Mining Company, Respon- dents. Privy Council, 1861. 14 Moo. P. C. 471.^ This was an appeal from the Supreme Court of the Cape of Good Hope, which had entered judgment for the assured, the respondents. The facts are sufficiently stated in the opinion.^ Mr. Bovill, Q. C, and Mr. JPhipson, for the appellants. Mr. JJush, Q. C, and Mr. Hodgson, for the respondents. Judgment was delivered by The Right Hon. Lord Wensleydale. The respondents in this case sought to recover a total loss upon a policy for £4,000 subscribed on behalf of the defendants, an insurance company at the Cape of Good Hope, on copper ore, on a ship, the "Admiral Collingwood," at and from the anchorages off Hondeklip Baj' and Port Nolloth to Swansea, to commence upon the loading on board the ship at and from the above ports. The respondents, under this policj-, might have shipped what pro- portion of the copper ore thej' pleased at one anchorage or the other, probably the whole at one. They put on board at Hondeklip 154 tons. The vessel sailed to Port Nolloth with that quantity on board ; arrived at Port Nolloth, there took on board the further quantity of 250 tons, and sailed for Swansea. In the way thither she sank, and the copper ore was lost. On the trial before the judges of the Supreme Court of the colony of the Cape of Good Hope, who are judges both of fact and law, witnesses were examined on both sides, and the judges did not all take the same view of the evidence. On perusing that evidence, the probability, their Lordships think, is that the ship was seaworthy at Hondeklip, and when she an-ived at Port Nolloth ; but that she became unseaworthy when she was loaded with the additional copper at that place, and sailed with it for Swansea, the cargo being then too heavy for her. We think we maj- assume this to be the true state of the facts ; and then follows the question of novelty and some nieetj'. Are the assured entitled to re- cover for the loss of the whole cargo ; or, if not, are they entitled to recover for the loss of the 154 tons shipped at Hondeklip? 1 The reporter's statement has been omitted. It included parts of the opinions delivered in the Supreme Court of the Cape of Good Hope. — Ed. 2 Present at the first hearing of the appeal : The Right Hon. Lord Kingsdown, the Right Hon. the Lord Justice Kkight BKncE, the Right Hon. Sir Edward Ryan, and the Right Hon. the Lord Justice Tuesee. Present at the second argument : The Right Hon. Lord Wexsleydale, the Right Hon. Lord KnfGSDOws, the Right Hon. the Lord Justice Knight Beuce, the Right Hon. Sir Edwaed Btah, and the Right Hon. the Lord Justice Tueneb. — Rep SECT. I.] BICCARD V. SHEI'HEED. 489 Their Lordships have had great difficulty in coming to a conclusion upon it, but after much consideration agree that the plaintiffs are enti- tled to recover for the latter, but for the latter onlj-. Some propositions in the doctrine of the implied warranty of sea- worthiness, which forms a part of every contract of marine insurance on voyages (for to time policies it does not apply), are perfectly settled.^ . . . There is a warranty of a similar nature in an insurance upon goods with respect to the ship upon which they are loaded. Whether thist warranty is to be qualifled in the manner pointed out by Mr. Lush iu his very able argument, it is not necessary to determine. He contended that when a shipment takes place in an intermediate open anchorage (not a port where there are means of repair), and in the course of a voyage from another terminus, all that the shipowner impliedly war- rants to the shipper, and all that the shipper impliedly warrants to the assurer, as to the state of the ship, is that the ship was seaworthy at the commencement of the original voyage to the place of shipment. Whether this, which is a highly reasonable proposition, be correct or not, we need not inquire, because, upon the evidence, there appears no doubt that the ship was seaworthy at Hondeklip, where the first parcel of ore was put on board, as at the Cape. What, then, is the commencement of the sea voyage in this case, which is to fix the time when the warrant}' is to attach, and when the vessel is to be fit in all respects for sea navigation ? The appellants contend tliat the words " at and from the anchorages off Hondeklip Bay and Port jSTolloth to Swansea," are equivalent to "at and from the coast of Africa to Swansea," and that the sea voj'age began at Port Nolloth ; and it was likened to an insurance at and from the island of Jamaica to England, in which, it was said, the sea V03-age would begin with the departure from the island ; and the case of Bond v. Nutt, 2 Cowp. 601, was referred to as proof of that proposition. Their Lordships think that such a construction cannot be put on these words, and the ease of Bond v. Nutt is only an authority to show that the departure from the island was within the meaning of a warranty to sail on or before a certain day, and not the commencement of a sea voyage within the meaning of a warranty of seaworthiness. The first voyage from port to port in the island, through tlie open sea, would an- swer that description. The true construction of the words in question undoubtedly is "at and from Hondeklip to Swansea, or at and from Hondeklip to Port NoUoth, and at and from that port to Swansea," as the power to ship at one or more of these places might be exercised (whether the places are to be taken in their order is immaterial to this inquiry). It seems to their Lordships, therefore, as there were undoubtedly two risks insured, — one on the parcel of goods shipped at Hondeklip, 1 The omitted passage contained a quotation from Dixon v. Sadler, ante, p. 475 (1839). — Ed. 490 BICCAKD V. SHEPHERD. [cHAP. VI. another on those shipped at Port NoUoth, — that the sea voyage may be considered as beginning at different times ; with respect to the first parcel at Hondeklip, with respect to the second, at Port Nolloth. As to the first part, the implied warranty of seaworthiness, being that the ship was in a proper state of repair and equipment, and sufficient for the carriage of the cargo then put on board to Swansea, was certainly complied with. It could not be that there was an implied warranty that the ship then was in a fit state to carry aU that might be put on board at Port Nolloth, so that if the ship should be lost before it arrived at Port Nolloth, with the goods then shipped on board, nothing would be recovered on the policy ; for before the second shipment the vessel might have been put into a state fully sufficient to carry the whole cargo. The warranty being complied with at Hondeklip as to the 154 tons there put on board, the subsequent improper conduct of the master and crew in rendering the vessel unseaworthy at Port Nolloth cannot affect the right to recover pro tanto. The assured or their agents, though concerned in the shipment, probabl}' knew nothing of the ca- pacity of the ship to carry the goods the}' put on board ; and the fault was that of the master and crew, which would not avoid the policy, nor would it if the shipping agents were parties, as the ship was immedi- ately lost by the perils insured against. Eedman v. Wilson, 14 M. & W. 476. Their Lordships, therefore, have come to the conclusion that for the first shipment the assured are entitled to recover. But, with respect to the second parcel, that shipped at Port Nolloth, the implied warranty, that the ship should be there fit to carry the addi- tional as well as the original cargo, was certainlj', upon their Lordships' view of the evidence, not complied with, and therefore the respondents cannot recover. The pleadings do not appear to have been framed vevy accurately to raise this defence ; but this objection has not been pressed upon their Lordships. Therefore their Lordships, after much consideration, and not without some doubt, have determined to advise her Majesty to affirm the judg- ment as to the value of the 154 tons shipped at Hondeklip and reverse it as to the residue. SECT. I.J HOXIE V. PACIFIC MUTUAL INS. CO. 491 HOXIE V. PACIFIC MUTUAL INS. CO. Supreme Judicial Court or Massachusetts, 18C3. 7 Allen, 211. Contract on a polic}- of insurance dated September 14, 1860, b}' ■which the defendants insured the plaintiff in the sum of $6,000, on the bark " Nimrod," at and from the 12th day of September, 1860, at noon to the 12th day of September, 1861, at noon. At the trial in this court, before Metcalf, J., it appeared that the bark sailed from Perth Amboy on the 27th of May, 1860, on a voyage to Aspinwall, laden with coal. A few days after she sailed she met with a severe gale, during which she sprung a leak, and leaked so badly that she was obliged to put back to Bermuda, which she had passed in the course of her voyage, as a port of distress. At Bermuda, by the order of surveyors, her cargo was discharged, and extensive re- pairs were made, continuing for more than three months. It was agreed that on the 1st of September, 1860, she was undergoing repairs which were not completed until the 17th of the same month, and that shortly afterwards she proceeded to Aspinwall, delivered her cargo, went from there in ballast to Kingston, Jamaica, where she discharged her ballast and took in some logwood, after which she went to St. Ann's Bay and took in some sugar, fustic, rum, and other articles, and sailed for London about the 25th of Julj', 1861. Shortly after sailing she began to leak, the sugar in her hold melted, she had a heavy list, and ultimately fell over and sunk. It was in controversy whether injuries sustained on her passage to Bermuda, not sufficiently repaired, occasioned her loss, or whether the loss was attributable to perils occurring after the 12th of September, 1860 ; and the judge, in conformity to a request of the plaintiff, in- structed the jury that " if the vessel was seaworthj' when she left Perth Amboy, and if she was injured b^- the perils of the seas before putting into Bermuda, and if the master used all care and attention in making repairs, but left port with some injury not repaired, because the same was not after such care and diligence discovered either by him or the surveyors, the underwriters are not discharged by reason of the non- repair of such undiscovered injurj', even if the loss was occasioned therebj-.'' The jury returned a verdict for the plaintiff, for $5,741 damages, and the defendants alleged exceptions. J. H. Clifford and II. Gray, Jr., for the defendants. 8. Bartlett, for the plaintiff. BiGELOw, C. J.^ . . . As nothing is shown to the contrary, it must be assumed that, at the date of the policj' and on the day when the risk began, the vessel was in such condition, undergoing repairs, that she was then seaworthy for port, so that the policy attached. 1 The length of the opinion has made it impracticable to reprint the whole. — Ed. 492 HOXIE V. PACIFIC MUTUAL INS. CO. [CHAP. VI. In this state of facts the question to be determined is, whether in a policy on time upon a vessel so situated there is an implied warranty of seaworthiness, similar to that which the law implies in case of a vo3-age policy, — that is, that the vessel is not only seaworthy for port, but also in a suitable condition for sea, by a breach of which the insurers are discharged from liability for loss, happening from any cause. This is an interesting and important question of commercial law, which has never j'et been adjudicated in this commonwealth.^ . . . It cannot be denied that until *the recent discussions arising in the cases of Capen v. Washington Ins. Co. and Small v. Gibson, it had alwa^-s been assumed as a settled doctrine of the law of insurance that, in policies on ships and vessels, whether for a voyage or for time, there was an implied warranty of seaworthiness. If we turn to foreign jurists and commentators on the commercial codes of continental Europe, whence we derive most of the rules and principles which lie at the foundation of our law of marine insurance, we shall, it is believed, find no trace that any distinction was recognized in the application of the doctrine of seaworthiness to policies for a V03'age or on time. That policies on time were not unknown contracts in the commercial com- munities of Europe prior to the year 1781, when Emerigon wrote his treatise, is manifest from his statement in c. 13, § 3, that he had seen insurances made for one year in which " the entire j-ear forms the vo}'- age insured." ^ . . . But although the doctrine of warranty of seaworthiness as applied to time policies was not doubted or called in question until the recent dis- cussions already alluded to, it was nevertheless suggested long since that some modification of it, as it was usuallj' understood in respect to voyage policies, might become necessary in certain cases where insurance was effected on a ship or vessel while at sea, for a limited time. Such seems to have been the intimation of the late chief justice of this court, in Paddoclc v. Franldin Ins. Co., 11 Pick. 231, accompanied, however, with a distinct intimation that the warranty of seaworthiness, although it might be applied with great liberality in such cases, would not be wholl}' dispensed with." . . . It is easy to see a good reason for holding that a policy on time, effected on a vessel when at sea, does not include any warranty of her 1 I!fere were cited Capen ». Washington Ins. Co., 12 Cush. 517 (1853) ; Small v. Gibson, 16 Q. B. 128, 141 (Ex. Ch., 1850) ; Gibson v. SmaU, ante, p. 478 (H. L., 1853) ; Thompson v. Hopper, 6 E. & B. 172 (1856) ; Fawcus v. Sarsfield, 6 E. & B. 192 (1856) ; Marshall on Ins. (Shee's ed.) 127. — Ed. 2 Here were cited Hucks v. Thornton, Holt N. P. 30 (1815) ; Hollingworth v. Brod- rick, 7 Ad. & E. 40 (1837) ; Sadler v. Dixon, 8 M. & W. 895 (1841) ; 3 Kent Com. (6th ed.) 287, 307 ; 1 Phillips on Ins. §§ 695, 727 ; Martin r. Fishing Ins. Co., 20 Pick. 389 (1838) ; and Thompson v. Hopper, 6 E. & B. 172, 179 (1856), where Ekle, J., dis- senting, said : " It does not appear that any person ever expressed the opinion that there was no warranty in any time policy until Baron Parke spoke in the House of Lords." — Ed. 8 Here was cited 1 Arnould Ins. (2d ed.) 411, 669. — Ed. SECT. I.] HOXIE V. PACIFIC MUTUAL INS. CO. 493 seaworthiness at the commencement of the risk. In such case, tlie in- surance is on a " vessel in an unknown sea in an unknown state." The insured has no means of knowing her actual condition, or, if she is injured and out of repair, of restoring her to a condition of seaworthi- ness. Both parties enter into the contract with a full knowledge of these facts. It would not only be pushing a rule of law to an unrea- sonable extent to say that under such circumstances the assured under- takes to warrant his ship, of the condition and circumstances of which he can know nothing, to be then seaworthy for any purpose, but it would be contrary to the manifest intent and understanding of the parties. In such cases, the circumstances attending the making of the contract of insurance tend directly to rebut any implication of a war- ranty of seaworthiness at the inception of the risk. But when it is attempted to go further, and to say that, because in certain cases of insurance on time it cannot be reasonablj- held that there is an implied warranty of seaworthiness at the inception of the risk, there is no such implied warranty at all in any such policy, whatever may be the circum- stances under which the contract was entered into, the reasoning is fal- lacious and unsound. Such a conclusion would be at variance with the authorities and principles on which the doctrine of seaworthiness as the basis of the contract of insurance is founded, and would wrest a par- ticular class of policies from all the analogies which regulate and govern other contracts of insurance precisely alike in all respects except in the single particular that the limitation of the risk is regulated by a fixed period of time, instead of by the duration of a voyage, or, as it is some- times expressed, by the motion of the earth instead of by the motion of the ship. Certainly' it would be contrary to all the received canons of legal exposition to construe policies of this nature as if they were iso- lated contracts, having no connection with or affinity to other similar contracts under the law merchant, and to which only the general rules regulating the interpretation of ordinary written contracts are to be applied. These policies ought not to be taken out by the mere force of judicial construction from the class of contracts to which they belong, or from the rules and principles by which such contracts are interpreted, any further than is rendered absolutely necessary by the peculiar stipulation which distinguishes them from other contracts of marine insurance. . . . Why, then, should the implied warranty of seaworthiness be wholly rejected as inapplicable to this large class of marine insurances ? Most of the reasons on which the doctrine of such warranty is founded, and which led to its adoption and incorporation into our system of commer- cial law, apply with as much force to policies on time as to those for a voyage. So far as the rule rests on sound policy, having in view the benefit of commerce and the preservation of human life by guarding against the danger of carelessness and neglect on the part of the as- sured concerning the condition of the ship and the consequent safety of passengers and crew, all policies on time certainly ought not to be 494 HOXIE V. PACIFIC MUTUAL INS. CO. [CHAP. VI. exempted from its operation. So far as it is deemed to be of the essence of the contract that the subject of it shall be fit and suitable for the purpose for which the parties understand and intend that it is to be used, so that the insurer may have a fair chance of earning his pre- mium, which he would not have if there was an original and inherent vice in the thing for the loss of which he agrees to indemnif}- the owner, the warranty that the ship is seaworthy would seem to form as essential a part of the contract of insurance in a time policy as in a policy for a voj'age. Equally necessary, too, is such warranty in both classes of policies, in order to prevent fraudulent insurances effected with a design to obtain compensation for losses not happening from perils of the sea. Nor can we see anj'thing in the nature of the warrant}- itself which ren- ders it incapable of being applied to most policies on time, substantially with the same effect as to voj-age policies. Such warranty in case of a vo3-age policy is not necessarily implied at the date of the policy or the commencement of the risk, nor does it alwaj's extend to or cover a period of time anterior to those dates, if the vessel is at sea when the policy is effected. In a policy, for instance, for a voyage, effected after a ship has sailed, and to commence on a designated day after her departure, the warranty of seaworthiness is satisfied if she was sea- worth}' when she departed from port, bound on her voyage. Nor does the warranty in a voyage policy depend on the question whether the owner knows of the defect or want of seaworthiness, or can discover it by the use of due diligence, nor j-et on the port where the vessel may happen to be. It is implied, although the insured may have been igno- rant of the condition of the ship when the insurance was effected, and although she may at the time be in a distant and foreign port. The warranty is not that the vessel is seaworthy for the voyage on which the vessel is bound, but for that portion of it which is covered hy the policy. It is the voj'age insured, the viaggium, not tlie iter navis, to which the implied warrantj' extends. These may be and often are the same ; but they may be wholly distinct. A vessel maj' be bound on a • succession of voyages. If the policy insures the vessel for all the voj-- ages, the warranty is that she shall be seaworthy for all, and the aggre- gation of the voj'ages constitutes in such case the voyage insured. But a policy may be effected to cover only one of the whole number of such voyages, in which case the warranty would be that she was seaworthy for that voyage onl}-, and it would not extend so. as to include the pas- sage of the vessel from any previous port, nor embrace any subsequent portion of her route. No one of these leading characteristics of the doctrine of warranty of seaworthiness, as usually applied in cases of voj'age policies, can be said to be inapplicable to a policj' on time. If a vessel is in port when a policy on time is made and takes effect, the warranty would be of seaworthiness at that time and place ; if she is at sea, it would relate back to the time when she was last in port, and could have been made seaworthy before the commencement of the terminus a quo of time when the risk commenced. The knowledge or SECT. I.] HOXIE V. PACIFIC MUTUAL INS. CO. 495 ignorance of the owner or his agent of the condition of the ship in port, or the fact that she was, when last in port, abroad and distant from the place of her owner's residence, can have no greater force as an argu- ment against such warrant^' in a polic}' on time than in one on a voj-age. As the warranty may be for part of a voyage, or for one onlj' of a suc- cession of A'oyages on which a vessel is bound, so bj- parity of reasoning it maj- be for a term of time, though not identical with and either longer or shorter than that which maj- be requisite to complete the actual voy- age on which the vessel is bound, or in the prosecution of which she maj' be engaged at the commencement of the risk. It is, however, urged, and this is the strongest argument against the analogy between time and voyage policies in respect to the warranty- of seaworthiness, that in the application of it to the latter, as the nature, extent, and necessities of a specific and designated voyage are known and can be anticipated, a vessel can be prepared and fitted for the ser- vice for which she is destined, so as to be seaworthy in the broadest sense of that term, as understood in the modern practice and law of in- surance ; but that in case of a time policj-, in which no limits or termini are given except the days named which fix the time, and no specific service or voyage is designated, and the insured is left at liberty to emploj' his vessel during the time covered by the policy according as his interest or necessities may dictate or require, it would be imprac- ticable to make her seaworthy for the voyage insured, that is, for the time during which the risk is to continue, and that it would be unrea- sonable to imply a warranty of seaworthiness under such circumstances. It seems to us that this objection is rather theoretical than practical. There is no doubt that the warrant}-, if one is implied, is for the voj*- age insured — using this phrase as nomen juris, to designate the term covered bj' the policj", whether its termini are fixed by points of place or time — and that seaworthiness imports, in the law of insurance, a relation between the condition of the ship and the perils she may have to encounter in the situation in which she may be placed ; so that be- fore departure on a voyage, whether limited hy designated ports or places, or only by a fixed period of time, she must be fit in a degi-ee which a prudent owner if uninsured would require, to meet the perils of the service she is engaged in, and to continue so during the voyage, unless exposed to extraordinary damage. Now the alleged want of analogy between time and voyage policies, as respects the practicability of making a vessel seaworthy in this sense for a specific voj'age, and for one the duration of which is marked bj' time, is often greatly over- stated. In the first place, it is not correct to say that all the necessities and perils of a voyage described by ports or places can in every case be foreseen and provided for. ... In the next place, in a great number if not in a majoritj- of cases of insurances on time, the prospective voyages of the ship or vessel are frequently well known and understood, and a policy on time is resorted to as a matter of convenience, to save the enumeration of the several ports or places which it may be necessary 496 HOXIE V. PACIFIC MUTUAL INS. CO. [CHAP. VI. to visit in the course of a vo3'age, or to avoid the risk of some slight deviation, which would invalidate a vo3'age policj'. . . . And even when the precise course or kind of business in which a ship or vessel may be engaged is not known at the time when insurance is effected, there would be little or no difficulty in making her seaworthy for any service in which she was likely- to be employed during the time for which she was insured, or in ascertaining whether she was so in case of disaster. ... In the practical business of insurance the exception would be a rare one in which it would be impracticable to make a vessel seaworthj' for a voyage insured, although designated only by limitations of time. Such exceptional cases form no valid reason for exempting all time policies from a condition of so much importance and value to the insured, which has always hitherto been held to form the basis of the contract of insurance. Ad ea quce frequentius accidunt jura adaptantur. Nor ought it to be overlooked, in the consideration of this question, that the introduction into the law of insurance of a rule which would exempt all policies on time from the implied warranty of seawortliiness would lead to incongruities and to a want of harmony in the application of well-established principles to the different classes of contracts of marine insurance, which ought, if possible, to be avoided. This may be illustrated by a case ... of a ship bound on a voyage to India or China. Suppose that she is insured by the same or two different own- ers, by two separate policies, one half of her value by a policy on time, the other half by a policy for the voj'age, the former covering substan- tially the same period of time as that requisite to complete the voyage, so that the risk in both policies is essentially- the same. If a ship thus insured should be lost in the prosecution of the voyage, after having been put in repair so far as due diligence by the owner or master should render it necessary, and it should turn out that she was unseaworthy at the commencement of the voyage, it would certainly seem to be con- trary to all the received rules of interpretation to construe the two contracts, which are substantiallj' alike in all respects, so as to arrive at results precisely opposite ; that is, so as to cast the loss on tlie in- surers in the case of the time policy, and on the insured in the case of the voyage policy. . . . It was suggested by the counsel for the plaintiff that if any warranty of seaworthiness was implied in the policy declared on, it was fully com- plied with by proof of the fact that the vessel was seaworthy at Perth Amboy on her departure thence in the prosecution of the "adventure during the continuance of which the policy was effected and the vessel was lost. But we are unable to appreciate the soundness of this sug- gestion. It confounds the voyage insured with the actual voyage on which the vessel happens to be bound at the date of the policy. As has been already said, these two have no necessary connection. Look- ing to the analogy of a policy for a voyage, the doctrine suggested cer- tainly finds no support or sanction. In a policy effected on a vessel SECT. I.] HOXIE V. PACIFIC MUTUAL INS. CO. 497 in port, whether domestic or foreign, whether at the beginning of an adventure or after a part of it is completed, there is no warranty that the vessel was seaworthj- at the commencement or during any antecedent portion of the voyage in the prosecution of which she is then engaged. The warranty in such case applies only to the inception of the risk, and to the prospective part of the adventure which is covered by the policy and thus forms the voyage insured, as distinguished from the vo3-age or voyages in the prosecution of which the vessel happens to be engaged. It is only when the vessel is at sea at the inception of the risk that the warranty of seaworthiness, in the case of a voyage polic}", relates back to the time when the voj-age insured commenced. But such a case affords no analogy for determining the point of time at which such warranty is to be implied, when a policy is effected on a vessel in port, where full repairs can be made at the inception of the risk, and the commencement of the term of time covered by the poliby. . . . These considerations have led our minds to the conclusion that, on the facts disclosed at the trial (and we do not mean to decide anything beyond the precise case before us), there was an implied warranty of seaworthiness in the policy declared on, in analogy to that which would exist under similar circumstances in a policj' for a vo^-age ; and that the insurance having been effected on a vessel while in port, to take effect from a certain daj-, which was before she sailed thence, the war- rant}' includes seaworthiness for port as well as seaworthiness in setting out therefrom, as, in a policj^ at and from a particular place. . . . As the instru(;jtions given to the jury negatived the existence of any such warranty, the order must be New trial granted.^ 1 Ace. ; Rouse v. Insurance Co., 3 Wall. Jr. 367 (1862). Contra: Thompson o. Hopper, 6 K. & B. 172 (1856) ; Fawcus v. Sarsfield, ib. 192 (1856); Merchants' Ins. Co. v. Morrison, 62 111. 242 (1871); Dudgeon u. Pembroke, 3 App. Cas. 284 (1877). See Hoxie v. Home Ins. Co., 32 Conn. 21 (1864). On seaworthiness in general, see also : — Bell V. Reed, 4 Binney, 127 (1811) ; Willcie V. Geddes, 3 Dow, 57 (H. L. Se. 1815) ; Treadwell v. Union Ins. Co., 6 Cow. 270 (1826) ; Phillips V. Headlam, 2 B. & Ad. 380 (1831) ; Cincinnati Mutual Ins. Co. v. May, 20 Ohio, 211 (1851) ; Knill V. Hooper, 2 H. & N. 277 (1857) ; Merchants' Ins. Co. v. Algeo, 31 Pa. 446 (1858) ; Draper v. Commercial Ins. Co., 21 N. Y. 378 (1860) ; Bouillon V. Lupton, 15 C. B. n. s. 113, 132-137 (1863) ; Walsh V. Washington M. Ins. Co., 32 N. Y. 427, 434-439 (1865) ; Lane v. Nixon, L. R. 1 C. P. 412 (1866) ; Queen's M. Ins. Co. v. Commercial Bank, L. R. 3 P. C. 234 (1870) ; Anderson v. Morice, L. R. 10 C. P. 58 (1874) ; Pickup V. Thames and Mersey M. Ins. Co., 3 Q. B. D. 594 (C. A., 1878). — Ed. 32 498 PLANCHi V. FLETCHER. [CHAP. VL SECTION I. {continueO). (C) Illegalitt or Votage. Asseurances se peuvent faire sur toute sorte de marchandises, pourveu que le transport ne soil pas prohibe par les edicts el ordonnances du Hoy : toulesfois, en prenanl conge ou licence de Sa Majesie, asseurance se pent faire sur mar- chandises defendues; auquel cos la licence doit notijiee d V asseweur, el specijieeen la police, autrement I'asseurance sera nulle. Guidon de la Mer,^ c. ii., art. ii. (1556-1600). PLAN CHE AND Another v. FLETCHER. King's Bench, 1779. 1 Doug. 251. The plaintiffs, Planetie and Jacquery, merchants in London, insured goods, " on board the Swedish ship called the ' Maria Magdalena,' lost or not lost, at and from London and Eamsgate to Nantz, with liberty to call at Ostend, being a general • ship in the port of London for Nantz." There was a declaration in the policy that the insurance was made on account of " certain persons carrying on trade under the name and firm of Vallee & du Plessis Monsieur Lasseau le Jeune, Guillaume Albert, et Poitier de la Gueule." The defendant underwrote the policy for £300 at three guineas per cent. The ship's clearances from the custom-house in London, and her other papers, were all made out as for Ostend only, but the ship and goods were intended to go directly from London to Nantz, without going to Ostend. Bills of lading, in the French language, dated the 18th of Jul}-, 1778, were signed by the captain in London, but purporting to be made at Ostend, and that the goods were shipped there to be delivered at Nantz. The policy' was subscribed by the defendant on the 7th of Jul}', and the lading was taken in between the 24th of July and the 17th of August. The proclamation for making reprisals on French ships, &c. bore date the 29th, and appeared in the Gazette on the 31st of Julj'. Two underwriters had signed the policy after the proclamation, at the same premium of three guineas ; one on the 31st of July, and the other on the 7th of August. The ship sailed on the 24th of August, and was taken by a King's cutter on her way to Nantz. After her departure from Gravesend, the captain threw overboard all the papers he had received from the custom-house at Loudon. The}- had been obliterated by the custom-house officers at Gravesend, and were no longer of any 1 From the version given by Pardessus, in Collection de Lois Maritimes, vol. 2, p. 379. —Ed. SECT. I.J PLANCH^ V. FLETCHER. 499 use. The ship was released bj' the Admiralty-, but the goods were condemned. The plaintiff had no connection or share in the ship. Such were the material facts of this case, as they were stated this daj-, b}' Lord Mansfield in his report, upon a rule to show cause wh}' there should not be a new trial. The cause had been tried at the last Sittings at Guildhall, and a verdict found for the plaintiffs. The grounds of the application for a new trial were two: 1. That there was a fraud on the underwriters, the ship having been cleared out for Ostend, and j'et never having been designed for that place. 2.- That, as hostilities were declared after the policj' was signed, and before the ship sailed, the defendant ought to have had notice, that he might have exercised his discretion whether he would choose for a peace premium to run the risk of capture. Besides the facts above mentioned, his' Lordship stated that the plaintiffs had produced evidence to show that all ships going with goods of British manufacture to France clear out for Ostend without meaning to go thither, and that this is uni- versallj' understood by persons concerned in that branch of commerce. The reason suggested for clearing out for Ostend, and afterwards mak- ing bills of lading as from that place, were, that the lighthouse duties are saved, which are payable when the voyage is known to be directly down the Channel, and that the French duties are less upon goods from Ostend than from England. The /Solicitor- General and Bower, for the plaintiffs. Dunning and Davenport, for the defendant. For the defendant, the fabrication of false and colorable papers, and the suppression of the true destination of the ship, were urged as circumstances of fraud, tending to mislead the underwriter, as to the voj'age intended to be insured, and the nature of the risk. But the second objection was chiefly relied upon, and it was said that it was the duty of the insured to have given the underwriter information that the ship continued in the Eiver after the proclamation. It was also contended, that in time of war the exportation of enem3-'s property, even in neutral bottoms, was illegal, and that an insurance upon such goods was void. In answer to this, it was said, in the first place, that there was no compulsion, by the terms of the insurance, for tlie ship to go to Ostend. If her fixed destination, as understood by the underwriters, had been from England to Ostend, and from Ostend to Nantz, the policy would have been otherwise worded ; and the course of the trade being noto- rious, the defendant could not be deceived or misled by her being cleared out for Ostend. As to the second objection, the rupture with France was impending and expected by all the world at the time when the policj' was signed. The proclamation did not contain an interdic- tion of commerce between the two nations ; the packets and mails passed regularly between Dover and Calais long afterwards. There was nothing illegal in exporting or insuring Fi'ench property in neutral bottoms after the proclamation, and the premium on such goods in 500 PLANCH^ V. FLETCHER. [CHAP. VI. neutral ships did not rise for a long time after the coTiimencement of hostilities. If the transaction had not been strictly' legal, there were cases where the court had refused to grant a new trial on that ground when the objection was against the justice and conscience of the case.^ Lord Mansfield. This verdict is impeached upon two grounds : 1. It is said, there was a fraud on the underwriters in clearing out the ship for Ostend when she was never intended to go thither. But I think there was no fraud on them, — perhaps not on anj-body. What had been practised in this case was proved to be the constant course of the trade, and notoriously so to everybody. The reason for clearing for Ostend, and signing bills of lading as from thence, did not fully appear. But it was guessed at. The Fermiers Gen^raux have the management of the taxes in France. As we have laid a large duty on French goods, the French may have done the same on ours, and it may be the interest of the farmers to connive at the importation of English commodities, and take Ostend duties, rather than stop the trade, b}' exacting a tax which amounts to a prohibition. But, at any rate, this was no fraud in this country. One nation does not take notice of the revenue laws of another. With regard to the evasion of the lighthouse duties, the ship was not liable to confiscation on that account. 2. The second objection is, that the policy was made before, and the ship sailed after, the proclamation for reprisals. But every man in England and France, on the 17th of July, expected the imme- diate commencement of a war. I will not say it was actually com- menced ; but the ambassadors of both countries were recalled ; the Pallas and Licorne were taken ; the fleets at sea ; and, as it appeared afterwards, waiting for each other to fight. It does not appear that the goods were French property ; ^ an Englishman might be sending his goods to France in a neutral ship. But it is indifferent whether they were English or French. The risk insured extends to all cap- tures,' and as to other underwriters signed at the same premium, after the proclamation, it appears that the war risk was in view when the defendant signed. Shall he avail himself of an event which increases the risk, but which he had in contemplation when he underwrote the policy ? I am of opinion that there should not be a new trial. The rule discharged.* ' They cited Deerly v. The Dnchess of Mazarine, B. R. H. 8 W. 3, 2 Salk. 646 ; Smith u. Page, M. 8 W. 3. B. R. ibid. 644 ; Sparkes v. Spicer, B. R. H. 10 W. 3, 2 Salk. 648; s. P. recognized in Allen v. Peshall, C. B. M. 18 Geo. 3, 2 Blackst. 1177. — Rep. 2 It was assumed by the counsel for the defendant, from the names of the persons in whom the interest was declared being French, and from the condemnation at the Admiralty. — Rep. 3 The description of the risk was in the usual printed form. — Rep. « In Atkinson o. Abbott, 11 East, 135, 141 (1809), Lord Ellenborouoh, C. J., said: "There is nothing illegal, so as to avoid a policy, in the mere circumstance of a ship taking out a clearance for a place named in the policy to which there is no inten- tion of going. The Stat, of Car. II. only gives » penalty of £100 for taking out a false clearance : but there is nothing in that to make the voyage illegal. That was SECT. I.] JOHNSTON V. SUTTON. 501 JOHNSTON AND Another v. SUTTON. King's Bench, 1779. 1 Doug. 254. This was au action on a policj- of insurance on goods on board the sliip " Venus," lost or not lost, " at and from London to New York, warranted to depart with convoy from the Channel for the vo.yage." The cause was tried before Lord Mansfield, at the last Sittings at Guildhall, and a verdict found for the plaintiffs. The defendant obtained a rule to show cause why there should not be a new trial, which came on to be argued immediately after the foregoing case of Planche v. Fletcher. The facts, upon his Lordship's report, appeared to be these : The ship was cleared for Halifax and New York. She had provisions on board, which she had a license to carrj- to New York, under a proviso in the prohibitory act of 16 Geo. 3. c. 5. But one half of the cargo, including the goods which were the subject of this policy, was not licensed, and was not calculated for the Halifax market, but for New York. Tliere had been a proclamation by Sir William Howe to allow the entry of unlicensed goods at New York, and though there were bonds usually given at the custom-house here, by which the captain engaged to carr3' the goods to Halifax, those bonds were afterwards cancelled, on producing a certificate from an officer appointed for that purpose at New York, declaring that they were landed there. The commander-in-chief had no authority under the act of Parliament to issue such proclamation, or to permit the ex- portation of unlicensed goods. The " Venus " was taken in her pas- sage to New York,^ by an American privateer. Dunning and Peckham, for the plaintiffs. The Solicitor- General and Xee, for the defendant. On the part of the plaintiffs, it was contended that a verdict agree- able to the justice and conscience of the case, although the transaction might not be strictly legal, would not be set aside by the court. The cases cited on this point in Planchd v. Fletcher were insisted upon, and a modern case of Burton v. Thompson, 2 Burr. 664, was also men- tioned in support of the same doctrine. determined in Planche v. Fletcher; and though the particular statute is not referred to in the report of the case, yet the provision of it was probably in the contemplation of the court." — Ed. 1 The statute {§ 1) prohibits all commerce with the province of New York, (amongst others), and confiscates all ships and their cargoes which shall be found trading, or going to, or coming from trading with them. Then there is a proviso (§ 2) excepting ships laden with provisions for the use of his Majesty's fleets or garri- sons, or the inhabitants of any town possessed by his Majesty's troops, provided the master shall produce a license, specifying the voyage, &c. and the quantity and species of provisions ; but by the same proviso it is declared that goods not licensed, found on board such ship, shall be forfeited. — Rep. 502 POTTS V. BELL. [CHAP. VL On the other side, it was said that the plaintiffs counsel were so well convinced that the objection was fatal, that they called for the cryer to non-suit their clients, but the jury delivered their verdict before he could be found. That there was no imputation on the defendant in making this defence, because, on the face of the polic}-, it was lawful ; for licensed goods might be legally carried to New York. He was to presume that the goods insured were licensed. The insurer has no opportunit}' of seeing the clearances. Lord Mansfield. The whole of the plaintiffs' case goes on an established practice, directly' against an act of Parliament. If the defendant did not know that the goods were unlicensed, the objection is fair as between the parties. If he did, he would not deserve to be favoured. But, however that may be, it was illegal to send the goods to New York, and, in pari delicto, potior est conditio defendentis. It is impossible to bring this within the cases which have been cited, because here there was a direct contravention of the law of the land. — As to the nonsuit, if it had been recorded, I should have set it aside, that the plaintiffs might not imagine themselves injured by the admis- sion of their counsel. The rvie made absolute.^ POTTS V. BELL and Othees. King's Bench, 1800. 8 T. R. 548. Upon a writ of error brought from the Court of Common Pleas it appeared that Bell and others brought an action against Potts upon a policy of insurance on the ship "Elizabeth" and goods on board at and from Rotterdam to Hull, with liberty to touch and staj- at any ports or places, &c. and declared as for a loss of the goods loaded on board by capture by enemies. There were other counts for money liad and received, and upon an account stated ; to which the general issue was pleaded. At the trial a verdict was found for the plaintiffs below ; and a bill of exceptions was tendered and allowed on the part of the plaintiff in error, whereby it appeared that at the trial the plaintiffs below proved in evidence the policy of assurance in the declaration mentioned, sub- scribed by Potts and dated the 7th of December, 1 797 ; and that the policy was effected in London by Barrett and Company, insurance brokers there, by the orders and for the benefit and risk of the plain- tiffs then and still being British merchants resident in London and interested in the goods insured to the value mentioned. That the ship " Elizabeth " was a neutral ship belonging to H. Bannermann and Son I Ace. : Camden v. Anderson, 6 T. R. 723 (1796) ; B. c. affirmed in 1 B. & P. 272 (Ex. Ch., 1798).— Ed. SECT. I.] POTTS V. BELL. 503 of Greetsil and Embden in Prussia, bound on the vo5-age insured from Rotterdam to Hull ; and that the clearance of the ship was ostensibly from Rotterdam to Norden, because the persons then exercising the powers of government in the United Provinces would not permit the ship to be cleared out from Rotterdam to Hull or any other port of Great Britain ; and that the goods insured, consisting of sixty casks of madders, were laden on board the "Elizabeth" at Rotterdam, to be convej-ed from thence to Hull by one Robert Twiss, then being the agent of the plaintiffs below and residing at Rotterdam by their orders and for their use, and were consigned bj- him to Messrs. Hewson and Gunnes at Hull, who then were the agents of the plaintiffs below, by their order and for their sole account and risk. That the ship " Eliza- beth " having -the goods insured on board afterwards on the 18th of December, 1797, sailed from Rotterdam for Hull, and was captured on her voyage the next day by a Erench ship, an enemy to the King. "Whereupon the counsel for the plaintiff in error, on his part, proved in evidence that the said sixty casks of madders, before the lading of them on board the " Elizabeth " and before the policy was subscribed, were purchased for the defendants in error by Twiss, their agent resi- dent at Rotterdam, in order to be sent from Rotterdam to Hull on their account and risk at London, and were afterwards laden on board the ship at Rotterdam for that purpose. That six bills of exchange were drawn by Twiss in payment for the madders at Rotter-- dam, but dated at Hamburg, upon the defendants in error, and which bills having been indorsed by the payees thereof respective!}-, were afterwards duly accepted and paid by the said defendants in error in London. That before and at the time of the said purchase of the said sixty casks of madders by Twiss, and of the loading of them on board the "Elizabeth" in order to be conveyed from Rotterdam to Hull for and on account of the defendants in error, and also before and at the time that the plaintiff in error subscribed the policj- of assurance thereon, and before and at the time of the ship's departure from Rotterdam towards Hull and of the capture of the said ship and madders as aforesaid, hostilities had commenced and still existed between Great Britain and the persons exercising the powers of government in the said United Provinces. That the plaintiff in error also proved the payment of the premium into court in this action. Whereupon the counsel for the plaintiff in error insisted at the trial that upon the matter so proved in evidence the plaintiffs below were not entitled to recover against him ; that the policy upon the said madders was void, for that it is not lawful for British subjects to carrj' on trade with any nation which at the time is in a state of open war and hostilities with Great Britain, nor to purchase any goods in such nation and import them from thence to Great Britain The bill of exceptions then stated the Judge's direction to the jury to find a verdict for the plaintiffs below, the finding of such verdict accordingly, and the assignment of errors thereon in the usual form. 604 POTTS V. BELL. [CHAP. VL This ease was first argued in Michaelmas Term last. Gibhs, for the plaintiff in error. Wigley, contra. In the course of the argument the counsel on both sides referred to some cases which had been decided at the Admiralty Court, and at the Cockpit ; and this court, considering that the subject was more frequently discussed there than in Westminster Hall, desired to hear a second argument by Civilians. According]}' in Hilary Term last the case was argued by Sir John Nicholl, the King's advocate, for the plaintiff in error. Dr. Swdbey, contra. Cur. ado. vult. Lord Kenyon, C. J., now said that the court had very fully con- sidered the question immediately after the very learned argument which had been made by the King's advocate in the last Term. That the reasons which he had urged and the authorities he had cited were so many, so uniforsQ, and so conclusive to show that a British subject's trading with an enemy was illegal, that the question might be con- sidered as finally at rest. That those authorities, it was true, were mostly drawn from the decisions of the Admiralty courts : and that after all the diligence which had been used there was only one direct authority on the subject to be found in the common-law books, and -that one was to the same effect ; ^ but that the circumstance of there being that single case only was strong to show that the point had not been since disputed, and that it might now be taken for granted that it was a principle of the common law that trading with an enemy with- out the King's licence was illegal in British subjects. That it was therefore needless in this case to dela}' giving judgment for the sake of pronouncing the opinion of the court in more formal terms ; more especially as they could do little more than recapitulate the judgment with the long train of authorities, already to be found in the clearest terms in the printed report of the case of the Hoop, published bj- Dr. Eobinson : ^ — That the consequence was that the judgment of the Court of Common Pleas must be reversed. Judgynent reversed. 1 The allusion was probably to Anonymous, 2 Kolle's Abr. 173, suh voc. Prerogative le Roy, (L) Guerri^, pi. 3 (1320). 2 See The Hoop, 1 Rob. Adm. 196 (1799) ; Furtado ». Eodgers, 3 B. & P. 191 (1802). In Eichardsou v. Maine F. & M. Ins. Co., 6 Mass. 102, 111-115 (1809), Paksons, C. J., for the court, said : — " We will first consider the supposed nullity of a policy, arising as it is said from insuring goods on illicit voyages. " Dlicit voyages may be ranked in several classes, some of which we wiU mention. " "When the sovereign of the country to which the ship belongs shall prohibit his subjects from trading with u. foreign country or port, whether the prohibition be a consequence of his declaring war against the foreign country, or be made by an express ordinance for any cause at the will of the sovereign, a voyage to that country for the purpose of trade is illicit, and all insurances on such voyages by his subjects SECT. I.] POTTS V, BELL. 505 are void, whether the assurers had, or had not, knowledge of the prohibition. For the law will not allow any effect to a contract made to protect a traffic which it has prohibited. A prohibition of this kind is considered by Emerigon, c. 12, § 31, vol. i. 542, under the head of " Interdiction of Commerce." " Another class of illicit voyages are those which are prohibited by the trade laws of a foreign state, whether those laws wholly exclude the merchant ships of other states from its ports, or only prohibit the importation or exportation of particular species of goods. Because the municipal laws of any state have not the force of laws without its jurisdiction, voyages prohibited in one state are not in any other state deemed for that reason to be illegal. These voyages may, therefore, be the subjects of insurance in any state in which they are not prohibited. And if the assurer will expressly insure against seizure for illicit trade, or if, with a full knowledge of the nature of the voyage, he will insure it without making any exception, he will be bound to indemniJEy the assured for the losses arising from the breaches of the trade laws of the foreign state. But although he may not take upon himself these losses, and thus be irresponsible for them, yet he is answerable for any other losses insured against, because the policy is not void. " The last class we shall mention is the transportation by a neutral of goods "con- traband of -war to the country of either of the belligerent powers. And here it is said that these voyages are prohibited by the law of nations, which forms a part of the municipal law of every state, and, consequently, that an insurance on such voy- ages, made in a neutral state, is prohibited by the laws of that state, and therefore, as in the case of an insurance on interdicted commerce, is void. " That there are certain laws, which form a part of the municipal laws of all civil- ized states, regulating their mutual intercourse and duties, and thence called the law of nations, must be admitted ; as, for instance, the law of nations, affecting the rights and the security of ambassadors. But we do not consider the law of nations, ascer- taining what voyages or merchandise are contraband of war, as having the same extent and effect. It is agreed by every civilized state, that if the subject of a neutral power shall attempt to furnish either of the belligerent sovereigns with goods contra- hand of war, the other may rightfully seize and condemn them as prize. But we do not know of any rule, established by the law of nations, that the neutral shipper of goods contraband of war is an offender against his own sovereign, and liable to be punished by the municipal laws of his own country. " When a neutral sovereign is notified of a declaration of war, he may, and usually does, notify his subjects of it, with orders to decline all contraband trade with the nations at war, declaring that if they are taken in it, he cannot protect them, but not announcing the trade as a violation of his own laws. Should their sovereign offer to protect them, his conduct would he incompatible with his neutrality. And as, on the one hand, he cannot complain of the confiscation of his subjects' goods, so, on the other, the power at war does not impute to him these practices of his subjects. A neu- tral merchant is not obliged to regard the state of war between other nations ; hut if he ships goods prohibited jure belli, they may be rightfully seized and condemned. It is one of the cases where two conflicting rights may exist, which either party may exercise, without charging the other with doing wrong. As the transportation is not prohibited by the laws of the neutral sovereign, his subject may lawfully be concerned in it ; and as the right of war authorizes a belligerent power to seize and condemn the goods, he may rightfully do it. " We will mention one other case. A neutral ship may lawfully be laden with the property of one of the hostile powers ; hut the other may seize her, carry her into port, and lawfully take from the ship his enemy's goods. Here are conflicting rights, which are admitted by the power who shall seize ; for he wiU pay the neutral his freight, when he acts fairly, attempting no improper concealment. " But we know of no case where the neutral merchant has been punished by his own sovereign for his contraband shipments. If he will adventure on the trade, and his effects are seized and condemned as prize, — to this penalty he must submit, for his sovereign wiU not interfere, because the capture was lawful. And it may be further observed, that if the exportation of contraband goods, from a neutral countiy 506 POLLEYS V. OCEAN INS. CO. [CHAP. VI POLLETS V. OCEAN INSURANCE COMPANY. Supreme Judicial Court of Maine, 1837. 14 Me. 141. This is an action of assumpsit on a policy of insurance, bearing date July 17, 1833, upon the schooner called the " Mary," and owned by the plaintiff, for the term of one year, commencing on the 11th of said Julj', the sum insured being 83,000. The schooner, during the year, viz., June 10, 1834, was totally- lost. It appeared on trial, that a sloop was built in 1816, and was enrolled by the name of the " Sophronio," and was again enrolled in the Custom House in Portland, by the same name, March 24, 1832 ; that the said schooner "Mary" was built upon the keel, floor-timbers, and naval- timbers of the sloop " Sophronio," and the size enlarged nearl3' twelve tons, and the name of the " Mar^* " given to her after being so enlarged ; and that this was known to the defendants at the time of executing the policj' ; and that the certificate of the builder of the vessel was pro- cured by the plaintiff and presented to the Custom House, to obtain the enrolment of the schooner " Marj'," without anj' intent to deceive or defraud, but with fair and honest intentions, as the jury believed ; but that the enrolment of the sloop " Sophronio" was not first sur- to a port of either of the powers at war, is a trade which, from its nature, is prohib- ited by the laws of the neutral soTereign, then the policy on such goods would be Toid, and the assurer would be exempted from any loss or damage arising even from the danger of the sea. But an exemption of this kind is not founded on any sonnd principle, nor is it supported by any usage. " We do not, therefore, discoTer any just distinction between an interloping trade in a foreign port, illicit lege loci, and a trade In transporting contraband goods, which is illicit jure belli, so far as either may be an object of insurance by neutrals in a neu- tral country. And we are satisfied that an insurance, effected in the country of a neutral prince, by his subjects, against capture and condemnation of their goods, because they are contraband of war, is not prohibited by his laws, merely because the capture and condemnation are justified by the laws of war. But if goods contra- band of war are on cargo, the assurer is not responsible for their capture and condem- nation on that account, unless, either with a full knowledge of the nature of the goods, and of the Toyage, or by an expre.^s undertaking, he shall insure them against such capture. So an insurer is not answerable for a seizure and confiscation of goods, for the violation of the trade laws of a foreign port, unle.^, with a full knowl- edge of the trade, or by an express undertaking, he shall insure them against such seizure. But in both cases, where no such specieil insurance is made, the policv is not void because the ship is bound on an interloping or contraband voyage, but the assurer will be answerable for the other risks, against which he has insured. " Goods contraband of war are of two descriptions, — munitions of war, the property of a neutral, bound from a neutral port to the territory of either of the belhgerents, after the existence of the war is known ; and every species of neutral goods, bound from a neutral port to a port belonging to either of the powers at war, and known to be blockaded by the other power. The principle, therefore, on which a belligerent will capture and condemn as prize the goods of a neutral, bound to a port known by him to be blockaded, arises from the consideration that all such goods are contraband of war." — Ed. SECT. I.J POLLEYS V. OCEAN INS. CO. 507 rendered and delivered up at the Custom House before the issuing of the enrolment of the " Mary," which was on the third day of June, 1833. The counsel for the defendants objected to the admission in evidence of the said enrolment of June 3, 1833, as contrary to the laws of the United States; but Emery, J., before whom the trial was, overruled the objection, and it was admitted. And the same counsel further in- sisted, that said schooner, on the voyage on which she was lost, was sailing under circumstances rendering her liable to forfeiture for the violation of said laws ; and that therefore a polic}- on a vessel, pursuing such a voj-age, was not valid or legal, or binding ; but the Judge also overruled this objection, as insufficient to bar said action.^ . . . The cause was thereupon submitted to the jurj', who returned their verdict in favor of the plaintiff. To these opinions and rulings of the Judge, the counsel of the defendants excepted. Mellen and Daveis, for the defendants. Fessende7i <& Deblois, for the plaintiff. Sheplet, J. One of the questions presented by this bill of excep- tions is, whether the contract declared on was, under the circumstances, a legal contract. To enable us to come to a right conclusion, it is de- sirable that the principles bj- which we must be guided should be, if possible, clearlj' stated. Neither the law nor the court can degrade itself bj' becoming the minister of evil. The consideration of a contract, or the matter out of which it arises, must therefore be legal. The object to be accom- plished, or the act required to be performed by it, must also be legal. And although by itself considered the objects or acts required by it ma}- be legal, yet if the design of the contract be to aid or assist in the accomplishment of an illegal purpose, it partakes of the character of the transaction with which it thus connects itself, and becomes tainted by it and illegal. To prove property in anything, it must be shown that the law allows that thing to be the subject of property in the char- acter and under the circumstances in which the claim is asserted ; other- wise one can establish no right of property in it. When a contract is formed upon a consideration legal at the time, its validitj' will not be impaired, though the law should afterwards declare the matter forming the consideration to be illegal. So if the act required to be performed be at the time legal, and the law afterward make the performance illegal, that does not render the contract illegal, though it prevents the performance of it. These are principles alike valuable to the communitj', as they are necessary to maintain the character of the law and of judicial tribunals. But while they are by no means to be infringed, they must not be pushed to such extremes as to interrupt, or embarrass the complicated transac- tions of societj'. The principles do not, nor would it be consistent with 1 In reprinting the statement and the opinion, passages on the admissibility of evi- dence have been omitted. — Ed. 508 POLLEYS V. OCEAN INS. CO. [CHAP. Xl. the ordinaiT transactions of life that they should, require all contracts to be considered illegal which grow out of some matter, or propertj', in which there had been incorporated, or to which had before attached, some illegal act. The law may declare, that on account of such former illegal ingredient, the article shall no longer be considered the subject of property, and in such case it cannot afterward form the basis of a legal contract. But if, notwithstanding the illegal act or ingredient attaches to it, the law permits it to be the subject of property, either absolutely or conditionally, until forfeited by some act yet to be performed, it may form the basis of a legal contract. When contracts are formed upon new or collateral considerations, and when thej- partake of the original illegal act, was much considered, and the cases were collected in Armstrong v. Toler, 11 Wheat. 258. The Chief Justice says: " How far this principle [that of illegality] is to affect subsequent or collateral contracts, the direct and immediate consideration of which is not immoral or illegal, is a question of con- siderable intricacy, on which many controversies have arisen and many decisions have been made." This remarli must be understood rather as referring to the diflSculty of applying the rule of law to the complicated transactions of business, than to any diflScultj' in comprehending the rule itself. In that case the consignee of goods, introduced contrar3- to law bj- collusive capture, and afterward decreed forfeit, was allowed to recover the monej' paid on a bond, given for their appraised value. And the rule is there stated to be, that " if the promise be unconnected with the illegal act, and is founded on a new consideration, it is not tainted by the act, although it was known to the party to whom the promise was made." That case may serve to illustrate the application of the rule where the new contract does not connect itself with the ille- gal act. And the case of Cannan v. Bryce, 3 Barn. & Aid. 179, as an illustration of the application of it, when the new contract is connected with the original act. The act of 7 Geo. 2, ch. 8, relating to stock job- bing, prohibits the payment of anj' money on account of not transfer- ring stocks in such cases ; and it was decided that one who lent moneys for the purpose of enabling a person to make such unlawful payment with a full knowledge of the object to which they were to be applied, and for the express purpose of accomplishing that object, could not re- cover. Here the lending of the mone}-, by itself considered, was an independent and legal act, but being for the very purpose of assisting to do an illegal act, it became connected with it and thereby illegal. In the law of insurance an exception to these rules has been estab- lished in the most commercial countries of modern times, b^' declaring those contracts to be legal which are made with the intention to violate the laws of trade of a foreign country. Such an exception breaks in upon the morality and harmony of legal science ; and since the reason- ings of Pothier, and of Story, and of Kent, and of other eminent jurists, the exception can only be sustained by allowing private interest to overcome the sense of moral and legal right. Whether the question SECT. I.J POLLEYS V. OCEAN INS. CO. 509 can be presented so as to enable a court to act upon it de novo, or whether it must remain a blot upon the law, may be doubtful. The policy, in this case, was not upon any particular voyage, but for the term of one year. There is nothing in the case which shows that any illegal voyage was contemplated by the contract, or that any such was in fact undertaken. The contract cannot therefore be illegal by reason of any act required by it, nor by reason of anj' aid intended to be given by it to the performance of an illegal adventure. The consid- eration was, then, the payment of the premium on the one hand for, and the assumption on the other of, the risk of the legal employment of the vessel for one year. There being nothing illegal in the con- sideration of the contract, or in the emploj-ment of the vessel to be aided bj- it, the contract can onl}' be illegal bj' being in some way connected with the prior illegal act, which had, bj^ the manner of building and by the use of the enrolment, attached to the vessel. Is there any such connection shown? By the act of Congress con- cerning the registering and recording of ships and vessels, ch. 146, sec. 14, it is provided, that when a vessel " shall be altered in form or burthen by being lengthened or built upon," she shall be registered anew bj- her former name ; and that her former certificate of registry shall be delivered up, under a penalty of five hundred dollars. The twentj'-seventh section of the same act provides, " that if any certificate of registr}"^ or record shall be fraudulently or knowingly used for any ship or vessel not then actuall}' entitled to the benefit thereof, accord- ing to the true intent of this act, such ship or vessel shall be forfeited to the United States." By the act for enrolling and licensing ships and vessels, ch. 153, sec. 2, vessels enrolled are put upon the same footing as to qualifications, and are subjected to the same requisites as regis- tered vessels. The jury found that the enrolment by the new name was procured b}- the plaintiff, " without any frauduleut intent to deceive or defraud ; " but that finding does not extend to the after use of it ; and the vessel may be regarded as having been liable to seizure and for- feiture. This liabilitj' was for a cause in no manner connected with the contract of insurance. It had existed, and its influence had been as great upon the vessel as it could at anj" time be, before this contract of insurance was made. The act was complete. It neither required, nor could it receive, aid from the new contract. In this respect it was more entirely free from all connection with the new contract than the illegal act in the case of Armstrong v. Toler was. It would be very detrimental to the commerce of the country to hold that a vessel was not the subject of a lawful insurance because she was liable to seizure and forfeiture for a cause not connected with the policy. The laws of the United States contemplate that vessels are thus liable for causes arising without wilful negligence or intention of fraud. Cases of that kind are not of unfrequent occurrence, and the Secretary of the Treas- ury is authorized by law to remit the forfeiture. It could never have been the design of the statute under such circumstances to destroy the 510 POLLEYS V. OCEAN INS. CO. [CHAP. VL legal title, or lawful right of emploj'ment, until the forfeiture was ex- acted. The risk is not increased, nor is the loss for such cause within the policy. The assurers cannot place themselves in the situation of the governmunt and claim to act for it. Xone can claim a forfeiture but tliose authorized by law. Nor can this matter be properly tried collaterally, and by a common law court. The jurisdiction belongs to another tribunal. It is a matter between others, in which the defend- ants are not interested, and with which they have no concern. There is another aspect in which the same transactions are presented. It is insisted that the enrolment should not have been admitted in evi- dence in proof of propertj-, because an unlawful document cannot be used as proof In considering this question, it will be necessary to bear in mind that it does not appear in the case that the vessel was in- sured as a vessel of the United States. Her national character does not appear to have entered into the contract. If such had been the fact, the plaintiff could not recover, because the laws of the United States declare that if not registered by the former name, in case she has been built upon, " she shall cease to be deemed a ship or vessel of the United States." As she was not insured as a vessel of the United States, and as the laws do not for such cause destro3' the title to the property, their effect being only to take from that title the particular character of being a vessel of the United States, the document was properlj- admitted. It is also contended, that not being properly and legally documented, she was not seaworthj-, and that she was not the proper subject of in- surance. It is necessarj' here again to notice a distinction. If, for the want of legal documents, the voyage is, b}- the laws of the country-, rendered illegal, then the policy is void on account of the illegality of the voj"age. Upon this principle alone, the case of Farmer v. Legg, 7 Term R. 186, could have been decided. But if, as in the present case, the laws do not declare the voyage to be illegal on account of the want of the proper documents, then the consequences are left to be de- termined by the mercantile law. And by that law, where the national character of the vessel is not made a part of the contract, the want of such documents is not material, unless it appears that the risk was en- hanced, or that the loss happened in consequence of the want of them ; in which case the insured cannot recover. 7 East, 367, Dawson v. Atty ; 14 East, 374, Bell v. Carstairs ; 2 Johns. 157, Elting et al. v. Scott et al. Nothing appearing in this case to bring it within this rule, these objections cannot prevail. ... Judgment is to be entered upon the verdict.^ 1 The case was taken to the Supreme Court of the United States upon writ of error, and is reported sub mm. Ocean Ins. Co. v. Pollejs, 13 Pet. 157 (18.39), where Stoet, J., for the court, in the course of an opinion holding that the writ of error must be dis- missed for want of jurisdiction, said : — " Then as to the other point. The objection made by the counsel for the Insurance Company was, that the schooner (" Mary "), on the voyage on which she was lost, was Bailing under circumstances rendering her liable to forfeiture for a violation of the laws of the United States ; and that therefore a policy on a vessel pursuing such a voyage SECT. I.] POLLEYS V. OCEAN INS. CO. 511 was not valid, or legal and binding. But the Judge also overruled this objection, as insufficient to bar the action. The objection was founded on the 27th section of the ship registry act of 1792, ch. 45, above referred to, which declares that if any cer- tificate of registry or record shall be fraudulently or liuowiugly used for any ship or vessel not then actually entitled to the benefit thereof, according to the true intent of this act, such ship or vessel shall be forfeited to the United States, with her tackle, apparel, and furniture. The objection then, as Insisted on by the counsel for the In- surance Company, involved two distinct propositions. The first was, that the schooner was sailing on the voyage under circumstances which render her liable to forfeiture. The second was, that the policy on her was therefore void. Now, the first might have been most fully admitted by the court, and yet the second have been denied, upon the ground that the policy was a lawful contract in itself, and only remotely connected with the illegal use of the certificate of registry, and in no respect designed to aid, assist, or advance any such illegal purpose. We all know that there are cases where a contract may be valid, notwithstanding it is remotely connected with an iudependent illegal transaction, which, however, it is not designed to aid or promote. The case of Arm- strong V. Toler, 11 Wheat. E. 258, presented a question of this sort, and was decided in favor of such a contract. But cases might easily be put where the doctrine itself would admit of a far more simple and easy illustration. Suppose the " Mary " had been re- paired in port, and the shipwrights had known the circumstances under which she had obtained the new certificate of registry ; would they, in consequence of such knowledge alone, have lost their title to recovery for their own work and labor 1 Suppose a ves- sel had been actually forfeited by some antecedent illegal act, are all contracts for her future employment void, although there is no illegal object in view, and the forfeiture may never be enforced V On illegality of voyage in general, see also ; — Delmada v. Motteux, 1 Park Ins. 8th ed. 503 (1784); Barker v. Blakes, 9 East, 283 (1808) ; Pollock u. Babcock, 6 Mass. 234 (1810); Carruthers v. Gray, 15 East, 35 (1812) ; Hagedorn v. Bell, 1 M. & S. 450 (1813) ; Bell V. Eeid, 1 M. & S. 726 (1813) ; Simeon v. Bazett, 2 M. & S. 94 (1813) ; Hagedorn v. Bazett, 2 M. & S. 100 (1813) ; Gibson v. Service, 1 Marsh. 119 (1814); s. c. 5 Taunt. 433; JParker v. Jones, 13 Mass. 173 (1816) ; EusseU V. Ee Grand, 15 Mass. 35 (1818) ; Pond V. Smith, 4 Conn. 297 (1822) ; Andrews v. Essex F. & M. Ins. Co., 3 Mason, 6, 18-20 (1822) ; Archibald v. Mercantile Ins. Co., 3 Pick. 70 (1825) ; Clark V. Protection Ins. Co., 1 Story, 109 (1840) ; Redmond v. Smith, 7 M. & G. 457 (1844) ; Cunard v. Hyde, E., B. & E. 670 (1858) ; Cunard v. Hyde, 2 E. & E. 1 (1859). — Ed. 512 BOAEDMAN V. MEEEIMACK MUTUAL FIEE INS. CO. [CHAP. VI. SECTION II. Mre Insurance. {A) Illegality of Business. BOAEDMAN and Another v. MEERIMACK MUTUAL FIEE INS. CO. BOAEDMAN v. MEERIMACK MUTUAL FIEE INS. CO. Supreme Judicial Court of Massachusetts, 1851. 8 Cush. 583. Shaw, C. J. These are actions on policies of insurance, one on a building, the other on personal property, consisting of leather and other materials for the manufacture of shoes, and manufactured stock in the same building. It is admitted that the building was burnt down, and the stock in it, witliin the time, and that the defendants are liable, unless they are discharged by the circumstances set forth in the facts agreed, on which the case is submitted. These circumstances are, that on the evening preceding the fire, a lottery of two hundred and sixty tickets, at one dollar each, was drawn in one of the rooms in the build- ing, and that about fifty persons were present in the course of the even- ing. This use of the building was with the consent of the plaintiffs, both of whom were present, and each held a ticket, received of the per- sons to whom such consent was given. The part of the building used was a single room, in the second storj', sixteen by twentj' feet, in which no stock was kept. It further appears, that the tickets not having been all disposed of, those remaining were raffled for, at the drawing of the lottery, but no consent was given by the plaintiffs to that, nor had they any knowledge of any such raffling. It is then agreed, that upon a trial there would be conflicting testi- monj' as to whether or not there was dissatisfaction at the meeting as to the proceedings in the drawing. There was no open altercation, nor was there any disturbance whatever. It is agreed, if admissible, that one Duffy set the fire which consumed the building ; and that it took place between three and four o'clock in the morning, after the drawing of the lottery ; that Duffy attended the drawing, and had a ticket. The court are unable to perceive in these circumstances an}- ground of defence to this suit on a contract made by the defendants to indem- nify the plaintiffs against loss by fire. In the first place, this contract of insurance was made on good con- sideration, and made to accomplish a good and lawful purpose. It does not therefore come within that class of eases where the consider- ation is a violation of law or good morals, or where the object and SECT. II.] BOAEDMAN V. MERRIMACK MUTUAL FIKE INS. CO. 513 effect of the contract will be to proinote or advance some unlawful purpose or business which would itself be a violation of law or im- moral ; as that of letting a house to a woman of ill fame, therebj- aid- ino', exciting, and encouraging a violation of the law, as in the case of Commonwealth v. Harrington, 3 Pick. 26. So here, if the suit were for the rent of rooms, to be used for drawing lotteries, or a single lot- terj-, the allowing a plaintiff to recover judgment would be to lend the aid of the law to enable one to reap the fruits of an unlawful bargain. But the ground taken distinctly is, that the building insured was used for a purpose not contemplated by the policy, and also for an unlawful purpose. In regard to the first, the argument proceeds on the ground, that as the building described in the policy was described as a shoe manufactory, the occupation, or eveu the temporary use of it, for another purpose, would annul and vacate the policy. On the . contrary, we suppose the law to be, that the assured may occupy and use his estate for any other lawful business or purpose not restrained by any provision or condition in the contract, and which does not in- crease the risk. And we understand that it is not suggested in this case that any such change was made in the structure or use of the building, as within its terms to vacate the policy ; and if an}- such change had been made and relied on, it was a fact to be distinctly put in issue and tried by a jurj-. But the argument is, that being insured as a shoe manufactory, a business well understood, it presumes no as- semblage of persons on the premises, but the contrary ; because the resort there of numbers must interrupt labor, and may endanger the securitj' of the stock by exposing it to depredation. This appears to us to be taking too limited a view of the nature of the contract of in- surance and the rights of the assured. Suppose in a spare large room, like the one described, a periodical auction sale of shoes and boots, their own and others, were made, which would bring an assemblage of persons there, creating no increased risk of fire, would it avoid the policy? Suppose that such spare room was let, occasionally or peri- odically, for a school, a Ijxeum, or a conference meeting, it could not affect the policy. But it comes back to the original ground, that the building was used for an unlawful purpose, and so there was an unlawful and unwar- ranted use of the building. This is not speaking with strict accuracy ; the law, which forbids the setting up or drawing of any lottery, and which renders it penal for any person who shall knowingly permit the drawing of any lotterj' in any house, shop, or building owned or occu- pied by him, does not subject the building to anj' forfeiture ; it renders such person guiltj^ of a misdemeanor, and personally liable for a penalty. It is therefore an unlawful use of the house only in the sense in which every person may be said to make unlawful use of his house who com- mits an offence under its roof against good morals or positive law. There is no natural, probable, or actual connection between the offence committed and the loss by fire. If indeed it were in the direct com- 514 BOAEDMAN V. MERRIMACK MUTUAL FIRE INS. CO. [CHAP. VI. mission of some unlawful act, by the assured, that the fire was kindled, so that the relation of cause and effect could be shown between the un- lawful act done and the loss occasioned, it would present a verj- differ- ent question. The cases cited in the argument for the defendants do not tend to sustain the defence. Eichardson v. Maine Ins. Co., 6 Mass. 102. The cases of a poliej* on the realty against loss by Are and of one on a vessel or cargo, personal property, are not very analogous, because the direct use and employ- ment of the latter may be infinitely various, to be controlled and di- rected by the owner or manager. The case cited recognizes the distinction between a policy made to protect a traffic, prohibited by the sovereign of the parties, and that which might violate the law of another country, or the law of nations. In case of its being, a voyage in violation of a municipal law bj- which they are bound, the voyage is illicit, and all insurances on such voyages are A'oid ; for the law will not allow any effect to a contract made to protect a traffic which it has prohibited. In that case, the verj- contract sought to be enforced was void in its inception, because illegal in its inception. The case of "Warren v. Manufacturers' Ins. Co., 13 Pick. 518, is not more in point. On the contrarj', it was there held that a non-compliance with a posi- tive law of the United States, in the conduct of the voyage, did not avoid the policy. The distinction between cases where contracts are or are not void, as against law, is well stated by Makshaii,, C. J., in Armstrong v. Toler, 11 Wheat. 271. The principle established is, that where the consideration is illegal, immoral, and wrong, or where the direct pur- pose of the contract is to effect, advance,' or encourage acts in viola- tion of law, it is void. But if the contract sought to be enforced is collateral and independent, though in some measure connected with acts done in violation of law, the contract is not void. In the present case, it appears to us that the illegal conduct of the plaintiffs, in assisting at the drawing of a lottery, or in permitting one to be drawn on their premises, although it subjected them personally to a penalty, did not affect their contract with the insurance companj-, but was wholly independent of it and disconnected ; as if they had committed any other misdemeanor or indictable offence under the same roof; and therefore did not avoid the policy, or afford any ground of defence to the company. Any other rule would extend the penalty for a violation of the law much beyond that prescribed by the law itself, and deprive the party of his civil rights, in favor of third parties in no degree affected by such unlawful acts. Judgment for the plaintiffs in both eases. 0. P Lord, for the plaintiffs. N. J. Lord and N. W. Sazen, for the defendants. SECT. II.] NIAGARA FIRE INS. CO. V. DeGRAFF. 515 NIAGARA FIRE INSURANCE COMPANY v. DeGRAFF. Supreme Court of Michigan, 1863. 12 Mich. 124.^ Error to Lenawee Circuit. C. A. Stacy and C. I. Walker, for plaintiffs in error. A. L. Millerd, H. B. Condict, and T. M. Cooley, for defendant in error. Campbell, J. PlaintiflEs in error insured DeGraff npon his stock of goods, described in his application as a " stock of dry goods, groceries, &c.," dividing the risk into specific sums on dry goods, groceries, hardware, and other things speciflcallj- mentioned. There was evidence tending to show that he had in his store a few bottles of spirituous liquors, and a barrel of alcohol. Alcohol was among the articles men- tioned in the second class of hazards in the second subdivision of extra hazards. Grocers' stocks generally were in the first subdivision of the same class. Bottled spirituous liquors were not classed as extra haz- ardous, but were included in the first class of ordinarj^ hazards in the second division of hazardous. There was evidence tending to show that the insurance agent, who drew up the application, was informed of the presence of the liquors and alcohol, which was, however, denied hj the agent. The property being destroyed, a suit was brought on the polic}', and judgment was recovered. Error is brought on the rul- ings upon the trial. The points taken refer mostly to a clause in the nolicy which declared that if the store should be used '■ for storing or keeping therein anj- articles, goods or merchandize, denominated haz- ardous, or extra hazardous, or specially hazardous, in the second class of the classes of hazards annexed to this policy, except as herein spe- ciallj' provided for, or hereafter agreed to by this corporation, in writ- ing upon this polic}', from thenceforth, so long as the same shall be so used, this policy shall be of no force or effect." There was a further clause annulling the policy whenever gunpowder or any other article subject to legal restriction should be kept in greater quantities or in a different manner than prescribed by law. The court below refused to charge, as requested, that, since the pas- sage of the Prohibitorj' Liquor Law, alcohol and spirituous liquors are not included in the term " groceries" as used in referring to goods kept for sale ; and charged that the question whether they were so included was one of fact for the jury. To this exception is taken. It was claimed on behalf of the plaintiffs iii error, that if these liquors can be allowed to be included in a policy, the policy will be to all in- tents and purposes insuring an illegal traflHc ; and several cases were cited involving marine policies on unlawful voyages, and lottery insur- ances, which have been held void on that ground. These cases are The reporter's statement has been omitted. — Ed. 516 NIAGARA FIRE INS. CO. V. DeGRAFF. [CHAP. VI. not at all parallel, because they rest upon the fact that, in each in- stance, it is made a necessaiy condition of the polic}- that the illegal act shall be done. The ship being insured for a certain v03-age, that voyage is the onl}' one upon which the insurance would appl}-, and the underwriter becomes thus directly a party to an illegal act. So insur- ing a lottery ticket requires the lottery to be drawn in order to attach the insurance to the risli. If this policy were in express terms a policy insuring the party selling liquors against loss by fine or forfeiture, it would be quite analogous. But this insurance attaches only to prop- erty, and the risks insured against are not the consequences of illegal acts, but of accident. Our statute ^ does not in any way destroy or affect the right of property in spirituous liquors, or prevent title being transmitted, but renders sales unprofitable bj' preventing the vendor from availing himself of the ordinary advantages of a sale, and also affixes certain penalties. Hibbard v. People, 4 Mich. 125 ; Bagg v. Jerome, 7 Mich. 145. If the owner sees fit to retain his propertj' with- out selling it, or to transmit it into another state or countrj', he can do so. By insuring his propertj- the insurance company have no concern with the use he may make of it, and as it is susceptible of lawful uses, no one can be held to contract concerning it in an illegal manner un- less the contract itself is for a directly illegal purpose. Collateral con- tracts, in which no illegal design enters, are not aflfected by an illegal transaction with which they may be remotelj' connected. In the ease of The Ocean Insurance Co. v. Polleys, 13 Pet. 157, an insurance upon a ship known by the insurance company to be liable to forfeiture under the registry laws of tlie United States was held valid, and a recovery was permitted for a loss wliile sailing under papers known to be illegail. The case of Armstrong v. Toler, 11 Wheat. 258, is still stronger. It is difficult to perceive how public policy can be violated by an insurance of any kind of property recognized by law to exist. The question then arises whether the court rightly left it to the jury to saj', as a matter of fact, whether the term ' ' groceries " included spirituous liquors and alcohol. That it may include them in tiie ab- sence of such a statute is not denied ; the recognized definitions embracing them clearly, so that it maj' be doubted whether it might not, in that case, require evidence of usage to exclude that meaning if such articles existed in an insured stock of groceries. See New York Equitable Insurance Co. v. Langdon, 6 Wend. 623. There was evi- dence before the jury in the case before us that these things did in fact form a part of the stock, and evidence tending to show a knowledge of that fact by the agent. The statute does not prohibit the sale of all 1 1 Compiled Laws of Michigan (ed. 1857), c. 52, as amended by Micliigan Laws of 1861, p. 472. " If any person by himself, his clerk, agent, or servant, shall, directly or indirectly, sell, or keep for sale, contrary to law, any such liquor, he shall forfeit and pay, on the first conviction, ten dollars, and the cost of suit or prosecution, and shall be at once committed to the common jail of the county until the same be paid." — 1 Compiled Laws of Michigan (ed. 1857), c. 52, s. 1663. — Ed. SECT. II.] NIAGARA FIRE INS. CO. V. DeGRAFF. 517 kinds of liquors, but, as to some, expressly recognizes the right in every one. Whatever may be the presumption, under our present statute, as to the extent of the term "groceries," — a question not raised in the case, and upon which, therefore, it would be improper to pass, — we think the instruction asked was altogether too broad, in claiming that alcohol and other liquors could not possibly be included. The qOestion was properlj- left to the jur}-. If the jurj' found — as their verdict shows thej* must have done — that the term " groceries " included the liquors in question, then the other instructions complained of, which held that by insuring such a stock the liquors were embraced, although extra hazardous, were clearly correct. By the use of a term including them they are " sj^ecially pro- vided/or in writing on the policy." Insuring a class of goods includes what is usuall3- contained in it, whether extra hazardous or not. See Bryant v. Poughkeepsie Mutual Insurance Co., 17 N. Y. 200; Harper V. Albany Mutual Insurance Co., 17 N. Y. 194 ;. Harper v. N. Y. City Insurance Co., 22 N. Y. 441 ; Delonguemare v. The Tradesmen's In- surance Co., 2 Hall, 589. In these instructions the jury were directed to include the articles only if satisfied that they were commonly kept and sold as part of a grocer's stock. This qualification was suflHciently broad to prevent any improper inferences. The clause of the policy vitiating it if gunpowder and other articles subject to legal restrictions should be kept in greater quantities or in a different manner than is provided by law was not pressed very strongly on the argument, and evidently refers only to articles of an intrinsicallj' dangerous nature, as liable to cause injury accidentally or b}- careless- ness. It has no reference to any risks except such as render the prop- erty more likely to be destroj-ed. There are no statutory provisions concerning liquors analogous to the laws restricting the use of powder. Our attention has been called to the fact that the other charges given on the one side, and refused on the other, are inconsistent with those complained of. So far as this is the case, however, they favored the plaintiffs in error, — those excepted to being the only ones which could damnifj' them. Had the verdict been for them, the discrepancies would have been more important in determining the rights of the other partj-. The question whether the jury did not find against evidence, or per- versely, could onlj' be presented in the Circuit Court. The judgment should be aflflrmed, with costs. Manotng, J., concurred. Christianct, J., also concurred in the result. Martin, C. J., was absent. 518 KELLY V. WOECESTEK MUTUAL FIKE INS. CO. [CHAP. VL KELLY V. WORCESTER MUTUAL FIRE INSURANCE COMPANY. Supreme Judicial Court op Massachusetts, 1867. 97 Mass. 284. Contract upon a policy of insurance on a building comprising the plaintiff's store, stable, and carriage-house, for one year from January- 1, 1866. Upon the face of the policy were printed these provisions: " Provided, always, that whenever a building hereby insured shall be \inoccupied, or shall be occupied or used for the manufacture of wool, cotton, hemp, oil, paper, machinery, iron or wood work of Aay kind, or any other business or purpose alike hazardous (unless herein spe- cially provided for) , or for the storage of wool, cotton, hemp, or wool or cotton waste, or if unoccupied or used for unlawful purposes, or if wood ashes are allowed in wooden vessels, or if the heating apparatus for anj- purposes are not well secured by incombustible materials, this policy shall be void ; and provided that if, without tlie consent of this compan}', expressed in this polic}', the assured shall now have, or here- after make, any other contract of insurance against loss by fire on the property, or any part thereof, herebj' insured, whether such other con- tract shall be valid or not as against the parties thereto, or either of them ; or if the risk shall be increased by anj' means whatever within the control of the assured ; or if the title to the property- insured, or any part thereof, shall be alienated, or this policy, or any interest therein, shall be assigned without the written consent of the company within thirty days from the time of such alienation ; or if smoking is allowed in any barn or stable insured or containing property herebj' insured ; or if the assured shall in any way attempt to defraud said company, then, and in either such case, this policy shall be void." The case was submitted to the decision of the court upon a statement of facts, the material part of which was as follows : " The building in- sured was totally destroyed by Are May 7, 1866, and due notice thereof and of the amount of the loss was given to the defendants. For some months previous to the fire, and at that time, Thomas F. Kelly, a brother of the plaintiff, had the care of the building. In Februar3-, 1866, Thomas hired of the plaintiff the store for the alleged purpose of storing in it a quantity of whiskey, and immediately afterwards the whiskey was put into the store by Thomas, and remained there till the time of the fire, except so much thereof as was sold at the store. While the whiskey was so stored in the building, Thomas from time to time sold to various individuals in the store quantities of whiskey, varying from one glass to two gallons, and delivered the same in the store with- out any license so to do. The store was generally kept locked, and the purchasers were admitted to it by Thomas. No other property was kept there for sale. At the time of the fire there were about nine- teen barrels of whiskey in the store, all of which was destroyed. The SECT. II.] KELLY V. WORCESTER MUTUAL FIRE INS. CO. 519 plaintiff knew that Thomas hired the store for the purpose of storing whiskey in it, that the whiskey was stored there, that Thomas kept said liquors with the intent to sell the same in said store, and that he had no license to sell intoxicating liquors, but the plaintiff did not know that any sales of said whiskey were made in said store." T. G. Kent, for the plaintiff. G. F, Soar and S. Utley, for the defendants. Gray, J. We have not found it necessary to consider the question, which was much discussed at the bar, whether, b}' the fair construction of tlie agreed statement, the plaintiff must be taken to have known tiiat the building insured was used for unlawful purposes ; because we are of opinion that upon the undisputed facts such knowledge need not be shown in order to sustain the defence. The plaintiff's tenant, for two or three months before the fire, stored a number of barrels of intoxicating liquors in the building, with intent to sell such liquors in it, and did in fact from time to time sell the same there by retail without license, in violation of the Gen. Sts. c. 86, §§ 28- 34, and did not sell or keep for sale on the premises any other property. This habitual use of the building for an unlawful purpose by the ten- ant, even if unknown to the owner, avoided his policy by the terms of the first proviso, the manifest object of which is to define certain risks which the insurers will not assume, without regard to the question whether they arise or exist by the act or with the knowledge of the as- sured ; and the omission of any reference to him in this proviso is made the more marked by the repeated mention of his action and control in the proviso which immediately' follows. The clause in the first proviso, which might most plausibly- be argued to involve his knowledge or per- mission, is that next after the clause " if occupied or used for unlawful purposes," by which it is further stipulated that " if wood ashes are allowed in wooden vessels," the policj' shall be void. But it has been decided by this court that a policy containing a clause almost precisely like this was avoided by the placing of ashes in a wooden barrel by a servant, without any direction of the assured. Worcester v. Worcester Insurance Co., 9 Gra^', 27. See also Mead v. Northwestern Insurance Co., 3 Selden, 533 ; Fire Association of Philadelphia v. Williamson, 26 Penn. State, 196 ; Howell v. Baltimore Equitable Society, 16 Mary- land, 377. In some of the cases cited for the plaintiff, the prohibited use was not so constant or habitual, or of such a nature as to fall within the terms of the provision, and in the others the knowledge or assent of the assured was expressly required in order to avoid the policy. Judgment for the defendants. 520 KELLY V. HOME INS. CO. [CHAP. VL KELLY V. HOME INSURANCE COMPANY. KELLY V. CROTON INSURANCE COMPANY. Supreme Judicial Court of Massachusetts, 1867. 97 Mass. 288. Chapman, J. Both of the policies on which these actions are brought insure the plaintiff on his stock of liquors and casks in a certain build- ing in Southborough occupied as a liquor store and private stable. It appears that the stock consisted of nineteen barrels of whiskey ; and at the time of the insurance, and thereafter to the time of the loss, it was intended for sale in this Commonwealth. At various times after the insurance was made, the plaintiff did sell to various individuals quantities of the whiskey, varying from one glass to two gallons, with- out license or authority. The insurance was made March 3, 1866, and the loss occurred May 7, 1866. It thus appears that the property- was kept for sale illegallj' in violation of Gen. Sts. c. 86.^ It was liable to be seized and confiscated as a nuisance, and the place where it was kept was made a nuisance by the plaintiff's intent to sell it illegally'. By thus keeping it, and also by thus selling it, the plaintiff committed an offence which was punishable b}- fine and imprisonment. The defend- ants contend that a contract to insure such property thus kept is void, because it is in contravention of the policy of the law. It was so ruled in the Superior Court, and the plaintiff alleged exceptions. The general rule of law on this subject is stated in Boardman v. Merrimack Insurance Co., 8 Cush. 583. " When the direct purpose of the contract is to effect, advance, or encourage acts in violation of law, it is void. But if the contract sought to be enfoi-ced is collateral and independent, though in some measure connected with the acts done in violation of law, the contract is not void." No oases have been cited in which this test has been applied to contracts of insurance against fire, but its application to marine insurance is well settled. In marine insiirance there is held to be an implied stipulation that the voyage shall be conducted legally in reference to the laws of the country where the vessel belongs. 1 Phil. Ins. (5th ed.) § 736. And Phillips states as a general principle that a contract of indemnity is void if incurring the risk or permitting indemnity against it is in contravention of the provisions or obvious policy of the law. lb. § 906. See also 1 Arnould on Ins., part 2, c. 5. Chancellor Kent thus states the general doctrine : "An insurance on a voyage undertaken in violation of a blockade, or of an embargo, or of the provisions of a treaty-, is illegal, whether the pol- icy' be on the ship, freight, or goods embarked in the illegal traffic. An 1 " No person shall own, possess, or keep any spirituous or intoxicating liquor, with intent to sell the same in this state, and no owner of such liquor shall permit or suffer any other person to keep the same for the purpose of selling it in this state, unless authorized as provided in this chapter." General Statutes of Massachusetts, c. 86, B. 29. — Ed. SECT. II.] KELLY V. HOME INS. CO. 521 insurance on property intended to be imported or exported contrar}- to the law of the place wliere the policj- is made, or sought to be enforced, is void. The illegality of the vojage in all cases avoids the polic}', and the voyage is always illegal when the goods or trade are prohibited, or the mode of its prosecution violates the provisions of a statute." 3 Kent Com. (6th ed.) 262. This court has held that when the government prohibits trade with a foreign country or port, for an}' cause whatever, a voj-age to that coun- try or port is illicit, and all insurances on such voyages are void, whether the assurers had or had not knowledge of the prohibition. The reason is that the law will not give effect to a contract made to protect a traffic which it has prohibited. Richardson v. Marine Insurance Co., 6 Mass. 111. See also Breed v. Eaton, 10 Mass. 21. The case of Cunard v. Hyde, 2 El. & El. 1, was an action upon a pol- icy on a cargo to be shipped from Miramichi, a port in Canada, to a port in the United Kingdom. The defence was, that, by the customs consolidation act, before any clearing officer permits a ship, wholly or partly laden with timber, to clear out from any port in North America or Honduras, after September 1 or before May 1, in any year, he shall ascertain that the whole cargo is below deck, and give the master a cer- tificate to that effect ; and the master shall not allow anj^ part of the cargo to be upon deck, or sail without such certificate, under penalty of £100. It was held that, as part of the cargo was loaded upon deck with the previous knowledge of the assured, in violation of this act, the voyage was so far illegal that the insurance upon the cargo was void, tliough the terms of the act applied the prohibition and the penalty to the master only, and did not declare the voj'age illegal. It had been decided, the previous year (1858), in Cunard v. Hyde, El. Bl. & El. 670, that such an insurance would not be void as against the assured unless he was privy to the illegal act of the master. These cases were affirmed in Wilson v. Rankin, 34 L. J. (N. S.) Q. B. 62, and s. c. in Exch. Ch. 35 L. J. (N. S.) Q. B. 87. Thus it appears that the law will not enforce a contract for the insurance of goods against the perils of the sea if, with the knowledge of the assured, they are carried on deck contrary to the provisions of a statute which requires the captain to carry then; below deck, and subjects him to a penalty for the offence. The principles above stated are fully recognized in Clark v. Protec- tion Insurance Co., 1 Storj', 109, and were applied to a time policy. The defence in that case rested on the ground that the vo3-age from Waldoborough, Maine, to New Orleans, and thence to Liverpool, was illegal, because the captain took on board at New Orleans a chain cable which had been smuggled into the United States in another vessel, by the procurement of the captain, for the purpose of being used on this voyage. But the offence of the captain in respect to the smuggling was connected with the other vessel ; and taking on board and carrying an article which had been smuggled in another voyage was not an offence against our revenue laws. Therefore the voyage was not illegal. The 522 KELLY V. HOME INS. CO. [CHAP. VL cable was liable to seizure, and it was held that if from this cause the vessel had been subject to loss by detention, the insurance would have been void as to such loss ; but as the loss was caused by the perils of the sea on the voyage to Liverpool, the insurance was held to be valid. But it was affirmed by the court, among other things, that if a voyage at its inception is founded on any illegalitj-, in which only one of the owners participates, it is utterly void as to all, and that a statute im- posing a penalty imports a prohibition, and makes the prohibited act illegal. The same principle upon which it is held that goods which are cai-- ried for an illegal purpose, or in an illegal manner, cannot be the sub- ject of a valid insurance against the perils of the sea, applies, with at least equal force, to an insurance against fire upon goods which are so unlawfully kept in a store that the owner is liable to fine and imprison- ment, the store made a nuisance, and the goods subject to seizure and forfeiture. In the present case the insured was the guilty party ; and his direct purpose in taking the policies was that he might continue his offence with the greater safetj-. His contract was in contravention of law, and void as to him, because he entered into it in order to protect himself in his illegal acts. JExceptions overruled.^ T. G. Kent, for the plaintiff. G. F. Soar and S. Utley, for the defendants. 1 Ace: Johnson v. Union M. & F. Ins. Co., 127 Mass. 555 (1879); Lawrence v. National F. Ins. Co., 127 Mass. 557, u. (1880). On illegality, in general, see also : — Carrigan v. Lycoming F. Ins. Co., 53 Vt. 418 (1881) ; Hinckley v. Germania F. Ins. Co., 140 Mass. 38 (1885) ; Pollard V. Plioenix Ins. Co., 63 Miss. 244 (1885) ; Erb V. German American Ins. Co., 98 Iowa, 606 (1896) ; Erb I). German Ins. Co., 99 Iowa, 398 (1896) ; Erb «. Fidelity Ins. Co., 99 Iowa, 727 (1896) ; Plienix Ins. Co. v. Clay, 101 Ga. 331 (1897) ; Springfield F. & M. Ins. Co. .;. Cannon, 46 S. W. Rep. 375 (Tex. Civ. App. 1898). — Ed. SECT. 11.] DOBSON V. SOTHEBY. 523 SECTION II. (continued). (B) Conditions pkohibiting the Keeping of Certain Things. DOBSON V. SOTHEBY and Others. Nisi Pkics, King's Bench, 1827. Moo. & M. 90. Assumpsit upon a policy of insurance against fire, against the de- fendants, three of the directors of the Beacon Insurance Companj'. The policy was eflTected upon " a barn, situate in an open field, tim- ber built and tiled," at the premium of Is. &d. per £100. The conditions indorsed upon the policy required the insurer to deliver to the company a description of the property to be insured, and provided that all insurances effected on propert}- falselj' described, so that the same might be charged at a lower rate of premium than would otherwise have been charged, should be void, and the premiums paid forfeited to the compan}-. The rate of premium paid by the plaintiff was the lowest rate, and was only payable for buildings of a certain description, wherein no fire is jjept, and no hazardous goods are deposited. There were other articles fixing a higher rate of premium for buildings of other descrip- tions, with the same proviso against hazardous goods ; and a proviso that "if buildings of any description insured with the company shall, at anj- time after such insurance, be made use of to stow or warehouse any hazardous goods," without leave from the company, the policy should be forfeited. The premises were agricultural buildings, but not such as were strictly to be described as a harn ; but they were of such a nature that the^' would have been insured by the company at the same rate, if they had been more accurately described. Thej' required tarring ; and a fire was consequently' lighted in the inside, and a tar-barrel was brought into the building, for the purpose of performing the necessary operations. In the absence and by the negligence of the plaintiff's servant, the tar boiled over, took fire, communicated with that in the barrel, and the premises were burnt down. F. Pollock, for the defendant, contended, that the plaintiff could not recover ; first, because the premises were incorrectly described as a barn ; secondly, because the lighting a fire within the building was a contravention of the terms of the policy, which required that no fire should be kept in buildings on which the rate of insurance in the pres- ent case was paid ; thirdly, that the tar-barrel came under the descrip- tion of hazardous goods, and, therefore, that bringing it within the premises was also a breach of the conditions of the policy ; and that all, or any of these circumstances, occasioned a forfeiture of the insurance. 524 MEAD V. KOETHWESTEEN INS. CO. [CHAP. TI. Lord Tenteeden, C. J. , said : If the property insured has not been correctly described, the defendants certainly are not liable ; but I do not think there is, in this case, anj- mis-description which will dis- charge them. The word " barn" is not the most correct description of the premises ; but it would give the company substantial informa- tion of their nature : there would be no difference in the risk, and the insurance would have been at the same rate, whether the word "barn/' or a more correct phrase, had been used ; I think, therefore, that they are substantially well described. Nor do I think that the other circum- stances relied on furnish &ny answer to the action. If the company intended to stipulate, not merely that no fire should habitually be kept on the premises, but that none should ever be introduced upon them, they might have expressed themselves to that effect ; and the same remark applies to the case of hazardous goods also. In the absence of an3' such stipulation, I think that the condition must be understood as forbidding only the habitual use of fire, or the ordinary deposit of hazardous goods, not their occasional introduction, as in this case, for a temporary purpose connected with the occupation of the premises. The common repairs of a building necessarily require the introduction of fire upon the premises, and one of the great objects of insuring is security against the negligence of sei-vants and workmen. I cannot, therefore, be of opinion that the policy in this case was forfeited ; and certainl}-, if it is valid, the circumstance that the fire happened through the negligence of the plaintiff's servant furnishes no answer to the action. Verdict for the plaintiff .^ Scarlett, A. G., Qurney, and Tomlinson, for the plaintiff. F. Pollock and Patteson, for the defendants. MEAD V. NORTHWESTERN INSURANCE COMPANY. Court of Appeals of New York, 1852. 7 N. Y. 530. This action was brought upon five policies of insurance, executed by the defendants upon five stores owned bj- the plaintiffs in Brooklyn, forming a single block of buildings. The stores insured by three of the policies were described as " his brick dwelling and store not coped, with tin roof;" and those covered by the other two policies as "his four-story brick and framed dwelling and store filled in with brick, roof part tin and part shingles." No other description of the buildings and none of the business to be carried on in them was contained in the policy. Each of the policies contained the following clause: " In case the above-mentioned premises shall at any time after the making, and 1 See Shaw v. Eobberds, 6 Ad. & E. 75 (1837) ; Glen u. Lewis, 8 Ex. 607, 619 (1853).— JiD. SECT. II.] MEAD V. NOKTHWESTEKN INS. CO. 525 during the time this policj- -would otherwise continue in force, be appro- priated, applied, or used to or for the purpose of carrj'ing on or exer- cising therein anj- trade, business, or vocation denominated hazardous or extra hazardous, or specified in the memorandum of special rates in the proposals annexed to this policj', or for the purpose of storing therein anj- of the articles, goods, or merchandise in the same pro- posals denominated hazardous or extra hazardous, or included in the memorandum of special rates, unless otherwise speciallj- provided for, or hereafter agreed to hy this company in writing, to be added to or indorsed upon this policj', then and from thenceforth, so long as the same shall be so appropriated, applied, or used, these presents shall cease and be of no force or effect. And it is moreover declared that this policj' is made and accepted in reference to the proposals and con- ditions hereunto annexed, which are to be used and resorted to in order to explain the rights and obligations of the parties hereto in all cases not herein otherwise speciallj' provided for." In the proposals and conditions referred to and which were printed upon the same sheet of paper with each policy " spirituous liquors " are included in the list of '• trades, goods, wares, and merchandise con- sidered hazardous," and it is declared that " camphene cannot be used in the building where insurance is eflected unless bj- special per- mission in writing." ^ . . . The cause was tried in April, 1851, at the circuit in Kings Countj', before Justice Morse. Upon the trial the plaintiff proved the making of the policies and the destruction of the buildings insured bj' fire in June, 1850, and their value and rested. The defendants then gave evidence, that camphene was used for light in the buildings bj' their occupants, and offered evidence that in one of the buildings articles denominated hazardous and extra hazardous were kept, which was excluded. It was, however, proved that in one of the buildings a grocery was kept, in which spirituous liquors were kept and sold, but it appeared that the fire did not originate from the camphene or spirits, and that they were removed before the fire reached the build- ings. The remaining facts of the case, together with the ruling of the justice at the circuit, and the exceptions, appear sufficiently in the opinion of the court. A verdict was taken for the plaintiff, subject to the opinion of the court upon a case, with leave to convert it into a bill of exceptions, upon which judgment was given for the plaintiff at a general term held in the city of Brooklyn, in April, 1852. The defend- ants appealed therefrom. J. Neilson, for appellants. D. E. Wheeler, for respondent. Welles, J. Upon the trial the defendants' counsel offered to prove by the witness Halliday, who occupied one of the buildings insured at the time of the fire, that he did business and kept articles in said build- ing denominated hazardous and extra hazardous, at the time of the fire. The evidence was objected to, and the objection sustained bj' the 1 A requiiement as to a survey has not been reprinted. — Ed. 526 MEAD V. NORTH-WESTERN INS. CO. [OHAP. VI. judge, to which the defendants' counsel excepted. In this I think there was error.^ . . . The offer was nearly- in the language of one of the above provisions, to show its violation. The answers given by the respondent's counsel to this point are, first, that the fire did not originate in the store occupied by the witness ; second, that no knowledge of the business carried on was shown in the respondent; third, that there was no proof that the business had been changed from the time the insurance was effected to the time of the fire ; and fourth, that this point was not reserved by the appellants' counsel at the close of the case, and is not among the objections then raised. None of these answers are sufficient. The provision of the policy referred to amounted to a prospective or promissory warranty, and was as obligatory as if it had been retrospective or concurrent. It was therefore of no consequence that the fire was not produced by its violation or breach (Murdock v. Chenango Co. Mut. Ins. Co., 2 Comst. 210). It is equally unimportant that the respondent was ignorant that such business was carried on. The question whether a warranty has been broken can never depend upon the knowledge or ignorance or intent of the party making it, touching the acts or the fact constituting the breach. It was undoubtedly competent for the parties to contract in relation to the future business to be carried on in the building in- sured, without reference to the previous business, and such was the case here. That the business prohibited had been carried on up to tlie time the policy was made, was no excuse for a violation of the con- tract. And flnallj-, it was not necessary or proper for the counsel to do more than to except to the decision of the judge at the circuit, over- ruling the evidence offered. He was in fact precluded from making the point in any other stage of the case by the exclusion of the evi- dence. . . . Lawrence Flj'nn, a witness for the defendants, testified that he lived in one of the buildings insured, and which was consumed bj' the fire ; that he sold candles, oil, camphene, and lamps ; that he had less than a gallon of camphene when the fire took place ; that he took the cam- phene and oil out before the fire ; that he went into possession Maj* 1st, 1851, and remained there until the fire ; that the building was used for a milliner's shop before he went there. The defendants' counsel offered to prove by this witness that camphene was used in this building by the person who occupied it previous to May 1st, 1850. This evidence was objected to, and the objection was sustained, to which the defend- ants' counsel excepted. Each of the policies contained a clause to the efl'ect that they were made and accepted in reference to the proposals and conditions thereto annexed, which were to be used and resorted to to explain the rights and obligations of the parties thereto in aU cases not therein specially provided for ; and in the proposals annexed was 1 In reprinting the opinion, passages hare been omitted that repeated the facts given in the statement or that bore exclasively upon matters as to whieli no error was found, — Ed. SECT, n.] MEAD V. NOETHWESTEKN INS. CO. B27 the following provision: " Camphene cannot be used in the building ■where insurance is effected, unless bj- special permission in vvriting, and is then to be charged an extra premium." The bill of exceptions states that " in each case the policy itself and the conditions and proposals annexed were on the same sheet of paper, physically attached." The prohibition, therefore, in relation to the use of camphene, must be taken and regarded as a part of the polic}' or contract of insurance (Jennings v. The Chenango Mut. Ins. Co., 2 Denio, 75) ; and it seems to me also that the provision in question on that subject was a warranty that camphene should not be used in the building insured. The only question in my mind is, whether the use of the prohibited article at one period of the time for which the policy should by its terms continue, will avoid the policy in a case where the loss occurred at a time subsequent to such use. For the pur- poses of this question it should be treated the same as if the use of the camphene had been permanent!}- discontinued before the occurrence of the fire which destroj-ed the property. A warranty in a contract of Insurance is in the nature of a condition precedent. It is settled by numerous decisions, that if the warranty is violated, it avoids the policy, and that it is immaterial whether the breach affects the risk or is connected with the loss or not. It would seem, in theorj-, that it was equallj- immaterial whether the act or thing to which the warranty related continued up to the time of the loss, or had ceased or been dis- continued before. The amount of it is, the defendants undertook to indemnify the plaintiff against damage or loss by fire, &c., upon con- dition that certain stipulations were observed and kept by and on behalf of the plaintiff and not otherwise. If the plaintiff failed to per- form those stipulations, the defendants' liabihty to indemnify ceased ; could the plaintiflF revive it at pleasure by fulfilling his agreement — in this case, by removing the camphene ? If he could in one instance he could, for aught I see, in any number of cases. I incline to the opinion that this could not be done in any case without the consent of the de- fendants, and that the only safe rule is to hold the contract of insur- ance at an end the moment the warranty is broken, and tiiat it cannot be revived again without the consent of both parties, unless the insurer has by some act or line of conduct waived the breach or violation of the warrant}". If this be so, the judge erred in excluding the evidence offered. Weir V. Aberdeen, 2 B. & Aid. 320 ; McLanahan v. Universal Ins. Co., 1 Pet. 170. . . . For the errors at the circuit before mentioned, I think the judgment below should be reversed, and a new trial ordered with costs to abide the event. All the judges present, except Morse, J., who gave no opinion, concurring. Judgment reversed and new trial ordered.^ 1 See Tnrnbull v. Home F. Ins. Co., 83 Md. 312, 321 (1896). — Ed. HYNDS V. SCHENECTADY CO. MUTUAL INS. CO. [CHAP. VL HYNDS ET AL. V. SCHENECTADY COUNTY MUTUAL INS. CO. Court of Appeals of New York, 1854. 11 N. Y. 554.^ Action upon a policy dated June 10, 1848, by which the defendant insured the plaintiffs against loss by fire to the amount of $1,500 on their flouring mill and machinery' and $500 on their carding machine and machinery. The ease was tried at the Schoharie County Circuit before Weight, J., and a jury. The policj' contained a provision against using the premises for the purpose either of storing or of keep- ing therein any of the articles denominated hazardous in the terms an- nexed to the policy. Flax was among the articles thus denominated hazardous. Prior to Maj' 27, 1848, the carding machine building had been used for the business of dressing flax. Before June 10, 1848, this business was discontinued, and the building was appropriated for a carding machine. When the change was made, the refuse flax and tow were removed ; but some unbroken flax, being in bulk about two and a half feet high, three feet wide, and of the length of the flax, was left in one room, where it remained at the time of the fire. On June 12, 1848, a fire originated in the carding machine building and con- sumed all the property insured. . The counsel for the defendant moved for a nonsuit, and excepted to the court's overruling of this motion. The counsel for the defandant requested the court to charge the jurj-: 1. That if thej' believed that there was flax kept in the lower room of the carding machine building at the time of the fire, the policy would be of no effect. The court refused to charge upon this proposi- tion other than as is hereafter stated ; to which refusal the defend- ant's counsel excepted. 2. That if the jury should believe that there was flax in the lower story of the carding machine building for safe keeping and not for the purpose of consumption, or in the usual course of business for which the building was occupied, the plaintiffs were not entitled to recover. The court refused to charge upon this prop- osition, other than as is hereafter stated ; to which refusal the defend- ant's counsel excepted. 3. That if the jury believed that the fire originated in the flax or tow in the lower room of the carding machine building, the plaintiffs are not entitled to recover. The court refused so to charge, and the defendant's counsel excepted. The court then, amongst other things, charged the jury, that if, at the time the Bre occurred, the building was appropriated, applied, or used for the storage of flax, the policy was of no force, and the plain- tiff" should not recover ; but if the building was not devoted to or used for that purpose, and the small pile of undressed flax, said to have 1 The statement has been rewritten. — Ed. SECT, n.] HTNDS V. SCHENECTADY CO. MUTUAL INS. CO, 529 been in the lower room of the carding machine building, was there but temporarily, and with no intention of having it regularly stored or kept there, then the policy would not be avoided. To the last branch of this paragraph of the charge the defendant's counsel excepted. The jury rendered a verdict in favor of the plaintiffs for $2,289.20, upon which judgment was entered. The defendant made a bill of exceptions, and on appeal the judgment was affirmed by the Supreme Court sitting in the Third District, at General Term. (See 16 Barb. 119). The defendant appealed to this court. J*. Potter, for the appellant. N. Sill, Jr. , for the respondents. Gardiner, C. J. The language of the condition of the policy in question, so far as it is applicable to the case before us, is " that in case the premises insured shall be appropriated, applied to or used for the purpose, either of storing or heeping therein any of the articles, goods, &c., denominated hazardous, &c., then, from thenceforth, so long as the same shall be so appropriated, applied, or used, these presents shall be of no force or effect." It is not enough, according to this phraseology, that hazardous articles are upon the premises. They must be there for the purpose of being stored or kept ; and the premises must be appropriately applied or used to effect that purpose. This is the definition that has been settled bj- repeated decisions in reference to the word " storing ; " and there is no reason why it should not be applied to "keeping," a word of more extensive signification undoubtedh', but which, in this connection, seems to demand a con- tinued occupation of the whole, or a part of the premises insured, in pursuance of a design for that specified purpose. Thus, the storing of gunpowder implies the user of the premises for that purpose, and such a condition would not be violated by keeping that article for sale at retail. But such a ' ' keeping " would be a breach of the condition of this policy, because it would require a continued user of some part of the premises to effect that purpose. But if the insured, on his return from hunting, should leave his flask, containing powder, in a desk in a building covered by the policy, for an hour, or a day, this would not be within the prohibition, for the act would not involve the notion of the appropriation, application, or user of the premises for the purpose of storing, or keeping gunpowder. The counsel for the appellant was probably- right in his suggestion that the word " keeping " was introduced into these policies after the decisions in 1 Hall, 226, and other cases which restricted the term " storing " to its ordinary commercial meaning. The alteration was designed to reach a class of cases where hazardous goods were kept for retail, or other pur- poses, which presupposed a continued deposit, and which were ex- cluded from the condition by the construction given by the courts to the policies in the cases mentioned. But it is not to be presumed that the company in this case intended by a formal condition to prohibit the insured from bringing a match upon the premises for the purpose 34 530 HAEPER V. ALBANY MUTUAL INS. CO. [CHAP. YL of lighting a fire, or a bottle of oil to appl3- to the machinerj-, although both might remain in the building for a brief period, and although it might be said that in the broadest sense of the term that both were kept upon the premises, while thej' remained there. There is a mani- fest distinction between a deposit of hazardous goods and a deposit for tlie puipose of keeping them. A distinction which is recognized by the terms of the condition, and which is necessary to prevent the policy from being altogether worthless as an indemnity, if not a mere imposition on the insured. This is the only point presented of any importance. It was raised on the motion to nonsuit and in the request to the judge for specific instructions to the jurj'. The charge was in conformity to the views above suggested. The judgment of the Supreme Court should be affirmed. EuGGLEs, Denio, Johnson, and Edwards, JJ., concurred in the foregoing opinion. Selden, Paekee, and Allen were in favor of reversing the judg- ment. Judgment affirmed} \ HAEPER AND Othees v. ALBANY MUTUAL INS. CO. CouET OF Appeals or New Yoek, 1858. 17 N. Y. 194. Appeal from the Supreme Court. The action was upon a policy of insurance against damage by fire, issued by the defendant, upon the plaintiffs' printing and book materials, stock, paper, and stereotj'pe plates and printed books, contained in certain buildings in the city of New York, therein described, " and privileged for a printing office, bindery, and bookstore, also for a steam-boiler in the yard. The policy contained provisions that " if the premises should at any time be altered, appropriated, applied, or used to or for the purpose of carrying on or exercising therein any other trade, business, or vocation denominated hazardous or extra hazardous, or specified in the memo- randum of special rates in the proposals or conditions annexed to the policy, or for the purpose of storing or keeping therein any of the like hazardous goods, wares, or merchandise, unless as therein specially provided for or thereafter agreed to by the company, otherwise to be added or indorsed upon the policy in writing, then and from thence- 1 Ace. : Mears v. Humboldt Ins. Co., 92 Pa. 15 (1879).— Ed. On "storing," see Langdon v. New York Equitable Ins. Co., 1 Hall, 226 (1828) ; s. c. on error, sub nom. New York Equitable Ins. Co. v. Langdon, 6 "Wend. 623 (1831) ; City F. Ins. Co. v. Corlies, 21 Wend. 367 (1839) ; RafEerty v. New Brunswick E. Ins. Co., 18 N. J. L. (3 Harr.) 480 (1842) ; O'Niel v. Buffalo E. Ins. Co., 3 N. Y. 122 (1849) ; Eenshaw v. Missouri State Mut. F. & M.Ins. Co., 103 Mo. 595, 605 (1890). — Ed. SECT. II.] HARPER V. ALBANY MUTUAL INS. CO. 531 forth, so long as the same should be so appropriated, applied, or used, the policy should cease and be of no force or effect." In the conditions annexed to the polic}-, in the class of goods specified as hazardous were spiritous liquors, and in the class specified as extra hazardous were spirits of turpentine and stocks of booksellers. Under the head of special rates were classed bookbinders, camphene on sale, printers of books, and job printers. Under this head was also this pro- vision : " Camphene, spirit gas, or burning fluid cannot be used in the building where insurance is effected, unless permission for such use be indorsed in writing upon the policy, and is then to be charged an extra premium." The policy was a printed blank, filled up in the usual form, and the above provisions were contained in the printed part of the policy. The trial was at the New York Circuit, before Mr. Justice Roosevelt and a jury. The plaintiffs proved a loss by fire exceeding the amount of insurance ; and it appeared, bj' the evidence on their part, that the fire was occasioned by the act of a plumber engaged in making some repairs, who accidentally threw a lighted match or paper into a pan containing a small quantitj' of camphene, used for the purpose of cleaning the rollers employed by the plaintiffs in inking their forms of type, wood-cuts, etc. It also appeared that the plaintiffs carried on an extensive book print- ing establishment, and that ihey used camphene for cleaning rollers, and for cleaning wood-cuts and electrotype plates in the course of their business of book making ; and that the use of it was limited to the nec- essary purposes of their business as printers. It also appeared that this application of camphene was, and for many years had been, ordi- nary and usual among printers, and that such use was necessary and indispensable. It was insisted, on the part of the defence, that such use of cam- phene was prohibited by the clause in the policy respecting the use of " camphene, spirit gas, or burning fluid." The judge charged the jurj-, under exception by the defendant, that the polic\- of insurance gave the plaintiffs the privilege of carrying on the printing business, and that if thej- should find that camphene was a necessary and ordinarj' material used in the business of printing, and that it was a general custom in such establishments as the plaintiffs' to employ that material and that the plaintiffs used it for that purpose, then there was no breach of the contract, and the plaintiffs were entitled to a verdict. The plaintiffs had a verdict, subject to the opinion of the court at General Term ; and the Supreme Court, at General Term in the First District, having ordered judgment upon the verdict, the defendant appealed to this court. A. Thompson, for the appellant. William M. Miarts, for the respondents. Pratt, J. The judgment of the Supreme Court, I think, should be aflSrmed. First. The exclusion of the use of camphene in the building where 532 HAEPEE V. ALBANY MUTUAL INS. CO. [CHAP. VI. insurance Is effected has reference to its use in lighting the premises. This is evident, I think, from the connection in which it is found with other articles used alone for that purpose. I know of no other use to which spirit gas and burning fluid are applicable except for the purpose of lighting buildings. And that is the ordinary and more general use to which camphene itself is applied. The three articles for lighting buildings being thus placed together in the prohibition, in connection with the consideration that such use is extremely hazardous, raises a strong presumption that its use for lighting alone was designed to be prohibited in this clause. But, taken in connection with the other provisions of the policj-, the presumption becomes conclusive. In the class of special rates we find enumerated camphene on sale, without any such special prohibition ; and in the same class is found printers of books and job printers, the very articles which the policy by its terms covers. Its use for cleaning rollers is clearly no more hazardous than keeping it for sale. I am satisfied, therefore, that it was not the mere presence of the article which was designed to be prohibited by this special clause in the policy, but its common though hazardous use for lighting buildings. Second. But if that clause should be deemed to include any and every use of camphene, it would not avoid the policj'. The insur- ance in this case is upon the stock in trade used in the business of printers of books and bookbinders, and covers all such articles as are necessarily and ordinarily used in such business. The term ' ' stock in trade " in a specified business, when used as matter of description in a policy of insurance, "includes, besides materials, everj'thing neces- essary for carrying on that business." (1 Phil. Ins., § 489.) They are just as clearly, therefore, embraced in the policy as if each article thus necessarily used was enumerated at length. (2 Hall, 589 ; Wall V. Howard Ins. Co., 14 Barb. 383, affirmed in this court December, 1854.) And the underwriters must be deemed to have been acquainted ■with the business, and with the materials ordinarily and necessai-ily used by the trade in prosecuting it. In issuing the policy they must be deemed to have intended to include all such materials in the risk. In construing the policy, therefore, it is to be treated as if the article of camphene for the use to which it was in fact applied, had been enu- merated with the other articles covered by the policy. Thus consid- ered, the rulings at the Circuit were clearly right. A policy of insurance, like any other contract, should be construed so as to give it effect rather than to make it void. The company have received a premium adequate, it is presumed, to the risk which they have taken, and hence nothing but the most stern legal necessity should constrain the court to give it a construction which would nullify it and render it a mere deception instead of the protection which the parties to it designed. It is a well settled point that the written part of a policy shall always prevail over the printed part, in cases of repugnancy. (2 Hall, 622.) SECT. II. J HAEPEE V. ALBANY MUTUAL INS. CO. 533 The printed forms are verj' general in their terms. The prohibitions inserted therein are more particular!}- applicable to the ordinary and more common policies of insurance upon non-hazardous property, for the purpose of protecting the insurers against any increased hazard in consequence of a change of business or the use of any material more hazardous than that insured against. In much the greater portion of in- surances there would be no repugnancy between the written and printed part of the policy ; and effect, in such eases, should undoubtedly be given to every part of the instrument. Still the substance of the contract is in the written part of the policj' ; and when the insurance is upon haz- ardous or extra hazardous goods or trades, or npon those specified in the memorandum of special rates, these printed portions are not ap- plicable, or at most only in a limited degree. Even in such case some eflfect maj- be given to these printed prohibitions. Thej' would be held probablj- to prohibit a change of business from the one designated to another not designated, although the latter should be no more haz- ardous. In such cases they would not be entirely useless. But when the insurance is directly upon the stock in trade, as for example in the business of manufacturing and sale of camphene, to hold that a general printed prohibition (contained in every policy of insurance) against keeping or using it, unless permission be specially given and indorsed upon the polic}', would have the effect to nullify its direct and positive stipulations, would be preposterous. Indeed, pre- sented in this form, no one would contend for such a proposition. And still that is substantially the point presented in this case. For if I am right in the proposition that if the article was necessarilj- and ordinarily used in the business it is included in the term " stock" used in the polic}-, it is as plainly- within the risk assumed by the defendants as if written in at length. Upon the whole I think the rulings at the Circuit were correct and the judgment must be aflBrmed. All the judges concurring. Judgment affirmed} 1 Acc: Leggett v. Mtna. Ins. Co., 10 Ricli. S. Car. Law, 202, 208 (1856); Bryant V. Poughkeepsie Mut. Ins. Co., 17 N. Y. 200 (1858) ; Whitmarsh v. Conway F. Ins. Co., 16 Gray, 359 (1860) ; Phoenix Ins. Co. v. Taylor, 5 Minn. 492 (1861) ; Niagara F. Ins. Co. V. De Graff, 12 Mich. 124 (1863) ; Pindar i;. Kings County Ins. Co., 36 N. Y. 648 (1867); Viele v. Germania Ins. Co., post, pp. 1046, 1058-1059 (1868); Collins v. Farmville Ins. & Banking Co., 79 N. Car. 279 (1878) ; Carrigan v. Lycoming F. Ins. Co., 53 Vt. 418, 425^27 (1881); Carlin r. Western Assurance Co., 57 Md. 515 (1881); Bar- nard w. National F. Ins. Co., 27 Mo. App. 26 (1887); Maril w. Connecticut F. Ins. Co., 95 Ga. 604 (1894) ; Yoch v. Home Mut. Ins. Co., Ill Cal. 503 (1896) ; Phoenix Ina. Co.y. Fleming, 65 Ark. 54 (1898). See Harper v. N. Y. City Ins. Co., 22 N. Y. 441 (1860) ; Commercial Ins. Co. v. Mehlman, 48 III. 313 (1868) ; Archer v. Merchants' and Manufacturers' Ins. Co., 43 Mo. 434 (1869) ; Hall v. Ins. Co. of North America, 58 N. Y. 292 (1874) ; Buchanan v. Exchange F. Ins. Co., 61 N. Y. 26 (1874) ; Lancaster Silver Plate Co. v. National F. Ins. Co., 170 Pa. 151 (1895); Lancaster Silver Plate Co. o. Manchester F. Assurance Co., 170 Pa. 166 (1895) ; Mascott v. First National F. Ins. Co., 69 Vt. 116 (1896). Compare Macomber v. Howard F. Ins. Co., 7 Gray, 257 (1856); McEwen v. Guth- ridge, 13 Moo. P. C. 304 (1860) ; Whitmarsh v. Charter Oak F. Ins. Co., 2 Allen, 581 (1861) ; Pindar v. Continental Ins. Co., 38 N. Y. 364 (1868) ; Birmingham F. Ins. Ca 53-i WHEELER V. TEADERS' INS. CO. [CHAP. VL WHEELER V. TRADEES' INSURANCE COMPANY. SuPKEME Court of New Hampshire, 1882. 62 N. H. 326.* ■ Assumpsit on a policy of insurance on a woollen mill and its con- tents. The policy contained the provision that "if the assured shall keep or use gunpowder, fireworks, nitroglycerine, phosphorus, salt- petre, nitrate of soda, petroleum, naphtha, gasoline, benzine, benzole, or benzine varnish, or keep or use camphene, spirit gas, or any burn- ing fluid or chemical oils, without written permission in this policy, then and in every such case this policy is void, and all insurance there- under shall immediatelj' cease and determine." About an hour before the fire the assured carried a barrel of naphtha into the mill, poured some of it into a watering-pot, and sprinkled it upon the wool for the purpose of killing moths. The naphtha had been bought for the purpose of killing the moths, and the intention was to take the remainder out- side the building and there clean the windows, which had alread3' been taken out, but the fumes of the naphtha mixed with the air made an explosive and inflammable compound, and thus the fire arose. The case was submitted to the court upon agreed facts. Marston tb Eastman and J. S. S. Frink, for the plaintiff. S. C. Eastman, for the defendants. Doe, C. J. Whether the expression " keep or use " means a keep- ing or use on a single occasion, or frequently repeated, or continued for several days or months, depends upon the subject-matter of the contract, and the intention of the parties proved by competent evi- dence. If the plaintiff had walked through his mill with a vial of naphtha in his pocket, the transit might not have involved the insured propertj^ in the danger which he had agreed should annul the policy. A drop of the liquid carried into the mill, and instantly used there as medicine, might create no appreciable hazard of fire. The policy covered certain risks ; but the danger of fire where naphtha is kept or used is such that the defendants expressly refused to assume it, and the plaintiff agreed to at least as much as this, — that his keeping or using naphtha, if it involved the mill in substantial danger, should ter- minate the insurance. Whether his agreement is broader than that, we need not inquire. Naphtha was several times drawn from the cask into a watering-pot holding about two quarts, carried across the room, and sprinkled upon the wool. Thus mixed with the air in a manner favorable to rapid evaporation, its bulk was quickly multiplied five or six hundred times, V. Kroegher, 83 Pa. 64 (1876); Cobb. t'. Ins. Co. of North America, 17 Kans. 492 (1877) ; Lancaster F. Ins. Co. v. Lenheim, 89 Pa. 497 (1879) ; Beer v. Insnrance Co., 39 Ohio St. 107 (1883); Pittsburgh Ins. Co. .;. Frazee, 107 Pa. 521 (1884); Western Assurance Co. v. Rector, 85 Ky. 294 (1887). — Ed. 1 The case has been restated. — Ed. SECT. II.J 'WHEELER V. TKADEES' INS. CO. 535 and it became explosive and ver}' inflammable. Penetrating all sources of combustion, it flowed over the mill, and exposed it and its contents to imminent danger of destruction. Unaware of the dangerous nature of the material he was using, the plaintiff put all the insured property in an enormous peril, which continued as long as the property existed. He had agreed that if he should do this, the whole fire risk should be his, and not the defendants', and he does not contend that his ignorance of the hazardous character of his act is material. In pursuance of his agreement the insurance ceased when the naphtha risk began. There was no contract that the defendants should bear any risk a year or a day after he wittinglj^ or unwittingly introduced such a danger as that which resulted from his use of naphtha. If he had in- tended to use it every day for a j^ear, as he used it on the day of the fire, and the fire had been caused by its use a moment after the first act of sprinkling the wool, the policy would have been invalidated by the dangerous use, and not by the consequent fire. It would not be material whether the fire started the first moment of the use in- tended to be continued a j'ear, or the last moment of the j'ear's actual use. It was not a mere intention to use naphtha once or many times, nor a fire resulting from, or made irresistible bj-, its use, nor a naphtha risk prolonged an unreasonable time, but a use of naphtha exposing the property to substantial danger, that was to put an end to the defend- ants' liabilitj'. "If the assured shall keep or use . . . naphtha, . . . this policy is void, and, all insurance thereunder shall immediately cease." The immediate cessation of the insurance when the plaintiff used naphtha does not mean that under such a naphtha risk as enveloped the mill when the fire broke out, the insurance would continue down to the last moment of the undefined period at the expiration of which that risk would become a habit of the plaintiff, and a customarj' con- dition of the property. On the facts stated, the plaintifl' cannot recover. Case discharged.^ WHEELER V. TRADERS' INSURANCE COMPANY. Supreme Couet op New Hampshire, 1883. 62 N. H. 450. Motion for rehearing Wheeler v. Traders' Insurance Companj', ante, p. 534. Marston & Eastman and J. S. H. FrinJc, for the plaintiff. ■ S. C. Eastman, for the defendants. 1 See Williams v. Fireman's Fund Ins. Co., 54 N. Y. 569, 572-573 (1874) ; Bayly 17. London & Lancashire Ins. Co., 4 Ins. L. J. 503 (U. S. C. C, D La., 1875); s. c. 2 Fed. Cas. 1087 ; Matson v. Farm Buildings Ins. Co., 73 N. Y. 310 (1878). Compare Farmers' and Mechanics' Ins. Co. i>. Simmons, 30 Pa. 299 (1858) ; Mears V. Humboldt Ins. Co., 92 Pa. 15, 20 (1879) ; La Force v. WUliams City F. Ins. Co., 43 Mo. App. 518, 530-532 (1890). — Ed. 536 -WHEELER V. TEADEES' INS. CO. [CHAP. TI. Allen, J. The stipulation in the policy, that " if the assured shall keep or use . . . petroleum, naphtha, gasoline, benzine, benzole, or benzine varnish, or keep or use camphene, spirit gas, or any burning fluid or chemical oils without written permission in this policy, then and in every such case this policy is void, and all insurance thereunder shall immediately cease and determine," was a part of the contract of in- surance entered into by the plaintiff with the defendants, without any apparent mistake, deception, or fraud. The plaintiff expresslj' agreed that a violation of the condition should of itself be a forfeiture of all insurance under the policy. Having voluntarily entered into the con- tract thus restricted, the plaintiff cannot reasonably complain of the enforcement of the forfeiture for a violation of the condition. Mead v. N. W. Ins. Co., 7 N. Y. 530 ; Lee v. Howard Ins. Co., 3 Gray, 583 ; Kelly V. Home Ins. Co., 97 Mass. 288. There is no ambiguity in the meaning of the words used, or the sense in which they were employed, by which the plaintiff might have the benefit of a doubt. Smith v. Ins. Co., 32 N. Y. 399. The con- tract must be interpreted, and the terms used must be defined in the light of the mischief intended to be avoided by the restriction. The prohibition of the keeping or use for any purpose, or for any measura- ble time, of an article so inviting to fire as that described in the case, was a reasonable prohibition, the violation of which, in any degree and for any time, would expose the insured premises to an extreme degree of danger ; and to give the restrictive clause in the policy a construc- tion which would permit the introduction into the premises of naphtha or benzine, and its use there for any dangerous purpose for any time, would be a practical nullification of that part of the contract. If it could be said that merely "keeping" it, not for sale, nor for any general use in the business of manufacturing, but for temporary storage, could not be within the prohibition intended by the parties to the con- tract, certainly the " use " made of it was one subject to the prohibition of the use of an article hazardous to an extraordinary degree, if the use of any combustible material ever could be. The cases in which a disregard of the prohibition of keeping or using extraordinarily hazardous articles had not been held to work a for- feiture of the policy are those where the use made was one incident to the business of the insured, adopted from necessity or custom, and recognized by the insurer, so that a waiver of the prohibitorj- clause followed. Such cases are : Carlin v. Assurance Co., 57 Md. 515, in which the prohibited oil was, at the time of the insurance, known by the insurers to be commonly used by the insured to lubricate machinery; Buchanan v. Ins. Co., 61 N. Y. 26, where the oil was known to be commonly used for illuminating purposes ; and Whitmarsh V. Ins. Co., 16 Gray, 359, in which the inhibited article was known to be usually kept and dealt with as a part of a stock of goods in a country store insured. The use by the plaintiff of the benzine or naphtha did not come within the doctrine of any of these cases, nor was SECT, il.] Mo^AELAND V. ST. PAUL F. AND M. INS. CO. 537 it a use In a small quantity as a medicine, or for other special and not dangerous purpose, as in Williams v. Ins. Co., 54 N. Y. 569. The plaintiff claims that the policy was not forfeited by the use of the naphtha, because the use was not habitual, but temporary, and confined to a single occasion. The cases relied on as authority for this position are cases, for the most part, where there was no express stipulation or warranty against the use of the particular dangerous article or material in question, but only a prohibition in general terms of keeping hazardous things on the premises or of carrying on a different or more dangerous trade. Dobson v. Sotheby, M. & M. 90 ; Shaw V. Eobberds, 6 A. & E. 76. But where there is a stipulation that the policy shall be avoided on the use of an article expressly named, and there is nothing in the policj' from which a permission to use the article, in a partial, limited, or temporary way, can be inferred, full effect has usually been given to the prohibitive clause by a for- feiture of the policy for its violation. Glen v. Lewis, 8 Exch. 607 ; Faulkner v. Central Ins. Co., 1 Kerr, N. B., 279 ; Worcester v. Ins. Co., 9 Gra}-, 27; Matson v. Ins. Co., 73 N. Y. 310; Birmingham Ins. Co. V. Kroegher, 83 Pa. St. 64 ; Cert v. Home Ins. Co., 44 Cal. 320. No reason has been suggested by the plaintiff whj- the restrictive clause in the policj' of insurance in this case should receive a construc- tion by rules different from those applied to ordinary business con- tracts. The terms of the prohibitive clause are simple, well known, and in common use. There is nothing ambiguous about them, and there can be no doubt as to their meaning. The stipulation was a plain, unqualified agreement that the policy should be forfeited if naphtha were used in the premises insured. It was a reasonable restriction against the use of a very dangerous and combustible material ; and a construction which would uphold the policy, in spite of a plainly hazardous use of any substantial quantity of so dangerous a fluid 'on the premises, for any substantial time, would defeat the object for which the restriction was made. Motion denied. McFARLAND v. ST. PAUL F. & M. INS. CO. Supreme Coxjkt of Minnesota, 1891. 46 Minn. 519. Appeal by plaintiff from an order of the District Court for Ramsey County, Wilkin, J., presiding, refusing a new trial after verdict di- rected for defendant, in an action to recover $1,450 on a fire insurance policy. Johns, Michad & Johns, for appellant. George L. Bunn, for respondent. Collins, J. Although the policy of insurance upon which plaintiflt seeks to recover in this action, for a loss caused by the explosion of a 538 McFAELAND V. ST. PAUL F. AND M. INS. CO. [cHAP. VI. gasoline stove, contained a clause which provided that, if the assured should keep or use gasoline upon the insured premises — a dwelling- house — without the written permission of the defendant company, the policj' should be void, it is contended by him that, as the house was insured without an application in writing, and without any representa- tions being made, after the company's agent had full opportunity to examine the premises, by which examination he would have discovered that the gasoline stove was in common use for cooking purposes, it was chargeable with such knowledge as an investigation would have dis- closed ; and that therefore it assumed the risk as it actually existed when the policy was issued, subject to any use as a dwelling-house not so exceptional and peculiar that the defendant company could not be supposed to have anticipated. To put the plaintiff's proposition in another form, it is that when an insurance company issues a fire policy without inquiry, or without application or representations, it consents to any existing use of the insured property which it could have ascer- tained by reasonable investigation, although by the terms of the policy such a use is expressly prohibited, and there is nothing about the de- scription of the property which necessarily implies or indicates that it may be used in the prohibited manner. On the trial, testimony was offered and received in plaintiff's behalf which tended to prove that the practice of using gasoline stoves in dwelling-houses had become quite prevalent in the citj' wherein the in- sured property was located. Undoubtedly, the purpose of this testi- mony was to show that the use of the forbidden article in dwellings was not exceptional or peculiar, but, on the contrary, had become es- tablished bj' custom. Its sufficiency in this respect we need not stop to consider, for all of this class of testimony should have been excluded as immaterial. The policj', which had gone into plaintiff's hands, and the contents of which he is presumed to have known, was unequivocal on this point, and declared that if gasoline was used on the premises the contract for insurance should be void. There was no language in the instrument from which a different or contrary intention — an intent to permit the use of gasoline — could be gathered. Tlie clause wherein its use was forbidden was not repugnant to any other provision, nor were there elsewhere terms or conditions from which it could be implied that the defendant company waived the prohibition. The plaintiff has not brought his case within an application of the rule laid down in Phoenix Ins. Co. v. Taylor, 5 Minn. 393 (492), in which it was held tliat printed conditions in an insurance policy prohibiting the keeping of gunpowder in the building containing the merchandise insured were controlled and governed by the written portion, describing the prop- erty covered by the policy as a " stock of goods, consisting of . . ., and such goods as are usually kept in a general retail store," — it hav- ing been shown that gunpowder was usually kept in such a store. By the use of general terms in the written part of the policy, — terms which would ordinarily include the forbidden article, — the insurance SECT. II.J McFAELAND V. ST. PAUL F. AND M. INS. CO. 539 companj' was deemed to have waived the invalidating printed clause as effectually as if the article had been expressly insured. We think it may be said, safely, that none of the well-considered cases go beyond this, proceeding strictly upon the principle that the written portion of the contract must be given the controlling force where a conflict or want of harmony arises between it and a printed stipulation. But in the case at bar there was no conflict or want of harmonj-. The defendant insured the plaintiff's dwelling-house upon an express condition that the use of gasoline should terminate the contract. The defendant did not use ambiguous language, or insert in one portion of its policj' a clause at variance with, or repugnant to, a clause found elsewhere, and thus mis- lead the insured as to the burdens or restrictions imposed upon him ; but, on the other hand, it emphatically notified him that if he used gas- oline, as well as other well-known hazardous articles, his policy became void. The cases cited by appellant where there were ambiguous and conflicting clauses and terms in the policies, in line with Phoenix Ins. Co. V. Taylor, supra, have no application to the facts now before us. Nor can it aid the plaintiff that he made no application for insurance, and no representations as to the use or non-use of gasoline on the premises. This is not a case where, there being no conditions iu the policy governing tlie matter, it might be held that the insured need not disclose facts incident to the risk, such as an incumbrance upon it, unless required to do so ; nor is it a case where the conditions are pred- icated upon, or referable to, an application made by the insured. The general rule is well stated to be that, where there is no application, the insured is bound by the conditions found in the policy which he has accepted and retained without objection. Swan v. Watertown Fire Ins. Co., 96 Pa. St. 37 ; May, Ins. 167. Exceptions may be found to this rule, but there are none which can be of service to appellant ; for the policy alone, unmodified bj- representations or in any other man- ner, was the contract existing between the parties. The conclusive effect of a condition in an insurance policy, under like circumstances, was in fact determined in the recently- decided case of Collins v. St. Paul F. & M. Ins. Co., 44 Minn. 440 (46 N. W. Eep. 906). The plain- tiff therein was not allowed to recover as against an explicit condition in the policy that the company should not be liable if the interest of the assured in the property was not one of absolute and sole ownership, because it appeared beyond controversy that plaintiff had but a life- estate. There was no attempt on the trial of that case to show that the plaintiff's application for insurance contained any question or answer in respect to the title. The right to recover was successfully resisted by the insurance companj' solely upon the condition found in the policy. Order affirmed.^ 1 Ace. : Eeeve v. Phoenix Ins. Co., 23 La. Ann. 219 (1871). In Heron v. Phcenix Mat. F. Ins. Co., 180 Pa. 257 (1897), the policy insured house- hold goods, etc., and provided that it should be void " 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, benzole, dynamite, ether, fireworks," etc. The 540 FAUST V. AMEEIOAN FIKE INS. CO. [CHAP. TI. FAUST, Appellant, v. AMERICAN FIRE INS. CO., Respondent. Supreme Court of Wisconsin, 1895. 91 Wis. 158.^ Appeal from a judgment of the Circuit Court for Dane County. The action was upon a fire insurance policy of the Wisconsin standard form. The written part said : ' ' Joseph Faust : Four hundred dollars on his two-story frame, shingle-roof building . . . occupied as a furniture store and repair shop. . . . Four hundred dollars on the stock of furniture, upholstery goods, and other merchandise, not more hazardous, usual to a retail furniture store, while contained therein." The printed part said : " This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void ... if (any ■usage or custom of trade or manufacture to the contrary notwithstand- ing) there be kept, used, or allowed on the above described premises benzine," etc. There were also provisions as to proofs of loss and as to waiver. The defence was a breach of the condition forbidding the keeping or using of benzine, and also a failure to furnish the requisite proofs of loss. The evidence showed that both at the issue of the policy and at the time of the fire the assured kept benzine on the premises, that the amount was small, that it was kept solelj' for use in the repair shop, and that it was necessary for such use. The evidence also showed that after the fire the insurance company's adjuster investi- gated the loss, discovered the use of benzine, thereupon notified the assured that this use avoided the policy, and took away and retained a list of the destro3ed items which had been furnished by the assured, and that no communication had been received from the company thereafter. The defendant moved for a nonsuit on the ground that the policy was avoided by the keeping or use of the benzine. Siebeckek, J., granted the motion, and judgment was rendered accordingly, where- upon the plaintiff appealed. Burr W. Jones and M jR. Stevens, for the appellant. BasJiford, Cf Connor, & Aylward, for the respondent. Marshall, J. The main question presented on this appeal is whether the presence of a small amount of benzine on the premises assured caused fireworks to be placed in the house, on the morning of July 3, for use on the following evening. The fireworks took fire on the afternoon of July 3, and caused the loss for which action was brought. The facts being undisputed, it was held that the jury should have been instructed to find for the defendant, Steeeett, C. J., for the court, saying : " There is no ground for a presumption that the parties here contemplated even the temporary presence of fireworks in the insured building in the face of an express contract to the contrary." — Ed. 1 The statement has been rewritten ; and the provisions as to proofs and waiver have not been reprinted. — Ed. SECT. II.] FAUST V. AMERICAN FIRE INS. CO. 541 for use in the repair shop rendered the contract of insurance void. Keeping ia mind the undisputed evidence that the prohibited article was not kept as an article of merchandise for sale, but as an article usuall}- and necessarily kept in operating the business of the repair department of the furniture store, which the policy expressly covered, we find abundant authority to support the general rule, which we adopt, that where a contract of insurance, by the written portion, covers property to be used in conducting a particular business, the keeping of an article necessarily' used in such business will not avoid the policj-, even though expressly prohibited in the printed conditions of the contract. To that effect are Mears v. Humboldt Ins. Co., 92 Pa. St. 15 ; Viele v. Germania Ins. Co., 26 Iowa, 9 ; Collins v. Farm- ville Ins. & B. Co., 79 N. C. 279, — cited by appellant's counsel, to which many may be added: Carrigan v. Lycoming F. Ins. Co., 53 Vt. 418 ; Stout V. Comm. U. Ass. Co., 11 Biss. 313 ; Franklin F. Ins. Co. V. Updegraff, 43 Pa. St. 350, 353 ; Plinsky v. Germania F. & M. Ins. Co., 32 Fed. Rep. 47 ; Bryant v. Poughkeepsie Mut. Ins. Co., 17 N. Y. 200 ; Phosnix Ins. Co. v. Taj-lor, 5 Minn. 492 ; Whitmarsh v. Conway F. Ins. Co., 16 Gray, 359 ; Franklin F. Ins. Co. v. Chicago I. Co., 36 Md. 102 ; Carlin v. Western Ass. Co., 57 Md. 515 ; Harper y. Albany Mut. Ins. Co., 17 N. Y. 197 ; Hall v. Ins. Co. of N. A., 58 N. Y. 292 ; and man}' others. In the early case of Harper v. Albany Mut. Ins. Co., 17 N. Y. 197, it was held that the underwriters must be presumed to have been acquainted with the business and with the materials necessarily used in prosecuting it, and to have included such materials in the risk, the same as if each article had been particularly' mentioned in the written portion of the policy ; that the written portion in that regard will con- trol the printed portion prohibiting the keeping of such articles. This case has been frequently cited and approved, and maj' be said to be strictly in line with the great weight of authority on the subject. In Hall V. Ins. Co. of N. A., 58 N. Y. 292, the court referred to Harper v. Albany Mut. Ins. Co., 17 N. Y. 197, and several others of like char- acter, stating, in effect, that they were all cases where the use of the prohibited article was necessary in the business ; while in the case then under consideration it was onlj' said to be usually used. It was sought by the insurance company to avoid the policy, notwithstanding, bj' distinguishing between necessarj' and customary use, but the court held that, under a policy covering a business, permission to use all articles ordinarily, as well as articles necessarilj', used must be held to be given and covered by the contract of insurance. In Carlin v. Western Ass. Co., 57 Md. 515, the policy covered a factory and machinerj', and prohibited the keeping or use of petroleum. The court held, in effect, that if the engine room and machinery were included in the description of the insured premises, the keeping of petroleum, although among the prohibited articles, would not avoid the policy if the evidence showed that it was an appropriate and cus- 542 FAUST V. AMERICAN FIEE INS. CO. [CHAP. VL tomary article used in the assured's trade for lubricating machinerj', and that he kept it solely for that purpose ; that the insurance com- pany, when it issued the policy", knew that the factor3- could not be run ■without machinerj', and it must be supposed to have contracted with reference to such use as an ordinary incident of the business; that if petroleum oil was usual and necessary, then such use must have been contemplated, though prohibited in the printed portion of the policy. The court concluded that the rule in respect to the question under consideration as stated is well settled. It must be recognized that there is some conflict in the authorities on this subject, but the great weight of authorit}' fully sustains the rule as above stated. In the light of the foregoing, obviously the contract of insurance which covered the building to be used as a repair shop in connection with the furniture store permitted all things necessary to the enjoy- ment of the property for such use. The clause in the written portion of the polic}-, " Four hundred dollars on the stock of furniture, uphols- tery goods, and other merchandise, not more hazardous, usual to a retail furniture store," must be construed to cover merchandise kept in the trade in the furniture store, and the words " not more hazardous" to refer to such merchandise only, and have no reference to the neces- sary articles kept for use in the repair shop. The words " anj' usage or custom of trade or manufacture to the contrary notwithstanding," contained in the printed portion of the policy, so far as they would otherwise prohibit the necessarj- use of benzine in the repair shop, must be held to be controlled by the written portion of the policy, which expressly insures the building in part as a repair shop; this upon the presumption, that must exist, that the parties intended that the repair shop as it was, and as it must necessarily continue to be if it continued at all, must be carried on with all usual and necessary incidents, and that as such it was protected by the contract of insur- ance ; also by force of the well-established rule, that the written special description of the particular subject-matter, wherever inconsistent with the printed clauses of the policy, must control. Citizens' Ins. Co. v. McLaughlin, 53 Pa. St. 485 ; Ciishman v. N. W. Ins. Co., 34 Me. 487; Archer v. Merchants' & M. Ins. Co., 43 Mo. 434. The construction we thus give the policy renders the contract just and reasonable, and carries out the obvious intention of the parties to it. Anj' other con- struction would lead to the absurd result that the prohibitorj- clause of the policy would absolutely prevent the carrying on of the business expressly permitted in the written portion. No such absurditj' can be held to have been contemplated by the parties, unless the terms of the contract are such as not to permit of any other reasonable construc- tion. As said in Carlin v. Western Ass. Co., 57 Md. 515: "Where the contrary is not expressly made to appear, it is not to be presumed that, when an insurance is effected with reference to an established and current business, whose protection is really the object of the insurance, SECT. II.] LONDON, ETC. FIKE INS. CO. V. FISCHEE. 543 such a narrow and stringent constrnction of the provisions of the policy was intended as will necessarilj' cause its serious embarrass- ment or suspension." The only other question which requires consideration is whether there has been a failure to comply with the condition requiring proofs of loss, so as to defeat a recovery on the policj-.' . . . Judgment reversed and new trial granted,^ LONDON AND LANCASHIRE FIRE INS. CO. v. FISCHER. United States Ciecdit Court of Appeals, Sixth Circuit, 1899. 92 Fed. R. 500.' Error to the Circuit Court of the United States for the District of Kentucky. This was an action on a policy of fire insurance of $3,000, " on stock of merchandise, principally hardware and cutlery, stoves and tinware, and materials used in his business, contained in frame metal-roof build, ing occupied by assured as dealer in above-described goods, with privi- lege to manufacture tinware by hand power, and upper floors occupied and known as ' Highland Hall,' and situate No. 1627 Baxter Avenue, Louisville, Ky." The defence rested upon violations of three conditions of the policy, one of which was : ' ' This entire policj', unless otherwise provided bj' agreement indorsed hereon or added hereto, shall be void ... if (any usage or custom of trade or manufacture to the contrary notwithstand- ing) there be kept, used, or allowed, on the above-described premises, benzine, benzole, dynamite, ether, fireworks, gasoline, Greek fire, gun- powder exceeding twenty-five pounds in quantity, naphtha, nitro- glycerine, or other explosives, phosphorus, or petroleum or any of its products of greater inflammability than kerosene oil of the United States standard." . . . As to the condition quoted, the charge to the jury was as follows : " Did the plaintiff in this case, between the 7th of October, '1895, and the 31st of May (the time of the fire), 1896, — did he, in the language of the policj', ' keep, use, or allow in the premises, to wit, the main 1 The remainder of the opinion dealt with this question. — Ed. 2 See Lancaster Silver Plate Co. v. National F. Ins. Co., 170 Pa. 151 (1895) ; Lan- caster Silver Plate Co. v. Manchester F. Assurance Co., id. 166 (1895); American Central Ins. Co. v. Green, 16 Tex. Civ. App. 531 (1897); Davis v. Pioneer Furni- ture Co., 102 Wis. 394 (1899). — Ed. ' 8. c. 34 C. C. A. 503. The statement hag been rewritten with the aid of the opin- ion of Barr, .!., in Fischer v. London & Lancashire F. Ins. Co., 83 Fed. E. 807 (TJ. S. C. C, D. Ky., 1897). In the statement and the opinion, matters bearing on other in- surance, chattel mortgage, and waiver have been omitted. — Ed. 544 LONDON, ETC. FIRE INS. CO. V. FISCHER. [CHAP. VL building, gasoline ' ? If you conclude that he did ' keep, use, or allow ' to be used, or kept, gasoline in the premises, thus described, why, then, 3'ou should find for the defendant, because by the very terms of the policy the plaintifiE agreed that the policy should be void, if he did this tiling, which was prohibited. You must keep in mind, now, this propo- sition refers only to the main building, which excludes the shed behind. Now, this language here is not used in any technical sense, either. It is for you to say whether, from the evidence, this plaintiff kept, used, or allowed to be kept or used, gasoline between the 7th of October, 1895, and the 31st of May following. You must consider the whole evidence on that subject." The jury found for the plaintiff. Augustus E. Wilson, for plaintiff in error. John Barret, for defendant in error. The opinion of the court (Tait and Lueton), circuit judges, was delivered by Tapt, Circuit Judge. . . . The second assignment is based upon the construction which the court gave of the word " allowed " in the clause providing that the policy should be void "if there be kept, used, or allowed " on the premises gasoline. The court con- strued the word "allowed" to mean "allowed to be kept or used." The evidence tended to show that gasoline was carried through the store from a shed in the back yard, not connected with the main building, where the stock of goods was insured. It was conceded that such carrying of gasoline through the store without leaving it there permanentlj' did not come within the adjudicated meaning of the terms " kept and u^ed ; " but it was contended that the word "allowed" embraced more than "kept or used," and was suflB- ciently broad to include the carrying of gasoline through the store for immediate delivery to customers, even though gasoline was not allowed to be stored on the premises, or to remain there longer than the time required to carry it from the back door to the customer, and to deliver it to him. The court construed the word " allowed" as if inserted for the purpose of making it clear that the condition would be broken, whether the keeping and using was done by the in- sured himself, or was allowed or permitted bj' him to be done by some one else. The argument made on this construction is that under it the word " allowed" is merely redundant, and adds nothing to the mean- ing of the other two words, because it has often been adjudicated that they are broad enough to cover, not only the act of the insured, but also the act of any person whom the insured may permit or allow to keep or use gasoline upon the premises, and in some cases even the act of a tenant in keeping gasoline against the express command of the in- sured. The mere fact that the words " kept or used " might, by con- struction, be made wide enough to include "allowed," does not require of us, when the word " allowed " is expressly made a part of the policy, to give it any different meaning from what it would have when it was SECT. II.J LONDON, ETC. FIEE INS. CO. V. FISCHER. 545 ^ implied from the use of other words. The habit of using apparently redundant expressions in statutes and contracts and deeds, for the pur- pose of excluding anj' possibility of a misconstruction, is very frequent. It justifies us in giving the word " allowed " its ordinary' meaning, in- stead of attributing to it a strained and vague significance, which will defeat the policy. The duty of the court, where the meaning is am- biguous, is to construe the words used against the insurer, who framed them, so as to validate the policj', rather than destroj' it. London Assurance v. Companhia De Moagens Do Barreiro, 167 U. S. 157, 17 Sup. Ct. 785 ; Imperial Fire Ins. Co. v. Coos Co., 151 U. S. 462, 14 Sup. Ct. 379 ; National Bank v. Insurance Co., 95 U. S. 673. This disposes of all the assignments of error made bj' the plaintiflT in error, and leads to an affirmance of the judgment.' 1 On " kept, used, or allowed," and the like, see also : — Duncan v. Sun F. Ins. Co., 6 Wend. 488 (1831) ; Faulkner v. Central F. Ins. Co., 1 Kerr, N. B. 279 (1841) ; Westfall V. Hudson River F. Ins. Co., 12 N. T. 289 (1855) ; Bowman v. Pacidc Ins. Co., 27 Mo. 152 (1858) ; Cerf V. Home Ins. Co., 44 Cal. 320 (1872) ; Arkell v. Commerce Ins. Co., 69 N. T. 191 (1877) ; State Ins. Co. v. Hughes, 10 Lea, 461, 467^69 (1882) ; Tischler v. California Farmers' Mut. F. Ins. Co., 66 Cal. 178 (1884) ; Liverpool & London Ins. Co. v. Gunther, 116 U. S. 113, 128-131 (1885) ; Frost's Detroit Lumber and Wooden-Ware Works v. Millers' and Manufac- turers' Mutual Ins. Co., 37 Minn. 300 (1887) ; Snyder v. DweUing-House Ins. Co., 59 N. J. L. 544 (1896). — Ed. 35 546 MEEKIAM V. MIDDLESEX MUTUAL FIRE INS. CO. [CHAP. VL SECTION II. (continued). {C) Conditions pkohibiting Incbeasb op Hazabd. MERRIAM V. MIDDLESEX MUTUAL FIRE INSURANCE COMPANY. Supreme Judicial Court of Massachusetts, 1839. 21 Pick. 162. Assumpsit upon a policy of insurance against fire, to recover for a loss which happened on March 3, 1836. Trial before Mokton, J. The building insured was in Lowell. It was a block of wooden houses, divided into two parts by a brick wall, running east and west. The fire originated in the southerly part, which was consumed down to the ground floor. The northerly part was but slightly burnt. The defendants insisted that the Are was occasioned by the gross carelessness and negligence of the plaintiff, and that he had altered his building after eflecting insurance, in such a manner as to make it more hazardous in regard to fire, and so had avoided the policy. There was evidence tending to show, that after the insurance had been effected, stoves were put up in the northerly part of the block; that the tenants applied to the plaintiff to put up stoves in their rooms, but that he refused, saying they had fireplaces, and if they wanted stoves, they must procure them at their own expense ; and that the tenants put in the stoves themselves and in a careless and unsafe manner. The jury were instructed, that an alteration of the building, after in- surance, without the consent of the insurers, so as to make the building more exposed to fire, would render the policy void ; but that the altera- tion must be such that a higher rate of premium would be demanded to insure the building in the altered state than would be demanded before such alteration ; otherwise the alteration would not be material. The jury found a verdict for the defendants. The plaintiff moved for a new trial, because the jury were misin- structed, and because the verdict was against the evidence and the weight of the evidence. M. H. Fuller, in support of the motion. Sosmer and J. Keyes, for the defendants. Wilde, J., delivered the opinion of the court. The plaintiff moves for a new trial for a supposed misdirection to the jury in matter of law, and because the verdict is against the weight of the evidence. The defendants, at the trial, relied on several grounds of defence, only one of which, however, is material in the decision of the present motion. The ground on which the jury found their verdict was, that after the plaintiff had effected the insurance, and before the fire, the building in- SECT. 11.] LOUD V. citizens' MUTUAL INS. CO. 547 sured had been altered by the tenants of the plaintiff, and with his con- sent, in such a manner as to expose it more to the hazard of fire, and that therebj' the policj', b3' the terms of it, was rendered null and void. The evidence reported has a tendencj' to show that such an alteration had been made with the knowledge and the permission of the plaintiff, and thereupon the jury were instructed, that if thej' should be satisfied that anj- such alteration had been so made, it would avoid the policy ; " but that the alteration must have been such that a higher rate of pre- mium would have been demanded, to insure the building in its altered state, than would be demanded before such alteration ; otherwise the alteration would not be material." To these instructions the plaintiff's counsel excepted, and thej' contend that no such alteration would avoid the policj', unless it could be shown that the loss was occasioned by the alteration. In support of this exception, the case of Stebbins v. The Globe Ins. Co., 2 Hall (New York), 632, and other authorities, are re- lied on ; but they are not applicable, as the terms of the policies in those cases and the present materiallj- differ. This policy was made in pursuance of § 13 of the defendants' act of incorporation (St. 1825, c. 141), which provides, " that if any altera- tion should be made in any house or building b}' the proprietor thereof, after insurance has been made thereon with said company, whereb}' it may be exposed to greater risk or hazard, from fire, than it was at the time it was insured, then, in every such case, the insurance made upon such house or building shall be void, unless an additional premium and deposit, after such alteration, be settled with, and paid to, the directors ; but no alterations or repairs in buildings not increasing such risk or hazai-d shall in anywise affect the insurance previously made thereon." This being the contract between the parties in this particular, there can be no question that the instructions to the jury were perfectly correct. In respect to the motion to set aside the verdict, as one against the weight of the evidence, we are of opinion that the weight of the evidence is in favor of the verdict, and certainly not against it. The most that can be said in favor of the motion is, that the evidence was in some respects conflicting, and upon such evidence the finding of the jury is not to be disturbed. Judgment on the verdict.^ LOUD AND Anothee v. CITIZENS' MUTUAL INS. CO. Supreme Judicial Coukt of Massachusetts, 1854. 2 Gray, 221. Action of contract on a polic}-, whereby the plaintiffs were insured, under the conditions and limitations expressed in the rules and regula- tions thereto annexed, $2,500 against loss or damage by fire, for one 1 Ace. : Lyman v. State Mnt. F. Ina. Co., 14 Allen, 329 (1867). — Ed. 548 LOUD V. citizens' mutual ins. CO. . [chap. VI. year from the 18th of January, 1853, on lumber, lime, nails, and lead in their two stores on their wharf at We3'mouth. One of the rules and regulations annexed to the policy was this: " Art. 10. Whenever the circumstances disclosed in any application shall become so changed as to increase the risk, the policy thereon shall be void, unless the insured make a new and full representation to the directors, and pay such further premium and deposit as they shall determine." The plaintiffs, in their application for insurance, which was expressly made a part of the polic3', represented that the stores were used for storing lumber, &c., and that one room in one of them was used as a counting-room. The application also contained the following question and answer: " How are the buildings warmed, and how are the stove- pipes secured? Number of stoves, if any?" Answer. "Counting- room warmed with coal stove. One stove. Funnel and stove well secured. No lights used in the building, evenings." The question of the liability of the defendants was submitted to the court upon the following facts: On the 17th of September, 1853, the schooner " Statira," having on board a cargo of lumber of the plaintiffs, when near their wharf, got aground and filled. The beds and bedding on board, having been brought on deck, and being wet with the rain, were, by the plaintiffs' permission, removed into the store in which the counting-room was. The vessel was then lightened, hauled into the wharf, and made fast. About midnight, one of the plaintiffs, at the request of the captain and crew, gave them permission to sleep in the counting-room, but told them that thej' should not make or use any fire or light, or even smoke. There was a stove in the counting- room, the funnel of which passed through the loft overhead, used for storing lumber, but was not then in a safe condition. The captain and crew, being wet and cold, disregarded the prohibition of the plaintiffs, and made a fire in the stove, which, in consequence of the defect in the funnel, quickly communicated to the building and lumber above, and so destro3-ed the property- insured. J. J. Clarke, for the plaintiffs. T. S. Harlow, for the defendants. Metcalf, J. The representation made by the plaintiffs in their application for insurance was, that the counting-room was warmed •with coal bj- one stove, and that the funnel and stove were well secured. , And there is nothing in the case to show that this was not a true repre- sentation when it was made. At the time of the fire, however, that part of the funnel which was in the loft over the counting-room was not in a safe condition. And the first question is whether, upon the facts of the case, the unsafe condition of the funnel, at that time, avoided the policy. It is contended by the defendants, that as the funnel of the stove was not in a safe condition when the loss happened, the circumstances disclosed in the plaintiffs' application were so changed as to avoid the policy, under the tenth of the rules and regulations annexed thereto. SECT. II.] • LOUD V. citizens' MUTUAL INS. CO. 549 This might be so, if the plaintiffs had continued to warm the counting- room by fire in the stove. But if thej' used no fire in the stove, the risk was not increased bj' the insecurity of the funnel, nor even by its being wholly detached from the stove. It is a common practice to remove a funnel from its connection with a stove, during the months when a fire is unnecessarj' and would be oppressive. And this does not, of itself, enhance the risk assumed by underwriters on the contents of the building. It is the use of fire in a stove, and that alone, which makes it necessary that the stove and funnel should be well secured. And the representation that the counting-room was warmed by a stove and funnel thus secured, must be understood to mean, that when it was warmed at all, it was thus warmed ; and not that the stove and funnel were well secured during the summer season, when there was no occasion to warm the room. It does not appear, from the papers in the case, how the funnel of the stove came into an unsafe condition. But it was orallj' agreed, at the argument, that the part of the funnel which was in the loft over the counting-room obstructed the free passage of persons about the loft, and was taken down in May or June ; and that the plaintiffs never afterwards made a fire in the stove. If the plaintiffs had used the stove on the night of the fire, or had au- thorized the use of it which was then made by the crew of the " Statira," the defendants would not have been liable for the loss. But the plain- tiffs did not authorize the use of fire in the stove. On the contrary, they forbade the use of fire in the room, in any wa}-. The violation of that injunction, by the seamen, does not furnish a defence against the plaintiffs' claim. It was a wrongful act of third persons, for the con- sequences of which the defendants are liable, in the same manner and to the same extent as if those persons had unlawfullj^ broken into the counting-room and burned the building by kindling a fire on the floor. The plaintiffs were under no obligation, legal or moral, to keep their stove secure against fire that might be kindled in it by trespassers and burglars, nor against forbidden acts of persons, " wet and cold," whom they admitted to the room as a shelter. Nor did this act of humanity of itself avoid the policy. Though the building was represented as occupied for storing lumber, and having a counting-room in it, yet the use of the counting-room for a single night, as a resting place for strangers, was not such a change of use as exempts the defendants from their liability to pay the loss sustained by the plaintiffs. See Boardman v. Merrimack Mutual Fire Ins. Co., 8 Cush. 685 ; Dobson V. Sotheby, Mood. & Malk. 90 ; Shaw v. Robberds, 1 Nev. & P. 279, and 6 Ad. & El. 75 ; Barrett v. Jermy, 3 Exchequer Eeports, 545. [Hynds v. Schenectady County Mutual Ins. Co., 1 Kernan, 554.] Judgment for the plaintiffs} 1 See Breuner v. L. L. & G. Ins. Co., 51 Cal. 101 (1875). — Ed. 550 TOWNSEND V. NORTHWESTERN INS. CO. [CHAP. VI. TOWNSEND ET AL. V. NORTHWESTERN INSURANCE COMPANY. Court of Appeals of New Yokk, 1858. 18 N. Y. 168. Appeal from the Supreme Court. The action was upon a policy of insurance against fire on a cotton factory and its machinery. Upon the trial before Bkown, J., and a jury, a defence was that there had been an increase of hazard in de- fiance of a condition in the policy. The judge having refused to direct a nonsuit and having given a charge to which the defendant company excepted, the plaintiffs had a verdict and judgment, which having been affirmed at general term, the defendant appealed. Further facts appear in the opinion.^ Samuel JSeardsley, for the appellant. E. L. Fancher, for the respondents. Harris, J.'* . . . It was made a condition in the contract of in- surance that if after insurance effected the risk should be increased, by any means whatever Within the control of the assured, it should render the insurance void. The plaintiffs had represented that there was a good forcing pump, designed expressly for protection against fires, and at all times in condition for use. It appeared upon the trial that the bulkhead, at the pond which supplied the factory with water, which was of wood, being out of re- pair, was taken down, and a new bulkhead, constructed of stone masonry, was substituted in its place. While this was being done, the water was turned off and the pump rendered useless. It was insisted by the defendants' counsel that, bj"^ making this change, the plaintiffs had materially increased the risk, and thus rendered the insurance void. Upon this ground, also, the court was asked to nonsuit the plaintiffs. The nonsuit was refused, and, upon this point, the court charged the jury that the defendants had assumed the risk of making ordinarj' and necessary repairs ; and if, in making such repairs, the supply of water had been necessarily interrupted, and there had been no unreasonable delaj' in making the repairs, the interruption would not avoid the policy ; but if, on the other hand, the supply of water had been un- necessarily interrupted, and the risk thus increased, the plaintiffs could not recover. To this part of the charge, and to this only, the defend- ants excepted. It was said upon the argument, and perhaps with truth, that "the upshot of this charge was, that the plaintiffs had a right, if the old bulkhead was ruinous, to remove it and build a new one of stone, although the pump was thereby totally disabled and the risk of fire increased." 1 The reporter's statement has not been reprinted. — Ed. 2 A passage as to misrepresentation has been omitted. — Ed. SECT. II.] TOWNSEND V. NOETHWESTEEN INS. CO. 551 This doctrine I understand to liave been distinctly asserted bj' this court in this verj' case, when before it upon a former occasion. [The learned judge here quoted from tlie opinion then delivered by Johnson, (now) C. J., which is hereinafter given at large,^ and then continued : — ] There can be no doubt, I think, that where there is no express pro- vision in the contract involving a relinquishment of the right to per- form the ordinary acts of ownership which are usually exercised b}' owners over their own propertj", or restricting the party insured as to what he may do upon his own propertj', he is authorized, without vaca- ting his polic3-, to make any repairs which may be required to render the premises useful for the purposes to which they are devoted. It is not to be presumed, in the absence of any express agreement on the subject, that when he effects an insurance on his building the owner deprives himself of the right to use it in the common and ordinary mode, including the right to make all proper and reasonable repairs. But it was insisted, on the trial, that the removal of the old bulkhead and the substitution of a stone structure in its place was an alteration and not a mere repair. The court was accordingly requested to charge the jury that, if an entirely new bulkhead was constructed in place of the old one torn down, of different materials and in different form, de- signed as an improvement upon the old one, then it was not a case of 1 The opinion delivered by Johnson, C. J., at the earlier stage of the case has not been fully reprinted herein ; but the most important passages were these : — " In order to say whether the risk has been increased, it is necessary to inquire, in the first place, what risk was originally assumed. In other words, upon the insurance of a building, is not the risk incident to the process of necessary repairs a part of the general risk assumed by the insurers, in the absence, of course, of any stipulation in the contract importing the contrary ? " When a building is insured, it is, of course, understood that it is to be used in the ordinary way of using similar buildings, and no one expects that it is to be set apart and wholly devoted to being kept safely. One of the ordinary incidents to this usual occupation is that of making repairs. The general right to make these has never been doubted, when the policy contained no special provision upon the subject. It has never been supposed that, to a claim for a loss happening in the course of or by means of necessary repairs, the insurer could say, the risk by which that loss was occasioned was not within the terms of my contract. In all the cases I have met with, where the subject is spoken of, the right to make such repairs is assumed to be clear, and no- where is it denied, unless upon the ground of some special stipulation to the contrary. Stetson V. Massachusetts Mutual Fire Insurance Co., 4 Mass. 330 ; Jolly v. Baltimore Equitable Insurance Co., 1 Harr. & Gill, 295 ; Dobson v. Sotheby, 1 Mood. & Malk. 90; Grant v. Howard Insurance Co., 5 Hill, 10 ; Jennings v. Chenango Mutual Insur- ance Co., 2 Denio, 75 ; O'Neil v. Buffalo Fire Insurance Co., 3 Comst. 122, all Ulua- trate this position. It is quite true that while such repairs are being made there may be a greater exposure to loss by fire, as may be also the case when fires are re- quired in the winter for the comfort of the occupants. Such exposure, however, is part of the proper risk insured against. It is a hazard which the subject insured un- dergoes in the course of ordinary occupation, and which, therefore, cannot be deemed an increase of risk, within the condition set up by the defendants as avoiding their contract. " In my own opinion, the language of the condition is not such as to permit its application to the hazard occasioned by making ordinary repairs." — Ed. 552 TOWKSEND V. NOETHWESTERN INS. CO. [CHAP. VL ordinarj' repairs. In the refusal so to charge there was no error. The substitution of a new bulkhead for one that had become useless by de- cay was certainly a repair, and not the less so because, in making the repair, the owner thought fit to make use of a more durable material than had at first been employed. All that the court refused to do was to charge, as matter of law, that the substitution of a new bulkhead for an old one was not a case of ordinary repair. At the most, it could only have been required to submit the question to the jury ; and this in fact was done, for, without deciding whether the new bulkhead was to be regarded as a repair or an alteration, the court instructed the jury that, if by anj- means what- soever within the control of the assured, except in regard to reasonable and necessary repairs, any change had been made in the condition of the building or the machinery therein, or in the apparatus for the ex- tinguishment of fires, whereby the risk had been increased, the insur- ance was void. This was certainly enough. The jury were left, without restriction, to inquire whether anything had been done, beyond the making of reasonable and necessary repairs, whereby the defendants' risk had been increased, with the instruction that, if the result of this inquiry should be in favor of the defendants, they were entitled to a verdict. This was all that the defendants had a right to claim. The judgment should be affirmed. Selden, J., expressed no opinion ; all the other judges concurring. Judgment affirmed.^ 1 See Houghton ». Manufacturers' Mutual F. Ins. Co., 8 Met. 114, 121-122 (1844) ; Lyman v. State Mut. F. Ins. Co., 14 Allen, 329 (1867) ; Frost's Detroit Lumber and Wooden- Ware Works v. Millers' and Manufacturers' Mutual Ins. Co., 37 Minn. 300 (1887) ; Mack v. Eochester German Ins. Co., 106 N. Y. 560 (1887). In First Congregational Church v. Holyoke Mat. F. Ins. Co., 158 Mass. 478 (1893), Knowlton, J., for the court, said : — " The policies sued on in these six cases are all alike in containing provisions which are relied on in defence, and which are as follows : ' This policy shall be Toid if . . . without the assent in writing or in print of the company . . . the situation or circum- stances affecting the risk shall ... be so altered as to cause an increase of such risk ; or if campheue, benzine, naphtha, or other chemical oils or burning fluids shall be kept or used by the insured on the premises insured.' . . . The property insured was a church edifice, built of wood, not clapboarded, but sheathed horizontally with grooved and tongued sheathing, closely matched together, and painted and sanded on the outside. The paint had peeled and curled, and at the time of the fire the plaintiff was repainting the ^uilding. . . . One Gilson, a painter, . . . was to bum off the old paint with a torch, or some such implement, preparatory to repainting. He procured for the purpose a naphtha torch, so made as to hold a quart or more of naphtha, with a handle at one side of the receptacle, and a tube extending out on the opposite side through which a flame could be emitted, produced by the gas from the naphtha and compressed air. . . . When the work had been going on about four weeks, the torch . . . having been used daily, . . . the building caught fire on the edge of a board where there was a crack and where the torch had just been used, and was entirely consumed. This was on the 16th day of July, 1890, and there was evidence that the weather was hot and that the boards were very dry. There was also evidence that, as a protection against fire, a pail of water was kept on hand while the work was going ou. The evidence tended strongly to show that the danger of a conflagration was SECT, n.] TOWNSEND V. NOETHWESTEEN INS. CO. 553 greatly increased by the use of the naphtha torch on the dry, inflammable, soft pino boards, with their shrunken joints. . . . " Was a change of this kind increasing the risk ... an alteration of ' the situation or circumstances affecting the risk,' within the meaning of those words in the policies ■? Those words imply something of duration, and a casual chauge of a temporary char- acter would not ordinarily render the policy void under this provision. . . . We are of opinion that the change of the condition was sufficiently long continued to be deemed a change in ' the situation or circumstances affecting the risk.' . . . " We find no eyideuce that naphtha was kept on the premises. The word ' kept,' as used in the policy, implies a use of the premises as a place of deposit for the pro- hibited articles for a considerable period of time. . . . " For nearly four weeks naphtha was used within a few inches of the outer wall ... to produce the flame which was brought in contact with the building. It would be a narrow and unreasonable construction of the policies in reference to the purposes for which the words were inserted to say that the use of naphtha was not ' on the premises ' because while in liquid form it was a few inches outside of the wall, when it was made to produce an effect directly on the premises by burning it in the form of gas and directing it against the building. . . . " The only ground on which the plaintiff could fairly ask to present a question to the jury is upon its contention that the use of the naphtha and the change in condi- tions affecting the risk occurred through making ordinary repairs in a reasonable and proper way, and that in the provisions quoted from the policies there is an implied exception of what is done in making ordinary repairs. . . . Both parties to a contract for insurance must be presumed to expect that the property will be preserved and kept in a proper condition by making repairs upon it. Policies on buildings are often issued for a term of five years or more. The making of ordinary repairs in a reason- able way may sometimes increase the risk more or less while the work is going on, or involve the use of an article whose use in a business carried on in the building is pro- hibited by the policy. In the absence of an express stipulation to that effect, a con- tract of insurance should not be held to forbid the making of ordinary repairs in a reasonably safe way, and provisions like these we are considering should not be deemed to apply to an increase of risk or to a use of an article necessary for the preservation of the property. We are therefore of opinion, that if the use of naphtha at the time and in the manner in which it was used was reasonable and proper in the repair of the building, having reference to the danger of fire as well as to other con- siderations, it would not render the policies void. But the questions submitted to the jury on the answers to which verdicts were ordered for the plaintiff did not sufficiently present the matters of fact in issue. The only question beariug on the most vital part of the issue was as follows : " Was the method used the method ordinarily pur- sued to remove the paint on the outside of a building preparatory to scraping it off to repaint it ? " The order of verdicts for the plaintiff on an affirmative answer to this question assumed that the removal of the paint from this building was reasonably necessary to the repair of the building. It also assumed that this building, in refer- ence to the danger from moving the flaming torch all over its external surface, was like ordinary buildings. Many buildings are built of brick, and painted on the outer walls. Many others are clapboarded in such a way as to make " very close, tight covering. If this is the method ordinarily pursued when paint is to be removed from the outside of a building, it does not follow that it is ordinarily pursued when the building is covered with soft pine sheathing, tongued and grooved and put on hori- zontally, and when, at the time of doing the work, the weather is very hot and dry, and the boards shrunken so that in some places there are cracks. " Gilson testified that, although he had been a house painter in Eockland twenty- five years, he had never burned off paint from the outside of a building before. The architect who was consulted by the plaintiff in regard to repairs advjsed removing the old paint by the application of a paint remover, which was a preparation to be applied by a brush or a sponge. The use of naphtha and the increase of risk by an alteration of the circumstances affecting it were permitted under the implied exception only when reasonably required for the making of repairs. If it was unreasonable to use '554 KYTE V. COMMERCIAL UNION ASSUBANCE GO. [CHAP. VI. KYTE V. COMMERCIAL UNION ASSURANCE COMPANY. Supreme Judicial Court of Massachusetts, 1889. 149 Mass. 116.^ Contract upon two policies of insurance, one upon a dwelling-house and the other upon a barn, in the form prescribed by the Pub. Sts. c. 119, § 139 (St. 1887, c. 214, § 60), against loss by fire, each for three years, from January 24, 1881, and April 2, 1881, respectively. Trial, before Blodgett, J., iii the Superior Court, Suffolk County, after the former decision, reported in 144 Mass. 43. The jury returned a verdict for the plaintiff ; and the defendant al- leged exceptions, as indicated in the opinion. -£'. JB. Powers and S. L. Powers, for the defendant. C. Q. TirreU, for the plaintiff. 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 knowledge, advice, agenc3-, 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 policj'. At the beginning of the trial, the defendant waived every defence ex- cept increase of risk. The defence of the illegal keeping of intoxicat- ing liquors, as a separate and distinct defence, was therefore waived. We have to consider, in the first place, whether the instructions re- quested b^' the defendant were given in substance. The plaintiff con- tends that the J' 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 instructed the jury, that if thej' should find that during the time for which these policies were issued the plaintiff' Kyte, by obtaining a common victualler's license and making use of this building under said license, and legally or illegally selling intoxi- cating liquors therein, increased the risk, then this pob'cy became void as to the plaintiff Kyte, and he could not recover for his interest therein ; and if they should find that while these policies were in force intoxicat- ing 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, naphtha nnder the circumstances, at the time and in the manner disclosed by the evi- dence, the use was not within the exception, and the policies became void. The ques- tion for the jury was whether the defendants, if familiar with the condition of the building and the methods usually adopted in making repairs, should have contemplated when they issued the policies that the plaintiff corporation would bum off the paint at such a time and in such a way as it did. Was such a use of naphtha a reasonably safe and proper way of making repairs on this building under the circumstances? The questions submitted to the jury were not equivalent to these." — Ed. 1 The reporter's statement has been omitted. — Ed. SECT. II.] KYTE V. COMJIEKCIAL UNION ASSURANCE CO. 555 this policy became void as to his interest, and he could not recover. This was a general and broad instruction, including the increase of risk by using the premises as a common victualling place, or as a place for selling intoxicating liquors legally or illegallj-, and well covered the gen- eral question of the effect of an increase of risk. From this instruction, taken alone, a jury might well have inferred that the policy would be void in case of any such increase of risk at any time during the time covered by the policies and before the fire. But the defendant, in the fourth request for instructions, asked for a special instruction, adapted to the case of a temporary increase of risk •which had ceased before the time of the fire ; that is to say, that if the jurj' should find that, by the illegal sale of intoxicating liquoi's in this building bj- the plaintiff Kyte, or by others with his consent and knowl- edge, 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 in- structed the jurj', in substance, that if that illegal use was temporarj-, not contemplated at the time when the policy was taken by the plain- tiff, and ceased before the fire, then the fact that he had made an illegal use of the premises in 1882, which was during the time covered by the policy, would not deprive the plaintiff of the right to maintain the action ; and that his right under the policy, if suspended while the illegal use of the building continued, would revive when he ceased to use it illegally. This instruction did not in express terms mention the subject of an increase of risk by the illegal use of the premises for sell- ing 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 maj' last, and may revive again upon the termination of the increase of risk. The pro- vision is that the policy shall be A'oid if any one of several circum- stances successively enumerated 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 importance, some of them going to the essential matters of the contract, and others being comparatively trivial in character. The language of the policy is the same in respect to them all, that the policy shall be void. In Hinckley v. Germania 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 bil- liard table without having an}- 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 gunpowder 556 KYTE V. COMMEECIAL UNION ASSUEANCE CO. [CHAP. VL or other articles subject to legal restriction should be kept in a manner diflferent 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 tempo- rary use had ceased. In deciding the ease, the court intimated that the plaintiffs act was not within the -meaning of the provision in the policj', unless the risk was therebj' 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 polic}', with- out an increase of risk, may be deemed merely to suspend, and not absolutely to avoid the policy. However that ma3' be, we think an in- crease of risk entitles the insurer to avoid the policj' absolutely. The contract of insurance depends essentially upon an adjustment of the premium to the risk assumed. If the assured bj' his voluntary act in- creases 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 com- panj-, it is not much different from a misrepresentation of the condition of the propertj'. If the provision stood alone, that in case of any material misrepre- sentation 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 certain injury to the insurer, and elianges 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 bj- 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 N. Y. 630. 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, con- tinued for fifteen months, and could not be treated as a casual, inad- vertent, or inevitable thing. Exception sustaitied.'^ 1 The law appears to be otherwise in Illinois. New England F. & M. Ins. Co. v. "Wetmore, 32 HL 221 (1863) ; Schmidt v. Peoria M. & F. Ins. Co., 41 III. 295 (1866) ; Traders' Ins. Co. v. Catlin, 163 111. 256 (1896). In Imperial Fire Ins. Co. v. Coos County, 151 U. S. 452 (1894), Jackson, J., for the court, said : — " It will be necessary to notice only the exceptions based npon the refusal of the court to instruct the jury, as requested by the defendant, " that if the work done by SECT. II.] KYTE V. C0MMERCI.4L UNION ASSURANCE CO. 557 the mechanics, as disclosed by the evidence, increased the hazard while such work was being done, then the plaintiff is not entitled to recover;" and the exception to the instruction given, to the effect that the question was whether the work and repairs done upon the building increased the risk at the time of the fire. . . . " Contracts of insurance are contracts of indemnity upon the terms and conditions specified in the policy or policies, embodying the agreement of the parties. For a comparatively small consideration the insurer imdertakes to guaranty the insured against loss or damage, upon the terms and conditions agreed upon, and upon no other, and when called upon to pay, in case of loss, the insurer, therefore, may justly insist upon the fulfilment of these terms. If the insured cannot bring himself within the conditions of the policy, he is not entitled to recover for the loss. The terms of the policy constitute the measure of the insurer's liability, and in order to recover, the assured must show himself within those terms ; and if it appears that the contract has been terminated by the violation on the part of the assured, of its conditions, then there can be no right of recovery. The compliance of the assured with the terms of the contract is a condition precedent to the right of recovery. If the assured has violated, or failed to perform the conditions of the contract, and such violation or want of performance has not been waived by the insurer, then the assured cannot recover. It is immaterial to consider the reasons for the conditions or provisions on which the contract is made to terminate, or any other provision of the policy which has been accepted and agreed upon. It is enough that the parties have made certain terms, conditions on which their contract shall continue or terminate. The courts may not make a contract for the parties. Their function and duty consist simply in enforcing and carrying out the one actually made. " It is settled, as laid down by this court in Thompson v. Phenix Ins. Co., 136 U. S. 287, that, when an insurance contract is so drawn as to be ambiguous, or to require interpretation, or to be fairly susceptible of two different constructions, so that reason- ably intelligent men on reading the contract would honestly differ as to the meaning thereof, that construction will be adopted which is most favorable to the insured. " But the rule is equally well settled that contracts of insurance, like other con- tracts, are to be construed according to the sense and meaning of the terms which the parties have used, and if they are clear and unambiguous, their terms are to be taken and understood in their plain, ordinary, and popular sense. " It is entirely competent for the parties to stipulate, as they did in this case, " that this policy should be void and of no effect, if, without notice to the company, and per- mission therefor indorsed hereon, . . . the premises shall be used or occupied so as to increase the risk, or cease to be used or occupied for the purposes stated herein ; ... or the risk be increased by any means within the knowledge or control of the assured ; ... or, if mechanics are employed in building, altering, or repairing prem- ises named herein, except in dwelling-houses, where not exceeding five days in one year are allowed for repairs." " These provisions are not unreasonable. The insurer may have been willing to carry the risk at the rate charged and paid, so long as the premises continued in the condition in which they were at the date of the contract ; but the company may have been unwilling to continue the contract under other and different conditions, and so it had a right to make the above stipulations and conditions on which the policy or the contract should terminate. These terms and conditions of the policy present no ambiguity whatever. . . . " It being shown that the insured in August, 1886, without the knowledge or writ- ten consent of the insurer, employed carpenters and brick masons, and reconstructed and enlarged the vaults and offices of the court-house — reconstructing the foundations corresponding to the enlargement of the vaults, which necessitated the cutting of the floors and ceilings of the different offices — and that this work occupied five or six weeks ; and in connection therewith necessitated painting, and a new method of heat- ing the offices of the register of probate and the clerk of the court (this change in the method of heating being completed about midnight of November 3, 1 886, and the fire which destroyed the building occurring some two hours thereafter), clearly entitled the plaintiff iu error to the instruction requested. . . . 558 AKGIEK V. WESTERN ASSURAKCE CO. [CHAP. VI. ANGIER ET AL. V. WESTERN ASSURANCE CO. Supreme Court of South Dakota, 1897. 10 S. Dak. 82. Appeal from Circuit Court, Minnehaha County. Hon. Jos. W. Jones, Judge. Action upon a policy of fire insurance. Plaintiff had judgment, from which, and from an order denying its motion for a new trial, defendant appeals. Affirmed. The facts are stated in the opinion. McDonald & Fauntleroy and C. S. Palmer, for appellant. U. 8. G. Cherry, for respondent. CoESON, p. J. This is an action upon a fire insurance policy. A verdict was directed for the plaintiffs, and the defendant appeals.' . . . The second defence is based upon the following stipulation in the policy: " This entire policy shall be Toid . . . if the hazard be increased by any means within the control or knowledge of the insured, ... or if (any usage or custom of trade or manufacture to the contrarj- notwith- standing) there be kept, used, or allowed on the above described premises, . . . phosphorus or petroleum, or any of its products of greater "The conrt not only refnsed this instrnction, but in its charge to the jary so con- strued the condition that if ' mechanics are employed in building, altering, or repair- ing the premises named herein,' without the consent of the insurer, as to make it mean that such alterations and repairs must be shown to have increased the risk in point of fact, and that such increase of risk must hare existed at the time of the fire. " If the mechanics were employed in altering and repairing the building in a man- ner beyond what was required for its ordinary repair and preservation, and in such a material way as constituted a breach of the condition of the contract, it is difficult to understand upon what principle the charge of the court can be sustained. The con- dition which was violated did not, in any way, depend upon the fact that it increased the risk, but by the express terms of the contract was made to avoid the policy if the condition was not observed. The instruction of the court gave no validity or effect to the condition and its breach, but made it depend upon the question whether the acts done in violation of it, in fact, increased the risk, and whether such increased risk was operative at the date of the fire. " The court below proceeded upon the theory that the fire having occurred after the employment of the mechanics had ceased, such employment, and the making of the alterations and repairs described, did not constitute a breach at the time of the fire ; that the increased risk, which was necessary to render the policy void, must be found to have existed at the time of the fire, and not at any preceding date. . . . "It is competent for the parties to agree that this or that alteration or change shall work a forfeiture, in which case the only inquiry will be whether the one in question comes within the category of changes which by agreement shall work a forfeiture. . . . "In Kyte v. Commercial Union Assurance Co., 149 Mass. 116, . . . the Supreme Conrt reversed the lower court, which had proceeded upon the same theory adopted by the Circuit Court in the case under consideration. The principles laid down in this and the other cases cited clearly establish that the general instrnction to the jury com- plained of in the present case was erroneous." — Ed. 1 The omitted passage stated the pleadings and dealt with waiver of proofs of loss. — Ed. SECT. II.] ANGIEE V. WESTERN ASSURANCE CO. 559 inflammabilitj- than kerosene oil of the United States standard (which last may be used for light, and kept for sale according to the 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." Sec. 4175, Corap. Laws, provides : " An insurer is not liable for a loss caused by the wilful act of the insured ; but he is not exon- erated by the negligence of the insured, or of his agents or others." The facts in regard to the origin of the fire are thus stated by the plaintiff Stevens on cross examination, and are undisputed : " I took a tomato can, maybe two-thirds or half full of kerosene oil, and put some of the oil on the kindling. I turned to strike a match to set it afire. I had on a pair of celluloid cuffs, and the flame caught on my cuffs, and in a moment they blazed up. I had the can in mj' left hand and it fell on the floor, and the fire caught in the stove the same time. I rushed out and tried to get my coat off. Q. And the whole thing caught fire and burned up? A. Yes. Q. How much oil would that tomato can hold? A. A pint or so. . . . Q. You put the oil on the wood, and struck a match for the purpose of lighting this coal oil? A. Yes, sir. Q. And it fell on your celluloid cuffs, you say ? A. Yes, sir. Q. And that set flre to the cuff, and the fire fell down on the oil in the stove? A. Yes, sir." As will have been observed, there is no clause in the policy prohibiting the plaintiff from keeping kerosene oil upon his premises to the extent of five barrels, United States standard, and there is no evidence that the oil used by plaintiff was below the prescribed standard. The quantity on hand at the time of the fire was less than one gallon. In view of the stipulation in the policy, the provisions of the statute, and the evidence, it is somewhat difl3cult to comprehend the theory of the defendant. It seems to be contended that the kerosene oil, used in the manner testified to by the plaintiff Stevens, increased the hazard, and therefore relieved the defendant from liability. Undoubtedly, the use of the kerosene in the manner detailed by the witness was a careless and negligent act, but it was not such an act as is understood by the term "increase of hazard." The stipulation of the policj' is that " the entire policy . . • shall be void ... if the hazard be increased by any means within the control or knowledge of the insured." Keeping kerosene upon the premises in no manner violated the stipulations of the parties, and could not therefore be held to constitute an increase of the hazard, within the meaning of the policy. The term "increase of hazard" denotes an alteration or change in the situation or condition of the property insured, which tends to increase the risk. These words implj' some- thing of duration, and a casual change of a temporary character would not ordinarily render the policy void, under the stipulations therein contained. First Congregational Church v. Holyoke Mut. Fire Ins. Co., 33 N. E. ^72, 158 Mass. 475. In that ease the Supreme Court of Massachusetts held the use of naphtha (the use or keeping of which on the insured premises was prohibited by the policy) for a period of a 560 ANGIER V. WESTEEN ASSUEANCE CO. [CHAP. VI. month, in burning paint from the outside of a wooden church, and causing the burning of the church, constituted such a change or alteration, and was sufficiently long continued to be deemed a change in the situation or circumstances affecting the risk. In Lj-man ■;;. Insurance Co., 14 Allen, 329, three weeks was held sufficient. In the case at bar the contention of counsel for appellant that the use of kerosene at only one time, in the manner detailed, constituted an increase in the hazard, in the sense in which that term is used in the policy, is not tenable. It, as we have said, constituted negligence on the part of the plaintiffs, but did not increase the hazard in the sense that the term is used in the policies of insurance.-' . . . The judgments of the Circuit Court and order denying a new trial are affirmed.^ ^ The omitted passage dealt with negligence and procedure. — Ed. 2 On increase of hazard in general, see also : — Stetson V. Massachusetts Mutual F. Ins. Co., 4 Mass. 330 (1808) ; Richards v. Protection Ins. Co., 30 Me. 273 (1849) ; Sanford v. Mechanics' Mutual F. Ins. Co., 12 Cnsh. 541 (1853) ; Reid V. Gore District Mutual F. Ins. Co., 11 U. C. Q. B. 345 (1854) ; Francis v. Somerville Mutual Ins. Co., 25 N. J. L. (1 Dutch.) 78 (1855) ; Washington Mutual Ins. Co. v. Merchants' and Manufacturers' Mutual Ins. Co., 5 Ohio St. 450 (1856); Clark V. Hamilton Mutual F. Ins. Co., 9 Gray, 148 (1857) ; Joyce ». Maine Ins. Co., 45 Me. 168 (1858) ; Allen y. Massasoit Ins. Co., 99 Mass. 160 (1868) ; Peterson v. Mississippi Valley Ins. Co., 24 Iowa, 494 (1868); Dittmer v. Germania Ins. Co., 23 La. Ann. 458 (1871) ; Commonwealth v. Hide & Leather Ins. Co., 112 Mass. 136 (1873) ; Parker v. Arctic F. Ins. Co., 59 N. Y. 1 (1874) ; Cornish v. Farm Buildings F. Ins. Co., 74 N. T. 295 (1878) j Pottsville Mut. F. Ins. Co. v. Horau, 89 Pa. 438 (1879) ; Crane v. City Ins. Co., 2 Flippin, 575 (U. S. C. C, S. D. O., 1880), s. c. 3 Fed. Rep. 558 ; Albion Lead Works v. Williamsburg City F. Ins. Co., 2 Fed. Rep. 479 (U. S. C. C, D. Mass., 1880). Daniels v. Equitable F. Ins. Co., 48 Conn. 105 (1880) ; Long V. Beeber, 106 Pa. 466 (1884) ; Rife w. Lebanon Mutual Ins. Co., 115 Pa. 530 (1886) ; Planters' Mutual Ins. Co. v. Rowland, 66 Md. 236 (1886); Davis V. Western Home Ins. Co., 81 Iowa, 496 (1890) ; Martin v. Capital Ins. Co., 85 Iowa, 643, 650-651 (1892) ; Willow Grove Creamery Co. v. Planters' Mutual Ins. Co., 77 Md. 532 (1893) ; Franklin Brass Co. v. Phoenix Assurance Co., 25 U. S. App. 119 (Fourth Cir- cuit, 1895), s. c. 65 Fed. Rep. 773, and 13 C. C. A. 124 ; King Brick Mfg. Co. v. Phoenix Ins. Co., 164 Mass. 291 (1895) ; Collins V. Merchants' and Bankers' Mutual Ins. Co., 95 Iowa, 540, 543-544 (1895) ; Des Moines Ice Co. v. Niagara F. Ins. Co., 99 Iowa, 193, 200-201 (1896) ; Bentley v. Lumbermen's Ins. Co., 191 Pa. 276 (1899). — Ed. SECT. II.] SOYE V. MEECHANTS' INS. CO. 561 SECTION II. (continued). [D) Conditions prohibiting Vacancy and the lieb. SOYE V. MERCHANTS' INS. CO. Supreme Court of Louisiana, 1851. 6 La. Ann. 761. Appeal from the Fourth District Court of New Orleans, Stkaw- BEIDGE, J. A. Pitot, for plaintiff. L. Pierce, for defendants. The judgment of the court was pronounced by Slidell, J. This action is upon a fire policy, by which a dwelling- house was insured. The defendants answered that they were not lia- ble, because, at the time of the fire, and long previous thereto, the house had been abandoned, and was left open and without a tenant, and that with ordinary care, attention, and supervision, the loss would not have occurred. There was judgment for the plaintiff, and the defendants have appealed. It appears that the house was built about a year previous to the fire, and the assured had not been able to procure a tenant, except during one month. The key of the house was left, during the principal portion of the time, with a neighbor, who was requested to rent or sell it, and who showed it to such persons as came to look at it. One witness sa3's that, about two months before the fire, a window was left open for two or three nights and days ; he mentioned it to the assured, and recom- mended to him to send some one to watch and occupy the house during the night. Another witness says that, several times in the daytime (the dates he does not specify), he had seen the front doors partially open. The house was in a thinly populated quarter. How the fire originated does not clearly appear ; but it is probable it was the work of an incendiarj'. There is no clause in the policy, nor are we aware of any rule of law or usage, which would make it the duty of an assured to have his house, if untenanted, guarded by a keeper. It is said by counsel that leaving an untenanted house open is a temptation to incendiaries ; but there is no evidence that the house was in that condition on the night of the fire, so that the legal effect of such negligence need not be determined. Judgment affirmed, with costs. 562 KEITH V. QUINCY MUTUAL FIEE INS. CO. [CHAP. VI. KEITH V. QUINCY MUTUAL FIRE IXS. CO. Supreme Judicial Court of Massachusetts, 1865. 10 Allen, 228. Contract upon a policy of insurance for one j'ear, dated Februarj' 21, 1863, issued by the defendants upon the plain tiflTs wooden build- ing in West Sandwich, occupied by him for a trip-hammer shop, and on a water-wheel and the machinery therein. The policy contained a provision that " if the building insured remains unoccupied over thirt3' days without notice, this policy shall be void." The answer set up, amongst other things, that at the time of the alleged fire the building had remained unoccupied for many months. At the trial in the Superior Court, before Lord, J., a verdict was ren- dered for the defendants. The plaintiff tendered a bill of exceptions, which the judge refused to allow, certifying that the report was very erroneous in many respects ; that the ruling upon the question of occu- pancj' was as given, but in all other respects the bill was so erroneous that it must be disallowed. The ruling upon the question of occupanc}- was as follows: " It is not suflScient to constitute occupancy that the tools remained in the shop, and that the plaintiffs son went through the shop almost every daj- to look around and see if things were right, but some practical use must have been made of the building ; and if it thus remained without any practical use for the space of thirty days, it was, within the meaning of the policj', an unoccupied building for that time, and the policj' became void." The first count in the declaration was upon an agreement to renew a former polic}' of insurance upon the same premises, which expired on the day of the date of this policy, and which did not contain the pro- vision requiring the building to be occupied ; and the answer denied the making of any such agreement. The plaintiffs bill of exceptions, as tendered, contained a statement of certain facts upon which he con- tended that this count could be supported, and also of a ruling of the court that he could not rely and recover upon it. The plaintiff also took some steps toward proving the truth of his bill of exceptions, as tendered to the judge of the Superior Court ; but no additional exception was ever established or allowed. Ji". W. Savyyer, for the plaintiff. The meaning given by the judge to the word " unoccupied" is erroneous. The true meaning as applied to buildings is, "not taken up, vacant, unused." Any substantial use of premises by persons, tools, or furniture is an occupancy. Walker v. Furbush, 11 Cush. 366. This shop was no more unoccupied than is a store with goods in it during the night ; a dwelling-house when the fam- il}- are away ; a warehouse when no goods are coming in or going out ; a farmer's bam full of products ; or a school-house during vacation. G. Marston, for the defendants. SECT. II.] KEITH V. QUINCY MUTUAL EIRE INS. CO. 563 Dewet, J. This case must be decided solely upon the ruling of the court with reference to the clause in the polic}", " if the building insured remains unoccupied over thirty da3-s without notice, this policy shall be void." The plaintiff had procured a policy of insurance upon a wooden building occupied by him for a trip-hammer shop. The presiding jndge, in reference to the defence set up in the answer that the building had remained unoccupied over thirty days without notice, instructed the jur3' that " it is not sufficient to constitute occupanc}' that the tools re- mained in the shop, and that the plaintiff's son went through the shop almost every da}- to look around to see if things were right, but some practical use must have been made of the building ; and if it thus re- mained without an}- practical use for the space of thirtj- daj-s, it was, within the meaning of the policj-, an unoccupied building for that time, and the policy became void." As adapted to the provisions in the policj' we cannot sa}- that these instructions were erroneous. The case presented is onh' the abstract one of the correctness of the general principle stated, the particular facts of the case not being before us bj- anj' allowed bill of exceptions. The presiding judge refused to certify the bill of exceptions as drawn up by the counsel for the plaintiff, and, upon a hearing before this court on the application in behalf of the plaintiff for an allowance of the same, it has only further appeared that the plaintiff offered to prove that the defendant's agent, through whom the insurance was effected, knew how the trip-hammer shop had been used by the plaintiff in pre- vious years, and that it had always been used from time to time, as the course of the plaintiff's business required trip-hammer and other lighter forging work. But this evidence of such knowledge, if in the case and if unobjectionable otherwise, would be immaterial, as the stipulation in the policy alleged to have been violated was whollj- in reference to the future, and was not to be qualified by any particular previous use of this trip-hammer shop. The court also properlj- ruled that the plaintiff could not recover under the first count, setting forth an agreement to insure in a differ- ent form. The plaintiff received the policy without objection, and it thus became a valid contract between the parties. He gave notice of his loss under it, and has sought to make it the foundation of a legal claim. Mcceptions overruled.^ 1 Ace. . Halpin v. Phenix Ins. Co., 118 N. Y. 165 (1890). — Ed. 564 WHITNEr V. BLACK EIVEK INS. 00. [CHAP. VI. WHITNEY, Respondent, v. BLACK EIVER INS. CO., Appellant. Court op Appeals of New Yoke, 1878. 72 N. Y. 117. Appeal from a judgment of the General Term of the Supreme Court, in the third judicial department, afflrming a judgment in favor of plain- tiff entered upon a verdict. (Reported below, 9 Hun, 37.) This action was brought upon a policy of fire insurance issued by defendant. The defence was an alleged forfeiture of the policy by violation of conditions therein. The facts sufficiently appear in the opinion. James F. Starhuck, for appellant. Leslie W. Hussell, for respondent. Andrews, J. The insurance was upon the plaintiff's saw-mill, gang, water-power, and on his fixed and movable machinery, mill-tools, and implements contained and used in the mill ; and among the several pages of printed conditions and stipulations in the policj' is a condition that if the premises become "vacant and unoccupied," the policy shall be void. It is quite obvious that the parties did not intend by this provision that tlie saw-mill should be inhabited, or that any person should remain in it so as to watch and guard it against fires, in order that the plaintiff should have the protection of the policy. The saw- mill, when the policy was issued, was used during the day, and was left open night and day, as saw-mills usually are. The plaintiff lived near it, and the mill had such oversight as under such circumstances he could give it. The saw-mill was not intended as a domicile, and the meaning of this condition, when used in a policy upon a dwelling- house, maj' be quite different from its meaning when applied to a saw- mill. The condition against vacancj', although designed mainly for cases where the building insured is used as a habitation, is, however, found in the policy, and effect is to be given to it. But it is to be con- strued in view of the situation and character of the propertj' insured, and the contingencies affecting its use, to which this and other property of like character, similarlj- situated, is subject. The description in the policy shows that the defendant knew that the mill was operated by water-power, and as it was a saw-mill the insurer must be presumed to have known that saw-mills are or may be used as well for custom work as for sawing the logs of the owner ; and as machinery was used for the operation of the mill, the fact that it was liable to break down and need repairs must also have been within the contemplation of the parties when the policy was issued. The interruptions of the business and the discontinuance of the active use of the saw-mill by reason of low water, diminished custom, or derangement of the machinery, if held to be a violation of the condition, and to create a vacancy and non-occupation of the building within the true meaning of the condition, would greatly SECT. II.] WHITNEY V. BLACK EIVEE INS. CO. 565 impair the value of the contract as a contract of indemnitj', and the result would be that tlie contract would be deemed forfeited by the happening of events which might reasonably have been anticipated, and which were among the common incidents of the business carried on on the insured premises. We do not think this would be a reasonable construction of the con- tract. Delays and interruptions incident to the business of conducting a saw-mill, although involving a temporary discontinuance of the active use of the mill for sawing purposes, would not, we think, make the mill "vacant and unoccupied" within the meaning of the policy. Take the case of the insurance of a church building or schoolhouse, or cider- mill. Would the fact that the church was closed for six days consecu- tively each week be a violation of the condition in question, or would the schoolhouse in vacation time, or the cider-mill, when no apples were to be had, be without the protection of the policj' ? These illus- trations serve to show that the condition against vacancy and non- occupation is to be construed and applied in view of the subject-matter of the contract, and of the ordinary incidents attending the use of the insured property. The referee finds that the plaintiff's mill was not vacant and unoccu- pied at or before the fire, and this finding is conclusive, unless upon the uncontroverted facts a vacancy and non-occupation was established. We think the finding of the referee upon this question cannot be dis- turbed. The breaking of the journal the last of February, 1873, ren- dered the gang of saws temporarily useless, and the condition of the water making it difficult at that time to repair the journal, the repairs were not made. But the other saws continued to run without interrup- tion to the last of March, when the sawyer who had been employed by the plaintiff left. He returned the first week in April, and did some sawing, and no more sawing was done until the last of April or first of Maj-, when several hundred feet of lumber were sawed, and some planing was done. The fire occurred on the sixteenth of Maj-, and no sawing had been done for sixteen or eighteen da3-s before. But there were logs in the mill-yard and elsewhere, which the plaintiff intended to saw at the mill. There was lumber piled in the yard, and a small quantitj' was kept in the mill up to the time of the fire, from which, from time to time, small sales were made, — the last one the da}- before the fire. The evidence would not have justified the finding that the plaintiff had abandoned, or intended to abandon, the use of the mill. There was no error, therefore, in the finding of the referee, that the mill did not become vacant and unoccupied within the meaning of the policy. The policy also contains a condition that it shall be void if the insured premises "shall be occupied or used so as to increase the risk," without the consent of the company. There was, at the time of the insurance, a planer in the mill, which was used from time to time in planing lumber cut at the mill, and this occasional use was continued 566 WHITNEY V. BLACK KIVER INS. CO. [cHAP. VI. after the policy was issued. It is claimed that this was an increase of the risk within the covenant. It is a conclusive answer to this position, that the covenant only prohibits a new and different use of the prop- ertj' from that to which it was applied when the policj' was issued, by which the risk is increased. The continuation of an existing use, in the absence of warranty against such use or fraudulent representation or concealment, neither of which is alleged in the answer, is not a vio- lation of the contract, and it is not material that the company did not know that the planer was used when the policy was issued. We have examined the exceptions to the admission and rejection of evidence, and find no error in the rulings of the referee. The judgment should be affirmed. All concur. Judgment affirmed} 1 In Poss t>. 'Westem Assurance Co., 7 Lea (Tenn.), 704 (1881), Cooper, J., for the court, said : " The point which the parties desire to have determined, which has been argued before us, and which is, though inartificially, made by the pleading, is whether, under the terms of the policy, a temporary cessation of the operation of the chair and furniture factory of the insured, by reason of the prevalence of the yellow fever in epidemic form, would avoid the policy; in other words, whether the condi- tion of the policy, that it shall become void if the manufacturing establishment insured " shall cease to be operated," applies only to a permanent and not a tempo- rary cessation of the operations of the establishment. And we are very clearly of opinion that the policy contemplates, in this connection, only the permanent ceasing to be operated. The language is, " cease to be operated." If the letter of the con- tract be alone looked to, the cessation of work on Sunday, the stoppage of operations by the necessity of cleaning out the boiler, by an accident to the machinery, or by a strike of the hands, might be held to vitiate the policy. Of course, the parties never contemplated such a construction of their words, nor has the argument submitted on behalf of the defendant gone to that length. But if a temporary cessation to operate the establishment, by reason of these and other common occurrences, would not avoid the policy, it can scarcely be successfully maintained that a temporary cessation occasioned by the visitation of Providence in the form of a deadly epidemic shall have a greater effect. The whole clause of the policy, which we have quoted above, shows that the parties contemplated a permanent cessation of operations. The language used is the language of the insurance company, and must be taken most strongly against the company whenever it admits fairly of two constructions. It could never have been intended to apply to a ceasing to operate occasioned by the usual incidents to the business, among which would be the impossibility of procuring operatives tem- porarily for any cause. The clause in question, moreover, probably exclusively applies to an insurance of the building in which manufacturing is carried on, and not to an insurance of the boiler, machinery, etc., as in the case before us." See Ladd v. iEtna Ins. Co., 147 N. Y. 478 (1895) ; Des Moines Ice Co. v. Niagara F. Ins. Co., 99 Iowa, 193, 198-200 (1896). — Ed. SECT. II.J STUPETSKI V. TEANSATLANTIC FIRE INS. CO. 567 STUPETSKI V. TRANSATLANTIC FIRE INS. CO. Sdpkeme Court op Michigan, 1880. 43 Mich. 373. Error to Superior Court of Detroit. Assumpsit on insurance policy'. Plaintiff brings error. John C. Donnelly, for plaintiff in error. Morgan E. Dowling, for defendant in error. Campbell, J. Plaintiff sued defendant on a policy of insurance, for the destruction of his dwelling and contents b}' fire. The policy was \)\ one of its conditions made void if the house should " become vacant or unoccupied" without assent of the companj-. The fire which destroyed the property was on September 4, 1879. Plaintiff used the premises as his own dwelling. About ten days before the fire he received a telegraphic despatch from South Bend, Indiana, announcing that his daughter, who lived there, was dangerouslj' ill, and at the point of death. He with his wife and another daughter at once went there, intending to return, and he did return the next day but one after the flre. A son who was not boarding at home was directed to and did visit the house daily to look after the house and feed the stock. The court below instructed the jurj' that this was enough to require the house to be regarded as vacant and unoccupied, and directed a verdict for the defendant. There is not much authority upon this precise form of condition, but we think it must be construed as it would be usuall3' understood by ordi- narj- persons reading and acting on it. We think it would not convey to an ordinary mind the idea that a house is vacant or unoccupied when it has an inhabitant who intends to remain in it as his residence, and who has left it for a temporary purpose. If the phrases were used in their strict legal sense, no one would imagine that the tenant was not such an occupant as would be liable to the responsibilities attached by law to occupants, or that there was such a vacancy of possession as would suspend possessory rights. It would be burglarj^ to feloniously break and enter the house, and arson to maliciously burn it. There may be less occasion to care for a house in which no one lives than for one ten- anted, but a person temporarily absent will usuallj' take some pains to have his premises kept under oversight, and in the present case such provision was made for the domestic animals as well as for the house itself. It would, we think, be regarded as singular doctrine to hold that families leaving theirhouses on excursions or other temporary occasions cease to occupj' them.^ . . . It is not safe to resort to extreme definitions be3-ond the usual under- standing. We think in the case before us the premises did not become 1 Here were stated Cummins c;. Agricnltural Ins. Co., 67 N. Y. 260 (1876) ; and Whitney v. Black Eiver Ins. Co., ante, p. 564 (1878). — Ed. 568 HEERMAN V. MEKCHANTS' INS. CO. [CHAP. VI. vacant or unoccupied, if left for the purpose testified to, and that it was error to charge the jury as was done here. The judgment must be reversed with costs, and a new trial granted.^ The other justices concurred. HERRMAN, Responbent, v. MERCHANTS' INS. CO., Appellant. CouET OP Appeals of New York, 1880. 81 N. Y. 184. Appeal from judgment of the General Term of the Superior Court of the city of New York, affirming a judgment in favor of plaintiflE entered upon a verdict directed by the court. (Reported below, 12 J. & S. 444.) The nature of the action and the facts are set forth sufficiently in the opinion. George W. Parsons, for appellant. N. B. Home, for respondent. Eakl, J. This is an action upon a fire policy, and the defence is a breach of certain warranties contained in the policy. The insurance was upon a dwelling-house and other buildings, and upon certain personal property therein, and the fire which occasioned the lo"ss occurred in the daj'time, in April, 1877, and probably was of incendiary origin. The policy contained a condition that it should be void if the premises should become "vacant and unoccupied." The dwelling-house was a summer residence of the plaintiff. He resided in it in the summer and fall of 1876, and removed therefrom in November of that year, and went with his family to the city of New York, intend- ing to return again about the middle of May. He left all his furniture in the house, which was furnished throughout, and left his house in charge of a person who lived near thereto. We should have had a different question for consideration if the con- dition had been that the policy should become void if the house should become "vacant or unoccupied," or simply "unoccupied." Here we have the two words joined together, " vacant and unoccupied;" and what do they mean? They should not be taken in an}- technical or nar- row sense. They need not be taken in the sense in which they may have been understood by underwriters, as botli parties to this contract were not underwriters, supposed to be familiar with the meaning of such words when used in the business of fire insurance. But they must be 1 Ace. : Hill V. Ohio Ins. Co., 99 Mich. 466 (1894) ; Home F. Ins. Co. o. Peyson, .54 Neb. 495 (1898). See Ashworth u. Builders' Mut. F. Ins. Co., 112 Mass. 422 (1873); Corrigan v. Connecticut F. Ina. Co., 122 Mass. 298 (1877) ; Shackelton v. Sun Fire Office, 55 Mich. 288 (1884) ; Agricultural Ins. Co. v. Hamilton, 82 Md. 88 (1895). Compare Fitzgerald v. Connecticut F. Ins. Co., 64 Wis. 463 (1885). — Ed. SECT. II.] HERRMAN V. MERCHANTS* INS. CO. 569 taken in their ordinary sense, as commonly used and understood ; and if the sense in which they were used is uncertain, as thej' are found in a contract prepared and executed bj' the insurer, they should be con- strued most favorably to the insured. Hoffman v. ^tna Ins. Co., 32 N. Y. 405 ; Eann v. Home Ins. Co., 59 N. Y. 387. We do not progress much by ascertaining what the insurer meant by these words ; but we must endeavor to ascertain how the insured understood and could prop- erly understand them, — in other words, the meaning which they convey to the common mind. A dwelling-house is unoccupied when no one lives therein, but is not then necessarily vacant. A house filled with furniture throughout cannot be said to be " vacant," the primary and ordinary meaning of which is " empty." To avoid the policy, the premises must not only be unoccu- pied but also vacant. Force should be given to both words. This is not a casual contract drawn in haste, in which language has been carelessly used ; but it is a form of contract used by the defendant in its business, probably adopted with great deliberation, everj' word of which, as we may suppose, has been carefullj' weighed. It was not intended that mere non- occupancy should avoid the policj' ; if it had been, it cannot be supposed that the word " vacant " would have been superadded. It is not nec- essary to hold that a house with a few articles of furniture in it, from which the owner or tenant has removed, with no definite intention of returning, might not be regarded as vacant,' or found to be so by a jury. It is sufficient to hold that a house thoroughlj' furnished, from which the owner has removed for a season, intending to return again and resume possession, is not, in any proper sense, a vacant house. There are many houses in and about the city of New York, and elsewhere, which are occupied only in the summer as summer residences, or onlj* in the winter as winter residences, the furniture remaining in them all the time ; and for aught we know, these two words were adopted with a view to insurances upon such houses.^ . . . There was also a condition in this policy that if the risk should be increased either " internallj- or externally," the insured should give proper notice thereof in writing, and have the same entered on the policy, and that any failure to comply with the condition should render the policy void. It is claimed on the part of the defendant that this condition was violated by non-occupancy of the house. Its counsel offered to show that the risk was increased by such non-occupancy, and the proof was rejected. Upon the assumption that the risk was thus increased, we are of opinion that this condition was not violated. The policy contained express conditions as to vacancy and occupancy, and as to the mode in which, and purposes for which, the house was to be used ; and it is not to be supposed that this general condition was intended for any of the cases thus specially noticed. What is to be re- 1 Here were summarized Alston «.01d North State Ins. Co.," 80 N. Car. 326 (1879) ; North American F. Ins. Co. o. Zaenger, 63 111. 464 (1872) ; and American Ins. Co. v. Padfield,78 lU. 167 (1875). — Ed. 570 HEERMAN V. ADRIATIC FIRE INS. CO. [CHAP. VI. garded in the business of insurance as an increase of risk is frequently a matter of much difficult}', about which men, even experts, differ. Such general language must, therefore, be strictlj- construed against the underwriter, or else one may not know whether he has violated his policy or not, until the verdict of a jury upon disputed evidence. The words risk increased " either internally or externally," do not convey to m}' mind an increase of risk hy removal from the house, but an in- crease of risk by internal or external changes in the house itself, or its exposure, which manifestly increase the risk of fire so that it is not the same risk insured. There was no question of fact for submission to the jurj', and the court did not err in directing a verdict for plaintiff. The judgment should be affirmed. All concur. Judgment affirmed?- HERRMAN, Respondent, v. ADRIATIC FIRE INS. CO., Appellant. CoDRT OF Appeals of New York, 1881. 85 N. Y. 162.^ This was an action upon a policy of fire insurance issued to the plaintiff for three j'ears, beginning June 3, 1874, insuring specific amounts upon a dwelling-house, household furniture therein, outhouses, barn, carriage-house, farmer's house and outbuildings, produce in barn, live stock, horses, carriages, and harness. The policy provided that " if the above-mentioned premises . . . shall become vacant or un- occupied, and so remain for more than thirtj' days, without notice to and consent of this company in writing, , . . this policj' shall be void." The premises were a farm and summer residence. In November, 1876, the plaintiff and his family returned to their city home for the winter, leaving in the insured dwelling-house their summer clothing and all the furniture. The farmer employed by the plaintiff lived in the farmer's house, watched the dwelling-house insured, and once a week caused it to be ventilated, and then to be locked up again. The plaintiff himself visited the dwelling-house once a fortnight, going through the rooms and eating a lunch there, but not remaining over night. Three days before the fire, he and his wife made such a visit to the premises. On April 8, 1877, the dwelling-house, its furniture, and the outhouses were destroyed by fire. The loss exceeded the amount insured upon these items. A verdict was directed for the defendant company, whereupon the 1 See Xorman v. Missouri Town Mutual Ins. Co., 74 Mo. App. 456 (1898). Compare Moore u. Phoenix Ins. Co., 64 N. H. 140 (1886). — Ed. 2 The reporter's statement has not been reprinted. — Ed. SECT. II.] HEEEMAN V. ADRIATIC FIEE INS. CO. 571 plaintiff excepted. The General Term of the Superior Court of the Citj- of New York sustained the plaintiff's exceptions, set aside the verdict, and ordered a new trial, as reported in 13 J. & S. 394. The defendant companj- appealed. James Tlwmson, for appellant. JSr. JB. Hoxie, for respondent. FoLGEK, C. J. This is an action on a policj- of fire insurance. The property insured consisted of diflferent buildings, and different kinds of chattel property kept in those buildings, respectively. The different properties insured, and the different amounts put at risk, each are speciflcally named in the policy with much minuteness. The property destroj-ed and for the loss of which the action is brought was but parts of the whole at risk, being the dwelling-house, and most of the contents of it, and four outbuildings, essential or convenient for use with the dwelling. The question in agitation at the trial term and at the General Term was, whether the policy was avoided by the breach of the condition, that if the premises should become vacant or unoccupied, and so re- main for more than thirty daj'S without notice to, and consent of, the defendant, in writing, the policy should be void. The plaintiff con- tends that the two words "vacant" and "unoccupied" are synonyms, and are to be interpreted as having the same meaning, and that that meaning is empty ; and then argues that, as the dwelling-house was not empt3', there was no breach of the condition. There are doubtless conditions of a dwelling-house, or other like structure, when either word applied to it, or both words applied to it, will express a like state of it. There are, however, states of it when that will not be the case. It is so, because the diflferent things that are receptive of the epithets of " vacant " and " unoccupied " are diflferent in their capability and sus- ceptibilitj' of being filled or occupied. Some cannot have one of those terms applicable to thern, without the other at the same time being also applicable. Some, from the nature of the use which goes with the oc- cupation of them, may not be vacant, and jet thej- will, in anj- just use of the term as applicable to them, be unoccupied. A dwelling-house is chieflj- designed for the abode of mankind. For the comfort of the dwellers in it, many kinds of chattel property are gathered in it. So that, in the use of it, it is a place of deposit of things inanimate and a place of resort and tarrj-ing of beings animate. With those animate far away from it, but with those inanimate still in it, it would not be vacant, for it would not be empty and void. And as a possible case, with all inanimate things taken out, but with those animate still remain- ing in it, it would not be unoccupied, for it would still be used for shelter and repose. And it is because, in our experience of the pur- pose and use of a dwelling-house, we have come to associate our notion of the occupation of it with the habitual presence and continued abode of human beings within it, that that word applied to a dwelling always raises that conception in the mind. Sometimes, indeed, the use of the 572 HERKMAN V. ADEIATIC FIEE INS. CO. [CHAP. VL word " vacant," as applied to a dwelling, carries the notion that there is no dweller therein : and we should not be sure alwaj-s to get or con- vey the idea of an empty house by the words " vacant dwelling " ap- plied to it. But when the phrase " vacant or unoccupied " is applied to a dwelling-house, plainly there is a purpose, — an attempt to give a different statement of the condition thereof; bj' the first word, as an empty house, bj' the second word, as one in which there is not habitu- ally the presence of human beings. In the case of Herrman v. The Merchants' Insurance Company, 81 N. T. 184, in this court, in June last, the decision went, not on the ground that the two words were used to mean, or that they meant, the same condition of the building, but that, by the use of the copulative conjunction with them, there was a contract framed of which there was no breach, unless the house was at the same time in the double state expressed bj' the phrase ; that is, both vacant and unoccupied at the time of the fire, both emptj' and unused for abode. It is clear, from the testimony, that the dwelling-house insured by the defendant was not occupied as such at the time of the fire. The fortnightly visits of the plaintiff and his wife to it were not the occu- pation that is meant when a dwelling-house is spoken of. The weekly tours of inspection of the farmer and members of his family living on the grounds, and his supervision of it from his own house, were more useful, but they fell short of being occupation of it. The term " un- occupied," used in the policj-, is entitled to a sense adapted to the occasion of its use, and the subject-matter to which it is applied. It does not need that we go into discussion of the good reasons for exact- ing the condition on taking a risk upon a dwelling-house. It is enough that the parties have come into that covenant. It is to have a meaning fitted to the circumstances in which it was made and to the subject to which it related. We have already said enough to show our opinion that, for a dwelling-house to be in a state of occupation, there must be in it the presence of human beings as at their customary place of abode, not absolutely and uninterruptedly continuous, but that must be the place of usual return and habitual stoppage. We think that a verdict of a jur}' would not have been allowed to stand, that found that this dwelling-house was occupied at the time of the fire, within the terras of the policy. But it is said, that though this may be so in gen- eral, j'et that the defendant made its contract with a view to just the state of things that existed with this property ; that it was chargeable with a knowledge of the character and use of the premises, and that there would be a change of occupanc}', such as in fact occurred. We cannot yield to that view. It may be that the defendant knew that it was but the place of summer abode for the plaintifiF. Its contract was issued in the summer, when the property was in strict occupancy, and it provided for the coming of the fall, when that occupancy would be abandoned or modified ; for the policy was not void at once on a cessa- tion of occupancy. That cessation must last for thirty days, and be SECT. II.] HEEEMAN V. ADEIATIC FIEE INS. CO. 573 unnotified to the defendants and continue thereafter without its con- sent. There was opportunity for the plaintiff to keep up that indem- nity or to get other ; and to the defendant to retain the risk, or to be freed from it, when that occupancj' was about to cease, and notice was given. Nor are we able, after much consideration, to agree with the learned General Term on the ground upon which it put its judgment. The con- dition of the policy is : " Or if the above-mentioned premises shall . . . become vacant or unoccupied . . . this policj- shall be void." As we have above said, there were several different kinds and pieces of prop- erty insured, and, as was indicated by the description of them, the whole making up a well-to-do proprietor's rural establishment. The understanding must have been that there was comprised in the whole the buildings on a farm or country seat and the chattel property usually kept at such a place. The contention is that the words " above-men- tioned premises" are collective and apply to all the property described, and the intent of the condition is that if all of it should be left unoccu- pied, then the policj* should be void ; but that one or several, or many of the buildings might be unoccupied, yet, if the rest were occupied, the condition of the policy would be saved. To give this construction to the phrase in question, it would need to carry it through all the con- ditions in the policy, to manifest absurdity and to an inconvenient precedent. There is a condition against other insurance, "on the property hereby insured." If the plaintiff had over-insured his dwell- ing-house, would not the condition have been broken, as to that, though he had not increased that on his kitchen detached? There is a con- dition against the change of title of the property. If the plaintiff had sold off so many acres as would include the farmhouse, would he have retained his insurance on that building because he had not transferred the whole premises? The plaintiff grasps at a two-edged sword, when he seeks to make such application of those general words of the policy. He contends that when words are used in the policy' referring back to the propertj' described, the}' mean to include the whole property. This would be to make the contract of insurance entire and indivisible ; and to affect all the property insured with any act of the insured, which, as to any item thereof, worked a breach of any condition. This is not the true, just, or equitable construction. The clause is to be used dis- tributiveh', and to be applied to each singular of the previous descrip- tion of the propert}', as the kind of that property and the nature of the use of it may demand. It was upon this principle that we grounded our decision in Merrill v. Agr. Ins. Co., 73 N. Y. 452. There we said : ' ' Though there may have been some conduct of the insured as to some of the property, not evil in itself, but working a breach of the condition in its letter, the effect of that breach ma}' be confined to the insurance upon that property, the contract as to that be held to be avoided, and as to the other subjects held valid." This was the con- verse of the proposition that we are now maintaining. 574 HEREMAN V. ADRIATIC FIEE IXS. CO. [cHAP. VI. The case of Bryan v. Peabodj Ins. Co., 8 W. Va. 605, is not par- allel with this. Therefore, though the farm premises and some of the buildings thereon were in actual human occupation, that use of them did not ex- tend to and take in the dwellings burned, so as to keep good the con- dition of the policy. It is further claimed that it was erroneous for the trial court to direct a verdict for the defendant, because all of the propertj' burned was not unoccupied. Besides the dwelling-house, there was lost a wash-house, a wood-house, a kitchen, and a privy. It is contended that there was no evidence that these were unoccupied. The reasoning is ingenious, but it is not convincing. It is said that it does not appear that the occupation of these structures was confined to the plaintiff or the members of his immediate family as it was made up when he dwelt upon the place, and that it might be that the farmer and the members of his family might have used and occupied them. Now, these out-buildings were appurtenant to the dwelling-house ; the use of them was concurrent with the use of the dwelling-house ; they were parts of the one domestic establishment, and separated but forty feet from the main building. It is too plain for denial, save as a dernier ressort, that the occupancy of them, in habitual, continuous use for the purposes for which they were built and to which thej- were put, began when that of the dwelling-house began, and ended when that ended. The plaintiff and the defendant made their contract in such terms as it pleased them both. It may or may not be a strict and rigorous ap- plication to the facts of the case of the condition that we have been considering ; but we cannot, consistentlj' with lasting principles of con- struction and interpretation, hold otherwise than that the plaintiff made a breach of a binding condition, and must abide the unfortunate con- sequence. Tlie order of the General Term should be reversed, and judgment absolute rendered in favor of defendant upon the verdict, with costs. All concur, except Miller, J., not voting. Order reversed and Judgment accordingly.^ 1 Compare Bryan v. Peabody Ins. Co., 8 W. Va. 605 (1875) ; Harrington a. Fitch- burg Mut. F. Ins. Co., 124 Mass. 126 (1878) ; Connecticut F. Ins. Co. „. Tilley, 88 Va. 1024 (1892) ; Worley v. State Ins. Co., 91 Iowa, 150 (1894). — Ed. SECT. II.] MOOEE V. PHCENIX INS. CO. 575 MOOEE i: PHCEXIX INS. CO. Supreme Court of New Hampshire, 1882. 62 N. H. 240.* This was an action of assumpsit upon a policy insuring the plaintiffs house, shed, and barn for 6800, and the hay and produce in the barn for $50. One defence was that the policy was not binding at the time of the fire, bj- reason of a breach of the provision against vacancy and unoccupanc^'. The essential facts appear in the opinion. The court denied the defendant companj-'s motion for a verdict, instructed the jury, as matter of law, that the non-occupancy from August 26 to December 11, 1876, did not avoid the policj-, and denied the defendant company's motion that the verdict for the plaintiff should be set aside. The defendant company excepted to each of these rulings. Philip Carpenter^ Bingham & Aldrich, and Bingham, Mitchells & Batchellor, for the defendants. May, Drew & Jordan, Band & Morse, and J. L. Foster, for the plaintiffs. Smith, J. The defendants are liable only in accordance with the terms and stipulations expressed in their contract as the conditions of their liability. The contract is in writing, and is contained in the policy of insurance. In consideration of $8.50 paid by the plaintiff, the defendants covenanted to insure his property against loss or damage by fire for the term of three years commencing August 15, 1876. The policy contained this condition ; "If the above-mentioned premises shall be occupied or used so as to increase the risk, or become vacant and unoccupied for a period of more than ten days, or the risk be increased bj' anj' means whatever within the control of the assured, ■without the assent of this company indorsed hereon, . . . then, and in every such case, this policy shall be void." The premises remained unoccupied from August 24 until December 11, 1876, and on the 18th or 19th of that month were destro3'ed by fire. The contract was, not that the policy should be void in case of loss or damage by fire during the period of unoccupancy, but that vacancj' and unoccupancj' should terminate the policy. There is no occasion to inquire what distinction there may be between a vacant and an unoccupied building (Herrman V. Merchants' Ins. Co., 81 N. Y. 184 ; Herrman v. Adriatic Ins. Co., 85 N. Y. 162 ; N. A. Fire Ins. Co. ■;;. Zaenger, 63 111. 464 ; American Ins. Co. V. Padfleld, 78 111. 167), for no point was made at the trial that the plaintiff's buildings were not both vacant and unoccupied from August 24 until- December 11. Nor is it necessary to go into an inquiry of the reasons for exacting this condition. It is enough that the parties entered into the covenant. It was a condition that would 1 The reporter's statement has not been reprinted. — Ed. 576 MOOEE V. PHCENIX INS. CO. [CHAP. VI. afford protection of a substantial character against fraudulent incendi- arism, of which insurers may well avail themselves. Hill v. Ins. Co., 58 N. H. 82 ; Sleeper v. Ins. Co., 66 N. H. 406. The insurers had a right, by the terms of the policy, to the care and supervision which are involved in the occupancy of the buildings. Ashworth v. Ins. Co., 112 Mass. 422. There was no waiver by the defendants of the condition, nor anj' assent to the changed condition of the premises insured, for thej' had no notice or knowledge that the buildings were unoccupied until the plaintiff furnished his proofs of loss. A waiver, to be effectual, must be intentional. The premises were left unoccupied more than ten daj's ; and if the non-occupation bad continued to the time of the fire, the plaintiff could not recover. Fabyan v. Ins. Co., 33 N. H. 206 ; Shepherd v. Ins. Co., 38 N. H., 240; Sleeper v. Ins. Co., 56 N. H. 406 ; Hill v. Ins. Co., 58 N. H. 82 ; Baldwin v. Ins. Co. , 60 N. H. 164 ; Lyman v. Ins. Co., 14 Allen, 329 ; Merriam v. Ins. Co., 21 Pick. 162; Herrman v. Ins. Co., 85 N. Y. 162; Harrison v. Ins. Co., 9 Allen, 231; Wustum v. Ins. Co., 15 Wis. 138; Mead v. Ins. Co., 7 N. Y. 530 ; May Ins. (ed. 1873) s. 248. It is contended by the plaintiff, upon the authority of State v. Richmond, 26 N. H. 232, that the policy had not become absolutely void at the expiration of ten days from the time the house became unoccupied, but was voidable only at the election of the defendants. In the construction of contracts words are to be understood in their ordinary and popular sense, except in those cases in which the words used have acquired by usage a peculiar sense different from the ordi- nary and popular one. In this case the word " void " has not acquired by usage a diflferent signification from the ordinary and popular one of a contract that has come to have no legal or binding force. Whether the cessation of the executory contract of insurance was temporary and conditional, or perpetual and absolute, is a question; but "void" means that on the eleventh day of continuous non-occupation the plaintiff was not insured. The defendants might have waived the condition altogether, or might have waived its breach ; but having had no opportunity before the loss to make their election to waive the breach, their refusal to pay, when notified of the loss and unoccupanc)', was an effectual election that they insisted upon the condition in the policy. The duty of obtaining the consent of the defendants to the changed condition of the buildings rested with the plaintiff. By his neglect to comply with this requirement of the contract, it came to an end by force of its own terms. Girard Ins. Co. v. Hebard, 95 Pa. St. 45. If, when the unoccupancy commenced, he had requested the assent of the defendants, they would have had their option to continue the policy upon payment of such additional premium as the increased risk called for, or to cancel the policy, refunding the unearned premium. Lyman V. Ins. Co. , 14 Allen, 329. There is no presumption that they would SECT. II.] MOORE V. PHCENIX INS. CO. 577 have given their assent to the unoccupancj- of the buildings without the payment of a premium commensurate with the additional hazard. The contract being once terminated, it could not be revived without the consent of both of the contracting parties. It is immaterial, then, whether the loss of the buildings is due to unoccupancy or to some other cause. Mead v. N. W. Ins. Co., 7 N. Y. 530, 535, 536 ; Lyman V. State M. F. Ins. Co., 14 Allen, 329, 335 ; Merriam v. Ins. Co., 21 Pick. 162; Jennings v. Ins. Co., 2 Denio, 81; Shepherd v. Ins. Co., 38 N. H. 232, 239, 240 ; Poor v. Ins. Co., 125 Mass. 274; Alexander V. Ins. Co., 66 N. T. 464, 468 ; Sleeper v. Ins. Co., 56 N. H. 401 ; Hill V. Ins. Co., 58 N. H. 82.^ . . . This result is in accordance, also, with that rule of the law of marine insurance which holds that a deviation from the stated voyage against a condition in the policy discharges the insurer, though the loss does not happen during the deviation, nor the risk be increased thereb}'. Kettell V. Wiggin, 13 Mass. 68 ; Burgess v. Ins. Co., 126 Mass. 70 ; Fernandez v. Ins. Co., 48 N. Y. 571 ; Ins. Co. v. Le Koy, 7 Cranch, 26. Kent says : " The courts are exceedingly strict in requiring a prompt and stead}' adherence to the performance of the precise voyage insured ; and, considering the particular state of facts upon which cal- culations of the value of risks are made, and the uncertainty and danger of abuse that relaxations of the doctrine would introduce, the severity of the rule is founded in sound policy." 3 Kent Com. 314. . . . The decisions in Maine, cited b}' the plaintiff, are not in point, for c. 34, Laws 1861, Maine, provides that "Any change in the property insured, its use or occupation, or breach of any of the conditions or terms of the contract by the insured, shall not affect the contract unless the risk was thereby materially increased." May Ins. 269 ; Cannell v. Phoenix Ins. Co., 59 Me. 582. The cases cited from Illinois seem to have followed the decision in Ins. Co. V. Wetmore, 32 111. 245, where the policy provided for a sus- pension of liability so long as the premises should be appropriated and occupied in violation of the terms of the polic}'. And accordingly', in N. E. F. & M. Ins. Co. v. Schettler, 38 111. 166 ; Schmidt v. Ins. Co., 41 111. 296 ; and Ins. Co. v. McDowell, 50 111. 120, it was held that the insurer's liability recommenced when the increased risk terminated. . . . The strict and literal meaning of the stipulation that the policy shall be void if the premises remain unoccupied more than ten daj's is not that the insurance will be suspended merely during non-occupation after the ten days, and will revive when occupation is resumed. In ordinary speech, a void policy is one that does not and will not insure the holder if the insurer seasonably asserts its invalidity. It might be argued that this clause should be so construed as to accomplish no more than the purpose for which it was inserted ; that its sole purpose 1 In reprinting the opinion, it has seemed necessary to omit several passages dis- cussing anthorities on the effect of breaking conditions as to prohibited articles, other insurance, and alienation. — Ed. 37 578 MOORE V. PHOENIX INS. CO. [CHAP. VI. was to protect the insurer against the risk resulting from non-occupa- tion ; and that if this risk was terminated by reoccupation, tlie parties intended the insurance should be suspended only during the existence of the cause of a risk which the company did not assume. On the other hand, it might be argued that such an intention would have been manifested by words speciallj' and expressly providing for a suspension and resumption of the insurance, and would not have been left to be inferred from the general agreement that the policy should be void ; that a final termination of the insurance at the end of ten daj'S of non- occupation is plainly expressed by the provision that the policy shall then be void ; and that the parties would not think it necessary to go further, and provide that the void policy should not become valid on reoccupation. Without determining the true construction, or what the result would be if there were no authority in this state, we are inclined to follow the decision in Fabyan v. Insurance Company, 33 N. H. 203, although in that case the question of suspension seems not to have been presented by the plaintiff or considered by the court. It was apparently assumed that " void " meant finally extinguished, and not temporarily suspended ; and in the present state of the authorities we are not prepared to hold that the assumption was erroneous. Verdict set aside} Blodgett and Carpenter, JJ., did not sit ; Stanley, J., dissented ; the others concurred. 1 Por the later history of the litigation, see Moore v. Phoenix F. Ins. Co., 64 N. H. 140 (1886). Compare Laselle v. Hoboken F. Ins. Co., 43 N. J. L. 468 (1881). On vacancy and the like, see also : — Sleeper v. N. H. F. Ins. Co., 56 N. H. 401 (1876) ; Hill V. Equitable M. F. Ins. Co., 58 N. H. 82 (1877) ; Cornish v. Farm Buildings F. Ins. Co., 74 N. Y. 295 (1878) ; American Ins. Co. v. Foster, 92 111. 334 (1879) ; Sonneborn v. Manufacturers' Ins. Co., 44 N. J. L. 220 (1882); Short V. Home Ins. Co., 90 N. Y. 16 (1882) ; Insurance Co. v. Wells, 42 Ohio St. 519 (1885) ; Snyder v. Fireman's Fund Ins. Co., 78 Iowa, 146 (1889) ; Halpin v. Ins. Co. of North America, 120 N. Y. 73 (1890); Continental Ins. Co. v. Kyle, 124 Ind. 132 (1890) ; England v. Westchester F. Ins. Co., 81 Wis. 583, 588 (1892); Limburg v. German F. Ins. Co., 90 Iowa, 709 (1894) ; Home Ins. Co. v. Scales, 71 Miss. 975 (1894) ; Moody V. Ins. Co., 52 Ohio St. 12, 20-24 (1894) ; Names v. Dwelling House Ins. Co., 95 Iowa, 642, 649-650 (1895); East Texas F. Ina. Co. v. Kempner, 12 Tex. Civ. App. 533 (1896) ; Home Ins. Co. v. MendenhaU, 164 111. 458, 468-^69 (1897) ; Jones V. Granite State F. Ins. Co., 90 Me. 40 (1897) ; Clifton Coal Co. v. Scottish U. & N. Ins. Co., 102 Iowa, 300 (1897) ; Stolteuburg v. Continental Ins. Co., 106 Iowa, 565 (1898). — Ed. SECT. II.] REAPER CITY INS. CO. V. BRENNAN. 579 SECTION II. (contimied). {E} Conditions as to Owneeship at the Inceftion of the Contract. REAPER CITY INS. CO. v. BRENNAN. Supreme ConRT of Illinois, 1871. 58 111. 158. Appeal from the Circuit Court of Sangamon Countj' ; the Hon. B. S. Edwards, Judge, presiding. This was an action on a policj' of insurance, brought by Brennan against the Reaper City Insurance Companj*. Judgment was rendered in favor of the plaintiff, from which the defendant appealed. Messrs. J. C. & C. L. Conkling, for the appellant. Messrs. Herndon & Orendorff, for the appellee. Mr. Chief Justice Lawrence delivered the opinion of the court : This is an action on a policy of insurance. At the time the insurance was effected, the property had been sold on a judgment and execution against the assured, but the twelve months allowed for redemption had not expired. It is insisted the non-disclosure of this sale avoids the policy, by virtue of the following clause therein : " If the property to be insured be held in trust or on commission, or be a leasehold interest or equit}' of redemption, or if the interest of the insured to the propert}' be anj' other than the entire, unconditional, and sole ownership of the property, for the use and benefit of the insured, it must be so represented to the company, and so expressed in the written part of this policy ; otherwise the policy shall be void." We must hold this defence valid. It cannot truthfully be said that the assured had, at the date of the insurance, "the entire, uncondi- tional, and sole ownership of the property." On the contrary, the purchaser at the sheriff's sale, although he had not acquired a complete title, either legal or equitable, as held in Phillips v. Demoss, 14 111. 412, had certainly acquired an interest in the land to the extent of his bid, which would, in a few months, ripen into a title unless redeemed. With this outstanding and paramount interest vested in another, the title of the assured was not " entire, unconditional, and sole." The judgment must be reversed and the cause remanded. Judgment reversed. 580 CLAY r. AND M. INS. CO. V. HUEON SALT, ETC. CO. [CHAP. TL CLAY FIRE AND MARINE INS. CO. v. HURON SALT AND LUMBER MANUFACTURING CO. SuPEBME Court of Michigan, 1875. 31 Mich. 346.^ Error to Bay Circuit. This was an action of assumpsit brought b}' the Huron Salt and Lumber Manufacturing Co., for the use and benefit of George C. Smith, upon a policy insuring The Huron Salt and Lumber Manufac- turing Co., to the amount of $1,500, on " their one-story frame salt block," and certain machinery contained therein, " loss payable to George C. Smith, ... as his interest may appear." The policy said that " if the assured is not the sole and unconditional owner of the property insured, or (if said property be a building or buildings) of the land on which such building or buildings stand, by a sole, uncondi- tional, and entire ownership and title, and is not so expressed in the written portion of the policy, — then . . . this policy shall be void." The insurance was for one year from April 2, 1873. The property was destroyed by fire on June 22, 1873. The insurance company pleaded the general issue and gave notice of defences, that when the policy was issued the plaintiff corporation was not the entire, unconditional, and sole owner ; that the interest of the plaintiff corporation was not expressed in the written part of the policj' ; that on or about April 1, 1868, the plaintiff corporation, bj' a written contract in the name of the president, sold the property to John W. Babcock, who fully paid for the property, went into possession, and at the date of the policy and of the loss was equitable owner and entitled to conveyance and possession ; that at the date of the policj' and of the loss the plaintiff company had no interest except as trustee of the naked legal title ; and that George C. Smith had no interest in the prop- erty at the date of the policy or of the loss. At the trial the defendant company offered to make proof of the facts stated in the notice as to the equitable title of Babcock. The offer was rejected. The defendant company also requested a charge that no recovery could be had without proof of some legal or equitable interest belonging to George C. Smith. This was refused. The jury found for the plaintiff company. The ease came to the Supreme Court upon a bill of exceptions. The exceptions included some matters not men- tioned in this statement. Holmes, Saynes & Stoddard, for plaintiff in error. McDonell Se Cobb, and Hoyt Post, for defendant in error. Graves, C. J.° . . . The point raised by a request to charge, as before mentioned, is not well taken. . . . 1 The statement has been based upon the opinion. — Ed. '^ In reprinting the opinion, the statement ol the case has been omitted ; and so hare passages foreign to ownership, which was the only point as to which error was found. — Ed. SECT. II.J CLAY F. AND M. INS. CO. V. HUKON SALT, ETC. CO. 581 The occurrence in the policj' of the direction to pay to George C. Smith, as his interest might appear, did not necessitate proof of any interest by him in the insured property. The insurance was not made ■with him, but with the salt and lumber compan3'. They paid the con- sideration and were the promisees. The expression in the policy in regard to paj'ing to Smith as his interest might appear, seems to have been chosen as a mode of appointing that payment should be made by the insurance company to him to the extent of some claim he had or was expected to have against the assured. Bates v. Equitable Ins. Co., 10 TTall. 33. "Whatever might be paid to him consistently and in accord- ance with his claim against the assured, which this appointment con- templated, would be a payment to the assured. No interest of Smith appears to have been contemplated as the sub- ject of the insurance, and no interest by him in the propert}- insured was made a condition of the right of the assured to assert a remedy in the policy. His chance and the right of the assured were not intended to depend upon his having an insurable interest in the property-, but upon the requisite ownership of the assured. We come now to the offer of the defence to prove that Babcock held the entire equitable estate and interest and the right to be immediately invested with the legal title, and that this bare legal title then due to Babcock was the only badge of ownership which the assured possessed. As the offer was refused, we must consider the case as though the fact proposed to be shown had been established. And it must be borne in mind that the question is not, whether the salt and lumber company, as lawful possessor for the time being of the bare legal title, had a scintilla of insurable interest, but it is, whether the clause which insisted that it should be stated in the policj', if the fact were so, that the assured was not the sole and unconditional owner b}' a sole, un- conditional, and entire ownership and title, was satisfied by the facts as we must assume them to have been under the offer of proof and the statement in the policy that the property was " their" propert3-. If it was not, then the policj" by its own terms was made ineffectual, and the plaintiff corporation was not entitled to recover. After much consideration, I am unable to concur with the circuit court upon this point. No reasonable interpretation of the policy has been intimated or has suggested itself which will harmonize the require- ments of the policy, the statement as to ownership in the clause de- scribing the property, and the condition of things contemplated by the offer of proof The express statement in regard to ownership was not, when viewed in connection with the subsequent clause, a correct state- ment. It gave no intimation of any outstanding right in Babcock, or in anj'body else. It conveyed no other idea than that of complete and exclusive ownership by the salt and lumber company. There was no qualification whatever. The matter will appear in the clearest light by reading the statement in the beginning of the polic}-, that the prop- erty was " their " property, in connection with the clause before quoted, 582 CLAY F. AND M. INS. CO. V. HURON SALT, ETC. CO. [CHAP. VI, requiring it to be stated, if true, that it was not their property by entire ownership and title, etc. When thus examined, the policy will be seen to import that the salt and lumber conipan3- was not merely owner, but owner by a sole, un- conditional, and entire ownership and title. At this very time, however, as must be conceded for the purpose of the question, Babcock's right was in every way so ample and complete that a statement in the policy that the propertj' belonged to him would have been Warranted. Certainly it cannot be claimed that a party holds by a sole, unconditional, and entire ownership and title, when in truth another at tiie same time has so complete a right and interest that he may be rightly considered as owner. The point appears too clear to justify elaborate discussion. Among a number of cases having some bearing, only two will be noticed. The first is the Columbian Insurance Co. v. Lawrence, 2 Pet. 25.^ . . . The other case is Hough v. City Fire Insurance Co., 29 Conn. 10. There the applicant, Samuel W. Hough, described the property as " his dwelling-house," and it was likewise so described in the policy. The policy contained the following condition: "If the interest in the prop- erty to be insured is not absolute, it must be so represented to the eompanj' and expressed in the policy- in writing ; otherwise the insur- ance shall be void." It appeared at the trial that Hough's ownership was similar to that claimed for Babcock in the case at bar. The legal title was in another, with whom Hough had made a parol contract to purchase for a fl.^:ed price. He had agreed absolutely to pay, had paid part, had entered as purchaser, and made valuable improvements. The court were of opinion that as he had a right to the property and the power by law to enforce that right, it might properly be denomi- nated his. Among other observations, the court said : " The evidence conduced to prove that the plaintiff's interest in that property was an absolute interest. That is an absolute interest in propertj- which is so completely vested in the individual that he can by no contingency be deprived of it without his own consent, and by this contract with Eliakim Hough, and its part performance, the plaintiff had acquired a right to the whole property, of which he could not be deprived without his own consent. So, too, he is the owner of such absolute interest who must necessarily sustain the loss if the property is destroyed. " ^ If Hough, as held in this case, had an absolute interest, and was so far owner that the property could rightly be described as Ms property in an application for insurance, and in a policj-, most clearly Babcock, if in the position contemplated by the offer of proof, held an absolute interest, and was in a situation which would have justified describing ' Here was stated Columbian Ins. Co. v. Lawrence, ante, p. 248, n. (1829). — Ed. 2 Ace: Loveuthal u. Home Ins. Co., 112 Ala. 108 (1896). Compare Brown v. Williams, 28 Me. 252 (1848) ; Hinman v. Hartford F. Ins. Co., 36 Wis. 159, 167 (1874).— Ed. SECT. II.] MEES V. FRANKLIN INS. CO. 583 him as owner, in the policj- in suit, and the salt and lumber company was not at the same time holding by a sole, unconditional, and entire ownership and title. The view taken disposes of the case, and renders a new trial neces- sary. The judgment should be reversed, with costs, and a new trial awarded.^ MERS V. FRANKLIN INS. CO. StTPKEME CouKT OP MissoDRi, 1878. 68 Mo. 127.'' Appeal from Cass Circuit Court. This was an action upon a policy whereby the defendant insured the plaintiff for one year from March 10, 1873, against loss by fire to the amount of $1,000 on his hotel, and $1,000 on personal property. All the property was destroyed b}' fire on April 18, 1873. The policy provided that " if the interest in the propertj- to be in- sured be a leasehold interest, or other interest not absolute, it must be so represented to the company and expi'essed in the policy in writing, otherwise the insurance shall be void." There was nothing to show that the plaintiff signed a written application for insurance, or made any representation as to the ownership of the house ; but in the policj- it was described as " his." The plaintiff had owned the house, but in November, 1872, it was sold to one Yocum at sheriff's sale under an execution. On Dec. 16, 1872, the plaintiff and Yocum, the latter acting by an agent, executed an instrument, under seal, whereby Yocum agreed to execute a quit- claim to the plaintiff in case the latter should pay $1,480 on or before June 1, 1873. On Dec. 16, 1872, the same parties executed a lease of the premises for one year. The plaintiff went into possession and paid rent Up to the day of the fire the plaintiff paid nothing under the agreement for a .convej'ance. On this state of facts the defendant contended that the policy was void as to the building. The plaintiff recovered judgment for the full amount of the policy. The defendant appealed. A.dams & Sherlock, for appellant. M. 0. Soggess, for respondent. Hough, Z? . . . We think it quite clear from the record that the plaintiff had, at the time of the fire, onl}' a leasehold interest in the building. The instrument executed by Yocum, through his agent, Briant, was not a contract of sale, and conferred upon the plaintiff 1 Ace: Barnard ». National F. Ins. Co., 27 Mo. App. 26 (1887); Hamilton v. Dwelling House Ins. Co., 98 Mich. 535 (1894). —Ed. 2 The statement has been based upon the opinion. — Ed. * After stating the case. — Ed. 584 MERS V. FKANKLIN INS. CO. [CHAP. VI. none of the rights of a vendee of the property in question, and hence does not come within the rule laid down in Gaylord v. Lamar Fire Ins. Co., 40 Mo. 13. So far as appears, this instrument was without any consideration, in fact was a simple gratuity, and conferred a mere privilege upon the plaintiff to redeem the estate upon the payment of a specified sum. It conferred a mere option, and not a vested interest. By it no obligation is created, on the part of the plaintiff, to pay the sum named at the time specified, or at any time, and there is no evi- dence of any independent undertaking to that effect. That the parties themselves considered it a mere privilege is manifested by the fact that plaintiff, at the time of receiving it, accepted the lease from Yocum of the very premises embraced in the agreement, and paid rent therefor. It is quite evident, therefore, that the plaintiff went into possession as lessee and not as vendee ; and that his interest was, at the time of the contract and the loss, a leasehold only. Hand v. Insurance Co., 57 N. Y. 41. We are next to consider whether the condition of the policy above recited has been complied with. A warranty is a part of the contract, and must be exactlj' and literally fulfilled. It is in the nature of a con- dition precedent, and no inquirj- is allowed into the materiality or im- materiality of the fact warranted. Loehner v. Home Mut. Ins. Co., 17 Mo. 255. Where a representation is inserted in the policy, or where it is referred to in the policj' as forming a part thereof, the representation becomes a warranty. Flanders, 233, and cases cited. Conditions an- nexed to a policy of insurance are, likewise, a part of the policj', and are of the same effect as if incorporated in it. Hy the general law of in- surance, the interest of the insured in the property is not required to be specifically described in the policy. Franklin v. The Atlantic Fire Ins. Co., 42 Mo. 459. The object of the condition above cited undoubtedly was to require in all cases a representation as to the interest of the assured, and to make such representation a warranty. This condition is a reasonable and valid one. In the case last cited this court, in speaking of a similar clause in a policy then before it, said that its ob- ject doubtless was to protect the company against the danger of taking risks on the property insured for so large an amount in proportion to its value, or the value of the interest of the assured, as to furnish a temptation to fraudulent conduct.^ . . . When, by the terms of the policy, no disclosure is required of the assured as to the extent of his interest, and no inquiry is made by the company in reference thereto, a lessee maj', in effecting insurance, properly describe the premises as his, but his recovery will, in case of loss, be restricted to his qualified interest. Niblo v. North American Fire Ins. Co., 1 Sand. 551, 561 ; Fletcher v. Commonwealth Ins. Co., 18 Pick. 419 ; Sussex Co. Mut. Ins. Co. v. Woodruff, 2 Butcher, 541. But when a disclosure of the true interest of the assured, if the same is not absolute, is required to be made by a condition of the policj', such in- 1 Here was stated Franklin v. Atlantic F. Ins. Co., 42 Mo. 456, 459 (1868). — Ed. SECT. 11.] DAKIN V. LIVERPOOL, LONDON AND GLOBE INS. CO. 585 terest must be stated to the company, or the policy will be void. The acceptance of a policj" containing the condition under consideration, without any representation as to title, or anj' statement of the specific interest of the assured, amounts to a declaration, on the part of the assured, that his interest is an absolute one.^ If the plaintiff had truly represented his interest in the propert}' insured, the failure of the agent to incorporate it in the policj' would not avoid the policj'. But as it does not appear that the plaintiff stated his real interest in the build- ing, he cannot recover for the loss thereof. The judgment must, there- fore, be reversed and the cause remanded. Reversed. Judges Napton and Heney concur. Shee-S700d, C. J., and Noe- T0^", J., dissent. DAKIN, Eespondent, v. LIVEEPOOL, LONDON AND GLOBE INSURANCE COMPANY, Appellant. CouET OF Appeals op New Yoek, 1879. 77 N. Y. 600.^ This action was brought upon four policies of insurance, issued by defendant upon a tannerj' in Schuyler County. (Mem. of decision below, 13 Hun, 122.) The policies were similar, save as to dates and amounts. In each the insurance was to " S. D. Wood and T. W. Moore & Co., as interest may appear. . . . Loss, if anj', payable to Lj'on & Dakin." The property was owned by T. W. Moore & Co. Wood had a mort- gage thereon, as had also Lyon & Dakin, theirs being the first mortgage. The interest of Lj'on, in the mortgage last mentioned, passed subsequently to Dakin, who convej'ed an interest therein to Wood. The defendant urged, among other objections to a recoverj^, that Wood's interest, as mortgagee, was not expressed in the policies, and that there was, therefore, a breach of conditions of each policj-, forfeiting it "if the interest of the assured in the propertj-, whether as owner, trustee, consignee, factor, agent, mortgagee, lessee, or other- wise, be not stated in the policy ; " or, " if the interest of the assured 1 Ace. : Lasher v. St. Joseph F. & M. Ins. Co., 86 N. Y. 423 (1 881 ) ; Scottish Union ftNationallns. Co. u. Petty, 2 1 Pla. 399 (1885) ; Wilcox u. Continental Ins. Co., 85 Wig. 193, 198 (1893); Hamilton v. Dwelling-House Ins. Co., 98 Mich. 535, 540-542 (1894); Syndicate Ins. Co. v. Bohn, 27 U. S. App. 564 (Eighth Circuit, 1894) ; s. c. 12 C. C. A. 531, and 65 Fed. R. 165; ./Etna Ins. Co. v. Holcomb, 89 Tex. 404, 410, 412 (1896); Dumas v. Northwestern National Ins. Co., 12 Dist. Col. App. 245 (1898). Contra : Philadelphia Tool Co. v. British American Assurance Co., 132 Pa. 236 (1890) ; Wright v. Fire Ins. Co., 12 Mont. 474 (1892) ; Schroedel v. Humboldt F. Ins. Co., 158 Pa. 459 (1893) ; Phenix Ins. Co. v. Fuller, 53 Neb. 811 (1898) ; Manchester F. Ass. Co. V. Abrams, 61 U. S. App. 276 (Ninth Circuit, 1898) ; s. c. 32 C. C. A. 426, and 89 Fed. R. 932.— Ed. ^ Among " memoranda of causes not reported in fuU." — Ed. 586 DAKIN V. LIVERPOOL, LONDON AND GLOBE INS. CO. [CHAP. VL in the property be any other than the entire, unconditional, and sole ownership of the property for the use and benefit of the assured," and it is not " so expressed in the written part of this policy." Held, that the interest of Wood was sufficiently expressed in the policies, and there was no breach of these conditions. The portion of the opinion upon that subject is as follows : — " The second point is, that Simeon D. Wood was assured as owner, •while his interest was really that of a mortgagee, whereby there was a breach of some conditions in the policj- which we have given above. But some effect is to be given to the phrase 'as interest may appear.' This was in manuscript, inserted in the printed form of policy by the defendant. It indicated uncertainty ; that there was something contin- gent and undetermined in the mind of the contracting parties as to the interest of Wood in the property at risk. The defendant claims that it indicated uncertainty as to the extent of the interest, and not as to its quality or character. But when it is once conceded or held that this phrase indicates uncertaint}', we know not why we should confine that uncertainty to one element of an insurable interest rather than another, unless there have been rules laid down giving such effect to the phrase. No adjudication has been cited to us so deciding. A somewhat exhaust- ive search fails to bring one to our attention ; while Pitney v. Glens Falls Ins. Co., 65 N. Y. 6, tends the other way. We know no reason, ■where the use of the phrase indicates such uncertainty in the drafts- man, and creates such doubt in the mind of one called to interpret as that there is an ambiguitj', to be explained only by evidence aliunde the paper, why the evidence may not be directed to the fact that the kind, as well as the extent, of interest was not clearly' ascertained by the contracting parties, or was purposely left without statement in full. Nor does the meaning of the word ' interest,' used in the phrase, con- fine the intention of the draftsman to the extent rather than the kind. The phrase ' an interest,' though primarily it included the terms estate, right, or title (Co. Litt. 345 5, *155) has latterly come often to mean less, and to be the same as concern, share, and the like. Inhab. of Northampton v. Smith, 11 Mete. 390. In contracts, in general, that ■word means the peculiar right of property which one has in a thing. More especially is this so in contracts of insurance, in the law of which so much space is taken by the topic of insurable interest, which deals especially with the kind rather than the extent of right in the propert}' ; as is apparent when we begin to enumerate the interests usually in- sured ; as owner, mortgagor, mortgagee, agent, consignee, factor, and the like, ad infinitum. The use of a similar phrase in a policy viz. : ' on account of whomsoever it might concern at the time of loss,' has been held to leave it undetermined, until the loss took place, who might then be the owner of the property and entitled to the money. Rogers v. Traders' Ins. Co., 6 Paige, 583. Effect has been given to a more restricted phrase, ' for account of whom it may concern ; ' though there must have existed, at the time the contract of insurance SECT, ir.] DAKIN V. LIVEEPOOL, LONDON AND GLOBE INS. CO. 587 was made, an intention to protect the person who claims the payment : Steele v. Ins. Co., 17 Penn. St. 290 ; yet that intention might be made known subsequently by evidence aliunde the policy. The use of such indeterminate phrases makes way for evidence in explanation of them, and of what was the purpose in the use of them. Finney v. Ins. Co., 8 Met. 348. After the door is thus opened for the admission of such evidence, what rule is tliere that will keep out any that will show what was in the mind of the contracting parties, on the subject of the interest to be insured? In Watson v. Swann, 11 C. B. [N. S.], 755, there was an open policj', ' upon any kind of goods and merchandise, as interest might appear.' The effect of the opinion delivered there is, that under such a phrase, persons who could not be named and ascertained at the time the policy is effected are allowed to come in and take the benefit of the insurance, if they were persons contem- plated at the time the policy was made. It is so then, that the use of such phrases, expressive of uncertainty in the mind of the insurers, at the time of the framing of the contract they have given out, as to some matter with which the contract is concerned, does open the instrument to explanation by proof aliunde the instrument. In the absence of any rule or reason confining the effect of such proof, any material matter which was then in doubt may be made sure by evidence, when the time has come that certainty is wished. Where the clause expressive of doubt shows that the uncertainty is as to the person who is to have the benefit of the contract, who the person is may be proven. Where it is as to the interest which is to be protected, what the interest is may be proven, and what is the extent, kind, or quality of it. The phrase in this polic}', ' as interest may appear,' is as applicable to Wood, as one of the insured, as to L. W. Moore & Co. It indicates that when the policj- was filled up by the defendant, there was uncertaint}' as to his interest, or that for some reason it was not thought best to state it ; and the use of the phrase gave the right to him to show what the fact was as to it, whenever the time came at which it was for his good to show it. It is a phrase anticipatory of the fact as it would then be shown ; and the use of the phrase is as if the recital of the fact, as it is afterwards shown, was, at the time of the making of the contract, written out in full in the policy. We must now read that paper as if there was written into it what was Wood's interest, which was to be saved by the contract, as now ascertained to have then been contem- plated as possible. Doing that, it is plain that the printed conditions of the policy, above given, relied upon by the defendant, are of no avail ; for then the interest of Wood is ' truly stated in this policy ; the interest of the assured in the property ' being ' other than the entire, unconditional, and sole ownership of the property for the use and benefit of the assured, is expressed in the- written part of the policy.' " It ma}^ be well to say here that this point of the defendant arises on the motion for a nonsuit. It was not claimed, on that motion, that 588 DAKIN V. LIVERPOOL, LONDON AND GLOBE INS. CO. [CHAP. TL the interest of Wood was ' not represented to the company.' We spend no time, therefore, on that clause of the condition. " It is suggested that if it had been proven that the company knew that "Wood was a mortgagee, and with that knowledge issued the policies, then effect and application could be given to these words so as not to have the contract fail, and it is urged that with such proof lacking, that result cannot follow. But one of the cases cited, Rogers V. Traders' Ins. Co., supra, shows that under the language there used the person who was to be benefited need not be known, at the time of the contract, to either of the parties insttumental in making it. And so it is said in the case from 11 C. B. n. s. supra : ' A very wide extension has been given to the principle I have adverted to as to the parties to a contract in respect of policies of insurance, viz. : that per- sons who could not be named or ascertained at the time the policy is effected are allowed to come in and take the benefit of the insurance.' There is no reason then wh}', when it is assumed that there is an insurable interest of some kind in a person, that interest maj' not be covered by the contract, though its exact nature and extent be left to future ascertainment. The cases cited hy the defendant (Bidwell V. N. W. Ins. Co., 19 N. T. 179; Bidwell v. N. W. Ins. Co., 24 N. y. 302 ; Pitney v. Glens Falls Ins. Co., 65 N. Y. 6 ; Van Sboick V. Niagara F. Ins. Co., 68 N. Y. 434 ; 24 N. Y. 302 ; 65 ]N\ Y. 6 ; 3 Keyes, 87, 436 ; 68 N. Y. 434) do indeed show that there was knowl- edge by the company when giving out the policj' ; but they do not hold or intimate an3'thing contrary to our views above expressed." In the complaint plaintiff demanded judgment for the amount due to him onlj'. Upon the trial the court allowed an amendment thereof so as to demand judgment for the full amount due on all the policies. Held, no error ; as by the policies the whole loss was made pa3'able to Lyon & Dakin, and so far as the contract of defendant was concerned, plaintiff had the right to enforce the policies to the full amount, he holding the residue over and above his own interest, as trustee for the benefit of the others interested. Further points were disposed of on the facts. Erastus JP. Hart, for appellant. M. M. Mead, for respondent. J'er Curiam opinion for affirmance. All concur. Judgment affirmed} 1 In Lasher v. St. Joseph F. &. M. Ins. Co., 86 N. T. 423 (1881), a policy insured Jane A. Lasher against loss by fire " on her household furniture . . . loss, if any, pay- able to Artemas Sahler and William Lounsbery as their interest may appear." Mrs. Lasher did not own the furniture, but was in possession under a contract to purchase it for 819,000 from Sahler and Lounsbery, the contract providing that the title should not pass until full payment was made, and that Mrs. Lasher should keep the furniture insured, loss, if any, payable to Sahler and Lounsbery as their interest might appear. At the time of the fire Mrs. Lasher had paid about $2,680. Eael, J., for a majority of the court, said ; — " The policy contained a provision that it should be void ' if the interest of the SECT. II.J DOLLIVEE V. ST. JOSEPH F. AND M. INS. CO. 589 DOLLIVER AND Others v. ST. JOSEPH FIRE AND MARINE INS. CO. Supreme Judicial Court of Massachusetts, 1880. 128 Mass. 315. SouLE, J. The plaintififs are the assignees in bankruptcy of Abra- ham Day, who, being tlie owner in fee of the buildings described in his policj', subject to certain mortgages and to a lease running for about three and one half years, obtained the policy sued on ; and, the build- ings having been destroyed bj' fire, bring this action to recover the amount for which they were insured. The plaintiffs were appointed assignees after the loss. The defendant contended, and the Chief Justice at the trial ruled, that the action could not be maintained, because no mention is made in the policy of the encumbrances on the title to the property destroyed. This ruling was based on the fol- lowing provision of the policy': "4. If the interest of the assured in the property be any other than the entire, unconditional, and sole ownership of the property, for the use and benefit of the assured, or if the building insured stands on leased ground, it must be so repre- sented to the companj', and so expressed in the written part of this policy, otherwise the policy shall be void." This provision is in the body of the policj', and is inserted for the benefit of the insurer. It is to be construed strictlj"^ against it, and liberally in behalf of the assured. If, therefore, its terms can be satisfied by a construction which will save the policy, and at the same time accord with the estab- lished rules of law, such construction must be adopted. It has long been settled in this Commonwealth that, as to all the world except the mortgagee, a mortgagor is the owner of the mort- gaged lands, at least till the mortgagee has entered for possession. Willington v. Gale, 7 Mass. 138 ; Waltham Bank v. Waltham, 10 Met. 334 ; White v. Whitney, 3 Met. 81 ; Ewer v. Hobbs, 5 Met. 1 ; Henry's case, 4 Cush. 257 ; Howard v. Robinson, 5 Cush. 119 ; Buffum v. Bowditch Ins. Co., 10 Cush. 540 ; Farnsworth v. Boston, 126 Mass. 1. assured in the property, whether as owner, trustee, consignee, factor, agent, mort- gagee, lessee, or otherwise, be not truly stated ' in the policy. It is claimed that this provision in the policy was violated, and we are of that opinion. Mrs. Lasher was the assured, and it' was her interest only which was insured. ... It was the obvious pur- pose of the provision quoted to require the assured to state truly her interest, what- ever it was. This she did not do. It is true that she had an interest which was insurable, but what that interest was she should have truly stated. . . . " The necessity for a true statement of plaintiff's interest in the furniture was not obviated by the clause making the loss payable to Sahler and Lounsbery as their interest might appear. . . . That clause at most implied that Sahler and Lounsbery had some lien upon, or some other interest in, the furniture which was consistent with title and ownership in her. It was not tantamount to a notice to the defendant that Sahler and Lounsbery owned the furniture, and that she had but a small interest therein under an unperformed contract of purchase, but simply to a notice that they had a lien upon or interest in the furniture which she owned." — Ed. 590 DOLLIVER V. ST. JOSEPH F. AND M. INS. CO. [cHAP. TI. This being the law, and the mortgagees not being in possession of the premises, the plaintiff's assignor might well be described in a policy- of insurance as the owner of the property insured ; and, inasmuch as his estate was in fee simple, not an estate for life, and not a base, qualified or conditional fee, it might well be described as the entire and unconditional ownership ; and, as he had no joint tenant nor tenant in common, his estate was well described as the sole owner- ship. As between him and the defendant, the mortgages and the lease were mere encumbrances on his title, not affecting its character as entire, and not changing it from an absolute to a conditional estate or ownership. Even as between him and the mortgagees, the mort- gagees' estate was the conditional one, determinable by satisfaction of the condition set out in the mortgage deed. There was no joint tenancy nor tenancy in common of the mortgagor and the mortgagees. All the characteristics of such tenancies are lacking in their relations to the property. The lease for years created onlj' a chattel interest in the premises, not affecting the ownership of the fee. It was merely an encumbrance. It has been held by the Supreme Court of the United States, in a recent case, that an outstanding lease did not invalidate a policy in which the ownership of the assured was described as entire, uncon- ditional, and sole. Insurance Co. v. Haven, 95 U. S. 242. And we do not understand that the ruling in the case at bar was supposed to rest on the existence of the lease. The policy sued on provides, in the condition numbered 1, that, " if the property be sold or transferred, or upon the passing or entry of a decree of foreclosure, or on a sale under a deed of trust, or if the property be assigned under any bankrupt or insolvent law, or any change 'takes place in title or possession, ... or if the interest of the assured, whether as owner, trustee, consignee, factor, agent, mort- gagee, lessee, or otherwise, be not truly stated in the policy, the policy is void." It is evident from the first branch of this condition, that the parties did not intend that the placing of a mortgage on the insured property should be regarded as a change of title, or have any effect on the rights of the parties to the contract of insurance, but that the entry of a decree for foreclosure should avoid the policy, although such decree would not destroy the insurable interest of the mortgagor. The language of the second branch of the con- dition excludes the idea that a mortgagee or a lessee is to be Regarded as in any sense an "owner" of the property, and the whole condition numbered 1 aids in arriving at the construction of the condition numbered 4, on which the defendant relies. Jackson v. Massachusetts Ins. Co., 23 Pick. 418. The plaintiffs' assignor owned the fee. There was no adverse interest in the property, except that of the mortgagees and the lessee. The policy, in its terms, indicates that mortgaging the property is not intended to affect the policy, though a decree for foreclosing a mortgage shall avoid it. Further- SECT. II.J DOLLIVER V. ST. JOSEPH F. AND M. INS. CO. 591 more the policy discriminates between owners and the holders of encumbrances, and nowhere contains any language which indicates that mortgagees or lessees are to be regarded, for any purposes of the policy, as owners of the property. It is to be borne in mind, further, that the terms of the condition relied on by the defendant are not those which would naturally direct the attention of the insured to the question whether or not his estate is encumbered. If the defendant intended that the validity of the policy should be affected by the failure to mention existing encum- berances, that intention could easily have been made clear by insert- ing the word " unencumbered," or other phrase equivalent thereto, in the fourth condition of the policy, after the word " sole." It has already been held by this court that a requirement of the policy that the proof of loss should state the " whole value and ownership of the property insured," did not require any statement as to encumbrances, the property being under mortgage. Taylor v. Mtna, Ins. Co., 120 Mass. 254. In Tennessee, it has been held that the assured, who had bought the propertj' and given the seller a lien for part of the purchase money, was the unconditional and sole owner of it. Manhattan Ins. Co. V. Barker, 7 Heisk. 603. This case does not require us to consider whether a subsequent mortgage should be regarded as "a change of title" which would avoid a policy containing nothing to explain the sense in which those words were used. See Edmands v. Mutual Safety Ins. Co., 1 Allen, 311; Shepherd v. Union Ins. Co., 38 N. H. 232 ; Commercial Ins. Co, V. Spankneble, 52 111. 53 ; Hartford Ins. Co. v. Walsh, 54 111. 164. On consideration, we are all of opinion that, on the peculiar lan- guage of the policy sued on, the ruling that the interest of the assured was not suflSciently expressed in the policy, and that the policy' was therefore void, was erroneous. The case must therefore Stand for trial} S. B. Ives, Jr. & L. S. Tuckernian, for the plaintiffs. A. S. Wheekr, for the defendant. 1 On the effect of a mortgage, see Warner v. Middlesex Mut. Assur. Co., 21 Conn. 444 (1852); Buffum v. Bowditch Mnt. F. Ins. Co., 10 Cash. 540, 543-544 (1852); Washington F. Ins. Co. v. KeUy, 32 Md. 421, 439-441 (1870) ; Carrigan v. Lycoming F, Ins. Co., 53 Vt. 418, 428-429 (1881) ; De Armand v. Home Ins. Co., 28 Fed. R. «d3 (U. S. C. C, W. D. Mich., 1886). On the effect of a lease, see Insurance Co. v. Haven, 95 U. S. 242 (1877). — Ed. 592 MILLER V. AMAZON INS. CO. [CHAP. TL MILLER V. AMAZON INSURANCE CO. Supreme Court op Michigan, 1881. 46 Mich. 463. Error to Bay. Assumpsit. Plaintiff brings error. Shepard & Lyon, for plaintiff in error. McDonell & Mann, for defendant in error. Graves, J. July 17, 1878, the insurance company issued a policy to James J. Miller, the plaintiff's husband, to insure for the term of one j'ear in the sum of $650 a two-story framed building situated on leased land and standing on blocks, and not fixed to the freehold. April 27, 1879, the building was destroj-ed by fire, and on the first of June thereafter the assured assigned his claim for the loss to his wife, the plaintiff. The company refused paj'ment and Mrs. Miller brought this action to enforce it. The case was tried by a jury and they found for the defendant corporation. Among other stipulations in the policy it was provided that it should be void "if the interest of the assured be any other than the entire, unconditional, free and unencumbered ownership of the property and is not so expressed in the written portion of the policj-," or " if the premises herebj' insured become vacated by the removal of the owner or occupant without immediate or written notice to the company and consent thereto indorsed." Nothing was inserted to qualify the scope or force of the clause concerning title or to show that the interest of the assured was any other than the entire, unconditional, free and unencumbered ownership. At the time of issuing the policy the building was occupied, but it became vacant some five daj-s prior to the fire, and so remained until it was destroyed, and no notice was given to the company. The defence was based on the foregoing stipulations, and if the facts were such as to furnish an answer to the action under either of them no discussion of the other will be necessary. The provision in regard to title stands first and is perhaps most important, and no one can fail to observe that it is much more sweeping and exclusive than the generality of such conditions, and the difference is so well marked that many decisions which have been made on stipulations of the same general nature can have no application. The substantial facts respecting the state of the title at the time of insurance are not controverted. In April, 1876, the building was owned by James J. Miller, the plaintifl"s husband and person assured. His nephew, James J. Miller, Jr., had been carrying on business in the building and had received pecuniary assistance through his uncle from the plaintiff. An arrangement was then made by which the plaintiff's husband, James J. Miller, Sr. , transferred an undivided half of the building to his nephew, James J. Miller, Jr., and the latter gave to his aunt, the plaintiff, a mortgage on said undivided half to SECT. IL] miller V. AMAZON INS. CO. 593 secure her the re-paj'ment of the money she had advanced to him, being $500. The mortgage also covered other property, and by its terms $250 were to be paid by the first day of November, 1876, and the remainder by the first day of November, 1877. It has not been foreclosed. August 14, 1876, Miller, Jr., the nephew, made an assignment for the benefit of his creditors to Charles Newman, and the undivided half of the building which he owned and which stood mortgaged to the plaintiff was included. Newman took possession. It hence appears that at this period the plaintiff's husband owned one undivided half of the property, and that the other undivided half was in Newman, the assignee, subject to the encumbrance upon it held by the plaintiff. In this state of things the plaintiff's husband applied for the insurance, and the agent refused to entertain the application, and gave as a reason, as the plaintiff's husband testifies, that the title "would have to be rectified," and that he would not insure the property " until I got it straightened out." The applicant then went awa;' to get the title " straightened out " and subsequently returned and informed the agent that he had succeeded and the policy was issued. The proceedings taken to concentrate and disencumber the title were explained by Miller on the trial in this way : He testified that he called on Newman and ' ' got," as he expressed it, " Newman's right ; " and that New- man told him that " it was not worth his while to go on ; " that he then had a conversation with his wife, the plaintiff,, in which he said to her that it was necessary for him to have her interest in the prop- erty to get it insured; and she replied, "All right; you can have it ; " and this is substantiallj- the plaintiff's version of the circumstances relied on to show that at the time of the insurance her husband was vested with the " eiitire, unconditional, free and unencumbered owner- ship " of the building. There was no writing to attest any transfer or surrender on the part of Newman or to show a conveyance from the plaintiff to her husband. But it was not indispensable that there should be. For the purpose of combining in himself the entire, free, and unencumbered ownership it was necessary that the plaintiff's husband should get in the right and title possessed by Newman and the mortgage interest possessed by the plaintiff, and these results, although capable of being effected without writing, could not be worked out except by transactions con- taining the elements necessary to make them binding, and here occurs a manifest difficult}'. There is a total want of consideration. If we understand the plaintiflfs husband as testifying that Newman gave up the assigned interest to him, then so far as the record dis- closes there was no consideration to support the arrangement and it had no force. But if Newman abandoned the property to the plaintiff as mortgagee, her interest was not increased, and could not be except through purchase on foreclosure, and no foreclosure has been had. The legal title must have continued in the assignee. But suppose the 38 594 DUPKEAU V. HIBERNIA INS. CO. [CHAP. VI. meaning was that the property should be applied on the mortgage (a view hardly possible), it seems not to have been acted on. It was not applied. There has been no recognition of anything of that kind. But whether another interest was or was not added to that held b3' the plaintiff under her mortgage, it was necessarj' that her husband should be positively vested with whatever interest she had. His description of the transaction relied upon as having legally conferred upon hirn that interest has been noticed, and we observe that it consisted of mere words. No mention of any consideration was made, and the transaction had nothing in it to bind him as vendee or assignee or her as vendor or assignor. It follows that according to the undis- puted facts the entire, unconditional, free, and unencumbered owner- ship of the building was not in the assured at the time of the insurance, and that the policy was therefore not enforceable against the company. The other question becomes immaterial. The result reached below was correct, and the judgment should be affirmed with costs. ^ DUPREAU V. HIBERNIA INSURANCE CO. Supreme Couet op Michigan, 1889. 76 Mich. 615. Error to Saginaw. Gage, J. Assumpsit on an insurance policy. Defendant brings error. The facts and points of counsel passed upon by the court are stated in the opinion. Wilber & Snicker, for appellant. Dxvrand & Brewer, for plaintiff. Long, J. Defendant issued its policy of insurance to plaintiff on May 15, 1888, for the sum of $500, — $400 upon his dwelling-house, and $100 on his barn. The application was verbal, and was made to Sehceneberg & Knight, at East Saginaw, this state, who were the local agents of the defendant company there. They were required to make their reports and remit- tances to John Naghten & Co., general agents of the western depart- ment at Chicago, Illinois. The policy was issued and delivered to the plaintiff on the above date, and a premium of $7.50 duly paid, the policy to continue in force for three years from May 15, 1888. July 16, 1888, the property was totally destroyed by fire. Notice was duly given of the fire and loss, and on the twenty-seventh day of July, 1888, the defendant companj', by its general agent, refused pay- ment by reason of the fact, then claimed by it, that the plaintiff was not the owner of the property at the time of taking the insurance. ' See Schroedel v. Humboldt F. Ins. Co., 158 Pa. 459 (1893). — Ed. SECT. II.J DUPKEAU V. HIBEENIA INS. CO. 595 The cause was tried ia the Saginaw Circuit Court, before a jur3-, where the plaintiff had verdict and judgment for the amount of the policy and interest. Defendant brings error. The policy contained, among other conditions, the following : — "This entire policy, unless otherwise provided by agreement in- dorsed hereon, or added hereto, shall be void, if the interest of the insured be other than unconditional and sole ownership, or if the sub- ject of insurance be a building on ground not owned by the insured in fee-simple, or if the subject of insurance be personal property, and be or become encumbered by chattel mortgage." It appears that the plaintiff held the premises upon which the build- ings were situate, and the buildings, under a land contract of purchase, dated May 15, 1888. This contract specifically describes the propertj-, and provides for the annual payments of $100 until the whole amount of the purchase money ($500) is paid ; $100 being paid down at the time of the purchase. The plaintiff went into the actual possession of the premises immediately upon the execution of this contract. Upon the payment of $100 additional, the contract provided for the execution and delivery of a deed of the premises to the plaintiff. The contract itself provided for the taking of possession of the premises by the plaintiff. On the trial in the court below the court charged the jurj' that the clause in the policy relative to the title would not violate the polic}-, as it appeared that the plaintiff was the equitable owner in fee of the premises. The court thereupon directed a verdict in favor of the plaintiff. It does not appear that any representations as to title and owner- ship were made by the plaintiff at the time of taking the polic}', but counsel for the defendant contend that, bj' the terms of the policy itself upon which the action is brought, the plaintiff cannot recover, as he has no such title in fee as contemplated by the contract. The land contract, under which the plaintiff held, provided that he should keep the buDdings thereon insured against loss and damage by fire hy in- surers, and in amount approved hy the first party, and should assign the -policy and the certificates thereof to the first part}'. The omission of the owner of the equitable title to state the nature thereof will not render the policy of insurance invalid, under a condi- tion therein forfeiting the insurance in case the interest is other than the entirfe, unconditional, and sole ownership, if the fact is not so rep- resented to the company. Farmers', etc. Ins. Co. v. Fogelman, 35 Mich. 481. It is insisted, however, that by the terms of the policy the title must be a legal estate in fee-simple, and that an equitable estate in fee would not satisfy its terms ; and that therefore the court was in error in directing the verdict in favor of the plaintiff. We are satisfied that the court was not in error. The plaintiff had paid quite a sum of monej' on the purchase price, and entered into an 596 COLLINS V. ST. PAUL FIRE AND MARINE INS. CO. [CHAP. VL undertaking to paj' the balance, and was to have immediate possession of the premises under the terms of the contract, and was to keep the buildings thereon insured. He was in actual possession at the time of taking the policy', and equitably the owner in fee, and we think he may be said at that time to have been the entire, unconditional, and sole owner, within the meaning of the terras of the policy. We think this doctrine is fulh' supported b^- numerous decisions. If loss occurred, it would fall upon the insured. He was in possession, having paid part of the purchase price, and under a valid agreement for the payment of the balance, and, by the very terms of his contract, the very partj- who had the insurable interest in it. In the case of Imperial Fire Ins. Co. v. Dunham, 117 Penn. St. 462, 475, 12 Atl. Eep. 668, 674, the language of the policj^ was : " This policy shall be void and of no effect if, without notice to this company, and permission therefor in writing indorsed hereon, the as- sured shall now have, or hereafter make or procure, any other insur- ance, whether valid or not, on the property hereby insured, or an}' part thereof, or if this policy be assigned before a loss, or if the interest of the assured be other than the entire, unconditional, and sole ownership, or if the property insured be a building standing on ground not owned hy the assured in fee-simple." The court, in passing upon this provision of the policj', said : — " He was the equitable owner in fee, and, in respect to the insurance, we think he may be said to have been the entire, unconditional, and sole owner. This provision of the policy does not necessarily distin- guish between the legal and the equitable estate." This seems to be the settled doctrine in most, if not all, of the states. We find no error in the record. The judgment of the court below must be aflBrmed, with costs.'' COLLINS V. ST. PAUL FIEE AND MARINE INS. CO. Supreme Court of Minnesota, 1890. 44 Minn. 440. Appeal by defendant from an order of the District Court for Sibley Countj', Edson, J., presiding, granting a new trial after verdict directed for defendant, in an action to recover $600 on the poliej' mentioned in the opinion. John J). O'Brien, for appellant. JR. A. & F. C. Irwin, for respondent. 1 Ace: Loventhal v. Home Ins. Co., 112 Ala. 108 (1896). See Swift v. Vermont Mut. F. Ins. Co., 18 Vt. 305 (1846) ; Pelton v. Westchester F. Ins. Co., 77 N. Y. eo.'j (1879) ; Capital City Ins. Co. u. Caldwell Bros., 95 Ala. 77, 88-89 (1891). Compare Hinman v. Hartford F. Ins. Co., 36 Wis. 159, 167 (1874). — Ed. SECT. 11. J COLLINS V. ST. PAUL FIEE AND MARINE INS. CO. 597 GiLFiLLAN, C. J. This is an action on a policy of insurance upon a dwelling-house and log barn, and sheds connected therewith, situate on section 31, township 114, range 25. Upon the trial the court below directed a verdict for the defendant, and after such verdict, upon plaintiff's motion, granted a new trial, and from the order granting it defendant appeals. On the case made at the trial it was impossible for the plaintiff to recover, for two reasons : First. The house, barn, and sheds, for a loss upon which a recoverj' is sought, were not on section 31 ; but plaintifif claimed at the trial, and gave some evidence tending to show, that it was the intention to insure, bj' the policy, similar buildings on section 32, and that section 31 was inserted in the policj' through mistake. If this were true it would be good cause for reforming the polioj- by inserting section 32 instead of section 31, but, until so reformed, no recovery could be had for loss to the build- ings on section 32. Second. Even if so reformed, no recovery could be had, for the policj- provides that the companj' shall not be liable "if the interest of the assured in the property is not one of absolute and sole ownership," and it appeared beyond controversj' that the plaintiff had onlj' a life-estate in the property. Of course she had an insurable interest, but that interest was not insured. The policj- expressly excluded from its operation any interest other than the absolute and sole ownership.^ Order reversed. 1 In Garver o. Hawkeye Ins. Co., 69 Iowa, 202 (1886), the application for insurance on a barn and contents, in section 36, stated that the applicant was " the sole and undisputed owner of said land and the property to be insured." The application was by its own terms and by the policy made a warranty. In fact the applicant had a life-estate in the realty. It was held that there could be no recovery for a loss by fire. Seevees, J., for the majority of the court, said : " The precise question we are rec(nired to determine is whether the owner of a life-estate is the 'sole and undis- puted owner' of real estate. . . . Now, what does 'sole owner' mean, or what did the parties understand thereby ? Evidently, we think, they meant, and must have understood, that the assured had the fee-sim^e title. ' Sole owner ' must mean, it seems so to us, that no one else has or owns an interest in the real estate. If one should state that he was the sole owner of real estate, describing it, the hearer would under- stand that he owned all there was or could be owned ; that no one else had any interest therein. If one should covenant in a deed that he was the sole owner of the real estate, such a covenant would be broken if he owned a life-estate only. There is no distinction between ' sole owner ' and the owner of an ' absolute interest ' in real estate. A sole interest and absolute interest mean the same thing." Compare Allen v. Charlestown Mut. F. Ins. Co., 5 Gray, 384 (1855). On conditions as to ownership at the inception of the contract, in general, see also ; — Smith u. Bowditch Mut. P. Ins. Co., 6 Cnsh. 448 (1850) ; Phillips V. Knox County Mut. F. Ins. Co., 20 Ohio, 174, 182-184 (1851) ; Hope Mut. Ins. Co. v. Brolaskey, 35 Pa. 282 (1860) ; South Australian Ins. Co. v. Randell, L. R. 3 P. C. 101 (1869) ; Citizens' F. Ins. S. & L. Co. v. Doll, 35 Md. 89 (1871) ; Manhattan Ins. Co. i>. Barker, 7 Heisk. (Tenn.) 503 (1872) ; Noyes v. Hartford F. Ins. Co., 54 N. Y. 668 (1873) ; Fowle V. Springfield F. & M. Ins. Co., 122 Mass. 191, 197-198 (1877) ; Franklin F. Ins. Co. v. Martin, 40 N. J. L. 568 (1878) ; 598 COLLINS V. ST. PAUL FIUE AND MARINE INS. CO. [CHAP. VI. "Walsh V. Fire Association, 127 Mass. 383 (1879) ; Castner v. Farmers' Mnt. F. Ins. Co., 46 Mich, l.'j (1881 ) ; Southwick V. Atlantic F. & M. Ins. Co., 133 Mass. 457 (1882) ; Martin v. State Ins. Co., 44 N. J. L. 485, 490 (1882) ; Crescent Ins. Co. v. Camp, 64 Tex. 521 (1885) j s. c. at a later stage, 71 Tex. 503 (1888); Weed V. London & Lancashire F. Ins. Co., 116 N. Y. 106, 113-115 (1889) ; Davis V. Pioneer Furniture Co., 102 Wis. 394 (1899). —Ed. BECT. 1I.J LANE V. MAINE MUTUAL FIKE INS. CO. 599 SECTION II. (continued). {F) CoNDITIOIfS PROHIBITING ALIENATION. (a) Alienation/ sale/ conveyance j transfer. LANE V. MAINE MUTUAL FIEE INS. CO. Supreme Court of Maine, 1835. 12 Me. 44. This was an action of assumpsit on a policj' of insurance, wlierein the defendants insured the plaintiff against fire to the amount of two hundred dollars on his store, and the like sum on the goods in said store, for six years from the 17th dsiy of January, 1832, promising, " according to the provisions of their act of incorporation, to pay the plaintiff the said sum within three months nest after said buildings, etc. should be burnt." The store and its contents were consumed bj' fire on the night of the 7th of June, 1834. In the 8th section of the act of incorporation, referred to in the policy, is the following provision, viz. : "When the property insured shall be alienated by sale or otherwise, the policy shall thereupon be void, and be surrendered to the directors of said company to be cancelled ; and upon such surrender the assured shall be entitled to receive his deposit note, upon the payment of his proportion of all losses and expenses that have accrued prior to such surrender." It was proved, that one James Dunn hired the store of the plaintiff, and purchased all the goods therein in Maj', 1833 — put his son into the store, who traded there and continued to hold exclusive possession until November of the same year, when the plaintiff took back the store and goods under an agreement with Dunn to allow him a certain sum for his services, and to pay the debts and receive the dues of the store. From this time, the plaintiff continued in the exclusive occupa- tion of the store, and traded therein until it was burned. The defendants contended, that this was such an alienation as rendered the policy void, both as to the store and the goods. But Parris, J., ruled otherwise, and a verdict was returned for the plaintiff, subject to the opinion of the whole court upon the facts here reported. The defendants also filed a motion in arrest of judgment, because, — 1. The plaintiff had not alleged in his declaration that he was the owner of the store and goods at the time they were burned. 2. That he had not alleged the value of said store and goods at the time. Longfellow, for the defendants. 8. & W. P. Fessende,n, for the plaintiff. Parris, J. The first question presented for our decision is, whether the hiring and occupation of the store by Dunn, from May to Novem- 600 LANE V. MAINE MUTUAL FIEE INS. CO. [CHAP. VI. ber, was such an alienation of the property insured as rendered the policy void under the 9th section of the act of incorporation therein referred to. In the construction of this language we should have regard to the circumstances under which it was used, and the situation and object of the parties using it. The insured was the owner of the store, and for the purpose of securing his interest against the peril of fire, became a member of the company, assuming the obligations of membership by the payment of money and depositing his note, thereby giving the company a lien, for the payment of such note, on the building insured. The insurers, in assuming the risk, provide for the continuance of the interest of the assured in the property covered, so long as their liability continues. In other words, they guard against its becoming a gaming or wager policy in any event. Accordingly so long as the property covered belongs to the insured, whether it be in his posses- sion, or that of his agent, servant, or lessee, the company's lien contin- ues, and an insurable interest remains. But when the propert}' is alienated, that is, when the insured is divested of title by sale or in anj' other manner, the lien of the company ceases, and the insured is no longer a member of the company. If a loss then happen it is not his loss, for as he had no property he could sustain no loss, and con- sequently could be entitled to no satisfaction. The party insured must, in all eases of fire insurance, have an interest or property at the time of insuring and at the time the fire happens. But he need not have an absolute and unqualified or even immediate interest in the property insured. A trustee, mortgagee, reversioner, a factor or agent of goods to be sold on commission, may legally insure their respective interests, subject to the rules of the office in which the insurance is effected. Upon general principles applicable to fire insurance, the person insured cannot convey the estate insured and assign the policy, so as to render it valid in favor of the grantee and assignee, unless by consent of the insurer. Mutual offices should have the power of exer- cising a discretion in the selection of persons whom they may admit to membership, and whose property they may insure. The character of the person insured may be a subject of importance. If by conveyance of the estate and assignment of the policy, the purchaser would stand in the place of the insured and be entitled to indemnity under the policy, the office might be defeated of this right of selection. Under these views of the law relating to fire insurance, we think the occupation of the store by Dunn, who, having no lease in writing, was at most onlj' tenant at will, was not an alienation of the property insured within the true meaning and intent of the act of incorporation. The language is, " when the property insured shall be alienated by sale or otherwise," etc. The word alien or alienate extends not only to alienations of land in deedhwt also to alienations in law. A trans- fer of title by devise, descent, or by levy would be as technically an SECT. II.] LANE V. MAINE MUTUAL FIRE INS. CO. 601 alienation as a transfer by deed. Blackstone, speaking of title by alienation, Book 2, ch. 19, says, " The most usual and universal method of acquiring a title to real estate is that of alienation, convey- ance or purchase in its limited sense ; under which m&y be comprised anj- method by which estates are voluntarily resigned by one man, and accepted by another ; whether that be effected by sale, gift, marriage, settlement, devise, or other transmission of property by the mutual consent of the parties." Alienation is defined in Jacob's Law Dic- tionarj- to be a transferring the property of a thing to another. The object of the statute was, without doubt, to render certain by positive enactment what would otherwise have depended upon common law principles and judicial decisions, viz. that the policies of the corn- pan}' should not be obligatory any longer than the property insured continued in the individual named in the policj', as the owner ; and that by a transfer of his interest the policj- should be void. This con- struction is believed to be in accordance with general usage, and the intention and understanding of the parties. As to the goods, we are clear that the policj' was intended to cover and did cover whatever goods the plaintiff might have in his store, at any time during the continuance of the risk, not beyond the amount actually insured. A construction limiting the policy to the goods actually in the store at the time the insurance was elfected would defeat the very object of the insured, and so must have been understood by the insurer. The plaintiff's business was trade, the vending of goods from his store. According to the construction put upon this pohcy bj- the company, the plaintiff has no security except upon the goods actually in the store when the policy was issued, and when those were disposed of, their liability was at an end. We cannot listen, for a moment, to such a suggestion. A policy of insurance being a contract of indemnity, must receive such a construction of the words emploj-ed in it as will make the protection it affords coextensive, if possible, with the risks of the assured. Dow v. The Hope Ins. Co., 1 Hall, 66. The risk of the assured was to continue six j'ears, and the assurers assumed that risk to the amount of two hundred dollars on the goods in the store. Both parties must have understood this to mean on goods which may be in the store at any time during the continuance of the policj'. If the assured had goods to an amount exceeding two hundred dollars, the undertaking of the company was limited by that amount. If, by sale, the quantity was reduced below that sum in value, the insurers were so far benefited, as their risk was diminished below that paid for by the premium, and if the whole were sold, the insurers were benefited to a still greater degree by a suspension of the risk. And it was a mere suspension, for upon filling up again the risk revived ; and we see no difference in principle between the case where the quantity is dimin- ished by a partial sale and then replenished, and where the whole is sold and an entire new stock purchased. In either case there is a risk, 602 HOrFMAN AND PLACE V. JEISX PIEE INS. CO. [CHAP. Vt limited in amount bj' the contract, which has been assumed by the insurer, and for which the insured has paid the stipulated pi'emium. We are clear that it is a continuing risk, to the amount specified, upon such goods as the insured may have in the store within the term covered by the policy, and not confined to such as were there at the time of assuming the risk.^ . . . There must be judgment on the verdict," HOFFMAN AND PLACE v. ^TNA FIRE INS. CO. Court of Appeals of New York, 1865. 32 N. Y. 405. The action was on a policy of insurance for $6,000, issued in Febru- ary, 1861, to Hofifman, Place & Co., of New York, covering their stock of merchandise, including not only their own goods, but those held by them in trust or on commission, or sold but not delivered, in their brick and marble store in Broadwaj'. The policy contained, among other things, a printed proviso that it should be null and void, "if the said property shall be sold or conveyed." The insurance was renewed in February, 1862. On the 7th of March following, Silver- nail, one of the partners, retired from the business, selling out his interest to Hoffman and Place, by whom the business was continued. They subsequently, with the written consent of the company, removed the business and stock to their new brick and marble store in Duane Street. The loss occurred on the 9th of April ; and the company declining to pay, the present action was brought. It was tried in the Superior Court before Judge Monell, and the jury found a verdict for the plaintiffs. The judgment was affirmed on appeal, and the present appeal is from that decision. The principal questions of law raised on the trial were, whether the transfer avoided the sale, and if not, whether goods afterwards added to the stock were within the protection of the policy. John H. Reynolds, for the appellants. Qrosvenor P. Lowrey, for the respondents. Porter, J. The weight of judicial authority in this state is against the doctrine that a policy issued to a firm is forfeited by a transfer of interest as between the parties assured. As a contrary opinion has pre- vailed to some extent, it may be well briefly to retrace the history of this question in our courts.' . . . 1 The remainder of the opinion dealt with the questions as to pleading. — Ed. 2 Ace: Power v. Ocean Ins. Co., 19 La. 28 (1841). — Ed. " Here were cited, frequently with discussion, McMastera u. Westchester County Mut. Ins. Co., 25 Wend. 379 (1841) ; Howard v. Albany Ins. Co., 3 Denio, 301 (1846) ; Murdock v. Chenango County Mut. Ins. Co., 2 N. Y. 210 (1849) ; Tillou v. Kingston Mut. Ins. Co., 7 Barb. 570 (1850) ; s. c. in the Court of Appeals, 5 N. Y. 405 (1851) ; SECT. II.] HOFFMAN AND PLACE V. ^TNA FIRE INS. CO. 603 It is quite apparent, therefore, that, in this state, there is a decisive preponderance of judicial authority against the recognition of a sale by one to another of the assured, as cause of forfeiture within the mean- ing of the proviso. But if the authorities were in equipoise, and the solution of the question depended on general reasoning and the appli- cation of settled and familiar principles of law, our conclusion would be in accordance with that of the court below. The terms of the proviso are, that the policy' shall be null and void, "if the said property shall be sold and convej-ed." But these words are, themselves, vague and indeterminate. Are they to be understood in their largest sense, without restriction or limitation ? Clearly not ; for we find, on referring to other portions of the policj', that it was issued to the assured as merchants, and that it covered a stock of goods which it was their business to sell from daj' to da}'. Is the proviso applicable to the particular goods in the store at the date of the insurance ? Such a construction would not only defeat the purpose of protecting a fluctuating stock, but it would annul the policy at once, for it would bring the first mercantile sale at the counter within the terms of the condition. What description of sales and conveyances, then, did the parties contemplate when this provision was framed? Evidently such, and such only, as would transfer the proprietary inter- est of those with whom the insurers contracted, to others with whom they had not consented to contract. They testified their confidence 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. If the assured parted with the possession, as well as the title of the goods, the insurers knew, of course, that their liability would cease ; but they were aware that, in the exigencies incident to business, parties often retain the control, possession, and apparent ownership of goods, after parting with all their title. To guard against such contingencies, they chose to provide for the forfeiture of the policy on the transfer of the title to others, even though the business should continue to be conducted by the assured. It is suggested that the proviso may have been designed to secure the continuance in the firm of the only member in whom the insurers reposed confidence. The only evidence of their confidence in either is the fact that they contracted with all ; and the theory is rather fanciful than sound that they maj' have intended to conclude a bargain with rogues, on the faith of a proviso that an honest man should be kept in the firm to watch them. Certainlj', nothing appears in the present case to indicate that all the assured were not equally worthy of confidence ; and it is not to be presumed that, in any case, underwriters would deliberately insure those whose integrity they had reason to distrust. Wilson V. Genesee Mut. Ins. Co., 16 Barb. 511 (1853); s. c. in the Court of Appeals, 14 N. Y. 418 (1856) ; Dey v. Ponghkeepsie Mut. Ins. Co., 23 Barb. 623, 627 (1857) ; Grosvenor v. Atlantic F. Ins. Co., 17 N. Y. 391, 399 (1858) ; and Buffalo Steam Engine Works V. Sun Mut. Ins. Co., 17 N. Y. 401, 412 (1858). — Ed. 604 HOFFMAN AND PLACE V. MTNIl FIEE INS. CO. [CHAP. VL The policy in question having been issued to a mercantile firm, the companj- must be deemed to have had in view the fluctuating nature of a partnership business, and the changes of relative interest incident to that relation. These might be very important to the assured, though wholly immaterial to the risk. It is manifest that mere variations m the character and amounts of the interests of the assured as between themselves did not constitute the mischief at which the proviso was aimed. If the applicants had originally objected to the form of the policy, on the ground that the effect of the clause might be to prevent the increase by a partner of his interest from one-fourth to one-third of the business, by purchase from the other members of the firm, the answer would undoubtedlj' have been that such a change was not within the operation or intent of the proviso. There is probably not a business firm in the state which would accept, at the usual rates, a policy declaring 191 terms that the premium should be forfeited and the insurance annulled, by a mere change of interest as between the part- ners. In this instance there is no such declaration ; and an implica- tion so repugnant to the evident design of the contract is not to be deduced from the unguarded use of general words, if they can be fairly limited to the appropriate and obvious sense in which they were employed by the parties. The design of the provision was, not to interdict all sales, but only sales of proprietary interests by parties insured to parties not insured. If the words were taken literally-, a renewal of the policy would be required at the close of each day's sales. Indeterminate forms of expression, in 9uch a case, are to be understood in a sense subservient to the general purposes of the contract. It is true that the language of the proviso against sales was not guarded by a special exclusion of changes of interest as between the assured, or of the sales of mer- chandise in the usual course of their business ; but this was for the obvious reason that there was nothing in the tenor of the instrument to denote that the application of the clause to such a case was within the contemplation of the underwriters.^ . . . Beading the proviso as it was read by the parties, it is easy to dis- cern the purpose of its insertion. It was to protect the company from a continuing obligation to the assured, if the title and beneficial inter- est should pass to others, whom they might not be equally wUling to trust. . . . The terms of the policy were not such as would naturally suggest even a query in the minds of the assured, whether a transfer of interest as between themselves would work a forfeiture of the insurance, and relieve the company from its promise to indemnify both, — the buyer as well as the seller, — the premium being paid in advance, and the risk remaining unchanged. One or two joint payees of a non-negotiable note would hardly be more surprised to be met with a claim, that by 1 Here and elsewhere in the opinion it has seemed necessary to omit passages dealing principally with general rules of construction. — Ed. SECT. II.] BLACKWELL V. INSURANCE COMPANY. 605 Inij-ing the interest of his associate he had extinguished the obligation of the maker to both. . . . The appellants seem to suppose that there is a technical embar- rassment on the question of damages, growing out of the fluctuating character of the stock, and the continuance of the business bj"^ the re- maining members of the firm, who succeeded, under the transfer, to the interest of the retiring partner. Looking to the nature and design of the contract of insurance, we find no such embarrassment.^ . . . The plaintiffs were parties to the contract made with the defendant. Thej- were conducting the business contemplated by the terms of the polic}-. The insurance was intended to cover the mercantile stock of which the assured were proprietors, stored, from time to time, in the building in which that business was conducted. There was no sub- stantial change material to the risk, and clearly none within the intent of the proviso. Each member of a partnership firm, as Lord Hard- wiCKE said, is " seized per my et per tout " of the common stock and effects. (West v. Skip, 1 Vesey Sen. 242.) This interest of each and all the policy in question was designed to protect ; and its lan- guage, fairlj- construed, is in harmony with this intent. There is no reason wh}' the fuU measure of agreed indemnity should be withheld from the plaintiffs, who were owners at the date of the insurance, and sole owners at the time of the loss. Hooper v. Hudson River Ins. Co., 17 N. Y. 425, 426 ; Wilson v. Genesee Mut. Ins. Co., 16 Barb. 511 ; Jefferson Ins. Co. v. Cotheal, 7 Wend. 73 ; Code, § 111. The judgment should be affirmed, with costs. Judgment affirmed.^ BLACKWELL v. INSURANCE COMPANY. SuPEEME Court of Ohio, 1891. 48 Ohio St. 533. Error to the Superior Court of Cincinnati. The plaintiff in error brought an action in the Superior Court of Cincinnati against the defendant in error, upon a policy of insurance issued by it to him upon a stock of dry goods, notions, etc. , owned by him in said city. The defendant admitted issuing the policy and the loss of the goods bj' fire, and set up in bar of a recovery for the loss, that the policy con- tained a provision that it should become "null and void" if the property insured should be sold or transferred by the assured ; and averring that, in violation of this condition, after the policy was issued and before the fire, he sold and transferred the goods and business to 1 Here was quoted a passage from Harper v. Hudson River F. Ins. Co., 17 N. Y. 424, 42.5 (1858). — Ed. 2 Ace. : Powers v. Guardian F. & L. Ins. Co., 136 Mass. 108 (1883). — Ed. 606 BLA.CKWBLL V. INSURANCE COMPANY. [CHAP. VI. a fii-m composed of himself and one Horman, and that at the time of the loss the goods were owned, and the business was conducted, by said firm, by which sale and transfer the policy became forfeited and void. The plaintiff interposed a demurrer to this defence, and upon its being overruled, declined to plead further, and suffered judgment to be entered against him. This judgment was affirmed by the Superior Court in General Term ; whereupon this proceeding was brought to reverse both judgments. Joseph W. O'Sara, for plaintiff in error. Ramsey, Maxwell <5b Ramsey, for defendant in error. Bkadbdry, J. The record in this case raises two questions, both of which must be determined in favor of the plaintifl' in error, to entitle Mm to relief. 1. Did the act of the assured, who before was a sole trader, in receiving a partner, constitute a sale and transfer of the insured property, within the meaning of the policy, and the policy thereby rendered void? 2. If it was not such a sale as to render the policy void, maj- the plaintiff maintain an action on the policy in his own name to recover for the>loss? There is some confiict among the authorities upon the first question. It is discussed by May in his work on Insurance, and by the courts of a number of the states ; notabty in Dix et al. v. The Mercantile Insur- ance Co., 22 111. 272 ; Finley et al. v. The Lycoming County Mutual Ins. Co., 30 Penn. St. 311 ; The Hartford Fire Ins. Co. v. Ross et al., 23 Ind. 179 ; The Western Mass. Ins. Co. v. Eiker et al., 10 Mich. 279; Drennan et al. v. London Assurance Corp., 20 Fed. Eep. 657; Malley v. Atlantic Ins. Co., 51 Conn. 222 ; Scanlon v. The Union Fire Ins. Co., 4 Biss. 511 ; Cowan v. The Iowa State Ins. Co., 40 Iowa, 551 ; Hathaway v. State Ins. Co., 64 Iowa, 229; Keeler v. Niagara Fire Ins. Co., 16 Wis. 523 ; Wood v. Rutland Ins. Co., 31 Vt. 552. An examination of the cases above cited will disclose that the con- ditions in the policies, where forfeiture for alienation was sustained, were materially different from the one involved in this action, except perhaps in the cases in 30 Penn. St. 311, and that in 16 Wis. 523, where the language of the condition was very similar to that now under consideration. In the other cases sustaining the forfeiture, the condition contained a provision forfeiting the policy, not merely for a " sale or transfer" of the property, but in case of " a change of title " or the sale of" a,ny undivided interest therein" (23 Ind. 179) ; in case of a " change of title" (10 Mich. 279) ; " or any change took place in the title or possession" (61 Conn. 222 ; 20 Fed. Rep. 657) ; and there- fore they cannot be rightfully claimed as direct authorities for the in- surance company in the case at bar. In the case in 40 Iowa, 551, the condition against alienation was very similar to those above quoted, but the Supreme Court of Iowa held " that nothing less than a sale of SECT. II.] BLACKWELL V. INSURANCE COMPANY. 607 the entire interest of the party insured would defeat the policy." This doctrine was maintained by Drummond, J., in 4 Biss. 411. Heretofore this precise question has not been before this court, and in the conflict of authorities respecting it, we feel at liberty to adopt that rule upon the subject which most nearly accords with the policy of our decisions and the presumed intention of the parties. It is the policy of this court to strictly construe those clauses in an insurance policy which forfeit the indemnity provided for the assured. West et al. V. The Citizens' Insurance Company-, 27 Ohio St. 1. In this case, on page 10, Johnson, J., refers with approval and in the follow- ing language to the views on the subject contained on page 74 of May on Insurance: "Exceptions in a policy should be strictly construed, and where there are two interpretations equally fair, that which gives the greater indemnity should prevail." And on page 13 (27 Ohio St.) the same learned jurist says : " Stipulations in a contract providing for disabilities or forfeitures, are to receive, when the intent is doubtful, a strict construction against those for whose benefit they are introduced." Let us recur to the exact words of forfeiture as they are set forth in the defendant's answer. " If . . . said assured should sell or trans- fer the property thereby insured, that said policy should become null and void." It was competent for the policy to provide, expresslj-, that a sale of a part of the propertj' or of an interest therein should avoid the policy' ; this they did not do. The absence of a specific provision to that effect when it could have been so easily inserted, together with the rule before referred to that conditions which defeat a policy should be construed strictly against the forfeiture, leads us to hold that a sale of the entire interest of the party insured was necessary to avoid the policy. In a strict legal sense, perhaps, wherever one engaged in business alone, takes a partner into his business, or a firm receives a new mem- ber, or a member goes out, the transaction results in the formation of a new concern, accompanied by a sale and transfer of all the property of the old establishment to the new one ; but it is at least doubtful whether this strict legal result is contemplated by the business world generally. That the parties in the case before us intended the policy should be avoided, in case the assured received a partner into his business, is uncertain ; that the plaintiflT understood the transaction to be a sale of an undivided half of the property and business to Herman, rather than a sale of the whole of it to a firm composed of himself and Horman, is quite probable. It was competent for the parties to pro- vide in unambiguous terms that, if the assured received into the busi- ness, without the consent of the insurer, a partner, the policy should become void. This was not done, and we think the principles already announced require us to hold that the sale and transfer resulting from the reception of a partner did not avoid the policy. Notwithstanding the transaction the plaintiflT retained a substantial and insurable interest in the property covered by the policy-, while to 608 BROWN V. COTTON, ETC. MANUF'kS' MUT. INS.- CO. [CHAP. TI. avoid the policy on account of the provision against alienation it should have divested him of his entire interest. The defendant contends that this construction disregards the rule that, in construing an instrument, effect should be given to all its parts ; and that to hold that the plaintiff must divest himself of his entire interest to avoid the policy renders the provision against aliena- tion nugatory, because, if the policy contained no such provision, j-et he could not recover for a loss that occurred after he had sold his en- tire interest, as in that event he suffered no injur}-, and the contract of insurance is one of indemnity. Whether the construction we have adopted renders the provision against alienation nugatorj' or not, or whether circumstances maj^ not arise under which it might be opera- tive, we do not deem it necessary to inquire, for the rule thus urged upon our consideration is only one of many rules applied by courts to ascertain the meaning of the words adopted by parties to express their intentions, and in many instances it readilj' yields to other rules of con- struction, as we think it should in the case now under consideration. The remaining question presents no difficulty. Section 4,993, Revised Statutes, requires an action to be brought in the name of the real party in interest. Here the plaintiff, alone, is interested in the policy of insurance set forth by hira in his petition ; the contract it contains is to indemnify him ; he can recover, of course, only to the extent he has been damaged ; but, as no question is before us as to its proper measure, it will not receive consideration. Judgment reversed. BROWN V. COTTON AND WOOLEN MANUFACTURERS' MUTUAL INSURANCE COMPANY. SuPKEME JuBiciAi CouRT OF MASSACHUSETTS, 1892. 156 Mass. 587. Holmes, J. This is an action on a policy of Insurance against fire, issued by the defendant, a Massachusetts companj', in 1885, upon the plaintiff's woollen factory in Connecticut. So far as material, the policj- was in the Massachusetts standard form, with a rider. Pub. Sts. c. 119, § 139.^ At the trial, the judge directed a verdict for the defendant, and reported the case to this court. When the policy was issued, the plaintiff had the legal title, probably as mortgagee in equity, by conveyance from her husband through a third person. We assume her title to have been sufficient without discussion. The defences relied on are, that before the fire she had broken the condi- tion against sale, that she no longer had an insurable interest, and 1 The form provided that " this policy shall be void if . . . without the assent in writing or in print of the company . . . the said property shall be sold." — Ed. SECT. II.J BROWN V. COTTON, ETC. MAXUF'KS' INS. CO. 609 that she had broken the condition against the factory ceasing opera- tion for more than thirty days. It also is set up that the plaintiff had not rendered a statement in writing setting forth the value of tlie property insured, etc., as required by the policj-. The plaintiff' replies to this last defence that it was waived, and we shall give it no con- sideration. For the purposes of our decision, we assume that, if it had stood alone, the plaintiff' at least would have had a right to go to the jurj-. The sale relied on was a conveyance by the plaintiff" four days before the fire to the trustee in insolvency of her husband's estate, by a deed which purported to be for valuable considerations, but for which the plaintiff' testified that she received nothing. The plaintiff proved against her husband's estate, and her claim was allowed, but she received nothing upon it. It is argued that her position as a creditor preserved for her an insurable interest in the factory after the transfer, and that the conveyance was not a sale. In the opinion of a majority of the court, the conveyance was a breach of condition. "We are of opinion, in the first place, that it makes no difl'erence whether the consideration of the conveyance is of substantial value, or is merely the technical consideration which is said to be imported by the execution of a deed. If the plaintiff's conveyance was in other respects a breach of the condition, the fact that she received nothing for it will not save it. Essex Savings Bank V. Meriden Ins. Co., 57 Conn. 335, 338. But it is said that the plaintiflT did not alienate her whole interest, because she retained an insurable interest after the transfer, as one of the creditors for whom her grantee held the propertj' in trust. We will assume that it is true that a creditor has an insurable interest in the estate of his debtor when conveyed to an assignee in insolvencj'. Eastern Railroad v. Relief Ins. Co., 98 Mass. 420, 423 ; Rohrbach v. Germania Ins. Co., 62 N. Y. 47, 58. But we think that an interest of that kind would not be a continuation of the former interest of the plaintiff. By her conveyance the plaintiff parted with the whole legal title, and, as her grantee already owned her husband's equity, she extinguished her mortgage. In whatever words we express the fact, she put an end to her preferred right to satisf}' her debt out of this land before other creditors could touch it. Her right afterwards was not created by or reserved or excepted out of her conveyance. It arose from the independent circumstances that her grantee was an assignee in insolvencj', and that the land became part of the fund held by him as such. It was a right, in common with other creditors, to share in the fund, and in the land onl}' in so far as it was part of the fund. We are of opinion that the condition against sale was broken. Dadmun Manuf. Co. v. Worcester Ins. Co., 11 Met. 429, 435 ; Oakes v. Manufacturers' Ins. Co., 131 Mass. 164, 165 ; Dailey v. Westchester Ins. Co., 131 Mass. 173; Grevemej-er v. Southern Ins. Co., 62 Penn. St. 340, 342 ; Adams v. Rockingham Ins. Co., 29 Maine, 610 BAENES V. UNION MUTUAL INS. CO. [CHAP. VI. 292, 296, 297 ; Hazard v. Franklin Ins. Co., 7 R. I. 429. See further, Young V. Eagle Ins. Co., 14 Graj-, 150, 152, 153. We express no opinion whether there was a breach of the condition against the factory ceasing operation. Judgment on the verdict. L. S. Bahney <& E. M Parker, for the plaintiff. J. N. Marshall ( G. J. Burns with him) , for the defendant. (b) Sale, transfer, or change in title or possession. BARNES V. UNION MUTUAL INS. CO. Supreme Coukt of Maine, 1863. 51 Me. 110. Repoeted from Nisi Prius by Davis, J. This was an action on a policy of insurance, to recover for loss insured against. F. 0. J. Smith, for the plaintiff. T. M. Hayes, for the defendants. The facts in the case, bearing on the questions considered, are full}' indicated in the opinion of the court, which was drawn up by Davis, J. The plaintiff applied for insurance on " one half, in common and undivided," of certain buildings, and household furniture therein. In answer to the question, "Who owns and occupies the buildings?" he answered, "The applicant owns and occupies the property." A fair construction of this representation of title is, that the applicant was the owner of an undivided half of the property described, and the sole owner of the property to he insured. This representation was true. The by-laws of the company are expressly made a part of the policy, as conditions of the insurance. By the sixteenth article, it is provided that "when the title of any property insured shall be changed, by sale, mortgage, or otherwise, the policy shall thereupon be void." The insurance in this case was for six years. The policy was dated Nov. 15, 1851. Upon a petition for partition, duly prosecuted by the other tenant in common, upon which judgment was rendered Jan. 20, 1857, the premises were divided, and the plaintiff became the owner of a particular half thereof, in severalty. The buildings were destroyed by fire, April 1, 1857. The partition of the property may not have been an alienation, as understood in matters of insurance. But when a by-law provides that any alteration or change in the title shall make the policy void, any material change in the title will have that effect, though it is not by an alienation. Edmands v. Mutual Safety Fire Ins. Co., 1 Allen, 311 ; Campbell v. Hamilton Mutual Ins. Co., 51 Me. 69. SECT. II.] LOY V. HOME INS. 00. 611 The title, in the case at bar, was materially changed bj- the partition. The effect was equivalent to an alienation, and a purchase. The plaintiff no longer owned any interest in the entire property, while he did own the entire interest in a part of it. It was the same as if he had given his co-tenant a deed of his interest in a specific part, and had received from him such a deed of the other part. His title no longer corresponded with the policy, in nature or quantitj-. He insured but one undivided half of the part which he owned after it was divided. And, after the division, he owned no part of the other half. If he could recover at all, which he cannot do, it would be for only one- fourth part of the whole, — or, for an undivided half of the part which he continued to own after the partition. The furniture was separately valued in the policy ; and it is claimed that the plaintiff is entitled to recover for the loss of that, if he fails to recover for the loss of the buildings. But the provision in the by-laws is that, if the title is changed, the policy shall be void. And besides, it has been decided b}' this court, that such a contract of insurance is indivisible, and, if rendered void by the assured in any of the items of property insured, the whole policy is void. Lovejo}^ v. Augusta M. F. Ins. Co., 45 Me. 472 ; Gould v. York County Mut. Fire Ins. Co., 47 Me. 403 ; Day v. Charter Oak Ins. Co., 51 Me. 91. Plaintiff nonsuit.^ Appleton, C. J., Kent, Walton, and Dickerson, JJ., concurred. (Kent, J., held that the representation of the plaintiff, as to oc- cupancy of the building, was either a misstatement or a concealment of a material fact.) LOY V. HOME INSURANCE CO. Supreme Court of Minnesota, 1877. 24 Minn. 315. Appeal by defendant from an order of the District Court for Olmsted Countj-, Mitchell, J., presiding, denying a motion for a new trial in an action on a policy of insurance. Henry O. Butler, for appellant. Start & Gove and P- M. Tolbert, for respondent. Cornell, J. The policy on which this action is brought contains the following among other conditions : — " If the property be sold or transferred, or any change takes place in title or possession (except by reason of the death of the insured), whether by legal process or judicial decree, or voluntary transfer or conveyance, . . . this policy shall be void." The property insured consisted of a dwelling-house, and certain fur- niture and wearing apparel therein contained, situate upon premises 1 Ace: Trabue v. DweUing-House Ins. Co., 121 Mo. 75 (1894). — Ed. 612 LOY V. HOME INS. CO. [cHAP. VI. belonging to the respondent. After the issuance of the policy the re- spondent mortgaged the premises, and the same were sold under a power of sale, upon a foreclosure of the mortgage b3- advertisement, pursuant to the statute. After the sale, and before the period for re- demption had expired, the loss occurred, the respondent still being in possession of the premises. The question for consideration is, whether this foreclosure sale was " a sale, transfer, or change in title," within the meaning of the fore- going condition, such as avoided the policy. In construing a condition of this character, if, upon a consideration of the whole contract, it is uncertain whether the language of the stip- ulation is used in an enlarged or restricted sense, or if it is fairly open to two constructions, one of which will uphold and the other de- feat the claim of the insured to the indemnit3' which it was his object in making the insurance to obtain, that should be adopted which is most favorable to the insured, and most in harmonj- with such, the main purpose of the contract on his part. The reasons for this are twofold : the tendency of any such stipulation is to narrow the range and limit the force of the underwriter's principal obligation. It is also inserted by him for his own benefit and in language of his own choice. If any doubt arises as to its meaning the fault is his in not malting use of more definite terms in which to express it ; hence the rule of strict construction against him, and the liberal one in favor of the assured, which prevail under such circumstances. Hoffman v. JEtna Ins. Co., 32 N. Y. 405 ; Westfall v. Hudson Eiv. Ins. Co., 2 Duer, 495 ; Ins. Co. V. Wright, 1 Wall. 456 ; West. Ins. Co. v. Crapper, 32 Pa. St. 351. Applying these principles, a correct interpretation of this condition of the policy would seem to be attended with but little diflSculty. In the first place it makes, a sale or transfer of the property a cause for avoiding the policy. Within the meaning of the stipulation this refers to an absolute and completed, and not a conditional or incomplete, sale or transfer ; in other words, a sale that wholly divests the owner of the property of all insurable interest therein. The succeeding clause, which gives a like eflfect to any " chano-e in title, . . . whether by legal process, judicial degree, or voluntary transfer or conveyance," has reference to an absolute transfer of the legal title in one of these ways, though such transfer, as in the case of a conveyance in trust, or by a deed, absolute in terms, but intended merely as a secuiitj-, might not operate to divest the owner of the property of all his insurable interest therein. In our judgment nothing short of a complete transfer of the legal title comes within the prohibition of this stipulation. The mere crea- tion of a lien or encumbrance upon the property insured cannot be re- garded as affecting " any change in title," either in the legal sense or according to the ordinary and popular understanding. " In legal ac- ceptation," says Allen, J., in S. F. & M. Ins. Co. v. Allen, 43 N. Y. 389, " title has respect to that which is the subject of ownership, and SECT. II."] LOY V. HOME INS. CO. 613 is that which is the foundation of ownership ; and with a change of title, the right of propert}-, the ownership, passes.'"' As applied to real estate, it is defined to be " the means whereb}' the owner of lands or other real property has the jnst and legal possession and enjoj-ment of it ; " " the lawful cause or ground of possessing that which is ours." (2 Bouv. Law Diet. 986.) In this sense, which is also the ordinary- and popular one in which the word is used, a " change in title " is a change in ownership, which carries the legal right of possession and propertj', and it is in this sense we must understand the word as having been used in this clause. Although within the meaning of the registry laws a mortgage of real estate is defined to be a convejance, yet under our laws it is not deemed a convej-ance in the sense of passing anj' estate or interest in lands, or transferring any legal title thereto. The only interest which a mortgagee acquires is a lien upon the land in way of security, which, prior to the foreclosure of the right of redemption, is treated as per- sonal propert3' that goes to the administrator or executor, and not to the heirs. The legal title, with the right of possession, remains with the mortgagor until a completed foreclosure is had bj- sale, and the same becomes absolute by the expiration of the period for redemption. Until this time expires the purchaser at the sale has onlj' a chattel and equitable interest. He has no legal title to the lands, nor an}' conve}-- able estate therein. The character of his interest is the same as that of a mortgagee before foreclosure sale. Gen. St. c. 52, §11 ; Id. c. 75, §11 ; Donnelly v. Simonton, 7 Minn. 110 (167) ; Horton v. Maflltt, 14 Minn. 290-292. Neither is a foreclosure b}- advertisement " legal process " or a "judi- cial decree." The proceedings in this kind of a foreclosure are carried on wholly outside of court, and without the aid of its process or decree. It is obvious, then, that neither the giving of the mortgage nor the sale of the premises on foreclosure, the time for redemption not having ex- pired, effected an}' change in title or possession in respect to the prop- ertj' insured, and did not, therefore, avoid the policy. Order affirmed} 1 See McKissick v. Mill Owners' Miit. F. Ins. Co., 50 Iowa, 116 (1878) ; Commer- cial Union Assurance Co. v. Scammon, 102 111. 46 (1882); Hopkins Mfg. Co. v. Aurora F. & M. Ins. Co., 48 Mich. 148 (1882) ; Marts v. Cumberland Mut. F. Ins. Co., 44 N. J. L. 478, 481-482 (1882); Haight v. Continental Ins. Co., 92 N. Y. 51 (1883) ; Hanover F. Ins. Co. v. Brown, 77 Md. 64 (1893). Compare Mclntire v. Norwich F. Ins. Co., 102 Mass. 230 (1869). In Hanover F. Ins. Co. o. Brown, supra, Bryan, J., for the court, said : — " The passing or entry of a decree of foreclosure is one of the causes which accord- ing to the terms of the policy would make it void ; and it is maintained by the defend- ant that the proceedings for a sale under the mortgage were equivalent to the entry of such a decree within the meaning of the policy. A mortgage is in law a conditional sale. The mortgagor in consideration of so much money sells the property to the mortgagee, upon the condition, however, that the sale is to be void, provided by a given day the mortgagor repays the money with interest. If the mortgagor fails to repay the money with interest at the time stipulated, the mortgagee's title to the 614 LOY V. HOME INS. CO. [CHAP. Vli property becomes absolute at law, because the condition subsequent which was to de- feat it has not been performed. But courts of equity give to the mortgagor what is called the equity of redemption ; that is, they allow him to redeem his forfeited mort- gage by repaying uotwithstanding the default the sum mentioned therein. And the only way for the mortgagee to prevent this redemption is to file a bill in equity in which he calls upon the mortgagor to repay the money, or be forever foreclosed of his equity of redemption. The court, in due course, passed a decree appointing a day for the money to be paid, and declaring that if it is not paid at or before that time the mortgagor's right of redemption shall be forever taken away. Upon the failure to pay at the designated time the decree is made final and absolute. This is a decree of fore- closure, and it was the ordinary proceeding in behalf of mortgagees before the Act of Assembly, which authorized courts of equity to decree that the property should be sold. The decree for foreclosure has disappeared from our practice, being entirely superseded by the more convenient decree for sale, which is however sometimes, though inaccurately, called a foreclosure decree. The proceeding in this case was not a de- cree of any kind, but an advertisement and sale under a power contained in a mort- gage. To be sure the sale under such a power would be as effective as a sale under a decree of a court of equity, and so would any other sale lawfully made. But if we could consider it as equivalent within the meaning of the policy to a decree, we could not disregard the difference between a decree for a sale and a decree of foreclosure. A sale under a decree does not pass the title unless it is ratified and confirmed. The court is the vendor acting through its agent the trustee who has been appointed to make the sale. He reports to the court the offer of the bidder for the property ; if the offer is accepted, the sale is ratified, and thereupon, and not sooner, the contract of sale becomes complete. Before ratification the transaction is merely an offer to pur- chase which has not been accepted. On the other hand a decree of foreclosure ipso facto extinguishes the mortgagor's right of redemption and vests the entire title in the mortgagee. " Another cause which would render the policy void is a sale under a deed of trust, or any change in the title or possession of the property. It was necessary that the sale made V)y the attorney named in the mortgage should be reported to a court of equity, and when it was reported, the same proceedings were required as if it had been made by a trustee under a decree. Code, Article 66, section 9, Public General Laws. We have seen that the sale was not a complete contract, and that when reported, it was merely an offer to make a purchase which had not been accepted by the only authority competent to accept it ; that is to say, the court. If we read the whole of this clause containing the causes of forfeiture it is evident that the purpose was to provide that the insurance should cease to be effective as soon as the title of the insured came to an end. It was not intended that he should have a right of re- covery for the destruction of property which he did not own. But it could not have been the purpose to forfeit the policy while his ownership continued. The sale under a deed of trust mentioned in the policy means a consummated transaction by which the interest of the insured was divested. The sale made by the attorney was finally ratified by the court after the fire had occurred. Before this ratification the pro- ceeding was merely an unaccepted proposition for a purchase and no change had taken place in the title. The property was occupied by a tenant of Hammond, the insured, and his occupancy was in law the possession of his landlord, and it continued to be vested in him until the change of title had been accomplished." — Ed. SECT, n.] HATHAWAY V. STATE INS. CO. 615 HATHAWAY et al. v. STATE INSURANCE CO. Sdpreme Court of Iowa, 1884. 64 Iowa, 229.^ Appeal from Fayette Circuit Court. The action was upon a policy insuring the firm of Hathaway & Smith, composed of plaintiff and E. P. Smith, against loss by fire on a stock of goods. The policy provided that "if the title of the prop- erty is transferred, incumbered, or changed, ... or if the policy is assigned, . . . the policj- shall be void." Before the loss, the partner- ship was dissolved, and Hathaway bought the interest of Smith in the property and in the policy. The defendant asked instructions that there was such a change of title as avoided the policj^ The court refused these instructions, and charged the jury that they were simply to determine whether the goods had been damaged by fire, and, if so, what was the amount of such damage. Verdict and judgment for plaintiff. Defendant appealed. Fouke & Lyon, Ainsworth & Hobson, and J. B. Johnson, for appellant. JbTin Hutchinson, and Hbyt & Hancock, for appellee. D. W. Clements, for intervenor. Reed, J.^ . . . Whether the sale b}' Smith of his interest has the effect claimed by defendant depends upon the construction which shall be placed on the words of the provision of the policy quoted above. The question as to the effect on the contract of insurance of the sale b^* one joint owner to another of his interest in the joint property, when the policy contains a provision against alienation, has often been before the courts ; and the numerical weight of authority is probably- in favor of the proposition that a sale bj' one partner to his co-partner of his interest in the partnership property does not have the effect to terminate a policy of insurance which contains a provision against the sale or transfer of the property. The case of Hoflfman v. ^tna Ins. Co., 32 N. Y. 405, is probably the leading case holding this doctrine. The policy in that case provided that it should be null and void, " if the said property shall be sold or conveyed." The policy was issued to a partnership, one member of which sold his interest in the property to his co-partner before the loss, and it was held that this did not have the effect to avoid the policy ; and this holding is followed in Dermani v. Ins. Co., 26 La. Ann. 69 ; Pierce v. Ins. Co., 50 N. H. 297; Burnett w. Ins. Co., 46 Ala. 11, and West «. Ins. Co., 27 Ohio St. 1 ; in each of which cases the policy contained substantially the same provision. The ground upon which the holding is put is, that the alienation against which the parties provided by the provision 1 The statement has been drawn from the opinion. — Ed. 2 After stating the case. — Ed. ' 616 HATHAWAY V. STATE INS. CO. [CHAP. VI. was of the whole of the insured property, and not merely' a portion of it, or some interest in it less than the whole ; and that a sale of his interest bj- one partner to his co-partner was not such a dis- position of the property as was contemplated bj' the parties when they framed the provision ; that what was intended to be guarded against was such a transfer of the property as would change the pro- prietary interest therein of the parties With whom the insurers con- tracted, and substitute others with whom thej- had not consented to contract ; but that the sale of his interest by one partner to his co- partner did not have the effect to introduce a stranger to the contract, or to make any change in the condition or situation of the propert}- or risk. In Cowan v. The State Ins. Co., 40 Iowa, 651, the policy was issued to plaintiff, but before the loss he sold the insured property to a partnership of which he was a member. It contained a similar pro- vision against alienation, and it was held by this court that, as he retained an insurable interest in the property, the polic}' was not avoided by the sale ; that, while the clause in the policy prohibited the alienation of the insured property, it did not forbid the sale of an interest therein less than the whole, and, as long as the plaintiff retained an insurable interest in the property, the policy attached to and protected that interest. We think it clear that this case does not sustain the position of appellee in the case now before us. The facts of the two cases, and the questions involved, are essentiall}' different. In the one, thp party seeking to enforce the contract was an original part}- to it, and the question involved was whether his right of recov- ery was defeated by his sale of an interest in the insured propertj', while, in this case, plaintiff is not personally a party to the contract, and the question is whether he acquired a right of action on the policy bj- his purchase of an additional interest in the property. Nor do we think that the other cases cited above are conclusive of the question here involved. The provisions of the policies involved in those cases were that the policies should be null and void if the property was sold or conveyed, while the provision in this case is that, " if the title of the property is transferred, incumbered, or changed, . . . the policy shall be void." The effect of this language is materially different from that used in the policies in the other cases. The title of the property would be transferred by a sale or conveyance of it to another person. If the word " changed " had not been inserted in the provision, the effect of the language would have been the same as that used in the other policies, and the same construction which was put upon the pro- visions in those cases could fairly have been put upon it. But the parties, having inserted in their contract words which fully express the provision that the policy would be avoided b}' a sale or convevance of the property to a stranger, have also inserted another word, by which the same consequence is made to follow a change of the title to the property. It is certainly true that by a transfer of the title to the whole of the property to a stranger the title would be changed, but SECT. II. ] HATHAWAY V. STATE INS. CO. 617 we cannot presume that the parties intended to express that provision b}' the use of the word "changed," for, as we have seen, they had ah-eady expressed it by the words which precede it in the contract. This latter word was deliberately used by the parties, and we can- not reject it in construing the contract, and, as it neither limits nor qualifies those which precede it, we are bound to presume that the parties intended by its use to express some provision or condition of their contract which was not otherwise expressed. The effect of the provision is, then, that the policy would be avoided, either by a transfer of the title of the property insured to a stranger, or by a change of the title to it. This conclusion can be avoided, as we think, oulj' by disregarding the elementary rules of construction. The case turns, then, upon the question whether a change of the title of the property occurred upon the dissolution of the pa,rtnership and the sale by Smith to plaintiff of all of his interest in the propert}-, and it seems to us there can be but one answer to this question. During the existence of the partnership it cannot be said that plaintiff had title to any specific share or interest in the property-. His claim was to the proportion of the residue which should be found to be due to him upon the final balance of the accounts of the firm, after the con- version of the assets and the liquidation of its debts. But, upon the dissolution of the partnership, and the purchase by him of Smith's interest, he was vested with the absolute title to the whole of the property. We think, therefore, that the Circuit Court erred in refus- ing to give the instructions asked by defendant. The conclusion we reach is sustained by the following authorities : Keeler v. Niagara Ins. Co., 16 Wis. 623; Hartford Fire Ins. Co. v. Ross, 23 Ind. 179; Dix v. Mercantile Ins. Co., 22 111. 272; Wood?;. Eutland Ins. Co., 31 Vt. 552. Meversed} 1 Ace. : Girard F. & M. Ins. Co. v. Hebard, 95 Pa. 45 (1880) ; Oldham v. Anchor F. Ins. Co., 90 Iowa, 225 (1894). Contra: Virginia F. & M. Ins. Co. v. Vaughan, 88 Va. 832, 835-837 (1892); Phe- nix Ins. Co. v. Holcombe, 57 Neb. 622 (1899). See Dreher v. ^tna Ins. Co., 18 Mo. 128 (1853); Jones v. Phoenix Ins. Co., 97 Iowa, 275 (1896). In West V. Citizens' Ins. Co., 27 Ohio St. 1 (1875), there was issued to H. F. West & Co., a firm of four members, a policy covering the firm's stock of goods, and provid- ing that " if this policy, or any interest therein, shall be assigned, . . . these presents shall be . . . void." One of the partners retired from the firm, and assigned to his co-partners his interest in the stock of goods and in the policy. It was held that the policy was not avoided, either wholly or in part, and that the partners continuing the business could recover the whole damage subsequently suffered by them, up to the amount of the policy. — Ed. 618 BAKRY V. HAMBUEG-BKEMEN FIRE INS. CO. [CHAP. VI. BARRY, Appellant, v. HAMBURG-BREMEN FIRE INS. CO., Respondent. Court of Appeals of New York, 1888. 110 N. Y. 1. Appeal from judgment of the General Term of the Superior Court of the city of New Yorli, entered upon an order made May 6, 1886, which affirmed a judgment in favor of defendant, entered upon an order nonsuiting plaintiff on trial. (Reported below, 21 J. & S. 249.) This action was brought upon a policy of fire insurance issued by defendant upon a dwelling-house. The material facts are stated in the opinion. W. E. Osborn, for appellant. Edward Salomon, for respondent. Roger, C. J. It was assumed upon the trial that the property de- scribed in the insurance policy, upon which this action was brought, had been destroyed by fire, and the policy had become payable, by its terms, to the plaintiff, except for the alleged breach of a condition of the policy set up as an affirmative defence by the answer. The condition referred to was a clause reciting substantially that "if the property shall be sold or transferred, or any change take place in the title or possession, whether by legal process, judicial decree, or voluntary transfer or conveyance, . . . without the consent of this company written hereon, . . . then . . . this policy shall be void." The property referred to consisted of real estate, and it was admitted on the trial that no change of possession thereof had taken place within the meaning of the above condition. It was alleged, however, that the property had been sold or transferred and a change of title had been effected, which, it was claimed, avoided the policy. To support this issue the defendant gave in evidence two deeds, both absolute in terms, and each purporting to convej* the property, one from Maria Sleight, the owner, to one Michael Moloughney, Jr., and another from Moloughney to John H. Corwin, which were each executed subsequent to the date of the policy, and were, respectively, duly recorded in the clerk's office of the countj' where the property was situated. This evidence established a prima facie case for the defendant. To obviate the effect of this evidence the plaintiff offered to prove that the deed to Moloughnej^ was given under a parol agree- ment to secure an existing indebtedness from Mrs. Sleight to Molough- ney, and that a subsequent agreement was made between Mrs. Sleight and Moloughney, whereby Moloughney relinquished his security and conveyed the property to Corwin, as security for a debt owing by Mrs. Sleight to the latter. The defendant's counsel, for the purposes of the motion, admitted the truth of the facts stated in the plaintiff's offer, and thereupon moved the court to nonsuit the plaintiff, and the court granted the SECT. II.] BAERY V. HAMBURG-BREMEN FIRE INS. CO. 619 motion, to which ruling the plaintiff duly excepted. The General Term, upon appeal to that court, affirmed the judgment, and the plaintiff appeals to this court. For the purpose of our decision it must, therefore, be assumed that the deeds in question were given as securitj-. We are of the opinion that the courts below have erred in their views of this case, .and that the question presented by the excep- tion has been repeatedly adjudged in favor of the plaintiff by the courts of this state. There is no ambiguity in the terms of the con- dition of the policy', and no question of construction arises over the true meaning and intent of the provision. If the property has, in fact, been sold or transferred or any change has taken place in the title or possession, then the policy by its terms becomes void. In determining this question we can only inquire whether any transaction has taken place which, in law, transferred the title of the propertj'. The parties must be assumed to have contracted with full knowledge of the law and to have used the terms emploj-ed in the policy with reference to the character which the law attaches to them. It is not contended bj- the defendant that the giving of a mortgage bj- Mrs. Sleight upon the propertj' would have effected a sale or transfer thereof or a change of title within the meaning of the con- dition, but it is claimed that because the defeasance was not written in the deeds put in evidence they operated as a legal transfer of the title so far as the defendant was concerned, and thus came within the terms of the polic}'. The precise and only question in the case is what effect does the law give to a deed, absolute in form, but which, in fact, is given as securit3- for a debt. Is it a conve3'ance of title or simply a chattel interest incapable of affecting the title, except through legal proceedings to enforce the collection of a debt ? It seems to us that the courts below have failed to appreciate the effect produced bj^ the aboHtion of the distinction between law and equit}', and the more recent decisions in this state depriving a mort- gage of the characteristics of a conve3'ance. The cases are very numerous in our reports, and so familiar to the profession that we are surprised at the necessity, at this date, of referring to them at all. We will, however, cite a few of the cases showing that it has been the settled law for many j'ears that a deed, though absolute in form, if given as security for a debt, is, to all intents and purposes, both at law and in equitj-, a mortgage only.^ . . . It follows, from these authorities, that the legal position of Mrs. Sleight, as the owner of the propert}', was not changed or affected by the deeds referred to, and that such instruments did not bring the transaction within either the letter or the spirit of the contract. The interest of Mrs. Sleight in the property remained the same after as before the deliver3'. It is true, that, through a course of legal pro- 1 Here were stated or quoted Murray v. Walker, 31 N. Y. 399 (1865) ; Horn v. Keteltas, 46 N. Y. 605 (1871) ; Carrw. Carr, 52 N. Y. 251 (1873) ; Shattuck v. BaBCom, 105 N. Y. 39 (1887) ; and Hodges v. Tennessee Ins. Co., 8 N. Y. 416 (1853). 620 BAEEY V. HAMBURG-BREMEN FIRE INS. CO. [cHAP. VI. ceedings, the title to the property might finally be acquired by some one, if the debt was not paid, but this would be equally true if Mrs. Sleight had given to Moloughne}- her note of hand for the debt and it had been followed by judgment and a sale of the land under execution. The circumstance that Moloughnej'or CorwLn might, by a convej-ance to a bona-fide purchaser, have given a good title under the recording acts, does not affect the question as to whether Mrs. Sleiglit was the legal owner of the propertj' at the time of the trial. She could, of course, estop herself by her conduct as against certain persons, from proving the truth as to her title, but this does not show that she is not the holder of the legal title, and there is nothing in this case to bar her from controverting the truth of the defendant's evidence tending to show that she had transferred the title of the property. "We think the judgments of the courts below should be reversed and a new trial ordered, with costs to abide the event. All concur. Judgment reversed.^ 1 Ace. . German Ins. Co. o. Gibe, 162 111. 251 (1896) ; Bank of Glasco v. Spring- field F. & M. Ins. Co., 5 Kan. App. 388 (1897) ; Peck v. Girard E. & M. Ins. Co., 16 Utah, 121 (1897). Contra : Western Massachusetts Ins. Co. v. Riker, 10 Mich. 279 (1862). See Bryan v. Traders' Ins. Co., 145 Mass. 389 (1888). Compare Foote v. Hartford F. Ins. Co., 119 Mass. 259 (1876). In Judge V. Connecticut F. Ins. Co., 132 Mass. 521 (1882), a fire insurance policy on a stock in trade provided that " if the property be sold or transferred, or upon the passing or entry of a decree of foreclosure, or upon a sale under a deed of trust, or any change take place in title or possession (except in case of succession by reason of the death of the assured), whether by legal process or judicial decree or voluntary transfer or conveyance, . . . this policy shall be void." Chattel mortgages were subsequently executed; but possession was not taken under them, and the sums secured were not due at the time of the fire. Devens, J., for the court, said : — " That a subsequent mortgage is not to be treated as an alienation of the estate under the clause forbidding alienation, has been repeatedly held. Jackson v, Mass. Ins. Co., 23 Pick. 418. Tomlinson v. Monmouth Ins. Co., 47 Maine, 232 ; Smith v. Mon- mouth Ins. Co., 58 Maine, 96 ; Shepherd v. Union Ins. Co., 38 N. H. 232 ; Commercial Ins. Co. V. Spankneble, 52 111. 53. Nor is there in this respect any distinction between real and personal property, where the goods mortgaged are not taken possession of. Rice V. Tower, 1 Gray, 426 ; Van Deusen v. Charter Oak Ins. Co., 1 Rob. (N. Y.) 55 ; Hartford Ins. Co. v. Walsh, 54 El. 164. But even if there was not an alienation of the property, or any part of it, it may be contended that there was a change in title or interest which would avoid these policies. . . . " Had it been intended to include mortgages among those changes in title which would avoid the policies, it would seem that they would have been specified in express terms. When a policy enumerates changes in title in particular ways, by which it is to he avoided, a change otherwise made cannot have this effect, where at least it does not amount to an alienation of the property. All the ways enumerated are alienations of the property, which a mortgage is not. If it is an alteration or change in the title, it is one of an entirely different character from those specified. Mortgages are not sales, trans- fers, or conveyances, in the usual acceptation of those words. They are securities for the payment of money. Ewer v. Hobbs, 5 Met. 1 ; Norcross v. Norcross, 105 Mass. 265. The words which follow " change in title," &c., contemplate that the party making the sale or transfer is to part with his interest in whole or in part. They apply to the termination of that interest. The mortgagor is still interested to the fuU value of SECT. II.] GEEMANIA FIEE INS. CO. V. HOME INS. CO. 621 GERMANIA FIRE INS. CO., Appellant, v. HOME INS. CO., Respondent. Court of Appeals of New Yokk, 1894, 144 N. Y. 195.^ The Home Insurance Co. insured J. A. D. Verdier on a stock of hardware. The policy provided that "if the property be sold or transferred, or any change takes place in title or possession . . . this policy shall be void." Verdier took in a partner, Brown, trans- ferring to him a three-tenths interest in the property- insured. For a subsequent loss, action was brought by the Germania Fire Ins. Co. as assignee of Verdier & Brown. Upon an agreed statement of facts, the Special Term of the Superior Court of the city of New York gave judgment for the defendant. The General Term affirmed this judg- ment, as reported in 4 N. Y. Misc. 443. The plaintiff appealed. G. TV. Cotterill, for appellant. George Richards, for respondent. Bartlett, J.'' . . . The question presented by this appeal is whether the fact of the insured having taken in a partner rendered the policy void. It was stated on the argument that this precise point had never been presented to this court, but it is insisted that the trend of some of our decisions is in favor of plaintiff's contention that the policy is not avoided by taking in a new partner.' . . . None of these cases deals with the question now under consid- eration. We think it perfectly clear on principle that the sale of an interest in the insured property by Verdier to Brown and the formation of a co-partnership between the two rendered the polic}' void. The contract of insurance is peculiarly personal in its nature, and the success of the business of underwriting depends largely upon what is known as the moral hazard. It is a well-established principle of the common law that every man has the right to determine with whom he will enter into contract obligations. An insurance company is induced to issue or withhold its policy after earefiillj' scrutinizing the character of the applicant for insurance. the property ; he makes no such change in title or interest as would be effected by the transactions enumerated. . . . " We are therefore of opinion that there was no such change in title and interest as avoided the policies." — Ed. 1 The statement has been rewritten. — Ed. 2 After stating the case. — Ed. 3 Here were summarized Hoffman «. ^tna F. Ins. Co., ante, p. S02 (1865) ; Walton V. Agricultural Ins. Co., 116 N. Y. 317, 326 (1889) ; and Walradt v. Phcenix Ins. Co., post, p. 625 (1893.) —Ed. 622 GEEJIANIA riEE INS. CO. V. HOME INS. CO. [CHAP. VI. It Is of the utmost importance to the companj' to ascertain who is to be vested with the title and possession of the propert}' sought to be insured. It would be a harsh and indefensible rule that required the under- writer, who had insured an individual on a stock of goods in a store, to continue the insurance after the insured had taken in two partners and formed a firm wherein each partner was vested with an undivided third interest in the property covered by the policy, without having been afforded the opportunity to examine into the moral and business characters of two strangers to the original contract. The right of the insurance company was in nowise invaded when this court held that a sale by one partner to another of his interest, where both were insured, did not avoid the policy. It is only when a stranger is to be brought into contractual relations with the insurance company that the consent of the latter is essential. This right of the company has been upheld in other jurisdictions. Drennen v. London Assurance Corporation, 20 Fed. Rep. 657 ; Card V. Phoenix Ins. Co., 4 Mo. App. 424; Malley v. Atlantic Fire and Marine Ins. Co., 51 Conn. 222, 250, 251. The appellant urges that the protection of the policy should be extended to the new partner by virtue of the following words con- tained therein, viz. : " And the said Home Insurance Company hereby agree to make good unto the said assured, his executors, administrators, and assigns, all such immediate loss," etc. It is argued that the word "assigns" extends the insurance to the new partner's interest. The policy is capable of no such construction ; the clause in question is merely a covenant on the part of the companj' with the insured to pay to him, or his legal representatives or assigns, the amount of the loss that may become due to him under the terms of the policy. The judgment and order appealed from should be aflSrmed, with cost. All concur. Judgment accordingly^ 1 See Card v. Phoenix Ins. Co., 4 Mo. App. 424 (1877). — Ed. SECT. II.] FARMERS' AND MEECHANTS' INS. CO. V. JENSEN. 623 PHCENIX INS. CO. V. ASBUEY. Supreme Court of Georgia, 1897. 102 Ga. 565. Action on insurance policy. Before Judge Sheffield. Terrell Superior Court. May term, 1896. Mynatt & WiUcoxon and M. C. Edwards, Jr., for plaintiff in error. J. H. Guerry and J. A. Laing, contra. Cobb, J. 1. "When tiiis case was here at the March term, 1895 (95 Ga. 792) it was held that a convej-ance under section 1969 of the Code of 1882 (Civil Code, § 2771) was an alienation of the property passing title to the grantee, and that consequently the making of such a con- veyance by the insured vitiated a policy stipulating that it should be void "if the property should be sold, or the title or possession of the property, or any part thereof, transferred or changed, whether by legal process, judicial decree, conveyance, or otherwise." At the trial now under review it was affirmatively and conclusively shown that the deed made by the plaintiff below was void for usury. This being so, it did not pass title out of him, and therefore presented no obstacle to a recovery by him from the company. 2. This case is controlled by what is above stated ; the trial judge committed no error in instructing the jury that the company was liable, leaving them to fix the amount ; and it appearing that the verdict as to amount was sufficiently sup- ported by the evidence, there is no cause for granting another hearing. Judgment affirmed, all the justices concurring. FARMEES' AND MERCHANTS' INS. CO. v. JENSEN. Supreme Court of Nebraska, 1898. 56 Neb. 284. Error from the District Court of Saunders Countj'. Tried below before Sedgwick, J. The opinion contains a statement of the case. UaUecJc F. Hose and Wellington H. England, for plaintiff in error. Clark & Aden, contra. Eagan, Com. This is an error proceeding instituted in this court by the Farmers' and Merchants' Insurance Company to review a judg- ment of the District Court of Saunders County pronounced against it in favor of Iver Jensen. Jensen in his petition declared upon an ordinary fire insurance policy. The insurer interposed as a defence to the action that the contract of insurance provided that it should cease to be in force "in case any change shall take place in the title ... of the assured in the above mentioned property" without the 624 FAKMEES' AND MEECHANTS' INS. CO. V. JENSEN. [CHAP. VI. consent of the insurer thereto indorsed on the policy ; that after the delivery of the policy the insured, his wife joining therein, conve^'ed the real estate on which the insured property was situate, by ordinary warranty deed, to one John H. Jensen, and that the latter afterward by an ordinary warranty deed conveyed the insured property to the wife of the insured, all without the knowledge or consent of the insurer. The insured attempted to meet this defence by a reply admitting the conveyance of the title by the insured to John H. Jensen and by him to the wife of the insured, but alleging that these conveyances were made in pursuance of an agreement between the insured and his wife that the latter should and would hold the title to the property for the use and benefit of the insured aud subject to his direction and control. The judgment of the District Court cannot stand. The provision in the policy that it should cease to be in force if a change should take place in the title of the insured without the consent of tlie insurer is a valid and reasonable provision. An insurance contract is a personal one between the insured and the insurer. An insurance company might be very willing to guaranty A against loss or damage of his property b^' fire, but unwilling to furnish such a guaranty to A's ven- dee ; and it is for this reason that such a provision as the one under consideration is inserted in fire insurance policies, so that in case the insured shall transfer his title the insurer may have notice thereof and an opportunity to elect whether it will keep the policy in force in favor of the grantee or vendee ; and it is because the courts recognize such a provision in an insurance policy to be a personal contract between the insurer and the insured that they hold that the violation thereof by the insured terminates the contract of insurance. Milwaukee Me- chanics' Mutual Ins. Co. v. Ketterlin, 24 111. App. 188 ; Langdon v. Minnesota Farmers' Mutual Fire Ins. Ass'n, 22 Minn. 192 ; Oakes V. Manufacturers' Fire & Marine Ins. Co., 131 Mass. 164 ; Ehrsam Machine Co. v. Phenix Ins. Co., 43 Neb. 554. Counsel for the defendant in error insist that since the wife of the insured holds the legal title to the insured property in trust for him there has been no violation of the provision of the policy under consid- eration by the assured. This contention we think untenable. The provision of the policy is that if any change should take place in the title of the assured, the policy should cease to be in force. Certainly the execution and delivery of the warranty deed by the assured and his wife to John H. Jensen vested the latter with the legal title to these premises ; and the execution and delivery by the latter of the warranty deed to the wife of the assured vested her with the legal title to these premises. There has been, then, a change in the title of the assured. The authorities cited by counsel for defendant in error do not sustain their contention. One of these cases is Grable v. German Ins. Co., 32 Neb. 645. In that case the assured, without the knowledge or consent of the insurer, entered into a contract in writing, agreeing to SECT. II.] WALEADT V. PHCENIX INS. CO. 625 sell the insured property and make a conveyance thereof upon the pay- ment of certain sums of money in future by the purchaser. This con- tract was interposed as a defence to a suit on the insurance policy ; but the insurance companj- was held liable upon the ground that the contract agreeing to sell and convey was not an alienation of the title to the propert}'. Another case cited is Bailej' v. American Central Ins. Co., 13 Fed. Rep. 250. In that case the poUcy was issued to a mort- gagee. He subsequently became the owner of the insured propertj', after which it was destroyed b^' fire. In a suit upon the policj^ the insurance company interposed the defence of a change of title without its knowledge or consent ; but the court held that a mere increase of his interest in the insured propertj' was not a change of title within the meaning of the contract. The judgment of the District Court is Reversed and the cause remanded?- (c) Change in interest^ title, or possession. WALEADT, AS Assignee, etc., EesPONDENT, v. PHCENIX INSURANCE CO., Appellant. CouKT OP Appeals of New Yoek, 1893. 136 N. Y. 375.'' Action upon a policy for $1,500 insuring the plaintiff's assignor against loss by fire to a certain stock of goods described as then in a brick store in the village of Theresa, N. Y., for one year from April 13, 1889. The policy provided that " this entire policy . . . shall be void ... if any change, other than by the death of an insured, take place in the interest, title, or possession of the subject of insurance (except change of occupants without increase of hazard) whether by legal process or judgment or by voluntary act of the insured or otherwise." On Feb. 18, 1890, a judgment for $1,019.13 was recovered against the insured. On April 2, 1890, an execution was issued upon this judg- ment. On April 3 the execution was delivered to the sheriflf. On April 4 the sheriff levied upon the goods, caused the store to be closed, and took the keys. About midnight the property — worth about $11,000 — was entirely destroyed by fire. On April 5 the assured made a general assignment to the plaintiff for the benefit of creditors. 1 Ace. : Walton v. Agricultural In.s. Co., 116 N. Y. 317 (1889). See Oakes v. Manufacturers' F. & M. Ins. Co., 131 Mass. 164 (1881). Compare Kyte v. Commercial Union Assurance Co., 144 Mass. 43 (1887). — Ed. 2 The statement has been rewritten, upon the basis of the opinion, and with the aid of the report in 64 Hun, 129 (1892). — Ed. 40 626 WALEADT V. PHCENIX INS. CO. [CHAP. VL The defendant, at the close of the evidence, moved for a nonsuit. The court refused ; and the defendant excepted. The jury having found a verdict for the plaintiff, and the General Term of the Supreme Court having affirmed an order denying a motion for a new trial, the defendant company brought this appeaL A. H. Sawyer, for appellant. C. W. Thompson, for respondent. O'Brien, J.^ . . . The defendant insists that, upon these facts, there was such a change of interest and change of the possession as avoids the policj', within the meaning of the above conditions. If there was a change of interest, within the meaning of the policy, that result was produced by the delivery of the execution to the sheriff, as the goods of the debtor are bound from that time (Code, § 1405). The levy was not necessary to work such change, and the only effect it had was to change the possession. We must first determine what the parties to the contract intended when they made use of the terms, "change in the interest, title, or possession of the subject of insurance." The interest which a person may have in property is affected in many ways without producing a change in such interest, as that term is generally understood ; when he contracts a debt or incurs an obligation this, in a broad sense, may affect such interest, as the property constitutes the means of payment, and his pecuniary condition, in a general sense, depends upon what he has left after discharging all his debts and obligations. The debt assumes another form by the recovery of a judgment, and the execution is the process which, when delivered to the oflBcer, clothes him with authority to enforce the collection of the debt. That is the foundation of all the subsequent steps, and while each event in the progress of proceedings for collection may bring the debtor and creditor into closer relations and press nearer upon the property of the debtor, yet his title or interest in the property is not divested or transferred until a sale is made which operates in law to transfer his interest to another. By the delivery of the execution and the levy thereunder the officer has simply obtained authority, at some future time and in the mode prescribed by law, to expose the property of the debtor for sale, and that is the final act which changes the title and interest of the debtor. The oflScer has, no doubt, in law and from the necessity of the case, a sufficient interest in the property levied upon to enable him to protect it bj' insurance or against the acts of wrongdoers, otherwise the proceedings for collection of the debt might be defeated ; but still the owner retains the title in the same sense that he did after he made default in the payment of the debt, which, as we have seen, is the basis of every step in the process of enforcement. His interest is, no doubt, affected by the issuing of the execution and the levy, but that is also true, though perhaps in a more remote sense, by contract- ing the debt. The words "change of interest," as used in the policy, are substantially synonymous with the words " change of title," and 1 After stating the case. — Ed. SECT. II.] WALKADT V. PHCENIX INS. CO. 627 neither event occurs until the sale upon the execution. It may be asked what effect is, under such construction, to be given to the word interest, as used in the condition. It must be borne in mind that the standard policy now in use is so framed as to contain words suitable and applicable to every subject of insurance, but all the provisions are not necessarily applicable in ever}' case. That must alwajs be so whenever a contract in the same form and expressed in the same language is sought to be applied to different things, or to different classes of property'. The subject of insurance, its condition and situa- tion and the surrounding circumstances, ma}' vary so as to render words and phrases contained in the policy- not strictly applicable. There is a large class of risks, however, to which the word "interest," as used in the condition under consideration, is, no doubt, applicable. Policies are frequently written in favor of parties who have a claim upon prop- erty in the nature of a lien to secure the payment of a debt and perhaps for other purposes. When the debt is paid or transferred the interest of the insured in the subject of insurance is changed, and the indemnity' of the policy cannot inure to the benefit of another in the absence of express pro- vision or consent of the company. In such cases the word can have full effect and a perfectly natural and appropriate application. It is manifest that the parties to this contract knew and intended that in some respects the interest of the insured in the property- covered by the insurance would be changing from da}- to day. The insured was a country merchant, who, after he had effected the insurance, was at liberty to carry on trade in the goods, to buy and sell and contract debts as before ; and, under such circumstances to say that whenever an execution was delivered to the sheriff, or even the town constable, for any sum no matter hew insignificant, the policy was thereb}- avoided, would be to give to this condition a very harsh and narrow construc- tion, and one which, it seems to me, was never within the contemplation of the parties. The fair aud reasonable construction which we are bound to give to the contract does not require us to go as far as that. Quinlan v. Providence W. Ins. Co., 133 N. Y. 365. There are cases where it has been held that the recovery of a judgment and the levy of an execution avoided a policj', but that was in consequence of an express provision to that effect in the policy. These provisions have been omitted from this policj', and the same result cannot be accom- plished by a condition against a change of interest. That there was no such change of interest in this case, as is fairly contemplated by the policy, has been conclusively settled against the defendant's contention b}' a decision of this court. In Green v. Home- stead Fire Ins. Co., 82 N. Y. 517, the policy contained a condition rendering it void "if the interest of the insured be changed in any manner, whether bj- act of the insured or by operation of law." The subject of the insurance was real property, and a mechanics' lien had been filed and took effect thereon within the life of the policy and 628 WALRADT V. PHCENIX INS. CO. [CHAP. VI. before the loss. It was urged by the defendant that there could be no recovery in the case for the reason that there was a breach of the condition against any change of interest. Judge Rapallo, giving tlie opinion of the court, disposed of the question in a single sentence, in which he said, "The notice filed in pursuance of the mechanics' lien law clearly did not aflfect any change of interest in the propertj- in- sured," and the plaintiff recovered. I am unable to perceive that there is any satisfactory distinction to be made between the filing of a mechanics' lien upon real estate and the delivery of an execution against personal propertj', followed by a levj-. So that upon authority and reasonable construction, as to the intention of the parties, there was no change of interest in the case at bar. 92 N. Y. 54 ; 71 id. 508. The change of possession produced by the levj' and the action of the sheriff remains to be considered. The policy is not avoided, by the terms of the condition referred to, hj every change of possession that may take place in the property. A change of occupants, without increasing the hazard, is excepted from the operation of the condition and does not invalidate the insurance. The learned counsel for the defendant argues that the exception in the condition does not apply when personal propertj- is the subject of the insurance, and does not applj- in this case, as there cannot be an occupant of goods in a store, consistent with the ordinarj- and appropriate use of language. The General Term has shown that the word occupant is sometimes used with reference to personal propertj-. When the subject of insurance is a ship, a building not attached to the soil, so as to become part of the realty, or other things of like character, the term " change of occupants '' would be appropriate. When it is used in reference to goods in a store its fitness is not so apparent. But as the words of the policy were used to meet all cases we have no right to saj' that the exception in the condition was not designed to apply when goods were the subject of insurance, merely because the term " change of occu- pants " does not seem to be tlie most natural and appropriate. A large part of the contracts of insurance now entered into relate to personal propertj', and to hold that such an important exception, as that now under consideration, to the broad terms of a condition, had no applica- tion to such contracts, would make the rights of the parties turn upon the literal meaning of a word. What the parties intended was that a change in the control and dominion over the propertj' should not avoid the policj-, unless such change rendered the risk more hazardous. A change in the possession of a store of goods must, moreover, refer to the place where the goods are situated. In this case thej' are described as situated in a brick store. The place where the goods were kept, though not the subject of insurance, was an important element in the risk, and it was natural and proper for the parties to provide against a more hazardous change in the occupancy of that place, and hence the parties agreed that in case the possession of the goods changed that SECT. II.J GIBB V. PHILADELPHIA FIEE INS. CO. 629 fact alone would not avoid the policy unless the occupancj' of the place where they were was also changed in such a manner as to become more hazardous. In this way the words of the exception can be given their ordinary and natural meaning and the exception itself can have effect. It is onlj' in a plain case that we are warranted in saying that the parties have used language not intended to have any application to the subject-matter of the contract. Whether the change of possession that was shown in this case, followed by a change of occupants, was or was not more hazardous, depended upon the circumstances shown, and pre- sented a question of fact, which the learned trial judge properly sub- mitted to the jurj-, and was determined in favor of the plaintiff.^ . . . The judgment should be affirmed. All concur, except Earl, Peckham, and Gray, JJ., dissenting. Judgment affirmed.^ GIBB ET AL. V. PHILADELPHIA FIEE INS. CO. Supreme Court op Minnesota, 1894. 59 Minn. 267.* Appeal from a judgment of the District Court of Hennepin County. Kitchel, Cohen <& Shaw, for appellant. JFred W. Reed, for respondents. Canty, J. On February 29, 1892, the plaintiff Gibb was the owner in fee simple of the premises in question, subject to a mortgage of $1,200, held by the plaintiff Hilles. On that day defendant issued a policj' of insurance insuring Gibb to the amount of $2,000, for three years from and after that da}', against loss by Are to the buildings on the premises, loss, if any, payable to Hilles as her interest may appear ; but providing that if, in case of loss, the insurer is not liable to the mortgagor or owner, it shall be subrogated to the rights of the mort- gagee under her mortgage, and, upon paying the full amount due on the mortgage, shall receive an assignment of it. This mortgage clause also provided that the policy should not be invalidated as to the mort- gagee by any act of the owner, or by any change in the title or owner- ship of the premises. On February 28, 1893, there was a loss by fire amounting to $1,462.62. The plaintiffs brought this action to recover this loss. The case was tried b}' the court without a jury, and judgment was ordered in favor of Hilles for $1,200, the amount of her mortgage, and in favor of Gibb for the balance of said amount of the loss. From the judgment entered thereon, defendant appeals. 1 The remainder of the opinion dealt principally with arguments from analogy. — Ed. 2 Acc. : Herman v. Katz, 101 Tenn. 118 (1898). Compare Carey v. German American Ins. Co., 84 Wis. 80, 85-86 (1893). — Ed. .3 xhe reporter's statement has been omitted. — Ed. 630 GIBB V. PHILADELPHIA FIRE INS. CO. [cHAP. TI. The appellant concedes that the plaintiff Hilles is entitled to recover, but contends that a breach occurred, prior to the fire, which avoided tlie policy as to Gibb ; that he is not entitled to recover ; and that defendant is entitled, on payment to Hilles of the amount of her mortgage, to be subrogated to her rights under the mortgage. The policj' contains the following provisions: "This entire polie3-, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void ... if any change other than by the death of an insured take place in the interest, title, or possession of the subject of insur- ance (except change of occupants without increase of hazard), whether by legal process or judgment, or by voluntary' act of the insured, or otherwise." It is found by the court : That on March 23, 1892, plaintiff made a contract in writing with one Maggie J. Kell}', whereby he sold and agreed to convey to her the premises, consisting of five lots, by deed of warranty, on prompt and full performance hy her of the agree- ment, and she agreed to pay therefor the sum of 12,500, — $300 cash, and $1,000 in instalments of $50 every sixty daj-s thereafter until paid, the balance to be paid by her in assuming said mortgage, — she to have possession of the premises until default in payment ; and in case of such default she agreed to surrender possession on demand, and that the agreement should be void at the option of the vendor. That at and from the time of malting the policy of insurance, until the time of making the contract of sale, the buildings had been unoccupied, and that, on the making of said contract of sale, said Kelly entered into the possession of the buildings and premises, and occupied the same until the time of the fire, and made all her payments during that time, and was not in default in any manner upon said contract. It is contended by appellant that, by the transactions with Kellj', there took place a change in the interest, title, and possession of Gibb, and the condition against any such change was broken, and the policy avoided as to him. It seems to us that there was a breach in the condition against any change of interest. It is not claimed by respondents that there was any waiver of this condition, and the authorities cited by counsel are nearly all cases where the breach claimed was not of a condition against a change of interest, but a change of title. It is held by the great weight of authority that, where the condition is against any change in the title, there is no breach unless there is a change in the legal title, — that, as long as the insured retains the legal title and an insurable interest in the premises, the policy is not avoided by a transfer of the equitable title or of equitable interests ; but we cannot apply this doctrine to a con- dition against any change of interest. The terms are not sj-nonymous, as contended by counsel. The word " interest" is broader than the word " title " and includes both legal and equitable rights. It is not necessary to consider the question of the change of possession, except so far as it has an influence on the change of interest by strengthen- SECT. n.J GIBB V. PHILADELPHIA FIRE INS. CO. 631 ing and fortifying the interest acquired by Kelly. This disposes of the case. The plaintiff Hilles is entitled to judgment for the sum awarded her, but upon payment of the same the defendant is entitled to be subro- gated to her rights under her mortgage, and the defendant is entitled to judgment against the plaintiff Gibb that he take nothing by this action. The judgment appealed from should be reversed, with direc- tions to enter judgment in conformity with this opinion. iSo ordered.^ 1 Contra: Grable v. German Ins. Co., 32 Neb. 645 (1891). See Hill v. Camberland Valley Mut. Protection Co., 59 Pa. 474 (1868) ; Savage v. Howard Ins. Co., 52 N. Y. 502 (1873) ; Germond v. Home Ins. Co., 2 Hun, 540 (1874) ; Browning v. Home Ins. Co., 71 N. Y. 508 (1877) ; Pringle v. Des Moines Ins. Co., 107 Iowa, 742 (1898) ; Arkansas F. Ins. Co. o. Wilson, 67 Ark. 553 (1900). In Washington F. Ins. Co. v. Kelly, 32 Md. 421 (1870), Beekman and Reeder pro- cured insurance upon a building and afterwards made a contract for the sale of the insured property, under which contract part payment was made, but possession was not taken. For a loss subsequently occurring, it was held that there could be a recovery, notwithstanding a provision that the policy should be void " if the said property shall be sold or conveyed." Miller, J., at pp. 453-455, said : — "On the 11th of February, 1868, Beekman and Reeder entered into a ^v^itten agree- ment with Budd, by which they ' agree to sell ' to the latter the grounds, ' with the buildings and improvements thereon erected,' for 8462,000, which Budd agrees to pay — $10,000 in cash, 852,000 on delivery of the deed, to assume payment of the mortgage debts, amounting to 8350,000, and to execute a mortgage on the premises to secure the balance of $50,000, the deed and necessary papers to be delivered on or before the 1st of April, 1868. On the same day, Budd assigned this contract to the appellee, and directed the conveyance to be made to him. The $10,000 was paid, but possession was not given, nor was anything else done under the contract before the fire. On the 5th of March, three days after the fire, the deed was executed and delivered to the appellee, and the grantors on the same day agreed, in writing, to collect the amounts due on the insurance policies and apply the same for the benefit of the appellee. A formal written assignment of the policies, and of the claims arising thereon, was subsequently, on the 1st of June following, executed to the appellee. On this state of facts, one of the positions of the appellant, presented by its fifth prayer, is, that the contract of the 11th of February was a sale or conveyance of the property before loss, within the meaning and purpose of the provision in the body of the policy, making it void if the insured property ' shall be sold or conveyed ' without the assent of the company. Without any such provision against alienation, a sale of the property insured, by a fire policy, by which the assured parts with his whole interest therein, and is, therefore, deprived of all interest in its preservation, will prevent a recovery for a subsequent loss. The law requires he should have an insurable interest at the time of loss. Most policies, however, guard against this contingency by an express stipulation instead of relying solely upon the rule of law. Hence, clauses against alienation, couched in different phraseology, are constantly to be met with, sometimes in different parts of the policy, and sometimes in the same provision, and in immediate connection with that relating to the assignment of the policy itself. The latter fact does not seem to have been regarded as of import- ance, or as warranting any different construction than if it stood as a separate clause. The provision in this policy is in the simplest and least stringent form prohibiting a sate or conveyance, terms of equivalent import with, and certainly not more compre- hensive than, 'alienation by sale or otherwise.' The decided weight of authority upon the construction of clauses thus expressed is, that to call them into action or preclude the right to enforce the insurance, there must be an actual and complete alienation, and hence a contract of sale will act fall within its terms so long as the 632 WOOD V. AMERICAN FIRE INS. CO. [CHAP. VI. WOOD, Respondent, v. AMERICAN FIRE INS. CO., Appellant. Court of Appeals of New York, 1896. 149 N. Y. 382. Appeal from judgment of the General Term of the Supreme Court in the third judicial department,^ entered upon an order made May 8, 1894, which affirmed a judgment in favor of plaintiff entered upon a decision of the court on trial at Circuit without a jurj'. The nature of the action and the facts, so far as material, are stated in the opinion. Michael H. Cardozo and Shedden tfc Booth, for appellant. T. F. Conway, for respondent. O'Brien, J. The plaintiff recovered upon a policy of insurance, of •which she was the assignee, issued by the defendant, upon a building used as a store, January 9, 1891, and which was destroyed by fire March 31, 1891. The only defences interposed by the answer, which were proven and found at the trial, were : (1) That Wood Bros., a firm composed of six brothers, which owned the property and pro- cured the insurance, had not, at the time, the sole and unconditional title or ownership of the property ; and (2) that the property covered by the policy had been sold upon judgment and execution against the firm some days before the loss. The contract was made by means of what is known as the standard policy, which contained the condition that it " shall be void . . . if the interest ofH;he insured shall be other than unconditional and sole ownership, or ... if any change, other than by the death of an assured, take place in the interest, title, or posses- sion of the subject of the insurance . . . whether by legal process or judgment, or by the voluntary act of the insured or otherwise." With respect to the defence first referred to, it appeared that in the year 1885 one of the individuals composing the firm made a general assignment of his individual property for the benefit of his creditors, and also of his interest in the firm. That in 1888 his assignee vendor retains the legal title and continnes to have an interest in the preservation of the premises, as security for the payment of the purchase money, or, at all events, until the terms of sale are so far fulfilled as to invest the vendee with the f ull equita- ble ownership, and entitle him to the immediate possession of the property sold. 2 Amer. Lead. Cases (notes by Hare & Wallace), 626, and cases there cited; also, Hitchcoclc's Case, 26 N. Y. Eep., 68, and Smith's Case, 50 Maine, 96. I rest my opinion on this point entirely upon the weight of authority within which the present case clearly falls. The contract was executory, nothing having been done under it at the time of loss save payment of the $10,000 ; possession had not been delivered, and, by its terms, could not have been demanded until the deed was executed. Plac- ing my opinion upon this ground, it becomes unnecessary to inquire what rights the parties to this contract might have had in a Court of Equity, or in what light that court would have regarded the transaction, or how it would have deemed the title to the property as affected thereby." — Ed. 1 Reported in 78 Hun, 109 (1894).— Ed. SECT. II.j WOOD V. AMERICAN FIRE INS. CO. 633 sold whatever interest in the iirm property that passed to him bj' the assignment to a third party, and before the policy was issued had accounted and been discharged. The assignee had no accounting with the firm in order to ascertain what interest the assignor had, if any, in tlie surplus, if any, and no claim was ever made npon the firm for anything passing by the assignment. It appeared by the proofs and findings that the defendant's agents, who were, as may be fairly inferred, general agents, knew, at the time of issuing the policy and before, all the facts and circumstances with respect to the individual assignment and the transfer of that interest as above stated. The answer to the defence, based upon these facts, is twofold : (1) That since the title to the real estate held by a partnership is in the firm and not in the individual members of it, the transfer of the interest of one of the members, before the insurance, had no effect upon the unconditional and sole ownership of the firm. That an assignment by one partner of his share in the partnership stock simply transfers any interest he may have in any surplus remaining after payment of the firm debts and the settlement of the firm accounts. Whether the purchaser of such an interest takes anything whatever by the transfer cannot be known until all the partnership aflairs have been settled and adjusted. Menagh v. Whitwell, 52 N. Y. 146. The title to the real propertj-, which was the subject of the insurance, was in the partner- ship firm, and was not affected by the r.ssignment of one of the members. It still remained firm property, since the assignee had no interest in it as such, and whether the sale or transfer by the individual member was anything more than a mere form, or conveyed anything to the assignee, must depend upon the existence of a surplus after the partnership affairs are adjusted. It does not even appear in this case that there would then be any surplus to divide, though that cir- cumstance cannot be regarded as material upon the question whether such a transfer by a member affects or changes the estate or interest which the firm has in the partnership realtj'.^ . . . It appears from the findings that on the 20th of March, 1891, about ten daj's before the fire, the real estate which was the subject of the insurance was sold by the sheriff under an execution duly issued to him against the firm and a certificate of sale in due form delivered bj- him to the purchaser, one Aurelia 0. Wood, and the remaining and perhaps most important question is whether this sale worked such a change in the interest, title, or possession of the property as to avoid the policy within the meaning of the conditions to which reference has been made. In Walradt v. Phoenix Ins. Co., 136 N. Y. 375, we held that when the subject of the insurance was personal property, that the con- ditions of the policy were not violated by the mere levj' of an execution upon the goods insured. The reasoning of that case, however, plainly leads to the conclusion that it would be otherwise in case the levy had been followed by a sale. The sale of personal property upon an 1 The omitted passage held that this defence was oyerthrown by waiver. — Ed. 634 WOOD V. AMERICAN FIRE INS. CO. [CHAP. TI. execution divests the owner of his title to the property sold and transfers it to another. But what was said in that case with respect to the effect of a sale upon execution applies to personal property. There was no question in the case with respect to the effect of a sale of real estate, and nothing was decided upon that question. The effect of a sale of real estate upon execution is declared by statute, and no other effect can be given to it. The judgment debtor, or his assignee, or his creditors, maj' redeem the same within fifteen months thereafter, and the right and title of the judgment debtor is not divested by the sale until the expiration of the period for redemption. (Code C. P. § 1440.) During that time the debtor is entitled to the possession and use or the rents and profits. At the time, therefore, that the property in question was destroyed by fire, the interest, title, or possession of the insured had not been changed. The statute had operated to postpone the effect of the sale upon the interest, title, or possession of the owners until the expiration of the period for redemp- tion. In Browning v. Home Ins. Co., 71 N. Y. 508, the policy con- tained a provision that if the property be sold or transferred, or any change take place in the title or possession, then in either such case the policj' shall be void. The insured entered into a contract in writing for the sale of the premises, and this court held that the con- ditions of the policy were not violated. It was said that an executory contract for the sale of the property without change of possession did not work a breach of the conditions against a sale or transfer or change in title or possession. That such a condition applies onl3' to a legal transfer which divests the insured of title to or control over the property. Before we could assent to the proposition that in this case there was a breach of the conditions of the policy by the sheriff's sale we would be compelled to overrule numerous cases in this court which, in principle, decide otherwise. Baley v. Homestead Fire Ins. Co., 80 N. Y. 21 ; Cone v. Niagara Fire Ins. Co., 60 N. Y. 619 ; Haigtt V. Cout. Ins. Co., 92 N. Y. 51, 55 ; Green v. Homestead F. Ins. Co., 82 N. Y. 517. The judgment must, therefore, be aflSrmed, with costs. All concur, except Geat, J. , who dissents upon the ground that the policy was avoided by the change of interest effected by the sale of the property. Judgment affirmed.^ 1 As to the effect of a judicial sale, see the authorities cited ante, p. 613, n.; and also Collins ». London Assurance Corporation, 165 Pa. 298, 306-309 (1895); and Greenlee v. North British & Mercantile Ins. Co., 102 Iowa, 427 (1897), — Ed. SECT. II.J LAMPASAS HOTEL AND PARK CO. V. PHCENIX INS. CO. 635 LAMPASAS HOTEL AND PARK CO. v. PHCENIX INSURANCE CO. Court of Civil Appeals of Texas, 1896. 38 S. W. Rep. 361.^ This -was an action upon a policy insuring a hotel. Tlie defence was that the assured corporation had made a deed of trust in breach of a condition contained in the policy. The policy was of the New York standard form, and contained this condition : — "This entire policy shall be void ... if the interest of the insured be other than unconditional and sole ownership, or if the subject of the insurance be a building on ground not owned bj' the insured in fee simple, or if the subject of the insurance be personal propertj', and be or become incumbered by a chattel mortgage, or if, with the knowledge of the insured, foreclosure proceedings be commenced, or notice given of sale of anj' property covered by this policy by virtue of any mortgage or trust deed, or if any change other than by the death of the insured '^ take place in the interest, title, or possession of the sub- ' The statement has been based upon the opinion. — Ed. 2 In Burbank v. Eockingham Mut. F. Ins. Co., 24 N. H. 550 (1852), fhe insurance was on a grist-mill, and there was a provision that " when any house or other build- ing shall be alienated by sale or otherwise, the policy shall thereupon be void." A loss occurred after the death of the assvired, intestate. It was held that there could be a recovery. In Lappin v. Charter Oak F. & M. Ins. Co., 58 Barb. 325 (1870), a policy on a dwelling-house and furniture promised "to make good unto the said assured, liis executors, administrators, and assigns, all such immediate loss ... as shall happen by fire to the property," and there was a provision that " in case of any sale, transfer, or change of title, in the property insured . . . , or of any interest therein, such insur- ance shall be void and cease." A loss occurred after the death of the assured, intes- tate. It was held that there could be no recovery. In Sherwood v. Agricultural Ins. Co., 73 N. Y. 447 (1878), the insurance was on a dwelling-house and furniture, and there was a provision that " if without the written consent of this company first had and obtained, the said property shall be sold or con- veyed, or 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." A loss occurred after the death of the assured, testate. It was held, affirming the de- cision of the General Term of the Supreme Court, reported in 10 Hun, 593 (1877), that there could be no recovery. In Hine v. Woolworth, 93 N. Y. 75 (1883), a policy on a dwelling-house and furni- ture promised " to make good unto the said insured, his heirs, executors, administrar tors, and assigns, all such loss or damage ... as shall happen by fire or lightning to the property," and contained a provision that " if the interest of the insured therein be changed in any manner, whether by act of the insured or by operation of law, . . . this policy shall be null and void until the written consent of the company ... is obtained." A loss occurred after the death of the assured, intestate. It was held, affirming the decision of the General Term of the Supreme Court, reported suh nom, Hine o. Homestead F. Ins. Co., 29 Hun, 84 (1883), that there could be no recovery. In Eichardson v. German Ins. Co., 89 Ky. 571 (1890), a policy on a dwelling-houHe and furniture promised " to make good unto the said assured, his executors, adminis- 636 LAMPASAS HOTEL AND PAEK CO. V. PHCENIX INS. CO. [CHAP. VL ject of insurance (except change of occupants without increase of liazard), whether by legal prooess, or judgment, or by voluntary act of the insured, or otherwise." The policy was for one j-ear. It was issued on July 25, 1894. There was then a deed of trust on the property. On December 26, 1894, the assured companj' executed another deed of trust on the prop- ertj-, to secure a debt of $29,500, of which about $25,000 covered the debt and interest secured by the first deed of trust and the remainder covered money borrowed for running expenses. The property was destroyed by fire on February 10, 1895. In the District Court of Harris County there was judgment for the defendant. The plaintiff appealed. Hutchison., Campbell, and Sears, for appellant. Wm. Thompson, for appellee. Fly, J.^ . . . There is authority to sustain the proposition that a renewal of a mortgage that was known by the insurer to exist when the policy was issued will not forfeit the policy. Insurance Co. v. Saindon (Kan.), 35 Pac. 15; s. c. 36 Pac. 983; Bowlus «. Insurance Co. (Ind. Sup.), 32 N. E. 319. The new mortgage given was more than a renewal of the former mortgage. It was given not only to secure the original debt and accrued interest, but was given as security for other debts, not connected with the original debt. The original mortgage was given to secure a debt due to the Commercial National Bank of Houston, and the last one was given to secure the debt of the bank and one of George Sealey. The last mortgage was given without the knowledge or consent of appellee, and must be viewed as though the first had never existed. . . . We should conclude that the language of the policy shows that it was not intended that a mortgage given on real property should vitiate the policy, and will call attention to those portions of the policy which indicate this. There is no clause in the policy requiring the disclosure of the existence of any mortgage, and, of course, had there been no disclosure relating thereto, no forfeiture could have been claimed on that ground. It would seem that there was no attempt, therefore, in the policy to guard against existing mortgages. ... As if to empha- trators, and assigns, all such immediate loss or damage ... as shall happen by fire or lightning to the property," and contained a provision that " if the property, or any part thereof, shall be sold, conveyed, incumbered by mortgage or otherwise or any change takes place in the title, use, occupation, or possession thereof whatever, or if foreclosure proceedings shall be commenced, or if the interest of the insured in said property, or any part thereof, now is or shall become any other or less than a perfect legal and equitable title or ownership, free from any lien whatever, . . . this policy shall be void." A loss occurred after the death of the assured, intestate. It was held that there could be a recovery. And see Forest City Ins. Co. v. Hardesty, 182 HL 39 (1899). — Ed. 1 The passages omitted here and elsewhere in the opinion were devoted principally to stating the case and quoting from Walradt v. Phoenix Ins. Co., ante, p, 625 (1893) and Green v. Homestead F, Ins. Co., 82 N. Y. 517 (1880). — Ed. SECT. II.] LAMPASAS HOTEL AND PAKK CO. V. PHCENIX INS. CO. 637 size this line of action, and to show clearly that mortgages on insured real estate were not prohibited, it is specially provided that, " if the subject of insurance be personal property, and be or become incum- bered by a chattel mortgage," then the polic}' should become void. The language used seems to exclude the idea that it was contemplated that the execution of a mortgage on real property would work a for- feiture of the policj'. If the words " anj- change of interest" would include mortgages on real estate, why would it not include mortgages on personal propert}- ? ... It was not claimed b\- appellee in the lower court, nor is it claimed here, that the execution of the mortgage would operate as a forfeiture by virtue of any other than the provision in regard to change of interest. It is not claimed that the risk was increased bj- the execution of the mortgage, but, on the other hand, it was agreed by appellee in the lower court that the mortgage did not " in an}' way increase the hazard or the risk of the insurance compan}-," and that it did not lessen the plaintiff's vigilance and care in preventing the destruction or loss of the property bj' fire. It is contended b}- appellee that the case of Insurance Co. v. Clarke, 79 Tex. 23, 15 S. "W. 166, is decisive of this, but we are of the opinion that the decision in that case is not applicable to the contract of insur- ance in this case. In that case it was provided in the policy that the insured warranted that there was no mortgage, trust deed, or lien upon the property insured, or anj- part of the same, and that the policy would become void "if the interest of the assured in the property, whether as owner, trustee, consignee, agent, mortgagee, or lessee, or otherwise, is not truly stated in this policy, or if any change take place in the title, location, interest, or possession (except in case of succession by reason of death of the assured) , whether by sale, trans- fer, or convej-ance, in whole or in part, or by legal process, or by judi- cial decree." The sole defence was that the insured had, without the knowledge or consent of the insurer, executed a mortgage on the property. There was no attempt to pass upon what constituted a change of interest, but it was held that the execution and deliver}' of a mortgage operated a forfeiture of the policy, because a mortgage was a ' ' conve^'ance " within the terms of the contract. There was in that contract a special provision requiring disclosure of the fact that a mortgage existed when the polic}' existed. There was no special pro- vision as to the execution of mortgages on personal property, and there was a provision that a change of interest by a conve3'ance of the prop- erty in whole or in part should render the contract void. We are, how- ever, construing other and difiierent language from that employed in the policy in that ease, and what is said in it is not applicable to this. It may be well to note that the case of Insurance Co. v. Clarke is in conflict with the construction placed by a number of the ablest courts in America upon the identical language construed in it. Judge v. In- surance Co., 132 Mass. 521, and authorities therein cited. ... As has been so often said by courts, forfeitures are not favored by the law, and 638 LAMPASAS HOTEL AND PAEK 00. V. PHCENIX INS. CO. [cHAP. VL the language of an insurance policy will not, by judicial construction, be given sufficient elasticity to encompass a forfeiture, but the language used must plainlj- show that a forfeiture was intended by the parties to the contract to result in certain contingencies. We are of the opinion that under the'facts appellant was entitled to a judgment, and the judg- ment of the District Court is therefore reversed, and judgment here ren- dered in favor of appellant for the amount sued for, as well as interest and costs.' 1 Ace: Sun Fire Office v. Clark, 53 Ohio St. 4r4 (1895); Koshland v. Hartford Ins. Co., 31 Ore. 402 (1897) ; Peck v. Girard F. & M. Ins. Co., 16 Utah, 121 (1.897). Contra: Edmands v. Mutual Safety F. Ins. Co., 1 Allen, 311 (1861); Sossaman v. Pamlico Banking & Ins. Co., 78 N. Car. 145 (1878). See Ayres v. Hartford F. Ins. Co., 17 Iowa, 176 (1864). In Sun Fire Office v. Clark, supra, Minshai.l, C. J., for the court, said : — " It seems well settled in this state and elsewhere, that the making of a mortgage does not violate a provision in a policy of insurance, that any chauge in the title, interest, or possession of the assured in the property, without the assent of the insurer, shall avoid the policy. "The mortgage being simply a security for the debt, is extinguished by its payment without any re-conveyance. The mortgage of itself does not make the mortgagee a freeholder, and a judgment recovered against him does not become a lien on the land, nor is it liable to the dower-rights of his wife. It has none of the incidents of a legal or equitable title. True, upon foreclosure and sale, the mortgagee may by purchase at the sale become the owner of the land ; but this is a right he enjoys in common with all others. It is also true, that as between the mortgagor and mortgagee, the latter, on condition broken, is regarded as the legal, but not as the equitable owner. The mortgagor remains the equitable owner until the property is sold under the order of the court. Until then, he may, by paying the debt, redeem the land. So that his insurable interest in the property remains the same — which is the interest meant by the use of the word in the language of the policy, where it occurs. If lost by fire he remains liable on the debt, and has, by reason of the loss, so much the less property with which to pay it. Hence, he has the same interest in its preservation after as before making the mortgage ; and the moral hazard of the insurer is not increased. Byers v. Insurance Co., 35 Ohio St. 606; Kronk u. Insurance Co., 91 Pa. St. 300; Insurance Co. v. Stinson, 103 U. S. 25, 29; Barry v. Insurance Co., 110 N. Y. 1; Judge V. Insurance Co., 132 Mass. 521 ; Bryan v. Insurance Co., 145 Mass. 389; In- surance Co. V. Spaukneble, 52 III. 53 ; Insurance Co. c^. Lawrence, 2 Peters Rep. 25 ; Jecko V. Insurance Co., 7 Mo. App. 308 ; Guest v. Insurance Co., 66 Mich. 98 ; May on Insurance, sec. 272. " The general current of authority is in accordance with these cases ; and while a different view has been taken by the courts of some of the states, it will be found that, as a rule, this has proceeded from the old conception that a mortgage is to be regarded as a conveyance ; or from a more rigid adherence to the terms of the policy, in disregard of the rule that provisions imposing forfeitures should be strictly construed. " In giving effect to the language of any instrument, regard must be had to Its purpose. A mere change in title, where the owner retains the same actual interest in the property — the same insurable interest — is not within the reason of the language employed. The object of the provision containing the language was to protect the insurer against a possible change in the owner's insurable interest in the property by a sale, transfer, or conveyance, whereby the hazards of the contract into which he had entered might be increased without his consent. Hence, the generality of the language employed must be restrained to the reason and object of its use by the par- ties. To do otherwise would be to stick in the letter of the language employed by SECT. II.] LAMPASAS HOTEL AND PAEK CO. V. PHCENIX INS. CO. 639 the parties to express their meaning, 'without regard to its spirit. May on Insur.ince, sec. 273 ; Ayres v. Insurance Co., 17 Iowa, 176, 185." On alienation and the like, in general, see also : — Adams v. Rockingham Mut. F. Ins. Co., 29 IVIe. 292 (1849) ; Pitney v. Glens Falls Ins. Co., 65 N. Y. 6, 26-27 (1875) ; Keeney v. Home Ins. Co., 71 N. Y. 396 (1877) ; Manufacturers' F. & M. Ins. Co. v. Western Assurance Co., 145 Mass. 419 (1888) ; Brown V. Cotton and Woolen Mfrs.' Mut. Ins. Co., 156 Mass. 587 (1892) ; Gerling v. Agricultural Ins. Co., 39 W. Va. 689, 698-701 (1892) ; Lodge V. Capital Ins. Co., 91 Iowa, 103, 106-107 (1894); Orr V. Hanover F. Ins. Co., 158 111. 149 (1895) ; Milwaukee Trust Co. ii. Lancashire Ins. Co., 95 Wis. 192 (1897) ; Pioneer S. & L. Co. v. St. Paul F. & M. Ins. Co., 68 Minn. 170 (1897) ; Westchester F. Ins. Co. v. Jennings, 70 111. App. 539 (1897). —Ed. 640 NIGHTINGALE V. STATE MUTUAL LIFE INS. CO. [CHAP. TL SECTION III. Life Insurance.^ NIGHTINGALE and Another, Executors, v. STATE MUTUAL LIFE INS. CO. Supreme Court op Rhode Island, 1857. 5 R. I. 38.^ Assumpsit by the executors of the Rt. Rev. J. P. K. Henshaw, Bishop of Rhode Island, to recover the amount of a policy upon the testator's life. The policy took efiect April 1, 1848, and the annual premiums were paid until the testator's death, which occurred July 20, 1852. The policy provided that: "The person whose life is thus as- sured may reside constantly anywhere within the limits of New Eng- land, or of the states of New Yorli, New Jersey, Pennsylvania, and Ohio ; ... if such person . . . shall, between the first day of July and the fifteenth day of October, go into any other portion of the United States, beyond the limits of constant residence permitted herein, and be in such other portions of the United States more than five days, . . . this policy shall be void, and all payments thereon forfeited to the company ; but in case of forfeiture from the above or any other cause, the party interested shall have the benefit of such equitable adjustment as maj-, from time to time, be provided for by the board of directors." In July, 1852, the testator went to Maryland, to exercise temporarily the episcopal functions of an absent bishop. After being thus engaged for about ten days, he was stricken with apoplexy, and died. The death was neither caused nor hastened by change of climate, but was due exclusively to constitutional causes. The executors applied to the board of directors for the whole or some portion of the sum insured, as a matter of equitable adjustment. The directors voted to pay the ofiice value for surrender of the policy, viz. $169.65. The executors did not accept this offer, but brought action for $1,500, the amount of the policy. By agreement, the case was submitted to the court both as to law and as to facts. T. A. Jenckes, for the plaintiffs. Abraham Payne, for the defendants. Ames, C. J. It is admitted that the late Bishop Henshaw did, without consent of the defendant company issuing this policy, " first had and indorsed thereon," and between the 1st day of Julv and the 15th day of October, 1862, go into the state of Maryland, a portion of 1 For express conditions avoiding the contract because of misstatements in the application, see ante, Chap. V., sect. III. — Ed. ' 2 The statement has been rewritten. — Ed. SECT. III.] HAMMOND V. AMERICAN MUTUAL LIEE INS. CO. 641 the United States beyond the limits of constant residence permitted by the policy, and there remain more than five days, to wit, about ten days, at the end of which period, and about the 20th day of July of that year, he died. The holy errand on which he went, the absence of all connection between his going and remaining, and the cause of his death, are not permitted to swerve our judgment from the legal eflfect of so plain a breach of a condition of this policj"^, upon the occurring of which it is, hy its own terms, "to be void, and all paj'ments thereon to be forfeited to the company." It is true, that by the qualifying clause of the condition of forfeiture, the executors of the assured would have been entitled to the benefit of any equitable adjustment provided for by existing rules established by the directors, or accorded by their special act. Whether such rules should be established, or such special dispensation from the forfeiture should be granted, was, as it seems to us, left by this qualifying clause wholly to the discretion of the direct- ors, who " from time to time " might act in the matter ; except indeed, that they would not be permitted to change, to the injury of the as- sured, an established rule of adjustment existing at the time of the act or omission of forfeiture. The construction which supposes that such discretion was designed by both parties to the contract to be reposed in the directors, as fair arbiters for all interested, borrows sup- port from the fact, that, under the charter of this company, the direct- ors are elected by the joint votes of the assured and holders of the guaranty stock, and are to be chosen in moieties, out of these two classes of the members of the corporation. No rule of equitable ad- justment applicable to the case at bar appears to have been established by the directors of this companj', and the request made to them by the claimants for special action in their favor was, upon full consideration, rejected. We cannot interfere with their discretion in this matter with- out doing violence to the contract upon which we are called to adjudi- cate, and must therefore render Judgment for the defendants.^ HAMMOND V. AMERICAN MUTUAL LIFE INS. CO. Supreme Judicial Court of Massachusetts, 1858. 10 Graj% 306. Action of contract upon a policy of Insurance, insuring the life of John Hammond, in consideration of a premium "to be paid annually in advance, during the term of this policj', or half or quarter yearly in advance, with interest on each portion deferred ; " and payable to the plaintiff " within ninety days after proof of the death of the said John Hammond, provided this policy is then in force." The policy upon its 1 See Hathaway v. Trenton Mut. L. & F. Ins. Co., 11 Cush. 448 (1853). —Ed. 41 642 HAMMOND V. AMERICAN MUTUAL LIFE INS. CO. [CHAP. VL face declared that "in case the premium charged hereon shall not be paid annually in advance, or half or quarter j'early in advance, on or before the da}-, at noon, on whicli the same shall become due and pay- able,'' it should " cease and terminate, and neither the whole nor any part of the sum herein agreed to be paid shall be due or payable ; " and that the policy w&s " granted and accepted in reference to all the conditions herein contained," and others annexed. The " conditions of insurance" annexed to the policj-, provided that " policies are null and void during the nonpayment of any premium due ; but the company will, at their discretion, receive a payment after due, and continue the policy, if satisfied that the party remains in perfect health." Upon the back of the policy were these words : " Premiums payable 1st January ; or 1st January and 1st July ; or 1st January, 1st April, 1st July, and 1st October, at noon." The parties submitted the case to the decision of the court upon the policy and the following facts : John Hammond paid the premiums quar- ter yearly, as provided by the policy, and was taken sick on the 24th of September, and afterwards confined to his house, but not thought to be past recovery until the morning of Sunday, October 1st, 1854, and on that day, between the hours of two and four in the afternoon, died, without having paid the premium for the quarter which began on that day. The defendants' office was not open on Sunday, and no one was there to receive the premium, but this was not known to the plaintiff, and no attempt was made to paj- it until Monday, October 2d, in the forenoon, when it was tendered and refused. The death of the assured was notified by the plaintiff to the defendants on the 18th of Decem- ber, 1854. Z/. Mason, for the plaintiff. H. A. Scudder, for the defendants. Dewey, J. There can be no doubt as to the character of this con- tract, and that the policy would be forfeited and avoided by the neglect of the assured to pay the premium chargeable thereon at anj- quarter day when the same became due and paj-able. The policy was granted by the one party and accepted bj' the other with a recital therein that the same was to be taken "in reference to all the conditions herein contained." Among those conditions it is provided that " in case the premium charged hereon shall not be paid annually in advance, or half or quarter yearly in advance, on or before the daj-, at noon, on which the same shall become due and payable," then the same shall "cease and terminate, and neither the whole nor any part of the sum agreed to be paid shall be due or payable." The whole inquiry is reduced to this point, When was the quarter yearly payment for the quarter succeeding that commencing on the 1st of July, 1854, due, and by law required to be paid? Adopting the proper division of the year into four quarters, and commencing on the 1st of April, 1854, the third quarter would commence on the 1st of October, and the premium to be paid for that quarter, irrespectively SECT. III.] HAMMOND V. AMERICAN MUTUAL LIFE INS. CO. 643 of the circumstance that the first daj- of October occurred on Sunday, ■would be required to be paid on that daj'. The assured had, however, until the 1st of October at noon to paj- the premium. He was not in default before that time, unless it be that in case the 1st of October occurring on Sunday, he was required to paj- the premium on the Saturdaj- preceding. The only question in the case seems to be whether Sundaj- is to be excluded as a day of pa3-ment, and the payment prop- erly postponed till Monday, or whether the partj-, to save his policj- from being forfeited, must make his quarterly payment on or before Saturday, when the quarter day falls on Sundaj'. We have on the one hand the rule as to commercial paper, or nego- tiable notes payable with grace, requiring payment to be made on Saturday where the third day of grace falls on Sunday ; and on the other a rule, generally adopted as to other contracts to paj- money or perform other specific duties on a certain da}' named, that if such da}- falls on Sunday the day of performance is postponed till Monday. Salter v. Burt, 20 TTend. 205. In reference to notes payable on a certain day, but entitled to three days' grace, it is said that in such case the note by its terms would be due and payable two days earlier than Saturday, and that what was originally a mere indulgence to casualty or oversight should not be extended, and therefore if the last of three days of grace falls on Sun- day, the payment must be made on Saturday, and that it was more reasonable to take from than to add to a period of time thus originally allowed as mere grace and favor. But as to other contracts, which by the face of the instrument required a payment on a day which proves to be Sunday, to discharge literally the promise or duty, the law seems to sanction the postponement of the time for doing the same till the Monday following. In other words, Sunday is not a legal day for the performance of contracts and doing secular business. The statute law forbids all such acts. The party paying and the party receiving money on that day in discharge of a contract would subject themselves to a penalty for so doing. Sunday was not a day contemplated by the parties as embraced in the stipulation to pay a quarterly premium on the first day of October in each and every year during the life of the party assured. The defendants had no office open on that day, and were under no obligation to receive the payment of the premium on that day, if the same had been tendered by the assured. Such being the case, the assured was under no obligation to do what would have been not only an illegal act, but also one which the other party was not bound to recognize. In this view of the case there was no such default on the part of the assured, in not paying the premium fully due on the 1st of October, as should be held to terminate the policy. It is urged on the part of the defendants that this was not an ordi- nary contract to be performed on a day certain, and that the assured ■was under no legal obligation to pay subsequent premiums after the expiration of a quarter of a year ; but such payment was a voluntary 644 WILLIAMS V. WASHINGTON LIFE INS. CO. [CHAP. VI. act, to be done or not done at his election ; and therefore that the rule of law applied to a contract binding a part}- to do some act at some future named period, which proved to be Sunday, has no proper appli- cation here. But we think the rule as to tlie time of making the paj-- ment is the same in both cases. It was the purpose of the assured to obtain a policj' to continue during his life. Such policy was issued to him, but upon condition that he should make his quarter j'early pay- ments regularly in advance. It was obligatory on him to pay, if he would continue the policy in force. The day of payment was on this occasion the first day of October. That day, as it appears, fell on Sunday ; and this being so, he was entitled to the ordinary privilege of discharging his obligation on the Monday following. The quarter yearl}' payment, it is true, in terms became paj'able on Sunday noon ; but that day was not a day for secular business, and therefore, legally speaking, Sunday was not the day " at which the same become pay- able ; " and so, by the very provisions of the policy, properly construed, the quarterly premium was seasonably' tendered on Monday. Judgment for the plaintiff.^ WILLIAMS V. WASHINGTON LIFE INS. CO. Supreme Court op Iowa, 1871. 31 Iowa, 541 .'^ Appeal from Dubuque Circuit Court. The action was upon a policy of insurance procured by Mary F. Williams upon her own life for the benefit of her daughter, Isabella Williams. After paying an initial premium of $16.66 and one quar- terly premium of $16.67, Mary F. Williams surrendered the policy in consideration of the receipt of $40.00. She died shortly- after the next quarterly premium would have been payable ; but it was not paid. The action was brought by Isabella Williams. Under instructions the jury found for the plaintiff. The defendant appealed. Shiras, Van Duzee & Henderson, for the appellant. Adams <& Robinson, for the appellee. Cole, J. The court instructed the jury that, " by the terms of the policy, a mere omission to pay the premiums when due would not alone work a forfeiture ; if a forfeiture of the policy is claimed for the non- payment of premiums, it must be shown that an agent of the company presented a receipt for the premiums to a person liable to pay it, and such person refused or neglected to make the payment thereof." This is assigned as error. The language of the policy is : " If the said premiums shall not be 1 Ace. ; Campbell v. International L. Ass. Co., 4 Bosworth, 298 (1859). — Ed. 2 The statement has been rewritten. — Ed. SECT. III. J NEW YORK LIFE INS. CO. V. STATHAM. 645 paid on or before the daj-s above mentioned for the payment thereof, at the office of the companj' in the city of New Yorls: (unless otherwise expressly agreed in writing), or to the agents when they produce receipts signed bj- the president and secretar3-, then, and in every such case, the company shall not be liable for the paj-ment of the sum insured or any part thereof," etc. In our view, the true construction of this clause of the policy is, that the premiums are to be paid on the daj'S fixed by the policj' (as amended hy the agreement for quarterly payments) in any event ; and the assured might pay, on those days, either at the office of the company in New York, or to agents ; but the payment could only be made to such agents as should have and pro- duce receipts therefor signed by the president or secretary — the receipts thus signed being evidence of the authority of the agents to receive the premiums. This construction is in accord with the plain and ordinary meaning of the language used, with the uniform rule of insurance, requiring prompt and advance payments, and with even a technical construction of the language. The policy fixes the time for payment, and then says it may be made to the company or to agents when they produce receipts, etc. TF^ew means at which time {Bouv. L&w Die). Payment may, therefore, be made to the company at the time fixed, or to agents at which time, to wit : the time fixed in the policy for the payment, they producing receipts, etc. It being conceded that the premiums due on September 1 and Decem- ber 1, 1869, were without excuse not paid nor offered to be paid, it is fatal to plaintiflfs case. We need not, therefore, inquire whether the mother could or could not for a consideration surrender or cancel the policy. It having been done, and no objection made to it, no premiums paid or act done or claim made under the policy until after the death of the assured, the plaintiff cannot recover. It was error to give the instruction. Reversed. NEW YORK LIFE INS. CO. v. STATHAM et al. SAME V. SEYMS. MANHATTAN LIFE INS. CO. v. BUCK, Executor. Supreme Court of the United States, 1876. 93 U. S. 24. The first of these cases is here on appeal from, and the second and third on writs of error to, the Circuit Court of the United States for the Southern District of Mississippi. The first case is a bill in equity, filed to recover the amount of a policy of life assurance, granted by the defendant (now appellant) in 1851, on the life of Dr. A. D. Statham, of Mississippi, from the pro- ceeds of certain funds belonging to the defendant attached in the 646 NEW YORK LIFE INS. CO. V. STATHAM. [CHAP. VI. hands of its agent at Jackson, in ttiat state. It appears from the statements of the bill that the annual premiums accruing on the policy were all regularly paid, until the breaking out of the late civil war, but that, in consequence of that event, the premium due on the 8th of December, 1861, was not "paid ; the parties assured being residents of Mississippi, and the defendant a corporation of New York. Dr. Statham died in July, 1862. The second case is an action at law against the same defendant to recover the amount of a policy issued in 1859 on the life of Henry S. Seyms, the husband of the plaintiff. In this case, also, the premiums had been paid until the breaking out of the war, when, by reason thereof, they ceased to be paid, the plaintiff and her husband being residents of Mississippi. He died in Ma}-, 1862. The third case is a similar action against the Manhattan Life Insur- ance Company of New York, to recover the amount of a policy issued by it in 1868, on the life of C. L. Buck, of Vicksburg, Miss. ; the cir- cumstances being substantial!}' the same as in the other cases. Each policy is in the usual form of such an instrument, declaring that the company, in consideration of a certain specified sum to it in hand paid by the assured, and of an annual premium of the same amount to be paid on the same day and mouth in every j'ear during the continuance of the policj', did assure the life of the party named, in a specified amount, for the term of his natural life. Eacli contained various conditions, upon the breach of which it was to be null and void; and amongst others the following: "That in case the said [assured] shall not pay the said premium on or before the several days hereinbefore mentioned for the payment thereof, then and in every such case the said company shall not be liable to the payment of the sum insured, or in any part thereof, and this policj' shall cease and determine." The Manhattan policy contained the additional pro- vision, that, in every case where the polic}' should cease or become null and void, all previous payments made thereon should be forfeited to the companj'. The non-payment of the premiums in arrear was set up in bar of the actions ; and the plaintiffs respectively relied on the existence of the war as an excuse, offering to deduct the premiums in arrear from the amounts of tlie policies. The decree and judgments below were against the defendants. Mr. Matt. S. Carpenter and Mr. James A. Garfield, for the appel- lant in the first case, and for the plaintiff in error in the second. The third case was submitted by Mr. Alfred Pitman for the plaintiff in error. Mr. Clinton L. Rice, for the appellees in the first case, and Mr. Joseph Casey, for the defendant in error in the second. The third case was submitted by Mr. W. P. Harris, for the defendant in error. Mr. Justice Bradley, after stating the case, delivered the opinion of the court. SECT. III.] NEW YORK LIFE INS. CO. V. STATHAM. 647 We agree with the court below, that the contract is not an assurance for a single year, with a privilege of renewal from year to year by pay- ing the annual premium, but that it is an entire contract of assurance for life, subject to discontinuance and forfeiture for non-payment of any of the stipulated premiums. Such is the form of the contract, and such is its character. It has been contended that the payment of each premium is the consideration for insurance during the next following year, — as in fire policies. But the position is untenable. It often happens that the assured pays the entire premium in advance, or in five, ten, or twenty annual instalments. Such instalments are clearly not intended as the consideration for the respective years in which they are paid ; for, after they are all paid, the policy stands good for the balance of the life insured, without any further payment. Each instalment is, in fact, part consideration of the entire insurance for life. It is the same thing, where the annual premiums are spread over the whole life. The value of assurance for one year of a man's life when he is young, strong, and healthy, is manifestlj' not the same as when he is old and decrepit. There is no proper relation between the annual premium and the rislc of assurance for the year in which it is paid. This idea of assurance from year to 3'ear is the suggestion of ingenious counsel. The annual premiums are an annuitj-, the present value of which is calculated to correspond with the present value of the amount assured, a reasonable percentage being added to the pre- miums to cover expenses and contingencies. The whole premiums are balanced against the whole insurance. But whilst this is true, it must be conceded that promptness of paj'- ment is essential in the business of life insurance. All the calculations of the insurance company are based on the lij-pothesis of prompt pay- ments. They not only calculate on the receipt of the premiums when due, but on compounding Interest upon them. It is on this basis that they are enabled to offer assurance at the favorable rates they do. Forfeiture for non-payment is a necessary means of protecting them- selves from embarrassment. Unless it were enforceable, the business would be thrown into utter confusion. It is like the forfeiture of shares in mining enterprises, and all other hazardous undertakings. There must be power to cut off unprofitable members, orthe success of the whole scheme is endangered. The insured parties are associates in a great scheme. This associated relation exists whether the com- pany be a mutual one or not. Each is interested in the engagements of all ; for out of the coexistence of many risks arises the law of aver- age, which underlies the whole business. An essential feature of this scheme is the mathematical calculations referred to, on which the premiums and amounts assured are based. And these calculations, again, are based on the assumption of average mortality, and of prompt payments and compound interest thereon. Delinquency can- not be tolerated nor redeemed, except at the option of the company. This has always been the understanding and the practice in this de- 648 NEW YORK LIFE INS. CO. V. STATHAM. [CHAP. VI. parttnent of business. Some companies, it is true, accord a grace of thirty days, or other fixed period, within which the premium in arrear may be paid, on certain conditions of continued good health, &c. But this is a matter of stipulation, or of discretion, on the part of the par- ticular company. When no stipulation exists, it is the general under- standing that time is material, and that the forfeiture is absolute if the premium be not paid. The extraordinary and even desperate efforts sometimes made, when an insured person is ifi extremis, to meet a premium coming due, demonstrates the common view of this matter. The case, therefore, is one in which time is material and of the essence of the contract. Non-payment at the day involves absolute forfeiture, if such be the terms of the contract, as is the case here. Courts cannot with *safety vary the stipulation of the parties by introducing equities for the relief of the insured against their own negligence. But the court below bases its decision on the assumption that, when performance of the condition becomes illegal in consequence of the prev- alence of public war, it is excused, and forfeiture does not ensue. It supposes the contract to have been suspended during the war, and to have revived with all its force when the war ended. Such a suspension and revival do take place in the case of ordinary debts. But have they ever been known to take place in the case of executory contracts in which time is material ? If a Texas merchant had contracted to furnish some Northern explorer a thousand cans of preserved meat by a certain da_v, so as to be ready for his departure for the North Pole, and was pre- vented from furnishing it by the civil war, would the contract still be good at the close of the war five j-ears afterwards, and after the return of the expedition ? If the proprietor of a Tennessee quarry had agreed, in 1860, to furnish, during the two following years, ten thousand cubic feet of marble, for the construction of a building in Cincinnati, could he have claimed to perform the contract in 1865, on the ground that the war prevented an earlier performance ? The truth is, that the doctrine of the revival of contracts suspended during the war is one based on considerations of equitj' and justice, and cannot be invoked to revive a contract which it would be unjust or inequitable' to revive. In the case of life insurance, besides the materiality of time in the performance of the contract, another strong reason exists why the policy should not be revived. The parties do not stand on equal ground in reference to such a revival. It would operate most unjustly against the company. The business of insurance is founded on the law of averages ; that of life insurance eminently so. The average rate of mortality is the basis on which it rests. By spreading their risks over a large number of cases, the companies calculate on this average with reasonable certainty and safety. Anything that in- terferes with it deranges the security of the business. If every policy lapsed by reason of the war should be revived, and all the SECT. III.] NEW YORK LIFE INS. CO. V. STATHAM. 649 back premiums should be paid, ttie companies would have the bene- fit of this average amount of risk. But the good risks are never heard from ; only the bad are sought to be revived, where the person insured is either dead or dying. Tliose in health can get new policies cheaper than to pay arrearages on the old. To enforce a revival of the bad cases, whilst the company necessarily lose the cases which are desirable, would be manifestly unjust. An insured person, as before stated, does not stand isolated and alone. His case is con- nected with and co-related to the cases of all others insured by the same company'. The nature of the business, as a whole, must be looked at to understand the general equities of the parties. We are of opinion, therefore, that an action cannot be maintained for the amount assured on a policy of life insurance forfeited, like those in question, by non-payment of the premium, even though the pa3ment was prevented by the existence of the war. The question then arises, Must the insured lose all the money which has been paid for premiums on their respective policies? If they must, they will sustain an equal injustice to that which the companies would sustain by reviving the policies. At the very first blush, it seems manifest that justice requires that they should have some com- pensation or return for the monej' already paid, otherwise the com- panies would be the gainers from their loss ; and that from a cause for which neither party is to blame. The case may be illustrated thus: Suppose an inhabitant of Georgia had bargained for a house, situated in a Northern city, to be paid for by instalments, and no title to be made until all the instalments were paid, with a condition that, on the failure to pay any of the instalments when due, the con- tract should be at an end, and the previous payments forfeited ; and suppose that this condition was declared by the parties to be abso- lute and the time of paj'ment material. Now, if some of the instal- ments were paid before the war, and others accruing during the war were not paid, the contract, as an executory one, was at an end. If the necessities of the vendor obliged him to avail himself of the condition, and to resell the property to another party, would it be just for him to retain the money he had received? Perhaps it might be just if the failure to pay had been voluntary, or could, by possi- bility, have been avoided. But it was caused by an event beyond the control of either party, — an event which made it unlawful to pay. In such case, whilst it would be unjust, after the war, to en- force the contract as an executory one against the vendor, contrary to his will, it would be equally unjust in him, treating it as ended, to insist upon the forfeiture of the money already paid on it. An equitable right to some compensation or return for previous payments would clearly result from the circumstances of the case. The money paid by the purchaser, subject to the value of any possession which he maj- have enjoj'ed, should, ex cequo et bono, be returned to him. This would clearly be demanded by justice and right. 650 NEW YOKE LIFE INS. CO. V. STATHAM. [CHAP. VL And so, ia the present case, whilst the insurance company has a right to insist on the materiality of time in the condition of payment of premiums, and to hold the contract ended by reason of non-pay- ment, they cannot with any fairness insist upon the condition, as it regards the forfeiture of the premiums already paid ; that would be clearly unjust and inequitable. The insured has an equitable right to have this amount restored to him, subject to a deduction for the value of the assurance enjoyed by him whilst the policy was in exist- ence ; in other words, he is fairly entitled to have the equitable value of his policy. As before suggested, the annual premiums are not the consideration of assurance for the year in which they are severally paid, for they are equal in amount; whereas, the risk in the early years of life is much less than in the later. It is common knowledge, that the annual pre- miums are increased with the age of the person applying for insurance. According to approved tables, a person becoming insured at twenty- five is charged about twenty dollars annual premium on a policy of one thousand dollars, whilst a person at forty-five is charged about thirtj^-eight dollars. It is evident, therefore, that, when the younger person arrives at forty-five, his policy has become, by reason of his previous payments, of considerable value. Instead of having to pay, for the balance of his life, thirty-eight dollars per annum, as he would if he took out a new policy on which nothing had been paid, he has only to pay twenty dollars. The difference (eighteen dollars per annum during his life) is called the equitable value of his policy. The present value of the assurance on his life exceeds by this amount what he has yet to pay. Indeed, the company, if well managed, has laid aside and invested a reserve fund equal to this equitable value, to be appropriated to the pa3-ment of his policy when it falls due. This reserve fund has grown out of the premiums already paid. It belongs, in one sense, to the insured who has paid them, somewhat as a deposit in a savings-bank is said to belong to the person who made the de- posit. Indeed, some life-insurance companies have a standing regula- tion by which they agree to pay to any person insured the equitable value of his policy whenever he wishes it ; in other words, it is due on demand. But whether thus demandable or not, the policy has a real value corresponding to it, — a value on which the holder often realizes money by borrowing. The careful capitalist does not fail to see that the present value of the amount assured exceeds the present value of the annuity or annual premium yet to be paid by the assured party. The present value of the amount assured is exactlj' repre- sented by the annuity which would have to be paid on a new policy ; or, thirty-eight dollars per annum in the case supposed, where the party is forty-five years old ; whilst the present value of the premiums yet to be paid on a policy taken by the same person at twenty-five is but little more than half that amount. To forfeit this excess, which fairly belongs to the assured, and is fairly due from the company, and SECT. III.] NEW YOKK LIFE INS. CO. V. STATHAM. 651 which the latter actually has in its coffers, and to do this for a cause bej-ond individual control, would be rank injustice. It would be tak- ing awaj- from the assured that which had already become substa«- tiallj- Jiis propertj-. I.t would be contrary to the maxim, that no one should be made rich by making another poor. We are of opinion, therefore, first, that as the companies elected to insist upon the condition in these cases, the policies in question must be regarded as extinguished by the non-paj-ment of the pre- miums, though caused by the existence of the war, and that an action will not lie for the amount insured thereon. Secondlj-, , that such failure being caused by a public war, without the fault of the assured, they are entitled ex mquo et bono to recover the equitable value of the policies with interest from the close of the war. It results from these conclusions that the several judgments and the decree in the cases before us, being in favor of the plaintiffs for the whole sum assured, must be reversed, and the records remanded for further proceedings. We perceive that the declarations in the action at law contain no common or other counts applicable to the kind of relief which, according to our decision, the plaintiffs are entitled to demand ; but as the question is one of first impression, in which the parties were necessarily somewhat in the dark with regard to their precise rights and remedies, we think it fair and just that they should be allowed to amend their pleadings. In the equi- table suit, perhaps, the prayer for alternative relief might be sufficient to sustain a proper decree ; but, nevertheless, the complainants should be allowed to amend their bill, if they shall be so advised. In estimating the equitable value of a policy, no deduction should be made from the precise amount which the calculations give, as is sometimes done where policies are voluntarily surrendered, for the purpose of discouraging such surrenders ; and the value should be taken as of the day when the first default occurred in the payment of the premium by which the policy became forfeited. In each case the rates of mortality and interest used in the tables of the company will form the basis of the calculation. The decree in the equity suit and the judgments in the actions at lavi are reversed, a?id the causes respectively remanded to be proceeded with according to law and the directions of this opinion.^ Mr. Chief Justice Waite. I agree with the majoritj- of the court in the opinion that the decree and judgments in these cases should be ^ Other cases on war are. O'Reily v. Mutual Life Ins. Co., 2 Abb. Pr. s. s. 167 (1866) ; Robinson v. International L. Ass. Soe., 42 N. Y. 54 (1870) ; New York L. lua. Co. V. Clopton, 7 Bush, 179 (1870) ; Manhattan L. Ins. Co. v. Warwick, 20 Gratt. 614 (1871) ; Dillard v. Manhattan L. Ins. Co., 44 Ga. 119 (1871) ; Statham v. N. Y. Life Ins. Co., 45 Miss. 581 (1871) ; Hamilton v. Mutual Life Ins. Co., 9 Blatch. 234 (1871) ; 652 NEW YORK LIFE INS. CO. V. STATHAM. [CHAP. VI. reversed, and that the failure to paj' the annual premiums as they matured put an end to the policies, notwithstanding the default was occasioned by the war ; but I do not think that a default, even under such circumstances, raises an implied promise by the company .to pay the assured what his policy was equitably worth at the time. I there- fore dissent from that part of the judgment just announced which remands the causes for trial upon such a promise. Mr. Justice Strong. While I concur in a reversal of these judg- ments and the decree, I dissent entirely from the opinion filed by a majority of the court. I cannot construe the poKcies as the majority have construed them. A policy of life insurance is a peculiar con- tract. Its obligations are unilateral. It contains no undertaking of the assured to paj' premiums ; it merely gives him an option to pay or not, and thus to continue the obligation of the insurers, or terminate it at his pleasure. It follows that the consideration for the assumption of the insurers can in no sense be considered an annuity consisting of the annual premiums. In my opinion, the true meaning of the contract is, that the applicant for insurance, by paying the first premium, obtains an insurance for one J'ear, together with a right to have the insurance New York L. Ins. Co. a. White, 2 Ins. L. J. 917 (Va. Special Court of Appeals, 1872), s. c. 4 Bigelow's L. & A. Ins. Rep. 471 ; Cohen v. New York Mut. L. Ins. Co., 50 N. Y. 610 (1872); Sands v. New York L. Ins. Co., 50 N. Y. 626 (1872); Martine v. International L. Ins. Co., 53 N. Y. 339 (1873) ; Hancock v. New York L. Ins. Co., 11 Ped. Cas. 402 (1873) ; Tait v. New York L. Ins. Co., 1 Flippin, 288 (1873) ; Mutual Benefit L. Ins. Co. v. Atwood,24 Gratt. 497 (1874) ; Mutual Benefit L. Ins. Co. v. Hill- yard, 37 N. J. L. (8 Vroom) 444 (1874) ; Worthington v. Charter Oak L. Ins. Co., 41 Conn. 372 (1874) ; Bird «. Penn Mutual L. Ins. Co., 3 Fed. Cas. 430 (1876) ; Smith v. Charter Oak L. Ins. Co., 64 Mo. 330 (1876); Insurance Co. v. Davis, 95 U. S. 425 (1877) ; Owen V. New York L. Ins. Co., 1 Hughes, 322 (1877) ; DiboU v. iEtna L. Ins. Co., 32 La. Ann. 179, 182 (1880); Ellis v. Connecticut Mut. L. Ins. Co., 19 Blatch. 383 (1881); Abell v. Penn Mut. L. Ins. Co., 18 W. Ya. 400, 422-440 (1881); Clem- mitt V. New York Life Ins. Co., 76 Va. 355 (1882). In Roehner v. Knickerbocker Life Ins. Co., 63 N. Y. 160, 167-168 (1875), Polger, J., for the court, said : — " The contract of life insurance is sui generis. It is one-sided. By a strict observ- ance of the conditions of it, the insured may hold the insurers to their contract, while they have not the power or the right to compel him to remain in contract relations with them longer than he chooses. Thus it differs widely from a lease. For this rea- son the clauses of forfeiture in policies of life insurance have been construed literally, and on breach of condition the policies have been held avoided in favor of the insurers without demand or other notice of election on their part." In Thompson u. Insurance Co., 104 U. S. 252, 260 (1881), Bradley, J., for the court, said: — " Courts do not favor forfeitures, but they cannot avoid enforcing them when the party by whose default they are incurred cannot show some good and stable ground in the conduct of the other party, on which to base a reasonable excuse for the de- fault. . . We do not accept the position that the payment of the annual premium is a condition precedent to the continuance of the policy. That is untrue. It is a condi- tion subsequent only, the non-performance of which may incur a forfeiture of the policy, or may not, according to the circumstances. It is always open for the insured to show a waiver." — Ed SECT. III.J KLEIN V. INSURANCE COMPANY. 653 continued from j-ear to 3'ear during his life, upon pa5-ment of the same annual premium, if paid in advance. Whether he will avail himself of the refusal of the insurers, or not, is optional with him. The paj-- ment ad diem of the second or any subsequent premium is, therefore, condition precedent to continued liability of the insurers. The assured may perform it or not, at his option. In such a case, the doctrine that accident, inevitable necessity, or the act of God, may excuse performance, has no existence. It is for this reason that I think the policies upon which these suits were brought were not in force after the assured ceased to paj- premiums. And so, though for other reasons, the majority of the court holds ; but thej' hold, at the same time, that the assured in each case is entitled to recover the surrender, or what they call the "equitable, value of the policy. This is incomprehensible to me. I think it has never before been decided that the surrender value of a policy can be recovered by an assured, unless there has been at agreement between the parties for a surrender ; and certainlj- it has not before been decided that a supervening state of war makes a contract between private parties, or raises an implication of one. Mr. Justice Clifford, with whom concurred Mr. Justice Hunt, dissenting. Where the parties to an executory money-contract live in different countries, and the governments of those countries become involved in public war with each other, the contract between such parties is suspended during the existence of the war, and revives when peace ensues ; and that rule, in my judgment, is as applicable to the contract of life insurance as to any other executory contract. Consequently, I am obliged to dissent from the opinion and judgment of the court in these cases. KLEIN V. INSURANCE COMPANY. Supreme Court of the United States, 1881. 104 U. S. 88. Appeal from the Circuit Court of the United States for the Northern District of Illinois. The facts are stated in the opinion of the court. Mr. Bxram Barber^ Jr., for the appellant. Mr. Francis H. Kales, contra. Mr. Justice Woods delivered the opinion of the court. On Sept. 1, 1866, a policy of insurance was issued by the New York Life Insurance Company upon the life of Frederick W. Klein, in the sum of $5,000, payable to his wife, Caroline Klein, within sixty days after his death and due notice and proof thereof. 654 KLEIN V. INSUKANCE COMPANY. [CHAP. VL The policy is in the usual form. The consideration for its issue was the paj'ment to the company by Caroline Klein of an annual premium of $173, in semi-annual instalments of $86.50 each, on the first da3- of September and the first day of March of every year during the life of Frederick "W. Klein. The policy contains the following provision : " And it is also under- stood and agreed by the within assured to be the true intent and mean- ing hereof that ... in case the said Caroline Klein shall not pay the said premiums on or before the several days herein mentioned for the payment thereof, with any interest that may be due thereon, then and in every such case the said company shall not be liable for the payment of the sum assured or anj- part thereof, and this policy shall cease and determine." The premiums were punctually paid until March, 1871, when default was made in the payment of the semi-annual instalment which matured on the first day of that month, and it remained unpaid until the death of Frederick W. Klein, which occurred March 18, 1871. The agent of the company, after proof of the death of Klein, offered to paj' Caroline Klein the surrender value of the policy. She declined to accept any sum less than the amount of the insurance, and on the companj- then insisting upon the absolute forfeiture of the policy, ac- cording to its terms, she filed this bill. She therein alleges as the ground of relief that the policy was taken out by Frederick W. Klein without her knowledge ; that she had re- ceived no information of its terms or conditions until after his death ; that about February 1 he was taken down by the illness of which he died ; that for about twenty days prior to March 1 , and thence up to the time of his death, he was, in consequence of his sickness, deranged in mind and incapable of attending to any matter of business whatever, and for that reason, and that alone, failed to pa}- the premium when it was due, and that she failed to pay it because she was ignorant of the existence of the policj' and of its terms. The prayer of the bill is as follows : " That the said New York Life Insurance Company may be prevented from insisting upon and taking advantage of the alleged forfeiture of said policy of insurance, and that your oratrix may be relieved from said alleged default upon her part, and the accidental default of the said Frederick TV. Klein in the non- payment of said semi-annual premium maturing March 1, 1871, and that the said New York Life Insurance Company may be decreed to pay to your oratrix the said sum of §5,000," &c. The answer of the company denies its liability upon the policy of in- surance, and insists that the contract ceased and determined by reason of the non-paj-ment of the premium due March 1, 1871, and denies the equity of the bill. The bill was dismissed upon final hearing. The cause was then brought to this court for review, by the appeal of the complainant. Conceding, for the sake of argument, that the case made by the bill SECT. III.] KLEIN V. INSURANCE COMPANY. 655 is sustained by the evidence, the question is presented whether, upon the facts, the appellant was entitled to the relief praj'ed for. In New York Life Insurance Co. v. Statham, 93 U. S. 24, it was held bj- this court, Mr. Justice Bradley delivering its opinion, that a life insurance policy " is not a contract of insurance for a single year, with the privilege of renewal from year to year by paying the annual premium, but that it is an entire contract for assurance for life, subject to discontinuance and forfeiture for non-payment of an^- of the stip- ulated premiums." But, in the same case, the court further said : " In policies of life insurance time is material and of the essence of the contract, and non- payment at the day involves absolute forfeiture, if such be the terms of the contract." While conceding this to be the rule which would apply if an action at law were brought upon the policy, the appellant insists that she is en- titled to be relieved in equity against a forfeiture, by reason of the excuses for non-payment of the premium set out in the bill, and this contention raises the sole question in this case. We cannot accede to the view of the appellant. Where a penaltj' or a forfeiture is inserted in a contract merel}' to secure the performance or enjoyment of a collateral object, the latter is considered as the prin- cipal intent of the instrument, and the penalty is deemed onlj' as ac- cessory. Sloman v. Walter, 1 Bro. Ch. 418 ; Sanders v. Pope, 12 Ves. Jr. 282 ; Davis u West, id. 475 ; Skinner v. Dayton, 2 Johns. (N. Y.) Ch. .526. But in every such case the test by which to ascertain whether relief can or cannot be had in equity, is to consider whether compensation can or cannot be made. In Eose v. Eose, Amb. 331, 332, Lord Hardwicke laid down the rule thus : " Equity will relieve against all penalties whatsoever ; against non-payment of money at a day certain ; against forfeitures of copy- holds : but they are all cases where the court can do it with safety to the other party ; for if the court cannot put him in as good condition as if the agreement had been performed, the court will not relieve." A life insurance policy usually stipulates, first, for the payment of premiums ; second, for their payment on a day certain ; and, third, for the forfeiture of the policy in default of punctual payment. Such are the provisions of the policy which is the basis of this suit. Each of these provisions stands on precisely the same footing. If the payment of the premiums, and their payment on the day they fall due, are of the essence of the contract, so is the stipulation for the re- lease of the company from liability in default of punctual payment. No compensation can be made a life insurance company for the general want of punctuality on the part of its patrons. It was said in New Tork Life Insurance Co. v. Statham, supra, that " promptness of payment is essential in the business of life insurance. All the calculations of the insurance company are based on thehj-pothe- 656 KLEIN V. INSURANCE COMPANY. [CHAP. VI. sis of prompt pa3-ments. They not onlj' calculate on the receipt of premiums when due, but upon compounding interest upon them. It is on this basis that they are enabled to offer insurance at the favorable rates they do. Forfeiture for non-paj'ment is a necessary means of protecting themselves from embarrassment. Delinquency cannot be tolerated or redeemed except at the option of the company." If the assured can neglect paj'ment at maturity and j'et suffer no loss or forfeiture, premiums will not be punctually paid. The companies must have some efficient means of enforcing punctuality. Hence their contracts usually provide for the forfeiture of the policy upon default of prompt payment of the premiums. If they are not allowed to enforce this forfeiture they are deprived of the means which they have reserved bj' their contract of compelling the parties insured to meet their engage- ments. The provision, therefore, for the release of the company from liability on a failure of the insured to pay the premiums when due is of the very essence and substance of the contract of life insurance. To hold the company to its promise to pay the insurance, notwithstanding the default of the assured in making punctual payment of the premiums, is to destroy the very substance of the contract. This a court of equity cannot do. Wheeler v. Connecticut Mutual Life Insurance Co., 82 N. Y. 543. See also the opinion of Judge Gholson in Robert v. New England Life Insurance Co., 1 Disney (Ohio), 355. It might as well undertake to release the assured from the payment of premiums altogether as to relieve him from forfeiture of his policy in default of punctual payment. The company is as much entitled to the benefit of one stipulation as the other, because both are necessary to enable it to keep its own obligations. In a contract of life insurance the insurer and assured both take risks. The insurance company is bound to pay the entire insurance money, even though the party whose life is insured dies the daj' after the execution of the policy, and after the payment of but a single premium. The assured assumes the risk of paj-ing premiums during the life on which the insurance is taken, even though their aggregate amount should exceed the insurance money. He also takes the risk of the forfeiture of his policy if the premiums are not paid on the day they fall due. The insurance company has the same claim to be relieved in equity from loss resulting from risks assumed by it as the assured has from loss consequent on the risks assumed by him. Neither has any such right. The bill is, therefore, based on a misconception of the powers of a court of equity in such cases. ^ There is another answer to the case made by the bill. The engage- ment of the insurance company was with Caroline Klein, and not with Frederick W. Klein. It entered into no contract with the latter. It agreed to pay Caroline Klein the insurance, provided she paid with SECT. III.] KLEIN V. INSURANCE COMPANY. 657 punctuality the premiums. She was never incapacitated from making pa3-ment. The alleged fact that she had no knowledge of the exist- ence and terms of the policy does not relieve her default. If the fact be true, her ignorance resulted from the neglect of her husband, who, in respect to this contract of insurance, was her agent, in not inform- ing her about the insurance upon his life and the terms of the policy. The bill is, therefore, an effort by her to obtain relief in equity against the appellee from the consequences of the carelessness or neglect of her own agent. We are of opinion that the decree of the Circuit Court is right, and should be Affirmed.^ 1 Ace. : Wheeler v. Connecticut Mut. L. Ins. Co., 82 N. Y. 543 (1880) ; Yoe v. Benjamin C. Howard Masonic Mut. B. Assn., 63 Md. 86 (1884) ;. Carpenter v. Cen- tennial Mut. L. Assn., 68 Iowa, 453 (1886) ; Hawkshaw v. Supreme Lodge, 29 Fed. R. 770 (U. S. C. C, N. D. lU., 1887) ; Pitts v. Hartford Life and Annuity Ins. Co., 66 Conn. 376 (1895). In Robert v. New England Mut. L. Ins. Co., 1 Disn. 355, 361-365, 368-369 (Cincin- nati Superior Court, special term, 1857), Gholson, J., said: — " As a general rule, when the terms of a contract between parties are ascertained, what those terms require is the law of the case and must determine the rights iu- Tolved. . . . "To the strict and rigorous rule of the common law, as to the construction and enforcement of contracts and conditions, an exception has been established by which relief is given, in certain cases, upon principles of equity, against penalties and for- feitures. In some cases this relief has been obtained in a court of law ; in others, an application to a court of equity has been required. ... " It is the intention of the parties which is to be looked at, to ascertain whether, in a particular case, there be a proper ground for relief; whether the case be one of the exaction of a forfeiture, or the relief, if granted, would destroy the substance of the contract, according to the real intention of the parties. And this intention is to be ascertained from the nature of the agreement rather than from the language of the contract. Price v. Green, 16 M. & W. 346, 354. Of this the cases as to liquidated damages present an obTious illustration. ... I proceed to the direct question, whether there can be relief against the prescribed consequence, in a policy of life insurance, of the non-payment of the premium at the time it becomes payable, ac- cording to the contract between the parties. . . . "I shall, therefore, inquire, in the first place, as to the ordinary annual premium, in a life policy, whether its non-payment at the stipulated day really forfeits any further right, or whether the condition requiring such payment is a mere penalty, as to which relief will be given on the payment of interest, and thus though, while the premium remained rmpaid, the assured died. To the proposition thus generally and simply stated, there can, I think, be but one answer; and until it was presented in the examination of the case, I had never supposed there could be any doubt but that, from the very nature of the contract of life insurance, the prompt and punctual pay- ment of the premiums was of the very substance of the contract. " An attempt was made, in an early case, to assimilate the conditions in a life policy, requiring the payment of the premium, to the condition annexed to a deed conveying real estate. But the court said that the analogy did not hold, and that the rules appli- cable to conditions with respect to lands did not apply. ' This is a contract of assur- ance, and must be construed according to the meaning of the parties, expressed in the deed or policy.' Want v. Blunt, 12 East, 183. . . . " There is, however, to my mind, a still stronger reason why, as to the ordinary annual premium in a life policy, there can be no relief in case of its non-payment on the day specified. The contract is of the description which is termed unilateral. To have it 42 658 KLEIN V. INSURANCE COMPANY. [CHAP. VI. continue from year to year is in the nature of a privilege, secured by the agreement of the company. It may be waived or abandoned by the party, and the company has no right to thrust it upon him without his consent, expressed in the mode aud at the time appointed, and the very nature of the business of the company requires that they should know, at the time, whether their agreement is to continue. Tlie principle upon which relief has been refused, in the case of a privilege of purchase, fully applies. Davis V. Thomas, 1 Russ. & M. 506. . . . " If the breach of such a condition is a good defence at law, the absence of any case in which relief has been given in equity, upon the general ground of the jurisdiction to relieve against forfeitures, is a forcible Objection to the propriety of extending that branch of the jurisdiction to such cases. . . . There are, to my mind, serious objec- tions to any such relief in this case. . . . " The contract of life insurance is one of a peculiar nature. The company, for ex- ample, is called on, in this case, for the consideration of $90.40, to pay $8,000.00. If such demands are enforced, as they undoubtedly may be when there has been a com- pliance with the terms of contract, in what mode is the loss to be made up unless by the receipt of premiums and the judicious investment and use of the money received "! It is very justly said, in the printed form of the application of the company, which is a mutual insurance company, that the ' stability and permanence of such a company de- pends: 1. Upon an adequate premium being demanded. 2. Upon its being paid, or sufficiently secured, so that the company shall not run a risk on lives any further than each one contributes his just proportion to the funds of the company.' To carry out and enforce this principle is, in my opinion, the object of the clause which, in effect^ makes the continuance of any interest in the funds dependent on a strict compliance with the obligation, as assumed, to contribute to them." On the topic of this section, see also : — Want V. Blunt, 12 East, 183 (1810) ; Simpson v. Accidental Death Ins. Co., 2 C. B. n. s. 257 (1857); Notman v. Anchor Assurance Co., 4 C. B. n. s. 464 (1858) ; easier v. Connecticut Mnt. L. Ins. Co., 22 N. Y. 427 (1860) ; Pitt V. Berkshire L. Ins. Co., 100 Mass. 500 (1868) ; McAllister v. New England Mut. L. Ins. Co., 101 Mass. 558 (1869) ; Stone V. United States Casualty Co., 34 N. J. L. (5 Vroom) 371, 373 (1871) ; "Welts V. Connecticut Mut. L. Ins. Co., 48 N. Y. 34 (1871) ; Ayer v. New England Mut. L. Ins. Co., 109 Mass. 430 (1872) ; Currier v. Continental L. Ins. Co., 53 N. H. 538, 547-549 (1873) ; Chickering v. Globe Mut. L. Ins. Co., 116 Mass. 321 (1874) ; Connecticut Mut. L. Ins. Co. o. Home Ins. Co., 17 Blatch. 142 (1879) ; Holly V. Metropolitan L. Ins. Co., 105 N. Y. 437 (1887) ; D'OrluB. Bankers' and Merchants' Mut. L. Assn., 46 Fed. K. 355 (1891). — Ed. SECT. I.J KOHL V. PARK. 659 CHAPTER VII. THE PERIL. SECTION I. Marine Insurance. (A) The Kind of Pekil i:p,nKED against. ROHL V. PARR. Nisi Peius, King's Bench, 1796. 1 Esp. 444. Case on a policy of insurance on the ship " Zumbee," from St. Bar- tholomew to the river Gombroon on the coast of Africa, and from thence to the West Indies, during her stay. There was a memoran- dum, "to be free from average, under ten per cent, for loss in boats, and from five per cent for loss from insurrection." The ship sailed from St. Bartholomew on the 1st of September, 1792, arrived safe on the coast of Africa, and began to trade. In the month of September following, there was an insurrection of the slaves on board the ship. They had then forty-nine on board, and seven were killed, and one died by accident in consequence of a fall. After this, being about to return, it was found that the worm had taken her bottom, and had destroyed it so effectually, that the ship could barely get to Cape Coast, where she was condemned as irreparable. Upon these facts two points arose in the case, first, whether this was a total loss arising from the perils of the sea ; or, secondlj-, a partial loss above five per cent, for which the plaintiff was entitled to recover. Gibbs, for the plaintiff, contended, that the destruction of the ship's bottom from the worms having arisen in the course of her v03-age, was a peril of the sea. If the ship had struck against a rock under water, and her bottom been destroyed, that would have been clearly within the policy ; there it proceeded from an inanimate substance striking against the ship's bottom. The present case was that of an animated substance moving to destroy it. JErskine, contra, insisted it could not come under that description of loss, as not arising from any peril of the sea. 660 EOHL V. PARK. [CHAP. VII. Lord Kenton said, that it appeared to him a question of fact rather than of law, such as the jury were competent to decide on, from the opinion on the subject adopted by the underwriters and merchants. The jury (which was a special one) found, that this was not a loss within the term of " perils of the sea " in policies of insurance, and of course that the plaintiff could not recover for a total loss.^ . . . Lord Kenyon expressed his assent to the finding of the jury on both points.^ The plaintiff had a verdict for an average loss. Gibbs, Smith, and Farh, for the plaintiff. Erskine and Qarrow, for the defendant. 1 Passages as to the partial loss have been omitted. — Ed. 2 Ace: Martin v. Salem Marine Ins. Co., 2 Mass. 420 (1807). In Lovell v. McMillan, Faculty Decisions, 1808-1810, p. 341 (Conrt of Session, Scotland, 1809), s. c. Morison's Dictionary, 1808-1812, p. 9, Lords Cni-LEN and Glen- lee " stated that they considered destruction by worms not to be one of those perils of the sea undertaken by the underwriters ; perils are what we term casualties. But destruction by worms is not a casualty or a thing that happens by chance, but may be foreseen and guarded against." In Hazard v. New England Ins. Co., 8 Pet. 557, 583-585 (1834), McLean, J. for the court, approving an instruction that " if the jury should find that in the Pacific Ocean worms ordinarily assail and enter the bottoms of vessels, then the loss of a vessel de- stroyed by worms would not be within the policy," said, after citing Rohl v. Parr : — " It was weU remarked by Lord Kenyon, that whether a destruction by worms be within the policy was a question of fact rather than of law, and could be best ascer- tained by a jury from the opinion of underwriters and merchants. This was a nisi prius decision; but it gave such general satisfaction to both merchants and under- writers and aU others concerned, as never to have been questioned in England. It was the establishment of a usage by the opinions of those most competent to judge of its reasonableness and propriety ; and the approbation which has since been given to it in England by acquiescence, may well constitute it a rule in that country by which contracts of insurance are governed. And independent of the fact of its having been adopted by the Supreme Court of Massachusetts, is not the decision entitled to great consideration in this country? It comes from the same source from which the princi- ples of our commercial law are derived, and to some extent, the forms of our commer- cial contracts. Would it not be reasonable to suppose that these contracts are entered into with a knowledge of the rule by which they are construed in the most commercial country, if our own courts had adopted no mle on the subject? But in the present case, the opinion of Lord Kenyon having been adopted in Massachusetts, the rule must certainly apply to all contracts made and to be executed in that State. " The court, in their instruction, did not lay down the rule broadly, that a destruc- tion by worms was not within the policy; but the jury were told, that if, 'in the Pacific Ocean, worms ordinarily assail and enter the bottoms of vessels, then the loss of a vessel destroyed by worms would not be a loss within the policy.' In other words, if the vessel was lost by an ordinary occurrence in the Pacific Ocean, it was a loss against which the underwriters did not insure. In an enlarged sense, all losses which occur from maritime adventures may be said to arise from the perils ot the sea ; bnt the underwriters are not bound to this extent. They insure against losses from ex- traordinary occurrences only; such as stress of weather, winds and waves, lightning, tempests, rocks, &c. These are understood to be the 'perils of the sea' referred to in the policy, and not those ordinary perils which every vessel must encounter. " If worms ordinarily perforate every vessel which sails in a certain sea, is not a risk of injury from them, as common to every vessel which sails on that sea, as the ordinary wear and decay of a vessel on other seas'? The progress of the injury may be far more rapid in the one case than in the other ; but do they not both arise from causes peculiar to the different seas, and which affect, in the same way, all vessels SECT. L j FUETADO V. EODGERS. 661 FURTADO V. RODGERS. Common Pleas, 1802. 3 B. & P. 191. ^ Assumpsit on a policy of insurance dated Oct. 19, 1792, on the ship "PetroneUi," "at and from Bayonne to Martinique, and at and from thence to return to Baj-onne." The declaration averred that on November 12, 1793, while the ship was at Martinique, the island was attacked bj* the English and the ship was captured as a prize. The general issue was pleaded. Before Lord Alvanley, C. J., a verdict was found for the plaintiff, subject to the opinion of the court upon a case stating that the plaintiff, the owner of the ship, was a French subject, resident in France, and that France and Great Britain were in amity when the policy was effected and until Februarj', 1793. Bayley, Serjt., for the plaintiff. The question is whether, after the cessation of hostilities between England and France, a Frenchman is entitled to recover in the English courts upon a policy of insurance effected in England before the commencement of hostilities for a loss by British capture during the war. Best, Serjt., for the defendant. Cur. adv. vult. The opinion of the court was now delivered by Lord Altaniet, C. J. As it is of infinite importance to the parties that this case should be decided as speedily as possible, and as we entertain no doubts upon the subject, we think it right to deliver the judgment of the court without any further delay ; at the same time considering the magnitude of the question, we shall allow the parties to convert this case into a special verdict, in order that the opinion of the highest court in this kingdom may be taken, if it should be thought necessarv- There are two questions for our consideration : First, whether it be lawful for a British subject to insure an enemy from the effect of capture made by his own government? Secondlj', whether, if that be illegal, the insurance in this case having been made previous to the commencement of hostilities will make any difference? As to the first point, it has been understood for some years past to have been the opinion of all "Westminster Hall, and I that enter into them? In one sea, the aggregation of marine substances which attach to the bottom of the vessel may possibly produce a loss ; in another, a loss may be more likely to occur through the agency of worms. Can either of these losses be said to have been produced by extraordinary occurrences? Does not the cause of the injury exist in each sea, though in different degrees, and against which it is as neces- sary to guard as to prevent the submersion of a ship by having its seams well closed? " In the form in which the instruction under consideration was given, this court think there is no error. If it be desirable to be insured against this active agent which infests Southern seas, it may be specially named in the policy." — Ed. 1 The statement has been rewritten, — Ed. 662 FURTADO V. EODGEES. [CHAP. VII. believe of the nation at large, that such insurances are not strictly legal or capable of being enforced in a court of justice.^ . . . Bj- the terms of the policy the underwriters certainly undertake to indemnify the plaintifE against all captures and detentions of princes, without anj' exception in respect of the acts of the government of their own nation. The question then is, whether the law does not make that exception, and whether it be competent to an English underwriter to indemnify persons who may be engaged in war with his own sovereign against the consequences of that war? We are all of opinion that on the principles of the English law it is not competent to any subject to enter into a contract to do any thing which may be detrimental to the interests of his own country ; and that such a contract is as much prohibited as if it had been expressly forbidden by act of Parliament. It is admitted that if a man contract to do a thing which is afterwards prohibited by act of Parliament, he is not bound by his contract. This was expressly laid down in Brewster v. Kitchell, 1 Salk. 198. And on the same principle, where hostilities commence between the country of the underwriter and the assured, the former is forbidden to fulfil his contract. With respect to the expediency of these insurances, it seems only necessary to cite a single line from Bynkershoek, Qusest. Juris. Pub. lib. 1, c. 21, Marshall, p. 31, and part of a passage in Valin, p. 32, Marshall, p. 32. The former sa3-s, " Hostium pericula in se siisci2}er6 quid est aliud quam eorum commercia maritimapromovere," and the latter, speaking of the conduct of the English during the war of 1756, who permitted these insurances, says, " The consequence was, that one part of that nation restored to us bj' the effect of insurance what the other took from us b}- the rights of war." . . . We are all of opinion that to insure enemies' propert}- was at common law illegal, for the reasons given by the two foreign jurists to whom I have referred. If this be so, a contract of this kind entered into previous to the commencement of hostilities must be equally unavailable in a court of law, since it is equally injurious to the interests of the country ; for if such a contract could be supported, a foreigner might insure previous to the war against all the evils incident to war. But it is said that the action is suspended, and that the indemnitj' comes so late that it does not strengthen the resources of the enemy during the war. The enemy, however, is very little injured by captures for which he is sure at some period or other to be repaid by the underwriter. Since the case of Bell v. Potts,'' it has been universally understood that all commercial intercourse with the enemj- is to be considered as illegal at common law (though previous to that case a very learned judge ' appears to have entertained doubts on that subject) , and that consequently all insurances founded upon such intercourse are also 1 In reprinting the opinion, the discussion of the English authorities has been omitted. — Ed. 2 Reported, sub nom. Potts v. Bell, ante, p. 502 (1800). —Ed. 8 Mr. Justice Bullkr in Bell «. Gilson, 1 B. & P. 345 (1798). — Rep SECT. I.] THOMPSON V. WHITMOKE'. 663 illegal. Why are thej- Illegal? Because thej- are in contravention of His Majestj''s object in making war, which is by the capture of the enemies' propertj-, and by the prohibition of any beneficial intercourse between them and his own subjects to cripple their commerce. The same reasoning which influenced the Court of King's Bench in their decision iu Bell v. Potts, seems decisive in the present case. For it being determined that during war all commercial intercourse with the enemy is illegal at common law, it follows that whatever contract tends to protect the enemy's property from the calamities of war, though effected antecedent to the war, is nevertheless illegal. . . . The ground upon which we decide this case is, that when a British subject insures against captures, the law infers that the contract contains an exception of captures made by the government of his own countrj' ; and that if he had expressly insured against British capture, such a contract would be abrogated by the law of England. With respect to the argument insisted upon by way of answer to the public inconvenience likely to arise from permitting such contracts to be enforced, viz. that all contracts made with an enemy enure to the benefit of the King during the war, and that he may enforce payment of any debt due to an alien enemy from any of his subjects, we think it is not entitled to much weight. Such a course of proceeding never has been adopted ; nor is it very probable that it ever will be adopted, as well from the difficulties attending it, as the disinclination to put in force such a prerogative. The plaintiff, I am sorry to say, is not entitled to a return of premium, because the contract was legal at the time the risk commenced, and was a good insurance against all other losses but that arising from capture by the forces of Great Britain. Judgment far the defendant? THOMPSON V. WHITMOEE. Common Pleas, 1810. 3 Taunt. 227. This was an action upon a policy of assurance effected upon the ship " Collingwood," lost or not lost, at, and from, and to all ports and places whatsoever and wheresoever, at sea and in port, and in all and every service the ship might be ordered, for six calendar months, from the 8th of February, 1809, to the 7th day of August, 1809, to return 20s. per month for every uncommenced month, on being discharged govern- ment service. The plaintiff averred that the ship, by the waves, winds, and perils of the sea, was bilged, strained, broken, and destroyed. Upon the trial of this cause, at the Sittings at Guildhall, after Trinity 1 See Gist v. Mason, 1 T. R. 88 (1786) ; Brandon v. Nesbitt, 6 T. R. 23, 28 (1794) ; Bell V. Gilson, 1 B. & P. 345, 354 (1798) ; Brandon v. Curling, 4 East, 410, 416-41^ (1803). — Ed. 664 THOMPSON V. WHITMOKE. . [CHAP. TO. Term, 1810, before Mansfield, C. J., it was proved that the vessel, which was in the employ of government as a transport, and was a narrow-floored vessel of 244 tons, burthen, had, under the direction of the officers of the transport board, been carefully laid down on Gosport Beach to be cleaned and caulked, in a situation where vessels equally narrow-floored, and also vessels of a much greater bulk, therefore much more liable to injury, even of the burthen of 800 tons, had usually been laid down with safety for the same purpose. The ship lay there easy on the first day, when the tide left her ; but she was found on the fol- lowing day full of water, which rose in her with the rising of the cir- cumambient tide : and upon examination it appeared, that the planks of her side on which she lay, had given way, and that some of her foot- hooks were broken. Shepherd, Serjt., for the defendant, objected, that this was not a loss occasioned by any perils of the sea, and cited a case of Eowcroft V. Dunsmore, B. R., tried in 1801, before Lord Kenj-on, C. J., in which Lord Erskine was of counsel for the plaintifl": the ship was hove down, and while heaving down, she could not bear the strain : she was drawn on the land, where she bilged ; and the question was made, whether, it being necessary to perform this operation on her, this damage was occasioned by a peril of the sea. Lord Kenyon thouglit it was not a loss by a peril of the sea, but an accident that happened ; so in the present case, whether the ship were laid down negligentlj' or not, she bilged : if the blocks that supported her had fallen down, that also would have been an accident, but certainlj' would not have been a loss by perils of the sea. Mansfield, C. J., thought, that although the tides knocked away the shoars which supported the " Collingwood," and thereby occasioned the mischief, and although the ship was in the service of government at the time, and not under the control of the plaintiflf, j'et as the damage happened upon the land, it could not be considered as a loss sustained by the perils of the sea, and nonsuited the plaintifl", with liberty to move to enter a verdict with £8 41s. damages, if the court should be of opinion that the plaintiflf was, under the circumstances, entitled to recover. Ziens, Serjt., on this day moved to set aside the nonsuit, and enter a verdict for the plaintiff'; but The court were unanimous that the direction of the Chief Justice was right. Hule refused.^ 1 See DaTidson v. Bumand, L. E. 4 C. P. 117 (1868). Compare Swift v. Union Mat. M. Ina. Co., 122 Mass. 573 (1877). — Ed. SECT. I. j SMITH V. SCOTT. 665 SMITH AND Others v. SCOTT. Common Pleas, 1811. 4 Taunt, 126. 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 the 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 only one man on the deck, and he was asleep. Hereupon it was objected by the counsel for the defendant, that the occasion of the injury was not the perils of the seas, but the gross negligence of the crew of the "Margaret,'' and that this was a fatal variance from the loss averred. The jurj', 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 perQ 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 unskil- fully as to run it on a rock, that is not a peril of the sea, but a peril of the unskilfulness of the master. Rule refused.^ 1 See "Wason v. Xantho, post, p. 670, n. (1) (H. L. 1887). — Ed. 666 HUNTEE V. POTTS. [CHAP. VII. HUNTER V. POTTS. Nisi Prius, King's Bench, 1815. 4 Camp. 203. This was an action on a policy of insurance on goods b^' the ship " Rebecca," at and from London to Honduras, with leave to touch at Antigua, and discbarge and take in goods. The first count laid the loss by the perils of the seas. The second count alleged, that whilst the ship was sailing and proceeding with the goods on board thereof upon her said voyage, and before her arrival at Honduras, and during the course of the said voyage, to wit, on the twenty-fifth day of February, 1804, the said ship and the goods so on board thereof, were by certain perils, losses, and misfortunes, which came to the hurt, detriment, and damage of the said goods and the said ship, broken, spoiled, injured, lost, and destroj-ed, and the said goods thereb3' became, and were wholly lost to the proprietors thereof, to wit, at, etc. It appeared that the ship, having touched at Antigua, was detained there for a considerable time by the sickness of the crew, and that while she lay at that island, the rats, which had increased to a great extent, eat holes in her transoms, and other parts of her bottom. In consequence, a survey was called, and she was found so much injured, that she was unfit to proceed to Honduras. She was thereupon con- demned, and the cargo was sold. The plaintiff sought to recover a loss of £64 16s. 6t?. percent. Lord Ellenborough, however, was clearly of opinion, that this was not a loss within any of the perils insured against, and The plaintiff was nonsuited.^ Garrow, A. G., Park, and Puller, for the plaintiff. Topping and Richardson, for the defendant. 1 Compare Garrignes v. Coxe, 1 Binn. 592 (1809). See Laveioni v. Drury, 22 L. J. n. s. Ex. 2 (1852), s. c. 8 Ex. 166. In HamUtou v. Pandorf, 12 App. Gas. 518 (H. L. 1887), it was held that, under a charterparty and bills of lading excepting " dangers and accidents of the seas," ship- owners are excused from liability if rats gnaw a hole in a pipe and if the result is that sea water enters and damages the cargo. Lord Halsbuht, L. C. (for whose language it has seemed well to follow partly, 57 L. T. Rep. N. s. 726), said: "One of the dangers which both parties to the contract would have in their mind would, I think, be the possibility of the water get- ting into the vessel from the sea upon which the vessel was to sail in accomplishing her voyage ; it would not necessarily be by a storm, the parties have not so limited the language of the contract ; it might be by striking on a rock, or hy excessive heat, so as to open some of the upper timbers ; these and many more contingencies that might be suggested would let the sea in, but what the parties, I think, contemplated was that any accident (not wear and tear, or natural decay) should do damage by letting the sea into the vessel, that that should be one of the things contemplated by the contract. . . . " Now cases have been brought to your Lordships' attention In which the decision has turned, not, I think, upon the question of whether it was a sea peril or accident, but whether it was an accident at all. I think the idea of something fortuitous and SECT. I.J CULLEN V. BUTLER. 667 CULLEN V. BUTLER. King's Bench, 1816. 5 M. & S. 461. Assumpsit on a policy of insurance for £200, upon goods on board the ship " Industry," at and from London to the Canary Islands, the interest being averred in the plaintiff. The plaintiff declared in the first count, upon a loss by the perils and misfortunes of the seas ; and in the second count, he averred, that the ship, with the goods on board, departed and set sail from London in prosecution of her intended voy- age, and before her arrival at the Canary Islands, to wit, on the 7th of unexpected is involved in both words, ' peril ' or ' accident ; ' you could not speak of the danger of a ship's decay ; you would know that it must decay, and the destruction of the ship's bottom by vermin is assumed to be one of the natural and certain effects of an unprotected wooden vessel sailing through certain seas. " One ought, if it is possible, to give effect to all the words that the parties have used to express what this bargain is, and I think in this case it was a danger, accident, or peril, in the contemplation of both parties, that the sea might get in and spoil the rice. I cannot think it was less such a peril or accident because the hole through which the sea came was made by vermin from within the vessel, and not by a sword- fish from without, — the sea water did get in." Lord Watson said : " If the respondents were preferring a claim under a contract of marine insurance, expressed in ordinary terms, I should be clearly of opinion that they were entitled to recover, on the ground that their loss was occasioned by a peril of the sea within the meaning of the contract. When a cargo of rice is directly in- jured by rats, or by the crew of the vessel, the sea has no share in producing the dam- age, which in that case is wholly due to a risk not peculiar to the sea, but incidental to the keeping of that class of goods, whether on shore or on board a voyaging ship. But in the case where rats make a hole, or where one of the crew leaves a port-hole open, through which the sea enters and injures the cargo, the sea is the immediate cause of mischief, and it would afford no answer to the claim of the insured to say that, had ordinary precaution been taken to keep down vermin, or had careful hands been employed, the sea wovild not have been admitted and there would have been no consequent damage." Lord Bbamwell said : " As I have said elsewhere, I think the definition of Lopes, L. J., very good : ' It is a sea damage, occurring at sea, and nobody's fault.' What is the ' peril? ' It is that the ship or goods wiU be lost or damaged ; but it must be ' of the sea.' ' Fire ' would not be a peril of the sea ; so loss or damage from it would not be insured against by the general words. So of lightning. In the present case the sea has damaged the goods. That it might do so was a peril that the ship en- coantered. It is true that rats made the hole through which the water got in, and if the question were whether rats making a hole was a peril of the sea, I should say certainly not. If we could suppose that no water got it, but that the assured sued the underwriter for the damage done to the pipe, I should say clearly that he could not recover. But I should eqnally say that the underwriters on goods would be liable for the damages shown in this case. Then I am of opinion that ' perils of the seas ' is a phrase having the same meaning in bills of lading and charterparties as in policies of insurance. . . . An attempt was made to show that a peril of the sea meant a peril of what I feel inclined to call the sea's behavior or ill-condition. But that is met by the argument, that if so, striking on a sunken rock, on a calm day, or against an iceberg, and consequent fotindering, is not a peril of the sea or its consequence. No question of negligence exists in this case. The damage was caused by the sea in the course of navigation with no default in any one. I am, therefore, of opinion that the damage was caused by peril of the sea within the meaning of the bill of lading." — Eb. 668 CULLEN V. BUTLER. [CHAP. TIL Jul}', &c., in the night of that daj-, the master and crew of a certain British ship called the " Midas," believing the ship in the policy men- tioned to be an enemy's ship, and that the persons on board thereof were then and there in a hostile manner about to attack the " Midas " and attempt to board and take her as prize, did then and there, for the purpose of defending themselves and the " Midas " against such appre- hended attack, but without any fault committed or done by the master or crew of the ship in the policy mentioned, fire at and against, and strike and pierce with shot the ship in the policy mentioned, whereby the said ship, with the goods on board, was sunk in the sea and lost. Plea, non-assumpsit. At the trial before Lord Ellenborodgh, C. J., at the London Sittings after last Hilary Term, the jury found that the ship and cargo were lost in the manner, and under the circumstances stated in the second count. And thej' found a general verdict for the whole subscription, subject to the opinion of the court upon a case stating the above facts. And the question was, whether this was a loss covered by the policy, under the words, " perils of the seas," or under the general words, " all other perils, losses," &c. The case was argued at Serjeant's Inn before this term, by Parke for the plaintiff, and Burnewall for the defendant. Cur. adv. vult. Lord Ellenbobough, C. J., now delivered the judgment of the court. As the court is of opinion that the plaintiff is entitled to recover upon the second count of this declaration, framed upon the special cir- cumstances of this case, which clearly seem to fall within the general and comprehensive words in the policy subjoined to the particular causes of loss therein specified, viz. " all other perils, losses, and mis- fortunes which had or should come to the hurt, detriment, and damage of the said goods and merchandises, and ship, &c. or an}' part thereof," it becomes less material to consider whether the plaintiff would be en- titled to recover as for a loss ' ' by perils of the sea," iu the proper and strict sense of the words, i. e. ex marinoe tempestatis discrimine, as described by Emerigon ; which loss by perils of the sea is the specific loss stated in the first count. If it be a loss by perils of the sea, merely because it is a loss happening upon the sea, as has been con- tended, all the other causes of loss specified in the policy are, upon that ground, equally entitled so to be considered ; and it would be un- necessary as to them ever to assign any other cause of loss than a loss by perils of the sea. But as that has not been the understanding and practice on the subject hitherto, and inasmuch as the very insertion of the general or sweeping words, as they are called, in the policy after the special words, imports that the special words were not understood to include all perils happening on the sea, but that some more general words were required to be added, in order to extend the responsibilit3' of the underwriters unequivocally to other risks not included within the proper scope of any of those enumerated perils, I shall think it necessary only to advert shortly to some of the reasons upon which we think that SECT. I.J CULLEN V. BUTLEK. 669 the general words, thus inserted, comprehend a loss of this nature. The extent and meaning of the general words have not }'et been the immediate subject of an}- judicial construction in our courts of law. As they must, however, be considered as introduced into the policj- in furtherance of the objects of marine insurance, and may have the effect of extending a reasonable indemnitj* to many cases not distinctly cov- ered by the special words, they are entitled to be considered as material and operative words, and to have the due effect assigned to them in the construction of this Instrument ; and which will be done by allowing them to comprehend and cover other cases of marine damage of the like kind with those which are speciallj' enumerated and occasioned by similar causes. Emerigon, in c. 12, s. 1, p. 360. of his Treatise on Insurances, in discussing the general rule, that assurers answer for all loss and damages that happen on the sea, says, that it is to prevent doubts and vain disputes, that, in the printed formulas (of policies) the following words have been inserted ; and then he instances the general words to be found in the formulas of most of the principal commercial ports on the Continent: " All inconveniences, perils, and cas fortuits (which maj' be translated as misfortunes, accidents, &c.) which may happen," and generally of " all perils and fortunes which may happen in what manner soever, and which can be imagined," is the provision to be found in the formulas of Bourdeaux and Antwerp. - Generall}' of "■-all perils, fortunes, or accidents which may happen, in what manner soever, foreseen or unforeseen," is the formula of Nantes. And that of Rouen and Genoa, "generall}' of all inconveniences, foreseen or unfore- seen." The formula of Hamburgh is of all Cogitatis vel imaginatis, usitatis vel inusitatis, nullis exceptis. But although there be an express exclusion of any exception by the terms of the last-mentioned policy, the reason of the thing ingrafts an implied exception, even upon these words, general as thev are, that is, in the case of damage occasioned bj' the fault of the assured ; as to which the rule is. Si casus evenerit culpa assecurati, non tenentur assecuratores. And Emerigon (s. 2. p. 364) says, "This is a general rule, from which it is not allowed to derogate by a pact to the contrary ; " NuUa pactione effici potest ut dolus proestetur ; and he quotes Pothier, where he says, "I cannot effectually (valablement) contract with anj^ one that he shall charge himself with the faults which I shall commit." But this is a case in which the assured is, by the terms of the declaration and finding there- upon, expressly exempted from the imputation of blame in respect to the loss in question. It is no objection to the plaintiff's right to re- cover against the underwriters in this case, that he may have also a right to recover against the persons by whose immediate act the dam- age was occasioned. That has been decided in the case of a damage at sea by collision. The only inconvenience which can be suggested as likely to arise from a limited construction of the words ' ' perils of the seas," occurring in policies of assurance, and from the effect attributed to the general words, is, that in doubtful cases the plaintiff will feel it 670 CULLEN V. BUTLER. [CHAP. Til. necessarj' to introduced a special count, stating the particular circum- stances by which the loss was occasioned, instead of relying upon a count framed upon the special head of loss in the policy, viz. bj* perils of the seas, or the like. But this inconvenience will be well compen- sated to the assured, by the advantage of certainty, by which the risk of nonsuit at the trial, and the expenses attendant thereupon, will be avoided. Judgment for the plaintiff .^ 1 See Davidson v. Burnand, L. R. 4 C. P. 117 (1868). In Wilson v. Xantho, 12 App Gas. 503 (H. L. 1887), it was held that foundering caused by the negligence of another vessel is within a bill of lading's exception of " dangers and accidents of the sea." Lord Herschell said : " I think it clear that the term ' perils of the sea,' does not cover every accident or casualty which may happen to the subject-matter of the in- surance on the sea. It must he a peril 'of ' the sea. Again, it is well settled that it is not every loss or damage of which the sea is the immediate cause that is covered by these words. They do not protect, for example, against that natural and inevitable action of the winds and waves, which results in what may be described as wear and tear. There must be some casualty, something which could not be foreseen as one of the necessary incidents of the adventure. The purpose of the policy is to secure an indemnity against accidents which may happen, not against events which must hap- pen. It was contended that those losses only were losses by perils of the sea, which were occasioned by extraordinary violence of the winds or waves. I think this is too narrow a construction of the words, and it is certainly not supported by the authorities, or by common understanding. It is beyond question, that if a vessel strikes upon a sunken rock in fair weather and sinks, this is a loss by perils of the sea. And a loss by foundering, owing to a vessel coming into collision with another vessel, even when the collision results from the negligence of that other vessel, falls within the same category. Indeed, I am aware of only one case which throws a doubt upon the prop- osition that every loss by incursion of the sea, due to a vessel coming accidentally (using that word in its popular sense) into contact with a foreign body, which pene- trates it and causes a leak, is a loss by a peril of the sea. I refer to the case of CuUen V. Butler, where a ship having been sunk by another ship firing upon her in mistake for an enemy, the court inclined to the opinion that this was not a loss by perils of the sea. I think, however, this expression of opinion stands alone, and has not been sanctioned by subsequent cases." Lord Beamwell said : ' Was it by a peril of the sea that the defendants' ship foundered? The facts are, that the sea-water fiowed into her through a hole, and flowed in such quantities that she sank. It seems to me that the bare statement shows she went to the bottom through a peril of the sea. If the hole had been small, there being a piece of bad wood, a plank starting, or a similar cause, it would be called a leak, and no one would doubt that she foundered from a peril of the sea. Does it make any difference that the hole was large, and occasioned by collision? I cannot think it does. It is admitted that if the question had arisen on an insurance against loss by perils of the sea this would have been within the policy a loss by perils of the sea. Are the words to have different meanings in the two instruments? Why should they? Different consequences may follow. The insurer may be unable to defend himself on the ground that the loss was brought about by the negligence of the crew, while the freighter may maintain an action on the ground that it was. But how is the loss a loss by perils of the sea in one case and not in the other? The argu- ment is, that wind and waves did not cause the loss, but negligence in some one. But surely, if that were so, a loss by striking in calm weather on a sunken rock not marked on the chart would not be a loss by perils of the seas within the bill of lading ; or striking on a rock from which the light had been removed, or an iceberg, or a ves- sel without lights. I cannot bring myself to see that such cases are not losses by perils of the sea. Is not the chance of being run against by a clumsy rider one of the perils of hunting? " — Ed. SECT. I.] WATEES V. MEECHANTS' LOUISVILLE INS. CO. 671 WATERS V. MEECHANTS' LOUISVILLE INS. CO. Supreme Court of the United States, 1837. 11 Pet. 213.^ On a certificate of division from the Circuit Court for the District of Kentuckj'. The questions certified were as to the sufficiency of six pleas, which were to the effect that the officers and crew of the insured vessel roan- aged the cargo so negligently that there was an explosion, causing the loss ; and, more specifically, that the officers and crew, or some of them, negligently carried a lighted candle or lamp into the hold, where cargo was stored, and thus caused the explosion ; and further, that the risk was increased by having gunpowder on board. Crittenden, for the defendants. No counsel contra. Mr. Justice Stoet delivered the opinion of the court. This is a case certified to us from the Circuit Court for the District of Kentucky upon certain questions upon which the judges of that court were opposed in opinion. The action was brought hy Waters, the plaintiff, on a policy of insurance underwritten by the Merchants' Louisville Insurance Com- pany, whereby' they insured and caused to be insured, the plaintiff " lost or not lost, in the sum of 6,000 dollars, on the steamboat ' Lioness,' engine, tackle, and furniture, to navigate the western waters usuall3' navigated by steamboats, particularly from New Orleans to Natchitoches on Eed River, or elsewhere, the Missouri and Upper Mississippi excepted (Captain Waters having the privilege of placing competent masters in command at any time, 6,000 dollars being insured at New Albany, Indiana), whereof William Waters is at present master ; beginning the adventure upon the said steamboat, from the 12th of September, 1832, at twelve o'clock meridian, and to continue and endure until the 12th of September, 1833, at twelve o'clock, meridian (twelve months).'' The policy further provided, that " It shall be lawful for the said steamboat, during said time, to proceed to, touch, and stay at, any point or points, place or places, if thereunto obliged by stress of weather or other unavoidable accidents, also at the usual landings for wood and refreshments, and for discharging freight and passengers, without prejudice to this insurance. Touching the adventures and perils, which the aforesaid insurance company is con- tented to bear, they are, of the rivers, fire, enemies, pirates, assaihng thieves, and all other losses and misfortunes, which shall come to the hurt, detriment, or damage of the said steamboat, engine, tackle, and furniture, according to the true intent and meaning of this policy." The premium was nine per cent. The declaration avers a total loss ; 1 The reporter's statement has been omitted. — Ed. 672 WATERS V. merchants' LOUISVILLE INS. CO. [CHAP. VII. and that the said steamboat and appurtenances insured " were, by the adventures and perils of fire and the river, exploded, sunk to the bottom of Red River aforesaid, and utterly destroyed." The defendants pleaded six several pleas, to which a demurrer was put in by the plaintiff ; and in the consideration of the demurrer, the following questions and points occurred : , 1 . Does the policy cover a loss of the boat by a fire, caused by the barratry of the master and crew? 2. Does the policy cover a loss of the boat by fire, caused by the negligence, carelessness, or unskilfulness of the master and crew of the boat, or any of them? 3. Is the allegation of the defendants in their pleas, or either of them, to the effect that the fire, by which the boat was lost, was caused by the carelessness, or the neglect, or unskilful conduct of the master and crew, a defence to this action ? 4. Are the said pleas, or either of them, sufBcient? These questions constituted the points on which the division of the judges took place in the court below ; and they are those upon which we are now called to deliver our opinion upon the argument had at the bar. As we understand the first question, it assumes that the fire was directly and immediately caused by the barratry of "the master and crew, as the efficient agents ; or, in other words, that the fire was communicated and occasioned by the direct act and agency of the master and crew, intentionally done from a barratrous purpose. In this view of it, we have no hesitation to say, that a loss by fire caused by the barratry of the master or crew is not a loss within the policy. Such a loss is properly a loss attributable to the barratrj-, as its proximate cause, as it concurs as the efficient agent, with the element, eo instanti, when the injury is produced. If the master or crew should barratrously bore holes in the bottom of the vessel, and the latter should thereby be filled with water and sink, the loss would properlj' be deemed a loss by barratry, and not bj- a peril of the seas or of rivers, though the flow of the water should co-operate in pro- ducing the sinking. The second question raises a diflferent point, whether a loss b}' fire, remotely caused by the negligence, carelessness, or unskilfulness of the master and crew of the vessel, is a loss within the true intent and meaning of the policy. By unskilfulness, as here stated, we do not understand in this instance, a general unskilfulness, such as would be a breach of the implied warranty of competent skill to navigate and conduct the vessel, but only unskilfulness in the particular circum- stances remotely connected with the loss. In this sense, it is equiva- lent to negligence or carelessness in the execution of dutj-, and not to incapacity. This question has undergone many discussions in the courts of England and America, and has given rise to opposing judgments in SECT. I.] WATEES V. MEECHANTS' LOUISVILLE INS. CO. 673 the two countries. As applied to policies against fire on land, the doctrine has for a great length of time prevailed, that losses occa- sioned by the mere fault or negligence of the assured or his servants, unaffected by fraud or design, are within the protection of the poli- cies ; and as such recoverable from the underwriters. It is not certain upon what precise grounds this doctrine was originally settled. It may have been from the rules of interpretation applied to such poli- cies containing special exceptions, and not excepting this ; or it may have been, and more probably was, founded upon a more general ground, that as the terms of the policj', covered risks by fire gene- rally, no exception ought to be introduced by construction, except that of fraud of the assured, which, upon the principles of public policy and morals, was always to be implied. It is probable, too, that the con- sideration had great weight, that otherwise such policies would practi- cally be of little importance, since, comparatively speaking, few losses of this sort would occur which could not be traced back to some care- lessness, neglect, or inattention of the members of the family. Be the origin of it, however, what it maj', the doctrine is now firmly established both in England and America. We had occasion to consider and decide the point at the last term, in the case of the Columbia Insurance Company of Alexandria v. Lawrence, 10 Peters' E. 517, 518 ; which was a policy against the risk of fire on land. The argument addressed to us on that occasion, endeavored to estab- lish the proposition, that there was no real distinction between poli- cies against fire on land and at sea ; and that in each case the same risks were included : and that as the risk of loss by fire occasioned by negligence was not included in a marine policy, unless that of barratry was also contained in the same policy, it followed, that as the latter risk was not taken on a land policy, no recovery could be had. In reply to that argument, the court made the comments which have been alluded to at the bar, and the correctness of which it becomes now necessary to decide. It is certainly somewhat remarkable that the question now before us should never have been directly presented in the American or English courts ; viz. whether, in a marine policy (as this may well enough be called), where the risk of fire is taken, and the risk of barratry is not (as is the predicament of the present case), a loss by fire, remotely caused by negligence, is a loss within the policy. But it is scarcely a matter of less surprise, considering the great length of time during which policies against both risks have been in con- stant use among merchants ; that the question of a loss by negligence in a policy against both risks should not have arisen in either country until a comparatively recent period. If we look to the question upon mere principle, without reference to authority, it is diflScult to escape from the conclusion, that a loss by a peril insured against, and occasioned by negligence, is a loss within a marine policy ; unless there be some other language in it, AS 674 WATERS V. merchants' LOUISVILLE INS. CO. [CHAP. VII. which repels that conclusion. Such a loss is within the words, and it is incumbent upon those who seek to make any exception from the words, to show that it is not within the intent of the policj*. There is nothing unreasonable, unjust, or inconsistent with public policy, in allowing the insured to insure himself against all losses from any perils not occasioned by his own personal fraud. It was well ob- served by Mr. Justice Bayley, in delivering the opinion of the court in Bush v. The Royal Exchange Assurance Company, 2 Barn, and Aid. 79, after referring to the general risks in the polic}', that "the object of the assured, certainly, was to protect himself against all the risks incident to a marine adventure. The underwriter being there- fore liable, prima facie, by the express terms of the policy, it lies upon him to discharge himself. Does he do so b}' showing that the fire arose from the negligence of the master and mariners?" "If, indeed, the negligence of the master would exonerate the underwriter from responsibility, in case of a loss by fire ; it would also in cases of a loss by capture, or perils of the sea. And it would, therefore, constitute a good defence in an action upon a polic}', to show, that the captain had misconducted himself in the navigation of the ship, or that he had not resisted an enemy to the utmost of his power." There is great force in this reasoning, and the practical inconvenience of carving out such an implied exception from the general peril in the policj', furnishes a strong ground against it ; and it is to be remem- bered, that the exception is to be created by construction of the court, and is not found in the terms of the policj'. The reasons of public policy, and the presumption of intention in the parties to make such an exception, ought to be very clear and unequivocal, to justifj' the court in such a course. So far from any such policy or presumption betng clear and unequivocal, it may be affirmed that they lean the other way. The practical inconvenience of creating such an exception would be verj' great. Lord Tenterden alluded to it in Walker v. Maitland, 5 Barn. & Aid. 174. "No decision (said he) can be cited, wherein such a case (the loss by a peril of the sea) the underwriters have been held to be excused in consequence of the loss having been remotely occasioned by the negligence of the crew. I am afraid of laying down anj' such rule. It will introduce an infinite number of questions, as to the quantum of care, which, if used, might have prevented the loss. Suppose, for instance, the master were to send a man to the mast-head to look out, and he falls asleep, in consequence of which the vessel runs upon a rock, or is taken by the enemy ; in that case it might be argued, as here, that the loss was imputable to the negligence of one of the crew, and that the underwriters are not liable. These, and a variety of other such questions, would be introduced, in case our opinion were in favor of the underwriters." His lordship might have stated the argument from inconvenience, even in a more general form. If negligence of the master or crew were under such circumstances a good defence, it would be perfectly competent and proper to examine SECT. I.J WATERS V. MliECHANTS' LOUISVILLE INS. CO. 675 on the trial anj- single transaction of the whole vo^-age, and everj' iijcident of the navigation of the whole voj-age, whether there was due diligence in all respects, in hoisting or taking in sail, in steering the course, in trimming the ship, in selecting the route, in stopping in port, in hastening or retarding the operations of the voj-age ; for all these might be remotely connected with the loss. If there had been more diligence, or less negligence, the peril might have been avoided or escaped, or never encountered at all. Under such circumstances, the chance of a recovery upon a policy for any loss, from any peril insured against, would of itself be a risk of no inconsiderable hazard. This is not all : we must interpret this instrument according to the known principles of the common law. It is a well-established prin- ciple of that law, that in all cases of loss we are to attribute it to the proximate cause, and not to anj^ remote cause : causa proxirna non remota spectatur: and tliis has become a maxim, not only to govern other cases ; but, (as will be presently shown) to govern cases arising under policies of insurance. If this maxim is to be applied, it dis- poses of the whole argument in the present case ; and why it should not be so applied we are unable to see any reason. Let us now look to the authorities upon the point.^ - . . The third and fourth questions are completely answered by the reasoning already stated. Those pleas contain no legal defence to the action, in the form and manner in which they are pleaded ; and are not sufficient to bar a recovery by the plaintiff. Some suggestion was made at the bar, whether the explosion, as stated in the pleas, was a loss by fire, or by explosion merely. We are of opinion, that as the explosion was caused by fire, the latter was the proximate cause of the loss. The fifth plea turns upon a different ground. It is that the taking of gunpowder on board was an increase of the risk. If the taking of the gunpowder on board was not justified by the usage of the trade, and therefore was not contemplated as a risk by the policy, there might be great reason to contend, that if it increased the risk, the loss was not covered by the policy. But in our opinion the facts are too defectively stated in the fifth plea, to raise the question. Our opinion will be certified to the Circuit Court accordingly. On the first question, in the negative ; on the second question, *in the affir- mative ; and on the third and fourth questions, in the negative.^ 1 Here were discussed Busk v. Royal Exchange Assurance Co., 2 B. & Aid. 73 (1818) ; Walker v. Maitland, 5 B. & Aid. 171 (1821); Bishop v. Peutland, 7 B. & C. 219 (1827); Patapsco Ins. Co. v. Coulter, 3 Pet. 222 (18.30) ; and Columbia Ins. Co. v. Lawrence, 10 Pet. 507 (1836), s. c, but not a. p., ante, p. 247. — Ed. ■■* Ace: Dixon v Sadler, ante, p. 475 (1839), s. c. sub nom. Sadler v. Dixon, 8 M. & W 895 (Ex. Ch. 1841); Richelieu & Ontario Navigation Co. v. Boston M. Ins. Co., 26 Fed. R. 596, 602 (TJ. S. C. C, E. D. Mich. 1886) ; Crescent Ins. Co. o. Packet Co., 69 Miss. 208 (1891). In Trinder v. Thames and Mersey M. Ins. Co., '98, 2 Q. B. 114 (C. A.), the action 676 STARBUCK V. NEW ENGLAND MAKINE INS. CO. [CHAP. TIL STARBUCK V. NEW ENGLAND MARINE INS. CO. ' Supreme Judicial Court of Massachusetts, 1837. 19 Pick. 198. Assumpsit on a policy of insurance, dated November 1, 1832, on the ship "Loper," of Nantucket, and her outfits, bound on a whaling voj-age. At the trial, before Putnam, J., it appeared that the "Loper "sailed from Nantucket, on the 24th of November, 1832, and pursued her voj'age into the Pacific Ocean ; that while there, in November, 1833, she experienced a violent shock, which caused her to tremble, and created much alarm among her crew ; that she continued, however, whaling until the 8th of March, 1835, when she put into Talcahuana, to prepare for her homeward voyage ; that she did not leak more than ships frequently do ; that such repairs were made upon the vessel, at Talcahuana, as the master supposed to be necessary, but that her bottom was not repaired or examined ; and that, on the 24th of March, she sailed from Talcahuana for Nantucket, and, on the 20th of the following May, foundered and was abandoned by her crew, and the whole property insured was lost. In order to show adequate cause for the foundering of the vessel, the plaintiff introduced evidence tending to prove that it was occasioned by a blow received by some horned fish in November, 1833. The defendants contended, that the plaintiff was not entitled to recover, inasmuch as the ship, after receiving such blow, and during the existence of the defect caused thereby, put into the port of Tal- cahuana, where it could have been discovered and repaired, but left that port without repairing it. The jury were instructed, that if the vessel sailed from Talcahuana ■with a defect in her bottom, which afterwards caused her loss, j-et that the defendants were liable therefor, unless the captain liad i-easonable cause to suspect the existence of the defect at the time when the vessel ■was at Talcahuana, or had reasonable cause to believe that she could not proceed safely home without having the same repaired. The jury returned a verdict for the plaintiff for a total loss. ■was brought in behalf of o-wners of a vessel, upon a policy on freight ; and it was held to be no bar to recovery that the vessel was stranded by the negligence, not wilful, of one of the o^wners, who was the master. In Trinder v. North Queensland Ins. Co., '98, 2 Q. B. 114, 129 (C. A.), the action was brought upon a policy on a ship, in behalf of the part owner — the master — for whose sole benefit the insurance was effected; and afSrming the judgment of Kennedy, J., in the Commercial Court, 2 Commercial Cas. 216 (1897), s. c. 66 L. J. N. 8. Q. B. 802, and 77 L. T. Eep. n. s. 80, it was held to be no bar to recovery that the loss was due to the negligence, not wilful, of this part owner. On barratry, see Phyn v. Royal Exchange Assur. Co., 7 T. R. 50.5 (1798) ; Earle v. Rowcroft, 6 East, 126 (1806); Todd v. Ritchie, Starkie, 240 (18161 ; Jones v. Nichol- son, 10 Exch. 28 (1854) ; Germania Ins. Co. v. Sherlock, 25 Ohio St. 33 (1874). — Ed. SECT. I.j STAEBUCK V. NEW ENGLAND MARINE INS. CO. 677 If the instructions given to the jurj- were erroneous, the verdict was to be set aside, and a new trial granted ; otherwise, judgment was to be rendered on the verdict. W. J). Sohier, for the defendants. C. P- Curtis and B. .R. Curtis, for the plaintiff. Per Curiam. It is suggested on the part of the assured, that the loss arose from a blow received sixteen months before, which created some alarm-at the time, but not causing a leak, was not much thought of afterwards. The loss was subsequently' attributed to it, because there was no other apparent cause. The defendants contend, that the master should have examined the ship at Talcahuana, and repaired her. The argument is, that the assured is bound to have the ship seaworthy at the commencement of the voyage, and if she is not, the insurers are not responsible for subsequent loss, even if it arises from another cause, as, if she has not proper papers, or is struck hy lightning ; that this is a condition precedent, without which no liability attaches. This prin- ciple is correct ; but the defendants go further, and contend that she is to be seaworthy, not onl}- at the beginning, but during every stage of the voyage. But the obligation of the assured to keep her seaworthy depends upon different considerations and imposes different duties. If the assured does not make her seaworthy at first, she is not a vessel, not capable of being navigated ; and the contract being made under mutual mistake, the consequence follows, that the subject matter, respecting which the insurance was made, did not exist, and neither party is bound. But if she meets with an accident after the beginning of a V03age, as the very contract of insurance supposes that she ma}', it is the duty of the assured to make repairs. But the nature and extent of this duty are to depend on circumstances and have a reasonable construction ; and this was the ground of decision in Paddock v. Franklin Ins. Co. If the ship become unseaworthj' on the voyage, it is the dutj- of the owner, as soon as be discovers it, to make her good ; but he cannot do it before he discovers it. If he does not repair when he reasonably ought to do so, and a loss arises from it, the assured can- not recover, because it is not a loss by anj- of the perils insured against ; but if the loss arises from another cause, he may recover. The differ- ence is this : if the vessel is not seaworthy at first, the policy never attaches ; in the other case, the insurers, having become responsible, continue liable for all losses not arising from the fault of the owners. There are often latent defects at- the commencement of the voyage, and distressing cases happen, in consequence, because the policy does not attach. The counsel for the defendants contend, that the law is the same if the injury took place in the course of the voyage ; but we can- not accede to this doctrine. There is nothing in the opinion in Paddock v. Franklin Ins. Co. that warrants the position. A distinc- tion is there taken between unseaworthiness at the beginning, which is a breach of warranty, and a defect arising on the voyage, which is not repaired through the fault of the owner, and for which the owner is 678 STARBUCK V. NEW ENGLAND MARINE INS. CO. [CHAP. VII. responsible if tlie loss is from that cause. But the owner, or his agents, must know of the defect or there is no fault. Suppose an accident occurs at sea, what is the master to do? He is to ascertain, as soon as he can, the extent of the damage, and to take into consideration the relative distances of ports, and where he can repair, and the course of ■winds, trade winds, &c.', and to exercise his best judgment, under a view of all the circumstances. If the ship is sinking, he must go to the port he can reach soonest ; if not, it may be most reasonable to go to a more distant port, where he can get more effectual and permanent repairs. He must exercise a sound judgment, for the best interests of all concerned. The question then is, whether the instructions to the jury were right ; and we are of opinion that they were. An accident happened, in consequence of which there was much trembling of the vessel ; and it was supposed she had been struck by a swordfish or a whale. If she could then have been examined, it would have been the duty of the master to have had it done ; but she was in the ocean, and an examina- tion could not be made. After a long trial, however, it was found, she did not leak. Then was the master bound, at all events, to heave her out when she arrived at a port? We think he was merely bound to exercise sound discretion. But even if had hove her down, and not repaired her, and afterwards she sunk, the defect not being discovered, it is argued that the insurer would be discharged. If unseaworthiness at the time of sailing from Talcahuana was a condition precedent, this would undoubtedly be correct, because then the assured would take the risk of latent and unknown defects. But we think it was not so, and that the master must have known, or have had reason to believe, that there was a defect, in order to throw the risk from this cause upon the assured.^ 1 In Peters v. Phoenix Ins. Co., 3 S. & R. 25 (1817), Tilghman, C. J., said: "When a ship which has received damage puts into port to repair, the captain or agent who superintends the repairs is bound to use due diligence. But it may be impossible to make a complete repair, either for want of materials or of skilful workmen or of accommodations for hearing the ship down in order to make a thorough search. , . The law implies no warranty of seaworthiness except at the commencement of the voyage. To say, therefore, that a ship which has suffered damage by a peril insured against must, at all events, be so repaired at the port she puts into, as to render her seaworthy, is to add to the contract a condition not contained in it." In Copeland v. New England M. Ins. Co., 2 Met. 432, 439-440 (1841), Shaw, C. J., for the court, after citing Paddock v. 'Franklin Ins. Co., 11 Pick. 227, 234 (1831), and Hazard v. New England M. Ins. Co., 1 Sumner, 218 (1832), said: "Upon these prin- ciples and authorities, we consider it a rule of the law of insurance, as settled here, that in addition to the implied warranty which applies to the state of the vessel at the com- mencement of the voyage, and must be strictly complied with as a condition precedent, it is the duty of the assured, from time to time during the voyage, to repair her and keep her in a suitable condition for the service in which she is engaged, and if they fail to do so, and a loss happens which is attributable to that cause, the assured, and not the underwriters, must sustain it. And although there are some recent English cases which seem to wear a different aspect, or leave the point in doubt, yet, upon a full consideration and comparison, we are ijclined to think they are not opposed SECT. I.J STAEBUCK V. NEW ENGLAND MARINE INS. CO. 679 to this doctrine. . . . The doctrine of implied warranty of seaworthiness would go but a little way in securing the performance of the duties of the assured, because, as it has often been said, that warranty is complied with, if the vessel is seaworthy when she sails, although she becomes unseaworthy in twenty-four hours after. But if it can be definitely settled what are the duties of the assured, in regard to the conduct of the voyage, after its inception, and to what extent they are responsible for the acts and the negligence of the master, officers, and crew, and of all other persons who may have an agency in the navigation of the vessel and conduct of the voyage, it will be a question, in each particular case, whether the loss is one for the insurers or owners to bear. The modern cases go far to establish the rule, that for the conduct of the master or mariners, in the practical navigation, care, and management of the vessel, after the commencement of the voyage, the insurers are responsible, provided the actual loss arise from one of the perils insured against, although such peril was occasioned or increased by the negligence, carelessness, bad seamanship, or other mis- conduct of the master and mariners, not amounting to barratry." In Merchants' Mat. Ins. Co. u. Sweet, 6 Wis. 670, 674-675 (1858), Cole, J., for the court, said : " The underwriters in this country are held discharged from any loss which can be distinctly shown to have arisen from the negligence or misconduct of the assured in not keeping the ship in a proper state of repair. . . . And we suppose there may be a breach . . . arising as much from a neglect to keep the vessel properly ballasted as from any other cause. A vessel may become unnavigable or unseaworthy as well from overloading or a want of sufficient ballast as from some defect in the equipment or provision of the vessel. . . . There are undoubtedly certain mistakes of judgment and instances of negligence on the part of officers or crew whicb the under- writers are responsible for. A loss occasioned by a mistake of judgment or neglect of duty on the part of a commanding officer while acting purely in his official and pro- fessional character may be one of the perils covered by the policy. Or such a default as . . . where the master raised too much sail or neglected to have the pumps properly worked, in consequence of which the vessel was lost, is a risk incident to navigation and assumed by the insurers." In Union Ins. Co. v. Smith, 124 U. S. 405, 427 (1888), Blatchford, J., for the court, said : " The principle adopted by the Circuit Court in laying the case before the jury was the proper one. In the insurance of a vessel by a time policy, the warranty of seaworthiness is complied with if the vessel be seaworthy at the commencement of the risk, and the fact that she subsequently sustains damage, and is not properly refitted at an immediate port, does not discharge the insurer from subsequent risk or loss, provided such loss be not the consequence of the omission. A defect of sea- worthiness, arising after the commencement of the risk, and permitted to continue from bad faith or want of ordinary prudence or diligence on the part of the insured or his agents, discharges the insurer from liability for any loss which is the consequence of such bad faith, or want of prudence or diligence, but does not affect the contract of insurance as to any other risk or loss covered by the policy and caused or increased by such particular defect." And see McDowell v. General Mut. Ins. Co., 7 La. Ann. 684 (1852) ; Fawcus v. Sars- field, 6 E. & B. 192 (1856) ; Thompson v. Hopper, E., B. & E. 1038 (Ex. Ch. 1858) ; Dudgeon ». Pembroke, 2 App. Gas. 284,296-298 (1877).— Ed, 680 peerin's administrators v. protection ins. CO. [chap. vn. PEREIN'S ADMINISTRATORS v. PROTECTION INS. CO. Supreme Codet of Ohio, 1842. 11 Ohio, 147.* Action was brought on a policy to insure one-half of three-eighths of "the hull, tackle, and apparel of the steamboat 'Moselle.'" The risks insured against were " of the seas, rivers, fires, enemies, pirates, rovers, assaiUng thieves, and all other perils, losses, and misfortunes which shall come to the damage of the said steamboat, according to the true intent and meaning of this policj', as herein expressed." Within the time covered bj' the policy, there was a boiler explosion, by which the steamboat was destroyed. The defendant contended that the loss occurred through the negligence of the assured, the master, and the crew. The plea was the general issue. A verdict was taken for the amount of the loss, under the direction of the court. Thereupon this motion for a new trial was made, because (1) the court did not permit expert testimony that the explosion was due to negligence, and (2) the court did not instruct the jury that a loss bj^ explosion of the boilers from an internal cause is not covered by the policy, and (3) there was newly discovered evidence. 'Wright, Coffin & Miner, and H. Starr, for defendant, in support of the motion for new trial. Charles Fox, for plaintiff.' Lane, C. J. The newly discovered evidence is cumulative, onlj'. At the trial, it was shown that preparations were made before starting, to overtake another boat ; that fires were kept burning, with great fierceness ; and that the boilers had become very hot ; that the escape of steam was attended with a peculiar shrill noise, denoting great pressure, and so loud as to awaken notice and alarm. The new evi- dence is, the testimonj' of a witness, who, going on board, was terri- fied by the violence of the fires, the intensity of the heat, and the glimmer from the ascent of heated air, " which seemed to make the boilers creep and move in their beds," and goes little further than to furnish additional evidence of facts already before the jury. That a loss, arising from an explosion of the boiler, is covered by the policy, seems plain to us, when we consider the subject insured, and the nature of the risks to which it is, of necessitj', exposed. The insurance was on a steamboat. The policy is in the form which has long been in use for marine risks, and the words which describe the perils are large enough to embrace all such as arise in the ordinary use of the thing insured. A policy on ships covers losses arising from accidents to the power which moves them, and it must be presumed that the parties contemplated the same protection to a steamboat when 1 The statement has heen rewritten. — Ed. 2 The arguments on, each side were voluminous and valuable. The passages bear- ing on explosion are found in H Ohio, 154-156, 163-166. — Ed. SECT. I.] WASHINGTON MUTUAL INS. CO. V. EEED. 681 the loss occurs to her motive agencies. The other causes for which the new trial is asked, depend upon the right of the defendant to use the negligence of those managing the boat as a defence against this liability.^ . . . Motion overruled. Judgment for plcnntiff on the verdict."^ WASHINGTON MUTUAL INSURANCE CO. v. EEED et al. Supreme Court of Ohio, 1851. 20 Ohio, 199. Eekoe to the Supreme Court of Hamilton County. The original action was assumpsit, in the Commercial Court of Cincinnati. Reed and Bi-own, the plaintiffs below, declared specially, on a policj' of insurance effected by the defendant below, the Insurance Company, on 750 barrels of whiskey, to be shipped in a No. 1 flat boat, from Lawreneeburg, Indiana, to New Orleans. 1 The discussion of this question has heen omitted. — Ed. 2 Ace: Citizens' Ins. Co. v. Glasgow, 9 Mo. 406 (1845); and West India and Panama Telegraph Co. u. Home and Colonial M. Ins. Co., 6 Q. B. D. 51 (C. A., 1880) ; but this latter case has been disapproved by the House of Lords in Thames and Mersey M. Ins. Co. v. Hamilton, 12 App. Cas. 484 (1887). Compare Miller v. California Ins. Co., 76 Cal. 145 (1888). In Citizens' Ins. Co. v. Glasgow, supra, Napton, J., for the court, in commenting on Perrin v. Protection Ins. Co., said : "The court seemed to consider that this was a peril incident to narigation of a river by steam vessels, as much so as a loss by wind would be a peril of the sea, to which vessels propelled by that element are liable. It is no answer to this view of the subject to say that a peril by steam is not peculiar to the water, but may happen on land as well as at sea, for the same may be said in relation to the dangers arising from the violence of the winds. An injury to the motive power of a sea vessel by inevitable accident is admitted to be within the enum- erated perils of a marine policy ; for the same reason, an injury to the motive power of a steam vessel arising from inevitable accident, is within the perils of the river incident to such vessels. If steam were a power entirely within the control of man, the conclusion would be different. But I apprehend that whatever natural philoso- phers may think of this, the elements which combine to create the power of steam are as entirely within the reach of accident, and are no more subject to fixed laws than the elements which propel the ship at sea. Whatever may be the theories on either sub- ject, universal experience is that no human skill can entirely guard against accidents, either in the one case or the other." In Thames and Mersey M. Tns. Co. v. Hamilton, supra, the policy insured a steam- ship and its machinery, including donkey-engine and pumps, against " perils ... of the seas, . . . fire, . . . barratry, . . . and of all other perils." While the steamship was at anchor, awaiting orders, an attempt was made to fill the main boilers by means of the donkey-pump and engine, in the usual way. In the pipe from the donkey-pump to the main boilers, a valve, which ought to have been open when the boilers were pumped up, either had been left closed by the negligence of an engineer or had been accidentally salted up. When the donkey-pump was set to work, the pipes and water- chamber of the donkey-pump were overcharged, and water was forced into the air- chamber, which in consequence split. For this damage to the donkey-pump it was held that there could be no recovery. — Ed. 682 "WASHINGTON MUTUAL INS. CO. V. REED. [CHAP. VII. The declaration avers that while the policy was in force, said boat, " b}' a peril of the river, grounded and became, and was fast upon a bar ... in the bed ... of the river, whereby, and by reason of the beating of the waves against said flat boat, the same sprung a leak, whereby . . . the said 750 barrels of whiskey on board said boat, the property of plaintiffs, became, and were wholly lost." ■'. . . The parties in the court below having submitted their evidence, the jury returned a verdict for the defendant below, and judgment was entered. During tlie trial the plaintiffs excepted to the charge of the court to the jurj', and submitted a motion for a new trial, which was overruled. The cause was removed to the Supreme Court of Hamilton County, and the judgment was reversed for error in the charge of the court below. This is a writ of error to reverse the judgment of the Supreme Court of Hamilton County. . . . The policy of insurance, as far as is material to a correct undertaking of the decision of this court, is as follows: ..." Touching the perils which the said insurance company are content to bear, and take upon themselves in the premises, they are of the seas, rivers, fires, jettisons, enemies, pirates, and overpowering thieves (but not other thieves). Provided, that the insurers shall not be liable except in cases of general average for loss or damage on said property, unless it amounts to five per cent on the whole sum at risk. , . . Coffin & Mitchell, for plaintiff in error. Fox & French, for defendants in error. Caldwell, J.^ . . . The Supreme Court reversed the judgment of the Commercial Court, on the following ground, as stated in the record of reversal. " Because the court below, at the request of the defendants, charged the jury that if they were of the opinion that the loss, de- clared on by the plaintiff, arose from an ordinary swell in the river, produced by the passage of an ordinary steamboat, by the flat boat, while on her course in the river, then it was not a loss by a peril within the policj', and the plaintiff could not recover, whereas the court ought not so to have charged." . . . The charge has been substantially given above. It was, that the insurance company was not liable for the losses arising from the com- mon and ordinary perils to which boats are necessarily exposed in navigating to New Orleans, and that if the jurj' were of the opinion that the loss in this case arose from an ordinary swell in the river, produced by the passage of an ordinary steamboat, by the flat boat, while in her course in the river, then it was not a loss bj- a peril within the policy, and the plaintiff could not recover. In Phillips on Insurance, vol. 1, p. 635, it is said : " Under perils of the sea, which 1 The reporter's statement has been abbreviated. — En. ''■ From the opinion have been omitted passages not discussing the accuracy of the charge. — Ed. SECT. I.] WASHINGTON MUTUAL INS. CO. V. REED. 683 constitute a part of the risks in almost everj- marine policj-, are comprehended those of the winds, waves, lightning, rocks, shoals, running foul of other vessels, and in general, all causes of loss and damage to the property- insured, arising from the elements, and inevitable accidents, other than those of capture and detentions." In this case, it appears from tlie evidence that at the time the flat boat sprung the leak, the steamboat " John Drennan" was passing her, so close that a person could have jumped from one boat to the other; that the steamboat "John Drennan," in passing out of the deep into the shoal water, made a very heav}' swell, and that when the flat boat struck the swell, about mid-ship, the boat cracked, as if something was breaking ; that in a short time the water was coming into the boat faster than it could be pumped out, and that on examination it was found that the splicing of the gunwales had given way, &c. Now, injurj- arising from the action of the waves is one of the perils insured against, and we do not see, in reason, the difference between a wave raised bj' the wind and one raised by a steamboat. Nor have we been able to find that any such distinction has ever been held to exist. Nor do we think that anj- such discrimination, as appears to be presupposed by the terms " ordinarj' swells " and " ordinary steam- boats," exists. Whether the gale was a severe one, or whether it was moderate ; whether it produced heav}- swells, or only those that were moderately so, is not important in determining whether the insurer is liable or not ; it is onl}- necessary, to fix his liability, that the waves should have caused the injur}-. "Whether the Steamboat was very large, or only ordinary, whether the swell was extraordinarj' or not, is not the question ; but the question is, did the swell cause the damage to the boat? We see no more reason in making the liability of the insurance company depend on whether the boat was an ordinary one, and the swell an ordinary one, or whether they were both extraordinary, than there would be in making its liability depend on whether the snag against which the boat ran was an ordinarj' or extraordinarj' one. Now, if the steamboat had run against this boat, and run her under, there is no question but such coUision would have been a peril within the polic}- ; and we are unable to see any difference, in principle, between running a boat under by directly striking her with another boat, or by running so close to her as to cause the waves to sink or break her. The boat causing the injurj' would be equally liable in the one case as in the other, and so would the insurance company. But it is said that the peril arising from the waves of steamboats is one of the ordinarj- perils to which flat boats are sulvjected, and when it is not of an extraordinary character, it is not one of the perils insured against. The time has been, within the recollection of many, when danger to a flat boat, from the waves of a steamboat, on our waters, would have been a rare occurrence — when it would have been an extraordinary peril ; but we do not suppose tliat the fact that the number of steamboats has so increased, that it has become an ordinary peril, has altered the law of insurance. 684 WASHINGTON MUTUAL INS. CO. V. EEED. [CHAP. VII. The flat boat, although not so highly appreciated as a means of transportation as formerly, has lost none of her legal rights ; they must still be extended to her, if for no other reason, for the good she has done. Counsel for plaintiff in error have cited us to a number of authorities, in which it is said that the insurers are not liable for ordinary perils, but only for such as are of an extraordinary kind. I have been able to find no specific definition of what perils are to be considered ordinary and what extraordinary, in the sense in which these terms are used in this connection. The term " ordinary peril," is not used as of similar meaning with common or frequent peril, or peril likely to be encountered ; nor does it have any relation, so far as I have been able to discover, to how great or how small the force may be that is brought to bear or is encountered. The term, I think, is used rather in contradistinction to accident. The insurer does not become liable for inherent defects in the thing insured ; he does not insure against wear and tear — such things as all vessels must nec- essarily be subjected to ; does not insure against certain loss, but insures against accidents. The question how great the force was that produced the injury may be an important item of evidence, going to show seaworthiness or the jreverse, or the like ; but if the force produces the injury on a seaworthy vessel, the insurer is liable, if the peril belong to the class insured against, although such force ma}- have been ever so small. The case that gives tlie most color to the distinction that plaintiff's counsel have drawn between ordinary and extraordinary perils, is the case of Hazard's Administrator v. The New England Insurance Co., 8 Pet. 557. In that case the court saj', that the policy does not cover ordinary perils, but extraordinary ones ; and j'et we think it falls far short of sustaining their position. In that case, the judge, on the circuit, had charged ■" that if the jury should find that in the Pacific Ocean worms ordinarily assail and enter the bottom of vessels, then the loss of a vessel destroyed by worms would not be a loss within the policy." The Supreme Court sustained this charge. They based their decision principally on the case of Eohl v. Parr, 1 Esp. Judge McLean, however, remarks in delivering the opinion of the court: "If worms ordinarily perforate every vessel which sails in a certain sea, is not a risk of injury from them, as common to every vessel which sails on that sea as the ordinary wear and decay of a vessel on other seas? The progress of the injury may be far more rapid in the one case than in the other ; but do they not both arise from causes peculiar to the different seas, and which affect, in the same way, all vessels that enter into them ? " This case, I think, clearly keeps up, and is based on, the distinction between injuries that must necessarily occur, and accidents that may or are likely to occur. If all vessels that sail in the Pacific Ocean must necessarily be perforated with worms, it could not be an accident that the particular vessel in question was perforated by them. SECT. I.] MAGNUS V. BUTTEMEK. 685 We think the Commercial Court erred in their charge to the jury, and that the Supreme Court decided correctly in reversing their judgment The Judgment of the Supreme Court will therefore be affirmed. MAGNUS AND Others v. BUTTEMER. Common Pleas, 1852. 11 C. B. 876. This was an action of assumpsit on a policy of assurance on the ship " Elizabeth " for twelve calendar months, in port or at sea, in all ser- vices, in the coast and coasting trade of the United Kingdom. The declaration stated, that, during the time covered by the policy, and while the ship was in service in the coasting trade in the United Kingdom, with a cargo of timber on board, by the said ship taking the ground, and by and through the hardness and unevenness of the ground, and the perils and dangers of the seas, the ship was strained, broken, damaged, and injured ; and that an average loss was thereby incurred of £19 19s. Id. per cent. Pleas, — non assumpsit, and a denial of the loss in manner and form as alleged. Issue being joined, and the cause ripe for trial, it was agreed that the captain and mate of the " Elizabeth " should be examined viva voce before one of the masters of this court, and that the facts disclosed on such examination should be stated in a special case for the opinion of this court. The material facts were as follows : — The "Elizabeth" sailed from Rochester to Sunderland. On her arrival at Sunderland, the vessel went up the river abreast of Laing's shipyard. She had to wait four or five days before she could go in to discharge. She was moored head and stern, and floated when the tide was in, and was aground, but not dr3', 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 happened 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 flrst 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 bj' perils of the seas. 686 MAGNUS V. BUTTEMER. [CIIAP. VII. TomlinsoJi, for the plaintiffs. The facts stated in the ease disclose a loss by a peril insured against. The vessel was unloading in the ordinary manner, and at an ordinary place, when the stranding took place, rietcher v. Inglis, 2 B. & Aid. 315, is not to be distinguished from this case ; the facts are almost identical. In that case, a trans- port, in government service, was insured for twelve months, during which she was ordered into a dr}- harbor, the bed of which was hard and uneven, and, on the tide leaving her, she received damage by tailing the ground ; and it was held tliat this was a loss by a peril of the sea. That ease was recognized in Phillips v. Barber, 5 B. & Aid. 161. [Ckesswell, J. Phillips v. Barber was not a case of loss by a peril of the sea. Madle, J. In Fletcher v. Inglis, there was a loss by a peril of the aea. Here, however, nothing happened that was ex- traordinarj' or unexpected ; the ship took the ground as she naturally would in a tide-harbor. In Bishop v. Pentland, 7 B. & C. 219, 1 M. & R. 49, a ship having goods on Iward which were insured, but war- ranted free from average, unless general, or the ship should be stranded, was compelled, in the course of her voyage, to put into a tide-harbor, and was there moored alongside a quay, in the usual place for ships of her burden. It became necessary, in addition to the usual moorings, to fasten her by tackle to posts on the shore, to prevent her falling over, upon the tide leaving her. The rope with which she was so fast- ened, not being of sufficient strength, broke when the tide left the vessel, and she fell over upon her side, and was thereb}' stove in, and greatly damaged : and it was held that this was a stranding within the meaning of that word in the policy, although the stranding might have been occasioned remotely by the negligence of the crew in not provid- ing a rope of sufficient strength to fasten the ship to the shore. There, the damage was the result of an accident. But, taking the ground un- der such circumstances as are stated here is hardly a peril of the sea.] The cause of damage was very similar to what was held in Devaux v. J' Anson, 5 N. C. 619, 7 Scott, 517, to be a loss bj- a peril of the sea. James Wilde, contra. The damage sustained by this vessel was not the result of a peril which the underwriter insures against : it arose solelj' from the weight of the vessel, when loaded, pressing and resting upon a hard and uneven beach. In Kent's Commentaries, the learned commentator, in describing what are " perils of the sea," saj-s, 3 Kent's Com. 300 : " Those words apply to all those natural perils and oper- ations of the elements which occur without the intervention of human agency, and which the prudence of man could not foresee, nor his strength resist. Quod fato contingit, et cuivis patrifamilias quamvis diligentissimo possit contingere. The imprudence or want of skill in the master may have been unforeseen, but it is not a fortuitous event. The underwriter undertakes only to indemnify against extraordinary perils of the sea, and not against those ordinary ones to which every ship must inevitably be exposed." In Stevens on Average, 4th ed. p. 150, after speaking of those injuries to a ship which do not come within SECT. I.J MAGNUS V. BUTTEMEK. 687 the description of particular average, tiie author sa3's: " Having thus stated what is particular average, it msxy perhaps be useful to state what is not. It is not customar}- to consider the repairs of the ship, in con- sequence of springing a leak at sea, as a claim for which tlie under- writers are liable ; for, in all cases of particular average, the onus is thrown on the assured (the owner of the ship) . It is not for the in- surer to account for the cause of the accident. The assured must show that the damage for which he has a claim is the direct effect of a fortu- itous accident. In the absence of such proof, the springing a leak is to be attributed either to the working and straining of the vessel, — which is the wear and tear of the voyage, — or to some insufflcienc}' or iuherent defect ; for neither of which are the underwriters liable. But, whei'e the evidence derived from the log-book, and confirmed bj- the mariners, is sufficiently clear to show that the leak was occasioned by a stroke of the sea ; for instance, when a ship has been suddenly thrown on her beam-ends, and immediately on her righting it is discovered that she has sprung a leak, there is no doubt this comes under the head of a partial loss for which underwriters are liable." So, in Park on Insur- ance (8th ed. p. 240, citing Hearne v. Edmunds, 1 Brod. & B. 388, 4 J. B. Moore, 1.5) it is said, that, " where it is certain that, in the ordi- nary course of the navigation, the vessel would, by the flux and reflux of the tide, be left on the mud, it was held that this was not a stranding within the meaning of that term in the policy." Carruthers v. Syde- botham, 4 M. & Selw. 77, and Rayner v. Godmond, 5 B. & Aid. 225, were both eases of accidental damage. And in Bishop v. Pentland, LiTTLEDALE, J., takes the distinction expressly: he saj-s, — "where a vessel is on the ground or strand, in such a situation as she ought not to be in while prosecuting the voyage on which she is bound, that is a stranding within the meaning of the policy.'' In Fletcher v. Inglis, there are two thiugs which might have occasioned the damage, — the taking the ground on the receding of the tide, — and the bumping which was consequent on the swell: the court do not say on which ground their decision proceeded ; but it is evident it must have been the latter. In Devaux v. J'Anson, the statement in the declaration shows a clear accident. The question underwent full discussion in Wells V. Hopwood, 3 B. & Ad. 20. Lord Tentekden there lays down this intelligible rule: " Several of the cases hitherto decided on this subject are, as to their facts, verj' near each other, and not easily dis- tinguishable. But it appears to me that a general priuciple and rule of law may, although not explicitly laid down in any of them, be fairly collected from the greater number. And that rule I conceive to be this : Where a vessel takes the ground, in the ordinary and usual course of navigation and management, in a tide-river or harbor, upon the ebbing of the tide, or from natural deficiency of water, so that she may float again upon the flow of the tide or increase of water, such an event shall not be considered a stranding within the sense of the mem- orandum. But, where the ground is taken under any extraordinary 688 MAGNUS V. BUTTEMEE. [CHAP. VII. circumstances of time or place, by reason of some unusual and acciden- tal occurrence, such an event sliall be considered as a stranding witliin the meaning of the memorandum." According to that rule, there clearly was no stranding here, no loss by a peril of the sea. Tomlinson, in reply, cited Phillips v. Nairne, 4 C. B. 343. Jervis, C. J. 1 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 unnecessarily 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 under- writers liable, the injurj' must be the result of something fortuitous or accidental occurring in the course of the voyage. Here the vessel, upon her arrival at Sunderland, goes up the river, and, in consequence of the rising and falling of the tide, rests upon the river's bed, and re- ceives damage. 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 warrant}' 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 some- thing out of the ordinary course of the voyage, for which they are liable. This distinction has been well understood for many j'ears. 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 compre- hended within the perils insured agaiust. The case of Fletcher v. Inglis was sufficiently distinguished in the course of the argument ; the statement of damage there is this : " Between nine and ten at night, the tide having then left the vessel, a cracking noise was heard in the ship, proceeding, as the witness believed, from something breaking. Some time after this, on the return of the tide, there was a considerable swell in the harbor, and the ship 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 for tuitus, — the swell that set in, after which the ship's knees were found to be broken. That, I appre- hend, 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 extraordinar}- and accidental circum- stance of the great swell setting in the harbor. Suppose, instead of the swell, the case had stated, or the evidence shown, that a violent SECT. I.J MAGNUS V. BUTTEMEE. 689 storm had arisen, and that the vessel was dashed against a rock, and injured, nobody could have doubted that that was a loss by perils of the sea. That only differs in degree from the actual case of Fletcher v. Inglis ; but it differs very materially from the present case, which shows a mere subsiding of the ship upon the shore or beach on the 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 otherwise than it did happen. They intended the ship to take the ground as she did. There was no acci- dent. 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 held 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 voj-age to which she was exposed. Authority and common sense concur in showing that this is not a liability which ought to be cast upon the underwriters. Cresswell, J. I am of the same opinion, and should only be re- peating what has already been said if I gave my reasons for concur- ring with the rest of the court. Williams, J. This clearlj' is a case of ordinary wear and tear, and not accident. Judgment for the defendant} 1 Compare Potter v. Sufiolk Ins. Co., 2 Sumner, 197 (1835). In Paterson v. Harris, 1 B. & S. 336 (1861), the owner of a share in the Atlantic Telegraph Company procured a policy of marine insurance on that share, the policy being in the ordinary form and having annexed to it this memorandum : " It is under- stood and agreed that this insurance shall cover and include the successful working of the cable when laid down." The cable having failed to work successfully by reason of the chemical action of sea water, such chemical action being due to a defect in the insulation caused by an accident occurring before shipment, it was held that as to this cause of loss there could be no recovery, Cockburn, C. J., for the court, saying : " We are of opinion that this is not an injury which can properly be referred to perils of the seas, under which head of damage it was contended for the plaintiff that the loss fell. We are of opinion that an injury of' this nature, not arising from the external violence or mechanical action of the winds or waves, but which was the natural and necessary consequence of the ordinary action of the sea water on the cable, in the state in which it was when immersed in the sea, is not comprehended in the perils insured against. The injury, so far as the damage occasioned by the sea is concerned, was the inevitable consequence of the immersion of the cable in its then state in the sea water. But the purpose of insurance is to afford protection against contingencies and dangers which may or may not occur; it cannot properly apply to a case where the loss or in- jury must inevitably take place in the ordinary course of things. The wear and tear of a ship, the decay of her sheathing, the action of worms on her bottom, have been properly held not to he included in the insurance against perils of the seas, as being the unavoidable consequences of the service to which the vessel is exposed. The in- surer cannot be understood as undertaking to indemnify your losses which, in tlie nature of things, must necessarily happen. For these reasons, we are of opinion that the plaintiff is not entitled to recover in respect to this portion of his claim." In Merchants' Trading Co. v. Universal Mar. Ins. Co., 2 Aspinall's Maritime Cas. n. s. 14 690 TATLOE V. DUNBAR. [CHAP. VII. TAYLOR V. DUNBAR. Common Pleas, 1869. L. R. 4 C. P. 206. ^ This was an action upon a policy of insurance, in the usual form, against perils of the seas and all other perils, on goods per steamer from Hamburg to London. The case was stated for the opinion of the court. There were two claims for loss, one of twenty-six packages of pork on the " Leopard," and the other of thirty-two quarters of beef on the "Ostrich." The " Leopard" sailed from Hamburg on November 3, 1866, encountered hard gales of wind and most tempestuous weather, accompanied by high running seas which frequently broke over the ship ; and on November 6 the ship was put back to Cuxhaven. On Novem- ber 6 the ship put to sea again, again encountering hard gales and high running seas, and again was put back to Cuxhaven. On November 8 the ship finally sailed from Cuxhaven, and throughout the voyage experienced most boisterous weather and shipped much water. The pork was in no waj^ injured bj- the sea or by the storm ; but on Novem- ber 10 it was discovered that the pork, owing to the length of time to which the voj-age was protracted and delaj'ed bj' the weather, had become putrid, and it was necessarilj^ thrown overboard at sea. The facts as to the beef on the "Ostrich " were in effect the same, with different dates. The ordinary voyage of these steamers from Hamburg to London is fifty hours. If the voj-ages had been of the ordinary duration, the pork 431, n. (C. P. 1870), the question being whether Lush, J., had misdirected the jury, BoviLL, C. J., for the court, said : " He further explained to the jury that the terms ' perils of the sea ' denoted all marine casualties resulting from the riolent action of the elements of the wind and waters, lightning, tempest, stranding, striking on a rock, and so on — all casualties of that description as distinguished from the silent natural gradual action of the elements upon the yessel itself, though the latter properly be- longed to wear and tear, and that what the underwriters insured were casualties that might happen, not consequences which must happen, casualties which might occur and were incident to navigation arising from the violent action of the elements upon the ship. The learned judge proceeded to Say, 'that in the peculiar circumstances of this case, the voyage having scarcely commenced, the vessel being in still water at the time when this casualty happened, . . . two questions apparently different in form appeared to him to become merged in the one practical question, which was this. Was the leak, the extraordinary leak which occurred while the vessel was lying at anchor, attributable to injury and violence from without or weakness within ■?'... The perils mentioned by the learned judge do not include all the risks and perils covered by the policy, but from the nature of the question that was raised in this case, which was as to the cause of the sudden rushing of the water into the vessel, whether it was the inherent weakness of the vessel in consequence of original defects and con- struction, or neglected rust, or some unaccountable accident resulting in foundering, and with reference to the evidence, the attention of the jury was in our opinion properly caUed to such of the perils as were material." On stranding, see Bishop v. Pentland, 7 B. & C. 219 (1827) ; Wells v. Hopwood, 3 B. & Ad. 20 (1832) ; Lake v. Columbus Ins. Co., 13 Ohio, 48 (1844). — Ed. 1 The statement has been rewritten. — Ed. SECT. I.J TAYLOK V. DUNBAE. 691 and beef would have arrived in good condition. The damage was due solely to the dela^-. The question for the court was whether the plaintiff, whose interest was admitted, was entitled to recover the agreed amount of the two losses. Heasley, for the plaintiff. The question is, whether the loss was proximately caused by perils of the seas, within the meaning of this policy. The expression "perils of the seas" is thus defined in 1 Phillips on Insurance, 3d ed. 626, § 1099. "Under perils of the seas, which constitute a part of the risks in almost every marine policj^, arc comprehended those of the winds, waves, lightning, rocks, shoals, col- lisions, and in general all causes of loss and damage to the property insured, arising from the elements and inevitable accidents other than those of capture and detention." Chancellor Kent, 3 Com. 10 ed. 407, sajs : "Those words applj- to all those natural perils and operations of the elements which occur without the intervention of human agency, and which the prudence of man could not foresee, nor his strength re- sist.'' And Emerigon, p. 286 (by Meredith), says : ' ' Perils of the sea {fortunes de mer), properlj- termed, are those which proceed from rocks and tempests, ex marince tempesiatis discrimine. But, in the matter of insurance, by perils of the sea is understood all losses and damages which happen at sea bj- a fortuitous event, and even sometimes under the same denomination are understood accidents which happen in the course of the voyage through the misconduct of the captain and of the mariners. Thus, perils of the sea [fortunes de mer) is a generic term, comprehending everything for which the insurers are responsible." In Montoya v. London Assurance Co., 6 Ex. 451 ; 20 L. J. (Ex.) 254, where tobacco was damaged hy the ill-flavor imparted to it from the putrefaction of hides caused by the shipping of sea-water. Pollock, C. B., sa3"s : " I think it ma^- be laid down as a general rule, that when mischief arises from perils of the seas, and the natural and almost in- evitable consequence of that mischief is to create further mischievous results, the underwriters in such case are responsible for the further mischief so occasioned." In Lawrence v. Aberdein, 5 B. & A. 107, a policy was effected on living animals, warranted free from mortality and jettison. Some of the animals, in consequence of the agitation of the ship in a storm, were killed, and others from the same cause re- ceived such injury that thej' died before the termination of the voyage ; and this was held to be a loss by perils of the sea. The like was held in Gabaj' v. Lloyd, 3 B. & C. 793, where horses were killed by reason of the breaking down of the partitions which separated them, in conse- quence of the agitation of the ship in a storm. So, here, the loss arose from damage sustained by the meat in consequence of its being knocked about in the storm. [Montague Smith, J. The ease states that the pigs and beef were in no degree affected or injured by the sea-water or by the storm or tempest, but became putrid by the retardation and delay of the voyage. 692 TAYLOR V. DUNBAE. [CHAP. VII. The present case more clearly resembles Tatham v. Hodgson, 6 T. R. 656. There, upon an insurance of slaves against perils of the sea, their death by failure of sufficient and suitable provisions, occasioned by extraordinary delay in the voyage from bad weatlier, was held not to be a loss within the polic}-.] The loss here was the proximate result of the bad weather which the vessels encountered. Speaking of the general clause, " and of all other perils, losses, and misfortunes," &c., Mr. Arnould (2 Arnould on In- surance, 3d ed. p. 727), saj-s : "This general and sweeping clause, it is now decided, covers other cases of marine damage of the like kind with those specially enumerated, and occasioned by similar causes.'' [Keating, J., referred to lonides v. Universal Marine Insurance Co., 14 C. B. (n. s.) 259 ; 32 L. J. (C. P.) 170.] Sir Q. Sonyman, Q. C, contra. Underwriters do not insure against mere delay of the voj'age caused by change of wind or the prudence of the captain in avoiding foul weather. Everth v. Smith, 2 M. & S. 278; Philpott V. Swann, 11 C. B. (n. s.) 270, 30 L. J. (C. P.) 358. Keating, J. Mr. Beasley has referred us to every authority which could at all favor the view he wished to present ; but they do not, in mj' opinion, go far enough to sustain his argument. The facts stated in the case show beyond a doubt that the proximate cause of the loss of the meat was the delay in the prosecution of the voj-age. That delay was occasioned bj' tempestuous weather ; but no case that I am aware of has held that a loss by the unexpected duration of the voj-age, though that be caused by perils of the sea, entitles the assured to recover upon a policy like this. I think we should be establishing a dangerous precedent if we were to give effect to Mr. Beasley's argu- ment, seeing that there are so many cargoes which are necessarily afifected by the voj-age being delayed. I am not disposed to create such a precedent. I think our judgment ought to be for the defendant. Montague Smith, J. I am of the same opinion. The loss here has arisen in consequence of the putrefaction of the meat from the voj-age having been unusuall}' protracted. That is a loss which does not fall within any of the perils enumerated in this polic}'. To render the underwriters liable, it must be shown that the loss is proximately due to one of the known perils. Retardation or delay of the voyage is not one of them. The case states that the meat was not affected by the sea or bj' the storm. It was not, therefore, as Mr. Beasley wished us to assume, damaged by knocking about. If it had been, the case might have been brought within the principle of Lawrence v. Aberdein, 5 B. & A. 107, and Gabay v. lAoyA, 3 B. & C. 793. But the statement in the case precludes us from drawing any such inference. If we were to hold that a loss by delay, caused by bad weather or the prudence of the captain in anchoring to avoid it, was a loss by perils of the sea, we should be opening a door to claims for losses which never were in- tended to be covered by insurance, not only in the case of perishable goods, but in the case of goods of all other descriptions. By the com- SECT. I.J PROVIDENCE "WASHINGTON INS. CO. V. ADLER. 693 tnon understanding both of assured and assurers, delay in the voyage has never been considered as covered by a poUcy like this. I there- fore agree that our judgment should be for the defendant. Brett, J. I am also of opinion that damage to goods caused by de- lay of the voyage, through the consequence of stormy and tempestuous weather, is not one of the perils covered by an ordinary policy. Such damage must have occurred man}' times, and j"et no trace is to be found of such a claim being maintained. If it be desired, a clause may easily be inserted in the policy to meet the case. Judgment for the defendant.^ PROVIDENCE WASHINGTON INS. CO. v. ADLER and Others. Court of Appeals of Maryland, 1886. 65 Md. 162. Appeal from the Superior Court of Baltimore City.^ . . . The case is stated in the opinion. . . . The plaintiffs asked . . . instructions : . . . 4. That the defendant in taking a risk like the present, upon oil-cloth clothing, is presumed to know, and to have contemplated all the casualties and incidents to which the subject insured might be liable, and that the plaintiffs are entitled to recover . . . even should the jury find that the loss pro- ceeded from spontaneous combustion, should the jur^- further find that spontaneous combustion is one of the casualties and incidents to vs'hich the subject insured is liable. The defendant then submitted . . . instructions : . . . 1. That the plaintiffs . . . cannot recover, if . . . the oil-cloth coats . . . were damaged or destroj'ed from spontaneous combustion caused by their inherent infirmitj'. . . . The court (Fisheb, J.) granted the prayers of the plaintiffs, . . . but rejected the defendant's first praj-er. The defendant excepted. The verdict and judgment were for the plaintiffs, and the defendant appealed. John B. Kenly, for the appellant. Frank P. ClarJc, for the appellees. Stone, J. The plaintiffs shipped hy a line of steamers, running from New York to the South, a quantity of oil-cloth clothing to Louisiana and Texas. They insured this clothing before shipment in the office of the defendant company. The clothing was packed in boxes, and on its arrival at its destination it was found injured and comparatively worthless, either by spontaneous combustion or by some chemical action 1 See Goold v. Shaw, 1 Johns. Ca3.293 (1800) ; Baker v. Manufacturers ' Ins. Co., 12 Gray, 603 (1851); Perry v. Cobb, 88 Me. 435 (1896). — Ed. 2 The statement has been abridged. — Ed. 694 PKOVIDENCE WASHINGTON INS. CO. V. ADLEE. [CHAP. VII. arising from the material in the goods themselves. They all presented the appearance of having been burned or charred within the boxes. The clothing was not injured by any external force or accident, but whatever the injury was, it was the result of the inherent infirmity of the goods themselves. Neither the plaintiffs nor the defendants knew at the time the insurance was effected that the goods were liable to spontaneous combustion, or to be injured by any inherent defect in the goods. No extra premium to cover such risk was paid. Under these circumstances, the defendants claim that by the general principles of insurance law, they are not liable for a loss bj' sponta- neous combustion, caused by the inherent infirmity of the goods themselves. This was a marine policy, and one of the dangers insured against, by the terms of the policy, was fire. But while this is undoubtedly sb, the question remains, and is still undecided in this State, whether the term " fire " used in the ordinary marine policy will, upon general principles, cover the case of spontaneous combustion, caused bj' an inherent infirmity in the article insured, and not the result of accident or peril of the sea. There is no doubt of the liabiUtj- of the defendant company, under its polic)', had the ship taken fire, and the goods been consumed ; or had the fire originated from any of the perils insured against ; but the question is a very different one when, as in this case, the goods are in good faith insured, and believed, both by plaintiffs and defendant, not to be liable to spontaneous combustion by reason of their inherent infirmity, but which in fact were so liable, and were so injured. The authorities are few upon this subject, and neither full nor satis- factory. One of the oldest to which we have access is Emerigon,who sa3-s, page 290 : "Art. 12 of another title establishes, as a general rule, that every- thing which happens through the inherent vice of the thing, or b}- the act of the owners, master, or merchant shipper, shall not be reputed a peril, if not otherwise borne on the policy." It is then certain that the insurers never answer for damages and losses which happen directly through the act or fault of the assured himself. It would be in fact intolerable that the assured should be in- demnified by others for a loss of which he is the author. This rule is grounded on first principles. It is a general rule, from which it is not permitted to derogate by a contrary agreement. As Pothier remarks, " it is evident tliat I cannot validly agree with any one that he shall charge himself with the faults that I shall commit." We do not understand this learned author to mean that an article may not be insured that is inherently liable to spontaneous combustion, or decay, provided it is so caressed in the policy, but not otherwise. But if the loss happens through the fault of the assured, then the in- surers are not liable, whatever may be the terms of the policy. For example, if an article isMnsured, which when dry is not liable to spon- SECT. I.] PEOVIDENCE WASHINGTON INS. CO. V. ABLER. 695 taneous conjbustion, but ■when he puts it on board, it is wet, in such case no recovery can be had. Such we understand to be the views of this author. The next case to which we are referred is the case of Boyd v. Dubois, 3 Campbell. In that case Lord Ellenborough said : "If the hemp was put on board .in a state liable to effervesce, and it did effervesce, and generate the Are which consumed it, upon the common principles of insurance law, the assured cannot recover for a loss which he him- self has occasioned." The defendant in that case attempted to prove that the hemp, which was insured, was put aboard ship in a damaged condition ; and for that reason was apt to ferment and take fire. This case is in accord with Emerigon. The next authority is Parsons on Contracts, vol. ii. p. 374, 6th ed. The author therein says : " It is another rule that insurers are not liable for property destroyed by the eflfect of its own inherent deficiencies or tendencies, unless these tendencies are made active and destructive bj' a peril insured against. Thus, if hemp, which was dry when laden, be afterwards wet by a peril of the sea, and by reason of such wet ferments, or rots, or burns, the insurers would be liable." And that very learned author refers to both Emerigon and the case of Boyd and Dubois as his authorities. Chancellor Kent also takes a simUar view in his Commentaries, vol. iii. c. 48. Phillips on Insurance, c. 13, marginal page, says : "It is a general rule that insurers are not, under the common form of the policy, liable to any damage or loss arising from the qualities or defects of the subject insured, since these are not among the perils assumed by the underwriter." Parsons on the Law of Marine Insurance, vol. ii. p. 216, holds the same view. He says : " It is also a rule that the insurers are liable for no subject-matter of insurance which is destroyed by reason of its own inherent defects or tendencies. But this rule does not apply to tendencies which are called into activity only by a peril insured against. Thus, if hemp insured, burns up, or rots, from spontaneous ignition or fermentation, it being known that this may happen, if the hemp be damp, but not if it be dry, the question would be, whether it was damp or dry when it was put on board. But if the hemp were dry when laden, and was afterwards wet by reason of the straining of the ship in a storm, or bj' the ship- ping of a sea, or any like peril, then the insurers, whether on ship or cargo, would be liable." All these authorities refer to Emerigon and the case in 3 Campbell, and are all upon marine insurance. On the other hand, we have been referred to the case of The British American Insurance Co. v. Joseph,^ decided in the Court of Appeals 1 9 Lower Canada, 448 (1857). — Ed. 695 PKOVIDENCE WASHINGTON INS. CO. V. ADLEE. [OHAP. VII. for Lower Canada, which has been supposed to decide that a fli-e in- surance (not marine) covers the risk of spontaneous combustion ; and citing that case onl3', Mr. May, in his Worli on Fire Insurance, comes to the same conclusion. The Lower Canada case is certainly very imperfectly reported. The report is in French, and the court gave no opinion ; the terms of the policy are not set out, and but a very few of the facts in the case. It is by no means clear, from the few facts that are stated, that the spon- taneous combustion did not originate in a heap of uninsured coal, and extend from that to the insured coal. But suppose the case has all the effect claimed for it by the appellees, and does decide that in a pureh- fire insurance the risk of spontaneous combustion is covered, we could not agree that it should overrule the long list of high authorities to the contrary in marine policies. More especially since the reasons to the contrarj', we think, are satisfactory. No well managed insurance company would take a marine risk on an article inherently liable to spontaneous combustion ; nor would any prudent shipmaster or owner receive such on his vessel, as not merely the property so insured, but the property of others, and the safety of the ship, and the lives of the crew, would be endangered by so doing. It would, as Emerigon says, be intolerable that the owner should re- ceive pay for goods that destroyed themselves. The object of a marine policy is to insure against the perils of the sea, and not against the perils incident to the goods themselves. In this case it is very clear that the goods were injured by their own inherent infirmity, and that such inherent infirmity was not called into activity by any peril insured against. We think such loss was not within the contemplation of either partj^ to the contract of insurance. That the term "fire," used in the policy, included fire from acci- dent, or brought about by a peril of the sea, and not spontaneous combustion. Entertaining these views, we think the court below was in error in granting the fourth prayer of the plaintifEs, and in refusing the first prayer of the defendant, and the judgment must be reversed. But in- asmuch as the evidence is full and explicit that the injury was caused by the inherent infirmity of the goods, a new trial will not be awarded.* Judgment reversed.^ 1 On application for a rehearing, a new trial was awarded to permit the appellees to furnish new evidence to the effect that the injury was not in fact caused by the inherent infimiity of the goods. — Ed. 2 On the perils insured against, see also : — Tieruey v. Etherington, 1 Burr, at 348 (1743) ; Felly V. Koyal Exchange Assur. Co., 1 Burr. 341 (1757) ; Hodgson V. Malcolm, 2 B. & P. N, B. 336 (1806) ; Butler ». WUdman, 3 B. & Aid. 398 (1820) ; Ellery v. ISew England Ins. Co., 8 Pick. 14 (1829) ; "WOson V. Jones, L. E. 2 Ex. 139, 148 (Ex. Ch. 1867) ; Moores v. Louisville Underwriters, 14 Fed. Kep. 226 (C. C, W. D. Tenn., 1882) ; Snowden v. Guion, 101 N. Y. 458 (1886). — Ed. SECT. I.] PETEES V. WAEKEN INS. CO. 697 SECTION I. {continued). (B) The Connection between Pekil and Loss. BONDRETT v. HENTIGG. Nisi Prius, Common Pleas, 1816. Holt, N. P. 149. Policy of insurance on goods from London to the Isle of France, &c. Loss averred \>y perils of the sea. The plaintiff claimed a total loss. The ship had been wrecked ; but some of her cargo was saved and got on shore. It fell, however, into the hands of the natives of the Isle of France, who destroyed part and plundered the rest. Bosanquet, serjeant, for the defendant. This is not a loss by perils of the sea, and the plaintiff has not abandoned. To make it a total loss under these circumstances there must be an abandonment. GiBBs, C. J. An abandonment is not necessary to make it a total loss ; the cause of the loss was the perils of the seas ; and the portion of the goods which was saved from the wreck, though got on shore, never came again into the hands of the owners. It is therefore a total loss to them from the perils stated in the declaration. Vaughan, serjeant, and Barnewell, for plaintiff. Bosanquet^ serjeant, for defendant. PETERS AND Another v. WARREN INSURANCE COMPANY. Supreme Court of the United States, 1840. 14 Pet. 99.^ The case is stated in the opinion. Mr. Webster, for the plaintiffs. Mr. Parsons, for the defendant. Mr. Justice Stokt delivered the opinion of the court. This is the case of a division of opinion, certified to this courtby the judges of the Circuit Court for the District of Massachusetts. The defendant, by a policy of insurance, dated the 1st of April, 1836, insured the plaintiffs, for whom it may concern, paj^able to them, eight thousand dollars, on the ship " Paragon," for the term of one year, commencing the risk on the 13th of March, 1836, at noon, at five per cent. The policy contained the usual risks, and among others, that of perils of the sea. The declaration alleged a loss, by collision with another vessel, without any fault of the mas- ter or crew of the " Paragon ; " and also insisted on a general average 1 The reporter's statement has been omitted. — Ed. 698 PETEES V. WAEREN INS. CO. [CHAP. VII. and contribution. The parties at the trial agreed upon a statement of facts; bj' which it appeared that the "Paragon" was owned by the plaintiffs, and was in part insured by the defendants, by the policy above mentioned. On the 10th of November, 1836, the "Paragon" sailed from Hamburg, in ballast, for Gottenburg, to procure a cargo of iron for the United States. While proceeding down the Elbe, with a pilot on board, she came in contact with a galliot, called the " Frau Anna," and sunk her. By this accident, the "Paragon" lost her bowsprit, jibboom, and anchor, and sustained other damage, which obliged her to put into Cuxhaven, a port at the mouth of the Elbe, and subject to the jurisdiction of Hamburg, for repairs. Whilst lying there, the captain of the galliot libelled the " Paragon" in the Marine Court, alleging that the loss of the vessel was caused by the careless- ness or fault of those on board of the " Paragon." The ship was arrested, but was subsequently released on security being given by the agents of the owners, to respond to such damages as should be awarded by the court. Upon hearing of the cause, the court decided that the collision was not the result of fault or carelessness on either side, and that therefore, according to the marine law of Hamburg, the loss was a general average loss, and to be borne equally by each party; that is to say, that the " Paragon " was to bear one-half of the expense of her own repairs, and to pay one-half of the value of the galliot ; and that the galliot was to bear the loss of one-half of her own value, and to paj^ one-half of the repairs of the ' ' Paragon : " the result of which was, that the " Paragon " was to pay the sum of two thousand six hun- dred dollars, being one-half of the value of the galliot (three thousand dollars), after deducting one-half of her own repairs (four hundred dol- lars). The owners of the "Paragon" having no funds at Hamburg the captain was obliged to raise the money on bottomry. There being no cargo on board of the "Paragon," and no freight earned, the "Paragon" was obliged to bear the whole loss. Upon this state of facts the question arose, whether in this case the contributory amount paid by the " Paragon" on account of the col- lision, was a direct) positive, and proximate effect from the accident, in such sense as to render the defendants liable therefor. Upon this question the judges were opposed in opinion ; and it has accordingly been certified to this court for a final decision. That a loss by collision, without any fault on either side, is a loss by the perils of the sea, within the protection of the policy of insurance, is not doubted. So far as the injury and repairs done to the " Paragon " itself extend, it is admitted that the underwriters are liable for all the damages. The only point is, whether the underwriters are liable for the contribution actually paid on account of the loss of the galliot. This point does not appear ever to have been decided in any of the American courts. It is proper, therefore, to examine it upon principle, and to ascertain what is the true bearing of the foreign authorities upon it. SECT. I.] PETERS V. WAEREN INS. CO. 699 And first upon principle: That the owners of the "Paragon" have been compelled to pay this contribution without any fault on their side, is admitted ; that it constituted a proper subject of cognizance by the Marine Court of Hamburg, the collision having occurred within the territorial jurisdiction of that city, is also admitted ; and that the claim constituted a charge or lien upon the " Paragon," according to the local law, capable of being enforced by a proceeding in rem, is equally clear. Whj', then, should not the loss be borne by the underwriters, since it was an unavoidable incident or consequence resulting from the collision ? The argument is, that in the law of^nsurance, which governs the present contract, it is a settled rule that underwriters are liable only for losses arising from the proximate cause of the loss, and not for losses arising from a remote cause, not immediatelj' connected with the peril. Causa proxima non remota spectatur. The rule is correct, when it is understood and applied in the true sense ; and, as such it has been repeatedl}' recognized in this court. But the question, in all cases of this sort, is, what, in a just sense, is the proximate cause of the loss? The argument in the present case, on the part of the defendants, is, that the law of Hamburg is the immediate or proximate cause of the loss now claimed, and the collision is but the remote cause. But surely this is is an over-refinement, and savors more of metaphj'sical than of legal reasoning. If the argument were to be followed out, it might be said, with more exactness, that the decree of the court was the proxi- mate cause, and the law of Hamburg the remote cause of this loss. But law, as a practical science, does not indulge in such niceties. It seeks to administer justice according to the fair interpretation of the intention of the parties ; and deems that to be a loss within the policy which is a natural or necessary consequence of the peril insured against. In a just view of the matter, the collision was the sole proximate cause of the loss ; and the decree of the court did but ascertain and fix the amount chargeable upon the "Paragon," and attached thereto at the verj' moment of the collision. The contribution was a consequence of the collision, and not a cause. It was an incident inseparably con- nected, in contemplation of law, with the sinking of the galliot ; and a damage immediate, direct, and positive, from the collision. In the com- mon case of an action for damages for a tort done b}' the defendant, no one is accustomed to call the verdict of the jury, and the judgment of the court thereon, the cause of the loss to the defendant. It is properly attributed to the original tort, which gave the right to damages conse- quent thereon ; which damages the verdict and judgment ascertained, but did not cause. But let us see how the doctrine is applied in other analogous cases of insurance, to which, as much as to the present case, the same maxim ought to apply, if there is any just foundation for it here. If there be any commercial contract which, more than any other, requires the application of sound common sense and practical reasoning in the 700 PETERS V. WAKEEX INS. CO. [CHAP. VII. exposition of it, and in the uniformity of ttie application of rules to it, it is certainly a policy of insurance ; for it deals with the business and interests of common men, who are unused to deal with abstractions and refined distinctions. Take the case of a jettison at sea, to avoid a peril insured against. It is a voluntary sacrifice, and may be caused by the perils of the sea; but it is ascertained long afterwards, and that ascertainment, whether made by a court of justice, or by an agreement of the parties, would, in the sense of the maxim contended for in the argument, be the immediate cause of the contribution, and the jettison but a remote cause ; and the violence of the winds and waves a still more remote cause of the jettison. Yet all such niceties are disre- garded, and the underwriters are held liable for the loss thus sustained by the jettison, as a general average. It is no answer to say, that this is now the admitted doctrine of the law, and therefore it is treated as a loss within the policy. The true question to be asked is, Why is it so treated? General average, as such, is not, eo nomine, insured against in our policies. It is only, payable when it is a consequence, or re- sult, or incident (call it what we may) of some peril positively insured against; as, for example, of the perils of the sea. The case of a ran- som after capture stands upon similar grounds. The ransom is, in a strict metaphysical sense, no natural consequence of the capture. It may be agreed upon long afterwards ; and if we were to look to the immediate cause, it might be said that the voluntarj' act of the party in the paj'ment was the cause of the loss. But the law treats it as far otherwise, and deems the ransom a necessary means of deliverance from a peril insured against, and acting directly upon the property. The expenses consequent upon a capture, where restitution is decreed by a Court of Admiralty upon the payment of all the costs and expenses of the captors, fall under a similar consideration. In such cases, the decree of the court allowing the costs and expenses may be truly said to be the immediate cause of the loss ; but courts of justice treat it also as the natural consequence of the capture. A stiU more striking illustration will be found in the case of salvage decreed by a Court of Admiralty for services rendered to a vessel in distress. The vessel maj' have been long before dismasted or other- wise injured, or abandoned by her crew in consequence of the perils of the winds and waves ; and the salvage decreed in such a case would seem, at the first view, far removed from the original peril, and dis- connected from it : and yet, in the law of insurance, it is constantly attributed to the original peril, as the direct and proximate cause ; and the underwriters are held responsible therefor, although salvage is not specifically, and in terms, insured against. These are by no means the only illustrations of the danger of intro- ducing such an application of the maxim into the law of insurance as is now contended for. Suppose a perishable cargo is greatly damaged by the perils of the sea, and it should, in consequence thereof, long afterwards, and before arrival at the port of destination, become SECT. I.J PETERS V. WARREN IKS. CO. 701 gradually so putrescent as to be required to be thrown overboard for the safety of the crew : the immediate cause of the loss would be the act of the master and crew ; but there is no doubt that the under- writers would be liable for a total loss, upon the ground that the operative cause was the perils of the sea. Suppose a vessel which is insured against fire onl}-, is struck by lightning, and takes fire ; and in order to save her from utter destruction, she is scuttled and sunk in shoal water, and she cannot afterwards be raised ; it might be said that the immediate cause of the loss was the scuttling : but in a juridical sense it would be attributed to the fire ; and the under- writers would be held liable therefor. Suppose another case, that of a vessel insured against all perils but fire, and she is shipwrecked by a storm on a barbarous coast, and is there burnt b}- the natives ; it might be said that the proximate cause of the loss was the fire ; and yet there is no doubt that the underwriters would be held liable on the policy, upon the ground that the vessel had never been delivered from the original peril of shipwreck. Illustrations of this sort might be pursued much farther, but it seems unnecessary. Those which have been already suggested sufficiently establish that the maxim, Causa ■proxima non remota spectatur, is not without limitations, and has never been applied in matters of insurance to the extent contended for ; but that it has been constantlj' qualified, and constantly applied onl^- in a modified practical sense, to the perils insured against. In truth, in the present case, the loss occasioned by the contribution is (as has been already suggested) properly a conse- quence of the collision, and in no just sense a substantive independent loss. In the next place, how stand the authorities on this subject? The only authorit}- which has been cited by the counsel for the defendants, to sustain their argument, is the case of De Vaux v. Salvador, 4 Adol- phus and Ellis's Kep. 420. That case is certainly direct to the very point now in judgment. It was a case of collision, where the assured had been compelled to pay for an injury done to another vessel b}' the mutual fault of both vessels, according to the rule of the English Court of Admiralty, which, in a case of mutual fault, apportions the loss be- tween them. Lord Denman, in delivering the opinion of the court, admitted that the point was entirely new ; and after referring to the above maxim, said: " It turns out that the ship (insured) has done more damage than she has received, and is obliged to pay the owners of the other ship to some amount, under the rule of the Court of Admiralty. But this is neither a necessary nor a proximate effect of the perils of the sea. It grows out of an arbitrary provision in the law of nations ; from views of general expediency, not as dictated by nat- ural justice, nor (possibly) quite consistent with it: and can no more be charged on the underwriters than a penalty incurred by contraven- tion of the revenue laws of any particular State, which was rendered inevitable hy perils insured against." This is the whole reasoning of 702 PETEKS V. WAEEBN INS. CO. [CHAP. VII. the learned judge upon the point ; and with great respect, if the views ah-ead}- suggested are well founded, it is not supported by the analo- gies of the law, or by the principles generally applied to policies of insurance. The case of a penalty, put by the learned judge, does not strike us with the same force as it does his lordship. If any nation should be so regardless of the principles of natural justice as to declare that a vessel driven on shore by a storm should be forfeited because its revenue laws were thereby violated, it would then deserve consid- eration whether the underwriters would not be liable for the loss, as an inevitable incident to the shipwreck. At all events, the point is too doubtful in itself to justify' us in adopting it as the basis of an}- reasoning in the present case. The case before the King's Bench was confessedly new, and does not appear upon this point to have been much argued at the bar. It seems to have been decided, principally, upon the ground of the absence of an}' authorit}- in favor of tlie assured, and as it appears to us, in oppo- sition to the analogies furnished by other acknowledged doctrines in the law of insurance. The same question, however, has undergone the deliberate considera- tion of some of the greatest maritime jurists of continental Europe ; and the result at which they have arrived is directly opposite to that of the King's Bench. Pothier lays it down as, in his opinion, the clear result of the contract of insurance, that the underwriters are bound to pay not only the direct loss occasioned bj- any peril insured against, but all the expenses which follow as a consequence therefrom. Pothier, Traite d' Assurance, n. 49. Estrangin, a very excellent modern com- mentator upon Pothier (Estrangin's note), asserts that there is not the slightest doubt on the subject. Emerigon, whose reputation as a writer on the law of insurance is second to no one, unequivocally adopts the same opinion. Emerig. Assur., eh. 12 § 14, p. 414-417. In short, all those learned foreigners hold the doctrine that whenever the thing insured becomes by law directly chargeable with any ex- pense, contribution, or loss, in consequence of a particular peril, the law treats that peril, for all practical purposes, as the proximate cause of such expense, contribution, or loss. And this they hold, not upon any peculiar provisions of the French ordinance, but upon the general principles of law applicable to the contract of insurance. In our opinion this is the just sense and true interpretation of the contract. It has been suggested that there is a difference between our policies and the French policies ; the latter containing an express enumeration of fortuitous collision, or running foul (abordage fortuit), as a peril insured against ; while in our policies it falls only under the more gen- eral head of " perils of the sea.'' But this furnishes no just ground for any distinction in principle. The reasoning, if any, to be derived from this circumstance, would seem rather to apply with more force in favor of the plaintiff, since, even when the risk of collision is specifically enu- merated, the expenses and contribution attendant upon it are treated SECT. I.] PETEKS V. WARREN INS. CO. 703 as inseparable from the direct damage to the vessel itself, as a part of the loss. lu short, whether a particular risk is specified in terms, or is comprehended in the general words of the policy, the same result must arise, viz., that the underwriters are to bear all losses properly attributable to that peril, and no other losses. It may be proper to remark, that the rule which we here adopt is just as likel}', in actual practice, to operate favorably as unfavorably to the underwriters. If by the collision the "Paragon" had been sunk, and the galliot saved, the underwriters would have had the entire benefit of the reciprocity of the rule. It would sound odd that in such a case the underwriters should be entitled to receive the full benefit of the Hamburg law for their own indemnity; and j-et in the opposite case, that they should escape from the burden imposed bj" that law. In all foreign voyages, the underwriters necessarily have it in con- templation that the vessel insured must, or at least maj' be, subjected to the operation of the laws of the foreign ports which are visited. Those ver}' laws may in some cases impose burdens, and in some cases give benefits, different from our laws ; and yet there are cases under policies of insurance, where it is admitted that the foreign law will govern the rights of the parties, and not tlie domestic law. Such is the known case of a general average, settled in a foreign port accord- ing to the local law, although it may differ from our own. Simonds v. White, 2 Barn, and Cresw. 805. In the present case, the polic^'^ was on time, and the vessel had, as it were, a roving commission to visit anj' foreign port; and of course might well be 'presumed at different periods to come under the dominion of various codes of laws, which might subject her to various expenditures and burdens. The under- writers have no right to complain, that when those expenditures and burdens arise from a peril insured against, they are compelled to paj' them ; for they were bound to have foreseen the ordinary incidents of the voyage. Suppose a vessel injured by the perils of the sea puts into a foreign port to repair, and the license to repair, or the repairs them- selves, are burdened with a heavy revenue dutj' ; no one will doubt that the charge must be borne by the underwriters, as an expense incident to the repair ; and yet it might truly be said not to be the natural result of the peril, but only a charge imposed by law, consequent thereon. Upon the whole, we are of opinion that it be certified to the Circuit Court, that in this case the contributory amount paid by the " Para- gon," on account of the collision, was a direct, positive, and proximate effect from the accident, in such sense as to render the defendants liable therefor upon this policy. 704 MONTOYA V. LONDON ASSUKANCE CO. [CHAP. 711. MONTOYA AND Others v. LONDON ASSURANCE CO. Exchequer, 1851. 6 Exch. 451. Covenant on two sea policies of insurance on produce or goods. The declaration stated an average loss on tobacco by perils of the seas. The defendants pleaded (by statute) that they had not broken their covenants ; and issue having been joined thereon, by the consent of the parties, and bj' a judge's order, the following case (in substance) was stated for the opinion of this court : The plaintiffs, who are merchants carrj-ing on business in London, on the 9th of Januarj-, 1849, effected the first of the policies in the declaration mentioned with the defendants, on tobacco and hides {inter alia) from New Granada to ports of discharge in the United Kingdom, the plaintiffs engaging to pay averages on tobacco. On the 19th of February, 1849, the plaintiffs effected a similar policj', the second policy in the declaration mentioned, with the defendants, on tobacco and hides. The produce as declared was dvly shipped on board the vessel, which sailed with her cargo from St. Martha in New Granada on her voyage towards her port of discharge ; and whilst proceeding on her voyage encountered much bad weather, and was struck by heavy seas, and shipped large quantities of water, by reason whereof the produce so shipped sustained damage as hereafter mentioned. In April, 1849, the vessel arrived at her port of discharge ; and it was then discovered that some part of the cargo was considerably damaged from the causes above mentioned, and on the opening of the hold a suffocating stench and vapor or gas issued from it. The cargo had consisted principally of sugar, hides, and tobacco. The tobacco had been shipped according to the usual course adopted in exporting tobacco from ports in New Granada, in serons — a Spanish term signi- f^'ing dry hide packages. A very large part of the cargo of hides was in an absolute state of rottenness and putridity from sea damage, and a great number of the serons in which the tobacco was packed were also rotten, and greatly damaged by sea-water. A large portion of the cargo of tobacco was rendered totally worthless. The rest was greatly deteriorated in consequence of a part of the cargo having been exces- sively damaged by sea-water, which caused fermentation, and strongly impregnated more or less the whole of the cargo with a fetid flavor. The plaintiffs claimed in this action in respect only of the damage sustained by the tobacco part of the cargo insured, which was not, nor were the serons, immediatelj* in contact with nor directly damaged by sea-water, but which was damaged and deteriorated in the manner described, that is to say, was damaged and deteriorated in flavor onlj-, and not otherwise, by the fetid odor caused by and proceeding from the fermentation and putridity of that part of the cargo which had been directly damaged and pntrifled by the sea-water. SECT. I.J MONTOYA V. LONDON ASSURANCE CO. 705 The court were to be at libertj- to draw any such inference from the facts as a jury would be at liberty to draw. The question for the opinion of the court was, whether the defend- ants were liable for the damage aforesaid ; and if the court should be of opinion that they were, judgment was to be entered for the plain- tiffs for £630 ; but if the court should be of opinion that the defend- ants were not liable, judgment of 7iolle prosequi, or such judgment as the court might think fit, was to be entered. Sir F. Thesiger (Tomlinson with him), for the plaintiffs. Peacock, contra?- Pollock, C. B. We think it unnecessary to hear any further argu- ment on the part of the plaintiffs. The question for the court is, whether, under the particular circumstances of this case, the plaintiffs are entitled to recover from the underwriters for the damage occasioned to the tobacco, as a loss within the meaning of the policy ; and we are all clearly of opinion that our judgment ought to be for the plaintiffs. Mr. Peacock has argued the case with much ingenuity, and the effect of his argument has been to cause some doubt where the precise limits of the responsibility of underwriters are to be fixed. Many ingenious cases might be suggested, in which the court would have much diflBculty in deciding whether they would fall within such limits. But it appears to me that no such doubt or difficulty exists in the present case, and I think, as fell from one of the members of the court in the course of the argument, that, if the underwriters here would have been responsible for damage done to a cargo consisting entirely of corn, the lower part of which had been spoilt by direct contact with the sea-water, and the upper by the fermentation of the lower part, the underwriters must equally be liable in the present case : for, in truth, there is no distinc- tion between the two cases. It is a matter of no diflference whether the whole of the cargo belongs to one person, and consists of one entire package of corn, or whether the cargo consists partly of corn and partly of hides, and is the property of several owners. In both cases the loss arises from perils of the seas ; and it is difficult to see how the loss can be said not to be the immediate result of such perils. Several of the cases put to us on the part of the defendants are, in my opinion, cases of the direct and immediate consequence of perils of the seas, in ■which the sea-water is the immediate cause of the loss. And I think it 1 This argument was interrupted by Paeke, B., thus : " Suppose, in the present case, that instead of the cargo consisting of a layer of hides, the whole cargo had con- sisted of several quarters of corn, and that the lower portion had become damaged by the action of salt water, and had undergone the process of fermentation, and had, by the evolution of gas, totally destroyed the upper portion of the cargo, would not such a damage have fallen within the terms of this policy 1 " And the argument was interrupted by Platt, B., thus : " Even admitting that this damage might have been prevented if the captain of the vessel had landed the cargo at some intermediate port and had caused the hides to be dried, does not the loss equally arise from the perils of the seas, when, instead of adopting that course, the captain proceeds on his voyage ? " — Ed. 45 706 MONTOYA V. LONDON ASSTJEANCE CO. [CHAP. VII. may be laid down as a general rule, that where mischief arises from perils of the seas, and the natural and almost inevitable consequence of that mischief is to create further mischievous results, the underwriters, in Such case, are responsible for the further mischief so occasioned. Parke, B. I am also of opinion that our judgment ought to be for the plaintiffs. There is no doubt that the maxim of Lord Bacon, which was cited at the commencement of the case, and has been relied upon by Mr. Peacock, is perfectly correct, and applies not only to the present case but to all cases of this description ; and the question in each case is, what is caicsa proxima, and what causa remota? There is very great diflBculty, as my Lord Chief Baron has observed, in saying where the precise line is to be drawn ; and it is often no easy matter to decide whether a particular case falls within it or not. But I do not see that there is any difficulty in saying that the present case does fall within the line. If the owner of this tobacco which has been injured, could recover compensation for his loss occasioned by that injury from the master or owner of the vessel, there is no good reason why he should not be entitled also to recover against the underwriter for a loss occasioned by perils of the seas. If the cargo had consisted wholly of hides, and the upper part had been injured by vapors arising from the decomposition of the lower hides, occasioned by the action of sea-water, the owner of the hides would have been entitled to recover from the underwriter for the injury so occasioned to the upper layers. It is a matter of no difference whatever that the cargo consists partly of corn and partly of hides. The loss in either case is immediatel}" and directly caused by perils of the seas, and would therefore fall within the terms of this policy. It is therefore not necessary to give any opinion upon the cases which have been put on the part of the defendants. Some of them may fall within the line, and others without it. It seems to me to be impossible to distinguish this case from that which I put, where the cargo is supposed to consist entirely of hides or corn, and the upper part is injured by noxious gases arising from the decomposition of the lower portions, or by the water being raised by capillary attraction. The assured are therefore entitled to recover in this action. Platt, B. I am of the same opinion. I do not feel that I was answered by the difficulty which Mr. Peacock suggested in reply to the case I put to him during the course of his argument. The learned counsel asked at what time the loss occurred. I do not think that is a matter of the least moment or consequence whatever. The sea-water having caused the hides to ferment, and therebj'^ the tobacco to be spoilt, it is merely playing with terms to say that the injury is not occasioned by the sea-water. The action of the sea-water which has been shipped in consequence of bad weather occasions the fermentation, and is the proximate cause. It appears to me, therefore, that what- ever mischief is occasioned to the cargo by the shipping of sea-water, is a loss occasioned by the perils of the seas, and that the insurers are liable to make the loss good. SECT. I.] GENERAL MUTUAL INS. CO. V. SHEKWOOD. 707 Martin, B. I am clearly of opinion that the injury to the tobacco is a loss arising from perils of the seas. The case finds that the putre- faction of the hides was caused by the sea-water, which had found its waj- into the hold of the vessel, and that the putrefaction of the hides so occasioned had caused the destruction of the tobacco. I do not think it to be by any means necessary that the sea-water should be in absolute contact with the injured article. The result of the injury to the hides by the sea-water is the damage to the tobacco. It is, no doubt, difficult, to say where the line is to be drawn in all cases. But in the present the loss clearly falls within the terms of the policj-, as arising from perils of the seas. Judffme7it for the plaintiffs.^ GENERAL MUTUAL INS. CO., Plaintiffs in Ereok, V. SHERWOOD, Defendant in Error. Supreme Court of the United States, 1852. 14 How. 351.'' The case is stated in the opinion. Mr. A. Samilton, Jr., for the plaintiffs in error. Mr. Butler, with whom was Mr. Cutting, for the defendant in error. Mr. Justice Curtis delivered the opinion of the court. This is a writ of error to the Circuit Court of the United States for the Southern District of New York. The action was assumpsit on a time policy of insurance, subscribed bj- the plaintiffs in error, upon the brig " Emily," during one year from the seventeenth da}- of October, 1843, for the sum of eight thousand dollars, the vessel being valued at the sum of sixteen thousand dollars. The polic}-, described in the declaration, assumed to insure against the usual sea perils, among which is barratry of the master and mariners. The declaration avers, that during the prosecution of a voj-age, within the policy, while on the high seas, and near the entrance of the harbor of the city of New York, by and through the want of a proper look-out, by the mate of the said brig, and, by and through the erroneous order of the chief mate, who was stationed on the top-gallant forecastle of the said brig, who saw the schooner, hereinafter named, and cried out to the man at the, wheel, "helm hard down — luff " — whereas, he ought not to have given the said order ; and, by and through the negligence and fault of the said brig "Emily," the said brig ran into a schooner called the "Virginian," and so injured her that she sank, whereby the said brig "Emily" 1 See Cory v. Boylston F. & M. Ins. Co., 107 Mass. 140 (1871). Compare Cator v. Great Western Ins. Co., L. R. 8 C. P. 552 (1873) —Ed. 2 The reporter's statement has been omitted. — Ed. 708 GENERAL MUTUAL INS. CO. V. SHERWOOD. [CHAP. VIL became liable to the owners of the said schooner and her cargo, to make good their damages ; which liability was a charge and encum- brance on tlie said brig. The declaration then proceeds to aver, that the brig was libelled, by the owners of the schooner and her cargo, in the District Court of the United States ; that a decree was there made, whereby it was adjudged, ' ' That the collision in the pleadings mentioned, and the damages and loss incurred by the libellants, in consequence thereof, occurred by the negligence or fault of the said brig, and that the libellants were entitled to recover . their damages hy them sustained thereby ; " that the same having been assessed, a decree therefor was made by the District Court, which, on appeal, was aflBrmed by the Circuit Court, whicli found, " That the hands, on board the 'Emilj-,' failed to keep a proper look-out, and, that the said brig might have avoided the collision, by the use of proper caution, skill, and vigilance." The declaration further avers, that the plaintiff has paid divers sums of mono3-, to satisfy this decree and the expenses of making the defence, amounting to the sum of eight thousand dollars. This statement of the substance of the declaration presents the question which has been here argued, and sufficiently sliows how it arose ; for, although there was a demurrer to the first two counts in the declaration, and a trial upon the general issue pleaded to the other counts, and a bill of exceptions taken to the ruling at the trial, 3'et the same question is presented by each mode of trial, and that question is, whether, under a policy insuring against the usual perils, including barratrj', the underwriters are liable to repay to the insured, damages paid by him to the owners of another vessel and cargo, suffered in a collision occasioned by the negligence of the master or mariners of the vessel insured. The great and increasing internal navigation of the United States, carried on over long distances, through the channels of rivers and other comparativel3' narrow waters, where the danger of collisions, and the frequency of their occurrence, are much greater than on maritime voj-ages, renders the respective rights of underwriters and insured, growing out of such occurrences, of more moment in this than in any other civilized country ; and the court has considered the inquiry presented by this case, with the care which its difficult}- and its importance demand. In examining, for the first time, any question under a policy of insurance, it is necessary to ascertain whether the contract has received a practical construction, by merchants and underwriters ; not through any partial or local usages, but b}- the general consent of the mercantile world. Such a practical construction, when clearly apparent, is of great weight, not only because the parties to the policy may be pre- sumed to have contracted in reference to it, but because such a practice is very high evidence of the general convenience and sub- stantial equity of it, as a rule. This is true of most commercial con- SECT. I.J GENERAL MUTUAL INS. CO. V. SHEEWOOD. 709 tracts ; but it is especiallj- true of a policj- of insurance, whicli has been often declared to be an " obscure, Incoherent, and very strange in- strument," and, " general!}- more informal than anj' other brought into a court of justice " (Per Buller, J., 4 T. R. 210 ; Mansfield, C. J., 4 Taunt. 380 ; Marshal, C. J., 6 Cr. 45 ; Lord Mansfield, 1 Bur. 347) ; but which, notwithstanding the number and variety of the interests which it embraces, and of the events by which it is affected, has been reduced to much certainty, by the long practice of acute and well- informed men in commercial countries; by the decisions of courts in America and in England, and by able writers on the subject, in this and other countries. And it should not be forgotten, that, not only in the introduction of this branch of law into England, bj- Lord Mansfield, but in its progress since, both there and here, a constant reference has been bad to the usage of merchants, and the science of insurance law has been made and kept a practical and convenient sj'stem, by avoiding subtle and refined reasoning, however logical it may seem to be, and looking for safe practical rnle|. Now, although cases like the present must have very frequently occuiTed, we are not aware of an}' evidence tliat underwriters have paid such claims, or that, down to the time when one somewhat resembling it was rejected by the Court of King's Bench, in De Vaux V. Salvador, 5 Ad. and Ellis, decided in 1836, such a claim was ever made. And we believe that, if skilful merchants, or underwriters, or lawyers, accustomed to the practice of the commercial law, had been asked whether the insurers on one vessel were liable for damage done to another vessel, not insured by the polic}-, b}- a collision occasioned by the negligence of those on board the vessel insured, they would, down to a very recent period, have answered, unhesitatingly, in the negative. As we shall presently show, such, for a long time, was the opinion of the writers on insurance, on the continent of Europe, and in Eng- land and America. And this, alone, would be strong proof of the general understanding and practice of those connected with this subject. But, although this practical interpretation of the contract is entitled to much weight, we do not consider it perfectly decisive. It may be, that, by applying to the case the settled principles of the law of insurance, the loss is within the policy ; and, that it has not heretofore been found to be so, because an exact attention has not been given to the precise question. Or, it may be, that the weight of recent author- it}-, and the propriety of rendering the commercial law as uniform as its necessities, should constrain us to adopt the rule contended for by the defendant in error. And, therefore, we proceed to examine the principles and authorities, bearing on this question. Upon principle, the true inquiries are, what was the loss, and what was its cause ? The loss was the existence of a lien on the vessel insured, securing "i 10 GENERAL MUTUAL INS. CO. V. SHERWOOD. [OHAP. VIL a valid claim for damages, and the consequent diminution of tlie value of that vessel. In other words, by operation of law, the owners of the " Virginian" obtained a lien on the vessel insured, as security for the payment of damages, due to them for a marine tort, whereby their property was injured. What was the cause of this loss ? We think it is correctly stated by this court, in the case of the Paragon, 14 Peters, 109. In that case, it was said : "In the common case of an action for damages for a tort done by the defendant, no one is accustomed to call the verdict, of the jury and the judgment of the court thereon, the cause of the loss to the defendant. It is properly attributable to the original tort, which gave the right to damages consequent thereon.'' The cases there spoken of were claims in personam. But the language was used to illustrate the inquir}-, what should be deemed the cause of a loss by a claim in rem, and is strictly applicable to such a claim. Whether the owners of the "Virginian" would proceed in rem, or in personam, was at their election. It affected only their remed}'. Their right, and the grounds on which it rested, and the extent of the defendant's liability, and its causes, were the same in both modes of proceeding. And, in both, the cause of the loss of the defendant would be the negligence of his servants, amounting to a tort. The loss consisting in a valid claim on ithe vessel insured, we must look for the cause of the loss in the cause of the claim, and this is expressly averred b^- the declaration to have been the negligence of the servants of the assured. From the nature of the case, it was absolutely necessary to make such an averment. If the declaration had stated simply a collision, and that the plaintiff had paid the damages suffered by the "Virginian" and her cargo, it would clearly have been bad on demurrer ; because, although it would show a loss, it would state no cause of that loss. It is onlj- by adding the fact, that the damage done to the " Virginian " was caused by negligence, that is, by stating the cause of damage, that the cause of paj-ment appears, and, when it appears, it is seen to be the negligence of the servants of the assured. We know of no principle of insurance law which prevents us from looking for this sole operative cause, or requires us to stop short of it, iu applj'ing the maxim causa proxima non remota spectatur. The argument is, that collision, being a peril of the sea, the negligence which caused that peril to occur is not to be inquired into ; it lies behind the peril, and is too remote. This is true when the loss was inflicted by collision, or was by law a necessary consequence of it. The underwriter cannot set up the negligence of the servants of the assured as a defence. But in this case he does not seek to go behind the cause of loss, and defend himself by showing this cause was pro- duced by negligence. The insured himself goes behind the collision, and shows, as the sole reason why he has paid the money, that the negligence of his servants compelled him to paj' it. It is true that an expense, attached by the law maritime to the subject insured, solely as SECT. I. J GENERAL MUTUAL INS. CO. V. SHERWOOD. 711 a consequence of a peril, may be considered as proximately caused by that peril. But where the expense is attached to the vessel insured, not solelj- in consequence of a peril, but in consequence of the miscon- duct of the servants of the assured, the peril per se is not the efficient cause of the loss, and cannot, in any just sense, be considered its proximate cause. In such a case the real cause is the negligence, and unless the policy can be so interpreted as to insure against all losses directly referable to the negligence of the master and mariners, such a loss is not covered bj' the policj'. We are of opinion the policy cannot be so construed. When a peril of the sea is the proximate cause of a loss, the negligence which caused that peril is not inquired into ; not because the underwriter has taken upon himself all risks arising from negligence, but because he has assumed to indemnify the insured against losses from particular perils, and the assured has not warranted that his servants will use due care to avoid them. These views are sustained by many authorities. Mr. Arnould, in his valuable Treatise on Insurance (vol. 2, 775), lays down the correct rule: " Where the loss is not proximately caused by the perils of the sea, but is directly referable to the negligence or misconduct of the master or other agents of the assured, not amounting to barratry, there seems little doubt that the underwriters would be thereby dis- charged." To this rule must be referred that class of cases in which the misconduct of the master or marines has either aggravated the consequences of a peril insured against, or been of itself the efficient cause of the whole loss. Thus, if damage be done by a peril insured against, and the master neglects to repair that damage, and in con- sequence of the want of such repairs the vessel is lost, the neglect to make repairs, and not the sea damage, has been treated as the proximate cause of the loss. In the case of Copelaud v. The N. E. Marine Ins. Co., 2 Met. 432, Mr. Chief Justice Shaw reviews many of the cases, and states that ' ' the actual cause of the loss is the want of repair, for which the assured are responsible, and not the sea damage which caused the want of repair, for which it is admitted the under- writers are responsible." And the same principles were applied by Mr. Justice Story, in the case of Hazard v. N. E. Marine Ins. Co., 1 Sam. E. 218, where the loss was b\' worms, which got access to the vessel in consequence of her bottom being injured by stranding, which injury the master neglected to repair. So where a vessel has been lost or disabled, and the cargo saved, a loss caused by tlie neglect of the master to transship, or repair his vessel and carry the cargo, cannot be recovered. Schieffelin v. N. Y. Ins. Co., 9 Johns. 21 ; Bradhurst V. Col. Ins. Co., 9 Johns. 17 ; Am. Ins. Co. v. Centre, 4 Wend. 45 ; S. C. 7 Cow. 504 ; McGaw v. Ocean Ins. Co., 23 Pick. 405. So where condemnation of a neutral vessel was caused by resistance of search : Robinson v. Jones, 8 Mass. 536 ; or a loss arose from the master's negligently leaving the ship's register on shore: Cleveland v. Union Ins. Co., 8 Mass. 308. So where a vessel was burnt by the public 712 GENEEAL MUTUAL INS. CO. V. SHEEWOOD. [CHAP. VII. authorities of a place into which the master sailed with a false bill of health, having the plague on board, Emerigon (by Meredith), 348; in these and manj' other similar cases, the courts, having found the efficient cause of the loss to be some neglect of dut^' by the master, have held the underwriter discharged. Yet it is obvious that in all such cases, one of the perils insured against fell on the vessel. And they are to be reconciled with the other rule, that a loss caused by a peril of the sea is to be borne hy the underwriter, though the master did not use due care to avoid the peril, hy bearing in mind tliat in these cases it is negligence, and not simply a peril of the sea, which is the operative cause of the loss. It may sometimes be difficult to trace this distinction, and mistakes have doubtless been made in apply- ing it, but it is one of no small importance in the law of insurance, and cannot be disregarded without producing confusion. The two rules are in themselves consistent. Indeed, they are both but applica- tions, to different cases, of the maxim, causa proxima non remota spectatiir. In appl3-ing this maxim, in looking for the proximate cause of the loss, if it is found to be a peril of the sea, we inquire no further ; we do not look for the cause of that peril. But if the peril of the sea, which operated in a given case, was not of itself sufficient to occasion, and did not in and by itself occasion the loss claimed, if it depended upon the cause of that peril whether the loss claimed would follow it, and therefore a particular cause of the peril is essential to be shown by the assured, then we must look bej-ond the peril to its cause, to ascertain the efficient cause of the loss. The case at bar presents an illustration of both rules. So far as the brig "Emily" was herself injured by the collision, the cause of the loss was the collision, which was a peril insured against, and the assured, showing that this vessel suffered damage from that cause, makes a case, and is entitled to recover. But he claims to recover not only for the damages done to his vessel, which was insured, but for damages done to the other vessel, not insured. To entitle himself to recover these, he must show not only that they were suffei-ed by a peril of the sea, but that the underwriter is responsible for the eon- sequences of that peril falling on a vessel not insured. It is this responsibility which is the sole basis of his claim, and to make out this responsibility he does not and cannot rest upon the occurrence of a collision ; this affords no ground for this claim ; he must show a particular cause for that collision ; and aver that bj- reason of the existence of that cause, the loss was suffered by him, and so the underwriter became responsible for it. This negligence is therefore the fact without which the loss would not have been suffered b^- the plaintiff, and by its operation the loss is suffered by him. In the strictest sense, it causes the loss to the plaintiff. The loss of the owners of the " Virginian " was occasioned by a peril of the sea, by which their vessel was injured. But nothing connects the plaintiff with that loss, or makes it his, except the SECT. 1.] GENERAL MUTUAL INS. CO. V. SHERWOOD. 713 negligence of his servants. Of his loss this negligence is the onlj^ efficient cause, and in the sense of the law it is the proximate cause. The ablest writers of the continent of Europe, on the subject of insurance law, have distinctl}' declared, that, in case of damage to another vessel solely through the fault of the master or mariners of the assured vessel, the damage must be. repaired by him who occasioned it, and the insurer is not liable for it. Pothier Traite d' Assurance, No. 49, 50; Boucher, 1500, 1501, 1502; 4 Boulay Paty, Droit Maritime (ed. of 1823), 14, 16 ; Santayra's Com., 7, 223 ; Emerigon (by Meredith), 337. If the law of England is to be considered settled by the case of DeVaux v. Salvador, 4 Ad. & El. 420, it is clear such a loss could not be recovered there. Mr. Marshall is evidentlj' of opinion that unless the misconduct of the master and crew amounted to barratrj-, the loss could not be recovered. Marsh, on Ins., 495. And Mr. Phillips so states in terms. 1 Phil, on Ins., 636. It has been urged that, in the case of the Paragon (Peters v. Warren Ins. Co., 14 Pet. 99), this court adopted a rule which, if applied to the case at bar, would entitle the insured to recover. But we do not so consider it. It was there determined that a collision without fault was the proximate cause of that loss. Indeed, unless the operation of law, which fixed the lien, could be regarded as the cause of that loss, there was no cause but the collision, and that was a peril insured against. We are aware that in the case of Hall v. Washington Ins. Co., 2 Story, Mr. Justice Story took a different view of this question ; and we are informed that the Supreme Court of Massachusetts has recently decided a case in conformity with his opinion, which is not yet in print, and which we have not been able to see.^ But with great respect for that verj' eminent judge, and for that learned and able court, we think the rule we adopt is more in conformitj- with sound principle, as well as with the practical interpretation of the contract by underwriters and merchants, and that it is the safer and more expedient rule. We cannot doubt that the knowledge by owners, masters, and sea- men, that underwriters were responsible for all the damage done by collision with other A^essels through their negligence, would tend to relax their vigilance and materially- enhance the perils, both to life and propert}-, arising from this case. The judgment of the Circuit Court must be reversed, and the cause remanded, with directions to render a judgment for tlie defendants, on the demurrer to the first two counts, and award a venire de novo to try the general issue pleaded to the other counts.^ 1 The case alluded to is donbtless Nelson v. Suffolk Ins. Co., 8 Cush. 477 (1851). — Ed. 2 Ace: Mathews v. Howard Ins. Co., 11 N. Y. 9 (1854) ; Street v. Augusta Ins. and Ban Icing Co., 12 Kich. S. Car. Law, 13 (1859). Contra : Nelson v. Suffolk Ins. Co., 3 Cush. 477 (1851) ; Walker v. Boston Ins. Co., 714 GENERAL MUTUAL INS. CO. V. SHERWOOD. [CHAP. VIL 14 Gray, 288 (1859); Blanchard v. Equitable Safety Ins. Co., 12 Allen, 386 (1866) ; Thwing V. Great Western Ins. Co., Ill Mass. 93 (1872). See Thompson «. Reynolds, 7 E. & B. 172 (1857) ; Taylor ». Dewar, 5 B. & S. 58 (1864) ; Xenos v. Fox, L. K. 4 C. P. 665 (Ex. Ch. 1869) ; Whorf v. Equitable M. Ins. Co., 144 Mass. 68 (1887); London S. 0. Ins. Co. v. Grampian Steamship Co., 24 Q. B. D. 663 (C. A. 1890). On proximate cause in marine cases, see also : — Jones V. SchmoU, I T. K. 130, n. (N. P. 1785) ; Hodgson K. Malcolm, 2 B. & P. N. R. 336, 340 (1806) ; Livie V. Janson, 12 East, 648, 652 (1810); BeU V. Carstairs, 14 East, 375 (1811) ; Powell V. Gudgeon, 5 M. & S. 431 (1816) ; Lawrence v. Aberdein, 5 B. & Aid. 107 (1821); Naylor v. Palmer, 8 Exch. 739 (1853) ; lonides v. Universal M. Ins. Co., 14 C. B. n. s. 259 (1863) ; Dyer «. Piscataqua F. & M. Ins. Co., 53 Me. 118 (1865) ; Dent 0. Smith, L. R. 4 Q. B. 414 (1869) ; Insurance Co. v. Transportation Co., 12 Wall. 194, 199 (1870); Brown ». St. Nicholas Ins. Co., 61 N. Y. 332 (1874) ; Dudgeon v. Pembroke, 2 App. Cas. 284, 295-297 (H. L. 1877) ; Mercantile Steamship Co. v. Tyser, 7 Q. B. D. 73 (1881) ; Inman Steamship Co. ii. BischofE, 7 App. Cas. 670 (1882) ; Cory V. Burr, 8 App. Cas. 393 (1883) ; The Alps, '93, P. 109 ; The Bedouin, "94, P. 1 (C. A. 1893). — Ed. SECT. II.] AUSTIN V. DKEWE. 715 SECTION II. Fire Insurance. (A) The Kind of Peril insdred against. AUSTIN AND Another v. DREWE. CoMMOK Pleas, 1816. 6 Taunt. 43 6.^ This was an action of covenant on a policy of insurance effected ■with tiie defendant ' ' against all the damage which the plaintiffs should suffer by fire " on their "stock and utensils in their regular built sugar- bouse," and the plaintiffs averred that " their stock and utensils were very much damaged by fire in the sugar-house." The defendant pleaded that " the stock and utensils were by and through the carelessness, negligence, and improper conduct of the plaintiffs and their servants, in regulating and managing the fires usually employed in and about the sugar-house, damaged by the smoke arising from such fires, and not from any other cause, without this, that the stock and utensils were damaged by fire in the sugar-house within the meaning of the policj-." The plaintiffs replied, that the stock and utensils were dam- aged by fire in the sugar-house, within the meaning of the policy, and the defendant joined issue on this traverse. Upon the trial of this cause at Guildhall, at the Sittings after Michaelmas Term, 1815, before GiBBs, C. J., the evidence was, that the building insured contained eight stories, and in each story sugar, in a certain state of preparation, was deposited for the purpose of being refined ; in order for refining, a cer- tain degree of heat was necessary, and a chimnej' running up through the whole building formed almost one side of each of the stories, and by means of this chimney heat was communicated to each of the stories. At the top of the chimney, above the eight stories, was a register, which the plaintiffs used to shut at night, in order to retain in the chimney and building all the heat thej- could. They shut it one night, and lighted the fires next day, and they soon afterwards found the building full of smoke and sparks ; and on examination they found that ,the register, which always ought to be open whensoever the fire was burning, was continued shut down : sparks and smoke had got out into the rooms ; the heat had slightlj- blistered the walls, and consid- erably discolored and damaged the sugars. There was much smoke, but the only injury done to the sugars proceeded from heat ; the smoke would not have hurt them. There was no fire in the building that ought not to be there, nothing was on fire that ought not to be on 1 s. c. 2 Marsh. 130; and at Nisi Prius, Holt N. P. 126 (1815), and, sub. nom. Austin V. Drew, 4 Camp. 360. — Ed. 716 AUSTIN V. DREWB. [CHAP. VII. fire, the damage was occasioned by the sparks, heat, and smoke taking a wrong direction. Gibbs, C. J., directed the jur^', that inasmuch as the damage was occasioned entirely by the increased heat, which was produced by keeping the register closed, it was not a loss by fire within the meaning of the policy, but was occasioned bj' the improper manage- ment of the register.^ The jury found a verdict for the defendant. Shepherd, Attorne3--General, now moved for a new trial. The words of the policy are not " excess of fire," or " improper fire," but " dam- age by fire." The actual flame which proceeded from the grates below, and would, if the register had not been closed, have issued out of that chimney, being confined therein bj' the register, occasioned the mis- chief. If actual flame was the cause of the damage, it matters not whether the fire was properlj' or improperlj' lighted, but the question is, whether fire occasioned the damage. If any other criterion be taken, it would in many cases of policies against fire introduce nice 1 According to the report in 2 Marsh. 130, Gibbs, C. J., " told the jury that, as the damage had been produced by the increase of heat, occasioned by keeping the register improperly closed, and as nothing had taken fire which ought not to have been on fire, it was not a loss within the policy, but was occasioned by the unskilful manage- ment of the plaintiffs' machinery." According to the report in Holt N. P. 126, Gibbs, C. J., said : "I am of opinion that this is not a loss witliin the policy. No greater fire existed than was necessary for the purposes of the business. By omitting to open the register, heat and smoke have been forced into the rooms where the sugars were preparing ; the heat produced the mischief; no sensible damage resulted from the smoke and sparks, and the occa- sion which produced the excess of heat was not a fire against which the defendant had undertaken to indemnify the plaiutiffs. The servants had neglected to open the register. What is this but a bad management of their own machinery? The fire is where it ought to be ; no more than it ought to be. But it received a false direction by the irregular and improvident conduct of the plaintiffs' servants. As no substance, therefore, was taken possession of by the fire, which was not inteuded to be fuel for it ; as the sparks and smoke caused no mischief, but as the damage arose from an excess of heat in the rooms, occasioned by the register being shut, I am of opinion that the plaintiffs are not entitled to recover." According to the report in 4 Camp. 360, Gibbs, C. J., said : " I am of opinion that this action is not maintainable. There was no more fire than always exists when the manufacture is going on. Nothing was consumed by fire. The plaintiffs' loss arose from the negligent management of their machinery. The sugars were chiefly dam- aged by the heat; and what produced that heaf? Not any fire against which the company insures, but the fire for heating the pans, which continued all the time to burn without any excess. The servant forgot to open the register by which the smoke ought to have escaped, and the heat to have been tempered." Hereupon a juryman said : " If my servant by negligence sets my house afire, and it is burnt down, I expect, my Lord, to be paid by the insurance office." And Gibbs, C. J., answered : " And so you would, Sir ; but then there would be a fire, whereas here there has been none. If there is a fire, it is no answer that it was occasioned by the negligence or misconduct of servants ; but in this case there was no fire except in the stove and the flue, as there ought to have been, and the loss was occasioned by the confinement of heat. Had the fire been brought out of the flue, and anything had heen burnt, the company would have been liable. But can this be said where the fire never was at all excessive, and was always confined within its proper limits ■? This is not a fire within the meaning of the policy, nor a loss for which the company undertake. They might as well be sued for the damage done to drawing-room furniture by a smoky chimney." — Ed. SECT. II.] KENNISTON V. MEEEIMACK CO. MUTUAL INS. CO. 717 and intricate questions. It cannot be necessarj- that the fire, to pro- duce a loss within the policy, should be only such fire as is communi- cated to some substance not contained in the intended and proper receptacle of fire. Heat may be so intense as to ignite combustibles without the actual contact of flame. Suppose the intensity of heat nec- essarily required for an}- process to be so great that the fire made in a chimnej', though confined there, might ignite neighboring bodies, it might in that case as well be said that that was not a damage by fire, because tiie original fire was contained in its proper receptacle. In the common case of a house on fire, if goods are damaged by the removal, that is a loss by fire within the policy. Put the case of a chimney on fire, there is onlj- the usual quantity of heat below, but the mischief is occasioned by an accumulation of soot in the chimnej-, j'et the insurers would be bound to paj- any loss thereby occasioned. GiBBS, C. J. I thinl£ it is not necessary to determine any of those extreme questions. In the present case, I think no loss was sustained b}- anj' of the risks in the policj'. The loss was occasioned bj' the ex- treme mismanagement by the plaintiflTs of their register. I so directed the jury, and I have no reason to alter the opinion I then formed.^ Dallas, J. I am of the same opinion. The onlj- cause of the dam- age appears to me to have been the unskilful management of the ma- chinery by the plaintiff's own servants, and it is therefore not a loss within the meaning of the policy.^ JRule re/used.^ KENNISTON v. MERRIMACK COUNTY MUTUAL INS. CO. Superior Court of New Hampshire, 1843. 14 N. H. 341. Assumpsit, on a policy of insurance duly executed. The act creat- ing the defendant corporation (approved July 1, 1825), sect. 1, consti- tutes certain persons a body politic, " for the purpose of insuring their respective dwelling-houses, with their contents, against loss or damage ' In 2 Marsh. 130, this opinion is reported thus : — " It is not necessary to determine any of the extreme questions put on the part of the plaintiff. It is sufficient to say that in this case no loss has been sustained which can be brought within the fair meaning of the words of this policy. The damage was occasioned by the unskilful management of the machinery, and not by any of those accidents from which the defendants intended to indemnify the plaintiffs." — Ed. ^ In 2 Marsh. 130, this opinion is reported thus : — " His Lordship's direction appears to have been perfectly right, and the jury have drawn a perfectly correct conclusion from it. There was nothing on fire wliich ought not to have been on fire ; and the loss was occasioned by the carelessness of the plain- tiffs themselves." And the same report adds that Park, J., concurred in the decision. — Ed. ' See Scripture v. Lowell Mat. F. Ins. Co., post, p. 732 (1852); American Towing Co. V. German F. Ins. Co., 74 Md. 25 (1891). — Ed. 718 KENNISTON V. MERRIMACK CO. MUTUAL IKS. CO. [ciIAP. VII. by fire, whether the same shall happen by accident, lightning, or by any other means," excepting in case of design, invasion, or insurrection. The terms of the policy sued on were to pay, " within three months next after the said property sh^l be burnt, destroyed, or demolished by or by reason or by means of fire ; " and farther, if any part rebuilt, re- paired, &c., to the amount of the policy, " shall happen to be injured by means of fire, such damages shall be made good, according to the estimate thereof, or repaired and put in as good condition as the same was before the said Are happened." The plaintiff claims an indemnity as for a partial loss on his dwelling- house and its contents. To sustain his claim the plaintiff offered evidence tending to show that on a certain day his house was struck hy lightning, and diflferent parts of it materially injured, and also articles of crocker}-, glass, and tin ware broken or destroyed. His witnesses also testified that the boards and timber near one of the windows where the lightning struck, exhibited marks or traces of fire, being discolored and rendered of a dark brown color, as if affected b}' a blaze of fire. One witness testified that he saw on these boards and timbers where fire burned, and he had no doubt that the house would have been burned had not the water been admitted through the window which was broken out by the lightning. The only question made by the defendant was, whether the loss was covered by the policy or act of incorporation ; and the court being of the opinion that it was, a verdict was ordered to be taken for the plain- tiff, subject to be aflflrmed or set aside and a verdict entered for the defendant, as the opinion of this court might be on the case stated. Parker, C. J. There must be a new trial. On the facts stated, the court cannot determine whether the loss is, or is not, within the risks of the policy. If the damage was from lightning without any combustion, it is clearly not within the terms of the contract of insurance. The policy does not provide against every damage which may arise from the action of the electric fiuid. The charter of the insurance company indeed refers to lightning, but it is only to authorize the defendant to insure against losses by fire, which " shall happen by lightning." This is a very different thing from direct losses by lightning, both as regards their origin, nature, predis- posing causes, development and effects, and in reference to the possi- ble application of means to prevent and to limit the damage. The terms of the policy, too, were to pay within a certain time after the destruction "by reason or by means of fire." Fire is the one loss insured against ; and lightning, though not excepted from the sources of fire, is nowhere, either in the charter or policy itself, directly pro- vided against. It is true, that there was evidence tending to show that the building. Insured in the policy now in question, was set on fire by the lightning ; SECT. II.] JOHNSON V. BEEKSHIKE MUTUAL FIRE INS. CO. 719 and if such was the fact, this action is well brought. But this fact is not made certain by the evidence, and the question must be submitted to a jury. JVew trial ordered.^ JOHNSON V.BERKSHIRE MUTUAL FIRE INS. CO. SuPREsiE Jtjdiciax Court of Massachusetts, 1862. 4 Allen, 388. Contract upon a policy of insurance upon the plaintiff's barn and grain therein, issued by the defendants. A trial by jury was waived in the Superior Court, and the case was heard before Ames, J., who found the following facts : In the afternoon of a hot day in a dry season in August, 1859, during the time covered b3- the policy, the plaintiff and his son were unloading haj- from a wagon, and placing it in a shed adjoining the barn, and -while so engaged were annoyed by bees whose nest was in a hollow place under the door at which they were pitching in the hay ; and the plaintiff, finding tliat no hot water could readily be had, undertook to smoke them out by thrusting a wisp of straw into their hole and light- ing it with a match. A fresh breeze was blowing at the time ; the building was very old, and covered on the outside with white wood boards ; the barn adjoining was full of hay, and some hay was stored in the loft of the shed. After witlidrawing the wisp of straw, and while attempting to extinguish it, the fire spread with great rapidity on the outside of the shed, and destroyed the ^^propert}-. It was admitted that there was no fraudulent intent on the part of the plaintiff. Upon these facts, the judge found that there had been a want of ordinary care, judgment, and discretion on the part of the plaintiff ; that this default was the immediate and proximate cause of the fire ; and that, although he acted in good faith, and the negligence and default on his part did not amount to recklessness and wilful mis- conduct, yet under the circumstances he was not entitled to reco'i'er. The plaintiff alleged exceptions; and it was agreed that if the exceptions should be sustained, judgment should be entered for the plaintiff, for the amount of the policy. M. Wilcox, for the plaintiff. J. A. Walker, .for the defendants. Merrick, J. The defendants contend that the carelessness and negligence proved at the trial whereby the fire was caused, by which the barn and other property insured were destroyed, constitute a valid defence to this action. It is admitted that there was no fraudulent intent on the part of the plaintiff in the commission of the acts from which the fire immediately resulted. But it was found as a fact by the 1 Ace: Babcock v. Montgomery Connty Mat. Ins. Co., 4 N. Y. 326 (1850); An- drews V. Union Mut. F. Ins. Co., 37 Me. 256 (1854). — Ed. 720 JOHNSON V. BEKKSHIKE MUTUAL FIEB INS. CO. [CHAP. VIL court, the parties having waived a trial by jur^', that there had been an omission to exercise ordinary care, discretion, and judgment on his part ; and it was thereupon determined that, although he had acted in good faith, and his negligence and default did not amount to reckless- ness or wilful misconduct, he was not entitled to recover indemnity in this action for his loss. This determination was erroneous. It is said to have been formerly doubted whether in marine insurances underwriters were liable for losses by fire occasioned by the negligence or mismanagement of the master or mariners at sea, but that now it is the better and established doctrine that they are liable where the acts are not of a barratrous character, and that this is applicable in all cases of such loss whether occurring on land or at sea. 1 Phil. Ins., §§ 1049, 1096. And in Angell on Ins., § 125, it is stated as an indisputable proposition, that as applied to policies against fire on land the doctrine has for a great length of time prevailed that losses occasioned by the mere fault of the insured or liis servants, unaffected by fraud or design, are within the protection of the policies, and as such are recoverable from the under- writers. In Shaw v. Robberds, 6 Ad. & El. 75, it is said by the court that the object of insurance is to guard against the negligence of ser- vants and others ; and that there is no ground of distinction between the negligence of strangers and others and that of the assured himself ; and that in the absence of all fraud tlie particular cause of the loss is only to be looked at. And in Huckins v. People's Ins. Co., 11 Post. (N. H.) 238, it was distinctly held that carelessness and negligence as such cannot be held to be a defence to an action upon a policy of insurance ; that, in the absence of fraud, it is only the proximate cause of the loss that is to be considered. The same doctrine was recognized by this court in the case of Chandler v. Worcester Ins. Co., 3 Cush. 328. It is there said that the general rule unquestionably is, that in cases of insurance against fire the carelessness and negligence of the agents and servants of the assured constitute no defence. The defendants in that case offered to show not only that the plaintiff had been guiltj' of negligence but also of gross misconduct. And the court in examining the case, where the facts upon which the allegation of the gross misconduct imputed to the partj' were not reported, expressed an opinion that it might be of such character, though not amounting to a fraudulent intent to burn the building, as to deprive the assured of his right to recover ; and this for the reason assigned, that the misconduct might be such as to mani- fest a willingness, differing little from a fraudulent and criminal pur- pose to commit such an injury. But the law makes a clear distinction between even gross negligence and fraud, and although the former may be evidence tending to show mala fides, it is not in fact the same thing. 1 Parsons on Con., 571 ; Goodman v. Harvey, 4 Ad. & El. 870. In the present case, there is nothing in the facts found to show either a fraudulent intent or any willingness on the part of the plaintiff SECT. II.] KANE V. HIBEENIA INS. CO. 721 to set fire to the building. On the contrary, it is conceded that he acted in good faith. And although his conduct was very imprudent, it is obvious, as well from his purpose as from his efforts to prevent the conflagration when the fire began to kindle, that he was actuated hy no improper motive. These facts show a case of mere negligence, and therefore are not sufficient to preclude him from his right to recover on the policy an indemnity for his loss. Exceptions sustained} KANE V. HIBERNIA INSUEANCE COMPANY. CoxjHT OF Eekors OF New Jerset, 1877. 39 N. J. L. (10 Vroom) 697. On error to the Supreme Court. Kane brought an action of assumpsit against the insurance company on two policies of insurance (not under seal), against loss by fire. The defence was that the building insured was burned by design, with the knowledge and procurement of the plaintiff. The defendant's counsel asked the court to charge the jury that, as to the defence of burning by design, while the burden of proof was on the defendant to establish this defence, it was only necessary to do so by the fair weight or preponderance of the evidence. The court re- fused so to charge, and charged the jury that, in order to make out such defence, the defendant was bound to establish the same beyond a reasonable doubt, and by the same measure of testimony that would be necessary to convict the plaintiff if tried under an indictment charg- ing that offence. The question of the correctness of this instruction was reserved and heard before the Supreme Court. Kane v. Hibernia Insurance Com- pany, 9 Vroom, 441. The decision of the Supreme Court being adverse to the defendants, the case was removed by them to this court, by writ of error, on exceptions sealed at the trial. For the plaintiff in error, Joseph Goult and -Hi C. Pitney. Contra, F. Vborhees and J. C. Ten Eyck. The opinion of the court was delivered by Depue, J. The writ of error brings up for review only the propriety of the judge's charge. It is conceded that there is a difference between civil and criminal cases in respect to the degree or quantity of evidence necessary to de- termine the verdict of a jury. In civil cases, it is the duty of the jury 1 Acc.i Phenix Ins. Co. v. SulliTan, 39 Kans. 449 (1888). See Catlin v. Springfield F. Ins. Co., 1 Sumner, 434, 444 (1833) ; Shaw v. Eobberds, 6 Ad. & E. 75, 84 (1837) ; Henderson v. Western M. & F. Ins. Co., 10 Rob. La. 164 (1845). Compare Fleisch v. Ins. Co. of North America, 58 Mo. App. 596, 606-607 (1894).— Ed. 46 . 722 KANE V. HIBEENIA INS. CO. [CHAP. VII. to find for the party In whose favor the evidence preponderates ; but in criminal cases, the accused should not be convicted upon any prepon- derance of evidence, unless it generates full belief of the fact, to the exclusion of all reasonable doubt. 3 Greenl. Ev., § 29 ; Best on Ev., § 95. But it is contended that there is an exception to this general rule, where the issue in a civil, case is one in which crime is imputed, and the guilt or innocence of a party is directly or incidentally involved. In such cases, it is said that the presumption of innocence is to have as great effect as in criminal trials, and that to justify a verdict against the party to whom crime is imputed, the evidence adduced must be such as would be sufficient to convict upon an indictment for the crime imputed. 2 Greenl. Ev., §§ 408, 426 ; 1 Taylor on Ev., 97 a. This exception is most frequently invoked in actions of libel and slander, where a justification imputing crime is pleaded, and actions on fire policies, where the defence is that the property was wilfully' burned by the insured.^ . . . In an action on a contract of insurance, a defence that the loss was caused by the wilful act of the assured, does not necessarily involve a criminal accusation. It rests upon the legal maxim that no man shall be permitted to derive advantage from his own wrong. " It is," says Lord CampbeU, C. J., " a maxim of our insurance law, and of the in- surance laws of all commercial nations, that the assured cannot seek indemnity for a loss produced by his own wrongful act." Thompson • V. Hopper, 6 E. & B. 171, 196. In that case, which was an action on a marine policy, a plea that the plaintiffs knowinglj', wilfullj', and im- properly sent the ship to sea at a time when it was dangerous for her to go to sea in the state and condition in which she then was, and wrongfully and improperly caused and permitted the ship to be and remain on the high seas, near to the shore, in the state and condition aforesaid, without a master and without a proper crew to manage and navigate her, etc., and that the ship, by reason of the premises, was wrecked, was held to disclose a good defence. In delivering the judg- ment of the court, Lord Campbell said, " According to the statement in this plea, the plaintiffs' loss was caused by their wrongful act, and, if so, I think there was no necessity to characterize it as being either felonious or fraudulent." Knowledge and wilfulness and a loss resulting directly and immediately from such wrongful act, are the essential ele- ments of such a defence. Dudgeon v. Pembroke, L. R. 9 Q. B. 581 ; 1 Q. B. Div. 96 ; 2 App. Gas. 284; Thompson v. Hopper, E., B & E. 1038. Under a fire policy, the assured may recover for a loss occasioned by mere carelessness, without fraud or wilful misconduct. But to make defence to the action, the defendants need not prove that the plaintiff had committed an indictable offence. It is sufficient if it be shown that the plaintiff purposely and wantonly set fire to the property in- 1 Here and elsewhere in the opinion passages not dealing directly with Insnrance have been omitted. — Ed. SECT. II.] KANE V. HIBERNIA INS. CO. 723 sured. Schmidt v. X. Y. U. M. F. Ins. Co., 1 Gray, 529. At com- mon law, and independently of the act of 1859 (Rev., p. 242), a man might burn his own house without incurring liability to indictment, unless it was so situated with respect to the houses of others as to endanger their safety. 2 East PI. 1027, § 7 ; 1034, § 11 ; State v. Fish, 3 Dutcher, 323. After the act of 1859 became a law, a man might still, without criminal responsibilit}', burn his own house, if it was done without intent to prejudice the insurance thereon. Indeed, cases may arise where the assured may procure the destruction bj^ lire of his prop- erty, with intent to defraud the insurer, and not be liable to indictment under the statute. Criminal laws are essentially local in their opera- tion, and the incitement in a foreign jurisdiction to the commission of a crime in this State, is not indictable under our laws. Therefore, one who, in another State, procures another to enter this State and com- mit a crime, is not guiltj' of any offence punishable by the laws of this State. State v. "Wyckoff, 2 Vroom, 65. And yet it cannot be doubted that, before the act of 1859, an insurance companj' might successfully defend on the ground that the assured wilfully caused the destruction of the property insured, and that such defence ma\' be made where the assured is so circumstanced as not to be indictable under the statute. A contract for indemnity in such case would be absurd, and, so far as it related to a voluntary and intended loss, would be void in law. 1 Phillips' Ins. § 1046. The doctrine that, in an action on a policy, the defence that the' plaintiff had wilfully set fire to the premises must be as fully and satis- factorily proved as if the plaintiff were on trial on indictment, origi- nated in the case of Thurtell v. Beaumont, 8 J. B. Moore, 612 ; 1 Biug. 339. This ruling is adopted by Mr. Greenleaf and Mr. Taylor, and is strongly approved by the latter writer. 2 Greenl. Ev., § 418 ; 1 Taj-- lor's Ev. (5th ed.) 97 a. It is disapproved by Mr. Wharton, and is vigorously' assailed by Mr. May, the author of May on Insurance, in an article in the American Law Eeview. 2 Whart. Ev., § 1246 ; 10 Am. Law Rev. 642. The decision on this point, in Thurtell v. Beaumont, was made on an application for a rule, and without much consideration. It has never received approval in the English courts, although, as a rule of evidence, occasions have repeatedly arisen for its adoption and application. . . . It may safely be said that Thurtell v. Beaumont, in principle, stands alone and unsupported in the English courts, except in actions of libel and slander, which are to be regarded as exceptional, and resting upon considerations peculiar to the nature of the actions and of the injuries for which thej* are brought. In the courts of this country, the principle adjudged in Thurtell v. Beaumont has received but slender support, except in libel and slander cases. The weight of authority is decidedly against the soundness of tlie rule there propounded, in its application to actions on policies of insurance, as well as other civil actions, where the issue is such that, 724 KANE V. HIBEENIA. INS. CO. [CHAP, VII. for its support, a case must be made such as would afford ground for an indictment. . . . The decisions in actions on policies of insurance against loss bj- fire are mainly to the same effect. In Schmidt v. N. Y. U. M. Fire Ins. Co., 1 Gray, 529, the defence was, that the plaintiff had purposely set fire to the propert}' insured, and burned it ; and it was held that the judge properly refused to instruct the jury that they must be satisfied, beyond a reasonable doubt, of the truth of this defence. The criticism on this case, in the court below, that the instruction actually given was, in substance, equivalent to an instruction that the defence must be established beyond a reasonable doubt, and that the case, if it does not inferentially recognize the rule in Thurtell v. Beaumont, is of no value as an authority against it, though warranted by some expressions of the judge, in his opinion, is shown to be unti-ue, in fact, hy the opin- ion of the same judge, in Gordon v. Parmelee, 15 Graj', 413. In the latter case, he adverts to the case in 1 Graj-, and declares it was not the purpose of the court to sanction any exception to the rule, or to say that, in any civil action, the jury were not to decide by the preponder- ance of the proof or the weight of the evidence ; and he closes his opin- ion by saying that, "in the opinion of the court, it is better that the rule be uniform, leaving the instruction that the jury must be satisfied of the guilt of the party bej'ond a reasonable doubt, to apply solelj' to criminal cases." In the following cases, also, in actions on fire policies, where the defence was a wilful destruction, bj- the assured, of the prop- erty insured, the rule of evidence adopted in Thurtell v. Beaumont was repudiated, and the correct rule declared to be that, in civil cases, the verdict should be determined by the preponderance of the evidence, without regard to the fact that in the defence was involved a charge which might be made the ground of a criminal prosecution. Scott v. Home Ins. Co., 1 Dillon C. C. 105 ; Huchberger v. Merchants' Fire Ins. Co., 4 Bissel C. C. 265 ; Washington Ins. Co. v. Wilson, 7 Wis. 169 ; Blaeser v. M. M. M. Ins. Co., 37 Wis. 31 ; Rothschild v. Amer. Cent. Ins. Co., 62 Mo. 356 ; jEtna Ins. Co. v. Johnson, 11 Bush. 587 ; HoflTman v. W. M. & F. Ins. Co., 1 La. An. 216 ; Wightman v. Same, 8 Rob. 442. I fully concur in these decisions, and the reasoning on which the3' are founded. In actions where usury was pleaded, it has been said that the de- fence must be established beyond a reasonable doubt. Conover v. Van Mater, 3 G. E. Green, 481 ; Taylor v. Morris, 7 id. 606. This language was used, perhaps inconsideratelj-, to express the quantity oC evidence that, under the circumstances, should be required to defeat the plaintiff's security, without intending to assert that, as a rule of law, the same measure of proof should be required in civil as in crimi- nal cases. So also in suits on fire policies, on a defence like that in the present case, judges, in their instructions to juries, have commented on the gravity of the charge contained in such a defence, and have put SECT. II.] KANE V. HIBEENIA IXS. CO. 725 the presumption of innocence in the scales ab an element to weigh in favor of the plaintiff and decide the issue, if the evidence was not en- tirely satisfactory. The charge of Judge Davis, in Huchberger v. Merchants' Fire Insurance Companj-, and of Judge Dillon, in Scott v. Home Insurance Company, and of Chief Justice Whelpley, in Powers V. Market Fire Insurance Company, in the Morris Circuit, are exam- ples of this mode of dealing with the subject in the practical adminis- tration of the law. But in each of these cases the judge was careful to instruct the jurj' that the rule of law in criminal cases, with respect to the quantum of proof, was not to be applied. A judge may make such comments on the evidence as he deems proper, and maj- advise and instruct the jury with respect to the degree of proof they should require to decide the issue under the circum- stances of the particular case. But a charge that, as a question of law, proof beyond a reasonable doubt is required, is quite a different thing. While it is impracticable to frame a satisfactory definition of the ex- pression "reasonable doubt," yet the effect of a charge, in this lan- guage, is a matter of almost every day's observation. Every one familiar with the administration of justice can recall instances in which defendants, under such an instruction, have been pronounced not guiltj-, when the evidence of guilt was quite convincing. The importance of preserving the distinction between civil and criminal cases increases with the growth of the criminal law. Al- most every tortious act is by statute made indictable, if done wilfully or maliciously, and the courts should be reluctant to adopt, in civil cases, the rules peculiar to criminal law, lest wrong-doers be enabled to avoid civil liability, as well as escape criminal responsibility, under cover of the rules of criminal prosecution, the object of which is pun- ishment onh'. The judgment should be reversed.^ Dixon, J. Several of my brethren unite with me in desiring to ex- clude the inference that we assent to the intimation contained in the opinion just read, as to the exceptional character of actions of libel and slander. We prefer that the matter should remain open, to be decided when its decision is necessary. Knapp, Eeed, and Dodd, JJ., concurred in the views of Justice Dixon. For affirmance — None. For reversal — The Chancellok, Daleimple, Depue, Dixon, Knapp, Eeed, Clement, Dodd, Lathrop, Lilly, Wales — 11. 1 Ace: Continental Ins. Co. v. Jachnichen, 110 Ind. 59 (1886). See Perry v. Mechanics' Mut. Ins. Co., 11 Fed. R. 485 (C. C, X>. K. I., 1882); Karow v. Continental Ins. Co., 57 Wis. 56 (1883). — Ed. 726 WAT V. ABINGTON MUTUAL FIKE INS. CO. [CHAP. VII. WAY V. ABINGTON MUTUAL FIRE INS. CO. Supreme Judicial Court op Massachusetts, 1896. 166 Mass. 67.' This was an action upon a fire insurance policy, of the Massachusetts standard form, for $1,500. The property insured consisted of cigars manufactured and in process, tobacco, and supplies for cigars. About five o'clock in the afternoon the foreman emptied waste paper into a stove, and when the paper was consumed closed the drafts and shut the store for the night. About eight o'clock it was discovered that the premises were full of dense smoke. This came down the chimney. The soot in the chimney had been set on fire by the waste paper, and the smoke thus produced had been forced into the premises because the flue was choked with an accumulation of loose plaster and scales of soot. Thus resulted a damage by smoke alone to the goods insured. The damage was 01,180.65. The loss occurred within the term of the policy. The case was referred to an auditor, who reported the fore- going facts, and ruled " that, although the fire was confined in places constructed or maintained for holding and conducting fire and the prod- ucts of combustion under ordinary intended conditions, it was still not such a fire as the places and appliances were intended for, and neither the fire nor the damage was caused by any misuse or mis- management of such appliances, but the fire was accidental and in a place where the plaintiff did not intend to maintain it, and that it was the proximate cause of the damage ; that the chimney was not made or maintained for the pui-pose of maintaining fires therein, but for the purpose of conducting the products of combustion to the outside of the building, which in this case it failed to do by reason of the soot being so ignited and burnt, thereby causing the obstruction which forced the products of such fire into the rooms of the building and caused the damage." The auditor found for the plaintiff. At the trial in the Superior Court the plaintiff introduced no evi- dence except the auditor's report, the policj', and the affidavit of loss. The defendant's counsel in his opening to the jury contended that, within the common knowledge of the jurj', when stoves are used, soot collects in the chimne}' and is liable to burn, and chimnej's are con- structed with the expectation of such occasional burning and with the intention of carr3'ing off the products of such combustion, so tliat stoves and cbimnej's are intended and maintained as receptacles for fire, and fire, while confined therein, is not such fire as is insured against. Thereupon be called as a witness an experienced builder, by whom it was testified that the flue was of ordinary construction. To this wit- ness the defendant's counsel put questions whether soot ordinarily collects in such a flue and occasionally burns out, and whether such a 1 The statement has heen rewritten. — Ed. SECT. II.J WAY V. ABINGTON MUTUAL FIRE INS. CO. 727 flue is intended to meet that result and to carry ofE the consequences of such ignition; but upon the plaintifTs objection, Mason, C. J., excluded this evidence. The defendant requested instructions to the effect that the defendant was not liable so long as the fire was con- fined within the appliances intended to hold it and carrj' off' its effects, and that the defendant was not liable if the ordinary effect of maintain- ing fire in a stove is to create soot in the chimney, with the consequence that the lighting of a fire in the common wa}' occasionally sets fire to the accumulation ; and that the defendant was not liable if the smoke escaped into the premises by reason of an obstruction, and if the fire did not escape from the chimnej'. The judge did not give these in- structions, but gave a peremptory charge for the plaintiff. To all the rulings of the court the defendant excepted. X. S, Dabney^ for the defendant. A. Hemenway ( W. S. Preble with him), for the plaintiff. Knowlton, J. It is conceded by the defendant that it is liable for damage caused by smoke to the same extent as if damage had been caused directl3' bj' the fire which produced the smoke. The question before us is whether the fire in the chimney was within the contract of insurance made by the defendant. The policy purports to cover all loss or damage by fire, but the defendant contends that in all such contracts there is an implied exception of such fires as this from which the plaintiff" suffered loss. The facts are not in dispute, and if the defendant's witness had been permitted to testify as an expert, or if the jury had used their common experience and common knowledge to find the facts as the defendant's counsel in his opening contended that they should be found, there would have been no substantial conflict between the statement of the auditor and the facts relied upon bj' the defendant. A chimney is not intended to be used as a place in which to kindle fires, or to have fires for use or employment in connection with the occupation of a building. It is intended to carry off the products of combustion. One of the products of combustion in a stove or fireplace connected with a chimney is soot, which will accumulate more or less in the chimney, and will sometimes take fire from the flame in the stove or fireplace. Chimneys are constructed with a view to guard against accidents when such fires occur. Occasional fires in a chimney from the ignition of soot are to be expected. Such fires are not desired. Thej' are not maintained for any useful purpose. In a sense they are accidental, for they are not lighted intentionally, but they start from time to time without human agency when a large quantit}' of soot has accumulated and the circumstances chance to be favorable to ignition from the fire which is maintained in the place intended for it. The defendant's counsel contends that the policy was not intended to apply to a fire which is lighted and maintained for the ordinary pur- poses for which fires are used in buildings, and which is confined within the place that is fitted for such fires. He argues that, if a stove should 728 WAY V. ABINGTON MUTUAL FIRE INS. CO. [CHAP. TIL be cracked and spoiled by a fire kindled in it to warm the bouse, or if a fire in a fireplace should crack the mantel, or scorch valuable furni- ture left too near it, or injure propertj' by its smoke which the chimney failed to carry off, or if a lamp should throw off soot or smoke in such quantities as to cause damage to propertj', in every such case, if the fire burned nothing but that which was intended to be burned for a useful purpose in connection with the occupation of the house, and if it did not pass beyond the limits assigned for it, the insurance company would not be liable. See Austin v. Drew, 4 Camp. 360 ; s. c. Holt N. P. 126 ; 6 Taunt. 436, 438 ; American Towing Co. v. German Ins. Co., 74 Md. 25; Scripture v. Lowell Ins. Co., 10 Cnsh. 356. We are not disposed to question the soundness of the general principle on which this contention is founded, and we find it by no means easy to deter- mine whether the principle should be extended far enough to cover an occasional fire in a chimney incidental to the ordinary use of a stove, or whether such a fire should be held to be one for whose unexpected injurious consequences an insurance company should be liable. We are inclined to the opinion that a distinction should be made between a fire intentionally lighted and maintained for a useful purpose in connection with the occupation of a building and a fire which starts from such a fire without human agency in a place where fires are never lighted nor maintained, although such ignition may naturallj- be expected to occur occasionally as an incident to the maintenance of necessarj' fires, and although the place where it occurs is constructed with a view to pre- vent damage from such ignition. A fire in a chimney should be con- sidered rather a hostile fire than a friendly fire, and as such, if it causes damage, it is within the provisions of ordinary contracts of fire insurance. It is doubtless true that in former years in some parts of the country straw and other combustible materials have sometimes been put in chimneys and set on fire to burn out the soot. But neither at the trial of this case before the jury nor in the argument before us was there any suggestion that such a practice prevails or has ever prevailed In Boston, or that this chimney was constructed with a view to kindling fires in it for such a purpose. What our decision would be if damage was done by smoke from a fire in a chimney intentionally kindled to burn out the soot, it is unnecessary now to determine. It is also to be noted that there was an accidental obstruction of the flue by the falling of the plaster lining of the chimney, whieli in some aspects of the case might be deemed an important fact in favor of the plaintiffs claim. Exceptions overruled. SECT. ILJ CITY FIRE INS. CO. V. COKLIES. 729 SECTION II. {continued). (B) The Connection between Pekil and Loss. CITY FIRE INS. CO. v. J. & H. P. COELIES. Supreme Court of New York, 1839. 21 "Wend. 367. Error from the Superior Court of the city of New York. The plain- tiffs in error were defendants below. The action was on a policy of insurance, dated December 9, 1835, by which the company insured the plaintiffs for the period of four months and twenty-two days against loss or damage by fire, to the amount of $3,000, on earthen-ware in crates, contained in the brick, slated store No. 75 Pearl Street, New- York. In the declaration the loss was alleged to have happened by and through the explosion of large quantities of gunpowder and by fire. On the trial it appeared that in the great fire, on the morning of the 17th of December, 1835, the store No. 75 Pearl Street was blown up with gunpowder, and the goods insured totally destroyed. The explosion was ordered by the ma3'or of the city, to arrest the progress of a fire then raging to the east of this store. The building next to the store, but not the store itself, was on fire at the time of the explosion. The buildings all around this store, in every direction, took fire, and were more or less burnt or totally destroyed by the course of the flames ; and according to every probabilitj' the fire would have de- stroyed the store in question, with its contents, had it not been blown up. The crates, after they fell, were consumed by the. fire. The de- fendants moved for a nonsuit on the following grounds : 1. The loss alleged did not arise from a cause contemplated by the policy, but was a remote consequence of the fire not necessarily arising from it. 2. The mere fact of bringing gunpowder upon the premises sus- pended the policy, although deposited without the knowledge of the plaintiff. 3. A loss by explosion of gunpowder cannot be said to be a loss by fire, and those cases in which a recovery can be had where the goods have been destroyed not by fire, but by water or by breakage or the consequences of the fire, are cases where the injury arose in the attempt to save the goods insured ; here the goods insured were intentionally destroyed to save the property of others. 4. The act was done by the mayor by virtue of his oflJce for the benefit of the citizens at large, and the corporation of the city are lia- ble for his acts, even at common law independently of the statute ; if he had no authority, then his own was an usurped power, which is expressly excepted by the policy. 730 CITY FIEE INS. CO. V. COELIES, [CHAP. VIL 5. This fire was a general calamity, and property destroyed to put an end to it should be a general tax on the citizens, and not a partial one on this insurance company ; and in a doubtful case the policy should be so construed as to lay a general rather than a partial contribution. The chief justice, before whom the case was tried, denied the motion for a nonsuit, and charged the jury that the plaintiffs were entitled to a verdict. The defendants excepted, and the verdict and judgment having passed against them, they now bring error. J. W. Gerard, for plaintiffs in error. D. Lord, Jr. , for defendants in error. Bj' the Court, Bronson, J. I. There has, I think, been a loss by the peril insured against, within the meaning of the policy. In Grim V. The Phoenix Ins. (Do., 13 Johns. R. 451, no doubt seems to have been entertained, either by the court or counsel, that a loss by the ex- plosion of gunpowder was a loss by fire. And in Waters v. The Mer- chants' L. Ins. Co., 11 Pet. 213, the point was so adjudged. The court was of opinion that fire was the proximate cause of the loss. II. According to the terms of the poliej-, if the building was used for the purpose of storing gunpowder, the contract was, for the time, suspended. And see Duncan v. The Sun Fire Ins. Co., 6 Wend. 488. But placing gunpowder with a lighted match in the building, for the express purpose of producing an explosion, which immediately fol- lowed, was a very different thing from what the parties contemplated when the}- inserted this provision in the contract. Whether the in- surei-s are liable for this voluntarj- destruction of the property is a question yet to be considered. But T think it quite clear that they have not established the allegation that the building was used for the storing of gunpowder. III. The building containing the goods was destroyed by order of the maj-or of the city, for the purpose of arresting the progress of a conflagration. Are the insurers answerable for this voluntar}- destruc- tion of the property ? This question has been presented in a double form, — the one supposing that the mayor acted with, and the other that he acted without, authority. 1. Let us first assume that the mayor acted illegally. If the fire had been kindled by an incendiary, it is not denied that the insurers would be answerable. Why are thej- not then answerable if the mayor acted without authority? The act, though not done for a wicked purpose, was as illegal as though it had been the work of a felon. The answer attempted is that, although the mayor had no authority, yet as he acted colore officii, this is a case of loss happening by means of usurped power, which is expressly excepted by the policy. It is impossible to maintain that a mere excess of jurisdiction by a lawful magistrate is the exercise of an usurped power, within the mean- ing of this contract. That is not what the insurers had in mind when they made the exception. It was an usurpation of the power of gov- SECT. II.] CITY FIRE INS. CO. V. COKLIES. 731 eminent, against -which they intended to protect themselves, Such was the interpretation given to the same words in a policj' as earlj' as the year 1767. Drinkwater y. The London Assurance, 2 "Wils. 363. The property insured was destroyed by a mob, which arose on account of the high price of provisions ; and the insurers were held liable, not- withstanding a proviso in the policy that they would not answer for a destruction by " usurped power." Bathurst, J., said, those words, according to the true import thereof and the meaning of the parties, could onh- mean an invasion of the kingdom by foreign enemies to give laws and usurp the government, or an internal armed force in rebellion, assuming the power of government, by making laws, and punishing for not obejing those laws. Wilmot, C. J., said, the words meant an invasion from abroad, or an internal rebellion, when armies are em- ployed to support it ; when the laws are dormant and silent, and firing of towns is unavoidable. In Langdale v. Mason, 2 Marsh. Ins. 791, it was said bj' Lord Mansfield that these words were ambiguous, but the}' had been the subject of judicial determination ; that they must mean rebellion conducted by authority, — determined rebellion, with generals who could give orders. And he added: "Usurped power takes in rebellion, acting under usurped authority." Whatever doubt there may have been originallj' about the meaning of the words " usurped power," in a policy, their legal import had been settled long before this contract was made ; and we cannot assume that these parties used the words in any other than their legal sense. 2. But the mayor acted under lawful authority ; there was no usur- pation of any kind. Whether he had the concurrence of two aldermen, as the statute provides, or not, there can be no doubt of his common- law power, as the chief magistrate of the city, to destroy buildings, in a case of necessity, to prevent the spreading of a fire. Indeed, the same thing maj' be done by any magistrate, or even by a citizen, with- out official authority. The Mayor of N. Y. v. Lord, 17 Wend. 285. IV. If the mayor acted by lawful authoritj-, it is then said that the property was destroyed for the benefit of the citj-, and that the corpo- ration (not the insurers) must bear the loss. This case does not fall within the statute charging certain losses on the city, because it does not appear that the maj-or had " the consent and concurrence of any two aldermen," 2 E. L. 368, § 81 ; and for the further reason, that the property would have been consumed by fire if its destruction had not been ordered by the magistrate. The Mayor of N. Y. v. Lord, 17 Wend. 285. It is said that the corporation is liable at the common law for the acts of the mayor ; but no authority was cited in support of the position, and I am not prepared to say that, in a case like tliis, the doctrine can be maintained. The inclination of my mind is strongly the other way. But suppose the city is liable, I do not see how that fact can afl'ect this contract. If the insurers pay the loss, they may, perhaps, have an action against the corporation of the city, in the name of the as- 732 SCRIPTURE V. LOWELL MUTUAL FIRE INS. CO. [CHAP. VII. surcd, to recover back the money. Mason v. Sainsbury, 2 Mash. Ins. 794 ; 3 Doug. 61, S. C. But however that may be, the fact that the assured may have a remedy against the city, cauuot change or qualify the undertaking of the insurers. This leads me to notice a little more particularly the extent of the contract. The company agrees to make good unto the assured all such loss or damage to the property as shall happen by fire. Thus far there is no limit or qualification of the undertaking. If the loss happen by fire, unless there was fraud on the part of the assured, which is not pretended in this case, it matters not how the flame was kindled. Whether it be the result of accident or design, — whether the torch be applied by the honest magistrate or the wicked incendiary ; whether the purpose was to save a city, as at New York, or a countr}-, as at Moscow, — the loss is equally within the terms of the contract. That the insurers intended the general undertaking should extend to every possible loss by fire is evident from the fact that they afterwards pro- ceed to specify particular losses by fire for which they will not be answerable. Columbia Ins. Co. v. Lawrence, 10 Pet. 507. The ex- ceptions are contained in the sixth condition of the proposals annexed to the policy. It is unnecessary to recite the clause, because it is not pretended that this case comes within an}' of the exceptions, save that relating to a loss happening by means of "usurped power," and that point has already been considered. There has then been a loss by fire. The case falls within the gen- eral undertaking of the insurers, and is not affected by any of the ex- ceptions which they thought proper to make to the extent of their liability. We cannot add another exception. The insurers are bound by their contract. Judgment affirmed. SCRIPTUEE V. LOWELL MUTUAL FIRE INS. CO. Supreme Judicial Court of Massachusetts, 1852. 10 Cush. 356. Assumpsit upon a policy of insurance on a dwelling-house, owned by the plaintiff, but in the occupation of one Elbridge Smith. The ten- ant's minor son carried a cask of gunpowder into the attic, without the plaintiff's knowledge, and fired it with a match, doing the damage stated in the opinion of the court. The case was submitted upon an agreed statement of facts to the Court of Common Pleas, Perkins, J., who rendered judgment for the plaintiff for the whole amount of dam- age. The defendants appealed to this court. I. 8. Morse, for the defendants. A. JR. Brown, for the plaintiff. Gushing, 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 SECT. II.] SCRIPTURE V. LOWELL MUTUAL FIRE INS. CO. 733 clothing, charred and stained some of the wood-work, and blew off the roof of the house ; and the onl^' question in the case is, whether the loss thus occasioned to the building is covered bj' the conditions of an ordinarj- policy against fire. The question may be generalized thus : By the ignition 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 policj' insuring ' ' against loss or damage by fire ? " The very anomalous case of Austin v. Drewe has been adduced in argument and greatly relied upon as having apparent analog}- to this ; but when that case is examined the analogy disappears.^ . . . The con- flicting and imperfect reports of this case have led to various and con- tradictory misapprehensions of its import. On the one hand it has been supposed that the decision in Austin v. Drewe is put on the ground of carelessness of servants (compare Hughes on Ins. 507-511), and is thus in apparent contradiction with the decision of Dobson v. Sothebj', Mood. & Malk. 90, in which Lord Tenterden says, that " one of the great objects of insuring is security against the negligence of servants and workmen," — which doctrine is now, in regard to fire policies, at least, the well-settled law both in Great Britain and the United States. 1 Phillips on Ins. c. 13, § 2, 1049. Another authority supposes the point decided to have been, that "in order to recover upon a policy against loss or damage by fire, it is not sufficient to show that the property has been damaged by the heat of fires usually employed in manufacture, and incurred by the negligence of the insured, or his servants, bej'ond its usual intensity. Ellis on Ins. 25." This construction of the case of Austin v. Drewe is inexact ; for it does not plainly indicate that the real question in controversy was of damage to the subject-matter of manufacture. On the other hand, the decision in Austin v. Drewe has been assumed to establish that "to bring a loss within the risk insured against, it must appear to have been occasioned bj' actual ignition, and no dam- age occasioned by mere heat, however intense, will be within the pol- ic}-." 2 Marsh, on Ins. (3d ed.) 790. This proposition 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, b}- 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 doubts they throw over the case of Austin V. Drewe, 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 over-heating only." , . . 1 Here was stated Austin v. Drewe, ante, p. 715 (1816). — Ed. 2 Here were quoted the Kisi Prius reports of Austin v. Drewe, ante, p. 716, n. (1815). — Ed. 734 SCRIPTURE V. LOWELL MUTUAL FIRE INS. CO. [CHAP. TIL If, in Austin v. Drewe, the fire had been where it ought not to be, if, even with careless management, it had burned the building, and notwithstanding it was fire maintained only for the purpose of manu- facture, 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 oul3-, as correctly stated by Beaumont (Ins. 37), is decided by the case of Austin v. Drewe, 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 unskilfulness of the operator, and his mismanagement of heat as an agent or instrument of manufacture, that is not a loss within a fire policy. This we apprehend is good sense and sound law. But it does not touch at aU the present case. It has been thought proper thus to analj-ze the case of Austin v. Drewe, because having been variouslj- reported by four different re- porters, and presenting itself prominently in several of the text-books, but in nearly all of them with more or less of misconception, it has be- come the starting-point, in legal construction, of conflicting lines of argument leading to sundry false conclusions, and, among others, that of a supposed application to the present question. Some adjudications have also been cited of questions arising in the contingency of damage done by lightning.^ . . . The principle adjudged in the cases of this class will be readil}' seen by reversing the question. Suppose, not as fact but as mere supposi- tion, a policy insuring against damage done through electricitj- gene- rated 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 b}- lightning, if the effects be of light- ning 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 assumption, if the cattle die, as they may, by a stroke of lightning, without a burn or anj- other action of fire on their bodies, it would not be the risk contemplated by the contract. Beaumont on Ins. 37. The question of loss by lightning is very summarily disposed 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 light- ning, and of course to difi'erent conclusions touching its legal relations, which are correctl}- summed up by a late writer as follows, namely, that fire includes lightning if there be any mark of fire, but not other- wise. Beaumont on Ins. 37. 1 Here were summarized Kemiiston v. Merrimack County Mut. Ing. Co., ante, p. 717 (1843) ; and Babeock v. Montgomery County Mut. Ins. Co., 6 Barb. 637 (1849). — Ed. SECT. n.J SCKIPTUKE V. LOWELL MUTUAL FIKE INS. CO. 735 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 qf this, in New York, at least, the same courts, which decide that loss by light- ning merely is not covered by a fire poliej-, decide that loss by the ex- plosion of gunpowder is. 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, in- sured against Are, was partlj' laden with gunpowder, 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 Thomp- son, C. J. ; and throughout the cause 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 conclusion is also assumed in the case of Duncan v. Sun Fire In- surance Company, 6 "Wend. 488. In the case of Citj' Fire Insurance Company v. Corlies, the claim was on a fire polic}' 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 b}- the peril insured against, within the meaning of the policy." 21 Wend. 367. The same point has been ruled incidentally by the Supreme Court of the United States. Waters V. Merchants' Louisville Insurance Company, 11 Pet. 225. Perhaps it may add a little to the weight of these authorities to say, that the same thing as to loss by gunpowder — sulphureo pulvere accenso — seems to have been holden by the older commercial jurists in Europe. Straccha de Assec. gl. 18, § 2. This court, to be sure, is not bound by the decisions or opinions cited, but they are entitled to great consideration ; and there is not, so far as we know, any contrary adjudication or opinion. Uniformity of decision is in itself a desirable thing. The question, we admit, is a nice one. Upon careful reflection, however, we have come to the conclu- sion that the received 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 bj' the ignition of gun- powder, is within the present policy. If, then, a combustible substance, in the process of combustion, produces explosion also, it is not easy to perceive why, of the two diverse but concurrent results of the combus- tion, 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 thei-eb}'. It is no sufficient answer to say that some of the phenomena produced are in the form of explosion. All the effects, whatever they maj- be in form, are the natural results of the combustion of a combustible substance ; and, as the combustion is 736 SCEIPTUEE V. LOWELL MUTUAL FIRE INS. CO. [CHAP. VII. the action of fire, this must be held to be the proximate and legal cause of all the damage done to the premises of the plaintiff. Our opinion excludes, of course, all damage by mere explosions, 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 Administrator v. Protection Insurance Co., 11 Ohio, 146. It likewise excludes all damage occasioned but re- motely 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-ball, in which ex- amples the shock of a projectile, and not ignition or combustion, is the proximate cause of the damage done. We recognize and accept, in the full force of its application, the maxim : Injure non remota causa sed proxima 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 insurance, as a branch of legal knowledge, is, comparatively speaking, in its rudiments. The cases on marine in- surance 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 investigation of the point in Great Britain, Montoya v. London Assurance Co., 6 Welsh. Hurlst. & Gord. 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, j-et 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 dififerences, it is necessarj' to apply judicial discretion to the particular questions as thej- 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 dam- aged, 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 primarj' one being an example of causa proxima. 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 causans was a burning match ; at each stage of causation it was the action of fire. Nay, to be exact, the burning of the gunpowder, 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 SECT. II.] SCRIPTURE V. LOWELL MUTUAL FIRE INS. CO. 737 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 recog- nized 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 gunpowder, when ignited, consumes with more of rapidity than sulphur, and the combustion is accompanied or followed by ex- plosion. Still, the agent is fire, though it acts in different ways upon the different successive subjects of its action, beginning 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 an^- 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 the 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 com- bustible, may by the action of fire explode without ignition ; or which, as in the present case, of a house, hj having compressed within it some burning substance, which is explosive as well as combustible, like gun- powder, may suffer the double injury of combustion in part and in part of explosion. If, however, the question of consequential damage needed to be ex- plored for the determination of the present case, it would serve to con- firm the conclusion to which we have on other premises arrived. Thus, in Great Britain, damage, which occurs consequentially in the case of a fire, by reason of confusion of mind, as in throwing fragile objects out of the window, or by sudden terror from alarm, as in leaving open the tap 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, cor- nice, 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 building, 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. Its legal relations may likewise be followed In the familiar case of the squib falling on a party's premises, and by him hastily thrown off, and so falling upon the premises of another, and thus giving rise to the inquiry, whether the first throwing or the second throwing should be taken as the responsible cause. Scott v. Shepherd, 2 W. Black. (2d ed.) 892 and notes ; 3 Wils. 403. 47 738 SCEIPTUEE V. LOWELL MUTUAL FIRE INS. CO. [CHAP. VII. In tbe hj-pothesis that fire is to be regarded as causa proxima in the present case, we can see but one supposable defect, nanielj', the sug- gestion that, though it be conceded that the explosion of burning gun- powder, and its effects, are the action of fire, jet 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 picto- rial art, the cracking or discoloration of a rich vase or gem, the burst- ing 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 blowing up of a dwelling- house b}' the ignition of gunpowder. "VVe do not think the premises of this argument are sustained by the phj'sical facts which occurred. If the}- were so, then the nearest analogy would be of damage by smoke, that is, the moisture thrown off by burning wood, and carrying with it ashes, empyreumatic oil, and other constituent parts of the wood, either in their natural condition, or transformed bj' the process of com- bustion. Now, it is obvious that mere smoke, without any direct ac- tion of heat, may do great damage to manj' 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 not extend, are nevertheless damaged by the smoke penetrating into and filling them, can it be doubted that the dam- age thus done is a loss within the ordinarj' conditions of a fire policy? Semble, per Gibbs, Chief Justice, arguendo, in Austin v. Drewe, Holt N. P. 127. Yet, incontestablj', 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 gunpowder is igneous action. In conclusion, we think the rule which we propose for the present case reconciles all the conditions involved in the question ; is conform- able 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 combustion, or of explosion, or of both combined. In either case, the damage occurring is by the action of fire, and covered by the ordi- nary terms of a policy against loss by fire. Judgment for the plaintiff.^ 1 See Hayward v. Liverpool and London Ins. Co., 8 Keyes, 456 (1867), s. c. 2 Abb. N. Y. App. 349 ; Briggs v. North American and Mercantile Ins. Co., 53 N. Y. 446 (1873) ; Transatlantic F. Ins. Co. v. Dorsey, 56 Md. 70 (1881) ; Renshaw v. Missouri State Mnt. F. & M. Ins. Co., 103 Mo. 595, 606-611 (1890). In Millaudon v. New Orleans Ins. Co., 4 La. Ann. 15 (1849), sugar and molasses in a sugar-house were destroyed by the explosion of a steam-boiler used in the manufac- ture of sugar, and it was held that the loss was not corered by insurance against fire. Edstis, C. J., for the court, said: — " The damage ... is confined exclusively to that produced by the explosion, none SECT. II.] TILTON V. HAMILTON FIEE INS. CO. 739 TILTON V. HAMILTON FIRE INS. CO. Superior Court of the Citt of New York, 1857. 1 Bosworth, 367. This action comes before the court at General Term, on a verdict taken, subject to the opinion of the court, for its decision of questions of law arising at the trial, and which were there ordered to be heard, in the first instance, at the General Term. The case made is as fol- lows, viz. : — "This action was brought upon a policy of insurance made by the haying been done by fire. . . . There is a material difference between the risk of ex- plosion of a steam-boiler and that of fire, and . . . this difference is established by the popular and ordinary meaning attached to each. . . Steam has been for years the motire power in manufactories in England and parts of the United States, and acci- dents by explosion have often occurred. . . . " It is remarkable that no case has been found in which a recovery has been had on a fire policy for a loss by explosion. It is but fair to infer that the risks are consid- ered as different. . . . " So far as relates to the insurance, we are unable to distinguish a loss occasioned by the explosion of the boiler from that caused by the breaking or derangement of any other part of the machinery." In Heuer v. Northwestern National Ins. Co., 144 HI. 393 (1893), goods and fixtures were covered by a fire insurance policy providing that " this company shall not be lia- ble by virtue of this policy ... for any loss or damage by fire caused by means of an earthquake; nor of an invasion, insurrection, riot, civil commotion, or military or usurped power ; . . . nor for any loss caused by the explosion of gunpowder, nor any explosive substance, nor by lightning or explosion of any kind, unless fire ensues, and then for the loss or damage by fire only." The property was not burned, but was dam- aged through an explosion of illuminating gas in the building, and the explosion was caused through the accidental ignition of the gas by the flame of a match. Magku- DEK, J., for the court, said: — " Is the loss to be attributed to the explosion, or to the lighting of the match, which preceded the explosion ? If it is attributable to the explosion, the loss is not covered by the policy. . . . "The exemption clause provides that 'this company shall not be liable . . . for any loss caused bj . . . explosion of any kind, unless fire ensues.' The use of the expression, 'explosion of any kind,' contemplates the existence of more than one kind of explosion. Without undertaking to make an accurate classificatiop, we deem it suflicient to say, that one kind of explosion is that which is produced by the ' ignition and combustion of the agent of explosion,' as where a lighted match is applied to a keg of gunpowder, and another kind of explosion is that which does not involve ' igni- tion and combustion of the agent of explosion,' as where steam, or any other sub- stance, acts by expansion without combustion (Scripture v. Lowell Mut. F. Ins. Co., 10 Cash. 356). The exemption clause is broad enough to embrace both kinds of ex- plosion. As the present case, where it appears that a lighted match was applied to the illuminating gas confined in the basement of a building, furnishes an instance of the first kind of explosion above specified, it manifestly comes within the terms of the exemption. . . . " There was no fire prior to the explosion, and . . - the lighted match was not a fire within the policy. . . . " We think that the loss in this case resulted from the explosion, and not from any fire which preceded or followed the explosion, and that it comes within the terms of the exemption clause." — Ed. 740 TILTON V. HAMILTON FIKE INS. CO. [CHAP. VII. defendants, to recover from them their proportion of the loss and damage sustained by the plaintiff b}"^ the destruction or damage of the property insured, by a fire which occurred on the morning of the 5th of February, 1855. "By the pleadings in the action, the making of the policy and the occurrence of the fire were admitted, and also that the goods of the plaintiff saved from the fire were damaged to the extent of nine hun- dred dollars. In addition to this, the plaintiff claimed that there was a total loss of goods to the amount of $3,459.35, covered by the policy. " The defendants denied the total loss of any goods, and claimed that the plaintiff, on presenting his claim to the defendants, had made false statements as to the amount of his loss, whereby, under the terms of the policy, he had forfeited his claim to the amount of damage admitted to have been suffered. "The action came on to be tried before Mr. Justice Dder, and a jury, on the 21st April, 1856. " Upon the trial the plaintiff read in evidence the policy of insurance, bearing date June 1st, 1854, whereb}' the defendants insured the plain- tiff against loss or damage by fire, to the amount of $1,500, on his stock of ready-made clothing, contained in the building No. 140 Fulton Street, New York ; also, $400 additional on the store fixtures, furni- ture, &c. , for the term of one j-ear thereafter. "The plaintiff then offered evidence tending to show that on Satur- day, the third day of February, 1855, the store was closed at the usual hour in the evening, and that neither the plaintiff nor any of his clerks again entered it. That on Monday morning, the fifth of February, 1855, when the plaintiff and his clerks came to the store, they found the build- ing entirelj- destroj'ed. That neither the plaintiff nor any of his clerks were present at the fire. That in the morning after the fire, the plain- tiff was notified by the agents of the defendants, that they had removed his goods from the store, and that they were stored in the basement of the Sun Building, and soon afterwards, the plaintiff having hired the store No. 194 Fulton Street, the defendants delivered to him the goods saved, which were taken from the basement of the Sun Building to the store No. 194 Fulton Street, where an inventor}' was taken of the same. That by this inventory it appeared that the value of the goods saved amounted to $9,488.66. Evidence was also offered by the plaintiff, tending to show that on the night previous to the fire, when the store was closed, there was a stock of goods on hand of the value of $12,948.01. That many goods whicih were in the store on the evening previous to the fire were not among the goods delivered to the plaintiff after the fire. That the fixtures, &c., covered by the policy to the value of $500, were, together with the building, totally destroyed by the fire in question. " The defendants gave evidence tending to show that in making up the account of the goods saved from the fire, the plaintiff had fraudu- lently undervalued the goods, so as to increase the apparent amount of SECT. II.J TILTON V. HAMILTON FIKE INS. CO. 741 his total loss. The plaintiff offered counter evidence on this point, tending to show that the accounts were in all respects just and true. " The defendants then offered evidence tending to show that the fire in question was discovered about midnight, in the third story of the building No. 140 Fulton Street ; that a few minutes thereafter the in- surance watch arrived, broke open the doors, tooli possession of the store, and commenced moving the goods across the street ; that the police formed lines across the street, about midway of the block above and below the fire, to prevent persons approaching the fire;, that all the goods were removed from the store before the fire reached that portion of the building occupied by the plaintiff, and were taken across the street, and piled up on the sidewalk, extending from the curbstone back against the door of a hotel then open ; that the goods were cov- ered by oil-cloths, and policemen were stationed in charge to watch them ; that after all the goods had been removed across the street, thev were taken to the Sun Building, a hundred feet distant, and stored in the basement, which was locked up, and the kej- retained by one of the insurance agents until delivered to the plaintiff, the next morning ; that all the goods stored in the Sun Building were delivered to the plaintiff the next morning. "The plaintiff gave evidence tending to show that a large number of persons were admitted inside the lines formed by the police ; that persons passed them freely ; that there were several hundred persons assisting in removing the goods, including policemen, insurance watch, and others ; that there was a great deal of confusion ; and that goods might have been stolen and carried away without being noticed. " The court thereupon charged the jury, amongst other matters, as follows : " ' That if the witnesses on the part of the plaintiff are to be believed, the plaintiff had in his store, on the night of the fire, goods to the value of $12,948.01, while the goods saved by the defendants and delivered to the plaintiff at the Sun Building, on the morning after the fire, only amounted to $9,488.66, leaving a deficiency of $3,459.35, which the plaintiff claims were lost or destroyed bj- the fire. In opposition to this we have the testimony on the part of the defendants, that all the plaintiff's goods were removed bj- them from the store before the fire reached that portion of the building. None of the witnesses, how- ever, can testif}- that all the goods removed from the store ■were taken to the Sun Building, and these statements can onlj' be reconciled upon the supposition that a portion of the goods were abstracted during the fire. Although it is a serious question, and in my judgment a verj- doubtful one, whether the insurers, insuring against flre alone, are bound to make good any loss resulting from stealing the goods by persons at the fire, yet, for the purposes of this trial, I shall charge you that it is immaterial whether the goods were actually burned, or were abstracted or stolen bj' persons at the fire. If you are satisfied that the plaintiff was not guilty of any fraud in making the statement as to the amount 742 TILTON V. HAMILTON FIKE INS. CO. [CHAP. VII. of his loss, he is entitled to your verdict for the sum of $400 insured upon the fixtures, and also for three-twenty-eighths of that portion (if any) of the goods in the store on the night of the fire, which were either burned or abstracted by persons at the fire. If you find for the plain- tiff for the full amount claimed, j'our verdict will be for $900.' ' ' The counsel for the defendants thereupon excepted to that portion of the charge in which his honor charged the jury that the defendants ■were liable for goods stolen at the fire. " The jury thereupon returned a verdict for the plaintiff, for nine hundred dollars, which was directed by the court to be entered, subject xo the opinion of the court upon the question as to the liability of the defendants for goods stolen ; to be heard in the first instance at the General Term, on a case to be made, with leave to either party to turn the same into a biU. of exceptions." It was first argued at the February- General Term, 1857, before Bos- WOKTH and Hoffman, JJ. On April 11, 1857, they severally delivered written opinions, and, disagreeing in their conclusions, ordered a re- argument.^ The cause was re-argued on June 6, 1857, before Ddeb, C. J., and BoswoRTH, Hoffman, Slosson, and Woodruff, JJ. D. D. Field, for plaintiff. E. J. Phelps and F. W. Stoughton, for defendants. By the Court. Duer, C. J. The judge, upon the trial, charged the jury, that, if they were satisfied that the plaintiff had sustained the loss that -was claimed, he was entitled to recover, as well for the goods abstracted or stolen, as for those, if any, destroj'ed by fire. To this part of the. charge, the counsel for the defendants excepted ; and whether this exception is well taken is the single question that we are now re- quired to determine. In words less technical : Whether, as fire is the only risk mentioned in the policy, the defendants are answerable for the loss of goods that, during the course of, or subsequent to, their re- moval from the building on fire, and before any part of them had been restored to the possession of the assured, had been abstracted or stolen ? The determination of this question evidently depends upon the true interpretation and just application of the established maxim, that, in determining the character of a loss for which an indemnity is claimed under a contract of insurance, its proximate cause is alone to be re- garded ; ,§0 that, when it appears that this proximate cause was a peril not covered by the policy, the insurers are discharged from all liabilitj-. The well-known maxim of Lord Bacon, In jure causa proxima, non remota, spectatur, it is admitted, furnishes, in all cases, the controlling rule. Strictly speaking, the proximate cause is that which immediately precedes and directly occasions a loss ; and hence, if the maxim is to be understood in this limited sense, it is plain that the defendants are not answerable for the loss that is claimed, since its proximate cause, in this sense, was not fire, but theft, — a risk which the language of the 1 These opinions have not been reprinted. — Ed. SECT. II.j TILTON V. HAMILTON FIRE INS. CO. 743 policy does not embrace, and against which no indemnity in terms is promised. It is not pretended, however, that the maxim, in its application to the contract of insurance, has ever been understood, or, without an entire disregard of prior decisions, can now be understood, in this strict and limited sense, — a sense that, if adopted, would confine the liability of insurers to losses produced solely by the direct agency of a peril insured against, upon the property insured. It is not denied that, in numerous cases, where the property has not been at all injured or affected by direct action of the peril, the insurers have been held re- sponsible for a subsequent loss, even when its immediate cause has been an act or event not mentioned in the policy. Nor is it denied that, in all such cases, the law attributes the loss to the original peril, as its proximate cause. Thus, to select a frequent and familiar instance, where goods insured only against fire, and contained in a building actualh' on fire, are neither touched by the flames, nor affected by the heat, but are saturated bj' the water used to extinguish the fire, and are thereby damaged or rendered worthless, it has never been doubted that the insurers are bound by their contract to satisfy the loss ; nor that it is recoverable as a loss occasioned b3- fire, although the voluntarj- appli- cation of water was, in realitj', its sole immediate cause. And this single example is sufficient to prove that the maxim, Causa proximo, non remota, spectatur, is not to be strictly and literall}' construed, but, by its received interpretation, embraces consequential or incidental losses, as well as those which are direct and immediate. To enable us, therefore, to answer the novel question now before us, it will be neces- sary to define the consequential losses that the maxim by which we must be governed has been held to embrace, and carefully to distinguish them from those, the recovery of which it has been held to preclude. We must ascertain, if possible, the principle or grounds upon which each class of cases may justly be said to rest, that we maj- determine to which class that which is before us, by a parity of reasoning, ought to be referred ; and this we shall now endeavor to do, hy referring to a few of the cases belonging to each class. There are some losses, not produced by any direct action of a peril insured against upon the property insured, and therefore strietlj' conse- quential, which it is admitted by all that the insurers are bound to make good. They are responsible for ever}- loss which is, physically, a neces- sary consequence of the peril ; that is, for every loss that, from the nature of the peril, and of the subject insured, when the peril occurs, must inevitably follow.^ . . . My observation upon the cases that have been cited, is : that it can- not be denied that in each of them the loss for which an indemnity was 1 Here were discussed Montoya v. London Assur. Co., ante, p. 704, (1851) ; Livie c. Janson, 12 East, 648 (1810); Rice v. Homer, 12 Mass. 230 (1815); Patrick v. Com- mercial Ins, Co., 11 Johns. 14 (1814); HiUier u. Allegheny County Mut. Ins. Co., 3 Pa. 470 CI 846). — Ed. 744 TILTON V. HAMILTON FIRE INS. CO. [CHAP. VII. claimed, was, in one sense, a consequence of the peril insured against, since in each it was certain that but for the happening of the peril — the sea peril in the first case, the fire in the last — no loss, or a loss only partial, would have occurred ; but as in each case the propert3- insured would have been saved, in whole or in part, but for the happening of a subsequent event of risk, this subsequent risk, as it was the only efficient, was properlj- held to be the proximate cause of the loss, and as it was not covered by the terms of the policy, the insurers were, necessarily, dis- charged from its payment. In each case, the peril insured against was merely- the occasion, and not in any legal sense the cause of loss. From these, therefore, and manj- other cases in which the insurers have been exonerated from consequential losses, it may be safely de- duced, as a general rule, that insurers, whether on a marine or fire policy, are never liable for consequential losses, other than such as are physi- cally or legally necessary, unless it appears not only that the property insured was involved in a peril insured against, but that it must have perished from that cause, had the peril continued to operate. In fewer words, unless it appears that the loss, had it not been consequential, would have been immediate and total. When this necessary- condition of the liabilit3- of the insurers is proved to have existed, the consequential losses for which they have been held to be answerable maj- be divided into two classes ; and if the loss now claimed can with propriety be referred to either of these classes, the plaintiff will be entitled to our judgment ; otherwise, the verdict in his favor must be set aside and a new trial gi-anted. First : The insurer must satisfy every loss which is shown to have been, although not a necessary, a natural consequence of the peril in- sured against ; and bj- natural is evidently meant a usual and probable consequence, and such, therefore, as it is reasonable to believe was in the contemplation of the parties when the insurance was effected. Hence, the insurers are bound to indemnifj- the assured against every loss that maj' be expected to follow from the means usually emplojed to avert or diminish the peril, and save the property insured from the destruction, in which it would otherwise be involved ; and it can hardly be said that their liability for consequential losses that may with cer- tainty be referred to this class, has ever been doubted or denied. The examples that most readih- occur, are, under a marine policj-, jettison of goods, or the cutting away of a mast during a storm ; and, under a fire, the damage to the goods from water, and the injuries which they suffer from haste and negligence in the course of their removal from a building actually on fire. The second class of consequential losses for which the insurers are undoubtedly liable, as referable to the peril insured against as their proximate cause, embraces the cases in which the property insured is extricated from the peril that otherwise would have led to its destruc- tion, by means that could not have been anticipated b}- the parties, but by which it is taken from and never again restored to the possession of SECT. II.J TILTON V. HAMILTON FIEE INS. CO. 745 the assured, so that to him the loss is exactly the same that it would have been had the peril continued to operate.'' . . . I have alrcad}- said that, although the loss now claimed is consequen- tial, jet if it fall within either of the classes that have now been stated and explained, it is recoverable under the policj', as a loss by fire, and that it falls within both classes, is the conclusion to which we have all of us come, with the exception of ray brother Hoffman. We think that this conclusion is fully justified hy the decisions to which I have referred, and which we are not aware are contradicted or shaken by any other authorities. It cannot be denied, that the facts which I have stated to be the necessarj- condition of the liabilitj' of insurers for consequential losses, other than such as are inevitable, were in this case proved to exist. The goods were removed from a building actually on fire, and which was destroyed by the fire ; had they remained, their destruction was certain. Under these circumstances we think the loss as claimed was a natural consequence of the peril insured against. When the doors of a warehouse or store on fire are broken or thrown open, in order that the goods within, by their removal, maj' be saved from the peril, a loss of a portion of them by plunder we cannot but think is just as certainly' a natural consequence of the attempt to preserve them as the damage which they suff'er from the negligence or recklessness of those engaged in their removal. It is a consequence that from the frequencj' of its occurrence may be expected to follow, and which, it is therefore reason- able to believe, was in the contemplation of the parties when they made their contract. It is a public and notorious fact, which as such we maj- judicially notice, that in this city, and, indeed, in all crowded cities, losses from this cause constantly happen, and that from the temptation and facilities that a fire creates, it would be diflflcult and almost impos- sible to prevent them. And when we call to mind the hurrj-, confusion, and disorder that usually prevail, and the habits and character of those who form a large portion of the crowd that usually assemble at a fire, it would be a matter of great surprise if losses of this description were not as frequent as an experience almost dail}' attests they are. It was admitted by one of the learned counsel of the defendants, that as petty losses bj- theft not unfrequentlj- happen, it might not be unrea- sonable to hold that, for such the insurers are liable, as a natural conse- quence of the peril insui'ed against ; but he contended that, as a loss by theft of the magnitude of that which is now claimed very rarely occurs, it would be unjust to hold that the defendants ever meant to assume the risk, since it cannot be thought that such a loss was in the contem- plation of the parties when tliey made the contract. The argument is plausible, but it implies a distinction for which there is no warrant or precedent, and to which we cannot assent. The only question is, whether a loss by theft is from its nature a consequential 1 Here were discussed Bondrett v. Hentigg, ante, p. 697 (1816) ; Hahu u. Corbett, 2 Bing. 205 (1824) ; Dean v. Hornby, 3 E. & B. 180 (1854). — Ed. 746 TILTON V. HAMILTON FIEE INS. CO. [CHAP. VII. loss, for which the insurers are liable, and if this be admitted or proved, their obligation to satisfy the loss, when not exceeding the sum insured, cannot be varied by its amount. If all the costly furniture of a dwelling-house were defaced and broken by a disorderly crowd volunteering their aid to rescue it from a fire, we cannot believe that the unusual amount of the loss would be held to exonerate the insurers from its payment. And we see no reason to doubt that a loss by theft, if covered bj' the policy at all, stands upon the same ground. But were we prepared to say that, if the loss now claimed cannot be regarded as a natural consequence of the peril, and is not recoverable upon that ground, it is still certain that the goods upon which it is claimed, before their removal, were involved in a peril that must have led to their destruction, and that, although saved from this peril, they were never restored to the possession of the plaintiff.^ . . . Here, it is certain that the goods upon which the loss is claimed, had they remained in the store, must have been destroyed bj* the fire ; and equally so, that, since their removal they have never been restored to the possession of the plaintiff, — the loss to him is exactly the same as if they had been consumed by the fire. So far as he is concerned, they were never rescued from the peril in which they were involved, and which may, therefore, be justly considered the proximate cause of the loss. There is no ground for the allegation that the goods lost were in the possession of the plaintiff when the loss happened. They were taken from his possession by the persons who removed them, and those per- sons were in no sense his agents, or subject in any respect to his direc- tion or control. Neither he nor any person acting by his authority was present at the fire. The case, moreover, expressly states that the goods saved were taken possession of by an agent of the insurers, who stored them in a building of which he kept the key ; and that this key was not delivered to the plaintiff until the next morning. Until then the goods saved were not restored to his possession. Those that were stolen were at no time after their removal in his possession. The property remained in him, but the possession was gone. Dean v. Hornby, supra. The result of this discussion is, that, in our opinion, the jury were rightlj' instructed upon the trial, ^ and that the plaintiff is entitled to judgment upon the verdict which they rendered, and such is our decision.' . . . Hoffman, J., dissenting.^ . . . 1 A passage discussing the authorities already cited has been omitted. — Ed. 2 Ace: Whitehurst v. FayetteviUe Mut. Ins. Co., 6 Jones, N. Car. 352 (1859) ; Inde- pendent Mut. Ins. Co. V. Agnew, 34 Pa. 96 (1859) ; Newmark v. Liverpool and London F. & L. Ins. Co., 30 Mo. 160 (1860) ; WithereU v. Maine Ins. Co., 49 Me. aOO (1861). See Webb v. Protection Ins. Co., 14 Mo. 3 (1850); Leiber v. L., L. & G. Ins. Co., 6 Bush. 639 (1869). Ed. 3 Here was discussed Levy v. Baillie, 7 Bing. 349 (1831 ). — Ed. ^ This opinion has not been reprinted. — Ed. SECT. II.] BEADY V. NOKTHWESTEEN INS. CO. 747 BRADY V. NORTHWESTERN INS. CO. Supreme Court of Michigan, 1863. 11 Mich. 425.^ Error to Oakland Circuit. The action was upon a policy of fire insurance that covered a three- stor^"- wooden warehouse in Detroit. Tlie poUcy was for $2,000, and contained this provision : " In case of anj" loss oi" damage . . . it shall be optional with the company ... to rebuild or repair the building . . . giving notice of their intention . . . within forty days after . . . proofs of loss . . . and where no such offer ... is made, the loss due and ascertained shall be payable in sixty days after . . . proofs." The plaintiff introduced evidence that the roof of the building insured had been burned within the term of the policy, that the building was worth from $4,000 to $5,000 before the fire, and that the unconsumed portion was worth less than $100. The plaintiff then proposed to in- troduce in evidence the citj- charter, the ordinances, and the proceedings of the common council, in order to show that the warehouse was within the fire limits, that it could not be rebuilt without the permission of the common council, and that such permission had been refused ; but the defendant company objected to the introduction of this evidence on the ground that it had nothing to do with the rule of damages, and the court sustained the objection, whereupon the plaintiff excepted. The plaintiff admitted the receipt of $866.50 from the defendant company on account, and conceded that another company was responsible for one half of the entire loss. The defendant company introduced evi- dence to show what sum would have been necessary in order to restore the building. The court chai-ged the jury that the measure of recovery was such amount as would be suflicient to place the building in as good condition as it was in when the loss happened ; and to this estimate the plaintiff excepted. The judgment having been for the defendant companj-, the plaintiff appealed. G. V. JV. Lothrop and S. D. Miller^ for plaintiff in error. D. B. Duffield, H. K. Clarke, and 8. T. Douglass, for defendants in error. Martiist, C. J. The plaintiff in this case was insured by the defend- ants in the sum of $2,000, upon his warehouse, on the first daj' of Jan- uary, 1856, for one j-ear. The policy of insurance contained, among others, this provision : " This insurance (the risk not being changed) ma}' be continued for such further time as shall be agreed on ; the pre- mium therefor being paid and indorsed on this polic}', or a receipt given for the same." The obligation of the defendants seems to have been renewed every succeeding year, under this stipulation ; and upon 1 The reporter's statement has not been reprinted. — Eb. 748 BEADY v. NOETHWKSTEEN INS. CO. [CHAP. VII. such renewed obligation, dating from the first day of January, 1861, this action arises. Between the years 1856 and 1861, certain ordinances were adopted by the common council of Detroit for preventing the restoration or reconstruction, within certain boundaries, of wood buildings which might be injured or destroyed by fire. After the passing of these ordinances, the policy was renewed on payment of the premium origi- nally stipulated, and after being countersigned by the resident agent. The question now presented is, whether the liability of the defendant is under the promise of 1856 or that of 1861 ; in other words, was the undertaking of 1856 made a continuous undertaking, to be construed by the laws and ordinances as thej- existed in 1856 solely, or, bj' the renewal, were the parties bound by the laws and ordinances existing at the time of such renewal? We have no doubt that each renewal of the policy was a new eon- tract. Each was upon a new consideration, and. was optional with both parties. At the expiration of the j-ear over which the original policy extended, the obligation of the insurer was ended, and it was only bj' the concurrence of the will of both parties that the obligation could be continued. This concurrence is manifested by the payment of a consideration bj- the one part3-, and a renewed promise b}' the other ; and an obligation revived or continued under such circum- stances is an original obligation. It must be asked for bj' the one, and may be assumed or refused bj- the other ; and the policj"^, which is its evidence, is therefore only continued by the positive act of both parties. This is according to the terms of the policy, and of the cer- tificate of renewal ; and the fact that the insurance company, by the very terms of the certificate of renewal, required payment therefor, and that such certificate should be countersigned by the resident agent before it should become operative, shows that the companj' regard the renewal as a new contract, made at their option, and dependent in some degree upon the judgment and knowledge of such agent. Thus, if tlie agent should find the property depreciated in value, or the risk increased from anj' cause, he could refuse to countersign the renewal receipt, and the promise by the company to renew the policj' would be thereby terminated. Now, it is very clear that all such contracts must be mutual, and that where a right is reserved to a party to renew or dissolve an obligation, the determination of such party to renew an expired contract, if accepted by the other, makes an original contract. This contract of insurance is one of indemnity against loss by fire ; and the whole loss of which the fire is the actual cause, is within its terms to the extent of the indemnity promised. Much is said by judges of the proximate and remote cause of the loss ; and the dis- tinction was very elaborately discussed bj- counsel in the present case. But, after careful consideration, I must confess that, to my mind, the •^QxA nroximate. is unfortunateh' used, and serves often to mislead the inquirer, and to produce misapprehension of the real rule of law. That SECT. II.] BEADY V. NORTHWESTERN INS. CO. 749 which is the actual cause of the loss, whether operating directlj- or by putting intervening agencies — the operation of which could not be reasouablj- avoided — in motion, by which the loss is produced, is the cause to which such loss should be attributed. If, in the effort to extinguish fire, property is damaged or destroyed by water, the water may be said to be the proxitnate cause of the injury or destruction ; yet in no just sense can it be said to be the actual cause. That was the fire. The fair and reasonable interpretation of a policy of insur- ance against loss by fire will include within the obligation of the in- surer ever^- loss which necessarily follows from the occurrence of the fire, to the amount of the actual injury to the subject of the risl£, when- ever that injury arises directly and immediately from the peril, or necessarily from incidental and surrounding circumstances, the opera- tion and influence of which could not be avoided. Under this rule, what was the plaintiff's loss in the present case? The property insured was situated within the fire limits of Detroit, within which the reconstruction or repair of an3' wood building injured by fire was prohibited, unless by leave of the common council. The charter and ordinances of the city upon this subject, and the refusal of the common council to permit the repair of the building injured, were offered in evidence to show tlie extent of the plaintiff's loss, and rejected. This charter and these ordinances were in existence at the time of the last renewal of the policy. They were local laws affect- ing the property, and the risk which the defendant assumed, and of which the latter is presumed to have had knowledge, and to have estimated in renewing the policy. Whether, therefore, in case of damage or partial loss, the common council would permit a repair of the building, was a risk which the compan}- took upon itself, because the loss and injury to the plaintiff might depend in amount upon such action of the council, while such loss and injur}- would be absolutely and actually the consequence of the fire ; and because by the terms of the policj' the companj' reserved the right to repair or not at option, thus taking the risk of the power to repair, and of all loss which should accrue if repairing should be impossible from any cause. To hold that for an injury to the property, which results, without the fault of the insured, in a total loss to him, so far as value and use are concerned, the in- sured can only receive compensation to the extent of the appraised damage to the materials of which the building was constructed, and which were destroj'ed, would establish a narrow, illiberal, and illogical rule. The value of the building consisted in its adaptation to use, as well as in the materials of which it consisted ; and if it could not be restored to use after the fire, the loss was total, less the value of the materials rescued. In the very pertinent language of the plaintiff's counsel, " The contract was not simply an agreement to pay for so much material as might be damaged by fire — to pay such amount as the material might actually be worth. Fixed by the conditions of the policy as the most hazardous of all structures, and with a premium 750 BEADY V. NORTHWESTERN INS. CO. [CHAP. VII. adjusted accordingly, the insurer took the risk upon a ' three-storv wood warehouse,' actually in use as such. The risk was not taken upon a mere collection of beams, boards, and other materials, thrown together without purpose or special adaptation. It was upon a build- ing for trade, situated within a particular locality, within the jurisdic- tion of municipal authorities vested with legislative powers for special purposes, and subject to the exercise of those powers ; " and the par- ties must be regarded as contracting with a full knowledge of all the facts and the law, and the risk to which the property was thereby subjected. Of the power of the common council to pass the ordinances in ques- tion, we have no doubt. They contravene no provision of the Consti- tution as we read it, and thej' were made in the exercise of a police power necessarj^ to the safety of the city. A regulation of the use of property, or a prohibition of its repair when partially destroyed, can- not, to my mind, be regarded as a condemnation to public use. The court erred in excluding the testimony offered, and in the rule of damages given to the jury. The judgment is reversed, and a new trial ordered. Manning and Christianct, JJ., concurred. Campbell, J. As I do not concur in all the views expressed by the chief justice, and have arrived at a different conclusion upon the validity of the action of the Circuit Court, I proceed to state the reasons upon which I have formed my opinion. I concur in holding that if the by-law of the city of Detroit is valid and applicable, the plaintiff should recover on the basis of the claim which he sets up.'^ . . . I am also of opinion, with the chief justice, that the renewal of the policy in controversy was in law a new insurance, and subject to all legal regulations in force at the date of such renewal. The by-law in question, having been previously enacted, must, if valid, govern the case. I do not, however, regard it as valid. . . . I think there was no error in excluding the by-law from the case, and that the judgment should be affirmed. Judgment reversed, and neto trial ordered.^ 1 In repriuting this opinion, discussion has been omitted. — Ed. 2 Ace: Hamburg-Bremen F. Ins. Co. v. Garlington, 66 Tex. 103 (1886) ; Larkin V. Glens Palls Ins. Co., 80 Minn. 527 (1900). See Brown v. Royal Ins. Co., 1 E. & E. 853 (1859). — Ed. SECT. II.] WHITE V. EEPUBLIC FIKE INS. CO. 751 WHITE V. EEPUBLIC FIRE INS. CO. SAME V. RELIEF FIRE INS. CO. Supreme Court of Maine, 1869. 57 Me. 91.^ Assumpsit on two policies of insurance against loss or damage by fire. The stock and tools covered were in the third story of a building in Portland. The great fire of July 4, 1866, destroyed the eastern por- tion of the citj-, including the easterly side of the first street east of the building, and the southerly side of the street just opposite that prop- ert}-. A heavj- wind was blowing sparks and flames upon the building, and the roof was repeatedly on fire. All occupants removed their goods. The property left In the building was not damaged. Other facts appear in the opinion. The case was withdrawn from the jury and continued on report, the full court to render such judgment as the law and the evidence required. S. C. Strout and S. W. Gage, for the plaintiff. Davis & Drummond, for the defendants. DiCKERSON, J. Assumpsit on two policies of fire insurance, sub- mitted on report. On the night of the conflagration of July 4, 1866, at Portland, the plaintiff, apprehensive that the building known as Ware's block, on the northerlj' side of Federal Street, the third story of which was occupied hj him for the manufacture of brushes, would be destroyed by fire, removed his stock, consisting of bristles and manufactured brushes, and his tools, from the building. The block was not destroyed or in- jured by the fire ; and the plaintiff brings this action to recover the damages thus done to his stock and tools, and for the expense incurred in removing them. The important and interesting question is raised whether the plain- tiff's loss is covered by the policy. In general, the assured is entitled to indemnity, unless the loss happens from the qualities or defects of the subject insured, his own fault, or some peril for which he is answer- able. 1 Phillips on Ins. 639. It is argued bj' the learned counsel for the defendants that this is not a loss by fire ; that fire was not the proximate cause of the damage, and that therefore the loss is not covered by the policy. While it has been held that a loss by lightning without combustion is not a loss by fire, it has also been held that the loss of a building by being blown up by gunpowder, and demolished to stop a conflagration, is within the terms of a fire policy. Babcock v. Montgomery Co. Mut. Ins. Co., 6 Barb. 637; Keniston /«. Merrimack Co. Mut. Ins. Co., 14 N. H. 341; City Ins. Co. v. Corlies, 21 Wend. 367. Damage done to goods by having water thrown upon them in extin- 1 The statement has been rewritten. — Ed. 752 WHITE V. EEPDBLIC FIRE INS. CO. [CHAP. VII. guishing a fire, and a loss of goods by theft after they have been re- moved from a Are, are covered by the policy. Hillier v. Allegheny Ins. Co., 3 Penn. 470 ; Witherell v. Maine Ins. Co., 49 Me. 200. A bolt may be loosened, or a timber started in a storm, without caus- ing any loss until the subsequent action of the water or climate, or the greater strain of a different cargo has so augmented the injury as to cause the loss of the vessel ; and yet such a loss is a loss by the storm. Stephenson v. Piscataquis Ins. Co., 54 Me. 76. So if, after a storm has subsided, the boat is lost b}* reason of the disabled condition of the ship, in consequence of damage done during the storm, it is a loss by the storm. Potter v. Ocean Ins. Co., 3 Sum. 27. In these and like cases the direct proximate cause of the damage or loss is not to be found in the fire, or the storm, but in the water, the removal of the goods, the action of the climate, or strain of the cargo, or the disabled state of the ship. If courts were required to hold that no loss is caused by a policj' of insurance unless the peril insured against is directly operating upon the subject insured at the time of the ultimate catastrophe, they would deny the right to recover in many cases where it has long been recognized bj' courts of the highest au- thoritj". The legal maxim, causa proxima spectatur, is by no means of unusual application in its strict technical sense. If a loss from demolishing a building with gunpowder to stay the progress of a conflagration comes within the terms of a fire policy, ought not the damages and expense of removing such building to be recoverable if the object in view could be as speedily and successfully accomplished ? In such cases is not the fire, the impending conflagration, the exist- ing operating cause alike of the destruction of the building or of its removal from danger? Is the assured entitled to recover damages for one of the effects of the same procuring cause, and not for the other? If by reason of the immobilitj' of real estate, and the necessity of speedy action on such occasions, it becomes necessary to demolish a building, at the cost of the underwriters, to prevent it and other property from being destroyed by fire, does not the analogy of the law require that they should also be chargeable for the damage and expense of saving personal property from destruction by removing it to a place of safety ? Is not the producing cause of both results the same? So if the underwriters are liable for damage done to goods by having water thrown upon the building in which they are stored, to extinguish the fire, ought they not also to be liable for damage done to goods, in time of imminent peril, by throwing water upon the building containing them to prevent it and them from destruction, though actual ignition has not taken place? In both cases, technically speaking, the water, and not the fire, is the direct proximate cause of the damage. It is neither the policy of the law nor public policy to make it for the inter- est of the assured, in case of fire, to postpone the use of the means for SECT. II.] WHITE V. KEPUBLIC FIRE INS. CO. 753 extinguishing the fire, and the removal of the goods, until the building containing them is actually on fire. la many, if not most cases, such dela}' would be tantamount to consigning both goods and building to destruction. "Would the interests of insurance companies or the public morals be subserved by the establishment of such a policy ? The question presented is one of considerable difficulty, and one upon which the authorities are at variance. While the Supreme Court of Illinois, iu a case like the one at bar, have held that the underwriters are liable for the damage to the goods and the expense of removing them, the court in Pennsylvania have denied them liability. Case v. Hartford Ins. Co., 13 111. 676 ; Hillier v. Allegheny Ins. Co., 3 Penn. 470. We think the liability of the underwriters, in these and similar cases, depends very much upon the imminence of the peril, and the reasonableness of the means used to effect the removal. The necessity for removal is analogous to the necessity that justifies the sale of a dis- abled vessel by the water. It is not to be determined by the result alone, but by all the circumstances existing at the time of the fire. The necessity for removal need not be actual, that is, the building may not have been actually burned, since this may have been prevented by a change in the direction or force of the wind, the more skilful or efl9- cient management of the fire engines, or the sudden happening of a shower, or a like unforeseen event. But the imminence of the peril must be apparent, and such as would prompt a prudent uninsured per- son to remove the goods ; it must be such as to inspire a conviction that to refrain from removing the goods would be the violation of a manifest moral duty ; the damage and expense of removal, too, must be such as might reasonablj' be incurred under the circumstances of the occasion. Angel on Fire Ins. § 117. When such a case exists, we think it the better opinion to hold that the underwriters are chargeable for the damage and expense of remov- ing the goods, as this result seems most in accordance with reason, the analogies of the law, and public policy. Such, also, is the conclusion of Mr. Phillips, the learned commentator on the law of insurance. " It seems," he says, "to be the better doctrine, and the one most closely analogous to the jurisprudence on the subject of insurance generally, that the underwriters are liable for such damage and expense reason- abl3' and expediently incurred, as being directly occasioned by the peril insured against." 1 Phillips' Ins. 645-6. The doctrine we maintain on this subject is applicable to a large class of cases recognized by the law of insurance, and is found in that well-established principle of the law of insurance, that insurance against, or an exception of a peril, besides the consequences immediately follow- ing it, may include also a loss or expense arising on account of it, al- though what is insured against or excepted does not actually occur, provided the peril insured against, or excepted, is the eflScient acting or imminent cause or occasion of the loss or expense. 1 Phillips' Ins. § 1131. 48 754 LYNN GAS, ETC. CO. V. MERIDEN FIRE INS. CO. [CHAP. VII. The proximity of the fire to the building occupied by the plaintiff, its rapid progress, terrible intensity, and fearful ravages, leave no rea- son to doubt but the goods were removed through a reasonable appre- hension that they would be destroyed bj- fire if suffered to remain. Their situation, too, in the third story, requiring earlier attention, ren- dered their condition more hazardous than if they had been on the first floor. A prudent uninsured person could scarcely have omitted the precaution taken by the plaintiff. In removing the goods the plaintiff was bound to exercise that rea- sonable degree of care which was suited to the circumstances of the occasion ; and, when we consider the situation of tlie goods, the immi- nence of the peril, and the terror and consternation naturally excited hy the progress and fury of the conflagration, we are not prepared to say that he did not exercise such care. Under the rule for apportioning the damages between the two de- fendant companies, agreed upon by the parties, if the court should find that the plaintiff is entitled to recover, the plaintiff is to have judgment against the Relief Insurance Company for the sum of one thousand two hundred and twenty-nine dollars and seventy-six cents, and interest from the date of the writ ; and also against the Republic Insurance Company for six hundred and sevcntj'-three dollars and sixtj'-eight cents, and interest from date of the writ.^ Appleton, C. J., Walton, Barrows, and Taplet, JJ., concurred. I Cutting and Danforth, JJ., did not concur. LYNN GAS AND ELECTRIC CO. v. MERIDEN FIRE INS. CO. AND Others. Supreme Judicial Court of Massachusetts, 1893. 158 Mass. 570.^ Actions were brought against several companies upon fire insurance policies of the Massachusetts standard form. The cases were tried to- gether. The policies covered a building and contents used in the busi- ness of furnishing electricity for electric lighting. While the policies were in force, a fire occurred in the wire tower, which was that part of the building from which wires for electric lighting were carried. The tower and its contents were but slightly injured, and the fire was soon extinguished. Simultaneously, a fi3'-wheel and pulleys in a remote part of the building were disrupted, and thus this remote part of the building and the machinery contained therein suffered serious damage. The plaintiff's theory as to the connection of this damage with the fire was 1 See Holtzman v. rranklin Ins. Co., 4 Cranch C. 0. 295 (1833) ; Case v. Hartford r. Ins. Co., 13 HI. 676 (1852) ; Talamon v. Home Ins. Co., 16 La. Ann. 426 (1862). — Ed. 2 The statement has been rewritten. — Ed. SECT. n.J LYNN GAS, ETC. CO. V. MEEIDEN FIEE INS. CO. 755 that the fire caused a short circuit, as is more fully stated in the opinion. The defendants' theor}' was that the slipping of a belt caused both the fire and the disruption of the machinery, and that a defective pulley contributed to the disaster. The defendants asked instructions : (1) That they were not liable for damage b}' disruption of machiuer3' unless fire was the immediate oper- ating cause of such disruption ; (2) that if the fire in the tower was inadequate to' produce the disruption without the intervention of some nearer cause, the fire was not the proximate cause of such disruption, and the defendants were not liable therefor ; (3) that if the disruption of macliinery and wreck of building' would not have occurred but for some defect in the machinerj', or some failure of the machinery to per- form its office, such defect or failure not being caused b3- the fire, such defect or failure was the immediate cause of damage, and the defendants were not liable therefor ; and (4) that if the damage bj- disruption was not occasioned by the direct action of fire, but was a consequence of defective maehinerj-, or of neglect of the engine by a servant, such de- fect or neglect was the proximate cause of such damage, and the defends ants were not liable therefor. The presiding justice, Hammond, J., refused to give these instruc- tions, but stated the various theories of the facts and said : — " I instruct j-ou as the law of this case, that if you are satisfied that by action of the fire this short-circuiting was effected in the tower, and that the short-circuiting in the tower was the cause of the crash below, the loss is a loss or damage by fire within the meaning of the policj', and that it is not necessary that you should be satisfied that anj'thing below was burning. If j'ou are satisfied that the short-circuiting was caused by the fire in the tower, and would not have existed but for that fire, whether it be caused by flame, by the interposition of partially consumed particles of wood falling from the burning substance, by the heated air, or by the heating of the lightning arresters, that is, if the short circuit occurred and was caused by the action of the fire in any one of those ways and would not have occurred but-for the fire, and that the short- circuiting in the tower was the cause of the crash below, then the crash below is to be attributed to fire within the meaning of the policy, and the damage is a damage by fire within the meaning of the policy, and that this is so although j'ou may be satisfied that the pulleys were de- fective, and if not so would not have burst, but would have withstood the strain caused by the shortrcircuiting. And I rule, as matter of law, that if the damage was caused in that way it was a loss or damage bj' fire. ... It is not necessary that you should be satisfied the defendants' theor3- is correct in order to find for the defendants, but you must be satisfied that the plaintiff's theory is correct in order to find for the plaintiff, and if you are in doubt as to which way the evidence prepon- derates on this claim of the plaintiff your verdict should be for the defendants. You are not here to ascertain the cause of that fire except to this extent, namely, whether the plaintiff's view of the cause is correct or not." 756 LYNN GAS, ETC. CO. V. MERIDJEN FIEE INS. CO. [CHAP. VII. The defendants excepted to the refusal to give the four instructions requested, and excepted to such part of the instructions given as were inconsistent with those requests. The jury found for the plaintiff for the full damage. S. Lincoln & J. D. Bryant, for the defendants. W. H. Niles, for the plaintiff. Knowlton, J. The only exception relied on by the defendants in these cases is that relating to the claim for damage to the machinery used in generating electricity and to the building from a disruption of the machinery. This machinery was in a part of the building remote from the fire, and none of it was burned. In his charge to the jury the judge stated the theory of the plaintiff as follows : " The plaintiff says the position of the lightning arresters in the vicinity of the fire was such that by reason of the fire in the tower a connection was made between tbem called a short circuit ; that the short circuit resulted in keeping back or in bringing into the dynamo below an increase of electric cur- rent that made it more difficult for this armature to revolve than before, and caused a higher power to be exerted upon it, or at least caused greater resistance to the machinery ; that this resistance was trausmiited to the pulley by which this armature was run, through the belt ; that that shock destroj-ed that pulley ; that b3' the destruction of that pulley the main shaft was disturbed and the succeeding pullej's up to the jack- pulley were ruptured ; that by reason of pieces flying from the jack- pulley, or from some other cause, the Aj'-wheel of the engine was destroyed, the governor broken, and everything crushed; — in a word, that the short circuit in the tower by reason of the fire caused an extra strain upon the belt through the action of electricitj-, and that caused the damage." The plaintiff contended that the short circuit was pro- duced by the fire, either bj- means of heat on the horns of the lightning arresters, or by a flame acting as a conductor between the two horns, or in some other way. The jury found that the plaintiff's theory- of the cause of the damage was correct, and the question is whether the judge was right in ruling that an injury to the machinery caused in this way was a "loss or damage by fire " within the meaning of the policy. The subject-matter of the insurance was the building, machinerj', dynamos, and other electrical fixtures, besides tools, furniture, and supplies used in the business of furnishing electricity for electric light- ing. The defendants, when thej- made their contracts, understood that the building contained a large quantity of electrical machinery, and that electricity would be transmitted from the dynamos, and would be a powerful force in and about the building. They must be presumed to have contemplated such effects as fire might naturally produce in con- nection with machinery used in generating and transmitting strong currents of electricity. The subject involves a consideration of the causes to which an effect should be ascribed when several conditions, agencies, or authors con- tribute to produce an effect. The defendants contend that the appli- SECT. II. J LYNN GAS, ETC. CO. V. MEEIDEN FIRS INS. CO. 757 cation of the principle wliich is expressed by the maxim, In Jure non remota causa sed proxima spectatur, relieves them from liabilitj' in these cases. It has often been necessary to determine, in trials in court, what is to be deemed the responsible cause which furnishes a foundation for a claim when several agencies and conditions have a share in causing damage, and the best rule that can be formulated is often difficult of application. When it is said that the cause to be sought is the direct and proximate cause, it is not meant that the cause or agencj' which is nearest in time or place to the result is necessarily to be chosen. Free- man V. Mercantile Accident Association, 156 Mass. 351. The active efficient cause that sets in motion a train of events which brings about a result without the intervention of anj- force started and worljing actively from a new and independent source is the direct and proximate cause referred to in the cases. McDonald v. Snelling, 14 Allen, 290 ; Perley V. Eastern Railroad, 98 Mass. 414, 419 ; Gibney v. State, 137 N. Y. 529. In Milwaukee & St. Paul Railway v. Kellogg, 94 U. S. 469, 474, Mr. Justice Strong, who also wrote the opinions in Insurance Co. v. Trans- portation Co., 12 TVall. 194, and in "Western Massachusetts Ins. Co. ;•. Transportation Co., 12 Wall. 201, which are much relied on bj' the de- fendants, used the following language in the opinion of the court : " The primarj- cause may be the proximate cause of a disaster, though it ma}^ operate through successive instruments, as an article at the end of a chain ma^- be moved by a force applied to the other end, that force being the proximate cause of the movement, or as in the oft cited case of the squib thrown in the market-place. 2 Bl. Rep. 892. The question always is, Was there an unbroken connection between the wrongful act and the injury, a continuous operation? Did the facts constitute a continuous succession of events, so linked together as to make a natural whole, or was there some new and independent cause intervening be- tween the wrong and the injury?" If this were an action against one who negligently set the fire in the tower, and thus caused the injury to the machinerj-, it is clear, on the theory of the plaintiff, that the negligent act of setting the fire would be deemed the active efficient cause of the disruption of the machiner3- and the consequent injury to the building. It remains to inquire whether there is a different rule in an action on a pohcy of fire insurance. Under our statute creating a liability for damages received from de- fects in highways, it is held that the general rule is so far modified that there can be no recovery unless the defect is the sole cause of the acci- dent ; but this doctrine rests on the construction of the statute. Tis- dale V. Norton, 8 Met. 388 ; Marble v. Worcester, 4 Gray, 395 ; Jenks p. Wilbraham, 11 Gray, 142; McDonald v. Snelling, 14 Allen, 290; Babson v. Rockport, 101 Mass. 93. In suits brought on policies of fire insurance, it is held that the inten- tion of the defendants must have been to insure against losses where the cause insured against was a means or agencj- in causing the loss, even though it was entirely due to some other active, efllcient cause 758 LYNN GAS, ETC. CO. V. MERIDEN FIRE INS. CO. [CHAP. VII. which made use of it, or set it in motion, if the original efficient cause Tvas not itself made a subject of separate insurance in the contract be- tween the parties. For instance, where the negligent act of the insured, or of anybody else, causes a fire, and so causes damage, although the negligent act is the direct, proximate cause of the damage, through the fire, which was the passive agencj', the insurer is held liable for a loss caused by the fire. Johnson v. Berkshire Ins. Co., 4 Allen, 388 ; Walker V. Maitland, 5 B. & Aid. 171 ; Waters v. Merchants' Louisville Ins. Co., 11 Pet. 213 ; Peters v. Warren Ins. Co., 14 Pet. 99 ; General Ins. Co. V. Sherwood, 14 How. 351 ; Insurance Co. v. Tweed, 7 Wall. 44. This is the only particular in which the rule in regard to remote and proxi- mate causes is applied differently in actions on fire insurance policies from the application of it in other actions. A failure sometimes to rec- ognize this rule as standing on independent grounds, and established to carry out the intention of the parties to contracts of insurance, has led to confusion of statement in some of the cases. The diflSeultj' in applying the general rule in complicated cases has made the interpre- tation of some of the decisions doubtful ; but on principle, and by the weight of authority in many well-considered cases, we think it clear tliat, apart from the single exception above stated, the question, What is a cause which creates a liability ? is to be determined in the same waj- in actions on policies of fire insurance as in other actions. Scrip- ture V. Lowell Ins. Co., 10 Cush. 356 ; New York & Boston Despatch Express Co. v. Traders' & Mechanics' Ins. Co., 132 Mass. 377 ; St. John V. American Ins. Co., 1 Kernan, 516 ; General Ins. Co. v. Sherwood, 14 How. 351 ; Insurance Co. v. Tweed, 7 Wall. 44 ; Waters v. Merchants' Louisville Ins. Co., 11 Pet. 213, 225; Livie v. Janson, 12 East, 648; lonides v. Universal Ins. Co., 14 C. B. (n. s.) 259 ; Transatlantic Ins. Co. V. Dorsey, 56 Md. 70 ; United Ins. Co. v. Foote, 22 Ohio St. 340. In the present case, the electricity was one of the forces of nature, — a passive agent working under natural laws, — whose existence was known when the insurance policies were issued. Upon the theory adopted by the jury, the fire worked through agencies in the building, the atmosphere, the metallic machiner}-, electricitj'^, and other things ; and working precisely as the defendants would have expected it to work if thej' had thoi'oughly understood the situation and the laws applicable to the exisiting conditions, it put a great strain on the machinerj' and did great damage. No new cause acting from an independent source intervened. The fire was the direct and proximate cause of the damage according to the meaning of the words " direct and proximate cause," as interpreted by the best authorities. The instructions to the jury were full, clear, and correct, and the defendants' requests for instruc- tions were rightly refused. Exceptions overruled.^ ' On proximate cause in fire cases, see also: — Welles V. Boston Ins. Co., 6 Pick. 182 (1828) ; St. John V. American Mnt. F. & M. Ins. Co., 11 N. Y. 5U (1854). CabaUero v. Home Ins. Co., 15 La. Ann. 217 (1860) ; SECT. II.] LYNN GAS, ETC. CO. V. MEKIDEN FIRE INS. CO. 759 Everett v. London Assurance, 19 C. B. n. s. 126 (1865) ; Marsden v. City and County Assur. Co., L. E. 1 C. P. 232 (1866) ; Insurance Co. v. Tweed, 7 Wall. 44 (1868); Insurance Co. v. Transportation Co., 12 Wall. 194 (1870) ; German Ins. Co. v. Sherlock, 2.5 Ohio St. 33 (1874) ; Insurance Co. v. Boon, 95 U. S. 117 (1877) ; New York and Boston Despatch Express Co. v. Traders' and Mechanics' Ins. Co., 132 Mass. 377 (1882); Ermentrout v. Girard F. & M. Ins. Co., 63 Minn. 305 (1895) ; German F. Ins. Co. v. Roost, 55 Ohio St. 581 (1897). — Ed. 760 AMICABLE SOCIETY V. BOLLAND. [CHAP. VII. SECTION III. Ijife Insurance. {A) Death. AMICABLE SOCIETY, Appellants, v. BOLLAND and Others, Respondents. House of Lords, 1830. 4 Bligh, n. s. 194.^ In Hilary Term, 1825, the respondents filed a bill in the Court of Chancery against J. C. Disney and wife, Sir E. Home, J. Birch, and the appellants, stating, among other things, that in 1815 Henry Faunt- leroy effected insurance upon his life with the appellants in a policy payable to his executors, administrators, or assigns, that Fauntleroy paid the premiums from 1815 until his death, that in 1819 Fauntleroy made a gratuitous assignment of the policy to Sir E. Home and J. Birch, in trust for the wife of J. C. Disney, that in 1824 a commission of bankrupt issued against Fauntleroy, under which his estate and effects became vested in the respondents as his assignees under such commission, and that later in 1824 Fauntleroy died. It was prayed, among other things, that the assignment to Sir E. Home and J. Birch be set aside, that the respondents be declared en- titled to the policy and the proceeds, that the appellants be decreed to pay what was so due to the respondents, and that J. C. Disney and wife. Sir E. Home, and J. Birch be decreed, if necessary, to assign the policy to the respondents. The appellants' answer was to the effect that Fauntleroy was exe- cuted for a felony. The respondents having settled with the claimants under the assign- ment of 1819 and having obtained a reassignment, the cause came on to be heard before the Master of the EoUs, Sir John Leach, and it was decreed that the appellants should pay to the respondents the pro- ceeds of the policy. The appeal was against this decree. For the appellants. Sir C. Wetherell and Mr. Rose. For the respondents, Sir E. B. Sugden, S. G., and Mr. Koe. The Lord Chancellor.^ The circumstances of the case are shortly these : In January, 1815, Henry Fauntleroy insured his life with the Amicable Insurance Society. In the month of May in the same year he committed a forgery on the Bank of England. He continued to pay the premiums upon this insurance for a considerable period of time. 1 8. c. 2 Dow & C. 1. The statement has been rewritten. Before the Master of the Rolls the case is reported su6 nom. BoUand «. Disney, 3 Ross. 351 (1827). — Ed. ''■ Lord Lyndhcesi. — Ed. SECT. III.] AMICABLE SOCIETY V. HOLLAND. 761 In the year 1824 he was apprehended, and on the 29th of October in that j-ear he was declared a bankrupt, and an assignment of his effects was made to the respondents. On the following daj', the 30th of October, he was tried for this forger}- ; he was found guilty, sentenced to death, and in the month of November following was executed. The question under these circumstances is this : whether the assign- ees can recover against the insurance company the amount of this insurance ; that is to say, whether a partj", effecting with an insurance company an insurance upon his life, and afterwards committing a capital felony, being tried, convicted, and final!}- executed, — whether, under such circumstances, the parties representing him, and claiming under him, can recover the sum insured in the policy so effected. I attended to the argument at the bar, in conjunction with the noble lord ^ now present, and we have both come to the conclusion that the assignees cannot maintain this suit. It appears to me that this resolves itself into a very plain and simple consideration. Suppose that in the policj- itself this risk had been in- sured against : that is, that the party insuring had agreed to pay a sum of money year by j-ear, upon condition that in the event of his committing a capital felon}-, and being tried, convicted, and executed for that felony, his assignees shall receive a certain sum of money — is it possible that such a contract could be sustained? Is it not void upon the plainest principles of public policj- ? Would not such a con- tract (if available) take away one of those restraints operating on the minds of men against the commission of crimes, namely, the interest we have in the welfare and prosperity of our connections ? Now, if a policy of that description, with such a form of condition inserted in it in express terms, cannot, on grounds of public policy, be sustained, how is it to be contended that, in a policj- expressed in snch terms as the present, and after the events which have happened, — that we can sustain such a claim? Can we, in. considering this polic}-, give to it the effect of that insertion, which if expressed in terms would have ren- dered the policy, as far as that condition went, at least, altogether void ? Upon this short and plain ground, therefore, independent!}' of the more complicated arguments referred to by the counsel at the bar, in the discussion of this case, I think that this policy cannot be sustained, and that the respondents are not entitled to recover. I submit, there- fore, that the judgment of the court below ought, under these circum^ stances, to be reversed. Judgment reversed.^ 1 Lord Eadnok. — Rep. 2 Acc. . Burt V. Union Central L. Ins. Co., 105 Fed. R. 419 (C. C. A., Fifth Circuit, 1900), where a person procured insurance on his own life, later made an assignment of the policy, then was convicted, after a plea of insanity, of a murder committed subse- quently to tlie assignment, and finally was executed ; and it was held that a demurrer lay to the petition in which the assignees, after setting forth the conviction and execution, alleged that the insured person did not commit the murder and in fact was insane. — Ed. 762 BOEEADAILE V. HUNTER. [CHAP. VII. BOREADAILE, Executor, v. HUNTER. Common Pleas, 1843. 5 M. & G. 639.^ This was an action of covenant upon a policy procured by W. Borra- daile upon his own life, payable to his executors. The policy provided that ' ' in case the assured shall die upon the seas, ... or go beyond the limits of Europe, or enter into . . . naval or militarj' service, . . . or shall die by his own hands, or hy the hands of justice, or in conse- quence of a duel, or if the age of the said assured does now exceed thirt3'-six years, . . . this policj' shall be void." The pleadings raised the issue whether W. Borradaile died by his own hands. It was proved that he threw himself into the Thames and was drowned. Evidence was given to show that he was insane. The jury returned a verdict that " Mr. Borradaile voluntarily threw himself from the bridge with the intention of destroj'ing himself; but, at the time of committing the act, he was not capable of judging between right and wrong." The verdict was entered for the defendant, with liberty for the plaintiff to move that it be entered for him for the damages that had been as- sessed bj- the jury. A rule nisi to set aside the verdict was obtained accordingly. Channell, Serjt. (with whom was W. H. Watson), showed cause. Sir T. Wilde, Serjt., and R. V. Richards, in support of the rule. Cur. adv. vult. The learned judges, not being unanimous, now delivered their judg- ments seriatim, as follows : — Maule, J. In the judgment I am about to deliver I have not stated the facts, not having adverted to the circumstance of my opinion being delivered the first ; they will, however, no doubt be fully stated by the learned judge before whom the cause was tried. I have had much doubt in this case, but the conclusion at which I have at last arrived is, that the verdict for the defendant was right. The question is, what is the meaning, in the policy on the testator's life, of the words " in case the assured shall die by his own hands"? In construing these words, it is proper to consider, first, what is their meaning in the largest sense, which, according to the common use of language, belongs to them ; and, if it should appear that that sense is larger than the sense in which they must be understood in the instru- ment in question, secondly, what is the object for which they are used. They ought not to be extended beyond their ordinary sense, in order to comprehend a case within their object, for that would be to give » s. c. 5 Scott N. R. 418. The statement has been rewritten. — Ed. SECT. III.] BOERADAILE V. HUNTER. 76b effect to an intention not expressed ; nor can thej- be so restricted as to exclude a case both within their object and within their ordinary sense, without violating the fundamental rule which requires that effect should be given to such intention of the parties as they have used lit words to express. The words in question in their largest ordinary sense comprehend all cases of self-destruction, and certainlj- include the case of the present testator ; but, as it is admitted that in their largest sense they compre- hend many cases not within their meaning, as used on the present oc- casion, it is to be considered whether the case of the testator falls within the object for which they are used in this policy. A policy by which the sum insured is payable on the death of the assured in all events, gives him a pecuniary interest that he should die immediately, rather than at a future time, to the extent of the excess of the value of a present paj-ment over a deferred one, and offers therefore a tempta- tion to self-destruction to this extent. To protect the insurers against the increase of risk arising out of this temptation is the object for which the condition in question is inserted. It ought, therefore, to be so con- strued as to include those cases of self-destruction in which, but for the condition, the act might have been committed in order to accelerate the claim on the policy, and to exclude those in which the circumstances, supposing the policj- to have been unconditional, would show that the act could not have been committed with a view to pecuniary interest. Tljis principle of construction requires and accounts for the exclusion from the operation of the condition of those cases falling within the general sense of its words, to which it is admitted not to appl}', — such as those of accident and delirium. To apply it to the present case : it appears by the finding of the jury, that the testator volunta- rily threw himself into the water, intending to destroy his life, but that at the time he did so he was not capable of judging between right and wrong ; and, as a man who drowns himself voluntarily may do it to found a claim on a policy, though he may not think it wrong to do so, or though his mind may be so diseased that he does not know right from wrong, — which, as I understand the finding of the jury, was the case with the testator, — it seems to me that the object of the condition would not be effected unless it comprehended such a case of self-destruction. For these reasons, I think the defendant ought to retain the verdict, though I cannot but distrust my opinion when it differs from the judg- ment of the Lord Chief Justice. It is also impossible not to feel that the condition in question is, in respect of the amount of forfeiture, a hard one, as it goes beyond what is necessary to remove the temptation to suicide arising out of the claim acquired by the death of the party. That object would be effected by reducing the claim in case of suicide, to the amount for which the policy could have been sold immediately before the death of the assured, as completely as by a forfeiture of the whole. 764 BORRADAILE V. HCNTEK. [CHAP. VII. Erskine, J.^ . . . The language adopted by the society is certainly not well selected ; because, if taken literally, this case, and all other cases in which the work of self-destruction might be eflfected otherwise than by the hands of the assured, would be excluded from the operation of the proviso ; while all cases of unintentional self-destruction by the hands of the assured would be included in it. But it was ver3' properly conceded by the counsel for the plaintiff, that the clause must receive a reasonable construction, according to the plain and obvious intention of the parties, as collected from the whole of the instrument, and, therefore, that the proviso might be construed as if the words had been, " if the assured shall die by bis own act." . . . It has been argued, on the part of the plaintiff, that, as the very ob- ject of a life insurance is to secure a provision for a surviving family against the fatal consequences of decease in the assured, if the act oc- casioning the death can be traced as the result of a diseased mind, the case comes within the main scope and object of the contract of insur- ance. This argument would have been unanswerable if the policy had been wholly silent on the subject, as in the case of The Amicable Life Insurance Company v. Bolland, Selw. N. P. 10th ed. 1033, 4 Bligh, N. s. 194, 2 Dow & CI. 1 ; or if the proviso had been couched in terms pointed only to acts resulting from a criminal intention ; bnt the very object of a proviso like the present is to take out of the operation of the general terms of the policy, death resulting from causes which would otherwise fall within the general scope of the contract, although, ex abundanti cauteld, it also includes cases which tlie law itself would except, as those of criminal suicide, and death by sentence of the law, or duelling. . . . It is well known that the conduct of insane patients is, in some de- gree, under the control of their hopes and fears, and that especially their affection for others often exercises a swa^' over their minds where fear of death, or of personal suffering, might have no influence ; and insurers might well desire not to part with this restraint upon the mind and conduct of the assured, nor to release from all pecuniary interest in the continuance of the life of the assured those on whose watchful- ness its preservation might depend; and they might, further, most reasonably desire to exclude from all questions between themselves and the representatives of the assured the topic of criminality so likely to excite the compassionate prejudices of a jury, which were most pow- erfully appealed to on the trial of this cause. . . . And, when I find the terms "shall commit suicide," that have been popularly understood and judicially considered as importing a criminal act of self-destruction, exchanged for terms not hitherto so construed, it may, I think, be fairly inferred that the terms adopted were intended to embrace all cases of intentional self-destruction, unless it can be 1 The concurring opinions of Erskine and Coltman, JJ., and the dissenting opinion of Tindal, C. J., have not been reprinted in full. — Ed. SECT. III.] BOKRADAILE V. HUNTER. 765 collected from the immediate context that the parties used them in a more limited sense. . . . Other conditions precede and follow this clause which involve no criminalitj- of intention, to some of which conditions no such intention could by anj- fair inference be possibly attached, and to others (which are also open to the inference arising from the context) the courts of law have decided that no such inference does attach. . . . CoLTMAN, J. . . . But it is urged, that, in this case, the words of the exception are not to be construed in a literal sense ; for, many cases may be put which fall within the literal terms of the exception, which yet cannot reasonably* be supposed to fall within the intention of the contracting parties ; as, if in a state of delirium a man should remove bandages from a vein which had been opened, without being aware of the consequences, or should take poison by mistake. It maj' be true that there ma}- be certain acts done by the hands of a party which oc- casion his death, where, such acts not having been done intentionally by the party, he might not be considered as having died hy his own hands within the meaning of the policy. In such cases, a limitation not expressed might, perhaps, though not without some violence to the words, be introduced in construing the words of the exception, where such a limitation is necessary to give ei^ect to what is assumed to be the clear intention of the contracting parties ; yet it will not follow that a further limitation ought to be introduced in a case where there is no sufficient ground for inferring that such a construction is in accordance with the intention of the contracting parties. . . . It was further urged on behalf of the plaintiff, that, at any rate, to bring a case within the meaning of the exception there must be an intention in the party to die by his own hands ; and it was urged that an insane person could not be considered as having any intention ; that by an intention was meant a controllable intention ; that it was like the case of a man who should find himself suddenly on the brink of a precipice and irresistiblj' impelled to throw himself down it. But the fact in this case does not bear out the argument ; there is no ground for saying that Mr. Borradaile acted under any such uncontrollable impulse ; on the contrar}', the jury have found that he did the act vol- untaril}', which implies that he had power to do the act or to abstain from it. . . . TiNDAL, C. J. ... As the result of the finding of the jury is, that the assured killed himself intentionallj-, but not feloniously, the short question before us becomes this, whether the defendant can make out (for it lies on him to establish the affirmative) that the death of the assured under those circumstances falls within the meaning of the words in the proviso "dying by his own hands." And it appears to me that he cannot ; but that, looking at the words themselves, and tlie context and position in which they are found, a felonious killing of himself, and no other, was intended to be excepted from the polic}'. . . . The ex- pression — " dying by his own hand " — is, in fact, no more than the 766 LIFE INSUEANCE CO. V. TERRY. [CHAP. VII. translation into English of the word of Latin origin — " suicide ; " but, if the exception had run in the terms " shall die bj- suicide, or by the hands of justice, or in consequence of a duel," surely no doubt could have arisen that a felonious suicide was intended thereby ; and, if so, ought a different construction to prevail because the English term is found in the polic}' instead of the Latin ? . . . I therefore found the opinion at which I have arrived in this case upon the consideration that the insurers intended hj- the proviso to confine their exemption from liability to the case of felonious suicide only ; that, if the}- intended the exception to extend both to the case of felonious self-destruction and self-destruction not felonious, they ought so to have expressed it clearly in the policy- ; and that, at all events, if they have left it doubtful on tbe face of the policy whether it is so confined or not, that doubt ought, in my opinion, to be deter- mined against them ; for it is incumbent on them to bring themselves within the exception, and, if their meaning remains in doubt, the}- have failed so to do. . . . Hule discharged.^ LIFE INSURANCE COMPANY v. TERRY. Supreme Court of the United States, 1872. 15 Wall. 580.'' Error to the Circuit Court for the District of Kansas. Mary Terry brought an action in the court below against the Mutual Life Insurance Company of New York, to recover the sum of $2,000, claimed bj- her as due upon a policy of insurance on the life of her husband George Terry, made and issued to her as his wife. The policy contained a condition, of which a portion was in these words : — " If the said person, whose life is hereby insured, . . . shall die by his own hand, . . . this policy shall be null and void." Within the term of the policy, George Teriy died from the effects of poison taken by him. Evidence was given tending to show that at the time he took the poison he was insane. Evidence was also given tending to show that at that time he was sane, and capable of knowing tbe consequences of the act he was about to commit. 1 Ace. Clift V. Schwabe, 3 C. B. 437 (Ex. Ch. 1846), ("commit suicide or die by duelling or the hands of justice ") ; Dean v. American Mut. L. Ins. Co., 4 AUen, 96 (1862), (" die by his own hand, or In consequence of a duel, or by the hands of justice, or in the known violation of . . . law ") ; Cooper v. Massachusetts Mut. L. Ins. Co., 102 Mass. 227 (1869), ("die by suicide") ; Van Zandt v. Mutual Benefit L. Ins. Co.', 55 N. Y. 169 (1873), ("die by his own hands"). — Ed. 2 8. c. in the Circuit Court, sub. nom. Terry v. Life Ins. Co., 1 Dillon, 403 (1871). — Ed. SECT. III.J LIFE INSURANCE CO. V. TEERT. 767 Thereupon the counsel for the defendant requested the court to in- struct the jury thus : — " First. If the jury believe from the evidence in the case, that the said George Terry destroyed his own life ; and that, at the time of self-destruction, he had sufficient capacity to understand the nature of the act which he was about to commit, and the consequences which would result from it, then, and in that case, the plaintiff cannot recover on the policy declared on in this case. " Second. That if the jury believe from the evidence that the self- destruction of the said George Terrj- was intended by him, he having sufficient capacity at the time to understand the nature of the act which be was about to commit, and the consequences which would result from it, then, and in that case, it is wholU' immaterial in the present case that he was impelled thereto by insanity, which impaired his sense of moral responsibility, and rendered him, to a certain extent, irrespon- sible for his action." The court refused to give either of these instructions, and charged as follows : — "It being agreed that the deceased destroyed his life bj- taking poison, it is claimed bj" defendant that he ' died \>y his own hand,' within the meaning of the policy, and that they are, therefore, not liable. ' ' This is so far true that it devolves on the plaintiff to prove such insanity on the part of the decedent, existing at the time he took the poison, as will relieve the act of taking his own life from the effect which, by the general terms used in the policy', self-destruction was to have, namelj', to avoid the policj-. "It is not every kind or degree of insanitj' which will so far excuse the party taking his own life as to make the company insuring liable. "To do this, the act of self-destruction must have been the conse- quence of the insanitj-, and the mind of the decedent must have been so far deranged as to have made him incapable of using a rational judgment in regard to the act which he was committing. " If he was impelled to the act by an insane impulse which the rea- son that was left him did not enable him to resist, or if his reasoning powers were so far overthrown by his mental condition that he could not exercise his reasoning faculties on the act he was about to do, the company is liable. On the other hand, there is no presumption of law, prima facie or otherwise, that self-destruction arises from insanit}-, and if j'ou believe from the evidence that the decedent, although ex- cited, or angry, or distressed in mind, formed the determination to take his own life, because, in the exercise of his usual reasoning facul- ties, he preferred death to life, then the company is not liable, because he died by his own hand within the meaning of the policy." The cause came to this court on exceptions to the refusal of the court to give the instructions requested by the insurance company, and to the charge which was actually- given. 768 LIFE INSURANCE CO. V. TEEKY. [CHAP. VIL Messrs. JT. E. and J. T. Davies, for the plaintiff in error. Mr. W. W. Nevison, contra. Mr. Justice Hunt delivered tlie opinion of tiie court. The request for instructions made by the counsel of the insurance company proceeds upon the theory that if the deceased had sufficient mental capacity to understand the nature and consequences of his act, that is, that he was about to take poison, and that his death would be the result, he was responsible for his conduct, and the defendant is not liable ; and the fact that his sense of moral responsibility was im- paired by insanity does not affect the case. The charge proceeds upon the theorj' that a higher degree of mental and moral power must exist ; that although the deceased had the capa- city to know that he was about to take poison and that his death would be the result, yet, if his reasoning powers were so far gone that he could not exercise them on the act he was about to commit, its nature and effect, or if he was impelled by an insane impulse which his impaired capacity did not enable him to resist, he was not responsible for his conduct, and the defendant is liable. It may not be amiss to notice that the case does not present the point of what is called emotional insanity, or mania transitoria, that is, the case of one in the possession of his ordinary reasoning faculties, who allows his passions to convert him into a temporary maniac, and while in this condition commits the act in question. This case is ex- pressly excluded by the last clause of the charge, in which it is said that anger, distress, or excitement does not bring the case within the rule, if the insured possesses his ordinary reasoning faculties.-^ . . . There is a conflict in the authorities which cannot be reconciled. The propositions embodied in the charge before us are in some re- spects different from each other, but in principle thej' are identical. They rest upon the same basis, — the moral and intellectual incapacity of the deceased. In each case the physical act of self-destruction was that of George Terry. In neither was it truly his act. In the one supposition he did it when his reasoning powers were overthrown and he had not power or capacitj- to exercise them upon the act he was about to do. It was in effect as if his intellect and reason were blotted out or had never existed. In the other, if he understood and appreciated the effect of his act, an uncontrollable impulse caused by insanity compelled its commission. He had not the power to refrain from its commission, or to resist the impulse. Each of the principles put forth by the judge rests upon the same basis, — that the act was not the voluntary intelligent act of the deceased.^ . . . The question of sanity has usually been presented upon the validity of an agreement, the capacity to make a will, or upon responsibility for crime. If Terry had made an agreement under the circumstances stated in the charge, a jury or a court would have been justified in pro- 1 The statement of the authorities has heen omitted. — Ed. 2 Here followed a discussion of the causes of insanity. — Ed. SECT. III.] LIFE INSURANCE CO. V. TEEKY. 769 nouncing it invalid. A will, then, made hy him, would have been rejected by the surrogate if offered for probate. If upon trial for a criminal offence, upon all the authorities, he would have been entitled to a charge, that upon proof of the facts assumed, the jurj- must acquit him. "We think a similar principle must control the present case, although the standard may be different. We hold the rule on the question before us to be this : If the assured, being in the possession of his ordinarj' reasoning faculties, from anger, pride, jealousy, or a desire to escape from the ills of life, intentionally talies his own life, the proviso attaches, and there can be no recover)-. If the death is caused by the voluntary act of the assured, he knowing and intending that his death shall be the result of his act, but when his reasoning faculties are so far impaired that he is not able to understand the moral character,^ the general nature, consequences, and effect of the act he is about to commit, or when he is impelled thereto b)' an insane impulse, which he has not the power to resist,^ such death is not within the contemplation of the parties to the contract, and the insurer is liable. In the present instance the contract of insurance was made between Mrs. Terry and the company, the insured not being in form a party to the contract. Such contracts are frequently made b}' the insured him- self, the policy stating that it is for the benefit of the wife, and that in the event of death the money is to be paid to iier. We see no differ- ence in the cases. In each it is the case of a contract, and is to be so rendered as to give effect to the intention of the parties. Nor do we see any difference for this purpose in the meaning of the expressions, "commit suicide," "take his own life," or "die by his own hands." With either expression, it is not claimed that accidental self-destruc- tion, death in endeavoring to escape from the flames, or the like, is within the proviso. Judgment affirmed.^ Mr. Justice Strong dissented. 1 Ace: Breasted v. Farmers' L. & T. Co., 4 HiH 73 (1843), s. c. in the Court of Appeals, 8 N. Y. 299 (1853), ("die by his own hand") ; Phadenhauer v. Germania L. Ins. Co., 7 Heisk. 567 (1872), (" die by suicide or by his own hands") ; Life Asso- ciation V. Waller, 57 Ga. 533 (1876), (" die by suicide ") ; Insurance Co. v. Rodel, 95 U. S. 232 (1877), (" die by his own hand") ; Connecticut Mut. L. Ins. Co. v. Groom, 86 Pa. 92 (1878), ("die by suicide") ; Manhattan L. Ins. Co. v. Broughton, 109 U. S. 121 (1883), ("die by suicide"); Schultz v. Ins. Co., 40 Ohio, St. 217 (1883), ("under any circumstances, die by his own hand ") ; Michigan Mut. L. Ins. Co. v. Naugle, 130 Ind. 79 (1891), (" die by hisown hand") ; Connecticut Mut. L. Ins. Co. v. Akens, 150 U. S. 468 (1893), {" self-destruction ... in any form, except . . . the direct result of disease or of accident occurring without the voluntary act of the insured "). — Ed. 2 Ace. : Estabrook v. Union Mut. L. Ins. Co., 54 Me. 224 (1866) ; Scheffer v. Na- tional L. Ins. Co., 25 Minn. 534 (1879). — Ed. 3 See Van Zandt v. Mutual Benefit L. Ins. Co., 55 N. Y. 169, 178-179 (1873). — Ee. 49 770 BIGELOW V. BERKSHIRE LIFE INS. CO. [CHAP. YII. BIGELOW V. BERKSHIRE LIFE INSURANCE CO. SuPEEMB Court of the United States, 1876. 93 U. S. 284. Error to the Circuit Court of the United States for the Northern District of Illinois. This is an action on two policies issued bj' the defendant on the life of Henry W. Bigelow. Each contained a condition in avoidance, if the insured should die by suicide, sane or insane ; and in such case the company agreed to pay to the partj- in interest the surrender value of the policy at the time of the death of Bigelow. The defendant pleaded that Bigelow died from the effects of a pistol-wound inflicted upon his person by his own hand, and that he intended bj' this means to destroy his life. To this the plaintiffs replied, that Bigelow, at the time when he inflicted the pistol-wound upon his person by his own hand, was of unsound mind, and wholly' unconscious of the act. A demurrer to this replication was sustained by the court below, and the plaintiffs bring the case here for review. Mr. Thomas Hoyne, for the plaintiff in error. Mr. H. Q. Miller, contra. Mr. Justice Davis delivered the opinion of the court. There has been a great diversity of judicial opinion as to whether self-destruction by a man, in a fit of insanitj-, is within the condition of a life policy, where the words of exemption are that the insured "shall commit suicide," or "shall die by his own hand." But since the de- cision in Life Ins. Co. v. Terry, 15 Wall. 580, the question is no longer an open one in this court. In that case the words avoiding the policy were, "shall die by his own hand ; " and we held that tiiey referred to an act of criminal self-destruction, and did not apply to an insane per- son who took his own life. But the insurers in this case have gone further, and sought to avoid altogether this class of risks. If they have succeeded in doing so, it is our duty to give effect to the contract ; as neither the policy of the law nor sound morals forbid them to make it. If they are at liberty to stipulate against hazardous occupations, un- healthy climates, or death by the hands of the law, or in consequence of Injuries received when intoxicated, surely it is competent for thetn to stipulate against intentional self-destruction, whether it be the voluntary act of an accountable moral agent or not. It is not perceived why they cannot limit their liability, if the assured is in proper language told of the extent of the limitation, and it is not against public policj-. The words of this stipulation, "shall die by suicide (sane or insane)," must receive a reasonable construction. If they be taken in a strictly literal sense, their meaning might admit of discussion ; but it is obvious that they were not so used. " Shall die by his own hand, sane or insane," is, doubtless, a more accurate mode of expression ; but it does not more clearly declare the intention of the parties. Besides, the authorities SECT. III.] BIGELOW V. BERKSHIRE LIFE INS. CO. 771 uniformlj- treat the terms "suicide" and "dj-ing bj- one's own hand," in policies of life insurance, as sj-nonj-mous, and the popular understand- ing accords with this interpretation. Chief Justice Tindal, in Borra- daile v. Hunter, 5 Mann. & Gr. 668, sa^-s, "The expression 'dying by his own hand,' is, in fact, no more than the translation into English of the word of Latin origin, 'suicide.' " Life insurance companies indis- criminately use either phrase, as conveying the same idea. If the words, " shall commit suicide," standing alone in a policy, import self- murder, so do the words, "shall die by his own hand." Either mode of expression, when accompanied bj- qualifying words, must receive the same construction. This being so, there is no difHcult3' in defining the sense in which the language of this condition should be received. Felonious suicide was not alone in the contemplation of the parties. If it had been, there was no necessity of adding anything to the gen- eral words, which had been construed by manj' courts of high authority as not denoting self-destruction bj- an insane man. Such a man could not commit felony ; but, conscious of the phj-sical nature, although not of the criminalitj-, of the act, he could take his own life, with a settled purpose to do so. As the line between sanity and insanity is often shadowy and difficult to define, this company thought proper to take the subject from the domain of controversy, and by express stipulation preclude all liability by reason of the death of the insured by his own act, whether he was at the time a responsible moral agent or not. Nothing can be clearer than that the words, " sane or insane," were introduced for the purpose of excepting from the operation of the policy any intended self-destruction, whether the insured was of sound mind or in a state of insanity. These words have a precise, definite, well- understood meaning. No one could be misled by them ; nor could an expansion of this language more clearly express the intention of the parties. In the popular, as well as the legal, sense, suicide means, as we have seen, the death of a party by his own voluntary- act ; and this condition, based as it is on the construction of this language, in- formed the holder of the policj' that, if he purposely destroyed his own life, the company would be relieved from liability. It is unnecessary to discuss the various phases of insanity in order to determine whether a state of circumstances might not possibly arise which would defeat the condition. It will be time to decide that question when such a case is presented. For the purposes of this suit it is enough to saj-, that the policy was rendered void if the insured was conscious of the physical nature of his act, and intended by it to cause his death, although at the time he was incapable of judging between right and wrong, and of understanding the moral consequences of what he was doing. Insurance companies have only recently inserted in the provisos to their policies words of limitation corresponding to those used in this case. There has been, therefore, but little occasion for courts to pass upon them. But the direct question presented here was before the Su- preme Court of Wisconsin in 1874, in Pierce v. The Travellers' Life 772 BILLINGS V. ACCIDENT INS. CO. [CHAP. VIL Insurance Company, 34 Wis. 389, and received the same solution we Lave given it. More words were tliere used than are contained in this proviso ; but the effect is the same as if they had been omitted. To say that the companj- will not be liable if the insured shall die by "sui- cide, felonious or otherwise," is the same as declaring its non-liability, if he shall die by "suicide, sane or insane." They are equivalent phrases. Neither the reasoning nor the opinion of that court is at all affected by the introduction of words which are not common to both policies. It remains to be seen whether the court below erred in sustaining the demurrer. The replication concedes, in effect, all that is alleged in the plea ; but avers that the insured at the time " was of unsound mind, and wholly unconscious of the act." These words are identical with those in the replication to the plea in Breasted v. Farmers' Loan and Trust Company, 4 Hill, 73 ; and Judge Nelson treated them as an averment that the assured was insane when he destroyed his life. They can be construed in no other way. If the insured had perished by the acci- dental discharge of the pistol, the replication would have traversed the plea. Instead of this, it confesses that he intentionalh' took his own life ; and it attempts to avoid the bar by setting up a state of insanity-. The phrase, "wholly unconscious of the act," refers to the real nature and character of the act as a crime, and not to the mere act itself. Bigelow knew that he was taking his own life, and showed sufficient intelligence to employ' a loaded pistol to accomplish his purpose ; but he was unconscious of the great crime he was committing. His dark- ened mind did not enable him to see or appreciate the moral character of his act, but still left him capacity enough to understand its physical nature and consequences. In the view we take of the case, enough has been said to show that the court did not err in holding that the replication was bad. Judgment affirmed?- BILLINGS V. ACCIDENT INS. CO. Supreme Codkt op Vermont, 1891. 64 Vt. 78. Assumpsit upon a policy of life insurance. Plea, the general issue, and notice of special matter. Trial by jury at the March Term, Eutland County, 1889, Ross, J., presiding. The plaintiff offered certain evidence, as stated in the opinion, which the court refused 1 Acc: Adkins v. Columbia L. Ins. Co. 70 Mo. 27 (1879), ("by his own act and intention, whether sane or insane") ; Streeter v. Western Union Mut. L. & A. Soc, 65 Mich. 199 (1887), ("by his own hand, sane or insane"); Tritschler o. Keystone Mnt. Benefit Assn., 180 Pa 205 (1897), ("by suicide, feloniously or otherwise, sane or insane "j. — Ed. SECT. III.] BILLINGS V. ACCIDENT INS. CO. 773 to admit. Thereupon the case was withdi'awn from the jurj', and passed to the Supreme Court upon the exception of the plaintiff for the determination of the question raised by this offer. Bromley & Clark, and H. A. Harman, for the plaintiff. Henry Ballard and J. C. Baker, for the defendant. Taft, J. It is a condition of the policj- in question that it shall not cover a case if death results from suicide (sane or insane). It is not denied \)y the plaintiff but that the assured died from the effects of a pistol shot fired by himself ; but she insists and offered testimony to show that, when the insured so fired the shot, his mind had become so dominated and controlled by an unnatural impulse to fire said pistol into his own forehead that his will could not resist said impulse, and that he did not voluntarily or intentionallj- fire the same, but in obedi- ence to such impulse. That at the time when said shot was so fired, deceased had " become mentall}- incapable of understanding and appre- ciating the phj'sical nature and consequences of the act he was then committing, and did not understand or appreciate the same, and did not then know nor recognize the fact that hy so firing that pistol he would take his own life." Life insurance companies long since inserted in their contracts a clause of non-liability in case the assured died by " suicide " or " by his own hand," which courts have construed as sj'nonymous terms. In construing this clause^ courts have widely differed, some — notabh' those of England, Massachusetts, and New York — holding that no recover}- can be had in case of self-destruction, however insane the act of the assured might have been, while others, including this court, in Hathawa}' v. National Life Ins. Co., 48 Vt. 335, have held that when one's reason and judgment had become so impaired that his mind was overthrown, and he could not resist the insane idea that he must take his own life, although his mind in that condition contrived the means, and his physical strength carried them out and took his life, that such self-destruction did not void the policj'. After the decisions holding companies liable in case of suicide by the assured while insane, many companies inserted the- condition of non-liability in case of " suicide, sane or insane." This clause has been before the courts for construc- tion, and the decisions generallj' are, that a compan}' is not liable if the assured designedl}- dies by his own hand, i. e., if he commits the act intentionally with knowledge of its consequences, although unconscious of its criminal character. This is as far as many of the courts have been required to go upon the facts before them, but the question has arisen in some instances as to the liability of the insurer in case the assured destroys himself in such an insane condition as to be incapable of understanding the physical nature and consequences of the act he was doing; did not know that by firing the pistol, hanging himself, or doing like acts, he would take his own life. That the insurer is liable in such cases is maintained, apparently, in Mut. B. L. Ins. Co. v. Davies, 87 Ken. 541 ; and Adkins v. Col. L. Ins. Co., 70 Iklo. 27, and perhaps 774 BILLINGS V. ACCIDENT INS. CO. [CHAP. VIL some other cases. We think the contrary rule the better doctrine. The parties contracted, and the condition is expressed in terms not easily misunderstood ; the words are " nor will it (the policy) cover death or injury resulting from suicide (sane or insane).'"' It is no; contended that the insured was in any way misled, nor that the con- tract was contrary to sound morals or public policj'. If the insured can contract against hazardous occupations, residence within the trop- ics in July and August, death in a duel, by the hands of the law, in war, or when intoxicated, why can they not limit their liability in case of suicide, felonious or otherwise? It is our duty to construe the con- tract made bj' the parties, not contract for them. The better construc- tion to give a term or phrase in a contract is the one according to its ordinarj- and common meaning, as mankind would generally understand it. The defendant evidently was unwilling to incur the perils of in- sanity, and this clause limiting its liabilitj' was inserted for its protec- tion. It was a valid contract. The defendant had the right to say that it would not hold itself responsible for the acts of the assured committed when insane, and the question is, can the court with such a contract before it, attempt to measure the degrees of insanity ? The construction contended for by the plaintiff renders the words " sane or insane '' immaterial surplusage, of no force whatever. They must have been inserted for some purpose. Felonious suicide was not alone in the contemplation of the parties to the contract. If it had been there was no necessity of adding anything to the general words. The de- fendant says that by force of them we are not to be liable in case the assured dies by suicide, sane or insane, and the only answer is, it is true the assured died bj' his own hand when insane ; but he was very insane, in fact so insane that when he took his life he did not know what he was doing, nor the effect of his acts. If we adopt this con- struction of the contract, we add to it an element not agreed to b}' the parties. If the death of the assured was caused in the manner and under the circumstances stated in the plaintiff's offer of evidence, the defendant is not liable. There was nothing in the evidence nor offer of evidence tending to show an accidental discharge of the pistol, nor that death resulted from anything save the pistol shot fired bj- the as- sured. We hold there can be no recovery if the assured committed the fatal act otherwise than accidentally ; that the clause " suicide, sane or insane," was intended to, and does include self-destruction irrespective of the assured's mental condition at the time of the act which caused his death. This is the better rule, in that it gives effect to the contract made by the parties, and the logical conclusion of the better considered cases. De Gpgorza v. Knick. Life Ins. Co., 65 N. Y. 232 ; Pierce v. Trav. Ins. Co., 34 Wis. 389 ; Scarth v. Security M. L. Society, 75 Iowa, 346 (39 N. W. Rep. 658) ; Bigelow v. Berk. L. Ins. Co., 93 U. 8. 284 ; Chapman v. Rep. L. Ins. Co., 6 Biss, 238 (5 Big. L. & A. Ins. 110) ; Riley v. Hart. L. & A. Ins. Co., 25 Fed. Rep. 315; Streeter v. West U. M. L. A. Soc, 65 Mich. 199. SECT. III.] EITTEE V. MUTUAL LIFE INS. CO. 775 The construction of,- and ruling of the court upon, the clause of the contiact in question is sustained.^ Under the agreement of the parties the cause is remanded. RowELL, MuNSON, and Start, JJ., concur. Tylee and Thompson, JJ. , dissent EITTER V. MUTUAL LIFE INS. CO. Supreme Court of the United States, 1898. 169 U. S. 139.' Certiorari to the Circuit Court of Appeals for the Third Circuit. The action was brought bj' the executor of William M. Eunk upon six policies of life insurance, each bearing date November 10, 1891, one for $20,000, one for $15,000, and four for $10,000 each. Each policy was to the effect that, "in consideration of the application, . . . hereby made a part of this contract," the company promised to pay the amount of the policy to "William M. Runk, of Philadelphia, Pa., his executors, administrators, or assigns," upon the death of the said Runk, upon the condition that the annual premiums must be paid in advance. The premiums were duly paid. Runk died on October 5, 1892. The de- fence was that Runk committed suicide. At the trial, the defendant otfered in evidence the applications, each of which contained a warranty and agreement that Runk would not die by his own act, whether sane or insane, within two years. This evidence was rejected, because the applications were not attached to the policies as required by Laws of Pennsylvania, 1881, No. 23, p. 20. Evidence was given to the effect that Runk was insured to the amount of $500,000, that prior to taking the policies in litigation he had em- bezzled large sums and was without resources of his own, and that on the day before his death he wrote a letter saying that he could onlj' pay his debts with his life. After various requests, for instructions, the instructions actually given contained this passage : "If this man understood the consequences and effects of what he was doing or contemplating, to himself and to others, if he understood the wrongfulness of it, as a sane man would, then he was sane, so far as we have occasion to consider the subject ; otherwise he was not. Here the insured committed suicide, and, as the evidence shows, did it for the purpose ... of enabling the executor to recover on the policies, and use the mone}' to pay his obligations. I therefore charge you that if he was in a sane condition of mind at the time, as I 1 See De Gogorza v. Knickerbocker L. Ins. Co., 65 N. Y. 232, 241-242 (1875); Penfold V. Universal L. Ins. Co., 85 N. Y. 317, 322-323 (1881); Northwestern Mut. L. Ins. Co. V. Hazelett, 105 Ind. 212 (1885) ; Scarth v. Security Mut. L. Ins. Society, 75 Iowa, 346 (1888) ; Mutual Benefit L. Ins. Co. v. Daviess, 87 Ky. 541 (1888) ; SpruiU v. Northwestern Mnt. L. Ins. Co., 120 N. Car. 141, 143-144, 150-151 (1897).— Ed. 2 The statement has been based upon the opinion. — Ed. 776 EITTER V. MUTUAL LIFE INS. CO. [CHAP. VII. have described, able to understand the moral character and consequences of his act, his suicide is a defence to this suit. The only question, there- fore, for consideration is this question of sanitj-. ... In the absence of evidence on the subject he must be presumed to have been sane. The presumption of sanity' is not overthrown bj' the act of committing sui- cide. Suicide may be used as evidence of insanity, but standing alone it is not sufficient to establish it. . . . If j'ou find him to have been in- sane, as I have described, j-our verdict wiU be for the plaintiff. Other- wise it will be for the defendant." There was a verdict in favor of the defendant, upon which judgment was entered, and that judgment was aflBrmed in the Circuit Court of Appeals. 28 U. S. App. 612. Mr. Richard C. Dale and Mr. George Tucker Bispham, for plain- tiff in error. Mr. John Hampton Barnes was on their brief. Mr. John G. Johnson^ for defendant in error. Mr. Charles P. Sher- man and Mr. Edward Lyman Short were on his brief. Mr. Justice Harlan delivered the opinion of tlie court.^ . . . No error of law having been committed in respect of the issue as to the insanit}- of the assured, it is to be taken as the result of the verdict that he was of sound mind when he took his life. This brings us to the question whether the insurance compan}' was liable — assuming that it was not a part of the contract enforceable in Penns^'lvania, that the assured should " not die bj- his own act whether sane or insane," within two years from the date of the policj'. It is contended that the court erred in saj-ing to the jury, as in effect it did, that intentional self-destruction, the assured being of sound mind, is in itself a defence to an action upon a life policj', even if such policy does not, in express words, declare that it shall be void in the event of self-destruction when the assured is in sound mind. But is it not an implied condition of such a policy that the assured will not purposely, when in sound mind, take his own life, but will leave the event of his death to depend upon some cause other than wilful, deliberate self- destruction ? Looking at the nature and object of life insurance, can it be supposed to be within the contemplation of either party to the contract that the company shall be liable upon its promise to pay, where the assured, in sound mind, bj' destrojing his own life, intentionally precipitates the event upon the liappening of which such liability was to arise? Life insurance imports a mutual agreement, whereby the insurer, in consideration of the payment hy the assured of a named sum annuallj- or at certain times, stipulates to pay a larger sum at the deatli of the assured. The company takes into consideration, among other things, the age and health of the parents and relatives of the applicant for in- surance, together with his own age, course of life, habits, and present physical condition ; and the premium exacted from the assured is deter- mined by the probable duration of his life, calculated upon the basis of 1 After stating the case and discussing the defiuition of iusanitv. • — Ed. SECT. in.J EITTER V. MUTUAL LIFE INS. CO. 777 past experience in the business of insurance. Tlie results of that expe- rience are disclosed by standard life and annuity tables showing at any age the probable duration of life. These tables are deemed of such value that they inaj' be admitted in evidence for the purpose of assisting the jury in an action for personal injury, in which it is necessary to ascertain the compensation the plaintiff is entitled to recover for the loss of what he might have earned in his trade or profession but for such injury. Vicksburg & Meridian Railroad v. Putnam, 118 U. S. 545, 554. If a person should applj- for a polic}' expressly providing that the company should pay the sum named if or in the event the as- sured, at any time during the continuance of the contract, committed self-destruction, being at the time of sound mind, it is reasonably cer- tain that the application would be instantlj^ rejected. It is impossible to suppose that an application of that character would be granted. If experience justifies this view, it would follow that a policy stipulating generally for the payment of the sum named in it upon the death of the assured, should not be interpreted as intended to cover the event of death caused directly and intentionally by self-destruction wliilst the assured was in sound mind, but only death occurring in the ordinary course of his life. That the parties to the contract did not contemplate insurance against death caused by deliberate, intentional self-destruction when the assured was in sound mind, is apparent from the "provisions, requirements, and benefits " referred to in and made part of the policy. The3' show that the policj- was issued on the twentj'-3-ear distribution plan, and was to be credited with its distributive share of surplus apportioned at the expiration of twenty years from the date of issue ; that, after three full annual premiums were paid, the companj' would, upon the legal surrender of the policj', before default in the paj'ment of anj- premium, or within six months thereafter, issue a non-participating policy for a paid-up insurance, paj-able as provided, for the amount required bj' the provisions of the New York statute of May 21, 1879, Laws of New York, c. 347 ; that the assured was entitled to surrender the policy at the end of the first period of twenty years " and the full reserve com- puted by the American table of mortalitj', and four per cent interest, and the surplus, as defined above, will be paid therefor in cash ; " that if the assured surrendered the policy the total cash value at the option of the policyholder should be applied "to the purchase of an annuit}' for life, according to the published rates of the company at the time of surrender ; " that after two years from the date of the policy the only conditions that should be binding on the holder of the policy were that " he shall pay the premiums at the time and place and in the manner stipulated in the policy, and that the requirements of the company as to age, and military or naval service in time of war, shall be observed ;" that in all other respects, if the policy matured after the expiration of two 3'ears, the payment of the sum insured should not be disputed ; and that the party whose life was insured should always wear a suitable 778 EITTEK V. MUTUAL LIFE INS. CO. [CHAP. VII. truss. These provisions of the contract tend to show that the death referred to in the policy was a death occurring in the ordinary course of the life of the assured, and not by his own violent act designed to bring about that event. In the case of fire insurance it is well settled that although a policy, in the usual form, indemnifying against loss by fire, may cover a loss attributable merely to the negligence or carelessness of the insured, un- affected by fraud or design, it will not cover a destruction of the prop- erty by the wilful act of the assured himself in setting fire to it, not for the purpose of avoiding a peril of a worse kind, but with the intention of simply effecting its destruction. Much more should it be held that it is not contemplated bj* a policy taken out by the person whose life is insured and stipulating for the pa3-ment of a named sum to himself, liis executors, administrators, or assigns, that the companj' should be liable, if his death was intentionally caused by himself when in sound mind. When the policy is silent as to suicide, it is to be taken that the subject of the insurance, that is, the life of the assured, shall not be intention- ally and directly, with whatever motive, destroyed by him when in sound mind. To hold otherwise is to say that the occurrence of the event upon the happening of which the company undertook to paj-, was in- tended to be left to his option. That view ig against the very essence of the contract. There is another consideration supporting the contention that death intentionally caused by the act of the assured when in sound mind — the policj' being silent as to suicide — is not to be deemed to have been within the contemplation of the parties ; that is, that a different view would attribute to them a purpose to make a contract that could not be enforced without injury to the public. A contract, the tendency of which is to endanger the public interests or injuriously affect the public good, or which is subversive of sound moralitj-, ought never to receive the sanction of a court of justice or be made the foundation of its judg- ment. If, therefore, a policj' — taken out by the person whose life is insured, and in which the sum named is made payable to himself, his executors, administrators, or assigns — expressly' provided for the pay- ment of the sum stipulated when or if the assured, in sound mind, took his own life, the contract, even if not prohibited by statute, would be held to be against public policy, in that it tempted or encouraged the assured to commit suicide in order to make provision for those depend- ent upon him, or to whom he was indebted. Is the case any different in principle if such a policy is silent as to suicide, and the event insured against — the death of the assured — is brought about by his wilful, deliberate act when in sound mind ? Light will be thrown on this question by some of the adjudged cases, having more or less bearing upon the precise point now before this court for determination.'' . . . 1 Here were stated or quoted Life Ins. Co. v. Terry, ante, p. 766 (1872) ; Borradaile V. Hunter, ante, p. 762 (1843); Hartman o. Keystone Ins. Co., 21 Pa. 466, 479 (1853); SECT. III.] SEILEK V. ECONOMIC LIFE ASSOCIATION. 779 For the reasons we have stated, it must be held that the death of the assured, William M. Eunk, if directlj- and intentionall3- caused by him- self, when in sound mind, was not a risk intended to be covered, or which could legally have been covered, by the policies in suit. The case presents other questions, but they are of minor importance, and do not affect the substantial rights of the parties. We perceive no error of law in the record, and the judgment is Affirmed. Mr. Justice Peckham did not take part in the consideration or de- cision of this case. SEILER ET AL., Appellees, v. ECONOMIC LIFE ASSOCIATION, Appellant. Supreme Codrt or Iowa, 1898. 105 Iowa, 87.^ Appeal from Clinton District Court, Hon. P. B. Wolfe, Judge. Action was brought upon two policies issued to Joseph Seller, on Aug. 31, 1895, for the benefit of the plaintiffs. Seller committed sui- cide on Oct. 7, 1895. The policies contained no condition against suicide. The defendant, in its answer, set up two defences : (1) that Seller while in a sound mental condition took his own life ; and (2) that Seller procured the policies with intent to defraud the companj-. A demurrer to the first defence was sustained, and the defendant ex- cepted. A demurrer to the second defence was overruled, and upon this single issue of fact the case went to the jury, resulting in verdict and judgment for the plaintiffs. The defendant appealed, assigning fifty-nine errors, including the sustaining of the demurrer, the exclusion of evidence, the refusal and giving of instructions, and the ruling that the plaintiffs were entitled to open and close. Hayes & Schuyler, for appellant. Calvin S. G-eorge, for appellees. Watermak, J.^ . . . The question thus presented by the ruling on the demurrer is: If a policy of insurance on life, containing no stipu- lation as to suicide, is taken out in good faith by the assured, will it be avoided, as agamst a beneficiarj- named therein, by the fact that the assured thereafter, while sane, deliberate! j- and purposely took his own life ? The authorities are not many on the subject, and they are not seriously in conflict. While there are a number of cases in which some- New York Mnt. L. Ins. Co. v. Armstrong, 117 U. S. 591, 600 (1886) ; Hatch v. Mu- tual L. Ins. Co., 120 Mass. 550, 552 (1876); Supreme Commandery v. Ainsworth, 71 Ala. 4.36, 446 (1882) ; Amicable Society v. Bolland, ante, p. 760 (1830) ; Bunyon on Life AssarancCj 3d ed., 96; Moore v. Woolsey, 4 E. & B. 243, 254 (1854). —Ed. 1 The statement has been based upon the opinion. — Ed. 2 Only so much of the opinion has been reprinted as deals with the sustaining of the demurrer. — Ed. 780 SEILER V. BCONOMIO LIFE ASSOCIATION. [CHAP. VII. thing bas been said upon this matter in the waj- of dicta, there is but one in which it has been express!}' decided that the suicide of the assured, if sane, will avoid a polic}' that contains no provision of for- feiture in such case, and that is Ritter v. Insurance Co., 18 Sup. Ct. Eep. 300, decided at the October Term, last, of the Federal Supreme Court. The opinion in this case in the Circuit Court of Appeals appears in 17 C. C. A. 537, and 70 Fed. Rep. 954. This last citation is given because we shall have occasion to refer to this opinion in the course of what we shall say. It was held in the Ritter Case that there could be no recover^"^ on a policy of insurance by the executor of one who, while sane, intentionally took his own life, even though the policy contained no clause of forfeiture because of such act. We think that case is readily distinguishable from the case at bar. In the Ritter Case the action was brought bj' the personal representative of the assured, whose claim had to be made through the wrongdoer, while here the suit is in- stituted by beneficiaries named in the policy, and who claim in their own right. An investigation will disclose that the distinction we make is material, and supported hy authority. In Moore v. Woolsey, 4 El. & Bl. 243, the policy contained a stipulation avoiding it, as far as regarded the executors and administrators of the assured, if he died by his own hand, but leaving it in force to the extent of any interest acquired by a third person. The plea was that the assured had com- mitted suicide. Replication that one Kettle, before the death of the assured, had acquired by assignment an interest in the polic}'. Upon these issues, Lord Campbell, delivering the opinion, said: "If a man insures his life for a j'ear, and commits suicide within the j'ear, his executors cannot recover upon the policy, as the owner of a ship, who insures her for a year, cannot recover upon the policy, if within the year be cause her to be sunk. A stipulation that in either case upon such an event the policy would give a right of action would be void." This is the language quoted in the Ritter Case, and it was obiter onlv. But Lord Campbell said somethmg more, and something not only per- tinent to the issues before him, but that has direct application to the matter we are considering. He continues : " But where a man insures bis own life, we can discover no illegality in a stipulation that if the policy should afterwards be assigned, bona fide, for a valuable consid- eration, or a lien upon it should afterwards be acquired, bona fide, for a valuable consideration, it might be enforced for the benefit of others, whatever may be the means of his death. . . . The supposed induce- ment to commit suicide under such circumstances cannot vitiate the condition, more than the inducement which the lessor may be supposed to have to commit murder should render invalid a beneficial lease granted for lives. When we are called upon to nullify a contract on the ground of public policy, we must take care that we do not la}- down a rule which may interfere with the innocent and useful transactions of mankind." If public policy does not stand in the way of a recovery by an assignee, we can discern no reason wb}- it should in the case of SECT. III.] SEILER V. ECONOMIC LIFE ASSOCIATION. 781 a beneficiar}' named in the contract. It may be said tliat tlie assignee spoken of is one whose claim rests upon a consideration paid. To tliis we would saj- that the claim of the beneflciaiy is also based upon a con- sideration paid by the assured. If it should further be said that public policj' does not bar a recovery by the assignee because the interests of creditors furnish little or no motive for the self-destruction of the as- sured, our ansvrer would be this : The motives for suicide are manifold and varied. An inquiry as to what inducement is most likely to impel one to the act is profitless, for anj' rule of law that would prevent a recovery bj' these plaintiffs would operate in like manner against a mere creditor, if he were the beneficiarj' named. And, further, we might call attention to the Eitter -Case, in which the assured admit- tiugl3' sacrificed his life for the benefit of his creditors. In the opinion in the Ritter Case in the Circuit Court of Appeals it is said : "In the cases brought to our attention where suicide during sauit}', b^' the per- son whose life was insured, was held not to be a valid defence, the policj" was issued for the benefit of some other person, or an independ- ent interest, by assignment or otherwise, had been acquii'ed bj' a third person." Here is the distinction plainly made. So, also, in the opin- ion of Mr. Justice Harlan on appeal, we think the same idea is expressed. In commenting on an expression used in another case, he says : "This observation was irrelevant to the case before the court, and cannot be regarded as determining the point in judgment. If it was meant there should be a recoverj- by the personal representative, ... we cannot concur in that view." Another and a convincing reason for thinking that the doctrine announced in the Ritter Case was not intended to go further than to denj- a right of recover}- to the personal representatives of the assured is that no one of the several cases in which beneficiaries named in the contract have been held entitled to recover was mentioned in that opinion. We shall now refer to these cases : Fitch v. Insurance Co., 59 N. Y. 559, is the first. Suit was brought by the widow, to whom the policy was paj-able. The contract contained no clause avoid- ing it in case of suicide by the assured. One defence tendered was that the assured took his own life. Evidence to sustain it was ex- cluded by the trial court. In affirming this ruling the Court of Appeals says : ' ' The policy contained no stipulation that it should be void in case of the death of the insured bv suicide. It was not taken out for the benefit of Fitch, but of his wife and children. Although they were bound hy his representations, and any, fraud he may have com- mitted in taking out the policj', the policy having been obtained through his agency, j'ct thej' were not bound by anj^ acts or declarations done or made bj* him after the issue of the policy, unless such acts were in violation of some condition of the policj'. In Darrow v. Societj', 116 X. Y. 537 (22 N. E. Rep. 1093), the plaintiff was the beneficiary under the contract. The assured committed suicide. There was a provision in the policj' that it should " be void if the member herein shall die in consequence of a duel, or by the hands of justice, or in violation of, or 782 SEILEK V. ECONOMIC LIFE ASSOCIATION. [CHAP. VII. an attempt to violate, anj' criminal law of the United States, or of an y state or country- in which the member may be." Held that, suicide not being a crime in New York, the condition of the policy was not vio- lated, and the plaintiff could recover. Kerr v. Association, 39 Minn. 174 (39 N. W. Rep. 312), is a case similar in principle to the last. The same holding in favor of a beneficiarj- has been made by this court in Goodwin v. Society, supra. The policy sued upon there provided for its forfeiture in the event of suicide within two years, and by its express terms it was incontestable after that time. After the lapse of that period the assured took his own life. The policy was issued to the wife. In an action by her, we held she could recover. Now, if suicide is a risk that the company is forbidden, by considerations of public policj', to take, it could not have been held as within the agree- ment not to contest ; for, if a contract to insure as against the risk.of suicide is void, the waiver here must have been invalid, and the defence should have been sustained. The question was brought directly to the attention of the court in argument, as appears from the language of the opinioi}. These are the cases which we have been able to find. We wish now to add a few words on principle, by way of emphasis of a thought already expressed. It is not the wrongdoer who makes claim here, nor anj' representative whose rights are to be measured by those of the wrongdoer, but persons who acquired an interest at the time the policy was taken out, and who are not in anj' way responsible for the loss under it. The defendant might well have guarded against this contingency in its contract. Not having done so, we think it is now in no position to complain. . . . The judgment below will be affirmed} 1 \Acc. : Moms )). State Mut. L. Assnr. Co., 183 Pa. 563 (1898) ; Patterson c. Nat- ural Premium Mut, L. Ins. Co., 100 Wis. 118 (1898). On the peril insured against in life insurance, see also : — Howell V. Knickerbocker L. Ins. Co., 41 N. Y. 276 (1871) ; Insurance Co. o. Seaver, 19 Wall. 531 (1873) ; Hatch 17. Mutual Life Ins. Co., 120 Mass. 550 (1876) ; New York Mut. L. Ins. Co. i;. Armstrong, 117 U. S. 591, 598-600 (1886) ; Smith ». National Benefit Society, 123 N. Y. 85 (1890); Cleaver v. Mutual Eeserve Fund L. Assn., '92, 1 Q. B. 147 (C. A., 1891) ; Holdom V. Ancient Order of United Workmen, 159 III. 619 (1896) ; Schmidt v. Northern L. Assn., 83 N. W. Rep. 800 (Iowa, 1900). — Ed. SECT. III.] SINCLAIR V. MARITIME PASSENGERS' ASSUE. CO. 783 SECTION III. (continued). (B.) Accident SINCLAIE, Administratrix, v. MARITIME PASSENGERS' ASSURANCE CO. Queen's Bench, 1861. 3 E. & E. 478.^ Case stated by consent, and hj order of Blackbdrn, J., for the opinion of the court, without pleadings. Macnamara, for the plaintiff. Geary, for the defendants. Cur. adv. vult. CoCKBURN, C. J., now delivered the judgment of the court.'-' This was an action brought by the administratrix of one Lawrence Sinclair, on a policy of insurance effected by the deceased with the defendants, whereby he, being then about to proceed on a foreign voyage as mas- ter of a vessel, was insured to the extent of a reasonable compensation against anj- personal injury from or by reason of or in consequence of any accident which might happen to him upon any ocean, sea, river, or lake ; and in the sum of £100 for the benefit of his personal repre- sentative, in the event of the assured dying from the effects of any such injury within three months of its occurrence. The assured being with his ship in the Cochin River, on the southwest coast of India, while doing duty on the ship was (as it is termed in the special case) struck down by a sunstroke, from the effects of which he died in the course of the same daj-. The question is, whether, under such circumstances, the death of the deceased can be said to have arisen from accident, within the meaning of the policy. We are of opinion that it cannot, and that our judgment must be for the defendants. It is difficult to define the term " accident, " as used in a policy of this nature, so as to draw with perfect accuracy a boundary line be- tween injury or death from accident, and injury or death from natural causes, such as shall be of universal application. At the same time we think we may safely assume that, in the term "accident" as so used, some violence, casualty, or vis major, is necessarily involved. We cannot think disease produced by the action of a known cause can be considered as accidental. Thus disease or death engendered by exposure to heat, cold, damp, the vicissitudes of climate, or atmos- pheric influences, cannot, we think, properly be said to be accidental ; unless, at all events, the exposure is itself brought about bj' circum- stances which may give it the character of accident. Thus (by way of 1 The reporter's statement has not been reprinted. — Ed. 2 CocKBUKN, C. J., and Hill, J. — Ebp. 784 SCHNEIDER V. PROVIDENT LIFE INS. CO. [CHAP. VII. illustration), if, from the effects of ordinary exposure to the elements, such as is common in the course of navigation, a mariner should catch cold and die, such death would not be accidental ; although if, being obliged b}- shipwreck or other disasters to quit the ship and take to the sea in an open boat, he remained exposed to wet and cold for some time, and death ensued therefrom, the death might properly be held to be the result of accident. It is true that, in one sense, disease or death through the direct effect of a known natural cause, such as we have referred to, may be said to be accidental, inasmuch as it is uncertain beforehand whether the effect will ensue in any particular case. Ex- posed to the same malaria or infection, one man escapes, another suc- cumbs. Yet diseases thus arising have always been considered, not as accidental, but as proceeding from natural causes. In the present instance, the disease called sunstroke, although the name would at first seem to imply something of external violence, is, so far as we are informed, an inflammatory disease of the brain, brought on by exposure to the too intense heat of the sun's rays. It is a disease to which persons exposing themselves to the sun in a tropical climate are more or less liable, just as persons exposed to the other natural causes to which we have referred are liable to disastrous conse- quences therefrom. The deceased in the discharge of his ordinary duties about his ship became thus affected and so died. We think, for the reasons we have given, that his death must be considered as having arisen from a " natural cause," and not from " accident," within the meaning of this policj-. There must be judg- ment for the defendants. Judgment for the defendants} SCHNEIDER v. PROVIDENT LIFE mSDRANCE CO. Supreme Court op Wisconsin, 1869. 24 Wis. 28. Appeal from the Circuit Court for Dane County. Action upon a policj'' of insurance against personal injury arising from accident and causing death. The plaintiff appealed from a judgment of nonsuit, the grounds of which will appear from the opinion. Alden S. Sanborn (with S. U. Pinney, of counsel), for the appellant. Palmer, Hooker tfc Pitkin, for respondent. Paine, J. This action was upon a policy by which Brano Schneider was insured against injury or death by accident. He attempted to get on a train of cars while in slow motion, and fell under them and was killed. The policy contained a clause that the company should not be liable for any injury happening to the assured by reason of his " wilfully ' Ace. : Dozier t>. Fidelity and Casualty Co., 46 Fed. R. 446 (C. C, W. D. Mo. 1891). — Ed. SECT. III.] SCHNEIDEK V. PROVIDENT LIFE INS. CO. 785 and wantonl3' exposing himself to anj' unnecessary danger or peril." And, on the trial, the plaintiff was nonsuited, upon the ground that the death was within this exception. But the position most strongl}' urged b^- the respondent's counsel in this court was that, inasmuch as the negligence of the deceased contrib- uted to produce the injury, therefore the death was not occasioned by an accident at all, within the meaning of the policj'. I cannot assent to this proposition. It would establish a limitation to the meaning of the word "accident" which has never been established, either in law or common understanding. A very large proportion of those events which are universally called accidents happen through some carelessness of the partj- injured, which contributes to produce them. Thus, men are injured b^' the careless use of fire-arms, of explosive substances, of ma- chinerj-, the careless management of horses, and in a thousand ways, where it can readily be seen afterward that a little greater care on their part would have prevented it. Yet such injuries, having been unex- pected, and not caused intentionally or by design, are always called accidents, and properly so. Nothing is more common than items in the newspapers under the heading, " accidents through carelessness." There is nothing in the definition of the word that excludes the negli- gence of the injured party as one of the elements contributing to pro- duce the result. An accident is defined as "an event that takes place without one's foresight or expectation ; an event which proceeds from an unknown cause, or is an unusual effect of a known cause, and, there- fore, not expected." An accident may happen from an unknown cause. But it is not essential that the cause should be unknown. It ma}' be an unusual result of a known cause, and therefore unexpected to the party. And such was the case here, conceding that the negligence of the deceased was the cause of the accident. It is true that accidents often happen from such kinds of negligence. But still, it is equally true that they are not the usual result. If they were, people would cease to be guilty of such negligence. But cases in which accidents occur are very rare in comparison with the number in which there is the same negligence without any accident. A man draws his loaded gun toward him by the muzzle — the servant fills the lighted lamp with kerosene — a hundred times without injury. The next time the gun is discharged, and the lamp explodes. The result was unusual, and therefore as unexpected as it had been in all the pre- vious instances. So there are, undoubtedlj', thousands of persons who get on and off from cars in motion without accident, where one is in- jured. And, therefore, when an injury occurs, it is an unusual result, and unexpected, and strictly an accident. There are not many author- ities on the point.^ . . . 1 Here were discussed Theobald o. Railway Passengers' Assur. Co., 10 Ex. 45 (1854), and Trew v. Kailway Passengers' Assur. Co., 6 H. & N. 839 (Ex. Ch., 1861). — Ed. 50 786 ACCIDENT INS. CO. V. CEANDAL. [CHAP. VII. The question whether the injured party was guiltj- of negligence con- tributing to the accident does not arise at all in this class of cases. I think that is the true conclusion, both upon principle and authority, so far as there is anj' upon the subject ; and the only questions are, first, whether the death or injury was occasioned by an accident within the general meaning of the policj', and, if so, whether it was within any of the exceptions. This conclusion is also very strongly supported by that provision of the policy under which the plaintiff was nonsuited. That necessarily implies that any degree of negligence, falling short of " wilful and wanton exposure to unnecessary danger," would not prevent a recoverj-. Such a provision would be entirely superfluous and unmeaning in .§uch a con- tract, if the observance of due care and skill on the part of the assured constituted an element to his right of action, as it does in actions for injuries occasioned by the negligence of the defendant. The question, therefore, remains, whether the attempt of the deceased to get upon the train was within this provision, and constituted a " wil- ful and wanton exposure of himself to unnecessary danger." I cannot think so.^ . . . Judgment reversed. Venire facias de novo awarded.'^ ACCIDENT INS. CO. v. CRANDAL. SuPEEME Court of the United States, 1887. 120 U. S. 527.° Error to the Circuit Court of the United States for the Northern District of Illinois. The action was upon an accident insurance policy procured by E. M. Crandal, and made payable to his wife. The policy provided that "this insurance shall not extend ... to death or disability which may have been caused wholly or in part by bodily infirmities or disease, . . . and no claim shall be made under this policy when the death or injury may have been caused ... by suicide, or by freezing, or sunstroke, or self-inflicted injuries." The defence was suicide. The jury found a special verdict to the effect, among other things, that E. M. Crandal hanged himself, and thereof died on the same day, and that he was insane at the time of his act of self-destruction. On this verdict, judg- ment was given for the plaintiff. A motion for a new trial was over- ruled. Thereupon the defendant sued out this writ of error. 1 The discussion of this point has not been reprinted. — Ed. 2 See Provident L. Ins. and Investment Co. v. Martin, 32 Md. 310 (1870). Compare Standard Ins. Co. v. Langston, 60 Ark. 381 (1895). — Ed. ' 8. c. in the Circuit Court, avh nom. Crandal t>. Accident Ins. Co., 27 Fed. R. 40 (1886). The statement has been rewritten. — Ed. SECT. III.] ACCIDENT INS. CO. V. CEANDAL. 787 Mr. Emerson B. Tuttle, for plaintiff in error. Mr. George C. Fry, for defendant in error. Mr. Justice Gray ^ . . . delivered the opinion of the court. The single question to be decided therefore is, whether a policy of insurance against " bodilj- injuries, effected through external, acciden- tal, and violent means," and occasioning death or complete disability- to do business ; and providing that " this insurance shall not extend to death or disability which may have been caused wholly or in part by bodily infirmities or disease, or by suicide, or self-inflicted injuries," covers a death by hanging one's self while insane. The decisions upon the eflfect of a poUcy of life insurance, which provides that it shall be void if the assured " shall die b}- suicide," or " shall die by his own hand," go far towards determining this question. . . . In this state of the law, there can be no doubt that the assured did not die " by suicide," within the meaning of this policj- ; and the same reasons are conclusive against holding that he died b^- " self-inflicted injuries." If self-killing, " suicide," " dying b}- his own hand," cannot be predicated of an insane person, no more can " self-inflicted injuries ;" for in either case it is not his act. Nor does the case come within the clause which provides that the in- surance shall not extend to " death or disability which may have been caused wholly or in part by bodily infirmities or disease.'' If insanity could be considered as coming witliin this clause, it would be doubtful, to saj- the least, whether, under the rule of the law of insur- ance which attributes an injurj' or loss to its proximate cause only, and in view of the decisions in similar cases, the insanit}' of the assured, or anything but the act of hanging himself, could be held to be the cause of his death. Scheffer v. Railroad Co., 105 U. S. 249, 252 ; Trew v. Railway Passengers' Assurance Co., 5 H. & N. 211, and 6 H. & N. 839, 845 ; Reynolds v. Accidental Ins. Co., 22 Law Times (n. s.) 820 ; Winspear v. Accident Ins. Co., 42 Law Times (n. s.) 900; affirmed, 6 Q. B. D. 42; Lawrence v. Accidental Ins. Co., 7 Q. B. D. 216, 221 ; Scheiderer v. Travellers' Ins. Co., 58 Wis. 13. But the words " bodily infirmities or disease " do not include insan- ity. Although, as suggested hy Mr. Justice Hunt in Life Ins. Co. v. Terry, 15 Wall. 589, insanity or unsoundness of mind often, if not alwaj's, is accompanied by, or results from, disease of the body, still, in the common speech of mankind, mental are distinguished from bodily diseases. In the phrase "bodily infirmities or disease," the word "bodily" grammatically applies to "disease," as well as to "infirmi- ties ; " and it cannot but be so applied, without disregarding the fun- damental rule of interpretation, that policies of insurance are to be construed most stronglj' against the insurers who frame them. The 1 In reprinting the opinion, it has seemed necessary to omit passages on procedure and on life insurance as distinguished from accident insurance and on the effect of the application. — Ed. 788 UNITED STATES MUTUAL AGO. ASSOC. V. BARRY. [CHAP. VII. prefix of "bodily" hardlj' affects the meaning of "infirmities," and it is difficult to conjecture any purpose in inserting it in this proviso, other than to exclude mental disease from the enumeration of the causes of death or disability to which the insuratice does not extend. . . . The death of the assured not having been the effect of any cause specified in the proviso of the policy, and not coming within any war- rant3' in the application, the question recurs whether it is within the general words of the leading sentence of the policy, by which he is de- clared to be insured " against bodily injuries eflFected through external, accidental, and violent means." This sentence does not, like the pro- viso, speak of what the injury is " caused by ; " but it looks only to the " means" by which it is effected. No one doubts that hanging is a violent means of death. As it affects the body from without, it is ex- ternal, just as suffocation by drowning was held to be, in the cases of Trew, Keynolds, and Winspear, above cited. And, according to the decisions as to suicide under policies of life insurance, before referred to, it cannot, when done by an insane person, be held to be other than accidental. The result is, that the judgment of the Circuit Court in favor of the plaintiff was correct, and must be Affirmed.^ UNITED STATES MUTUAL ACCIDENT ASSOCIATION V. BARRY. Supreme Court of the United States. 1889. 131 U. S. 100." Error to the Circuit Court of the United States for the Eastern Dis- trict of Wisconsin. Action was brought by Theresa A. Barry upon a policy whereby the association accepted John S. Barry as a member, and promised to pay to Theresa A. Barry, his wife, the proceeds of an assessment " within sixty days after sufficient proof that said member . . . shall have sus- tained bodily injuries effected through external, violent, and accidental means, within the intent and meaning of the by-laws of said association and the conditions hereunto annexed, and such injuries alone shall have occasioned death. . . . Provided alwaj's, that benefits under this cer- tificate shall not extend to hernia, nor to any bodily injury of which there shall be no external and visible sign, nor to any bodily injury happening directly or indirectly in consequence of disease, nor to any death or disability which may have been caused wholly or in part by 1 See Games u. Iowa State Traveling Men's Assn., 106 Iowa, 281 (1898). Ed. 2 8. 0. in the Circuit Court, sub nom. Barry v. United States Mut. Ace. Assn. 23 Fed. R. 712 (1885). .The statement has been rewritten, and passages not bearing on the definition of an accident have been omitted. — Ed. SECT. III.] UNITED STATES MUTUAL ACC. ASSOC. V. BAEEY. 789 bodily infirmities or disease existing prior or subsequent to the date of the certificate, . . . nor to an}' case except where the injur}" is the proximate or sole cause of the disabilit}- or death. . . . And these benefits shall not be held to extend ... to any case of death, . . . unless the claimant under this certificate shall establish by direct and positive proof that the said death or personal injur}- was caused by ex- ternal violence and accidental means, and was not the result of design either on the part of the member or of any other person." The testimony indicated that John S. Barry, while in good health, jumped from a platform that was four or five feet from the ground ; that he landed upon his feet very heavily, as if he had come down sol- idly upon his heels ; that the jarring of his body produced a stricture of the duodenum, and that on account of this stricture he died in nine days. To rulings on evidence and on instructions the defendant took numerous exceptions ; and, more particularly, the defendant excepted to the bracketed parts of the following passages in the charge to the jury : — " If you find that injury was sustained, then the next question is, "Was it effected through external, violent, and accidental means? This is a pivotal point in the case, and therefore vitally important. Tlie means must have been external, violent, and accidental. Did an acci- dent occur in the means through which the alleged bodily injury was effected ? ["The jumping off the platform was the means by which the injury, if any was sustained, was caused.] [" Now, was there anything accidental, unforeseen, involuntary, unexpected, in the act of jumping, from the time the deceased left the platform until he alighted on the ground ?] ["The term 'accidental' is here used in its ordinary, popular sense, and in that sense it means 'happening by chance; unexpectedly tak- ing place ; not according to the usual course of things ; ' or not as expected.] [" In other words, if a result is such as follows from ordinary means voluntarily employed in a not unusual or unexpected way, then, I sup- pose, it cannot be called a result effected by accidental means.] [" But if in the act which precedes the injury something unforeseen, unexpected, unusual, occurs, which produces the injury, then the injury has resulted from the accident or through accidental means.] ["We understand, from the testimony, without question, that the deceased jumped from the platform with his eyes open, for his own convenience, in the free exercise of his choice, and not from any peril- ous necessity. He encountered no obstacle in jumping, and he alighted on the ground in an erect posture. So far we proceed without diffi- culty ; but you must go further and inquire, and here is the precise point on which the question turns : Was there or not any unexpected or unforeseen or involuntary movement of the body, from the time Dr. 790 UNITED STATES MUTUAL ACC. ASSOC. V. BARKY. [CHAP. VII. Barry left the platform until he reached the ground, or in the act of alighting? Did he or not alight on the ground just as he intended to do? Did he accomplish just what he intended to, in the waj- he in- tended to ? Did he or not unexpectedlj- lose or relax his self-control, in his downward movement? Did his feet strike the ground as he intended or expected, or did they not? Did he or not miscalculate the distance, and was there or not an}' involuntary turning of the bod}', in the downward movement, or in the act of alighting on the ground? These are points directly pertinent to the question in hand.] " And I instruct you that if Dr. Barry jumped from the platform and alighted on the ground in the way he intended to do, and nothing unforeseen, unexpected, or in voluntary occurred, changing or affecting the downward movement of his body as he expected or would naturally expect such a movement to be made, or causing him to strike the ground in any different way or position from that which he anticipated or would naturally anticipate, then any resulting injui-y was not effected through any accidental means. [But if, in jumping or alighting on the ground, there occurred, from any cause, any unforeseen or involuntary movement, turn, or strain of the body, which brought about the alleged injur}-, or if there occurred any unforeseen circumstance which inter- fered with or changed such a downward movement as he expected to make, or as it would be natural to expect under such circumstances, and as caused him to alight on the ground in a different position or wa}' from that which he intended or expected, and injur}' thereby re- sulted, then the injury would be attributable to accidental means."] The verdict was for the plaintiff. Mr. B. K. Miller, Jr., for plaintiff in error. Mr. William F. Vilas, for defendant in error. Mr. George Mc Whoeter and Mr. C. B. Bice filed a brief for defend- ant in error. Mr. Justice Blatchford ' . . . delivered the opinion of the court. . . . It is further urged that there was no evidence to support the verdict because no accident was shown. We do not concur in this view. The two companions of the deceased jumped from the same platform, at the same time and place, and alighted safely. It must be presumed not only that the deceased intended to alight safely, but thought that he ■would. The jury were, on all the evidence, at liberty to say that it •was an accident that he did not. The court properly instructed them that the jumping off the platform was the means by which the injury, if any was sustained, was caused ; that the question was, whether there was anything accidental, unforeseen, involuntary, unexpected, in the act of jumping, from the time the deceased left the platform until he alighted on the ground; that the term "accidental" was used in the policy in its ordinary, popular sense, as meaning " happening by chance ; unexpectedly taking place ; not according to the usual course 1 In reprinting the opinion, passages not bearing upon the quotations from the charge have been omitted. — Ed. SECT. III.] FIDELITY AND CASUALTY CO. V. JOHNSON. 791 of things ,• or not as expected ; " that, if a result is such as follows from ordinary means, voluntarily employed, in a not unusual or unex- pected way, it cannot be called a result effected by accidental means ; but that if, in the act which precedes the injury, something unforeseen, unexpected, unusual occurs which produces the injur^y, then the injury has resulted through accidental means. The jury were further told, no exception being taken, that, in considering the case, they ought not to adopt theories without proof, or substitute bare possibility for positive evidence of facts testified to bj' credible witnesses ; that where the weight of credible testimonj^ proved the existence of a fact, it should be accepted as a fact in the case ; but that where, if at all, proof was wanting, and the deficiency remained throughout the case, the allega- tion of fact should not be deemed established. In Martin v. Travellers' Ins. Co., 1 Foster & Fin. 505, the policy^ was against any bodily injury resulting from any accident or violence, " provided that the injury should be occasioned by any external or material cause operating on the person of the insured." In the course of his business he lifted a heavj' burden, and injured his spine. It was objected that he did not sustain bodily injurj' by reason of an accident. The plaintiff recovered. In North American Ins. Co. v. Burroughs, 69 Penn. St. 43, the policy was against death "in consequence of accident," and was to be opera- tive only in case the death was caused solel}- bj' an " accidental injury." It was held that an accidental strain, resulting in death, was an actci- dental injury within the meaning of the policy, and that it included death from any unexpected event happening by chance, and not occur- ring according to the usual course of things. The case of Southard v. Eailway Passengers' Assurance Co., 34 Conn. 574, is relied on by the defendant. That case, though pending in a State court in Connecticut, was decided by an arbitrator, who was then the learned district judge of the United States for the District of Connecticut. But if there is anything in that decision inconsistent with the present one, we must dissent from its views. . . . We see no error in anything excepted to by the defendant, and the judgment is Affirmed.''- FIDELITY AND CASUALTY CO. v. JOHNSON. Supreme Cottet op Mississippi, 1895. 72 Miss. 333. From the Circuit Court of Pike County, Hon. W. P. Cassedt, Judge. Action by appellee against appellant on an insurance policy for $1,000, insuring the husband of appellee, an employee of the Illinois 1 See North American L. & A. Ins. Co. <,. Burroughs, 69 Pa. 43 (1871) ; Feder v. Iowa State Traveling Men's Assn., 107 Iowa, 538 (1899); Standard L. & A. Ins. Co. V. Schmaltz, 66 Ark. 588 (1899). —Ed. 792 FIDELITY AND CASUALTY CO. V. JOHNSON. [CHAP. VII. Central Railroad Company, against " bodily injuries sustained through external, violent, and accidental means." The assured was hanged by a mob during the life of the policy. Plaintiff recovered judgment for the full amount of the policy. Motion for new trial overruled. De- fendant appealed. The opinion contains such further statement of the case as is necessar}' to an understanding of the questions decided. A. C. McJVair, for appellant. W. JB. Mixon and J. B. 8ternberger, for appellee. "Woods, J., delivered the opinion of the court.^ . . . The court refused to charge the jury for appellant as asked in its twelfth instruction. This instruction reads as follows : " If the jury believe, from the evidence in this case, that John Johnson came to his death by the hands of a mob, his death was not the result of an acci- dent, and this case is not within the terms and conditions of the policy sued on, and the jury will find for defendant." By the terms of the policy, indemnity against " bodily injuries sustained through external, violent, and accidental means " was secured bj' the insured. That John- son came to his death by external and violent means is not denied, but death by hanging at the hands of a mob, it is said by appellant's counsel, is foreign to our preconceived ideas as to what constitutes an accident. According to lexicographers, an accident is a sudden, unforeseen, and unexpected event. It has been held bj' courts adopting this or any similar definition that where a man was killed by robbers, that this was a case of death by accident in the sense in which that word is used in accident insurance policies. So, too, it has been held that death from a blow struck by one who has attempted to blackmail the assured was an accident covered bj' an accident insurance policj'. In these and all like cases in which death occurs by violent means exter- nal to the man, and against or without intention or concurrence of will on the part of the man, death may properly be called an accident. A learned and laborious writer states the true rule for determining whether injuries are accidental. With great simplicity, clearness, and strength, Biddle saj's : " An injury may be said objectively to be accidental, though subjectively it is not ; and, if it occur without the agency of the insured, it may logically be termed accidental, though it was brought about designedly by another person." See Biddle on Insurance and the numerous cases cited by him in his elaborate consideration of this subject in his vol. 2, chapter 10, beginning at page 780. See, too, Bacon's Benefit Societies and Life Insurance, vol. 2, chapter 15, and the man}' cases there cited. There is, upon authority, hardly room for controversy as to the rightfulness of the action of the court below in refusing to charge the jury that death by hanging at the hands of a mob was not an accident. There is evidence to support the verdict, and we are not authorized to substitute another finding, more in con- 1 Passages as to procedure and as to payment of dues hare been omitted. — Ed. SECT. III.] WESTERN COMMERCIAL TRAVELERS' ASSN. V. SMITH. 793 souance with our views of the testimony, for that of the jun', which rests upon sufficient proof. We find no reversible error, and the judg- ment of the trial court is Affirmed.^ WESTERN COMMERCIAL TRAVELERS' ASSN. v. SMITH. Circuit Court of Appeals op the United States, Eighth Circuit, 1898. 85 Fed. R. 401.^ In error to the Circuit Court of the United States for the Eastern District of Missouri. F. JV. Judson {C. S. Taussig and Louis B. Tatum, on the brief), for plaintiff in error. 8. L. Swarts (JS. M. Merriman and George H. Sanders, on the brief), for defendant in error. Before Sanborn and Thayer, Circuit Judges, and Philips, District Judge. Sanborn, Circuit Judge. The Western Commercial Travelers' Asso- ciation, the plaintiff in error, has sued out a writ to reverse a judgment against it upon a certificate of insurance against accident which is issued to Freeman O. Smith, one of its members, for the benefit of Sarah L. Smith, the defendant in error. A jury was waived, the court tried tiie case and made a special finding of the facts, and the error assigned is that the facts found do not support the judgment (1) because they show that immediate notice of the accident or injury was not given to the association, as required by the policy,' and (2) because they fail to show that the death of the member was produced " by bodily injuries eflfected by external, violent, and accidental means." These are the facts relative to the two questions thus raised, which appear from the pleadings and the findings : The certificate upon which the suit is based secured to the member, Freeman O. Smith, indemnity in various amounts for total disability, for the loss of an arm or a leg, or one arm and one leg, and for the loss of both arms or both legs, by accident ; and it also secured to his beneficiarj', the defendant in error, indemnity for his death produced "by bodily injuries effected by exter- nal, violent, and accidental means " alone. . . . In the latter part of August, 1895, while this certificate was in force, Freeman O. Smith, who was a strong and healthy man, com- menced wearing a pair of new shoes. About September 6, 1895, the friction of one of the shoes against one of his feet, unexpectedly and without design on his part, produced an abrasion of the sltin of one of his toes. He gave the abrasion reasonable attention, but it neverthe- 1 Ace. : Lovelace v. Travelers' Protective Assn., 126 Mo. 104 (1894). — Ed. " s. c. 56 U. S. App. 393, and 29 C. C. A. 223. — Ed. 8 Passages as to notice have not been reprinted. — Ed. 794 WESTEKN COMMERCIAL TRAVELERS' ASSN. V. SMITH. [CHAP. VII. less caused blood poisoning about September 26, 1895, which resulted in his death on October 3, 1895. . . . It is earnestly contended, however, that the death was not caused by bodily injuries effected by external, violent, and accidental means (1) because the disease of blood poisoning was the cause, and the abra- sion of the skin of the toe was only the occasion, the locality in which the disease first appeared, and (2) because the abrasion of the skin was not an accident, but was made in the ordinary course of things. The contract does not differ, in respect to the subject presented by this proposition, from those which have been repeatedly considered bj- this court, and we state its legal effect briefly, because the reasons and authorities in support of our views here have been frequently set forth in the opinions of this court which are cited below. If the death was caused by a disease, without any bodily injury in- flicted by external, violent, and accidental means, as in the case of the malignant pustule (Bacon v. Association, 123 N. Y. 304, 25 N. E. 399), and as in the case of sunstroke (Sinclair v. Assurance Co., 3 El. & El. 478; Dozier v. Casualty Co., 46 Fed. 446), the association was free from liability bj' the express terms of the certificate. If the deceased suffered an accident, but at the time he sustained it he was already suffering from a disease or bodily infirmity, and if the accident would not have caused his death if he had not been affected bj' the disease or infirmitj', but he died because the accident aggravated the disease, or the disease aggravated the effects of the accident, as in the case of the insured who was subject to such a bodily infirmity that a short run, followed by stooping, which would not have injured a healthy man, produced apoplexy (Insurance Co. v. Selden, 24 C. C. A. 92, 78 Fed. 285), the association was exempt from liability, because the death was caused partly by disease and partly by accident. If the death was caused by bodily injuries effected by external, violent, and accidental means alone, the association was liable to pay the promised indemnity. If the death was caused by a disease which was not the result of any bodily infirmity or disease in existence at the time of the accident, but which was itself caused by the external, violent, and accidental means which produced the bodily injury, the association was equally liable to pay the indemnity. In such a case, the disease is an effect of the acci- dent, the incidental means produced and used by the original moving cause to bring about its fatal effect, a mere link in the chain of causa- tion between the accident and the death, and the death is attributable, not to the disease, but to the causa causans, to the accident alone. Insurance Co. v. Melick, 27 U. S. App. 547, 560, 561, 12 C. C. A. 544, 552, and 65 Fed. 178, 186 ; Railway Co. v. Callaghan, 12 U. S. App. 541, 550, 6 C. C. A. 205, 210, and 56 Fed. 988, 994; Railway Co. V. Kellogg, 94 U. S. 469, 475 ; Association v. Shryock, 36 U. S. App. 658, 663, 20 C. C. A. 3, 5, and 73 Fed. 774, 776. Now, the finding of the facts made by the trial court is conclusive in this case, and the only question here presented is whether those facts SECT. III.j WESTERN COMMERCIAL TRAVELERS' ASSN. V. SMITH. 795 warrant the judgment below. That court has found that the deceased was an exceptionally strong and healthy man when the abrasion in question was produced. It has found that the wearing of the new shoe produced the abrasion on September 6, 1895, that this abrasion was the cause of blood poisoning on September 26, 1895, and that the blood poisoning produced the death on October 3, 1895. Tlie question whether the death was produced by the abrasion or by the disease is, therefore, extracted from this case. There is no ground for the con- tention that the disease of blood poisoning was an intervening and in- dependent cause of the death, because the finding of the court below is that that disease was a mere link in the chain of causation between the abrasion which produced it and the death which it produced. The only question remaining, therefore, is whether or not the abra- sion of the skin of the toe was produced bj- accidental means. If it was, the death was so produced ; and if it was not, there was no acci- dent, and consequently no cause of action. The contract was that the association would pa3- the promised indemnity for any death caused " hy bodil}- injuries effected bj' external, violent, and accidental means." There is no claim that the friction of the shoe which caused the abra- sion was not external and violent. The contention is that it was not accidental. The signiflcance of this word " accidental" is best per- ceived bj' a consideration of the relation of causes to their effects. The word is descriptive of means which produce effects which are not their natural and probable consequences. The natural consequence of means used is the consequence which ordinarily follows from their use, — the result which may be reasonably anticipated from their use, and which ought to be expected. The probable consequence of the use of given means is the consequence which is more likelj' to follow from their use than it is to fail to follow. An effect which is the natural and probable consequence of an act or course of action is not an acci- dent, nor is it produced bj- accidental means. It is either the result of actual design, or it falls under the maxim that ever}' man must be held to intend the natural and probable consequence of his deeds. On the otlier hand, an effect which is not the natural or probable consequence of the means which produced it, an effect which does not ordinarily follow and cannot be reasonably anticipated from the use of those means, an effect which the actor did not intend to produce and which he cannot be charged with the design of producing under the maxim to which we have adverted, is produced by accidental means. It is pro- duced by means which were neither designed nor calculated to cause it. Such an effect is not the result of design, cannot be reasonably antici- pated, is unexpected, and is produced by an unusual combination of fortuitous circumstances ; in other words, it is produced by accidental means. Railway Co. v. Elliott, 12 U. S. App. 381, 386, 387, 389, 5 C. C. A., 347, 350, 351, 353, 55 Fed. 949, 942, 953, 955. Was the abrasion of the skin of the toe of the deceased the natural and probable consequence of wearing new shoes? It must be conceded 796 WESTERN COMMERCIAL TRAVELERS* ASSN. V. SMITH. [CHAP. VIL that new shoes are not ordinarily worn with the design of causing abrasions of the skin of the feet, and the trial court has found that the abrasion upon the toe of the deceased was produced unexpectedh-, and without any design on his part to cause it. An abrasion of the skin, certainl3', is not the probable consequence of the use of new shoes ; for it cannot be said to follow such use more frequently than it fails to follow it. Nor can such an abrasion be said to be the natural conse- quence of wearing such shoes, ^— the consequence which ordinarily follows, or which might be reasonably anticipated. How, then, can it fail to be the chance result of accidental means, — means not designed or calculated to produce it? If the deceased, without design, had slipped, and caused an abrasion of the skin, as he was walking down the street, or had punctured the skin of his foot by stepping on a nail in his room, or had pierced it with a nail in his shoe as he was drawing it upon his foot, there could have been no doubt that these injuries were produced b}- accidental means ; and it is difficult to understand whj- an abrasion of the skin, produced unexpectedly and without de- sign, by friction caused by wearing a new shoe, does not fall within the same category. In McCarthy v. Insurance Co., 8 Biss. 362, Fed. Cas. No. 8,682, it is held that death from the rupture of a blood-vessel caused by swing- ing Indian clubs for exercise may be a death from bodily' injur\' caused by accidental means. In Martin v. Insurance Co., 1 Fost. & F. 505, a total disability caused by straining the back while lifting a heav}' bur- den was declared to be a disability produced by accident. In Insurance Co. V. Burroughs, 69 Pa. St. 43, 51, the court said that an accident is " an event that takes place without one's foresight 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,'' — and held that a strain of the abdominal muscles, pro- duced by pitching hay, which caused an inflammation that resulted in death, was an accident. Death bj- drowning, b^' involuntarilj' inhaling illuminating gas, or by fright, is death by accidental means. Trew v. Assurance Co., 6 Hurl. & N. 839 ; Mallory v. Insurance Co., 47 N. Y. 52 ; Paul v. Insurance Co., 112 N. Y. 472, 20 N. E. 347 ; McGlinchey V. Casualty Co., 80 Me. 251, 14 Atl. 13. In Insurance Co. v. Melick, 27 U. S. App. 547, 12 C. C. A. 544, and 65 Fed. 178, this court affirmed a judgment based upon a verdict that a death caused by lock- jaw, which was produced by a shot wound unexpectedly inflicted upon himself by the deceased, without design, was a death caused by bodily injury produced by accidental means alone. In Association v. Barry, 131 U. S. 100, 9 Sup. Ct. 755, three persons jumped from the same platform at the same time and place. Two of them alighted in safetv, while the third suffered a stricture of the duodenum which produced'a disease which caused his death. The Supreme Court affirmed a judg- ment founded upon a verdict that his death was the result of bodily injuries eflfected through external, violent, and accidental means, and approved an instruction to the jury that : — SECT. III.] WESTERN COMMERCIAL TRAVELERS' ASSN. V. SMITH. 797 " The term ' accidental ' was used in the polic}' in its ordinaiy, popu- lar sense, as meaning ' happening by chance ; unexpectedly taking place ; not according to the usual course of things, or not as expected ' ; that, if a result is such as follows from ordinarj' means, voluntarilj' emplo^-ed, in a not unusual or unexpected way, it cannot be called a result effected by accidental means ; but that if, in the act which pre- cedes the injurj-, something unforeseen, unexpected, unusual occurs, which produces the injury, then the injury lias resulted through acci- dental means." We are unable to distinguish the case at bar from those to which we have referred, and the case last cited is of controlling authority in this court. The abrasion of the skin of the toe of the deceased was unex- pectedly caused, without design on his part, by unforeseen, unusual, and unexpected friction in the act of wearing the shoe which preceded the injury. It was not the natural or probable consequence of that act, and it was, therefore, produced bj- accidental means. The judgment below must be aflSrmed, with costs ; and it is so ordered.^ 1 In Northwestern Travellers' Assn. v. London Guarantee and Ace. Co., 10 Mani- toba, 537 (1895), the policy insured against "bodily injuries effected through external violent and accidental means," but did " not extend to death or disability caused by an injury of which there shall be no external or visible signs, or wholly or in part by bodily iufirraity or disease . . . nor to any case except where some injury effected as aforesaid is the proximate and sole cause of the disability or death." While the insured was travelling over the prairie in a severe snow-storm, his wagon broke down. Being too numb to walk, the insured sent the driver for assistance ; but the driver lost his way, and, before assistance came, the weather became still colder and the insured was frozen to death. The case was tried without a jury, and a verdict was rendered against the insurer. This verdict was sustained by the Queen's Bench of Manitoba. On the perils covered by an accident policy, see also : — Theobald w. Railway Passengers' Assur. Co., 10 Ex. 45 (1854) ; Trew V. Railway Passengers' Assur. Co., 6 H. & N. 839 (Ex. Ch., 1861); Fitton V. Accidental Death Ins. Co,, 17 C. B. n. s. 122 (1864); Smith V. Accident Ins. Co., L. R- 5 Ex. 302 (1870) ; Northrnp v. Railway Passenger Assur. Co., 43 N. Y. 516 (1871) ; Ripley v. Insurance Co., 16 Wall. 336 (1872) ; Winspear v. Accident Ins. Co., 6 Q. B. D. 42 (C. A. 1880) ; Lawrence v. Accidental Ins. Co., 7 Q. B. D. 216 (1881) ; Rodey v. Travelers' Ins. Co., 3 N. M. 316 (1886) ; McGlinchey v. Fidelity and Casualty Co., 80 Me. 251 (1888) ; Travelers' Ins. Co. v. McConkey, 127 U. S. 661 (1888) ; Isitt V. Railway Passengers Assur. Co., 22 Q. B. D. 504 (1889) ; Paul V. Travelers' Ins. Co , 112 N. Y. 472 (1889) ; Cornish v. Accident Ins. Co., 23 Q. B D. 453 (C. A., 1889) ; Bacon v. United States Mnt. Ace. Assn., 123 N. Y. 304 (1890) ; Pickett V. Pacific Mut. L. Ins. Co., 144 Pa. 79 (1891 ) ; Hamlyn v. Crown Accidental Ins. Co., [1893] 1 Q. B. 750 (C. A.) ; American Ace. Co. o. Reigart, 94 Ky. 547 (1893) ; Menneiley v. Employers' Liability Assur. Corp , 148 N. Y. 596 (1896) ; Travelers' Ins. Co. v. Dunlap, 160 HL 642 (1896) ; McGlother v. Provident Mut. Ace. Assn., 60 U. S. App. 705 (Eighth Circuit, 1898), =. 0. 32 C. C. A. 318, and 89 Fed. R. 685 ; Fidelity and Casualty Co. v. Sittig, 181 111. Ill (1899). —Ed. 798 LEWIS V. KTJCKER. [CHAP. VIII. CHAPTER VIII. THE AMOUNT OF RECOVERY. Assecu7'alus enim non qucerit lucrum, sed agit ne in damno sit. Stkaccha de Assecumtionibus,^ glossa XX., num. 4 (156 SECTION I. Marine Insurance. {A) Geneeal Peinciples, especially as to Pabtiax Losses. LEWIS V. RUCKER. King's Bench, 1761. 2 Burr. 1167.= This was an action, in beiialf of Bourdieu, upon a policy insuring a cargo of sugars, coffee, and indigo, from St. Thomas to Hamburg. The claj'ed sugars were valued at £30 a liogshead, and the Muscovado sugars at £20 a hogshead. The sugars were waiTanted free from aver- age under five per cent. The sea-water got in, and every hogshead of sugar was damaged. On account of the damaged state of the sugars, it was necessary to make sale immediatel}-. The sugars sold at £20 Os. 8d. a hogshead. If not damaged, they would have then brought £23 7s. 8d. a hogshead. Just before the cargo reached Hamburg, the price of sugars fell suddenly by reason of the proposal of a congress and the expectation of peace. Upon the cessation of these causes the price rose again ; and if the sugars could have been kept, as the owners had intended, more than £30 a hogshead would have been received. The defendant paid into court a sum determined by taking such proportion of the sum at which the sugars were valued in the policy as the price of the damaged sugars bore to the price of sound sugars at Ham- burg. Lord Mansfield left it to the jury whether the difference be- tween the sound and the damaged sugars at the port of delivery ought to be the rule, or whether the necessity of an immediate sale, certainly occasioned by the damage, and the loss thereby, should be taken into 1 See ante, p. 1, n. 2. — Ed. 2 The statement has been based upon the opinion. — Ed. SECT. I.] LE-\yiS V. KUCKEE. 799 consideration. Upon verdict for the defendant, tlie plaintiff obtained a rule for the defendant to show cause why the verdict should not be set aside and a new trial had. Cur. adv. vult. Lord Mansfield, C. J.^ . . . The special jury (amongst whom there ■were manj- knowing and considerable merchants) found the defendant's rule of estimation to be right, and gave their verdict for him. They understood the question very well, and knew more of the subject of it than anybody else present, and formed their judgment from their own notions and experience, without much assistance from anything that passed. . . . No fact is disputed. " The onl}- question is whether, all the facts being agreed, the jury have estimated the damage by a proper measure. To make the matter more intelligible, I will first state the rule by •which the defendant and jurj- have gone ; and then 1 will examine •whether the plaintiff has shown a better. The defendant takes the proportion of the difference between sound and damaged at the port of delivery, and pays that proportion upon the value of the goods specified in the policj- ; and has no regard to the price in monej-, which either the sound or damaged goods bore in the port of delivery. He says the proportion of the difference is equally the rule, whether the goods come to a rising or a falling market. For instance, suppose the value in the policy £30, — they are damaged, but sell for £40, if they had been sound they would have sold for £50, — the difference is a fifth ; the insurer then must pay a fifth of the prime cost, or value in the policy (that is, £6). E converso, if they come to a losing market, and sell for £10, being damaged, but would have sold for £20 if sound, the difference is one-half: the insurer must pay half the prime cost, or value in the policj' (that is, £15). To this rule two objections have been made. 1st objection. That it is going by a different measure in tlie case of a partial from that which governs in the case of a total loss ; for, upon a total loss, the prime cost, or value in the policy, must be paid. Answer. The distinction is founded in the nature of the thing. In- surance is a contract of indemnity against the perils of the voyage ; the insurer engages, so far as the amount of the prime cost, or value in the policj-, " that the thing shall come safe ; " he has nothing to do with the market ; he has no concern in any profit or loss which may arise to the merchant from the goods ; if they be totally lost, he must pay the prime cost, — that is, the value of the thing he insured at the outset ; he has no concern in any subsequent value. So likewise, if part of the cargo, capable of a several and distinct valuation at the outset, be totally lost; as if there be 100 hogsheads of 1 Statements of the facts and of the arguments have been omitted. Apparent mis- prints have been corrected in accordance with the suggestions in 2 Evans' View of Lord Mansfield's Decisions, 16-21. — Ed. 800 LEWIS V. KUCKEE. [CHAP. VIII. sugar, and ten happen to be lost, the insurer must paj- the prime cost of those ten hogsheads, without any regard to the price for which the other iiinetj' may be sold. But where an entire individual, as one hogshead, happens to be spoiled, no measure can be taken from the prime cost to ascertain the quantity of such damage ; but if you can fix whether it be a third, fourth, or fifth worse, the damage is fixed to a mathematical certainty. How is this to be found out ? Not by any price at the outset port ; but it must be at the port of delivery, where the voyage is completed and the whole damage known. Whether the price there be high or low, in either case it equallj' shows whether the damaged goods are a third, a fourth, or a fifth worse than if they had come sound ; consequently, whether the injury sustained be a third, fourth, or fifth of the value of the thing : and, as the insurer pays the whole prime cost, if the thing be wholly lost ; so, if it be only a third, fourth, or fifth worse, he pays a third, fourth, or fifth of the value of the goods so damaged. 2d oly. The next objection with which this case has been much entangled is taken from this being a valued policy. I am a little at a loss to apply the arguments drawn from thence. It is said " that a valued is a wager policy (like interest or no interest) ; if so, there can be no average loss, and the insured can only recover as for a total, abandoning what is saved, because the value specified is fictitious." Ans. A valued policy is not to be considered as a wager policj-, or like " interest or no interest ; " if it was, it would-be void by the act of 19 G. 2, c. 37. The only effect of the valuation is fixing the amount of the prime cost, just as if the parties admitted it at the trial ; but in every argument, and for everj' other purpose, it must be taken that the value was fixed in such a manner as that the insured meant only to have an indemnitj". If it be undervalued, the merchant himself stands insurer of the sur- plus. If it be much overvalued, it must be done with a bad view ; either to game, contrary' to the 19th of the late king, or with some view to a fraudulent loss ; therefore the insured never can be allowed in a court of justice to plead that he has greatly overvalued, or that his interest was a trifle only. It is settled, " that upon valued policies, the merchant need only prove some interest, to take it out of 19 G. 2, because the adverse party has admitted the value ; and if more was required, the agreed valuation would signify nothing." But if it should come out in proof that a man had insured £2,000, and had interest on board to the value of a cable only, there never has been, and I believe there never will be, a determination, that by such an evasion the act of parliament may be defeated. There are many conveniences from allowing valued policies; but where they are used merely as a cover to a wager, they would be considered as an evasion. SECT. I.] LEWas V. EUCKER. 801 The effect of tbe valuation is onlj' fixing, conclusively, the prime cost. If it be an open policy, the prime cost must be proved ; in a valued policy it Is agreed. To argue " that there can be no adjustment of an average loss upon a valued policy," is direct! j- contrar3- to the very terms of the policy itself. It is expressl}' subject to average, if the loss upon sugars ex- ceed £5 per cent ; if it was not, the consequence would not be that every partial loss must thereby become total ; but the event, to entitle the insured to recover, would not happen unless there was a total loss. Consequently, the plaintiflFs in this case would not be entitled to recover at aU ; for there is no color to say this was a total loss. Besides, the plaintiffs have taken to the goods, and sold them. In opposition to the measure the jury have gone b^', the plaintiffs con- tend that they ought to be paid the whole value in the policy upon one of two grounds. 1st. Because the general rule of estimating should be the difference between the price the damaged goods sell for and the prime cost (or value in the policy-). Here the damaged sold at £20 Os. 8d. per hogs- head, and the underwriter should make it up £30. Ans. It is impossible this should be the rule. It would involve the underwriter in the rise or fall of the market ; it would subject him, in some cases, to pay vastly more than the loss ; in others it would deprive the insured of any satisfaction, though there was a loss. For instance, suppose the prime cost or value in the policy £30 per hogshead ; the sugars are injured ; the price of the best is ^20 a hogs- head, the price of the damaged is £19 10s. The loss is about a fortieth, and the insurer would be to pay above a third. Suppose the}' come to a rising market, and the sound sugars sell for £40 a hogshead, and the damaged for £35, the loss is an eighth; j'et the insurer would be to pay nothing. The second ground upon which the plaintiff contends that the £30 should be made up, is, that it appears the sugars would have sold for that price if the damage from the sea-water had not made an immediate sale necessary. The moment the jury brought in their verdict, I was satisfied that they did right in totally disregarding the particular circumstances of this case ; and I wrote a memorandum, at Guildhall, in my note- book, "that the verdict seemed to me to be right." As I expected the other cause would be tried, I thought a good deal of the point, and endeavored to get what assistance I could by convers- ing with some gentlemen of experience in adjustments. The point has now been verj- full}' argued at the bar ; and the more I have thought, the more I have heard, upon the subject, the more I am convinced that the jury did right to pay no regard to these circumstances. The nature of the contract is, " that tlie goods shall come safe to the port of delivery ; or if they do not, to indemnify the plaintiff to the amount of the prime cost, or value in the policy." If they arrive, but 61 802 LEWIS V. EUCKER. [CHAP. VIII. lessened in value, through damages received at sea, the nature of an indemnity speaks demonstrabh', that it must be by putting the mer- chant in the same condition (relation being had to the prime cost or value in the policy) which he would have been in if the goods had arrived free from damage ; that is, by paying such proportion or ali- quot part of the prime cost, or value in the policj', as corresponds with the proportion, or aliquot part of the diminution in value occasioned by the damage. The dut}' accrues upon the ship's arrival and landing her cargo at the port of delivery; the insured has then a right to demand sat- isfaction. The adjustment never can depend upon future events or speculations. How long are they to wait? a week, a month, or a year? In this case, the price rose ; but if the congress had taken place, or a peace had been made, the price would have fallen. The defend- ant did not insure " that there should be no congress or peace." It is true Mr. Bourdieu acted upon political speculation, and ordered the sugars to be kept till the price should be £30 or upwards ; but no pri- vate scheme or project of trade of the insured can affect the insurer ; he knew nothing of it. The defendant did not undertake that the sugars should bear a price of £30 a hogshead. ff speculative destinations of the merchant, and the success of such speculations, were to be regarded, it would introduce the greatest in- justice and inconvenience. The underwriter knows nothing of them. The orders here were given after the signing of the policy. But the decisive answer is, that the underwriter has nothing to do with the price, and that the right of the insured to a satisfaction, where goods are damaged, arises immediately upon their being landed at the port of delivery. We are of opinion that the plaintiffs are not entitled to have the price for which the damaged sugars were sold made up £30 per hogshead ; and it seems to us as plain as any proposition in Euclid, that the rule by which the jury have gone is the right measure. The rule must be discharged.^ 1 See Johnson v. Sheddon, 2 East, 581 (1802); Lawrence v. New York Ins. Co., 3 Johns. Cas. 217 (1802) ; Tunno v. Edwards, 12 East, 488 (1810) ; Goldsmid v. GUlies, 4 Taunt. 803 (1812). —Ed. SECT. I.] USHER V. NOBLE. 803 NEWBY V. REED. Nisi Prius, King's Bench, 1763. 1 W. Bl. 416. It was ruled by Lord Mansfield, C. J., and agreed to be the course of practice, that upon a double insurance, though the insured is not en- titled to two satisfactions, j-et, upon the first action, he may recover tlie whole sum insured, and may leave the defendant therein to recover a rateable satisfaction from the other insurers.^ USHER V. NOBLE. King's Bench, 1810. 12 East, 639. This was an action upon a policy of insurance subscribed by the defendant for £200, on goods on board the "General Miranda" at and from Jamaica to London. In the declaration the loss was thus averred : That the ship, having the goods on board, was, in the river Thames, and before the discharge of the goods at London, by the mere danger of the seas, and force and violence of the tide and winds, and the pressure of other ships, stranded and sunk, and the goods therebj- 1 In Godin v. London Ass. Co., I Burr. 489, 490 (1758), Lord Mansfield, C. J., for the court, said : — " Before the introduction of wagering policies, it was, upon principles of conven- ience, very wisely established, ' that a man should not recover more than he had lost.' Insurance was considered as an indemnity only, in case of a loss : and therefore the sat- isfaction ought not to exceed the loss. This rule was calculated to prevent fraud ; lest the temptation of gain should occasion unfair and wilful losses. " If the insured is to receive but one satisfaction, natural justice says that the sev- eral insurers shaU all of them contribute pro rata, to satisfy that loss against which they have aU insured. " No particular cases are to be found, upon this head ; or, at least, none have been cited by the counsel on either side. " Where a man makes a double insurance of the same thing, in such a manner that he can clearly recover against several insurers, in distinct policies, a double satisfaction, the law certainly says, ' that he ought not to recover doubly for the same loss, but be content with one single satisfaction for it.' And if the same man really, and for his own proper account, insures the same goods doubly, though both insurances be not made in his own name, but one or both of them in the name of another person, yet that is just the same thing; for the same person is to have the benefit of both policies. And if the whole should be recovered from one, he ought to stand in the place of the insured, to receive contribution from the other, who was equally liable to pay the whole." See Rogers v. Davis, 2 Park Ins. (8th ed.), 601 (N. P. 1766) ; Davis v. Gildart, 2 Park Ins. (8th ed.) 601 (N. P. 1767) ; Thurston u. Koch, 4 Dall. 348 (U. S. C. C, D. Pa., 1800) ; Potter v. Marine Ins. Co., 2 Mason, 475 (1822) ; American Ins. Co. v. Griswold, 14 Wend. 399 (1835) ; McAllister v. Hoadley, 76 Fed. E. 1000 (U. S. D. C, S. D. N. Y., 1896). — Ed. 804 USHER V. NOBLE. [CHAP. VIII. totally lost. The declaration also contained the money counts. The defendant pleaded non assumpsit, and paid £14 into court generally upon the whole declaration. And at the trial before Lord Ellen- borough, C. J., at Guildhall, a verdict was found for the plaintiff for the damages laid in the declaration, subject to the opinion of the court upon this ease. (It being agreed that the amount of the damage should be settled b^- arbitration, if the court should be of opinion that the plaintiff was entitled to recover anj-thing be^'ond the sum paid into court). On the 4th October, 1807, the ship "General Miranda" arrived from Jamaica with the plaintiff's goods insured on board in the river Thames, and anchored near the entrance into the West India docks. Shortly afterwards, and as soon as the necessary forms were complied with, the vessel left her anchorage in the river for the purpose of entering these docks, in order to unload her cargo there ; but on her near approach, and when about to go through the dock gates, she was wrongfully refused admittance, and ordered back by the servants of the company, under whose direction and management these docks were placed. Upon this she returned back to the river, and endeavored to regain a place of safety there ; but this was found impracticable ; and the best thing that could be done was to moor her to a chain near the entrance to the docks, at which several other vessels that had returned from such entrance had previously moored. This was accordingly done, and the " General Miranda," being the vessel nearest the shore, was at the falling of the tide forced by the violence of the current and pressure of the other ships upon a shoal or bank of the river, and was there bilged and stranded ; and, in consequence, a part of the plaintiff's goods consisting of coffee was greatly damaged. In consequence of this the plaintiff brought an action against the West India Dock Company, and recovered a verdict against them for the amount of the loss, estimated according to the market price of coffee in London at the time when the loss took place, but wbich was less than the prime cost of the coffee at Jamaica. The defendant obtained a judge's order for liberty to inspect and take copies of the statement of the loss, and the following was delivered as such copy : — " Statement of average per ' General Miranda,' Orr. Jamaica to X,ondon. Amount of goods per invoice No. 1 & 2, £ s. d. and bills of lading No. 3&4 6326 1 Insuring £7600 to cover, as under, £6750 at 15 gs. per cent 1063 2 6 850 12 107 2 £7600 Policy 19 Carried over 1189 4 6 6326 • 1 SECT. I.] USHEE V. NOBLE. 805 Brought over 1189 Commission J- per cent for effecting . . . Commission ^ per cent for settling in case of loss Deduct Amount of sound coffee and wood per invoice No 5, and landing account No. 6&7 2570 3 Insurance on £3085 to cover, as under, £2740 at 15 gs. per cent . . 413 11 345 43 9 4 Policy for £3085 7 14 3 Commission J per cent for effecting 15 8 6 Ditto ^ per cent for recovery in case of loss 15 8 6 — 513 11 1189 4 38 6 £ s. d. 6326 1 38 1265 4 6 7591 4 7 3083 14 9 Add General average per Mr. Parkinson, award No. 8 4507 189 9 10 4 5 4696 14 3 Deduct Proceeds of damaged coffee per A sale, No. 9 174 12 9 Recovered from West India Dock Company per state- ment,i No. 10 ." . . . . 2741 15 8 From which deduct extra law expenses 98 18 8 2642 17 2817 9 9 1879 4 6 If £7600 : 1879 : : £100 Answer, £24 : 14 : 6^ per cent exclusive of return of premium for sailing in companj- with armed ship. I The West India Dock Company Cwt. To amount of loss on 748 2 10 damaged coffee, per " General Miranda," averaged per account sales of sound coffee, per said vessel, 430 3 12 of £ s. d. sound coffee having netted £1569 13s. Irf 2727 4 Amount of general average 189 4 5 2916 8 5 Deduct Proceeds of damaged coffee 174 12 9 2741 15 8 — Kep. 806 USHER V. NOBLE. [CHAP. VIII. The only question at the trial was, by what measure the damage was to be estimated between the assured and the underwriters. The plain- tiff contended that he was entitled to such proportion of the prime cost as would correspond with the proportion of the diminution of the market price occasioned by injury which the coffee had sustained, according to the rule laid down in Lewis v. Ruoker, 2 Burr. 1169. If this measure should be adopted, the sum paid into court was insuflScient. The de- fendant contended that the case of Lewis v. Rueker did not apply to this case ; and that the plaintiff was only entitled to the difference be- tween the actual value of the damaged and sound coffee at the market price in London, when the ship arrived ; and according to which rule he had received a compensation from the West India Dock Companj', who had been the cause of the loss. If the plaintiff were entitled to recover according to the prime cost, it was admitted that the £7 per cent paid into court was not enough to cover the whole extent of the defend- ant's liability, the ulterior amount of which was agreed to be settled b^' arbitration. If the plaintiff were entitled to recover only according to the actual value of the coffee in London when the loss took place, the sum paid into court was sufficient to recover the defendant's liabilitj-. The question therefore was whether the plaintiff were entitled to recover anything beyond the sum paid into court? If he were, the present ver- dict was to stand, and the amount to be settled by arbitration ; if not, a nonsuit was to be entered. Abbott, for the plaintiff. Carr, for the defendant. Lord ELLENBOitonGH, C. J. As the court will have to promulgate a rule which will bind, in future in similar cases, it will perhaps be more willingh- acquiesced in if delivered upon more mature deliberation ; we will therefore take further time before we give our opinion. The ques- tion will be whether every case be not in effect the case of a valued policy so far as it involves this consideration, and consequently within the rule laid down in Lewis v. Rueker. Where the parties have put an express valuation on the subject-matter of the insurance, that rule is admitted to govern ; and the question is whether general usage has not established the invoice price as the basis of the value in all other cases wliere the policy is open. Some rule there must be, and I rather think that the one laid down in Lewis v. Rueker was adopted as being upon the whole the most convenient in all cases. The case stood over for further consideration till this terra, when his Lordship delivered the opinion of the court. It is admitted that the assured is entitled to an indemnity, and no more ; but by what standard of value the indemnity sought should be regulated is the question. In the case of a valued policj', the valuation in the policy is the agreed standard ; in case of an open policy, the invoice price at tlie loading port, including premiums of insurance and commission, is, for all purposes of either total or average loss, the usual standard of calculation resorted to for the purpose of ascertaining this SECT. I.] BYENES V. NATIONAL INS. CO. 807 value. The selling or market price at the port of delivery cannot be alone the standard ; as that does not include premiums of insurance and commission which must be brought into the account, in order to constitute an indemnity to an owner of goods who has increased the original amount and value of his risk by the very act of insuring. The proportion of loss is necessarily calculated through another medium, namelj', by comparing the selling price of the sound commodity with the damaged part of the same commoditj' at the port of delivery. The dif- ference between these two subjects of comparison affords the proportion of loss in any given case ; i. e., it gives the aliquot part of the orig- inal value, which may be considered as destroj-ed by the perils insured against, and for which the assured is entitled to be recompensed. When this is ascertained, it only remains to applj' this liquidated proportion of loss to the standard by which the value is calculated, i. e., to the invoice price, being itself calculated as before stated ; and you then get the 1-half, the l-4th, or l-8th of the loss to be made good in terms of money. This rule of calculation is generally favorable to the under- writer, as the invoice price is less in most cases than the price at the port of delivery ; but the assured may obviate this inconvenience by making his policy a valued one, or by stipulating that, in case of loss, the loss shall be estimated according to the value of like goods at the port of delivery. In the absence of any express contract on the subject, the general usage of the assured and underwriters supplies the defect of stipulation and adopts the invoice value, with the additions I have men- tioned as the standard of value for this purpose. In this case, after re- ceiving the money paid by the West India Dock Company, the assured is left short of his full reimbursement (even on the defendant's own cal- culation) by the premiums of insurance at 15 guineas per cent commis- sion, and extra costs of suit, for which no allowance was made by the West India Dock Compan}- ; so that quacunque via data, the £7 per cent paid into court is too little. The consequence is that the verdict must stand, subject to the reference of account to an arbitrator, as agreed by the case. BYRNES AKD Othees v. NATIONAL INSURANCE CO. Supreme Court of New York, 1823. 1 Cow. 265. Assumpsit upon a policy of insurance. The ship "Hercules," owned by the plaintiffs, was insured by the defendants, on a voyage from New York to Liverpool, and at and from thence to New York, to the amount of $10,000, by policy in the usual form, dated October 19, 1820. In coming down the river, after leaving the dock at Liverpool on her return voj'age, she got aground, and was obliged to put back, unload her cargo, and repair. She had been copper-sheathed about two years 808 BYENKS V. NATIONAL INS. CO. [CIIAP. VIII. before, and some of the sheathing having been rubbed oflf bj^ grounding, a part of it was taken off and replaced by new sheathing, also of copper. The bills and costs of her repairs, adjusted, and admitted, between the parties to be particular average, after deducting the usual allowance of one third, new for old, amounting to $1,612.76, all of which the defend- ants paid, except $279.26, their liability to pay which depended upon the determination of the question hereafter mentioned, and which sum was retained by them until the question should be decided by this court. The tradesmen who furnished the copper for re-sheathing the ship, re- tained and credited in their account the value of the old copper taken off the vessel, as far as it went, in part payment. The new copper furnished amounted to £358 5s. 8d., and the old copper received by them amounted to £188 10s. They rendered their bill accordingly, charging the new copper furnished and crediting the old copper re- ceived by them, which left a balance due them of £169 15s. 8d., which the plaintiffs paid, and which balance only the}- charged in their ac- count of particular average. Upon this balance the deduction of one third new for old was made. But the defendants insisted that they had a right to claim the deduction or allowance of one third, new for old, upon the whole amount of the bill for new copper used in the repair, including the £188 10s. which was paid for by the old copper taken by the tradesmen. On the other hand, the plaintiffs contended, that the deduction in respect of the copper ought to be made only on the balance of £109 15s. 8d., paid by them to the tradesmen, and for which only they made their claim on the defendants. If the defend- ants were right in their position, then the particular average had been fully paid, and it was agreed that they would be entitled to judgment ; but that, if the plaintiffs were right, then they would be entitled to judgment for the $279.26, with interest from 23d June, 1821, that being ' the amount of the deduction claimed, of the one third new for old, on the sum of £188 10s. paid by the old copper. A copy of the trades- men's bill as furnished, and of the adjustment between the parties, was annexed to the case ; and a cognovit was given to cover the amount, if the court should be of opinion with the plaintiffs. W. Slosson, for the plaintiffs. iT". Wells, contra. Curia, per Sutherland, J. The general rule is unquestionable that, in the adjustment of a claim made by the insured upon the under- writers for repairs put upon a vessel, the underwriters are entitled to a deduction of one third from the expenses of the repairs ; ■^ or, in other words, that they are bound to pay but two thirds of the expense. This deduction of one third new for old, as it is termed, is allowed upon the supposition that the vessel, after being repaired, is in better condi- tion than she was at the commencement of the voyage, in consequence of new materials having been substituted for old. And, as the contract 1 Stevens on Average, 159 ; Da Costa v. Newnham, 2 T. R. 407 ; Smith v. Bell 2 Caines' Cas. 153 ; Dunham v. Commercial Ins. Co., 11 Johns. 315. — Rep. SECT. I.] BYRNES V. NATIONAL INS. CO. 809 of the underwriters is one of indemnitj- merely, it is equitable that a deduction should be made in their favor, from the cost of the repairs, equal to the enhanced condition of the vessel. To avoid the inconvenience and embarrassment of an inquiry in each particular case into the difference in value between the present and former condition of the vessel, it has been established as a general rule that this difference shall be estimated at one third of the cost of the repairs. In the English courts, if the inquiry is sustained and the repairs are made wtien the vessel is new, that is, in her first voyage, no deduction is allowed to the underwriters ; because the vessel being new, it is not to be supposed that she is put in better condition by the repairs. But in this court that distinction has not been adopted ; and the deduction is made alike, whether the vessel is new or old.^ This being the general principle, the question is presented in this case, whether the value of the old materials, whatever it may be, is to be deducted from the gross amount of repairs, and the deduction of one third new for old made from the balance ; or whether tiie one third is to be deducted from the gross amount, and the old materials to belong to the underwriters. For instance, suppose the gross amount of repairs to be four hundred dollars — the old materials to be worth one hundred dollars. The assured contend that the amount is to be thus stated : — Repairs $400.00 Deduct value of old materials 100.00 Balance 300.00 Deduct one third new for old 100.00 To be paid by underwriters $200.00 The underwriters, on the contrary, contend that the true principle of settlement is as follows : — Repairs $400.00 Deduct one third new for old 133.33 266.67 Deduct also old materials applied to repairs . . . 100.00 $166.67 This question has never arisen, that I can find, either in the English courts or our own ; and, although cases will not frequently occur in which the old materials will be ofsufflcient value to induce a discussion of it, some rule upon the subject ought to be established. It seems to me to resolve itself into the inquiry to whom do the old materials belong ? 1 Dunham v. Commercial Ins. Co., II Jolins. 315. — Eep. 810 RYDER V. PHCENIX INS. CO. [CHAP. VIII. If they belong to the assured there is an end of the question ; for having been applied bj' them to the payment of the repairs, pro tanto, the assurer cannot possibly claim any further benefit from them. If there is anything in the nature of an abandonment of them to the underwriters, then the principle contended for by the defendant may be well founded. But there is nothing like an abandonment. The assured do not, and could not, claim from the underwriters the gross amount of repairs. They can only claim the difference between that amount and the value of the old materials ; for to that extent only are they injured, and an indemnity is all that they can claim. It is more analogous to the adjusting of a partial loss,^ in which case the title to the goods remains in the assured. The rule, therefore, seems to me to be this : to apply the old mate- rials towards payment of the new, and to allow the deduction of the one third new for old upon the balance. This rule is simple, and capable of universal application. It aiFords full indemnity to the as- sured, and gives to the underwriters all the benefit that the principle, upon which the practice of deducting one third new for old has been established, will justify. The plaintiffs are, therefore, entitled to judg- ment for $279.26, with interest from the 3d day of June, 1821, as stated in the case. Judginent for the plaintiffs accordingly.'^ RYDER AND Another v. PHCENIX INSURANCE CO. Supreme Judicial Court of Massachusetts, 1867. 98 Mass. 185. Contract on a policy of insurance against the usual marine risks, made by the defendants June 26, 1866, for one year from June 14, 1866, on the barque " Dreadnaught," for seven thousand eight hundred dollars, payable to the plaintiffs. The vessel was valued at thirty thousand dollars in the policy, on the face of which was printed the following clause : "It is hereby agreed, that if the insured shall have made any other insurance upon the barque aforesaid, prior in date to this polic}', then the said insurance company shall be answerable only for so much as the amount of such prior insurance may be deficient towards fully cov- ering the property hereby insured, whether for the whole voyage, or from one port of lading or discharge to another ; and the said insur- ance company shall return the premium, or a ratable part thereof, upon so much of the sum by them insured, or for such part of the voyage as 1 Vide Lawrence v. New York Ins. Co., .3 Johns. Cas. 217 ; Lewis v. Eucker, 2 Burr. 1167, 1170 ; Johnson v. Sheddon, 2 East, 581. — Rep. 2 Ace. : Brooks v. Oriental Ins. Co., 7 Pick. 259 (1828). See Wallace v. Ohio Ins. Co., 4 Ohio, 234 (1829). — Ed. SECT. I.J KYDEK V. I'HCENIX INS. CO. 811 the3- shall be exonerated from by such prior insurance ; provided, that uo return premium shall be made for any passage whereon the risk has once commenced. And in case of any insurance upon the said barque, whether it be for the whole or part of the voyage, subsequent in date to this policy, the said insurance company' shall, nevertheless, be an- swerable to the full extent of the sum herein insured, without right to claim contribution from such subsequent insurers ; and shall accord- ingly be entitled to retain the premium by them received, in the same manner as if no such subsequent insurance had been made. And, in case of loss, such loss shall be paid in sixty daj-s after proof and adjustment thereof." The declaration contained also a count in mone}" had and received for the premium of seven hundred and fortj'-two dollars paid upon this policy. The case was submitted to the determination of the court on agreed facts, the material part of which was as follows : The barque was totally lost at sea on August 2, 1866. The defend- ants, a corporation established under the laws of New York and doing business in this Commonwealth under the laws thereof, admit that they had due notice of the loss, and that after proof and adjustment thereof more than sixty days elapsed before this action was brought. The plaintiffs, on June 26, 1866, and at the time of the loss, had other sub- sisting policies on the barque, from the Triton, the New England, and the Equitable Insurance Companies, to the amount of twenty-two thousand dollars, against the same risks as the policy made by the defendants. The Columbian Insurance Company, a corporation estab- lished under the laws of New York and doing business in Boston b}' an agent under the statutes of this Commonwealth, had also, in November and December, 1865, made three policies, amounting in all to the sum of twenty-four thousand dollars, on the same property and against the same risks, each for a year, which expired in November, 1866. In all these various policies, as in that made by the defendants, the vessel was valued at thirty thousand dollars. In Januarj', 1866, the Columbian Insurance Company became notoriously insolvent, and the plaintiffs proposed to pay the premiums due on their policies therein up to the time when the vessel had been last heard from, and to cancel the same ; but this proposition was not accepted. In February, 1866, a judgment was entered by the Supreme Court of New York declaring that com- pany dissolved and appointing receivers of their property. [The pro- ceedings in that case are stated in Taj-lor v. Columbian Insurance Co. 14 Allen, 353.] The receivers so appointed have never paid, and it is now unlikely that they will ever pay, any dividends to the creditors of the company. JR. H. Dana, Jr., and L. S. Dahney, for the plaintiffs. B. It. Curtis and G. L. Hoberts, for the defendants. Grat, J. In case of double insurance, that is, of two insurances on the same interest at the same time and against the same risks, the 812 EYDER V. PHOENIX INS. CO. [CHAP. Till. general maritime law and the custom, understanding and practice of merchants have often differed from the common law as to the propor- tions in which the different underwriters should contribute, and the mode of enforcing their liability'. By the general maritime law and the French ordinance of 1681, in case of two policies upon the same property, tlie amount of the first of which equalled its full value, that alone was binding, and the second underwriters were exempt, and returned the premium, resei-ving one half per cent ; and if the first policy did not amount to the whole value of the property, the second underwriters answered for the surplus only. 2 Valin, 73, and authorities cited. As was observed by Mr. Justice Paterson in Thurston v. Koch, 4 Dall. 350, " the solvency' of the first insurer to the full value being assumed, the ordinance is predi- cated on the principle that there remains no property to be insured, and of course no risli to be run." A like rule prevailed bj' custom of merchants in England in the latter part of the seventeenth century. Malynes Lex Merc. 112, 118 ; African Co. v. Bull, 1 Show. 132. Before the American Revolution the rule of the common law was declared and established, that in this, as in any case of two sureties for the same debt, the creditor might recover the whole amount from either, leaving him to sue the other for contribution. Godin v. London Assurance Co., 1 Burr. 492, 495 ; Millar on Ins. 266 ; Marshall on Ins., part 1, c. 4, § 4. See also Fisk v. Masterman, 8 M. & W. 165 ; Bruce V. Jones, 1 H. & C. 769. In the leading American case of Thurston v. Koch, 4 Dall. 348, xxxii, decided in the Circuit Court of the United States in Pennsj-lvania in 1800, the law of England, as thus estab- lished before the Declaration of Independence, was held to be binding as law here, although the usage in Philadelphia for years had been to settle losses in accordance with the French ordinance and the early English custom. And that decision has been uniformly recognized and followed, in the absence of express stipulation to the contrary in the policy. Craig v. Murgatroyd, 4 Yeates, 161 ; American Insurance Co. V. Griswold, 14 Wend. 461, 473, 493 ; Millaudon v. Western Insurance Co., 9 La. 27; Cromie v. Kentucky & Louisville Insurance Co., 15 B. Monr. 432 ; 3 Kent Com. (6th ed.), 280, 281. But this rule, which obliges the assured to pay a double premium while he secures only one insurance, and allows him to elect, at any time within the period of the statute of limitations, which insurer he will sue and compel to seek contribution of the other (who may mean- while have become insolvent), has proved so unsatisfactory to mer- chants and underwriters, that clauses substantialh' reviving the older rule have been generallj' introduced in this country. And such a clause is contained in the policy now in suit. The manifest purpose of this clause is in case of loss to fix by the policy itself the amount for which the underwriter shall be responsible, unaffected by the subsequent insolvency of either underwriter or by any choice of the assured. Insurance of the solvency of an insurer is per- SECT. I.] EYDEE V. PHCENIX INS. CO. 813 mitted and practised on the continent of Europe, but has never been in use in England or America. Marshall on Ins., part 1, c. 4, § 3 ; 3 Kent Com. 280. The contingency in which the liabilit}- of the defendants is limited by their policy is not " if there shall be any prior insurance actually existing at the time of the loss," but " if the insured shall have made anj' other insurance prior in date " upon the same property, in which is of course implied " against the same risks, and outstanding at the time of obtaining the second insurance." The amount for which these defendants as second insurers shall be answer- able is declared to be, not that amount which the prior insurers maj' be unable to paj-, but " so much as the amount of such prior insurance may be deficient towards fully covering the property hereby insured, whether for the whole voyage, or from one port of lading or discharge to another." In other words, it is determined, not hy the amount which can be recovered of the prior insurers, dependent upon the contingency of their solvency, but bj- the sum insured by them, as expressed on the face of their policy. The premium to be returned is not merely upon so much of the sum insured as the defendants shall not be required to pay, by reason of its being recovered of the earlier under- writers, but upon so much of the sum or for such part of the voyage insured by them as they "shall be exonerated from by such prior insurance," that is, by the fact of being thereby already- insured. The stipulation does not indeed applj' unless both policies according to their terms cover the property at the time and place of the loss. It was therefore held in Kent v. Manufacturers' Insurance Co., 18 Pick. 19, that if the first policy had expired by its own limitation of time before the loss, the second insurers were liable. But the court said, in illustration of the proposition that the clause regulated the extent of the liability which the second underwriters incurred, " If, for example, the subsequent policy covers the same vessel, voyage and risks, as were covered by the prior policy, the -assured would not by the terras of the contract be entitled to recover anything upon the subsequent polic}-. And it is well settled that nothing done by the parties to the first policj' after the execution of the second can alter the relative situa- tion of the parties to the latter, as fixed bj' the terms of their own contract. It was therefore held by Mr. Justice Story that a discharge of the first policy by agreement of the parties to it, after the making of the second policy, though before any risk attached under the latter, had no effect upon it. Seamans v. Loring, 1 Mason, 127. In Macy V. Whaling Insurance Co., 9 Met. 354, this court approved of that decision ; and held that the cancelling of the first policy after the making of a second containing a clause like that now in question, even before the loss, did not increase the liability of the second insurers ; for, by a construction which would allow it such an operation, as was said by Mr. Justice Hubbard, speaking for the court, " The relations of the parties are altered injuriously to the second underwriters without their consent, and the effect is not only to increase the risk directly, 814 EYDEE V. PHCENIX INS. CO. [cHAP. Till. but its tendency, if allowed, would be to make the subsequent under- writers insurers of the solvencj' of the prior ; because, on any misfor- tune happening to the prior underwriters, by which their ability to pay losses should be impaired or destroyed, the party would cancel his policy to enable him to resort to his subsequent insurers for losses for which they would not be accountable in case of the continuance of the prior policj'." See also McKim v. Phoenix Insurance Co., 2 Wash. C. C. 95 ; Murray v. Insurance Co. of Pennsylvania, Id. 189. The facts agreed in this case show that at the time of the making of the policy in suit the plaintiffs held other policies prior in date upon the same property, to its full valuation against the same risks, which bad not been then cancelled, and which would not expire according to their terms until after the time when the loss happened. Upon the grounds already stated, neither the ipsolvency of the Columbian Insur- ance Company and the want of funds to pay its liabilities, nor any discharge of those liabilities without the defendants' consent since they made their policy, could increase the liability which thej' by the terms of that policy had assumed. We need not particularly consider the effect of the proceedings in the courts of New York ; for, even if the corporation was thereby dissolved (which is by no means clear), its liabilities would be no more thrown upon the defendants, who were not sureties for the payment of their debts nor insurers of their solvenc}', than if the prior underwriters, being natural persons, had died or become insolvent without performing their agreement. The very statutes of New York, upon which the plaintiffs rely, by providing a mode in which the policies of an insolvent corporation maybe cancelled imply that if not so cancelled they continue to be existing contracts. Kev. Sts. of N. Y. (5 ed.) part 3, tit. 4, c. 8, § 86. Leroy v. State Insurance Co., 2 Edw. Ch. 673 ; In re Croton Insurance Co., 3 Barb. Ch. 643. The cases of fire insurance, cited for the plaintiffs, in which this court has held that a policy, declared on its face to be void in case of previous insurance on the same property, or in case of obtaining sub- sequent insurance, was valid if the only other insurance was void for misrepresentation or by its own terms, have no application to this case ; for they were not decided, as the learned counsel argued, upon the ground that such other insurance was worthless and could not be enforced, but upon the ground that it was in law and in fact no insurance. As the defendants' policy never attached, the plaintiffs, as was admitted at the argument, are entitled, upon the second count in their declaration, to Judgment for a return of premium?- 1 See Carleton v. Cliina Mnt. Ins. Co., 174 Mass. 280 (1899).— Ed. SECT. I.J SHAWE V. FELTON. 815 SECTION I. (continued). {B) Valued Policies. SHAWE V. FELTON. King's Bench, 1801. 2 East, 109. This was an action on a policy of insurance on the ship " Indian," and goods, valued at £6,600, on a voyage at and from Liverpool to the coast of Africa, during her stay and.trade there, and from thence to her port or ports of discharge, sale, and final destination in the West Indies and America, and until she was moored twentj'-four hours in safety. At the trial before Lord Kenton, C. J., at the last Sittings at Guildhall, it was proved that the ship was seaworthy when she sailed from Liver- pool ; and it was not disputed that the insurers were interested in the ship and outfit (including provisions and sea-stores laid in for the slaves, which were to be taken in on the coast of Africa, and also wages ad- vanced to the crew) to the extent of the value insured. The ship arrived on the coast of Africa, tooli in a cargo of slaves there, and proceeded to Demerara. In the course of her voj'age thither, and in calm weather, she met with a violent concussion, described to resemble an earthquake, from which she received so much damage that it was with the greatest difficulty she was kept afloat by pumping until she reached Demerara, almost a wreck, where she was obliged to be lashed alongside of a hulk to keep her from sinking ; and in attempting to remove her from thence to the shore, a few days afterwards, she sunk, although the dis- tance was only about fifty yards. At the time of her arrival at Deme- rara her stores were considerably expended. The ship was originally destined there, in the first instance, with directions to the captain to proceed to other ports and places in case he could not dispose of the slaves there at a certain average price. And his letter of instructions from his owners contained the following direction : "As 3'our vessel is not according to the late act of Parliament,^ we would have you sell her in the "West Indies, provided you can procure £1,200, but expect you will get from £1,500 to £1,200. Should you not dispose of her, j'ou will procure what freight you can for Liverpool." In fact, the vessel having been surveyed at Demerara, and condemned as unserviceable, was sold only for £388. In consequence of this, the captain was obliged to dispose of all the slaves there, not indeed so advantageously as he 1 This was one of the several acts which passed for the regulation of the African slave trade ; limiting the number of slaves to the tonnage, and requiring the vessels to be of a certain bnild. The act alluded to was to take place after the voyage in question commenced. — Bep. 816 SHAWE V. FELTON. [CHAP. VIII. might otherwise have done had he been enabled to proceed to other places, but still so as to cover the average price to which he was lim- ited by his instructions. The plaintiff gave notice of abandonment to the underwriters, and recovered as for a total loss on the ship ; and the verdict was taken for the full amount of the sum insured, it being a valued policj'. A rule was obtained, calling on the plaintiff to show cause why the verdict should not be set aside and a new trial had, on the grounds that the subject matter of the insurance was so much reduced from the origi- nal value at the time of the loss (if it were to be considered as a total loss), that the sum valued in the policy ought not to conclude the under- writer. That a policy, though valued, was still no more than a contract of indemnity, and was only meant to bind the parties when the subject- matter continued nearly in tlie same state as at first, allowing for usual wear and tear. That in particular it ought not to conclude in this case ; because not only the actual worth of the ship was by the owner's own confession of so much less than the stipulated value, but also the stores which were included in the insurance were profitably expended by him in the purchase and sustenance of the slaves, all of whom had been brought to an advantageous marJiet ; and therefore, so far from the plaintiff having incurred anj- loss in this respect for which he was en- titled to an indemnity, he was in fact a considerable gainer bj' the adventure. The Attorney-General (Sir ^c?war(?iaM)), ErsTcine, Park, and Wood, showed cause against the rule. Gibbs and Cassels, in support of the rule. Lord Kenton, C. J. The jury had no doubt but that the ship was seaworthy when she sailed, and that there was a total loss ; for tliough she arrived at Demerara, she was never moored twenty-four hours, nor a moment in safety. She came there a perfect wreck, having received her death's wound at sea, and was with the utmost difficulty kept afloat till all the people on board were landed. It is not pretended now that there was any fraud in the case ; but it is contended that the under- writer is not bound by the valuation in the policy. It is of little conse- quence to inquire what my opinion would have been upon the subject of valued policies in the year 1746, immediately after the Stat, of the 19 Geo. II. passed : for very soon after they were decided to be legal by as cautious and upright and painstaking a judge as ever presided in this court (Lord C. J. Lee) . He was succeeded by Sir Dudley Ryder, and this latter by Lord Mansfield ; and during all this period such poli- cies have been sanctioned hj one uniform course of decisions. All this is now supposed to be wrong ; and the rules by which this and other commercial nations have so long regulated their dealings is now wished to be disturbed ; but I will not lend my aid to open such a new and wide door of litigation, much exceeding everything that has gone be- fore. If we were to enter into the calculations which have been con- tended for, every valued policy would be to be opened. Every man's SECT. I.J SnAWE V. FELTON. 817 meal on board a ship would take from the value of the original outfit. Is tills to be endured? Will good faith admit of it? Where is the line to be drawn between a greater or less diminution of the value ? There- fore as the rule and practice of valued policies have been acted upon and sanctioned since the passing of the statute, I am not one who wish quieta movere. Grose, J. We are desired bj' this motion to open a valued policy, contrarj^ to the practice, and in a case where no fraud is imputed ; for doing which no authority has been cited. If we were to admit it in this instance, it would be required in every other ; and thus a door would be opened to endless litigation. Therefore, to avoid great injustice to individuals, and great public inconvenience, I think we are bound to refuse the application. Lavtrence, J. As the practice of binding parties as to the amount of their interest by valued policies has obtained ever since the Stat, of Geo. II., it would require ver}' strong reasons to show that it is wrong. That statute was passed to prohibit mere wagering policies by persons insuring who had no interest in the thing insured, and therefore it avoids policies made, interest or no interest, or without further proof of inter- est than the policy itself. The effect therefore of a valued policy is not to conclude the underwriter from showing that the assured had no inter- est, and that in fact it was a mere wagering policj' within the statute ; but in order to avoid disputes as to the quantum of the assured's inter- est, the parties agree that it shall be estimated at a certain value. Here it is not pretended that the subject matter of the insurance was not at first of the value estimated in the policy. Then how does this differ from the case of an open policy in this respect? Would it not be suffi- cient for the assured in an open policy to prove that at the time the ship sailed the subject-matter of the insurance was of such a value ? Is not that the period to look to, and not the state of the thing at the time of the total loss happening? If on account of the peculiar nature of an African vo3-age there ought to be a difference in this respect between these and other trading adventurers, the underwriters may, if they please, introduce a special clause in the policy to provide for the dimi- nution in value by the expenditure of stores and provisions in the purchase and sustaining of the slaves. As it stands at present, there appears no ground for making any such distinction. Le Blanc, J. The present is an extreme case, because the loss happened at the last period of the voyage at which it could happen. But the same thing must occur more or less in every polic}' upon ship and outfit. The value of the property must be continually diminishing, and if the loss happen at the latter end of a long voyage, no doubt the property must be considerably deteriorated at the time by the usual wear and tear ; and yet it is never objected that the underwriter is not liable for the original value. As to the owner himself having estimated the value of the property at so much less than the sum at which it was insured, many things may happen to render a vessel of less value 52 818 SHAWE V. FELTON. [CHAP. Tilt when the voj'age is concluded, although the subject matter exists ; the amount of the repairs required, &c. The rule having been so long laid down as to valued policies, it is too late to open it again. Jiule discharged.^ 1 In Grant v. Parkinson, 3 Doug. 16 (1781), Lord Mansfield, C. J., said: "Before the statute, nothing was so common as a valued policy ; and then, at the trial, there was no necessity to prove either value or interest, whether the words ' without further proof than the policy' were or were not added. Then this statute was made; and in the construction of it, it has been held, whether right or wrong it is now immaterial to inquire, that a valued policy is not void, but it is sufBcient if the party proves some in- terest. The other side may show that this is a mere evasion of the act ; but in general nothing is necessary on a valued policy but to prove some actual interest. In the pres- ent case the insurance is made by a contractor for spruce beer on the profits to arise from a cargo of molasses. If the ship arrives, the profit is certain. The policy is not meant to conceal the interest, but to get rid of the proof of the quantum." In Barker v. Janson, L. E. 3 C. P. 303 (1868), a ship worth more than £8,000 sailed from England, and on the outward voyage was injured to such an extent that the cost of repairs would exceed the value when repaired. While the ship was at Calcutta in this condition, the owners, in ignorance ojE the facts, obtained insurance for £6,000 in a time policy that valued the ship at £8,000. During the time of this policy, and before repairs had been executed, the ship was lost in a storm. The jury found that the vessel was a ship at the time of the storm. It was held, that the policy attached, and that, although because of the original damage the owners had recovered £7,000 from other underwriters as for a partial loss, the valuation could not be opened. BoviLL, C. J., said : " There is no doubt, however, now that the parties may use either an open or a valued policy. In this case both parties have agreed upon a time policy (in which there is no warranty of seaworthiness)', and have further agreed that, what- ever its condition may have been at the time when the policy attached, they will treat the value of the vessel as of a certain amount, and both parties acting in good faith are willing to be bound by that valuation. If such be the agreement of the parties, upon what principle would the court be justified in setting it aside ? An exorbitant valua- tion may be evidence of fraud, but when the transaction is bonajide, the valuation agreed upon is binding." And Montagtie Smith, J., said: "It has been found convenient that the value of a ship should be agreed on, and stated in the policy, in order to avoid such inquiries as that now brought before us. If we were to grant this rule, it would become a question of degree in each case whether the difference in value was suiEcient to entitle the parties to re-open the valoation. A thousand things might lessen the value of a vessel between the time of a policy being made and the time of its attaching, such as natural decay, worms, or the ship becoming a drug in the market ; and aU the evils intended to be avoided by this kind of policy would arise again. The estimated value, if excessive, may often be evidence of fraud, or of an intention to make a wagering policy ; bat here it is admitted that there was no intention to value the vessel beyond what was reasonable and fair. I think there is no pretence, either, for saying that there was a mistake ; it is a misuse of the term, for the intention was to avoid all questions as to what was the real value of the ship, and both parties were aware that it could not at the time be ascertained with certainty what that value was." See Lidgett v. Secretan, L. R. 6 C. P. 616 (1871). —Ed. SECT. I.J FOKBES V. ASPINALL. 819 FOEBES AND Another v. ASPINALL. King's Bench, 1811. 13 East, 323. This case came before the court upon a motion for a new trial in an action on a policy of insurance, in which the plaintiffs had recovered a verdict at the Sittings after last Trinity Term at Guildhall. It was first moved in the last term, when a rule to show cause was granted ; and it was afterwards argued at length in the same term by the Attornej'- General, Scarlet and Richardson, on the part of the plaintiffs, and by Park and Littledale for the defendant. The court took till this term to consider of their judgment ; in delivering which the Lord Chief Justice went so fully into the arguments urged and the cases cited at the bar, that it is unnecessary to repeat them. The insurance, as it concerned this case, was on freight valued at £6,500 upon the ship " Chiswick " " at and from any port or ports in Hayti to Liverpool, or her port of discharge in the United Kingdom." The declaration alleged that on the 9th of July, 1808, the ship was in safety in a certain port in Hayti, and that divers goods and merchan- dises were then and there loaded on board to be carried on the voj'age insured ; that the plaintiffs were interested in the freight, &c. to the amount insured ; and that on the 15th Jul3', the ship, with the goods on board, was lost by the perils of the seas, and the plaintiffs thereby lost their freight, &c. The facts proved and admitted were that the plaintiffs were the owners of the ship " Chiswick"; that she sailed from Liverpool with the goods to Haj'ti to trade there, and to bring home a return cargo of produce, and arrived at Hayti on the 4th of Julj', 1808, with goods to be there bartered for other goods to be brought back to Liverpool. Part of the goods were accordingly bartered and exchanged for fift^-- five bales of cotton, which were shipped on board at Jaquemel (on the south side of Hayti), the remaining part of her outward cargo was still on board, and would in all probability have been exchanged for other goods, but for the loss after-mentioned. That the ship proceeded from Jaquemel to Au Cayes, another port of Hayti, to barter away the resi- due of her outward cargo, and to complete her lading home ; and with such cargo, and the fifty-five bales on board, was in safety on the 15th of Jul}-, when, by the perils of the seas, she was driven on shore and lost. That the defendant settled for the freight of the fifty-five bales of cotton, without prejudice to the plaintiff's claim for further loss of freight, if they were entitled to it. That the remaining part of the outward cargo, though damaged, was saved from the wreck, and, in twelve days after the loss of the ship, was exchanged for 250 tons of coffee and 100 tons of wood, the freight of which would have been of larger value than the sum insured on freight, if the ship had not been lost. 820 FORBES V. ASPINALL. [OHAP. Till. Lord Ellenborough, C. J., now delivered the judgment of the court. This was a motion for a new trial in an action upon a policy of in- surance " at or from any port or ports in Hayti to Liverpool," &c., on freight valued at £6,500. The ship had sailed from Liverpool to Hayti with a cargo intended for barter ; had bartered away part of her out- ward cargo, and taken in fifty-five bales of cotton iu part of her return cargo ; and was proceeding from one port in Ha3-ti to another ; viz., from Jaquenel to Au Cayes, to barter awaj- the residue of her outward cargo, and to complete her lading home, when she met with an accident by the perils of the seas which occasioned a totalloss. If the plaintiffs be onl^' entitled to a satisfaction for a partial loss, that satisfaction has already been made, and a nonsuit should be entered. But the plain- tiffs contend that as this was a valued policy, and as part of the goods to be carried upon the freight insured were on board at the time of the loss, they are entitled to claim their verdict for a total loss. Freight is the profit earned by the ship-owner in the carriage of goods on board his ship, and an insurance upon freight is an insurance made in order to secure that profit to the ship-owner in case he is prevented by any of the perils insured against from actually earning such profit. An insur- ance upon freight has no reference to the hull of the ship, or to its outfit for the voyage, both of which are protected by insurance upon the ship ; but its sole object is to protect 'the assured from being deprived, by any of the perils insured against, of the profit he would otherwise earn bj'^ the carriage of goods. To recover, therefore, in any case upon a policy upon freight, it is incumbent on the assured to prove that unless some of the perils insured against had intervened to prevent it, some freight would have been earned ; and where the policy is open, the actual amount of the freight, which would have been so earned, limits the extent of the underwriter's liability. In every action upon such a policy evidence is given, either that goods were put on board, from the carriage of which freight would result, or that there was some contract, under which the ship-owner, if the voyage were not stopped by the perils insured against, would have been entitled to demand freight ; and in either case, if the policy be open, the sum payable to the ship-owner for freight, together with the premiums of insurance and commission thereupon, is the extent to which the underwriters are chargeable. In this case, therefore, as there was no contract under which the ship- owner could claim freight but for goods actually shipped on the home- ward voyage, the assured could have made no claim, had this been an open policy, but to the extent of the actual freight on the fifty-five bales of cotton, which were shipped for this country, and of the premiums and commission thereon. And indeed that point has been settled against this very plaintiff in an action on an open policy on this very risk, in Forbes and Another v. Cowie, in Mr. Park's Addenda to the last edi- tion, p. 604. The question then is, whether it makes any essential difference, that this is the case of a valued policy ? And we are of SECT. I.] FOKBES V. ASPINALL. 821 opinion, upon full consideration, that it does not. The object of valu- ation in a policj- is to fix b3- agreement between the parties an estimate upon the subject insured, and to supersede the necessity' of proving the actual value, by specifying a certain sum as the amount of that value. In fixing that sum, if the assured keep fairlj' within the principle of insurances, which is merely to obtain an indemnitj", he will never go bej-ond the first cost, in the case of the goods ; adding thereto onlj- the premium and commission, and, if he thinli fi.t, the probable profit; and in the case of freight, he will not go beyond the amount of what the ship would earn, with the premiums' and commission thereupon. The valuation, however, in the case of goods, looks to all the goods intended to be loaded ; and in the case of freight, it looks to freight upon all the goods the ship is intended to carry upon the voyage insured ; and if hy the perils insured against in a valued policy on goods, part only of the goods intended to be covered be lost, the valuation must be opened, and the assured can onlj- recover in respect of that part ; and so, if by the perils insured against the freight of part only of the goods to be carried be lost, the assured can onlj' recover in respect of that loss, according to the proportion which that part bears to the whole sum at which the entire freight was estimated in the valuation. If, for instance, the insurance be generallj- upon goods, and the goods intended to be protected be 500 hogsheads of sugar, and a valuation be made accord- ingly, but the ship by accident takes on board 100 only, and sails, and is afterwards lost by one of the perils insured against with those 100 on board, can it be contended that the assured shall recover to the full amount of the valuation, that is for the whole 500, when he has lost only 100? So in the case of freight, if the ship would cany 500 tons, and, in fixing the valuation, the assured calculate his freight upon 500 tons, but when he reaches the loading port he can get 10 tons only upon freight, and sails upon the voyage insured with those 10 tons only, is it to be allowed that if the ship be lost by any of the perils insured against, and he thereby lose freight upon 10 tons, he shall be entitled to the valuation which includes the freight upon 500 tons ? And yet to this extent the plaintiffs argument in this case is carried. The proposition is monstrous : instead of consigning the policy, as it ought to be consigned, to a contract as nearlj' as may be of indemnitj', against what may be lost in respect of freight by the perils insured against, it converts it into a contract of indemnity against a different class of acci- dents, which may operate to prevent the assured from being able to procure a full cargo upon freight, and may make it the interest of the assured, which it never ought to be, that a loss should happen. The court, therefore, will look for very strong authorities before they yield to such a proposition. It was pressed, upon the argument, that in the case of a valued policy, if any interest be proved to be on board, and there be no fraud, a total loss will entitle the assured to recover the sum specified in the valuation. And to that position we accede, with this limitation, that is, provided there is a total loss, by any of the 822 HAIGH V. DE LA COUE. [CHAP. VIII. perils Insured against, of the whole subject-matter of insurance to which the valuation applied, viz., of all the intended cargo of goods, where the insurance was on goods ; and of all the intended freight, where the insurance was upon freight. But if it be meant to carrj- that position to this extent, that the underwriter is not at liberty to inquire what was intended to have been included in the valuation, or when he has ascer- tained that point, that he cannot reduce the sum below the valuation, by proving that a part only of what was included in the valuation has been lost by a peril insured against ; we deny the position when so extended.* ... In a case, therefore, circumstanced as this is, where the valuation was with reference to freight upon a complete cargo ; ■where a complete cargo, or anything like a complete cargo, never was in fact obtained, and for all that appears never might have been ob- tained ; where there was no contract hy any person to load a complete cargo, or paj' dead freight, but the ship was a mere seeking ship ; we cannot feel ourselves warranted in sajing that there has been a total loss bj' anj- peril insured against of that which the insurance was in- tended to cover, and which the valuation contemplated, viz., freight upon a complete cargo ; but are obliged to pronounce that no loss bj* tlie perils insured against is made out beyond the loss of freight upon part of a cargo only, viz., upon the fifty-five bales of cotton ; that the assured are therefore not entitled to recover a total loss, but an appor- tionment only, according to the measure of their actual loss : and as tliat apportionment has been already allowed to the plaintiffs, that there must be a new trial. ^ HAIGH AND Othees, Assignees, v. J)E LA COUR. Nisi Prius, Common Pleas, 1812. 3 Camp. 319. This was an action on a policy of insurance on goods valued at £5,000 on board the " Maria" at and from London to Pernambucco. In this case the defendant had signed an adjustment, on invoices and bills of lading being produced to him which had been furnished by the assured, representing that goods above the value of £5,000 had been shipped by them on board the " Maria." These invoices were now proved to have been fictitious and the bills of lading to have been inter- polated after thej' were signed by the captain. In fact, goods were shipped by the bankrupts to the value of £1,400 and no more. The ship was afterwards run away with and can-ied to the West Indies, 1 Here were discussed Shawe v. Felton, ante, p. 815 (1801), and Montgomery!). Egginton, 3 T. R. 362 (1789). — Ed. 2 Ace: Rickman r. Carstairs, 5 B. & Ad. 6.51 (1833); Tobin v. Harford, 17 C. B. N. 8. 528 (Ex. Ch. 1864) ; Denoon v. Home and Colonial Assnr. Co., L. R. 7 C. P. 341 (1872). SECT. I.] BRUCE V. JONES. 823 where the cargo was disposed of b3' a person whom the bankrupts put on board in quality of supercargo. /Shepherd, Serjt., for the plaintiffs, allowed they could not recover to the full amount of the valuation in the policj-, but insisted that as there were some goods on board belonging to the bankrupts, the assignees had a right to the verdict joro tanto. This could only be looked upon as a ease of short interest. Sir James Mansfield, C. J. If the bankrupts intended from the beginning to cheat the underwriters, the assignees can recover nothing. The fraud entirely vitiates the contract. Plaintiffs nonsuited.^ Shepherd and Best, Serjts., and Copley, for the plaintiffs. Lens and Yaughan, Serjts., and Campbell, for the defendant. BRUCE V. JONES. Exchequer, 1863. 1 H. & C. 769. Declaration on a policy of insurance for £2,400 on the ship " Hero," on a voyage from Cardiff to Manilla, and in which the ship was valued at £3,200 and underwritten by the defendant for £125. The declara- tion alleged a total loss. Plea (inter alia). That the plaintiff made other policies of insurance on the same ship on the same voyage, viz., a policy dated the 30th of Julj-, 1860, in which the said ship was valued at £3,000, which said polic3' was underwritten for sums amounting altogether to £725 ; a policy dated the 8th Ma}', 1861, in which the same ship was valued at £3,000, and the policy underwritten for £500 ; a policy dated the 20th June, 1861, in which the same ship was valued at £5,000, and under- written for the sum of X3,450. Averments : that the said ship men- tioned and insured in each of the said policies was the same ship, and the risk intended to be covered the same risk ; that the said ship was lost after the making of the said policies, and that divers of the said several insurers upon the said ship, whose names were subscribed to the said policies other than the policy in the declaration mentioned, paid to the plaintiff, and the plaintiff accepted and received of and from the said underwriters, sums amounting altogether to the sum of £3,200, and the plaintiff then and therebj- became satisfied and indemnified for the said loss of the said ship as ^reed upon in the said policy in the declaration mentioned. Issue thereon. At the trial, before "Willes, J., at the last Liverpool Summer Assizes, it appeared that the policy in question, which was dated the 6th August, 1 In loDides v. Pender, L. R. 9 Q. B. 531 (1874), s c. quoted ante, p. 167 n., it was held that a marine policy is invalidated by non-disclosnre of such excessive over-valua- tion as would be deemed material by a reasonable underwriter. — Ed. 824 BBTJCE V. JONES. [CHAP. VIII. 1860, was effected at Liverpool for £2,400 on the plaintiff's ship " Hero," valued at £3,200, and was underwritten by the defendant for £125. The loss of the ship having been proved, the defendant gave in evidence three other policies effected by the plaintiff on the same ship for the same voyage, viz., a policy effected at Bristol, dated the 30th Jul}', 1860, for £725, in which the ship was valued at £3,000 ; another effected at Aberdeen, dated the 8th May, 1861, for £500, in which the ship was valued at £3,000 ; and another effected in London, dated the 20th June, 1861, for £3,450, in which the ship was valued at £5,000. There was conflicting evidence as to the real value of the ship. The plaintiff had received from the underwriters of the Bristol policy £492 6s. 6d., from the underwriters of the Aberdeen policy £684 7s., and from the underwriters of the London policj' £1,950, amounting in the whole to £3,126 13s. 6d. The learned judge, in leaving the question of damage to the jury, told them that insurance was a contract of indemnity, and that, for the purpose of the present action and as between the plaintiff and defend- ant, the value agreed upon and stated in the policy must be taken as the real value of the ship, viz., £3,200, and that as the plaintiff was entitled to recover in respect of a total loss, he was entitled to be in- demnified to that amount ; but that the sums which the plaintiff had received on the three other policies, amounting to £3,126 13s. 6d., must be deducted from the agreed value ; so that there would only be due on the policy on which this action was brought £73 6s. 6d., of which the defendant's proportion as one of the underwriters was £3 16s., which was all that the plaintiff was entitled to recover against him ; that the fact that the ship bad been valued at a larger sum in another policy ought not to be taken into consideration. The jury found a verdict for the plaintiff for £3 16s. Brett, in last Michaelmas Term, obtained a rule nisi for a new trial, on the ground of misdirection as to the measure of damages ; against which Edward Jamas (with whom was Milward) showed cause (Jan. 23) . The direction of the learned judge was correct. The plaintiff is only entitled to recover from the defendant the balance of the amount in- sured, after giving credit for the sums already received by the plaintiff under the other policies. Insurance is a contract of indemnity : if there be an open policy, the assured is entitled to recover the value of the ship ; but where there is a valued policy the sum stated in it is the agreed value as between the parties, and the assured cannot recover more. In Bousfield v. Barnes, 4 Camp. 228, the plaintiff had effected two policies, one for £600, valued at £6,000, and the other for £6,000, valued at £8,000. The ship having been wrecked, the underwriters paid him the £6,000, and he then sued upon the other policy. Evi- dence was adduced that the ship was worth more than £8,000, and on that ground it was held that he was entitled to recover. Lord Ellenborough there said: "I will take care that the assured do not SECT. I.] BRUCE V. JONES. 825 recover upon the whole more than the real value of the subject-matter insured. But I think it is not enough for the underwriters on a par- ticular policy to show that the assured has received from another quarter the amount of the valuation in that polic}', unless this amounts in point of fact to a complete indemnitj-." Where a person effects two policies of insurance in each of which the same value is declared, he is bound by that sum : Irving v. Richardson, 1 Moo. & R. 153 ; Morgan V. Price, 4 Exch. 615. [Wilde, B. — Insurance is a contract of indem- nity as respects the true value ; and therefore, to the extent to which the assured has been damnified he is entitled to recover. But where the policy is valued the assured is estopped from saying that he has sustained damage to a greater extent than the agreed value.] In Park on Insurance, vol. 2, p. 600, 8th ed., it is said : " Where a man has made a double insurance, he may recover his loss against which of the underwriters he pleases, but he can recover for no more than the amount of his loss." In Lewis v. Rucker, 2 Burr. 1167, 1171, Lord Mansfield, C. J., said : " The only effect of the valuation is fixing the amount of the prime cost; just as if the parties admitted it at trial; but in everj' argument, and for every other purpose, it must be taken that the value was fixed in such a manner as that the insured meant only to have an indemnity." £rett and Quain, in support of the rule. It is not contended that an underwriter is liable to paj' more than the agreed value of the ship as between him and the assured ; but he is not entitled to any deduc- tion in respect of sums received by the assured on other policies. The sum stated in each policy is not the actual but the agreed value of the ship. It is well known that the value of a ship varies according to the demand for shipping. It depends on the state of trade, not on the cost of the ship. A ship may be undervalued at one time and overvalued at another, and therefore to avoid all dispute the parties agreed to a value by which they shall be bound. Here the plaintiff, having sustained a total loss, is prima facie entitled to recover the agreed value. The defendant admits the loss, but gives in evidence policies between the plaintiff and other underwriters for the purpose of showing that he has been paid. But those documents being in evidence must be taken for all purposes. For instance, the London policy being given in evidence for the purpose of showing a payment under it of £1,950, it must be taken that at the time that policy was effected the ship was of the value stated in it, viz., £5,000, and therefore only two fifths of its value has been paid under that policy. Again, under the Bristol policj', £492 has been paid, which is only one sixth of the agreed value ; and under the Aberdeen policy £684 has been paid, which is only seven thirtj-- seconds of the agreed value. This mode of calculation shows a much larger sum due to the plaintiff on the present policy than was found by the jury. In Arnould on Insurance, vol. 1, p. 346, 2d ed'., it is said that the rule established by Lord Mansfield is as follows : "In case of over-insurance, the difl'erent sets of policies are considered as making 826 BRUCE V. JONES. [CHAP. VIII. but one insurance, and are good to the extent of the value of the effects put in risk ; the assured can recover on the different policies no more than their value, but he may sue the underwriters on either of the poli- cies, and recover from those he so sues to the full extent of his loss, supposing it to be covered by the policy on which he elects tb sue, leaving the underwriters on that policy to recover a ratable sum, by way of contribution, from the underwriters on the other policy." Refer- ence is there made to Newby v. Reed, 1 W. Black. 416, which was a case of open policies, and the question is whether the same rule applies to valued policies in each of which a different value is stated. If the rule contended for by the defendant is to prevail, this strange conse- quence will follow, that supposing the plaintiff sued on all the policies except the London one, and recovered their full amount, he would re- ceive upon those policies £3,625, and he might then sue upon the London policy and recover £1,375, being the difference between £3,625 and £5,000, the agreed value in the London policy. So that tlie amount which the plaintiff would be entitled to recover would de- pend upon which polic3' he first put in suit. The more rational rule is to take the average value of the four policies, by adding together the several agreed values in each and dividing it by four, which in this case would give £3,600 as the value of the ship. Pollock, C. B. We are all of opinion that the rule ought to be discharged. I think mj' brother Willes was quite right in his direc- tion, and that it is fortified by authority and reason. The action is brought on a policy of insurance for £2,400, effected on a ship valued at £3,200. It appears that ihe ship was insured by other policies and that the assured has received on them £3,126 13s. 6d., and the question is whether he is entitled to recover more than the difference between that and £3,200, viz., £73 6s. 6d. The plaintiff seeks to recover more, on the ground that the sums which he has received on the other policies ought not to be taken into consideration. The learned judge who tried the cause did not adopt that view, and I think properly. He considered that, as between the plaintiff and defendant, the value of the vessel must be taken as £3,200, and it appears to me that is the correct view. It may happen that when a vessel is insured for a long time or a long voyage, her value may not be the same at the beginning as at the end of the voyage. More freight being carried might increase her value, or she might have met with an accident and have been so thoroughly repaired that her value might be considerablj- increased. But in gen- eral the value must be taken to be that which is stated in the policy. If that is binding upon the underwriter, so that he cannot give evidence of the real value of the vessel, and so prevent the assured from recover- ing the amount stated in the policy, the assured is equally bound by the agreed value, and if he has received that amount he has no further claim upon any other underwriter. If he has received less he can only recover on other policies the difference. Upon these grounds I think that the rule ought to be discharged. SECT. I.] BRUCE V. JONES. 827 Martin, B. I am of the same opinion. I admit that a judgment given, in a matter of this kind is not altogether satisfactorj-, which arises from the circumstance that courts of law view policies of insur- ance in one light, whilst the assured views them in a totallj- different light. Courts of law are obliged to discuss these questions on the principle that the sum to be recovered is an indemnitj- for the value of the ship, but persons who insure entertain an entirely different notion, so that we have to decide on principles at variance with those of the parties when they enter into these contracts. It is therefore scarcely possible that the decision of a court of law can be satisfactor}- to them. If the practice between the ship-owner and the underwriter were founded on the principle alluded to by Lord Mansfield in his judgment in Lewis V. Eucker, 2 Burr. 1167, 1171, viz., "that the value is fixed in such a manner that the insured means only to have an indemnitj'," the matter would be plain. But that is not the mode in which ship-owners and underwriters do business. I remember a case respecting a ship the owner of which, who was a witness, proved that he had effected a polic}' and valued the ship upon a principle which had no reference whatever to its real value. He had opened a debtor and creditor account be- tween himself and the ship, and insured the ship for the balance owing to him. A lawj'er would say that a ship-owner hadjio right to insure on that principle, and that he ought to value the ship on the principle stated by Lord Mansfield, to which 1 have referred. It seems to me in this case that the view taken by my brother Willes was in accordance with authoritj'. He considered that, by the agree- ment between the assured and the underwriters, the value of the ship was to be taken at £3,200, and that the plaintiff was entitled to recover that sum in respect of the loss of the ship. He then inquired what sum of money the assured had received, leaving out of consideration how he got it, and finding that he had received £3,126 13s. 6d., he treated it as if there had been a salvage of the ship, and the assured had received that amount after the ship was sold. He then placed that amount to the credit of the underwriter as against the £3,200, and he entirely dismissed from his consideration what was stated as the value of the ship in other policies between the plaintiflT and individuals to whom the defendant was a stranger. According to the best judgment I can form on the matter, that is the more correct mode of estimating the damage. It is in accordance with the view taken bj- courts of law, that insurance is a contract of indemnity against the loss actually sus- tained. I am not insensible to the observation that the amount which the assured is entitled to recover may depend upon which policy he first puts in suit ; but, in point of fact, each policy is a separate contract, and the assured must deal with each underwriter according to his par- ticular contract. Channell, B. I am of the same opinion. The damages were as- sessed under the direction of the learned judge ; and an application is made for a new trial on the ground that he misdirected the jury in 828 BRUCE V. JONES. [CHAP. Till. stating his view as to the measure of damage. The broad question is whether the plaintiff is entitled as against the defendant to damages to a greater amount than he has recovered. If so, there would be ground for granting a new trial ; but, being of opinion that the damages were rightly assessed, it is unnecessary to consider whether anj' other mode of assessment should be resorted to. The plaintiff has recovered from the defendant, not his proportion of the £3,200, the agreed value in the policy, but his proportion of the difference between that sum and the amount which the plaintiff received on the three other policies. I think that is all the plaintiff is entitled to ; and that, when the defendant is sued for his proportion upon a policy in which the ship is valued at £3,200, that must be taken as the value of the ship for the purpose of his liability ; and the question is how far that is lessened by the sums received on other policies. I agree that some inconvenience may result from the rule now laid down, and it is not satisfactory to find that, if the order of suing on the policies had been inverted, a different amount would have been recovered. But I think that is in a great degree attributable to the character of these insurances, as explained by my brother Martin ; and that, at all events, as the plaintiff has effected an insurance in which his ship is valued at £3,200, we must abide by the rule of law that, for the purpose of estimating the liability of the de- fendant, that amount must be taken as fixed by the policy. Biule discharged,''- ^ Other cases of inconsistent yaluations are : Kenny v. Clarkson, I Johns. 385 (1806) ; Murray v. Ins. Co. of Pennsylyania, 2 Wash. C. C. 186 (1808) ; Watson v. Ins. Co. of North America, 3 Wash. C. 0. 1 (1811). — Ed. SECT. I.] HAMILTON V. MENDES. 829 SECTION I. (continued). (C) Total Losses, Actual and Constructive. HAMILTON i: MENDES. King's Bench, 1761. 2 Burr. 1198.i This was a special case reserved at Guildhall, at tiie Sittings there before Lord Mansfield, after Michaelmas Term, 1760, in an action brought against the defendant, as one of the insurers, upon a policj' of insurance from Virginia or Marj-land to London, of a ship called the " Selby," and of goods and merchandise therein, until she shall have moored at anchor twentj'-four hours in good safety. The case stated for the opinion of the court was as follows : — That the ship " Selbj'," mentioned in the policj', being valued at £1,200, and the plaintiff having interest therein, caused the policy in question to be made ; and the same was accordingly made, in the name of John Mackintosh, on behalf and for the use and benefit of the plain- tiff, and which was subscribed b}' the defendant, for the sum of £100. That the ship being of the burthen of two hundred tons, was, on the 28th of March, 1760, in good safety at Virginia, where she took on board 192 hogsheads of tobacco, to be delivered at London. That on the said 28th daj' of March, she departed and set sail from Virginia for London ; and on the 6th day of Ma^- following, as she was sailing and proceeding in her said voyage, was taken by a French privateer called the " Aurora," of Bayonne, Captain Jean Piena Lesea commander, who, with his company, were subjects of the French king, then being at war with our lord King George the Second. That at the time of the capture the " Selbj' " had nine men on board, and the captain of the said privateer took out six, besides the captain, Dorsdill, leaving only the mate and one man on board. That the French put a prize-master and several men on board the said ship " Selby," to carry her to France. That as the French were carrying the said ship " Selby " towards France, on the 23d day of the said May, she was retaken oflT Bayonne, b3' the " Southampton," an English man-of-war, commanded by Cap- tain Antrobns, who sent her into Plymouth, where she arrived the 6th day of June following. That the plaintiff living at Hull, as soon as he was informed what had befallen his said ship the " Selby," wrote a letter, on the 23d day of June, to his agent, Joun Mackintosh, living in London, to acquaint the defendant, " That the plaintiff did from thenceforth abandon to 1 8. C, sub mm. Hamilton v. Mendez, 1 W. Bl. 276. — Ed. 830 HAMILTON V. MENDES. [CHAP. VIII. him his interest in the said ship, as to the said £100 by the defendant insured." That the said John Mackintosh, on the 26th daj' of the said June, acquainted the defendant with an offer to abandon the ship ; to which the defendant said, ' ' He did not think himself bound to take to the ship ; but was read3' to paj' the salvage and all other losses and charges that the plaintiff sustained bj' the capture." That upon the 19th day of August the said ship "Selby" was brouglit into the port of London, by the order of the owners of the cargo and the re-captors. That the said ship " Selby " sustained no damage from the capture. That the whole cargo of the said ship "Selby " was delivered to the freighters at the port of London, who paid the freight to Benjamin Vaughan, without prejudice. The question therefore submitted to the opinion of the court in this case is, " Whether the plaintiff, on the said 26th day of June, had a right to abandon, and hath a right to recover as for a total loss ? " If he is entitled to recover for a total loss, then the jury find a verdict for the plaintiff, damages £98, costs 40s. But if the court shall be of opinion that he had no right to abandon on the said 26th day of June, or he ought only to recover an average loss, then the jury find a ver- dict for the plaintiff, damages £10, costs 40s. Mr. Morton and Mr. Norton, for the plaintiff. Mr. Aston and Mr. Gould, for the defendant. Cur. adv. Lord Mansfield now delivered the resolution of the court, having first stated the case, as settled at nisi prius. The plaintiff has averred in his declaration, as the basis of his de- mand for a total loss, " that by the capture the ship became wholly lost to him." • The general question is, "Whether the plaintiff, who at the time of his action brought, at the time of his offer to abandon, and at the time he was first apprised of any accident having happened, had only, in truth, sustained an average loss, ought to recover for a total one ? In support of the affirmative, the counsel for the plaintiff insisted upon the four following points : — 1st. That by this capture the property was changed, and therefore the loss total forever. 2dly. If the property was not changed, yet the capture was a total loss. 3dly. That when the ship was brought into Plymouth, particularly on the 26th of June, the recovery was not such as, in truth, changed the totalitj"^ of the loss into an average. 4thly. Supposing it did, yet, the loss having once been total, a right vested in the insured to recover the whole upon abandoning ; which right could never afterwards be devested or taken from him by any subsequent event. SECT. I.] HAMILTON V. MENDES. 831 As to the first point, If the change of property was at all material as between the insurer and insured, it would not be applicable to the present case, because, bj' the marine law received and practised in England, there is no change of property-, in case of a capture, before condemnation ; and now, hy the act of Parliament, in case of a recap- ture, the Jits postUminii continues forever.^ I know, manj- writers argue, between the insurer and insured, from the distinction, " whether the property- was or was not changed by the capture, so as to transfer a complete right from the enem^' to a recap- tor or neutral vendee, against the former owner." But arbitrary notions concerning the change of property bj- a capture, as between the former owner and a re-captor or vendee, ought never to be the rule of decision, as between the insurer and insured upon a contract of indemnity, contrary to the real truth of the fact. And therefore I agree with the counsel for the plaintiff, upon their second point, "that by this capture, while it continued, the ship was totally lost," though it be admitted, " that the propertj', in case of a recapture, never was changed, but returned to the former owner." The third point depends, as everj- question of this kind must, upon the particular circumstances. It does not necessarily follow that, be- cause there is a recapture, therefore the loss ceases to be total.^ . . . Therefore it is most clear that upon the 26th of June, the ship had sustained no other loss by reason of the capture than a short temporary obstruction, and a charge which the defendant had offered to pay and satisf3\ This brings the whole to the fourth and last point. The plaintiffs demand is for an indemnity. His action, then, must be founded upon the nature of his damnification, as it really is, at the time the action is brought. It is repugnant, upon a contract of indem- nitj', to recover as for a total loss, when the final event has decided that the damnification, in truth, is an average, or perhaps no loss at all. Whatever undoes the damnification, in whole or in part, must operate upon the indemnity in the same degree. It is a contradiction in terms to bring an action for indemnity, when, upon the whole event, no dam- age has been sustained. This reasoning is so much founded in sense and the nature of the thing that the common law of England adopts it (though inclined to strictness). The tenant is obliged to indemnify his landlord from waste ; but if the tenant do, or suffer waste to be done, in houses, yet if he repair before any action brought, there lies no action of waste against him ; ' but he cannot plead non fecit vas- tum, but the special matter. The special matter shows that the injury being repaired before the action brought, the plaintiff had no cause of action, and whatever takes away the cause takes away the action. Suppose a surety sued to judgment, and afterwards, before an action 1 29 G. II. u. 34, s. 24. — Rep. 2 The discussion of this point has teen omitted. — Ed. 8 Co. Lit. 53 a. — Rep. 832 HAMILTON V. MENDES. [CHAP. VIII. brought, the principal pays the debt and costs, and procures satisfaction to be acknowledged upon record ; the surety can have no action for indemnity, because he is indemnified before any action brought. If the demand, or cause of action, does not subsist at the time the action is brought, the having existed at any former time can be of no avail. But in the present case, the notion of a " vested right in the plaintiff to sue as for a total loss before the re-capture," is fictitious only, and not founded in truth ; for the insured is not obliged to abandon, in any case : he has an election. No right can vest as for a total loss till he has made that election. He cannot elect before advice is received of the loss ; and if that advice shows the peril to be over, and the thing in safety, he cannot elect at all ; because he has no right to abandon when the thing is safe. Writers upon the marine law are apt to embarrass general principles with the positive regulations of their own country ; but they seem all to agree " that if the thing is recovered before the money paid, the in- sured can only be entitled according to the final event." ^ . . . The present attempt is the first that ever was made to charge the insurer as for a total loss upon an interest policy after the thing was recovered. . . . But without dwelling longer upon principles or authorities, the con- sequences of the present question are decisive. It is impossible that any man should desire to abandon in a case circumstanced like the present but for one of two reasons, viz. , either because he has over- valued, or because the market has fallen below the original price. The only reasons which can make it the interest of the party to desire, are conclusive against allowing it. It is unjust to turn the fall of the market upon the insurer, who has no concern in it, and who could never gain by the rise. And an over- valuation is contrar}- to the general policy of the marine law, contrary to the spirit of the Act of 19 G. II., a temptation to fraud, and a source of great abuse ; therefore no man should be allowed to avail himself of having over-valued. If the valuation be true the plaintiff is indemnified by being paid the charge he has been put to by the capture. If he has over-valued, he will be a gainer if he is permitted to abandon ; and he can only desire it because he has over-valued. This was avowed upon the first argu- ment, and that very reason is conclusive against its being allowed. The insurer, by the maritime law, ought never to pa}- less upon a contract of indemnity than the value of the loss, and the insured ought never to gain more. Therefore if there was occasion to resort to that argument the consequence of the determination would alone be sufficient upon the present occasion. But, upon principles, this action could not be maintained as for a total loss, if the question was to be judged by the strictest rules of 1 Here, and in subseqnent parts of the opinion, the discussion of the authorities has been omitted. — Ed. SECT. I.] HAMILTON V. MENDES. 833 common law ; much less can it be supported for a total loss, as the question ought to be decided, bj' the large principles of the marine law, according to the substantial intent of the contract and the real truth of the fact. The dail}' negotiations and property of merchants ought not to de- pend upon subtleties and niceties, but upon rules, easily learned and easilj' retained, because they are the dictates of common sense, drawn from the truth of the case. If the question is to depend upon the fact, every man can judge of the nature of the loss before the money is paid ; but if it is to depend upon speculative refinements, from the law of nations, or the Eoman j'zis postliminii concerning the change or revesting of property, no wonder merchants are in the dark, when doctors have differed upon the subject from the beginning, and are not yet agreed. To obviate too large an inference being drawn from this determina- tion I desire it may be understood that the point here determined is, " That the plaintiff, upon a policj-, can onl}'^ recover an indemnitj' ac- cording to the nature of his case at the time of the action brought, or (at most) at the time of his offer to abandon." We give no opinion how it would be in case the ship or goods be re- stored in safety, between the offer to abandon and the action brought ; or between the commencement of the action and the verdict. And particularly I desire that no inference may be drawn, " that in case the ship or goods should be restored after the money paid as for a total loss, the insurer could compel the insured to refund the money and take the ship or goods." That case is totally different from the present, and depends, throughout, upon different reasons and principles. Here the event had fixed the loss to be an average onlj', before the action brought, before the offer to abandon, and before the plaintiff had notice of any accident, consequently before he could make an election. Therefore, under these circumstances, we are of opinion " that he cannot recover for a total, but for an average loss onlj' ; " the quantity of which is estimated and ascertained by the jury. The judgment must he entered up as for the average loss stated in the case} 1 See Bainbridge v. Neilson, 10 East, 329 (1808); Buys v. Royal Exchange Assur. Corp., [1897] 2 Q. B. 135. — Ed. 63 834 GAEDINEE V. SMITH. [CHAP. YIII. GARDINER and Others v. SMITH. Supreme Court of New York, 1799. 1 Johns. Cas. 141. This was an action on a policy of insurance on goods ' ' at and from Nevv; York to any port or ports in Jamaica, and twenty-four hours after the goods, as named in the margin, are landed. in Jamaica." The policj- was against the usual risks, and also against the risk of contra- band and illicit trade. The plaintiff declared for a total loss by seizure for illicit trade. On the trial before Mr. Justice Radcliff, at the last March circuit in the city of New York, it appeared that the goods as mentioned in the mar- gin of the policy, were duly shipped on the voyage insured ; that they consisted partly of dry goods which were illicit by the laws of Jamaica, and partly of lumber and provisions which were not illicit ; that the vessel and goods arrived at Kingston in Jamaica, on the 12th October ; that the vessel v/as duly entered, and on the 14th of October began to discharge her cargo. On that day she put on shore her deck lad- ing, and on the day following she discharged part of the cargo from the hold ; the next day being Sunday, nothing was done, but early in the Succeeding day, to wit, the 17th of October, while proceeding in the further discharge of the cargo, the vessel and the remaining goods on board, the quantitj' of which was unknown, were seized by the custom- house officers of the port ; the greater part of the dry goods had been landed, and some of them which had been so landed were put into a store, and were also seized, but part of them had been on shore for twentj'-four hours. Of the above-mentioned goods, there were after- wards libelled in the Court of Admiralty at Jamaica, as having become forfeited, 5,000 pieces of nankeen, 55 pieces of linen, and 74 pieces of painted cloth, and upon computation it appeared that the value of the articles saved was less than half the amount insured. The libel was also given in evidence, but no sentence of condemnation was produced. The plaintiff on receiving notice of the loss, which was accompanied with information of the articles saved, consisting of lumber, provisions, and some of the dry goods, abandoned to the underwriters, and offered the usual proof of loss and interest. The consignee of the goods sold those which were reported to be saved, and rendered to the plaintiff an account of sales which, however, did not comprise as many goods as would be equal to the difference between those shipped and the articles specified in the libel. The consignee afterwards sent to New York a quantity of rum and sugar towards the paj'ment of the balance of bis account, which was partlj' composed of the proceeds of the articles saved. On the arrival of the rum and sugar, the plaintiff offered to the underwriters, rum at the first cost and charges, equal to the amount of the proceeds of the goods saved, which they refused to accept, and the rum was afterwards sold by the plaintiff and sustained a loss. SECT. I.] GARDINER V. SMITH. 835 The judge directed the jun-, that by the true construction of the policy, the risk continued upon all the goods insured until twenty-four hours after they were all landed ; and informed them that in his opinion the plaintiffs were entitled to recover as for a total loss. The jurj' found accordingly, for the plaintiffs for a total loss, credit- ing the underwriters for the proceeds of the articles saved according to the account of sales, and debiting them for the loss on the rum. It was agreed by the parties, that if the court should be of opinion that the adjustment for a total loss was right, and the debit for the loss of the rum was wrong, then the debit should be deducted proportionabl}- from the amount of the verdict. On the part of the defendant three points were made : — 1 . Whether the policy ought to be construed to protect all the goods until all of them were landed. 2. Whether the plaintiffs were entitled to recover for a total or a partial loss. 3. Whether the loss on the remittance of the rum and sugar was chargeable to the defendants. Sarison, for the plaintiffs. £. Livingstoriy for the defendant. Lansing, C. J. This was a voyage undertaken expresslj' for the purpose of illicit trade in a foreign country. A policy on such a voj'age against our own laws would be void, but we are not bound to declare it void when merely contravening the positive regulations of another state. On account of the nature of the voyage, the insurance in point of time, was extended to twenty-four hours after the goods should be landed. A protection against the risk of seizure until thej' should be so landed, was a direct and important stipulation in the contract, and the insurance being entire, we are of opinion that the risk continued on the entire 'goods until twenty-four hours after all of them were landed. This is the correct sense of the terms of the policy, and it would be inconvenient to admit a different construction. The risk cannot reasonably be divided and applied to separate parcels. It would be difficult if not impossible, under the usual circumstances of such a voyage, to descend to the minute details which would be requi- site, and to distinguish the precise time of landing each article. As to the second question, it is admitted that, by a computation, the accurac}' of which is not denied, the value of the goods saved did not amount to half the value insured. The loss was therefore total, accord- ing to the rule which has been established where a moiety is lost. The plaintiffs having abandoned, are therefore entitled to recover for a total loss. The last point respects the conduct of the consignee. After the abandonment he became the agent of the assurer, and the disposition of the goods saved as made by him, while he acted bona fide, ought to be at the risk and for the benefit of the assurer. The loss on the sugar and rum, in which the proceeds of the propertj' saved were invested, 836 DtTTILH V. GATLIFF. [CHAP. VIII. ought, therefore, to,be charged to the defendant. The plaintiffs, on the arrival of these articles, tendered to the defendant the rum only, but it appears that the rum and sugar were part of a mixed cargo, which was the product of different funds, and diflBcult to be distinguished ; that the sugar was not withheld from an improper motive, but omitted to be tendered through mistake, and that the assurer wholly declined having anything to do with the shipment. Under such circumstances attend- ing a commercial transaction, and considering that the defendant refused to accept any part of the shipment, I think the strictness of a complete tender may well be dispensed with, and that the plaintiff is entitled to judgment on the verdict generallj'. The other judges concurred, except on the last point, as to which they were of opinion that the defendant was entitled to a deduction for a proportional part of the rum and sugar, hy a calculation to be made on the product of the whole cargo. Judgment for the plaintiffs accordingly.''- DUTILH V. GATLIFF. Supreme Codet op Pennsylvania, 1806. 4 Dall. 446. The following case was stated for the opinion of the court : — " Case. On the 24th of September, 1799, the defendant, Samuel Gatliff, underwrote seven hundred and fifty dollars upon a policy of insurance on the schooner 'Little Will,' belonging to John Dutilh and Thomas Lillibridge, for whom the plaintiff was agent, on a voyage at and from Philadelphia to Havanna. "On the 26th of September, 1799, the 'Little Will' sailed on her voyage from Philadelphia for Havanna, and on the 8th day of October following she was captured by three British privateers, and carried into the port of Nassau, New Providence, where she arrived on the 13th of the same month. " Upon her arrival in Nassau the said schooner was libelled in the Admiralty Court, and on the 9th day of November following was regu- larly acquitted ; and in the whole she remained thirty-seven days at Nas- sau, during thirty-five of which she was in custody of the captors ; but the fact of her acquittal was not known to the plaintiff until subsequent to the abandonment hereafter mentioned, although it was known to John Dutilh, one of the owners, and supercargo, who was with her at Nassau. I On the American fifty per cent rule, see also Ludlow v. Colnmbian Ins. Co., 1 Johns. 3.35 (1806); Vandenhenvel v. United Ins. Co., 1 Johns. 406 (1806) ; Wood V. Lincoln and Kennebeck Ins. Co., 6 Mass. 479 (1810); Ralston v. Union Ing. Co., 4 Binn. 386 (1812) ; Marcardier v. Chesapeake Ins. Co., 8 Cranch, 39 (1814) ; Peters V. Phoenix Ins. Co., 3 S. & R. 25 (1817); Peele v. Merchants Ins. Co., 3 Mason, 27, 58-62, 69-70 (1822) ; Dehlois v. Ocean Ins. Co., 16 Pick. 803, 309-310 (1835'). — Ed. SECT. I.] DUTILH V. GATLIFF. 837 " On the 13th day of November the plaintiff wrote the letter of aban- donment, enclosing the papers therein referred to, which was received by the defendant the same day. "On the 20th November the said schooner sailed from Nassau for Havanna, where she arrived on the 21st of the same month, and sold her cargo, except three boxes plundered at New Providence. After- wards the said schooner sailed from Havanna for Philadelphia, where she arrived on the 26th or 27th of February, in the year 1800, with a cargo of sugars, on which freight became due and was received by Stephen Dutilh, for the benefit of those who were entitled to it. Each party refusing to accept the schooner, she was sold for wharfage, and the whole proceeds of sale applied to the payment thereof. " Tlie schooner 'Little Will' was American propertj', as warranted. " The question for the court is, whether the plaintiff is entitled to recover as for a total loss ? " If the court shall be of opinion that the loss was total, then it shall be referred, in the usual form, to three persons, to be appointed by the court, to ascertain what is due, after the legal and just deductions. " If the court shall be of opinion it was not a total loss, it shall, in like manner, be referred to three referees, or anj- two of them, to be ap- pointed by the court, to ascertain the partial loss to which the defendant is liable. "eT. Ingersoll, for the plaintiff. " W. Lewis, for the defendant." After argument, the chief justice delivered the unanimous opinion of the court. TiLGHMAN, chief justice. On the case stated, the question submitted to the court is, whether the plaintiff is entitled to recover for a total loss ? In resolving this question I shall divide it into two points. 1st. Did there ever exist a total loss ? 2d. Supposing that there once existed a total loss, has any circum- stance occurred which excludes the plaintiff from recovering for more than a •partial loss ? 1st. The case before us includes one of the risks expressly mentioned in the policy, a taking at sea. But it has been objected that this taking was not by an enemy ; and that when a belligerent takes a neutral, it is to be presumed that the taking is only for the purpose of searching for the property of his enemy, or goods contraband of war ; and that in the end justice will be done to the neutral. To a certain extent there is weight in this distinction ; but it must not be carried too far. At the time when the capture in question was made the United States acknowledged the right of the British to detain their vessels for the purpose of a reasonable search. The bare taking of the vessel, there- fore, could by no means constitute a loss ; and if under suspicious cir- cumstances she should be carried into port, to afford an opportunity for a complete investigation, perhaps, even that ought not of itself to be 838 DUTILH V. GATLIFF. [CHAP. VIII. considered as a total loss. On this, however, I give no opinion. But ■when the captor, having carried the vessel into port, and completed the examination of the cargo and papers, instead of discharging her, pro- ceeds to libel her as prize, I think the loss is complete. The property is no longer subject to the command of the owner, and it is unreason- able that he should wait the event of judicial proceedings, which may continue for j'ears. The case of an embargo is less strong ; because, there the confiscation of the property is not intended, and a temporary interruption of the voyage is all that in general is to be apprehended. Yet the assured is not obliged to wait the result, but maj* abandon im- mediately on receipt of intelligence of the embargo. Not many judicial decisions have been produced on the peint in question. Where prin- ciples are strong it is sufficient that there have been no decisions to the contrary. It appears, however, that in the State of New York the pre- cise point has been determined. In the case of Mumford v. Church, decided in the Supreme Court of New York, July term, 1799, the assured recovered for a total loss, where there was a capture, carrying into port, and libelling by a British captor, although after the abandon- ment the propert}- was restored. It is necessary that some general rule should be established, some line drawn, by which the assured may know at what time he has a right to abandon. In most cases the voyage is extremely injured bj' proceedings in the Court of Admiralt}', and the event is doubtful. For it cannot be denied that of late 3ears such extraordinarj' occurrences have taken place in war and politics as have ver3' much affected the principles and practice of foreign Courts of Admiralt}-. Whatever maj- be said of the law of nature and nations, and the immutable principles of justice, we see very plainly that the courts obey the will of the sovereign power of their country ; and this will fluctuates with the circumstances of the times. I am, therefore, of opinion that, both by the words and spirit of a policy of insurance, the assured may abandon when he receives intelligence of the libelling of his vessel. 2d. This brings me to the consideration of the second point. Has any circumstance occurred which limits the plaintiff to a recovery for onlj' a partial loss ? It is contended that such an event has occurred ; that the vessel was acquitted by the decree of the Court of Admiraltj- ; that after acquittal she proceeded on her v03-age, and that one of the owners was on the spot, and knew of the acquittal. I do not think there is much weight in the circumstance of one of the owners being on the spot ; because the general agent of all the owners was in Philadelphia. This general agent effected the insurance, and conducted all the business with the underwriters, and the owner, who was in New Providence, gave him intelligence of what occurred from time to time, and by no means in- tended, from anything that appears, to restrain him from making an abandonment. It is true that the vessel proceeded on her voyage after she was restored ; but it is not stated, nor can the court presume, that SECT. I.] DUTILH V. GATLIFF. 839 any of the owners acted in a manner inconsistent with the abandon- ment made b}- their agent. It was proper, at all events, to pursue the voj-age for the benefit of whoever might be interested in it. This is the usual practice, and a practice authorized by the policj', and very much for the advantage of the underwriters. The only difficult}' in the case before the court arises from this cir- cumstance, that before the action was brought the vessel was restored, and even at the time of the abandonment there was a decree of acquittal, although restitution does not appear to have been actually made till some daj-s after. The counsel for the defendant have relied much on the opinion of Lord Mansfield in the case of Hamilton v. Mendez, to establish this principle, that a policy of insurance, being in its nature a contract of indemnity, the plaintiflf can recover no more than the amount of his actual loss at the commencement of the action. There is no doubt of the soundness of the principle — I mean that a policy is a contract of indemnitj-. The onlj- question is, at what period the rights of the parties are to be tested by this principle, whether at the time of abandonment or at the commencement of the action. I have con- sidered attentivel}- the case of Hamilton v. Mendez. It must be obvious to ever}' one that the decision in that case was perfecth' right. It was simplj- this : that a man shall not be permitted to abandon and recover for a total loss, when he knew at the time of his offer to abandon that bis propertj-, which had been lost, was restored, and the voyage vei'y little injured. But in reading the opinion of Lord Mansfield we find a want of accuracy with which that great man was seldom chargeable. Sometimes it appears as if he thought the period for fixing the rights of the insurers and insured was the commencement of the suit ; some- times the time of abandonment ; and sometimes he even seems to extend his ideas so far as the time of the verdict. But final!}- he ex- plicitly declares that he decides nothing but the point before him. He seems to have felt a little sore at the improper application of some general expressions used by him in the case of Goss v. Withers. Anx- ious to cut off all pretense for doing the same in Hamilton v. Mendez, he has taken too much pains to avoid the possibility of misrepresenta- tion. Hence his argument, considered in the detail, is not altogether clear and consistent. Upon the whole of this case of Hamilton v. Mendez, I think it most safe to confine its authorit}' to the point actually decided, which was very different from that we are now considering. Some period must be fixed for determining the right of the parties. To limit it to the time of commencing the action would be of little service to the insurers ; for the law being once so established, an action would be brought in every instance on the first default of pay- ment. The time of abandonment seems the most natural and con- venient period ; because the assured must make his election to abandon or not in a reasonable and short time after he hears of the loss, and the property, being transferred by the abandonment, can never after be reclaimed by the assured. Want of mutuality is want of justice. 840 EOUX V. SALVADOR. [CHAP. Till. There is no reason why the assured should be bound, but the assurer left free to take advantage of events subsequent to the abandonment. It has been contended by the plaintiff's counsel that the right to abandon would not have been affected, even if the property had been re- stored at the time of abandonment, because the restitution was unknown to the plaintiff. As to this, I give no opinion. It is unnecessarj- ; be- cause it is stated that the vessel remained in the custody of the captors at the time of abandonment. The defendant's counsel have urged that this was the fault of the captain, or of one of the owners, who was at New Providence; because, after a decree of acquittal, a writ of restitu- tion might have been sued out. But it not being stated that there was any fault or negligence in the captain or owner, I do not think that the court can infer it. It being stated that the vessel remained in the custody of the captors, we must presume that the custody was legal. Whether for the purpose of giving the captors an opportunity of enter- ing an appeal, or for what other purpose it was that the restitution was delayed, we are at a loss to determine. But as restitution was not actually made, and as the plaintiff was ignorant even of the decree of acquittal, his right to abandon remained unimpaired. Upon the whole, we are of opinion that the plaintiff is entitled to recover for a total loss. Judgment for the. plaintiff} KOUX V. SALVADOR. Exchequer Chamber, 1836. 3 Bing. N. C. 266.'' Assumpsit on a policy of insurance, subscribed by the defendant for £200. Maule, for the plaintiff. Sir J. Campbell, Attorney-General, contra. Cur. adv. vult. Lord Abinger, C. B. This was a writ of error upon a judgment of the Court of Common Pleas, in an action on a policy of insurance upon goods by the " Roxalane" at and from any ports or places in South 1 See Ehinelander v. Insurance Co., 4 Cranch, 29 (1807) ; Orient Ins. Co. c Adams, 123 TJ. S. 67 (1887). On the necessity of prompt notice of election to abandon, see Mitchell v. Edie, 1 T. R. 608 (1787) ; Allwood v. Henckell, 1 Park Ins. 8th ed. 399 (N. P. 1795) ; Ander- son V. Royal Exchange Assnr. Co., 7 East, 38 (1805) ; Smith v. Newbnryport M. Ins. Co., 4 Mass. 668 (1808); Gernon v. Eoyal Exchange Assurance, 6 Taunt. 383 (1815), 8. c. 2 Marsh. 88 ; Mellon v. Louisiana State Ins. Co., 5 Martin, n. s. 563 (1827) ; Rey- nolds V. Ocean Ins. Co., 22 Pick. 191 (1839) ; Howland ». India Mat. Ins. Co., 131 Mass. 239, 253, 256-2.57 (1881). — Ed. 2 The reporter's statement has been omitted. In the Common Fleas the case is reported in 1 Bing. N. C. 526 (1835).— Ed. SECT. I.] EOUX V. SALVADOR. 841 America, or to a port in France or the United Kingdom, with various liberties, not material to be mentioned. Bj' a written memorandum at the foot of the policy, the insurance was declared to be on hides shipped at Valparaiso free of average, unless the ship should be stranded ; and, in case of average loss, the underwriters were to pay the expense of washing and drying in full. The declaration contains the usual aver- ments, and states that the hides were shipped at Valparaiso ; that the vessel set sail with them on board for Bordeaux, a port in France ; and that in the course of the voyage, the hides became lost by the perils of the sea, and never arrived at Bordeaux. The plea is the general issue. It appears by the record that the cause was tried, and a special ver- dict found, which after stating the facts necessary to support those parts of the declaration upon which no question arises, sets forth the loss, in substance as follows : That the hides of the value of £1,000 having been shipped in the vessel, she set sail on her voyage ; in the progress of which she encountered perils of the sea, and sprung a leak, in consequence of which she was compelled to put into Bio Janeiro, being the nearest port ; that her cargo was taken out and landed, when it was found, as the fact was, that the hides were damaged by the perils of the sea ; that by reason of their being wetted by the water issuing through the leak, and of the consequent dampness of the hold, thej' were undergoing a process of fermentation, which conld not be checked ; and that in consequence of their progressive putrefaction it was impos- sible to carry them, or any part of them, in a saleable state, to the ter- mination of the voyage ; and that if it had been attempted to take them to Bordeaux they would in consequence of the putrefaction have lost the character of the hides before their arrival. The special verdict further states, that the hides were in consequence sold at Eio Janeiro by order of the French consul there, for the sum of £270 ; that they were purchased to be tanned, and were afterwards tanned ; that the ship being repaired, set sail for Bordeaux, and was stranded upon en- tering the Garonne ; and that the earliest intelligence of the damage and sale were received at the same time in a letter from Bordeaux. The judgment is entered for the defendant : to set aside which judg- ment this writ of error is brought. The stranding of the vessel upon entering the river Garonne in her passage to Bordeaux, is introduced into the special verdict, with a view to meet the supposed case of a partial loss : and it has been contended, that the fact of stranding, being a condition to let in the claim for a partial loss, it is not material whether the stranding takes place whilst the goods insured are on board, or after they have been landed- We are not prepared to adopt that conclusion : but the view we take of this case renders it unnecessary to enter into any discussion of the argument, or to pronounce any opinion upon it. It appears from the report of the judgment of the Court of Common Pleas upon this case, that the learned judges were of opinion that there was a constructive total loss, in case it had been 842 EOUX V. SALVADOR. [CHAP. VIII. followed by an abandonment to the underwriters ; and that their judg- ment for the defendant was grounded upon the want of such abandon- ment. It has been urged before us in support of the judgment, first, that there was no total loss ; secondly, that if there were any circumstances which might have amounted to more than an average or partial loss, they were not such as without an abandonment could have been con- verted into a total loss. Upon the first point it has been contended, that even if these goods had not been excepted from average loss by the memorandum, unless upon the condition of stranding, there would not in this case have been a total loss, and that, a fortiori, being goods so expressly excepted from average loss by the memorandum, they could not become totall}' lost so long as any part of them remained in specie at the termination of the rislf ; that the risk terminated when the goods were taken out at Rio de Janeiro, when they were so far from being destroyed by the perils of the sea, that they were actually sold as hides, and were capable of being tanned. It appears to us that there is no ground whatever for this assumed distinction between goods that are subject to a partial loss uncondi- tionallj', and goods excepted by the memorandum from such a loss. The interest which the assured may have in certain cases to convert a partial loss into a total loss, may be a fair argument to a jury upon a doubtful question of fact as to the nature of the loss or the motive for an abandonment ; and, in the same view that interest has been adverted to occasionally by judges, where the conclusions to be drawn from facts upon a special case, or upon a motion for a new trial, were open to discussion. But there is neither authority nor principle for the dis- tinction in point of law ; whether a loss be total or partial in its nature, must depend upon general principles. The memorandum does not vary the rules upon which a loss shall be partial or total ; it does no more than preclude the indemnity for an ascertained partial loss, except on certain conditions. It has no application whatever to a total loss, or to the principle on which a total loss is to be ascertained. Dismissing this distinction then, the argument rests upon the position, that if, at the termination of the risk, the goods remain in specie, how- ever damaged, there is not a total loss. Now this position ma}' be just, if by the " termination of the risk," is meant the arrival of the goods at their place of destination according to the terms of the policy. But there is a fallacy in applying those words to the termination of the adventure before that period by a peril of the sea. The object of the policy is to obtain an indemnity for any loss that the assured may sus- tain by the goods being prevented by the perils of the sea from arriving in safety at the port of their destination. If, by reason of the perils insured against, the goods do not so arrive, the risk may in one sense be said to have terminated at the moment when the goods are finally separated from the vessel : whether, upon such an event, the loss is total or partial, no doubt, depends upon circumstances. But the ex- SECT. I.] EOUX V. SALVADOR. 843 istence of the goods, or any part of them, in specie, is neither a con- clusive, nor, in many cases, a material circumstance to that question. If the goods are of an imperishable nature, if the assured become possessed or can have the control of them, if they have still an op- portunity of sending them to their destination, the mere retardation of their arrival at their original port may be of no prejudice to them be- yond the expense of re-shipment in another vessel. In such a case, the loss can be but a partial loss, and must be so deemed, even though the assured should, for some real or supposed advantage to themselves, elect to sell the goods where they have been landed, instead of taking measures to transmit them to their original destination. But if the goods once damaged hy the perils of the sea, and necessarilj- landed before the termination of the voyage, are, by reason of that damage, in such a state, though the species be not utterly destroyed, that they cannot with safety be reshipped into the same or anj- other vessel ; if it be certain that, before the termination of the original voyage, the species itself would disappear, and the goods assume a new form, losing all their original character ; if, though imperishable, they are in the hands of strangers not under the control of the assured ; if by any circumstance over which he has no control the}' can never, or within no assignable period, be brought to their original destination ; in any of these cases, the circumstance of their existing in specie at that forced termination of the risk, is of no importance. The loss is, in its nature, total to him who has no means of recovering his goods, whether his inabilit}' arises from their annihilation or from any other insuper- able obstacle.' ... In the case before us the jurj' have found that the hides were so far damaged b}' a peril of the sea, that they never could have arrived in the form of hides. Hy the process of fermentation and putrefaction, which had commenced, a total destruction of them before their arrival at the port of destination, became as inevitable as if they had been cast into the sea or consumed by fire. Their destruction not being consummated at the time they were taken out of the vessel, they became in that state a salvage for the benefit of the party who was to sustain the loss, and were according!}- sold ; and the facts of the loss and the sale were made known at the same time to the assured. Neither he nor the underwriters could at that time exercise a.r\y con- trol over them, or by any interference alter the consequences. It appears to us, therefore, that this was not the case of what has been called a constructive loss, but of an absolute total loss of the goods : the3' could never arrive ; and, at the same moment when the intelli- gence of the loss arrived, all speculation was at an end. It has indeed been strenuously contended before us, that the sale of the hides whilst the}' remained in specie, rendered abandonment necessary to make the 1 Here were stated Hunt v. Eo3'al Exchange Assurance, 5 M. & S. 47 (1816) ; An- derson w. Wallis, 2 M. & S.240 (1813) ; Glennie v. London Assur. Co., 2 M. & S. 371 (1814) ; Thompson v. Royal Exchange Assur. Co., 16 East, 214 (1812) ; and Anderson f. Royal Exchange Assur. Co., 7 East, 38 (1805). — Ed. 844 EOUX V. SALVADOR. [CHAP. Till. loss total ; that the money produced at the sale became vested in the assured ; that he had an undoubted right to keep it if he thought proper, and to treat the loss as partial ; and that, wherever it is in his power to treat the loss as partial, an abandonment is necessary to make it a total loss. The assured certainl3- has always an option to claim or not ; but his abstaining from his right does not alter the nature of it : and if it be true that the proceeds of the sale vested in him, thej- would equally have done so, if, instead of being sold in specie, the hides had actually changed their form, and been sold as glue, or manure, or ashes. The argument, therefore, in effect, resolves itself into this question, whether, when a total loss has taken place before the termination of the risk insured, with a salvage of some portion of the subject insured, which has been converted into mone3-, the insured is bound to aban- don before he can recover for a total loss. If any doubt should exist upon this point, it is important that it should be well considered and determined. The liistory of our own law furnishes few, if any, illustrations of the subject of abandonment before the time of Lord Mansfield. That great judge was obliged to resort to the aid of foreign codes, and to the opinions of foreign jurists, for the rules and principles which he laid down in the leading cases of Goss t;. Withers, 2 Burr. 683, and Hamilton v. Mendez, 1 W. Bl. 276.^ . . . But whatever lights might have been heretofore derived from foreign codes and jurists, the practice of insurance in England has been so extensive, and the questions arising upon every branch of it have been so thoroughly considered and settled, that we need not now look beyond the authorities of the English law to illustrate the principle on which the doctrine of abandonment rests, and the consequences which result from it. It is, indeed, satisfactory to know, that however the laws of foreign states upon the subject may vary from each other, or from our own, they are all directed to the common object of making the contract of insurance a contract of indemnity, and nothing more. Upon that principle is founded the whole doctrine of abandonment in our law. The underwriter engages, that the object of the assurance shall arrive in safety at its destined termination. If, in tlie progress of the voyage, it becomes totally destroyed or annihilated, or if it be placed, by reason of the perils against which he insures, in such a position, that it is wholly out of the power of the assured or of the un- derwriter to procure its arrival, he is bound by the very letter of his contract to pay the sum insured. But there are intermediate cases — there may be a capture, which, though ^rjma /acse a total loss, may be followed by a recapture, which would revest tlie property in the as- sured. There may be a forcible detention which maj' speedily termi- nate, or maj- last so long as to end in the impossibility of bringing the ship or the goods to their destination. There may be some other peril which renders the ship unnavigable, without any reasonable hope of 1 A discussion of foreign law has been omitted. — Ed. SECT. I.] EOUX V. SALVADOR. 845 repair, or by which the goods are partlj- lost, or so damaged, that they are not worth the expense of bringing them, or what remains of them, to their destination. In all these or any similar cases, if a prudent man not insured, would decline any further expense in prosecuting an adventure, the termination of which will probably never be successfully accomplished, a party insured may, for his own benefit, as well as that of the underwriter, treat the case as one of a total loss, and demand tlie full sum insured. But if he elects to do this, as the thing insured, or a portion of it still exists, and is vested in him, the ver3' principle of the indemnity requires that he should make a cession of all his right to the recovery of it, and that too, within a reasonable time after he receives the intelligence of the accident, that the underwriter may be entitled to all the benefit of what maj' still be of any value ; and that he maj', if he pleases, take measures, at his own cost, for realizing or increasing that value. In all these cases not only the thing assured or part of it is supposed to exist in specie, but there is a possibility, how- ever remote, of its arriving at its destination, or at least of its value being in some way affected bj' the measures that may be adopted for the recover}' or preservation of it. If the assured prefers the chance of anj' advantage that may result to him bej'ond the value insured, he is at liberty to do so ; but then he must also abide the risk of the arri- val of the thing insured in such a state as to entitle him to no more than a partial loss. If, in the event, the loss should become absolute, the underwriter is not the less liable upon his contract, because the in- sured has used his own exertions to preserve the thing assured, or has postponed his claim till that event of a total loss has become certain which was uncertain before. In the language of Lord EUenborough, in the case of Mellish v. Andrews, 15 East, 13 : "It is an established and familiar rule of insurance, that when the thing insured subsists in specie, and there is a chance of its recover}', there must be an aban- donment. A part}' is not in any case obliged to abandon, neither will the want of an abandonment oust him of his claim for that which is in fact an average or total loss, as the case may be." Again, in Mullett V. Shedden, 13 East, 304, the same learned judge says, " If, instead of the saltpetre having been taken out of the ship and sold, and the property divested, and the subject-matter lost to the owner, it had re- mained on board the ship, and been restored at last to the owner, I should have thought there was much in the argument, that, in order to make it a total loss, there should have been notice of abandonment, and that such notice should have been given sooner : but here the property itself was totally lost to the owner, and the necessity of any abandonment was altogether done away." In that case, the sentence under which the sale was made had been reversed, and the proceeds directed to be paid to the owner. So that there was a substitution of money for a portion at least of the matter insured. Both these cases are direct authorities that no abandonment is necessary where there is a total loss of the subject-matter insured. To which may be added the 846 EOUX V. SALVADOK. [CIIAP. VIII. cases of Green v. The Royal Exchange Assurance Company, 6 Taunt. 68 ; Idle v. The Roj-al Exchange Assurance Companj-, 8 Taunt. 755 ; Robertson v. Clarke, 1 Bing. 445 ; Cambridge v. Anderton, 2 B. & G. 697 : this last is in all points similar to the present, and is an express decision that, when the subject-matter insured has, by a peril of the sea, lost its form and species, where a ship, for example, has become a wreck or a mere congeries of planks, and has been bona fide sold in that state for a sum of money, the assured may recover a total loss without any abandonment. In fact, when such a sale takes place, and in the opinion of the jury is justified by necessity and a due regard to the interest of all parties, it is made for the benefit of the party who is to sustain the loss ; and if there be an insurance, the net amount of the sale, after deducing the charges, becomes money had and received to the use of the underwriter, upon the pa3-raent by him of the total loss. It may be proper to mention, however, that the assured may preclude himself from recovering a total loss, if, by any view to his own interest, he voluntarily does, or permits to be done, any act whereby the interests of the underwriter ma}' be prejudiced in the recover}' of that monej'.'^ . . . Judgment for plaintiff .^ 1 Here was discussed Mitchell v. Edie, 1 T. E. 608 (1787). — Ed. 2 Ace. : De Peyster v. Sun Mut. Ins. Co., 19 N. Y. 275 (1859). See Wallerstein i>. Columbian Ins. Co., 44 N. Y. 204 (1870); Insurance Co. v. Fogarty, 19 Wall. 640 (1873). In Asfar v. Blundell, [1896] 1 Q.B. 123, 127-128 (C. A. 1895), Lord Eshek, M. K., said : " The first point taken on behalf of the defendants, the underwriters, is that there has been no total loss of the dates, and therefore no total loss of the freight on them. The ingenuity of the argument might commend itself to a body ' of chemists, but not to business men. We are dealing with dates as a subject- matter of commerce; and it is contended that, although these dates were under water for two days, and when brought up were simply a mass of pulpy matter impregnated with sewage and in a state of fermentation, there had been no change in their nature, and they stiU were dates. There is a perfectly well known test which has for many years been applied to such cases as the present — that test is whether, as a matter of business, the nature of the thing has been altered. The nature of a thing is not necessarily altered because the thing itself has been damaged ; wheat or rice may be damaged, but may still remain the things dealt with as wheat or rice in business. But if the nature of the thing is altered, and it becomes for business purposes something else, so that it is not dealt with by business people as the thing which it originally was, the question for determination is whether the thing insured, the original article of commerce, has become a total loss. If it is so changed in its nature by the perils of the sea as to become an unmerchantable thing, which no buyer would buy and no honest seller would sell, then there is a total loss. That test was applied in the present case by the learned judge in the court below, who decided as a fact that the dates had been so deteriorated that they had become something whiqh was not merchantable as dates. If that was so, there was a total loss of the dates. What was the effect of this upon the insurance 1 If they were totally lost as dates, no freight in respect of them became due from the consignee to the person to whom the biU of lading freight was payable — that is, to the charterers — and there was a total loss of the bill of lading freight on these dates." — Ed. SECT. I.] BEADLIE V. MARYLAND INS. CO. 847 BRADLIE AND Another, Plaintiffs in Erhoe, v. MARYLAND INS. CO., Defendants in Error. Supreme Court op the United States, 1838. 12 Pet. 378.^ Error to the Circuit Court of the United States for the District of Maryland. The action was upon a policy of insurance, dated November 22, 1832, whereby the defendants caused the plaintiffs, by their agents, William Howell & Son, to be insured $10,000 on the brig " Gracchus," valued at that sum, at and from Baltimore, for six months. The declaration alleged a total loss by casting ashore in the river Mississippi. The brig sailed from Baltimore to New Orleans, and on the return voj-age went on shore in the river Mississippi on March 24, 1833. A signal was made for a steamboat, which came to the assistance of the brig. The brig was got off, and returned to New Orleans the same day in a leaky condition. On March 25 the master learned that the steamboat intended to libel for a salvage of fifty per cent ; and he wrote to one of the plaintiffs to that effect. On March 27 the brig was taken across the river for repairs, and was libelled for the sal- vage in the District Court of Louisiana. On April 22, William Howell & Co. addressed a letter to the defendants, submitting the letter of March 25, and saying, " In consequence of the damage, to- gether with the detention that must grow out of a lawsuit, . . . the voyage being broken up, we do hereby abandon to j'ou the brig ' Gracchus,' . . . and claim for a total loss." On the same day, the defendants answered, saying, " We cannot accept the abandon- ment . . . , but expect you to do what is necessarj' in the case for the safety and relief of the vessel." On May 9, the District Court decreed twenty-flve per cent of the value of the vessel and cargo (esti- mated at $7,000) as salvage, the brig being valued at $2,500. On May 14, the master got possession again, the salvage having been paid. On June 3, the brig was repaired and ready for a cargo. The repairs at New Orleans amounted to $1,690.15 ; and the share of the brig, at the general average or salvage, amounted to $1,245.07; and the two items amounted to $2,935.22. To meet this sum and other expenses, the master borrowed $3,715.41 from Harrison, Brown & Co., giving a bottomry bond, payable on the safe arrival of the brig at Baltimore. The brig sailed for Baltimore early in July, and arrived in the latter part of that month. The brig was libelled on the bottomry bond, and by the District Court of Maryland was ordered sold. The sale was accordingly made by the marshal for the $4,750, which sum was paid 1 The statement has been rewritten. — Ed. 848 BEADLIE V. MARYLAND INS. CO. [cHAP. Till. by the purchaser on September 24. On the same daj", the under- writers wrote to Howell & Son, offering to paj' $2,409.11 as for general and particular average, including the repairs less a deduction of one- third new for old, and also saj'ing : "If yoa find any other charge . . . in order to raise the funds on bottomry, we will pay our full propor- tion . . . upon being made acquainted with the amount." On the same daj', Howell & Son refused the offer, sa3-ing that in behalf of the owners they claimed a total loss. After the evidence was closed, the counsel for the defendants moved for instructions that are summarized in the opinion. The court refused to give the instructions prayed for, and gave to the jury the following instruction : If the jury find from the evidence, that the " Gracchus" was so damaged by the disaster mentioned in the letter of Captain Snow, of March 25, 1833, that she could not be got off and repaired without an expenditure of money to an amount exceeding half her value, at the port of New Orleans, after such re- pairs were made, then the plaintiffs are entitled to recover for a total loss, under the abandonment made on the 22d day of April, 1833 ; and in ascertaining the amount of such expenditure, the jury must include the sum for which the brig was liable to the salvors, according to the decree of the District Court of Louisiana, stated in the evidence ; but if the jury find that the vessel could have been got off and repaired, without an expenditure of money to the amount of pore than half her value, then, upon the evidence offered, the plaintiffs are not entitled to recover for a total loss, on the ground that the voyage was retarded or lost, nor on account of the arrest and detention of the vessel by the admiralty process, issued at the instance of the salvors. The defendants excepted to the refusal of the court to give the in- structions prayed, and also to the opinion actually given by the court in their instructions to the jury. The plaintiffs also excepted to the same opinion given by the court. The plaintiffs also prayed " the court to direct the jury, that in this cause the insured, by their letter of the 22d April, authorized and re- quired the proper expenditures to be made upon the vessel, for which said underwriters are liable under their policy : that no funds being supplied by them in New Orleans to meet this loss ; and the salvage and repairs having been paid for by money raised upon respondentia upon the vessel ; if the jury shall find that said vessel, under the lien of this bond, came to Baltimore, and the defendants were then ap- prized of the existence of such respondentia, and were also informed of the existence of the proceedings thereupon against said vessel, and they neglected to pay so much thereof as 'they ought to have paid to relieve said vessel, and omitted to place her in the hands of the owners, discharged of so much of such bottomry as the underwriters were liable for, and in consequence thereof, said vessel was libelled and con- demned and sold, and thereby wholly lost to the plaintiffs ; then the plaintiffs are entitled to recover for the whole value of the vessel." SECT. I.] BEADLIE V. MARYLAND INS. CO. 849 The court refused to give this instruction, and the plaintiffs excepted. The jury found a verdict for the plaintiffs for a partial loss, assessing the damages at three thousand four hundred and eighty-nine dollars and twenty-two cents, upon which the court gave a judgment : on this judgment the plaintiffs entered a credit for four hundred and eighty- five dollars and twenty-two cents, the amount of the premium note, and interest. The plaintiffs prosecuted this writ of error. The case was argued b}^ Mr. Johnson for the plaintiffs in error ; and by Mr. Meredith and Mr. Stewart for the defendants. Mr. Justice Story delivered the opinion of the court.^ . . . Although the prayers for the instructions by the defendants are not before the court for the purpose of direct consideration, as the defendants have brought no writ of error ; yet it is impossible completely to understand the nature and extent, and proper construction of the opinion given by the court, without adverting to the propositions contained in them : for to them, and to them only was the opinion of the court given as a response. The second instruction asked by the defendants, in substance, in- sisted, that to entitle the plaintiffs to recover for a total loss, the damage to the "Gracchus" from the accident should be more than one-half the sum to which she was valued in the policy ; and that in estimating that damage, the costs of the repairs only were to be taken, deducting one-third new for old. In effect, therefore, it excluded all consideration of the salvage in the ascertainment of the loss. The third instruction was in substance similar to the second, except that it did not insist upon the exclusion of the salvage. In effect, therefore, it insisted upon the valuation in the policy, as the standard by which to ascertain whether the damage was half the value of the " Gracchus," or not. The fourth instruction insisted, that to entitle the plaintiffs to recover for a total loss, the damage must exceed one-half the value of the " Gracchus" at the time of the accident; and that in estimating the damage, the general and particular averages, as adjusted at New Or- leans, were to be taken, deducting one-third new for old. In effect, therefore, it insisted that nothing but these adjustments were to be taken into consideration, in ascertaining the totality of the loss at the time of the abandonment (admitting the abandonment to be suf- ficient), however imminent might be the dangers, or great the losses then actually impending over the " Gracchus." And all three of tliese prayers further insisted, that the deduction of one-third new for old, should be made from the amount of the repairs, as in the case of a partial loss, in ascertaining whether there was a' right to abandon for a total loss, upon the ground that the damage exceeded a moiety of the value of the vessel. The instructions of the court actually given in these prayers, involve 1 After stating the case — Ed. 54 850 BRADLIE V. MARYLAND INS. CO. [CHAP. VIII.' the following propositions : 1. That if the expenditures in repairing the damage exceeded half the value of the brig at the port of New Orleans, after such repairs were made, including therein the salvage awarded to the salvors ; the plaintiffs were entitled to recover for a total loss, under the abandonment made on the 22d of April, 1833. 2. If the expenditures to get off and repair the brig, were less than the half of such value, then the plaintiffs were not entitled to recover for a total loss, upon the ground that the voyage was retarded or lost; nor on account of the arrest and detention of the brig, under the ad- miralty process, for the salvage. The question is, whether these instructions were correct. In con- sidering the first, it is material to remark, that by the well settled principles of our law, the state of the facts, and not the state of the information at the time of the abandonment, constitutes the true cri- terion by which we are to ascertain whether a total loss has occurred or not, for which an abandonment can be made. If the abandonment, when made, is good, the rights of the parties are definitely fixed, and do not become changed by any subsequent events. If, on the other hand, the abandonment, when made, is not good, subsequent circum- stances will not affect it, so as, retroactively', to impart to it a valid itj' which it had not at its origin. In some respects, our law on this point differs from that of England ; for, by the latter, the right to a total loss vested by an abandonment, may be divested by subsequent events, which change that total loss into a partial loss. It is unnecessary to cite cases on this subject, as the diversity is well known ; and the courts in neither country have shown any disposition of late years to recede from their own doctrine. The cases of Rhinelander v. The .Insurance Company of Pennsj'lvania, 4 Cranch, 29 ; and Marshall v. The Delaware Insurance Company, 4 Cranch, 202, are direct aflSrma- tions of our rule : and those of Bainbridge v. Neilson, 10 East's Eep. 329 ; Patterson v. Ritchie, 4 M. & Selw. 394 ; and M'lver v. Hender- son, 4 M. &. Selw. 584, of the English rule. In cases where the abandonment is founded upon a supposed tech- nical total loss, by a damage or injury exceeding one-half the value of the vessel, although the fact of such damage or injury must exist at the time, yet it is necessarily open to proofs, to be derived from sub- sequent events. Thus, for example, if the repairs, when subsequently made, clearly exceed the half value, it is plain that this affords one of the best proofs of the actual damage or injury. On the other hand, if the subsequent repairs are far below the half value, this, so far as it goes, affords an inference the other vrny. But it is not, and in many cases cannot be decisive of the right to abandon. In many cases of stranding, the state of the vessel at the time may be such, from the imminency of the peril, and the apparent extent of expenditures re- quired to deliver her from it, as to justify an abandonment; although, by some fortunate occurrence, she may be delivered from her peril, without an actual expenditure of one-half of her value after she is in 'sect. I.] BRADLIE V. MARYLAND INS. CO. 851 safetj". Under such circumstances, if, in all human probabilitj', the expenditures which must be incurred to deliver her from her peril, are, at the time, so far as anj- reasonable calculations can be made, in the highest degree of probabilitj-, bej-ond half value ; and if her distress and peril be such as would induce a considerate owner, uninsured, and upon the spot, to withhold any attempt to get the vessel off, because of such apparently great expenditures, the abandonment would doubt- less be good. It was to such a case that Lord EUenborough alluded, in Anderson i: "Wallis, 2 M. & Selw., when he said : " There is not any case, nor principle, which authorizes an abandonment, unless where the loss has been actually a total loss, or in the highest degree probable at the time of the abandonment." Mr. Chancellor Kent, in his learned Commentaries, Vol. III. 321, has laid down the true results of the doc- trine of law on this subject. " The rigiit of abandonment [says he] does not depend upon the certainty, but upon the high probability of a total loss, either of the property or of the voj-age, or both. The insured is to act, not upon certainties, but upon probabilities ; and if the facts present a case of extreme hazard, and of probable expense, exceeding half the value of the ship, the insured may abandon ; though it should happen that she was afterwards recovered at a less expense." ^ We have no difficulty, therefore, in acceding to the argument of the coun- sel for the plaintiffs in error on this point. But its application to the ruling of the court will be considered hereafter. In respect to the mode of ascertaining the value of the ship, and, of course, whether she is injured to the amount of half her value, it has, upon the fullest consideration, been held by this court, that the true basis of the valuation is the value of the ship at the time of the disas- ter ; and that, if after the damage is or might be repaired, the ship is not, or would not be worth, at the place of the repairs, double the cost of the repairs, it is to be treated as a technical total loss. This was the doctrine asserted in the Patapsco Insurance Company v. South- gate, 5 Pet., 604, in which the court below had instructed the jury, that, if the vessel could not have been repaired without an expenditure exceeding half her value at the port of the repairs, after the repairs were made, it constituted a total loss. This court held that instruc- tion to be entirely correct. It follows, from this doctrine, that the valuation of the vessel in the policy,^ or the value at the home port, or in the general market of other ports, constitutes no ingredient in ascer- taining whether the injury by the disaster is more than one-half the value of the vessel or not. For the like reason, the ordinarj' deduction in cases of a partial loss of one-third new for old, from the repairs, is 1 See Orient Ins. Co. v. Adams, 123 U. S. 67 (1887) ; Spalding v. Alliance Marine and General Assur. Co., 10 Hawaii, 190 (1896). — Ed. 2 Ace. Peele v. Merchants Ins. Co., 3 Mason, 27, 70-73 (1822) ; Allen v. Sugrue, 8 B. & C. 561 (1828), s. c. 3 M. & K. 9 ; Irving v. Manning, 6 C. B. 391 (H. L. 1848), 8. c. 1 H. L. C. 287. Contra : Deblois v. Ocean Ins. Co., 16 Pick. 303, 310-313 (1835). —Ed. 852 BRADLIE V. MARYLAND INS. CO. [CHAP. Till. equally inapplicable to cases of a technical total loss,^ b^' an injury ex- ceeding one-half of the value of the vessel. That rule supposes the vessel to be repaired and returned to the owner ; who receives a cor- respondent benefit from the repairs beyond his loss, to the amount of the one-third. But in the case of a total loss, the owner receives no such benefit ; the vessel never returns to him, but is transferred to the underwriters. If the actual cost of the repairs exceeds one-half of her value after the repairs are made, then the case falls directly within the predicament of the doctrine asserted in the case of 5 Pet. 604. The same limitations of the rule, and the reasons of it, are verj' accurately laid down by Mr. Chancellor Kent, in his Commentaries, Vol. III. 330 ; and in Da Costa v. Newnham, 2 T. E. 407. If, with these principles in view, we examine the first instruction given in this case in the Circuit Court, it will be found to be perfectly correct. Indeed, that part of the instruction which declares that if the brig "could not be got off and repaired without an expenditure of money to an amount exceeding half her value at the port of New Orleans, after such repairs were made, then the plaintiffs are entitled to recover for a total loss under the abandonment,'' is precisely in the terms of the instruction given in The Patapsco Insurance Company v. Southgate, 5 Pet. 604. The error, which has been insisted on at the argument by the plaintiffs, is in the additional direction ; that " in ascertaining the amount of such expenditure, the jury must include the sum for which the brig was liable to the salvors, according to the de- cree of the District Court of Louisiana, stated in the evidence : " which, it is contended, removed from the consideration of the jury the right to take into the account the high probability, at the time of the abandon- ment, of the allowance of a greater salvage, and even to the extent of the fiftj' per cent then claimed by the salvors. And in support of the argument, it is insisted that the state of the facts, and the high proba- bilities at the time of the abandonment, constitute the governing rule ; and not the ultimate result in the subsequent events. But it appears to us that the argument is founded upon a total misunderstanding of the true import of this part of the instruction. The court did not un- dertake to say, and did not say, that the jury might not properly take into consideration the high probability of a larger salvage at the time of the abandonment ; but simply, that the jury must include in the half value, the amount of the actual salvage decreed, because that was, in truth, a part of the loss. The instruction was, therefore, not a limita- tion restrictive of the rights and claims of the plaintiffs, but, in fact, a 1 Ace.; Peele v. Merchants Ina. Co., 3 Mason, 27, 73-77 (1822); Wallace v. Thames and Mersey Ins. Co., 22 Fed. R. 66 (C. C, E. D. Mich., 1884). Contra: Deblois v. Ocean Ins. Co., 16 Pick. 303, 313-314 (1835). In Heebner o. Eagle Ins. Co., 10 Gray, 131, 143 (1859), Bigelow, J., for the court, said : " By the well settled rule of law in this commonwealth, applicable to policies of insurance, where an injury is sustained by a vessel, the loss is not total unless the expense of repairs exceed fifty per cent of the valuation in the policy, after the deduc- tion of one third new for old. Deblois v. Ocean Ins. Co., 16 Pick. 314." — Ed. SECT. I.] CINCINXATI INS. CO. V. DUFFIELD. 853 direction in favor of their rights and claims, and in support of the abandonment. This is demonstrated by the then actual position of the cause. The defendants had asked an instruction that the cost of the repairs only, exclusive of the salvage, should be taken into con- sideration in estimating the half value ; and also that the one-third new for old, should be deducted from the amount of the cost, in esti- mating the half value. The court, in effect, negatived both instruc- tions ; and in the pai'ticulars now objected to, there was a positive direction to the jurj' not to exclude, but to include the salvage, in the estimate of the loss. In this view of the matter, the instruction was most favorable to the plaintiffs ; and, so far from excluding evidence which might show the amount of the actual damage at the time of the abandonment ; it resorted, and very properly resorted to the subsequent ascertainment of salvage as positive evidence, that to that extent at least, the actual damage was enhanced bej'ond the cost of the repairs. "We are entirely satisfied with this part of the instruction, in this view, which seems to us to be the true interpretation of it.^ . . . Upon the whole, our opinion is that there is no error, in the instruc- tions given or refused by the Circuit Court, and the judgment is there- fore aflBrmed, with costs. CINCINNATI INS. CO. v. DUFFIELD and Others. Supreme Court op Ohio, 1856. 6 Ohio St. 200. Petition in error to reverse the judgment of the Superior Court of Cincinnati, at general term. An insurance was effected on the steamboat " Sam Cloon," in four insurance companies ; the agreed value of the boat being $20,000, and amount insured in each office $3,750, or in all $15,000. The policy in each case was in the same form and with the same conditions. The steamboat having been sunk in the Mississippi Eiver, was, by a writing executed for the purpose, abandoned to the insurance compa- nies ; who, by means of persons acting for them, raised the boat, and realized from the wreck, after deducting charges and expenses, the sura of $3,000. An action was brought bj' the owners, who effected the insurance, to recover one-fourth of that sum, claiming that they still retained, after the abandonment, an interest of one-fourth in the wreck. This claim was resisted bj' the insurance companies on the ground that bj' the terms and conditions of the policies the owners were required to abandon not only to the extent of the interest insured, but all interest in the subject-matter insured. The part of the policies supposed to bear on this question was as follows : " And in case of loss or misfor- tune, as aforesaid, it shall be the duty of the assured, their agents or 1 The remainder of the opinion dealt with the latter part of the instruction given, and also with the instruction requested by the plaintiffs, but refused. — Ed. 854 CINCINNATI INS. CO. V. DUFFIELD. [CHAP. VIII. assigns, to use every reasonable effort for the safeguard and recovery of the said steamboat, and everj- part thereof, and if recovered, to cause the same to be forthwith repaired, if practicable ; and in case of neglect or refusal on the part of the assured, their agents or assigns, to adopt prompt and sufficient measures for the safeguard and recovery thereof, then said insurers are hereby authorized, and shall have the election to interpose and recover said steamboat, and cause the same to be repaired for account of the assured, to the charges of which the said insurance company will contribute in proportion as the sum herein insured bears to the agreed value in this policy, or to consider such neglect or refusal as an abandonment, and be entitled to recover said steamboat, or any part thereof, at their own expense, and for their own use and benefit ; and In no case whatever shall the assured have the right to abandon, until it shall be ascertained that the recovery and repairs of said steamboat are impracticable ; nor sell the wreck, or any part thereof, without the consent of this compan}' ; and in aU cases of abandonment the assured shall assign, transfer, and set over to said insurance company all their interest in and to the said steamboat, and every part thereof, free of all claims and charges whatever." The action was submitted for trial to the Superior Court of Cincin- nati, at special term, and judgment was rendered in favor of the insured for one-fourth of the sum realized from the wreck. To reverse this judgment, a petition in error was preferred by the insurance company before the Superior Court, at general terra, and the judgment at special term was affirmed. To reverse this judgment of affirmance, the present petition in error is prosecuted in this court. In argument, counsel confined themselves mainly to this question : Under a form of policy above mentioned, what is the legal effect of the term abandonment ? Is it to transfer to the underwriter, as and for his own, the entire interest of the insured in the proceeds of the wreck, or only the interest which is covered by the policy ? Coffin and Mitchell, for plaintiflf in error. John S. Nixon, for defendants in error. Scott, J. In order to have a clear apprehension and correct solu- tion of the question made in this case, it is necessary to understand what is meant by an abandonment; what are its legal effects, and what would be the legal rights of the parties, independent of the pro- visions of the policj" on the subject of abandonment. The term abandonment, as used in policies of marine insurance, and in the law regulating that subject, is a technical one. " An abandonment is an act on the part of the assured, by which he relinquishes and transfei's to the underwriters his insurable interest, as far as it is a sulyect of the policy, or the proceeds of it, or the claims arising from it." Phil, on Ins. 382. " The abandonment cannot transfer the interest of the assured any further than that interest is covered by the policy." Arnould, 1159. SECT. I. J CINCINNATI INS. CO. V. DUFFIELD. 855 "The abandonment, when properly made, operates as a transfer of the propertj- to the underwriter, and gives him a title to it, or what re- mains of it, as far as it was covered by the policy." 5 Pet. 622. Such we understand to be the well-settled legal effect of an abandon- ment. It operates as a transfer to the underwriter of the property in- sured, only to the extent of the indemnity contemplated b^' the policy ; and this limitation of its operation is not only sanctioned by the au- thoritj- of the elementary writers and the general current of decisions, but has its foundation in equity and sound principle. Upon what principle of equit}- should the underwriter, in case of abandonment, take the wreck, not only of that which he has insured, and of which his contract binds him to pa}' the full agreed value, but also of that which he has not insured, and for which he is in no event liable to paj'? It would seem equitable, — and in ordinarj' cases of insurance such is doubtless the law, — that where an abandonment may be and is legally made, the wreck, or its proceeds, inure to the benefit of those who bear the burden of the loss, — to the underwriters in proportion to the parts by them severally insured, and to the owner in proportion to the part remaining uninsured, and as to which he is virtually' his own insurer. The ground upon which the insurer takes the wreck is, that he paj'S the party assured for a total loss ; and to the extent to which his con- tract binds him thus to pa}', to the same extent, and no further, is he entitled to the proceeds of the wreck. His rights originate from his obligations, and cannot be more than co-extensive. But did the parties intend, bj' the clause in the policy out of which this controversy arises, materiallj' to change the legal rights of the in- surer and the assured, growing out of and incident to an abandonment? That clause is in these terms : "In all cases of abandonment the assured shall assign, transfer, and set over to said insurance company all their interest in and to the said steamboat, and every part thereof, free of all claims and charges whatever." The right of the party assured to " abandon " in a proper case, seems here to be contemplated and strictly recognized ; and yet if we adopt the construction claimed by the plaintiff in error, the policy does not permit the making of a legal technical abandonment under any circumstances, but substitutes therefor a transfer, having an effect which the law does not attach to an abandonment. That the " claims and charges " mentioned in this clause were under- stood bj' tha parties to refer, not to the interest of the party insured in the boat, but to mortgages or other liens held by other parties against the boat, is satisfactorily shown by the terms of the guaranty taken bj' the plaintiff in error from the defendants on the payment of the sum insured. The construction claimed would, in cases of partial insurance, often prevent an abandonment, where the settled rule of law would authorize it, or would defeat that indemnity, which is the very ground and object of all legitimate insurance. 856 CINCINNATI INS. CO. V. DUFFIELD. [CHAP. VIII. A construction leading to such results, so vitally changing the legal rights of the parties, and working apparent injustice, ought not to be adopted, unless required by clear and explicit language. We thi ik a different construction may be fairly given to the clause in question — that it was not intended to change the legal effect of an abandonment, which the framer of the policy may be presumed to have understood, but to prescribe the form in which the transfer should be made to the underwriters of the interest which they derive by law from the abandonment, and to point out the mode in which the intention to abandon should be unequivocally expressed. The elementary writers tell us that "no particular form of aban- donment is prescribed, nor is the form material ; " " it has not been considered necessary, as a general rule, that it should be made in writing." Phillips on Ins. 447. In Chesapeake Insurance Co. v. Stark, 6 Cranch, 272, C. J. Mar- shall, giving the opinion of the court, said: "The informality of the deed of cession is thought unimportant, because, if the abandonment was unexceptionable, the property vested immediately in the under- writers, and the deed was not essential to the rights of either party." As no deed of cession, transfer, writing, or particular form is essen- tial to an abandonment, doubts have sometimes arisen as to what will constitute a valid abandonment. To prevent all difficulty or mis- understanding on this point, we maj' reasonably suppose was the object in requiring that the abandonment should be accompanied and evi- denced bj' a formal assignment and transfer of the property insured. And the clause may have also been intended to provide that the aban- donment should be general, embracing the whole subject-matter of the insurance. Besides, we understand an abandonment to operate as a transfer to the underwriter of the legal title to, and right of disposal of what re- mains of the thing insured ; and the formal assignment provided for in the clause under consideration, may reasonably' have been intended simply to facilitate the sale of the wreck by the insurance companies, without discharging them from their legal liability to account to the party assured for his proportion of the proceeds. Such discharge can only be effected by language so clear and explicit as to leave no reason- able ground for misapprehension on the part of the insured. Judgment affirmed} Baetlet, C. J., and Swan, Beinkeehoff, and Bowen, JJ., con- curred. 1 See Natchez and New Orleans P. & N. Co. v. LonisTille Underwriters, 44 La. Ann. 714 (1892) ; Harvey ». Detroit F. & M. Ins. Co., 120 Mich. 601, 610-611 (1899). On total loss in general, see also : — Pole 0. Fitzgerald, Willes, 641, 644-648 (Ex. Ch. 1752); s. c. ««6 nom. Fitz- Gerald v. Pole, 4 Bro. P. C. (Toml. ed.) 4S9, 449 (H. L. 1754) ; Parsons v. Scott, 2 Tannt. 362 (1810) ; Biays v. Chesapeake Ins. Co., 7 Cranch, 415 (1813) ; Falkner v. Eitchie, 2 M. & S. 290 (1814) ; SECT. I.] CINCINNATI INS. CO. V. DUFFIELD. '857 Smith V. Robertson, 2 Dow, 474 (1814) ; Hunt V. Royal Exchange Assurance, 5 M. cSo S. 47 (1816) ; Houstmau v. Thornton, Holt N. P. 242 (1816) ; Cambridge v. Anderton, 4 D. & R. 203 (1824) ; s. c. 2 B. & C. 691 ; Gordon v. Massachusetts F. & M. Ins. Co., 2 Pick. 249 (1824) ; Humphreys v. Union Ins. Co., 3 Mason, 429 (1824) ; Patapsco Ins. Co. v. Sonthgate, 5 Pet. 604 (1831) ; Sewall V. United States Ins. Co., 11 Pick. 90 (1831) ; Cincinnati Ins. Co. o. Bakewell, 4 B. Mon. 541 (1844) ; Moss y. Smith, 9 C. B. 94 (1850) ; Eosetto V. Gurney, 11 C. B. 176 (1851); Kalli V. Janson, 6 E. & B. 422 (Ex. Ch. 1856) ; Duff V. Mackenzie, 3 C. B. n. s. 16 (1857) ; McConochie v. Sun Mut. Ins. Co., 26 N. Y. 477 (1863) ; Farnworth v. Hyde, L. R. 2 C. P. 204 (Ex. Ch. 1866) ; Rankin v. Potter, L. R. 6 H. L. 83 (1873) ; Provincial Ins. Co. v. Leduc, L. R. 6 P. C. 224, 237, 241 (1874) ; Hubbell V. Great Western Ins. Co., 74 N. Y. 246, 260-261 (1878) ; Kaltenboch v. Mackenzie, 3 C. P. D. 467 (C. A. 1878) ; Boardman v. Boston M. Ins. Co., 146 Mass. 442 (1888) ; Carr v. Security Ins. Co., 109 N. Y. 504 (1888) ; Mayo V. India Mut. Ins. Co., 152 Mass. 172 (1890) ; Sailing Ship Blairmore Co. u. Macredie, [1898] A. C. 593 ; Washburn & Moen Mfg. Co. u. Reliance M. Ins. Co., 179 U. S. 1 (1900). And on the amount of recovery under a policy procured by the owner of a limited interest, see : — Stuart V. Columbian Ins. Co., 2 Cranch C. C. 442 (1823), —vendor; Irving V. Richardson, 2 B. & Ad. 193 (1831), — mortgagee; Lazarus v. Commonwealth Ins. Co., 19 Pick. 81 (1837), — mortgagor; Hancox v. Fishing Ins. Co., 3 Sumner, 132 (1837), — lienholder; Finney w. Warren Ins. Co., 1 Met. 16 (1840), — part owner; Joyce V. Kennard, L. R. 7 Q. B. 78 (1871), — carrier ; Ebsworth v. Alliance M. Ins. Co., L. R. 8 C. P. 596 (1873) ; s. c. reversed, by arrangement between the parties, 43 L. J. N. s. C. P. 394 (Ex. Ch. 1874), — consignee ; Knight V. Eureka F. & M. Ins. Co , 26 Ohio St. 664 (1875), — part owner ; Mnrdock v. Franklin Ins. Co., 33 W. Va. 407 (1 889), — charterer. — En. 858 HAEEIS V. EAGLE FIRE COMPANY. [CHAP. Till. SECTION II. Mre Insurance. * {A) Genebal Pkinciples as to Both Open axd Valued Policies. HARRIS V. EAGLE FIRE COMPANY. Supreme Court of New York, 1810. 5 Johns. 368. This was an action of covenant, on a policy of insurance against fire. At the trial of the cause, a verdict was taken for the plaintiff, by consent, for 1,235 dollars and 10 cents, subject to the opinion of the court on a ease, containing the following facts : — The plaintiff resided in Richmond, in Virginia, where he manufactured tobacco, in a particular manner; and procured a policy of insurance to be made by the defendants against fire, upon manufactured and unmanufactured tobacco, utensils, and other property, to the amount of 20,000 dollars, and which was thus described in the policy. " Ten thousand dollars upon his (the plaintiff's) merchandise and utensils specified on the back hereof, and contained in his two-story frame building, occupied by the assured, for a tobacco manufactorj-, the said building being marked No. 1, on a plan filed with the sur- ve^'or's reports. No. 800. " Ten thousand dollars upon his merchandise and other property, as specified on the back hereof, contained in his one-story wooden build- ing adjoining the aforesaid building, and marked on said plan, No. 2." The memorandum on the back of the policj', and referred to in the policy, speciSes among other articles insured, in building No. 1, " 380 kegs of manufactured tobacco, worth 9,600 dollars." The policy was dated 31st October, 1807, and the insurance was to continue for one year from the date. A fire happened on the 6th March, 1808, which consumed a consid- erable portion of the property insured, and among it 157 kegs of manufactured tobacco. The plaintiff, it was admitted, was entitled to recover for the loss of the property insured, and had been paid by the defendants for all of it, except the 157 kegs of manufactured tobacco. And the point in controversy between the parties was, as to the mode of estimating the loss on those kegs. The manufactured tobacco was of the same kind as that which the plaintiff had sold, for several years previous to the fire, and of the same quality as the 380 kegs specified on the back of the policy, as worth 9,600 dollars ; and which were estimated under their average value, in reference to the price, at which they would have sold to a bona fide purchaser, out of the manufactory ; but it was the practice of the plaintiff and his agents (without any warranty for that purpose), SECT. II.J HARRIS V. EAGLE FIRE COMPANY. 859 to take back an}' of the article sold to a purchaser, which proved to be injured in manufacturing, and to return the price, or give other tobacco ; and kegs of such tobacco had been sometimes returned in consequence. The plaintiff claimed to be compensated for the 157 kegs of manu- factured tobacco, at the same rate as is specified in the memorandum on the back of the policy, to be the worth of the whole 380 kegs, the 157 kegs being of the same kind and quality. The defendants insisted that the plaintiff would be indemnified, if he received the first cost of the tobacco, together with the cost of manu- facturing it, and a reasonable allowance for his attention, and the use and risk of the capital employed. It was admitted, that if such a mode of calculation was adopted, 12^ per cent on the amount would be such reasonable allowance ; and that according to that mode of calculation the plaintiff had been fully paid. It was agreed, that if the court should be of opinion that the loss was to be estimated in the mode insisted on by the plaintiff, the verdict was to stand, otherwise the verdict was to be set aside, and judgment entered for the defendants ; and that any mistake in the sum for which the verdict was taken, should be rectified. Boyd, for the defendants. T. A. Emmet, contra. Hoffman, in reply. ^ Thompson, J., delivered the opinion of the court. The rule by which the loss is to be calculated, is the onh' question arising in this case. The loss was a total destruction of 157 kegs of manufactured tobacco ; and the assured claims the price for which they would have sold at his manufactory to a bona fide purchaser ; being, as he con- tends, the valuation in the policy. The underwriters contend, that they ought only to pay the first cost of the tobacco, together with the cost of manufacturing the same, and a reasonable allowance for the use and risk of the capital of the manufacturer, and for his attention. "Which of these rules ought to govern, must, it appears to me, depend upon the question, whether this is to be deemed an open or valued policy. We find in the books but few cases in which the subject of insurance against loss by fire has come under consideration, and none which throw any light on the present question. The rules applicable to marine insurance, so far as the analogj' between the two cases will hold, ought to govern us. And according to those rules, this must, I think, be considered a valued policy, so far as relates to the kegs of tobacco. The case states, that among the articles insured, there were 380 kegs manufactured tobacco, worth 9, 600 dollars ; this was the rate at which the tobacco was estimated, in making up the 20,000 dollars, the amount of the insurance. The premium was paid accord- ing to this valuation ; and the 157 kegs which were lost, are expressly stated to be of the same kind and quality as the whole 380 kegs. We have, therefore, an infallible rule bj' which to estimate the several and distinct value of each keg of tobacco. But it was said on the 860 HAEEIS V. EAGLE FIRE COMPANY. [cHAP. VIII. argument, that admitting this to be a valued policy, it would make no difference, for it was only in case of a total loss, that there was any distinction between an open and a valued policy; that in case of a partial loss, the like inquiry into the true amount of such loss is to be made, whether the policy be of the one sort or the other. This is undoubtedly true, when ascertaining the extent of damage which the particular sub- ject has sustained, and when there was not an absolute destruction of the subject. But where there is an actual total loss of any article, dis- tinctly valued in the policy, that valuation, I apprehend, must govern in all cases. The valuation in a policy, is in the nature of liquidated damages, to save the necessity of proving them. In case of a total loss of the subject, by allowing the value to be inserted in the policy, the underwriter agrees that it shall be taken as there stated. This valua- tion is always considered as the fair amount of the prime cost, or at least that which the parties have agreed to adopt as such. (1 Marsh. 199.) If in the valuation of an article manufactured by the assured, he has chosen to estimate his labor and supposed profits, and to pay a premium therefor, I see no objection against it. It furnishes no evi- dence of a fraudulent intention to overvalue. In France, where almost all policies are valued, if the goods be of the growth or manufacture of the assured, the current price is always adopted as the value. (2 Marsh. 533.) The effect of a valuation is only fixing conclusively the prime cost ; if it be an open policy, the prime cost must be proved ; if a valued policy, it is agreed. (2 Burr. 1171.) In the case of Lewis v. Rucker, 2 Burr. 1167, Lord Mansfield, through- out, speaks of the prime cost and valuation, as meaning the same thing. In speaking of the general nature of the contract of insurance, he says, " The insurer engages, so far as the prime cost or value in the policy, that the thing shall come safe. If the goods be totally lost, he must pay the prime cost, that is, the value of the thing he insured at the outset. If part of the cargo, capable of a several and distinct valua- tion, at the outset, be totally lost, as if there be one hundred hogsheads of sugar, and ten happen to be lost, the insurer must pay the prime cost (or valuation) of those ten hogsheads. But where an entire indi- vidual, as one hogshead, happens to be spoiled, no measure can be taken from the prime cost, to ascertain the quantity of such damage." To apply those rules to the case before us. The parties have agreed, in order to save the necessity of particular proof in case of loss, that the valuation in the policy shall be considered the prime cost of the to- bacco. That is, that the prime cost of 380 kegs of tobacco, shall be estimated at 9,600 dollars ; each keg is, therefore, capable of a several and distinct valuation. There has been a total loss of 157 kegs of this tobacco, and according to Lord Mansfield's doctrine,, the underwriters must pay the prime cost, or valuation, of the 157 kegs. Had the 380 kegs been totally destroyed, would there have been any doubt, but that the defendants must have paid the 9,600 dollars? I see no reason why SECT. II.] NICOLET V. INSUEAXCE COMPANY. 861 a different rule should prevail where there has been a total loss of any number of the kegs, each one being of equal weight and quality. There is much greater certainty and simplicity in this mode of calculation, than to go into an inquiry as to the value of the raw material, and the expense of manufacturing it. There is no pretence that there has been anj- fraud, or over-valuation. "We are, therefore, of opinion, that the plaintiff is entitled to judg- ment for the amount of the verdict. Judgment for the plaintiff } NICOLET ET AL. V. INSURANCE COMPANY. Supreme Cotjkt of Louisiana, 1832. 3 La. 366. Appeal from the court of the first district. This was a claim for loss under an insurance from fire. The policy stated, "thatT. Nicolet & Co. had paid the defendants the sum of one hundred dollars for insurance from loss or damage b}' fire, according to the tenor of the conditions hereunto annexed, not exceeding in each case the sum or sums hereinafter recited, upon the property herein de- scribed, in the place or places herein set forth and not elsewhere (unless allowed by indorsement previously made, as set forth in the margin), viz : on cotton to the amount of twentj- thousand dollars, or as maj' appear to that extent located in their names, in seven named jaresses, say, twentj' thousand dollars." On the same sheet were printed several articles entitled, " Conditions of Insurance." The first of which stated that " each building must be separately valued and a specific sum in- sured tliereon, and in like manner, a separate sum insured on the prop- erty contained therein." The eleventh article stated, " that for the further convenience of merchants and others, who have propertj' in two distinct buildings, the same ma3- be insured with the customary average clause." No average clause was written out, but proof was given of what was the usual average clause, and two witnesses proved that it was usual to insert it in the policies of another office ; viz., The Louisiana State Insurance Office, though they stated no instance had occurred of a loss being paid under such circumstances. On the back of the polic}- was indorsed T. Nicolet & Co., cotton, six months, twenty thousand dollars at one-half per cent, one hundred dollars ; and it was proved that from one-third to one-half per cent was the current premium for the risk on a single press. Hart's press, one of the seven, was burned, and the plaintiffs had therein, at the time, five hundred and fiftj--seven bales of cotton, of which four hundred and sixty-three, worth seventeen thousand eight 1 See Cushman v. Northwestern Ins, Co., 34 Me. 487 (1852). —Ed. 862 NICOLET V. INSURANCE COMPANY. [CHAP. VIII. hundred and forty-six dollars, were lost, and ninety-four, the value of which was not shown, were saved. There was also, at the same time, in the other six presses, four hun- dred and fifty-seven bales, the value of which was not shown. To the plaintifi's application for payment, the defendants objected, unless an account was furnished of the amount of cotton at risk in the remaining six presses, which plaintiffs refused to give. Suit was then brought, the defendants paid eight thousand five hundred dollars with- out prejudice, and it was prosecuted for the balance. There was a verdict and judgment for the plaintiflfs, and the defendants appealed. Strawbridge, for appellants. Lockett^ for appellees. Mathews, J., delivered the opinion of the court.^ . . . The sole question presented bj' the case to be determined is, whether the insurers are bound, according to a just and legal interpretation of their contract, to indemnify the insured to the full extend of their loss, or only^jjro rata on an average estimate of the amount lost, compared with the value of all the cotton stored in the various presses mentioned in the policy. The counsel for the appellants relies on two principal grounds for a re- versal of the judgment rendered by the court below. He insists : 1. That the loss must be averaged according to an express condition of the policy. 2. If such condition be not expressed in such a manner as to bind the insured to submit to average, a legal construction of the con- tract imposes on them this obligation. The clause of the policy as- sumed as giving a right to the insurers to claim the benefit of average, is found in the eleventh article of a printed paper attached to the con- tract of insurance, and headed conditions of insurance. These may be presumed to be the conditions on which insurances can be obtained by applicants to the company. They are twelve in number, and all favorable to the interests of the insurers ; but eertainlj' may be waived bj' the party in whose favor they are stipulated ; and if a contract, by which risk is assumed, contain express agreements legally irreconcilable with these printed conditions, the former must prevail. The article relied on is in these words : ' ' For the further convenience of merchants who may have property in two or more distinct buildings, the same may be insured in one sum with the customary average clause." Suppose, however, an insurance be made without this clause, would it be the duty of a court, called on to interpret the contract of the parties, to consider everything as stipulated in it which it might by a grant have contained, in the absence of any clause to that effect ? We think not. This article contains an enunciation to the public that the New Orleans Insurance Company will Insure property in two or more distinct build- ings, in one sum, with the customary average clause, but does not de- clare that they will not make such insurances without that clause. In the article immediately preceding, it is declared that "no policy for a 1 A passage stating the case has been omitted. — Ed. SECT. II.] NICOLET V. INSURANCE COMPANr. 863 shorter period than a year shall be issued to cover other than specific goods identified by marks and numbers." But in the very policy be- fore us we find this company insuring property for six months only, ■without specification, either by marks or numbers, yet it is not pre- tended that the contract is void on this account, although directlj' op- posed to the condition stated in the printed articles. The absurditj' of such a pretention is perhaps the reason why it has not been urged against the plaintiffs. The diflference of absurdity is not easily per- ceived between insisting on an article which would entirely annul the contract and one which might radically change the nature and extent of the obligations created by it. We are of opinion that the clause relating to average, not being inserted in the body of the policy, may be considered as waived.^ . . . Whether the defendants in the present case be bound according to a just and legal interpretation of their contract to indemnify the insured to the full extent of their loss or only by average (leaving out of view the clause of the eleventh article, which might have been inserted) is a question not of easy solution. The rules which would govern in a case of marine insurance similar to the present, appear to be well settled, and the principle which pre- vails in the construction of a contract of the former kind, seems to be firmlj' established and fixed by law and usage in most commercial countries ; and has been adopted as a rule of decision in the United States. According to this principle, in the event of a partial loss on vessels or merchandise insured against risks by sea, an average takes place, regulated by a percentage on the whole value of the property insured, whether that value be entirely covered by the policy or not. If the insurance be for less than the whole, the underwriters are re- sponsible only in the proportion which the part of which the)' have assumed the risk, bears to the whole. Phillips on Ins. p. 372 ; Park, 137. The doctrine established in England and the United States, relative to adjustment in cases of partial loss on property covered by marine insurances, seems to prevail in France to the same extent in contracts of insurance against loss and damage by fire, as appears in a new treatise on insurance against fire, written by Boudousquie, and edited in 1829. See this work, pp. 187, 357-8. How a difference in rules of interpretation of a contract of assurance against loss by fire, and one against loss by sea, can reasonably' exist, it is difficult to perceive. The first principles on which an}' course of reasoning can be fairly pursued are certainly the same in both cases. The intention of the parties to either contract must be sought for in the expressions of the instrument from which these obligations result. Let us examine the policy now under consideration, independent of that general usage which has assumed the force of law, in relation to marine insurances. The plaintiffs procured insurance on cotton to the amount of twenty thousand dollars, located in their names in seven 1 A passage foreign to the amount of recovery has been omitted. — Ed. 864 NICOLET V. INSURANCE COMPANY. [CHAP. VIII. dififereat storehouses, for which they paid a premium of one hundred dollars. In consideration of this premium, the company promised to pay to the assured for all such damage and loss as should happen by fire to the property insured, not to exceed the sum of twenty thousand dollars. It appears by the evidence of the case that the plaintiffs had cotton to the value of thirty-nine thousand and eighty-four dollars (located in the various places as designated in the policj') at the time when part of it, valued at seventeen thousand eight hundred and fortj-- six dollars, was destroyed by fire by the burning of one of the ware- houses in which it was stored. An obligation to pay more than twentj- thousand dollars could, in no event, have been imposed on the insurers. If the property at risk had been of a value less than this amount, the assured would have been entitled to no more than an indemnity equiva- lent to their loss and the sum stipulated in the contract reducible to the actual damage. If the propertj' insured exceeded the amount cov- ered by the policy, the indemnity, in the event of a total loss, could not be enlarged so as to afford full protection. In the first hj'pothesis the contract is favorable to the insurers, because less was put at risk than an equivalent to the premium ; or, if thej- are obliged to return a part, the premium and risk might be deemed correlatives. In the second, they are clearly so, according to the contract. This correspondence between premium and risk is, perhaps, a fundamental principle of all agreements to indemnify for losses. But in a contract where the obli- gation to pay on account of loss can in no event surpass the relative premium paid, it would seem that justice ought to require the obligors to make good the full amount of damages sustained by the destruction of any part of the property insured to that amount. The amount in- sured by the present policy was not sufficient to cover the whole of the property- put at risk, and consequently could not protect all the parts. All were, however, in danger, and it may as well be considered as attaching to the part destroyed as that which was saved from the fire. The company bind themselves by the contract to pa}-, make good and satisfy all such damage or loss as shall happen by fire to the property insured ; and it is shown by the evidence that loss has been sustained amounting to seventeen thousand eight hundred and forty-six dollars. Looking alone to this contract, could it be said in truth that its obliga- tion may be discharged by the payment of a sum less than all the damage and loss suffered by the insured? Their intention was evi- dently to cover the risks on all and every, or any part or parcels of the cotton insured, to the extent of twenty thousand dollars, or under that sum, as loss might happen ; and there is nothing on the face of the policv which shows that the insurers did not acquiesce in this intention. A different interpretation would not afford complete indemnity, although such would be required in conformitj- with rules as laid down in Bou- dousquie's Treatise on Insurance against Fire; but they are not the rules of construction which seem to prevail in the United States ; and the latter, we think, may be justly adopted in the decision of the SECT. II. J WALLACE V. INSURANCE COMPANY. 865 present case, without entering into anj' discussion of tlie weight of arguments which might be urged in opposition.^ See Phillips on Ins. p. 375, note, and 6 Pickering, p. 186, Reports of Cases in the Supreme Court of Massachusetts. The verdict and judgment of the District Court is correct, except in allowing interest. The claim was uncertain and unliquidated until that judgment was rendered, and interest should not have been allowed in this respect ; it is preciselj' like the case of "Workman v. Louisiana Insurance Companj', in which interest was refused. It is, therefore, ordered, adjudged, and decreed, that the judgment of said court be reA'ersed and annulled. And proceeding here to give such judgment as ought there to have been given, it is further ordered, adjudged, and decreed, that the plaintiffs and appellees do recover from the defendants and appellants the sum of nine thousand three hundred and forty-six dollars and eighty- two cents, with costs in the court below ; those of the appeal to be borne by the appellees. WALLACE ET AL. V. INSURANCE COMPANY. Supreme Court of Louisiana, 1832. 4 La. 289. Appeal from the court of the First District. The facts are fully stated in the opinion of the court, delivered by Porter, J. This is an action on a policy of insurance against fire. The case presents three questions : 1. Whether the policy was a valued one ? 2. Whether, if it was open, the verdict and judgment be supported by evidence? 3. Whether the defendants had not a right to discharge themselves from the payment of money by rebuilding the houses which were burned ? In arguing the question whether the contract on which this litigation has arisen, was what is denominated a valued policy, counsel have gone into the consideration of the legality of such an agreement in a fire insurance.^ . . . Be the law, however, on this question as it may, we do not think there was in this case a valued policy. The contract states the com- pany have insured eight thousand five hundred dollars on one brick house and two wooden ones. The words "valued at" are not inserted, but the former is put down at six thousand seven hundred dollars, the 1 Ace: Underhill v. Agawam Mnt. F. Ins. Co., 6 Cush. 440, 447 (1850) ; Missis- sippi Mnt. Ins. Co. v. Ingram, 34 Miss. 215 (1857). —Ed. " The discussion of this point has been omitted. — Ed. 55 866 WALLACE V. INSUKANCE COMPANY. [CHAP. VIIL latter at one thousand eight hundred dollars. Then follows this clause, '' and the said company do herebj- promise, &c. to make good to the said insured, &c. all such loss or damage not exceeding the sum hereby insured. The said loss or damage to be estimated according to the true and actual value of the said property- at the time the same shall happen. The rules which govern the interpretation of other contracts regulate those of insurance, and it is a cardinal rule of construction to give if possible every part of the agreement effect. It is indeed true, as ob- served from the bar, that the written parts of a policj' control those which are printed, but this principle can only receive a proper applica- tion in cases where it is not possible to satisfactorily reconcile them. No such difficulty presents itself here. The sums placed opposite the houses respectively may be easily accounted for as indicating an amount beyond which the company would not be responsible. The absence of the terms " valued at," which are invariablj' used in mari- time policies, where the intention of the parties is to make the estima- tion conclusive, strengthens this construction. We are clear there is no such repugnance between the written and printed clauses as authorizes us to reject one of them. See 2 Washington, C. C. E. 175. II. We think the evidence supports the judgment below, and that a correct conclusion was drawn by the jury in relation to the value of the property destroj-ed by fire. Connected with this part of the case is the bill of exceptions to the judge's refusal to permit the jurj- to take into consideration the amount stated in the policy as insured on each house. Whether this estimation might not properly have formed an element in the calculation the jur}- was required to make, need not be decided. For if we were of opinion it should have been admitted, we would remand the cause, and we understand the appellee prefers an affirmance of the judgment. III. On the last point, which is as to the right of the defendants to rebuild, there is no doubt. No usage is found to sanction such a pre- tension. There is no law which authorizes it. The contract makes no mention of it. On the contrary it stipulates the loss shall be compen- sated in money. It is true rebuilding might in some cases be an in- demnity for the loss. It would perhaps have been so in this instance, but then it was not the indemnity the assured paid for, and we are at a loss to conceive how on policies where such a right is not expressly conferred it could be supposed one of the parties had a right to change the agreement and substitute one mode of performance for another. It is therefore ordered, adjudged, and decreed that the judgment of the District Court be af&rmed, with costs. ^ Pierce, for appellant. Slidett, for appellees. 1 On the pnrpose and constrnction of the statntes commonly called valued policy laws, see Reilly v. Franklin Ins. Co., 43 Wis. 449 (1877) ; Seyk v. Millers' Nat. Ins. Co., 74 Wis. 67 (1889) ; Insurance Co. u. Leslie, 47 Ohio St. 409 (1890) ; German Ins. SECT. II.] IN EE -WEIGHT AND POLE. 867 In the Matter of Arbitration between WRIGHT and POLE. King's Bench, 1834. 1 Ad. & E. 621. i Charles "Wright, proprietor of the Ship Inn at Dover, effected an insurance, as after-mentioned, with the Sun Fire Office Company. In November, 1832, a fire broke out on the insured premises, and Wright claimed compensation fi-om the company for the loss therebj- occasioned. His claim being objected to, the parties, by deed (which was afterwards made a rule of court) referred the dispute to arbitration. It appeared before the arbitrator that, by the policj' of insurance, Wright and another (his partner when the policj' was signed) had in- sured, among other things, "on their interest only in the said Ship Inn and offices, £1,000." B3' virtue of this clause, Wright made the follow- ing demandbefore the arbitrator : " Also such damages as he can satisfy the arbitrator he has sustained under the claim delivered to the Sun Fire Office for his loss in his interest in the said Ship Inn and offices ; such damages consisting in rent paid bj' him to his landlord, J. M. Fector, Esq., the hire of other houses or apartments whilst the apart- ments damaged in such inn b}' the fire were undergoing the necessary repairs, and the loss or damage sustained by him by reason of various persons refusing or declining to go to the said Ship Inn whilst the apartments so damaged were undergoing such repair." It was objected that this claim was not maintainable, for that the interest insured could be understood only to mean the interest Wright had in the fabric of the inn and offices, by reason of the improvements and additions proved to have been made thereto by him, and by his father, through whom he derived title to the premises, and that in respect of that interest he had no claim, the inn and offices having been reinstated in pursuance of the policy, as Wright admitted. The arbitrator awarded that £450 was due from Charles Pole, as one of the managers or directors of the Sun Fire Office Company, to the said Charles Wright, " for the loss he has sustained in his business as an innkeeper, by not being able to occupy the said Ship Inn and offices during the time that elapsed between the Co. V. Eddy, 36 Neb. 461 (1 893) ; Havens v. Gerraania F. Ins. Co., 123 Mo. 403 (1894) ; Eoyal Ins. Co. v. M'Intyre, 90 Tex. 170 (1896). On policies expressly permitting the underwriter to elect to rebuild, see : Parker v. Eagle F. Ins. Co., 9 Gray, 152 (18.57) ; Brown v. Royal Ins. Co., 1 E. & E. 853 (1859) ; MorreU w. Irving F. Ins. Co., 33 N. Y. 429 (1865) ; Beals v. Home Ins. Co., 36 N. Y. 522 (1867) ; Heilmann v. Westchester F. Ins. Co., 75 N. Y. 7 (1878) ; Wynkoop t\ Niagara F. Ins. Co., 91 N. Y. 478 (1883) ; Fire As.sociation v. Rosenthal, 108 Pa. 474 (1885) ; Good v. Buckeye Mut. F. Ins. Co., 43 Ohio St. 394 (1885) ; Piatt v. Aetna Ins. Co., 153 111. 113 (1894); Phoenix Ins. Co. v. Levy, 12 Tex. Civ. App. 45 (1895) ; McAllaster v. Niagara F. Ins. Co., 156 N. Y. 80 (1898) ; Elliott v. Merchants and Bankers F. Ins. Co., 109 Iowa, 39 (1899). — Ed. 1 s. c. suh mm. In the Matter of Arbitration between the Sun Fire Office Co. and "Wright, 3 N. & M. 819. — Ed. " 868 IN RE WRIGHT AND POLE. [CHAP. VIIL fire and the rebuilding of the said premises." He also awarded a sum for loss ou goods. A rule nisi having been obtained for setting aside the award, R. V. Richards now showed cause.'' The insurance was effected on Wright's •' interest in tlie Ship Inn," and it was for the arbitrator to sa}- what that interest was, and whether there was a loss in respect of it. [Lord Denman, C. J. Do j-ou contend, that if he had carried on busi- ness at another inn while his own premises were rebuilding, and bad gone on there so successfuUj- as to be no loser during that period, he would have had no claim now in respect of interest, but that, if less successful, he might have claimed in proportion?] The question would alwaj's have been for the arbitrator, whether there was a loss within the meaning of the poliej*. The profits of the business were clearl}' in- surable. [Lord Denman, C. J. The question is, whether thej' are covered bj' the insurance actuallj' effected.] In Crowley v. Cohen, 3 B. & Ad. 478, Lord Tenterden said that, in a policy- of insurance, " although the subject-matter of the insurance must be properlj- de- scribed, the nature of. the interest may in general be left at large." Littledale, J., makes a similar observation ; Parke, J., says, " The particular nature of the interest is a matter which onl}' bears on the amount of damages ; it is never specially set out in a policj- ; " and Patteson, J., adds : " It is only necessarj- to state accurately the sub- ject-matter insured, not the particular interest which the assured has in it." In Flint v. Flemyng, 1 B. & Ad. 45, it was held that a ship- owner, on an insurance of freight, might recover for the profits which he would have made bj- carrying his own goods. [Tactnton, J. The profits were of the same nature, whether he carried his own goods or those of another.] Kelly, contra, on stating that he should not dispute the award on anj' point but this, was stopped hy the court. Lord Denman, C. J. We all think the case quite clear on this point. Tlie interest in question might have been the subject of insurance, but an arbitrator cannot take into consideration the possible profits of an inn, under the shape of an interest in buildings. Littledale, J., concurred. Taunton, J. If a party would recover such profits as these, he must insure them qua profits. I never heard before of a recovery of profits of a business as an incidental part of the loss under an insurance upon a house or ship. Williams, J., concurred. Rule absolute for setting aside the disputed part of the award.^ 1 The award was disputed on more than one ground ; but Kelly stating, on behalf of the company, that they were willing the award should stand except as to £450, no decision was given on any other point. — Rep. 2 See Leonarda v. Phoenix Assur. Co., 2 Rob. (La.) 131 (1842) ; Niblo v. North American F. Ins. Co., 1 Sandf. 551 (1848). — Ed. SECT. II.] HOFFMAN V. WESTERN MAEISE AND FIEE INS. CO. 869 HOFFMAN V. WESTERN MARINE AND FIRE INSURANCE CO. SoPREME CouET OF LOUISIANA, 1846. 1 La. Ann. 216. Appeal from the Commercial Court of New Orleans, Watts, J. The judgment of the court was pronounced by Slidell, J. This is a suit on a fire policy upon merchandize, bed- room furniture, &c. , in a store occupied by plaintiff. The amount claimed is based upon an account annexed to the petition. This ac- count is composed mainl}' of items exhibiting the sound value of the goods, as appraised in the store after the fire. A few of the items are for goods lost or destroyed at the fire, put down at an appraised value. From the total of these items thus appraised, is deducted the net amount which the goods and furniture produced at an auction, ordered by the plaintiff after the company had refused to pay him, and for the balance — the difference between the appraised value and the auction sales being §1,231.19, the plaintiff sues, and has obtained a verdict. The evidence at the trial was of the same character. The appraise- ments of the goods and furniture were offered, and the accounts of the auction sales were also offered. The juiy gave their verdict for the precise balance stated in the account annexed to the petition. The insurers' liabilitj- is distinctl}- defined b}- the policy, and bj- well ascertained principles of the law of insurance. If goods are wholly destroj'ed by fire, the Insurer is bound to make indemnitj', bj' paying their value at the time of the loss. If the goods be not destroyed but damaged, the insurer is bound, bj' the like rule of indemnity, to pa}- the assured the difference of value between the goods in their sound and in their damaged condition. The idea of a right of abandonment of the goods, which seems to have existed in the plaintiff's mind, and in that of his principal witness, who assisted him in making out the ap- praisement, is entirely' unsanctioned bj' the law of fire insui'ance. In- surance companies sometimes assent to the sale of damaged goods at auction to ascertain the value, but they are under no obligation so to do, without a clause to that effect. When the}' assent to that course to ascertain the damaged value, the indemnity is the difference between the auction return and their sound value at the date of the fire. Where a sale is thus made with their assent, or, without their assent, j'et upon notice to them, it is obvious that they could have an opportunity of being represented at the sale, and of taking measures to prevent an undue sacrifice. The court below was requested by the defendants' counsel, " to charge the jur}- that, the difference between the price for which the goods injured by the fire were sold at public auction and the valuation of said goods before they were injured, was not a proper criterion to fix and determine the amount of indemnitj' for which the defendants were 870 HOFFMAN V. WESTERN MARINE AND FIRE INS. CO. [CHAP. Till. liable under their contract of insurance, and that the amount of dam- age or injury sustained bj- the property insured ought to have been proved by other testimony, or legal evidence ; but the court refused to charge the jury as requested, but charged them, on the contrary, that the auction sale and valuation of the property as aforesaid, afforded a proper basis to establish the amount of indemnitj- to which the plain- tiff was entitled." The minds of the jurj' might have been misled by this refusal, and charge of the court, and it is natural to suppose that they were so, as they have given their verdict for the precise dif- ference between the appraisements and the auction sales. In our opinion the charge of the court should have been that, one assured in a fire policy is entitled to recover the fair market value, at the date of the fire, of goods totally destroyed, and, as to goods dam- aged, the difiEerence between the value, at the date of the fire, of goods in their damaged state and like goods undamaged ; and that in ascer- taining the damaged value, a fair sale at auction made by the assured, in cases where the goods are so much damaged as not to be saleable ki the ordinary mode, and upon reasonable notice given to the insurer or with the insurer's knowledge, ma}- be considered by the jurj-in estimat- ing the extent of damages, and ascertaining the amount of indemnity. But that when an auction sale is made by the assured, without notice to, or knowledge b}', the insurer, the mere returns of sale are not of themselves sufficient evidence of the damaged value. In the present case the insurers were parties to the appraisement, their own agent having acted and signed as one of the appraisers ; and as no fraud or mistake in the framing of the appraisement is proved, the company is bound by it, as prima facie evidence of the sound value of the goods, both of those lost or destroj-ed at the fire, and of those which existed at the store, after tlie fire, in a damaged condition. But there is no satisfactory evidence in addition to the auction sales, to show the extent of the damage. It is obvious that, by taking the mere auction sale, made witliont proof of notice or privity of the insurer, a fair measure of indemnity is not given, for goods sold under the hammer as damaged goods, might well be sacrificed. In the present case we are not able to say whether there was a sacrifice as to the merchandize, as the appraisement was single, to wit, of sound value onlj-. But with regard to the furni- ture, it appears that the appraisers made a double appraisement, esti- mating the value before the fire at $231, and the damage by the fire, which was the loss to the plaintiffs, at $45 ; thus leaving its value in its damaged condition at $153.54; whereas it was sold at auction for the gross sum of only $48.12, and a net sum of $42.46, which latter amount only is credited to the insurers by the plaintiff's petition and bj- the finding of the jury. We should not suppose the sacrifice as great in the case of the merchandize, but we are still left in doubt by the evi- dence as to the extent of the damage, having no guide but the auction- eer's return. SECT. II.] BEINLEY V. NATIONAL INS. CO. 871 Under these circumstances, and without entering into a consideration of the charges of fraud, we deem it our dut3' to remand this cause. In doing so, however, it is proper to notice some other questions of law presented in tliis case.^ . . . It is therefore ordered that the judgment of the court below be reversed, and that this cause be remanded to the Fourth District Court of jSTew Orleans, for a new trial ; the plaintiff paying the cost of this appeal.^ W. H. and R. Sunt, for the plaintiff. Maybin and Moselius, for the appellants. BRINLET V. NATIONAL INSURANCE CO. Supreme Jcdicial Court of Massachusetts, 1847. 11 Met. 195. Assumpsit on a policy of insurance, dated August 28th, 1844, whereby the defendants caused George Brinley to be insured against loss by fire, for one j'ear, four thousand dollars on a brick building, used as a store, in Dock Square, Boston. This provision was in the policj- : " That in case of any loss or damage the said companj' shall have the right to replace the articles lost or damaged with others of the same kind and equal goodness, at any time within sixty days after notice of the loss." The trial was before Shaw, C. J., whose report thereof was as fol- lows : There was proof that the store was totally destroyed by fire within the 3'ear, and that the policj" was assigned b}"^ the assured, after the loss to the plaintiff, with the consent of the defendants ; and no objection was made to the plaintiff's bringing the action in his own name. The store having been rebuilt upon a plan different from that of the one destroyed, the cost of the new building could not be the measure of the plaintiflTs loss by the destruction of the old one. There was much conflicting evidence, and many varying estimates of the cost of erecting a new building of the same dimensions and materials, and upon the same plan with that of the one burnt ; all of which was left to the jury. The defendants contended that, as a store of similar dimensions and plan with the old one, built of new materials, would be worth more than the old one, a deduction ought to be made from the estimated cost of a new store, for the difference in value between the old store and such new store ; analogous to the deduction of new for old in the adjustment of losses on marine policies. This position was not sus- 1 The omitted passages discussed points foreign to the amount of recovery, and held that as to one of these points the court helow had committed error. — Ed. 2 See Clement v. British American Assur. Co., 141 Mass. 298, 301, 304-305 (1886). — Ed. 872 BEINLEY V. NATIONAi ISS. CO. [CHAP. Till. tained by the judge ; but the jury were instructed, that the contract was a contract of indemnity'; that, to afford indemnity, the defend- ants were bound either to replace the building in as good condition as it was in before the fire, or to pay the plaintiflF a sum of money sufficient to place the assured, as owner of the building, in as good a situation as if the fire had not happened ; that, in doing this, if any materials were left, thej- might be used, as far as the3- would go, and as far as they were fit, in rebuilding ; but if the building could not be placed in as good a condition as it was in before, without using new materials, and new materials were used, no deduction should be made on that account, although it might be more durable than the old building would have been, and for some purposes more valuable. The jury returned a verdict for $3,689, which is to be set aside, and a new trial granted, if the above instruction was wrong ; otherwise judgment to be entered on the verdict. Gardiner & English, for the defendants. M. S. Clarke, for the plaintifi'. Wilde, J. At the trial, the defendants contended that as a new store of similar dimension and plan with the old one, built of new materials, would be worth more than the old one, a deduction ou^ht to be made from the estimated cost of a new store, for the difference in value between the old store and the new one : analogous to the de- duction of new for old in the adjustment of losses on marine policies. This claim of deduction was not sustained by the judge at the trial, and we are not aware of any authority or principle by which it can be sup- ported. The rule, in adjusting marine losses, is arbitrar}-, and operates in some cases unjustly, giving to the insured more or less than a full indemnit}-, to which he is entitled by the policj', and to no more. The rule originated from the usages among merchants and underwriters, probably from the great difflcultj' of ascertaining the actual loss, with- out first repairing the damage done, or estimating the cost of repairs. The rule is applicable only to cases of a partial or a constructive total loss. It depends on usage, sanctioned by judicial decisions ; and in . some cases this rule of estimating the loss is expressly provided for by the terms of the policj-. Such has been the stipulation in the marine policies in Boston for many years. But the rule has never been adapted to policies of .insurance on buildings and other property- against fire. The question then is, what is the rule of damages, if any there be, in cases like the present ? The plaintiflf's counsel contends that the actual loss is to be ascertained bj' the expense of restoring the propertj' without any deduction for the difference of value between the new and old ma- terials ; and so the rule is laid down by Professor Greenleaf. 2 Greenl. on Ev. § 407. But the only adjudicated case he cites which has any direct bearing on the question is that of Vance v. Forster, 1 Irish Circuit Cases, 51, in which Mr. Baron Pennefather laid down a very different rule. He says, as is reported in 3 Stephens N. P. 2,084, that " the jury are to say what state of repair the machinery was in, what it SECT. II.] BEINLEY V. NATIONAL INS. CO. 873 would cost to replace it by new machinery, and Low much better (if at all) the mill " in which the machinery was placed "would be with the new machinery than it was at the time of the fire ; and the difference is to be deducted from the entire expense of placing there such new machi- nerj-." This rule, in all cases where the cost of repairs is one of the ele- ments by which the jury are to estimate the actual loss, seems to be founded on the principles of justice, as it will give to the assured a full in- demnity, and no more, to which he is entitled by the contract. But by the rule contended for by the plaintiff's counsel, the assured in most cases would recover more than an indemnitj- ; and much more when the building insured is dilapidated and much out of repair. Such rule is not supported by any principle of justice, nor by the authority of anj' ad- judged case. It is founded on an erroneous construction of the contract. It supposes that the insurers are bound to repair the building, or to pay the expenses of the repairs. But no such obligation is imposed on them by the polic}'. They have the privilege to make the requisite repairs, if they see fit, to protect themselves against the recovery of excessive damages, or for any other reason. But if they elect not to make the repairs, they are liable only to pay a fair indemnit}' for tlie loss. But whatever may be the rule when the building insured is partially injured by the peril insured against, it has no application to cases like the present, where the building is totallj' destroyed, and is to be replaced by a new one. The rule of damages in cases on marine policies would not apply to a case where the ship had been totally destroyed. In the present case the building was destroj-ed bj- fire, and a new building was erected upon a different plan ; so that the cost of a new building could not be certainly ascertained. If the rule laid down in Vance v. Forster were apphed, the jury must ascertain, bj- the estimates and opinions of witnesses, the amount of the expenses of a new building, and thej- must estimate the value of the old building, in order to ascertain the difference, if any there be, between the new and the old. We can perceive no use in requiring this double estimate ; for where the plaintiff is onl^' entitled to recover the amount of the value of the building destroyed, the esti- mate of the cost of a new building is useless. We are therefore of opinion that there is no rule of damages applicable to the present case, and that in all cases where no rule of damages is established by law, the jury are to decide upon the question, and that to their decision there can be no legal exception. The instructions were conformable to these principles, except in one particular. The jury were instructed that no deduction was to be made from the expenses of repairing or rebuilding the store insured, although the new building might be more durable than the old building would have been, and for some purposes more valuable. In this respect we think the jur}' were misdirected, and consequently that the defendants are entitled to a new trial.* 1 Ace. : Guinn v. Phoenix Ins. Co., 80 Iowa, 346 (1890) ; Hilton v. Phoenix Assur. Co., 92 Me. 272 (1898J. — Ed. 874 COMMONWEALTH INS. 00. V. SENNETT, BARE & CO. [CHAP. Till. COMMONWEALTH INS. CO. v. SENNETT, BARR & CO. StrpREME CocRT OF Pennsylvania, 1860. 37 Pa. 205. Error to the Common Pleas of Erie County. This was an action of debt, brought in the court below by Pardon Sennett, M. R. Barr, Conrad Brown, and J. J. Finley, partners doing business as Sennett, Barr & Co., against The Commonwealth Insurance Company. To a narr. in debt, the defendants filed a special plea, averring con- cealments and misrepresentation on the part of the plaintiffs, adding the formal pleas of non est factum and nil debet. To this a replica- tion and demurrer was filed, which demurrer was afterwards withdrawn. The plaintiffs then replied to and traversed the defendants' plea, and, on the issue thus made up, the parties went to trial. The plaintiffs below were owners of a number of machines called mowers and reapers, which tbej- had manufactured for sale, and stored in a warehouse at Erie. They were insured against loss or damage by fire bj' the defendants below, in a policy in the usual form, in the sum of $3,000. The policy was dated May 25, 1857, and was for the term of six months. On the 25th of November, 1857, the poliej' was renewed by J. J. Lints, agent of defendants, for a further period of six months. On the night of the 10th of February, 1858, the property insured was totally destroj'ed by fire. On the trial, the defendants offered to show, bj' Matthew Dickson and others, that the kind of machine known as Danforth's reaper and mower, and manufactured by the plaintiffs, and being the same kind of machine insured and destroyed, were of little or no value — were worthless as an agricultural instrument, or for any other use or pur- pose — and that they had no value, save as mere wood and old iron — and that the machines were worthless both on account of defects in construction, and in the principle of the machines themselves. To tliis the plaintiffs objected, but the court said : " We will admit evi- dence to show that the machines could be manufactured at a less price than the plaintiffs' witnesses sa}- they were made and sold for, or that the plaintiffs' knew, when making them, that they were worthless in principle, and that they were defective in workmanship, but not that the}' were defective in principle, as it was a patented one." To this ruling the defendants excepted. The policy provided, among other things, as follows : " And the said company do hereby promise and agree to make good unto the said assured, their executors, administrators, or assigns, all such immediate loss or damage not exceeding the sum hereby insured, as shall happen bj- fire to the property above specified, — the said loss or damage to be estimated according to the true and actual cash value of the said prop- erty at the time the same shall happen." SECT. II.J COMMONWEALTH INS. CO. V. SEXNETT, BARE & CO. 875 The defendants requested the court to instruct the jurj- as to the measure of damages, that the javy were not to be confined to the evi- dence of the cost of manufacturing the machines as givep by plaintiffs, but might be governed by the actual cash value, as proved by defend- ants, without reference to the cost of construction. The court refused so to charge the jnrj', but instructed them that " the value as estimated in the manufacture of each machine, and before it was tried in the field, would be the standard of valuation." And further on this point, the court said to the jury : " Admitting that manj- of the machines did not work when the)* were put to the trial, and this because of a de- fect in the principle upon which thej- were got up, and not in the mechanism of them, that would not interfere with the plaintiffs' right to recover according to their estimated or actual value when the in- surance was made, unless, as before stated, the plaintiffs were aware of the defect. The asking or selling price would not be the standard of value, for the company would have the option to replace by similar articles or pa}' the cash, but the cost of construction." The jury found in favor of the plaintiffs the sum of $3,262.50, and judgment having been entered thereon, the case was removed into this court by the defendants, who assigned for error the instruction of the court below, as to the measure of damages. W. A. Galbraith, for plaintiff in error. Church & Marshall, for defendants in error. The opinion of the court was delivei-ed, October 25, 1860, by Thompson, J. There is nothing in the policy of the law which abridges the right and power of parties to a contract of insurance from stipulating in regard to the mode and manner of estimating or valuing a loss when it shall occur, or as to the time which shall be the period of the A'aluation of the property destroj-ed, or such other mat- ters within the scope of a fair transaction as the}- may see proper. Insurance is a contract of indemnity', and if the parties stipulate for the manner in which that indemnitj' shall be made, on the contingencj' of liability, it is their right to do so, and the law will carr}' out their contracts as made, if there be no fraud in them, as in other cases. Trask z;. The State Fire and Marine Ins. Co., 5 Casey, 198; North- Western Ins. Co. V. Phcenix Oil and Candle Co., 7 Casey, 448. Mr. Phillips, in his Treatise on Insurance, cap. 1, § 3, says : " The indemnit}' intended in insurance is not the putting the party insured into as good a condition as he would in fact have been if no loss had happened ; it means the repayment of the expense incurred, and the payment for as much of the insured subject as is lost, at its market value, or its value as agreed upon in the policy." The policj- in this case was an open one, as contradistinguished from a valued policj', and in it the parties have chosen to fix for them- selves the standard of valuation, and have stipulated that it should be the "true actual cash value of the property," and the time for ascer- taining such value to be the date of its injury or destruction by fire. 876 COMMONWEALTH INS. CO. V. SENNETT, BARE & CO. [CHAP. VIII. Now, unless it can be shown that they had not the right so to con- tract, or have used terms possessing some other than their ordinary meaning and import, this basis for estimating the loss thus established, must control and govern. It is the law of the contract established by the parties themselves. Nothing has or can be shown, we think, to countervail their right so to contract in regard to the subject-matter mentioned, or which controls the ordinary meaning of the terms used by them. This has not and cannot be done. The contract is so plain, that interpretation is not needed to arrive at what was meant. The parties meant only what they have plainly said ; and it was a plain mistake to disregard the language used, and construe the contract as if no stipulation existed. It is usual, in the absence of a stipulation in marine insurance, to value the goods lost and covered bj' an open policy, as of the time of the commencement of the risk, and this was the nature of the insur- ance treated of by jyir. Phillips, as cited bj' the counsel for the defendant in error. I will not attempt to point out the distinctive differences in this re- spect between marine and fire insurances, and wherein they consist. If we were dealing with a policy- in which no stipulation existed for determining when or how the valuation should be made, and the ques- tion were to be determined by principles of law exclusively, we might be required to look more closely to them. But such is not the case here. The parties have made the law of this contract in this particular for themselves, and we must administer it. They have covered the whole ground. The case of Niblo v. The North American Ins. Co., 1 Sandf. 558, has DO possible bearing on the point in question. There the policy contained no stipulation such as we find here, and the court allowed the full value of the tenement insured without regard to the extrinsic circum- stance that it was to be removed within fifteen days. They held that peradventure the lease of the ground might be renewed, or the in- sured might sell it to the owner of the ground, or its value might not be impaired by removing it to an adjacent vacant lot. Intrinsically it was not impaired by the circumstance that the ground lease was soon to end. Such had been the doctrine laid down in Laurent v. The Cliat- ham Fire Ins. Co., 1 Hall, 41. Such cases as these are good enough law where they belong, but furnish no rule where the parties have fixed a law for themselves. These ^'iews apply as well to the restricted oper- ation of the testimony received, as to tlie ruling in answer to the de- fendant's eleventh point. There was error in both. The option to replace the machinery, if destroyed, was a reservation for the benefit of the company ; they were not bound to adopt it. What it would cost to replace it, was, therefore, not to furnish the rule for the damages which the company must pay to make good the loss. If this were to be held, it would be equivalent to enforcing the option as an obligation. It is stated in Angell on Insurance, § 269, that in- SECT. II.J EQUITABLE FIRE INS. CO. V. QUINN. 877 surers have the privilege of making repairs or replacing propertj-, if thej- see fit to do so ; but if tliej- elect not to do so, " they are liable onlj- to pay a fair indemnity for the loss.'' This shows that the esti- mated cost of a compliance with the option is not to be considered in assessing the amount to be paid on the loss. If it bad any weight here, it was wrong. Nor was the fact that the machines insured were constructed under a patent, of any importance. Patented or unpatented, what they were worth at the happening of the fire, was, by the agreement of the parties, to be the measure of their value ; and this must be ascertained hy testi- mony, as is done in ever3' other case, where the value is not fixed. For these reasons, the judgment is reversed, and a venire de novo awarded. EQUITABLE FIRE INS. CO., Appellants, v. QUINN, Respondent. Queen's Bench, in Appeal, District of Quebec, 1861. 11 Lower Canada, 170. Before Sir L. H. La Fontaine, C. J., Atlvtin, Dutal, Meredith, and Mondelet, JJ. In this case, the respondent, plaintiff in the court below, obtained judgment against the appellants for the sum of £200, being the amount insured by them on his stock and utensils in trade as a general turner. The principal matters of fact in the plaintiffs declaration were admitted, including the making of the policj', the amount insured thereby, the renewal thereof, and a loss by fire while the policy was in force ; but not admitting the quantity and value of the articles insured b}- the policj'. The quantity and value were, however, established by the respondent's witnesses. Bj- the policj', the appellants agreed to pa}' or make good to the insured all such loss or damage as the said insured should suffer by fire. The loss and damage which he had suffered, the respondent contended, was the value of the blocks in the market. The appellants, on the contrary, contended that they were onlj' liable to the respondent for the cost of the effects, inasmuch as the respondent had not effected insurance upon the profits he expected to make upon his goods. A number of witnesses were produced by the appellants who established the cost of the articles insured at a considerably lower amount than the value proved b^' the respondent. The appellants, in consequence, tendered the sum of one hundred pounds with interest and costs to the party insured, who refused to accept the offer, and the present appeal was iu consequence instituted. 878 EQUITABLE FIKE INS. CO. V. QUINN. [CHAP. VIII. Meredith, J. The action in the court below was founded upon a policy of insurance by which the plaintiff, a block-maker by trade, insured his stock in trade, consisting of blocks, for £200. The property insured having been destroyed by fire, the present action was brought for the recovery of the insurance ; and the only question between the parties is as to the value of the blocks destroyed. The defendants contend that the plaintiff is not entitled to more than the amount which it cost the plaintiff to manufacture the blocks in question ; but this pretension cannot, I think, be maintained. The plaintiff is entitled to what the blocks were worth in the market, at the time they were burned ; and I think, according to the evidence, they were worth the amount the plaintiff had insured upon them, namely £200, that being the amount of the judgment in favor of the plaintiff; and therefore that that judgment ought to be confirmed. Duval, J. The judgment of the court below should, in my opinion, be confirmed, inasmuch as both the English and French law, on this point, declare that the amount covered by the insurance is the actual loss, without any reference to the cost price ; and this is what the court now grants. The judgment of the court below was therefore confirmed} J^elievre, for appellants. Stuart and Murphy, for respondent. 1 In Mitchell v. St. Panl German F. Ins. Co., 92 Mich. 594 (1892), insurance was procured upon lumber. The policy said ; " This company shall not be liable beyond the actual cash value of the property at the time any loss or damage occurs, and the loss or damage shall be a.scertained or estimated according to such actual cash value, with proper deduction for depreciation, however caused, and sjiall in no event exceed what it would then cost the insured to repair or replace the same with material of like kind and quality." The lumber was destroyed by fire. The persona procuring the insurance had manufactured the lumber in their own mill, which was at the yards where the lumber was piled. They were the owners of timber lands from which the destroyed lumber could be replaced, and after the fire they continued to cut from their lands and to operate their mill. It was held that the proper basis for recovery was not cost of reproduction, but market value. Long, J., for the court, said : — "We think the word 'then' is significant, and must be given weight in determin- ing the true intent and meaning of the contract. If the defendant's theory of construc- tion be adopted, the word 'then ' must be dropped out, and the contract construed as intending to give to the insurance company the benefit of the time it would take the insured to replace it or reproduce it ; that is, if the insured had the means of replacing or reproducing the burned lumber, having timber from which to manufacture lumber and the mill to manufacture it with, then an estimate should be made of that cost as the measure of damages, though it might take six months or a year to replace or reproduce it. In this sense the words ' replace ' and ' reproduce ' would be synony- mous ; but the contract cannot be construed in that way without doing violence to the language employed. Clearly, it means just what it says, ' what it would then cost the insured to replace it,' and not what it would cost the insured to cut from his own stumpage, manufacture lumber at his own mill, and replace, after the delay of cutting, hauling, sawing, piling in the yards, etc. " We are unable to agree with the learned counsel for the defendant that the con- tract is to be construed any differently in this case than though the plaintiffs had no stumpage of their own, and no mill by which they could manufacture lumber. It means that the plaintiffs had the right, on the date of the fire, to recover from the SECT. II.] OGDEN V. EAST RIVER INS. CO. 879 OGDEN ET AL., Respondents, v. EAST RIVER INS. CO., Appellant. Court of Appeals of New York, 1872. 50 N. Y. 388. Appeal from judgment of the General Term of the Supreme Court in the first judicial department, affirming a judgment in favor of plain- tiffs, entered upon a verdict. The action was brought upon a polic}- of insurance issued hy defend- ant to plaintiffs for $3,000 on plaintiffs' stock in trade, " contained in the three-story brick building known as No. 392 Washington Street, in the cit^- of New York." Other insurance was permitted without notice until required. The policj' contained a provision that " in case of loss the insured shall not recover on this policj' anj- greater proportion of the loss or damage sustained to the subject insured than the amount hereby in- sured shall bear to the whole amount insured on the said propert)-." The plaintiffs, at the time of the fire, held fourteen other policies, issued by various companies, to the amount of $47,500, covering said property in No. 392 Washington Street and a large amount of other propertj' owned bj- plaintiffs. On the 30th November, 1864, all the propertj' insured and covered bj' said fifteen policies was destroj-ed by defendant such an amount of money as it would cost them to replace the lumber, or, in other words, the market value of the lumber at the date of the fire. It cannot be said that, because the lumber was so great in amount, it would have no market value, or that such a large amount could not have been purchased in open market. It is like any other commodity of which constant sales are being made. If it had been flour, it is not contended that, because the insured may have had a farm and could raise the wheat, and a mill where he could manufacture it into flour, he could recover only what it would actually cost to raise the wheat and convert it into flour ; but there would be as much reason to hold the contract controlled by such considerations in the one case as in the other. Lumber is a marketable commodity, and it is well known can be purchased in the open market as well as flour. Certain grades have certain prices, and grades of lumber are as well known to the trade as grades of wheat. We know of no reason for saying that fifteen or sixteen million feet of lumber cannot be purchased in open market, or that it has not as certain and fixed market value as a thousand or five thousand bushels of wheat. " It cannot be said that it was in the contemplation of the parties, at the time the contract was entered into, that it was to have the construction now contended for by counsel for the defendant. Suppose plaintiffs had sold their timber and removed their mill before the fire, which they would have had the right to do. The contingency would then have arisen where they could not have reproduced the lumber. It would then be conceded that the measure of loss-damage would be the cost of replacing it by purchase in the open market. If the contract bore the construction contended for at its execution, under the circumstances above supposed, it would be changed by the change in the situation and surroundings of the insured. It would be construed in one way at its inception, and by a change of circumstances be susceptible of another construction at the time of the fire." See Hartford F. Ins. Co. v. Cannon, 19 Tex. Civ. App. 305 (1898). Compare Chippewa Lnmher Co. v. Phenix Ins. Co., 80 Mich. 116, 123-124 (1890). — Ed. 880 OGDEN V. EAST EIVER INS. CO. [cHAP. VIII. fire. The value of the entire propertj- so destroj-ed was 688,788.83. The value of the property covered b^- defendant's policj' was $16,305.89. The court upon trial directed a verdict in favor of plaintiffs for the full amount of the policj- and interest, which was rendered accordingly. Charles Tracy, for the appellant. William F. Shepard^ for the respondents. Eapallo, J. The clause, now usual in policies of insurance, which provides for an apportionment of the loss in case of other insurance on the propert}', is a part of the contract, and must receive a reasonable construction. We have no right to engraft upon it the rules governing suits for contribution among insurers, nor to restrict its operation to cases where such suits could be maintained, but must look at the lan- guage of the clause itself and construe it as we would any other stipu- lation between the insurer and the insured. We cannot adopt the view taken of this clause in the case of Howard Ins. Co. V. Scribner, 5 Hill, 298, where it was held (in analogy to the rule in actions for contribution) that where a specific parcel of property is insured by one policy, and the same propertj- is covered by another policy, which also includes other property, the latter policy is to be thrown wholly out of view, and does not constitute other insurance within the meaning of the clause. Neither can we agree to the doctrine contended for by the counsel for the appellant, that the whole sum in- sured by the more comprehensive policy is to be considered as so much additional insurance upon the parcel separately insured. Where several parcels of propertj- are insured together for an entire sum, it is impossible to saj' as to either of the parcels that there is no insurance upon it. Neither is it reasonable to assume that any of the parcels is insured for more than its value where the whole sum insured is less than the aggregate value of all the parcels covered by the policy. The difficulty lies in determining what part of the whole sum insured is to be deemed applicable to either parcel where the policy itself makes no separation. If the entire property is destroyed, as in this case, the rule laid down in 2 Phillips on Insurance (p. 56, No. 1263, a) and in Blake v. Exch. Mut. Ins. Co., 12 Gray, 265, carries out the intent of the clause and works entire equitj- between the insurers and the insured, as well as between the several insurers. That rule is, in substance, that for the purpose of apportioning the loss in case of over insurance, where several parcels are insured together bj' one policy for an entire sum, and one of the parcels is insured separately bj- another policj', the sum insured by the first mentioned policy is to be distributed among the several parcels in the proportion which the sura insured bj' that policy bears to the total value of all the parcels. Thus in round numbers the sum in- sured in this case by the policies, other than the defendant's, on the property, as an entirety, was $47,000. The total value of the property covered by these policies was $88,000. In case of a total loss, each parcel should be deemed insured thereby for f| of its value. The SECT. II. J STATE INS. CO. V. TAYLOR. 881 parcel separately insured bj- the defendant was worth $16,000, and was insured b}' the defendant for $3,000, which was equal to -^ of its value. It is manifest that there was no over insurance, and that consequently there is no occasion for any apportionment. Whether this would be the proper rule in case the $16,000 parcel alone had been destroyed or damaged, it is not now necessary to deter- mine. In that event, if the defendant's policj- had not existed, the whole loss would have been recoverable under the $47,000 insurance. It maj' be that the rule for ascertaining the amount of insurance upon any particular parcel where insurances are commingled, as in this case, is dependent upon the extent of the loss, and that whatever could be recovered upon the more comprehensive policy without regard to the other is the amount to be deemed insured thereby on the part injured in case of a partial loss, and that on that basis an over insurance to the extent of the separate policy- might be established. 'By insuring several parcels of property for an entire sum the insured obtains the advantage, and the insurer subjects himself to the liability of having so much of the total sum insured as may be necessary to compensate for damage to an}- part of the propertj- applied to that part, though the sum named in the policj^ would have been insufficient to cover the loss if the whole had been destroyed. Thus it is left to the result, in case of a partial loss, to determine what sum is insured upon anj- particular parcel, the onl}' limit being its value. On the other hand, it would be desirable to adopt a general rule applicable to all contingencies. We refrain from expressing an opinion now upon the several phases which might be developed under an insurance of this character in case of partial loss, confining our adjudication to the case before us, which was that of a total loss of the whole subject insured by all the policies. The judgment should be affirmed, with costs. AU concur. Jicdffment affirmed.^ STATE INS. CO. v. TAYLOR. Supreme Coukt or Colorado, 1890. 14 Colo. 499. Appeal from District Court of Chaffee Countj-. On the 30th day of Januarj', 1885, appellant issued to appellee a policy of insurance on his frame house, used as a residence, in the village or town of Hancock, Chaffee Countj-, and its contents, including wearing apparel, family stores and provisions, for the sum of $1,200, — $800 being on the building and $400 on the contents; insuring against fire and lightning for one j'ear for a premium of $48.^ . . . 1 See Lncas v. Jefferson Ins. Co., 6 Cow. 635 (1827). Compare Clarke v. Western Assur. Co., 146 Pa. 561 (1892). — Ed. 2 In reprinting the statement and the opinion, passages not dealing with the amount of recovery have been omitted. — Ed. 56 , 882 STATE INS. CO. V. TAYLOB. [CHAP. VIII. On the 3d day of Novembet of the same j'ear, the house took fire in the upper part (ceiling or roof) from a stove-pipe, and was destroyed, with most of the contents. . . . In the answer the defendant admitted the making and delivering of the policj', denied that the loss was $1,200, as shown b}' proofs of the loss submitted, and said it ought to be not to exceed $524.62. . . . The case was, by agreement of parties, tried by the judge of the district court without a jury. He found for the plaintiff in the sum of $1,045, and judgment was entered for that amount. Stuart Bros., for appellant. W. S. Decker and C. A. Allen, for appellee. Reed, Commissioner. . . . The onlj- remaining question is as to the rule of damages in arriving at the value of the building destroyed. It is contended that the amount allowed was excessive ; that the true value was what the propertj' would have sold for in the market. Counsel do not say whether, in fixing the value, the house is to be considered a chattel, and its value what it would bring severed from the realty, or whether its value was to be estimated in connection with the land on which it stood. The rule contended for cannot be the correct one. If so, — if there was no market demand for the propert}' so it could be sold, — it would have no value, and there would be, consequently, no loss. Another trouble is as above suggested : It would make the value of the house insured to depend upon the marketabilitj' of the uninsured land. A farmer might have an insured building of the value of $5,000 on a large farm, and yet be held to have sustained no loss by its de- struction because there was no demand for land in that location, and the farm could not have been sold. While the price for which the prop- erty could be sold might be admissible in evidence to assist in arriving at its value, it was not the only, nor a safe, criterion. If not salable at all, it might have a value to the owner as a home for himself and family, or for business purposes. Where, as in this case, the policy was " valued " (amount of insurance fixed), the rule is indemnification to the owner not exceeding the sum insured ; the question, not what some one would have paid for the buUding, but what amount would indemnify the owner for the loss sustained. The rule of damages is the value of the property lost, and not the cost of replacement. Steward?'. Insurance Co., 5 Hun, 261. It is for the jury to determine how much money will make good to the insured his loss. Brinleyv. Insurance Co., 11 Mete. 195. " It is for the jury to saj' what the actual value of the building was, in view of all the facts, and their finding is conclusive." Wood, Ins. § 446. Counsel seem to have confounded the measure or rule of damage for merchandise or goods destroyed with that for buildings. In the former the value in market is correct. In the latter it must be " the actual value of the property in the coudition it was in at the time of loss, taking into consideration its age and condition, and not necessarilj' what it would cost to erect a new building. The assured should be allowed the value SECT. 11.] STATE INS. CO. V. TAYLOE. 883 of his building at the time of loss ; and if, bj- reason of age or use, it is less valuable than a new building, erected upon the same plan, of similar materials, and of the same dimensions, the insurer should be allowed for such difference arising from deterioration." Wood, Ins. § 446 ; Insurance Co. v. Sennett, 37 Pa. St. 205. It follows that the original cost of the building, the cost of con- structing a like building at the time of trial, on the same land, and the difference in value between the building destroyed, by reason of its age and use, and a new one, were all proper inquiries to assist the conrt in arriving at a just conclusion in regard to the loss sustained ; and the admission of evidence upon these points was not erroneous, as supposed by appellant. In our view of the case, no serious errors oc- curred upon the trial, and the judgment should be affirmed. EiCHMOND and Pattison, C. C, concur. Per Curiam. For the reasons stated in the foregoing opinion the judgment is affirmed. Affirmed} ^ In Bardwell v. Conway Mut. F. Ins. Co., 122 Mass. 90, 95 (1877), Devens, J., for the court, said : " The defendant sought to show what the land sold for after the huildings were destroyed, as affording evidence of the value of the buildings when connected with proof of what both together had been offered for at sale. We cannot say that this was improperly excluded. The relation which the buildings occupy to the land is not necessarily such that their value can approximately be ascertained by such a comparison as was proposed. In some instances they add to the value of the estate more than their own independent value, while, in others, buildings which it would cost much money to renew, do not add sensibly to the amount for which the estate, on which they are situated, could be sold." On amount of recovery in general, see also : — Pentz V. Aetna F. Ins. Co., 9 Paige, 568 (1842) ; Liscom V. Boston Mut. F. Ins. Co., 9 Met. 205 (1845) ; Crombie v. Portsmouth Mut. F. Ins. Co., 26 N. H. 389 ( 1853) ; Cumberland Valley Mut. Protection Co. ^. Schell, 29 Pa. 31 (1857) ; Tuckerman v. Home Ins. Co., 9 R. I. 414 (1870) ; Woodrnff v. Imperial F. Ins. Co., 83 N. Y. 133 (1880). — Ed. 884 LAURENT V. CHATHAM FIRE INS. CO. [CHAP. VIII. SECTION II. (oontinued). {B) Limited Interests. LAURENT V. CHATHAM FIRE INS. CO. SuPERiOK Court of the Citt of New York, 1828. 1 Hall, 41.^ This was an action of assumpsit on a policy of fire insurance for $800 upon a building. The plea was the general issue. At the trial before Hoffman, J., it appeared that the building was destroj'ed by flre on August 15, 1827; that it stood upon ground leased to the plaintiff for a term expiring September 1, 1827 ; that the lease contained a covenant for renewal, but that the plaintiff had given no notice of a desire to renew ; that the building was erected by the plaintiff, was his property, and was capable of removal ; that the build- ing cost more than $1,100, and was intrinsically worth about 81,000; but that, if it were necessary to remove the building, it would not bring more than $200. The counsel for the defendants submitted that, as the plaintiff had no interest in the lot, except for a term of which onlj- fifteen daj's remained at the time of the fire, and as the value of the building if removed was only $200, the plaintiff could not be entitled to recover $800. But the judge ruled that, as the building had cost upwards of $1,100 and was worth at least $1,000, and as there were vacant lots in the immediate vicinity upon which it might have been placed even if the plaintiff did not i-enew his lease, and as the defendant company must be presumed to have written the policy with knowledge of the circum- stances, the plaintiff was entitled to recover the full amount with in- terest. To this opinion the defendant company excepted. The jury returned a verdict for $900. The defendant company now moved for a new trial. Mr. Jay, in support of the motion. Mr. Charles Graham, for the plaintiff, contra. Jones, C. J., delivered the opinion of the court.'' . . It is certainly true, as a general rule, that the policy of insurance is a contract of indemnity, and that the actual loss upon an open policy is the measure of the indemnity to which the assured is entitled. But will that rule, if applied to this case, sustain this defence ? The plain- tiff insists that this is not an open policy ; and if he is correct in that opinion, and the contract is to be deemed a valued policy, there could be no longer any question of his right to recover to the full amount of his insurance. But I cannot accede to that opinion.' * The statement has been rewritten. — Ed. 2 Passages stating the case have been omitted. Ed. " The discussion of this point has been omitted Ed. SECT. II.J LAURENT V. CHATHAM FIKE INS. CO. 885 This polic}- contains no such agreement or valuation, and has no feature of a valued policj'. The assured cannot recover anj' greater satisfaction for his loss than the actual value of the building which was destroj-ed by the fire at the time of its destruction. But his contract VFOuld entitle him to recover the full value of that building at the time of the loss, if the full amount was covered by the policy. And if the actual value exceeds the sum insured, he will of course be entitled to the whole amount of the insurance towards his indemnit3'. This gen- eral proposition, as applicable to open policies, is admitted by both parties. They differ upon the rule, or principle of valuation ; the in- sured insisting upon the full intrinsic value of the building as the standard, but the company contending for the relative value of it to the owner, subject to removal from its location at the time of the fire, as the just measure of the indemnity to which he is entitled. The judge ruled that the intrinsic value of the building at the time was the true measure of the loss within the meaning of the contract of indemnity, and we concur with him in that opinion. The actual value of the premises insured is the standard which the policy obviously contemplated for settling the loss, and adjusting the indemnity. The agreement is to make good the loss or damage to the property by the fire, and the estimate of that loss or damage is to be according to the value of the property at the time the loss occurs ; and the conditions annexed, -to which the policj' refers for the explanation of its meaning, are too clear to admit of any other interpretation. A particular account of the loss or damage is to be given in ; and the value of the property, if in question, is to be ascertained b}- the books of account and vouchers of the claimant, which are to come in aid of the estimate of the value of the propert}' at the time of the loss. But it is said that the policy is a contract of indemnitj', and that the principle of indemnity which pervades the insurance must control the construction of the policj- ; and upon that principle it is insisted, that the value of the property to the assured at the time of the loss, circum- stanced as it may then be, in reference to his use and enjoyment of it, is the loss he sustains by the destruction of it, and must be the measure of bis indemnity for the loss. It will at once be seen, that if this prin- ciple of indemnity is to be admitted, the extent and value of the recovery will in every case vary with the special and peculiar circumstances of the insured, and the local advantages or disadvantages of the building, and the uses to which it is applied ; and the intrinsic value of the build- ing will form no criterion of the loss of the proprietor in case of its destruction. A building, for example, which the necessities of the owner compel hira to offer at public sale, for ready money, will be worth to him no more than what it will produce at such a sale ; and a building for which there happens to be great competition will command a much larger price than its true value. Are these incidental and collateral circumstances to enter into the estimate of value under the contract of insurance, and give the rule of indemnity to the proprietor 886 • LAURENT V. CHATHAM FIEE INS. CO. [CHAP. VIII. for the loss of the building ? Two houses of equal value maj-, from their local situation, be verj' unequal in the revenues thej- produce to the proprietors ; would the loss of them, if destroyed bj' fire, entitle the proprietors to different indemnities in proportion to the rents, or revenues of the tenants ? Would the insurers be compelled to pay double the amount of the cost of the profitable stand, because the loca- tion of the tenement made it of that value to the owner, and j-et be compellable to paj' for the loss of the other tenement, the one-half onl3' of its actual cost, because from its unfavorable location, or from some popular prejudice it would sell for no more than one-half of its value ? It is the tenement upon which the insurance is made ; and the actual value of it as a building is the loss of the insured in case of its destruc- tion by fire. To that measure of indemnity the proprietor is entitled, however unproductive the property maj' be, and he is entitled to no more, whatever revenue he may have derived from the tenement. The obligation of the contract, then, is to pay the insured the actual value of the tenement as a building, or a proportion of its value, equal to the sum insured upon it in case of the destruction of it by fire within the term for which the policj' protects it, for his indemnity for his loss. The policy in terms refers to the true and actual value of the property at the time of the loss, and makes that value the standard by which to estimate the loss or damage which the insurer is bound to satisfj', and the insured is entitled to claim. This agreement cannot -be other- wise understood than as binding the parties to the intrinsic value of the property at the time of its destruction, as the rule by which the in- demnitj- is to be measured, without reference or regard to any special and adventitious circumstances which may enhance or diminish the relative value or importance of it to the insured. It is the true and actual value of the tenement itself at the time, independently of its location, or the insecurity of the title, or terms by which it is held that the insurers agree to make good to the present proprietor in case the loss or damage by fire happens during the continuance of his ownership, and within the term of the insurance. It is of no importance whether the tenement stands upon freehold or upon leasehold gi-ound, or whether the lease is about expiring, or has the full time to run when the fire occurs, or whether it is renewable or not. The condition of the policy is satisfied if the title and ownership are in the insured at the time of the insurance, and at the time of the loss, and the measure of his in- demnity is the amount of his interest in the tenement when destroyed by the fire, notwithstanding that the whole interest would have expired the very next day, or soon after the loss occurred. But whether thei-e may not be incidents and special circumstances so intimatel}' connected with the premises, or so permanently attached to them as to affect their intrinsic value, or the insurable interest of the partj-, who effects the insurance upon them, I am not prepared to say ; and it is not material to the decision of the question before us to inquire, for this clearly is not such a case. In this case the tenement belonged exclusively to the SECT. II.J LAURENT V. CHATHAM FIRE INS. CO. 887 insured, and the lease of the lot upon which it stood had fifteen da3s to run, and was moreover renewable. The true and actual value of it exceeded the sum insured upon it, and the loss of it by the fire was absolute and total, and took place within the term for which it was insured. The sole ground of objection to the right to recover the full amount of the insurance is that tlie lease was about expiring, and had not been renewed, and it did not appear that the notice required by the lease to entitle the holder to a renewal had been given ; and on these grounds the recovery is sought to be limited to the value of the build- ing as a tenement to be removed from the premises. But if that con- tingency could in any supposable ease be brought into the calculation, and suffered to reduce the insurable interest, or the claim to indemnity for the actual loss of the building by the fire (which, if I am right in vay conclusions on the point, would be wholly inadmissible), still it would not follow that in this case such deduction could be made, for it is not reduced to a certaint5' that the lease would not have been re- newed. Applicg-tion maj- have been made to the agents for renewal ; or if the time limited for the renewal as a matter of right had been suf- fered to elapse, the lessee might within the remaining fifteen days of the subsisting term have made an arrangement with the landlord for the continuance of the lease, or he might have sold the tenement to his successor or to the landlord ; or, the tenement, which from its construc- tion, not having any foundation or fixture attaching it to the soil was capable of removal, might have been removed to one of the vacant lots in its immediate vicinity of which it appears in proof there were several. In anj- one of these contingencies the tenement which is found to have "been worth upwards of $1,000, might well have produced to the owner of it the sum of $800 insured upon it bj' the defendants. The plaintiff, by the total destruction of it bj' the fire, lost the means of availing himself of the sale, or the removal of it, and may have been compelled by the loss of the building to relinquish the right reserved to him to renew and continue the lease. Besides, if it had been reduced to a cer- tainty that the lease was not to be renewed, and that the building was to be sold or removed, what proof is there that the avails of it if sold, or the value of it if removed to a contiguous lot, would not have been equal to the sum insured upon it ? Only one witness has been examined to the point, and he simply testifies that he would not have given more than $200 for the building, if it had been necessary to remove it ; but to give his testimony decisive weight, he should have stated what the probable expense would have been to remove it to the adjoining lot, and what its value in such new location would have been ; because, if offered for sale, the owner of the contiguous vacant lot might have com- peted for the purchase of it for that purpose. But witnesses testifying to the point under the most favorable circumstances could only speak from opinion, and the value they would put upon a tenement so circum- stanced could be no more than estimates, which would vary with the opinions and views of the witnesses. The value of the building to LAUEENT V. CHATHAM FIEE INS. CO. [CHAP. Vin. Dodge, the witness who was examined, for example, would be much less than it would be to the new tenant, who should succeed the plain- tiff, or the landlord who owned the lot on which it stood, or to the owners of the vacant lots in its immediate vicinity. Are such estimates then a just criterion for the measure of the indemnity of the insured for his loss ? He was clearly entitled, even upon the principle the defend- ants would apply to his case, to the price his building would have sold for. What sum it would have produced on a sale of it cannot now be known ; but as the fair value of it to himself, if he had continued in the tenure of the premises, or to the tenant who might succeed him, or to the landlord, exceeded the amount of the insurance, he has a just claim upon that principle to a full recovery. In another view of it, the rule contended for by the insurers would be unequal and unjust in its operation. The insured pays the premium upon the whole sum, and he insures for the entire risk of the propertj' to that amount, during the whole term of the policy. He has a right, therefore, to claim the amount he thus insures, if he looses property of that value by the peril, during the continuance of the risk ; but if other considerations are to enter into the calculations of value, and he is to be paid at a reduced rate, because in certain contingencies the property might fail to produce to him the full value of it as it stood at the time of the loss, he will not have the full benefit of his insurance, for which he has paid the full premium. These views' of the practical results of a speculative calculation of damages on the principles for which the defendants contend, present to us powerful considerations for preferring the true and actual value of the building as the standard of indemnity. The intrinsic value of the tenement, as a building at the time of the loss, is not a matter of mere estimate, but is susceptible of proof. The ninth condition attached to the policy prescribes the form and substance of the proofs required of the claimant to entitle him to payment, and the true and actual value of the property at the time of the fire, is the rule by which the amount of the loss or damage is to be estimated and settled. The rule is uniform and rational ; it is in accordance with the letter and spirit of the contract, and administers equal justice to the parties. It was in my judgment rightly applied to this case, and accord- ingly the motion for a new trial must be denied.* 1 Ace. : 'Washington Mills Emery Mfg. Co. v. Commercial F. Ins. Co., 1.3 Fed. R. 646 (C. C, D. Mass., 1882) ; Washington Mills Emery Mfg. Co. v. Weymouth and Braintree Mnt. F. Ins. Co., 135 Mass. 503 (1883). See Collingridge v. Eoyal Exchange Assar. Corp., 3 Q. B. D. 173 (1877). — Ed. SECT. II.] STRONG V. MANUFACTURERS' INS. CO. 889 STRONG V. MANUFACTUREES' INS. CO. Supreme Judicial Codkt of Massachusetts, 1830. 10 Pick. 40. Assumpsit on a polic}- of insurance, dated December 29, 1828, whereby the defendants insured for the plaintiff $1,400 on his dwelling- house in Northampton, against loss by fire. Upon a case stated it appeared that the house was destroyed by fire on April 23, 1829, and the amount of the loss was $1,300. The policy contained a provision, that if the property should be sold or conveyed, in whole or in part, the policj' should become void. The plaintiflF, upon his application for insurance, stated in writing, in reply to interrogatories on the part of the defendants, that the property was his own ; but no inquiry was made and no information communicated as to the state of the title. In 1825, the plaintiff mortgaged the estate to one Damon to secure the payment of a note for §300 ; this note has never been paid. In 1827, the plaintiff again mortgaged it to Damon, to secure him against a note for 81,100, which he had signed jointly with the plaintiff and others. The plaintiff paid one half of this note in 1827, and a new note for the balance signed by the same persons was given bj- waj' of renewal. On Julj- 31, 1828, Damon had assigned both mortgages to one Stebbins. On December 4, 1828, the equity of redemption was seized bj' virtue of three executions issued in pursuance of judgments recov- ered against the plaintiff ; and on January 7, 1829, it was sold by auction for 8210. This sum was applied in payment of the executions, but was insufficient to discharge the whole amount of tbem. On January 6, 1829, it was agreed between the plaintiff and Stebbins, that Steb- bins should take possession of the mortgaged premises for condition broken, and that the plaintiff should continue to occupy them until May, 1829. Stebbins accordingly took possession and leased the prem- ises to the plaintiff until May 1, 1829, the plaintiff agreeing to pay him 825 rent, and to give up the premises without further let or hindrance at the expiration of the term. On November 5, 1829, the equity of redemption was reconveyed to the plaintiff by the purchaser. According as the opinion of the court should be upon the foregoing statement of facts, a default or nonsuit was to be entered. Strong and Forbes, for the plaintiff. Dewey, for the defendants. The case was continued nisi, and the opinion of the court was after- ward drawn up by Wilde, J. Upon the facts stated we think there can be no question that the plaintiff had an insurable interest in the house assured, at the time the policy was effected ; for although a policj' of insurance is a contract of indemnity, and wager policies are not to be countenanced, yet a legal title to the property insured is not necessary to give validity 890 yETNA FIRE INS. CO. V. TYLER. [CHAP. VIII. to such a contract. A mere equitable title, or anj- qualified property in the thing insured, may be legally protected bj' insurance ; Colum- bian Ins. Co. V. Lawrence, 2 Pet. 25 ; Marshall on Ins. (1st ed.) 91 ; and it is very clear that the plaintiff not only had an insurable in- terest, but that his interest was substantially the same as it would have been had the property insured been free from any incumbrance ; for he was liable to the mortgagee and the attaching creditor for the whole amount of the debts for which they had obtained liens, and it is well settled that a mortgager may protect his equitable interest at any time until actual foreclosure of the mortgage. Nor did anj' of the events subsequent to the insurance wholly devest the plaintiff of his interest, for after the sale of the equity still he had a right to redeem, and this right might constitute a valuable interest. No evidence was offered to show that it was not. The presumption is that it was of some value, for the plaintiff did afterwards actually redeem or purchase the equit3' ; and independently of any circumstance tending to show that a riglit of redemption is a valuable interest, the law would presume that it was, the contrary not appearing. The plain- tiff too might, from local attachment and other circumstances, estimate the property higher than others would, and as the value of property is not to be ascertained by the market price, or by the opinion of wit- nesses, in a case like this, we think the underwriters have not shown anj' defence on the ground that the plaintiff had no interest at the time of the loss. The value of the plaintiff's interest in the property in- sured is not material. If he had an insurable interest at the time the policy was effected, and an interest also at the time of the loss, he is entitled to recover the whole amount of damage to propertj', not ex- ceeding the sum insured. But the principal objection on which the defendants' counsel rely is, that the plaintiff did not make a full and fair representation of his interest, and that there was such a concealment as vitiated the policy.^ . . . Judgment for plaintiff on default,^ ^TNA FIRE INS. CO. v. TYLER. CoDKT OF Errors of New York, 1836. 16 Wend. 385.' Error from the Supreme Court. Tyler sued the ^tna Fire Insur- ance Company, on a policy against fire on a dwelling-house. In his 1 The discussion of this question has been omitted. — Ed. 2 See Borden v. Hingham Mut. F. Ins. Co., 18 Pick. 523 (1836) ; Buck v. Phcenix Ins. Co., 76 Me. 586 (1886). — Ed, ' In reprinting the statement, passages foreign to the amount of recovery have been omitted. — Ed. SECT, n.] .ETNA FIRE INS. CO. V. TYLER. 891 application in writing he stated that lie wished to " effect an insurance on my house in which I reside," and the polic)- itself stated that the plaintiff was insured upon his two storj' frame dwelling-house. The insurance was to the amount of $1,500, for the period of one year from 24th August, 1827, and within the year the house was consumed by fire. . . . The policy in the body thereof contained the following conditions : . . . " And in case of anj- other insurance upon the property hereby insured, whether prior or subsequent to the date of this policy, the in- sured shall not, in case of loss or damage, be entitled to demand or recover on this policy, any greater portion of the loss or damage sustained than the amount hereby insured shall bear to the whole amount insured on the said policy." The policy contained the usual clause referring to the conditions attached thereto. . . . The fifth condi- tion is in these words : " Kotice of all previous insurances upon prop- erty- insured b}- this companj- shall be given to them and indorsed on this policy . . . at or before the time of their making insurance thereon, otherwise the policj' made by this company shall be of no effect. . . . After the plaintiff bad rested, the counsel for the defendants offered to prove that the plaintiff, at the time he effected the insurance, held the propertj- insured onl}- by an executory contract, upon which he had paid but a small sum, for the purpose of showing that the title to the property was not in him ; and for the further purpose of showing a fraudulent concealment of the nature and extent of his interest. The evidence was objected to, but the objection was overruled. The de- fendants then produced in evidence a contract between one F. Shafer and the plaintiff, bearing date 2d July, 1827, whereby Shafer bargains and sells the lot on which the house insured is situate, to the plain- tiff, and covenants to convej- the premises in fee, on the plaintiff per- forming the covenants on his part, or on neglect to convey, to paj- all damages. The plaintiff, on his part, covenants to paj' $700 in cash by instalments, and $1,300 in an article for land, which he agrees to assign the next day, and to pay the money due and to grow due upon the article; and when entitled to a deed, to convey the land to Shafer. On the back of the contract were indorsements, by which Shafer ac- knowledged that the assignment of the article was duly executed on the 3d Juh-, 1827; that on the 2d October, 1827, he had received of the plaintiff $50, and on the 10th January, 1828, the further sum of $111 ; and it was proved that $500 remained due under the article to the owner of the land. . . . The defendants also offered to prove that Shafer (the bargainor of the plaintiff) had procured an insurance upon the same propertj-, bj' a policy underwritten by the Merchants' Insur- ance Company of Albany-, on the 30th June, 1825, and that the same had been continued bj- renewals from year to j'ear, the last renewal having taken place on the 28th May, 1827, continuing the policy until the 28th May, 1828. The plaintiff objected to this evidence, but the judge ruled it to be admissible, and it was according!}- adduced, and the 892 jEtna fiee ins. co. v. tylee. [chap, tiil defendants proved that the plaintiff knew of the existence of such policy at the time that he procured insurance from them. The counsel for the defendants insisted, ... 4. That if the plaintiff was entitled to recover, he could recover onlj' the amount of his loss, deducting therefrom a proportionable part of the amount in arrear and unpaid to Shafer. The judge charged the jurj- that the plaintiff was entitled to recover, if anything, the actual value of the premises in- sured to the extent of the insurance. 5. They insisted that the plain- tiff was entitled to recover only such proportion of the loss as the amount insured bj' the defendants bore to the whole amount insured by them and the other companj-. The judge charged that the plaintiff, if entitled to recover any thing, must recover the full value of the prem- ises insured. . . . The defendants' counsel having excepted to the several decisions made by the judge, . . . applied to the Supreme Court for a new trial, which was denied and judgment rendered upon the verdict. . . . Judgment having been rendered for the plaintiff upon the verdict rendered in his favor, the defendants sued out a writ of error. I. L. Wendell and 8. Stevens, for the plaintiffs in error. M. T. Reynolds and S. Beardsley (attornej--general), for the de- fendant. The following opinion was delivered : — By the Chancellou. ^ There is no misdescription in this case of the subject of insurance in the policj'. Neither was there any misrepre- sentation or concealment of any fact on the part of the assured, which was at all material to the risk, in the application for the insurance ; and the jury have negatived all pretence of fraud on the part of T^'ler, in not disclosing the true state of his title. It is a fact of public notoriety that a great portion of the property in the eighth senate district, and much in every other part of the State, is held by those who are con- sidered the real owners thereof for most purposes, under contracts, without having paid the whole purchase money, and obtained legal con- veyances ; and this court certainlj' cannot presume that the officers of this or anj' other insurance company in the State are ignorant of this fact, or that they considered the fact as in any way material to the risk. If they considered it material that the state of the legal title should be disclosed, thej' would, in their notices to the public specifying the information required from country applicants, have inserted this as a necessary part of that information. Yet this is not required in any conditions which I have seen except in the case of mutual insurance companies, where the true state of the title is material to enable the officers of the company to judge of the security which the insured premises will afford for the payment of the premium note, if an assess- ment should become necessarj-. It is also a fact of public notoriety, that in common parlance the person who is in possession of real property as owner, under a valid and subsisting contract for the purchase thereof, 1 Hon. Eettben H. Walwoeth. — Ed. SECT. n.J ^gETNA FIEE INS. CO. V. TYLEB. 893 whether he has paid the whole of the purchase money, and gotten the legal title or not, is called the owner thereof, and the propertj' is usually called his by others. In equity it is, in fact, his ; and the vendor has onlj- a lien thereon for the security of his unpaid purchase monej'; and I am yet to learn that the person who is in the actual possession of property as the real owner thereof iu equity, and who must sustain the whole loss thereof primarilj- in case of its destruction by the perils insured against, cannot insure it as owner, unless there is something in the terms of the policj", or in the conditions referred to therein, requir- ing the true state of the legal title to be disclosed. See 10 Pickering's Reports, 40, 542. The assured in this case had also an insurable interest to the full value of the dwelling-house described in the policy ; and the liability of the underwriters to him was neither diminished nor impaired by the previous policj- which the person from whom he purchased had obtained from another compan}-. To constitute a double insurance, both policies must be upon the same insurable interests, either in the name of the owner of that interest, or in the name of some other person for his benefit. In this case Tyler could not claim any benefit under the policj' of Shafer, as it had not been assigned to him with the assent of the underwriters therein at the time of the loss. It could not, therefore, in anj- event, protect him against any portion of the loss he might sustain b}' the destruction of the house insured, or prevent his liability for the payment of the whole of the purchase money due on his contract. Policies against fire are personal contracts with the assured ; and they do not pass to an assignee or purchaser of the prop- erty insured without the consent of the underwriters. Lynch v. Day- reU, 3 Bro. P. C. 497. The Sadlers' Company v. Badcock, 2 Atk. 654. If the assured, therefore, sells the property and parts with all his interest therein before the loss happens, there is an end of the policy unless it is assigned to the purchaser with the assent of the com- pany ; or if he retains but a partial interest in the propertj', it will only protect such insurable interest as he had in the property at the time of the loss. In the present case all the insurable interests which Shafer had in the property after his sale to Tyler, was the amount of his un- paid purchase money, so far as the land upon which the house stood was insufficient to protect him from loss ; and provided the purchaser was unable to pa}- the same. Even a recover}- by Shafer from the other company would not protect Tyler from any part of the loss sus- tained by the destruction of the building, as he would still be liable for the whole amount of the purchase money. Shafer, indeed, could not recover that money and retain it for his own benefit after he had been paid by his underwriters ; but it could be collected in his name for the benefit of such underwriters, as they are in equity entitled to all his rights and remedies if they pay the amount of his loss. This principle of equitable subrogation or substitution of the underwriters in the place of the assured, is recognized by every writer on the subject of insur- 894 ^TNA FIRE INS. CO. V. TYLEE. [CHAP. Till. ance, and is constantl3' acted upon in courts of law as well as in equit}- ; so that where the assured has any claim to indemnity for his loss against a third person who is primarily liable for the same, if; the assured discharges such third person from his liabilit}' before the paj-- ment of the loss hy the underwriters, he discharges his claim against them for such loss, pro tanto. Or if he obtains payment from such third person afterwards, it is in the nature of salvage, which he holds as trustee for the underwriters who had paid his loss. '^ . . . It is evi- dent, therefore, in the case under consideration, that the two insur- ances, after the sale and when the last insurance was made, were upon two distinct and separate interests. The subject matters thereof were different : the one being upon Tyler's debt to Shafer, which might be lost by the destruction of the house if the vendee was unable to pa3-, and the other upon the actual loss of the house. The loss of the house must fall upon the holder of the last policy, in any event, as the underwriters iu the first policy will be entitled to an assignment of Tyler's contract to pay the purchase money, and may collect the full amount thereof from him if the^' shall pay to Shafer the full amount of his debt. I am satisfied from this view of the rights of the different parties that there was no prior insurance, witliin the meaning of the policj-, of which the assured was bound to give notice, or which could be resorted to b}" him to obtain satisfaction for part of his loss. The clauses in the policy and in the conditions annexed to the same on the same subject, unquestionably were intended to mean the same thing ; and if they differ in any respect, the policy itself must be resorted to to explain the meaning ; as it would then be a case which would be specially- provided for in the polic3', otherwise than in the conditions annexed. The language of the policy is sufficiently broad to cover any previous in- surance on the property in which Tyler had an interest, or which could protect him as the purchaser of the propertj', provided the previous policy had been assigned to him at the time of his purchase, with the assent of the other company. The terms of the condition are : " If the assured shall have alread)' any other insurance against loss by fire on the property hereb}' insured," &c., evidently intending to cover not only insurances made by the assured and in his own name, but any others which he had either in the name of another or bj' assignment for his benefit. But no one can suppose for a moment that these underwriters intended to be so unreasonable as to require a person insuring with them, under a penalty of a forfeiture of his policy, to give notice of every insurance which any former owner of the property might have made thereon, although he had no interest in that insurance, and the rights of the com- pany could not in any way be affected thereby ; that if there was any such insurance, even in those cases where the fact was notified to the underwriters, the person insured with them should only recover a part of his loss from them, although he had no interest iu and could not be benefited bj- the other insurance. To suppose the underwriters in- 1 The presentation of the authorities has been omitted. — Ed. SECT. II.] .ffiTNA FIRE INS. CO. V. TYLER. 895 tended that such a construction should be given to this part of the policy ■would be to suppose that they intended to entrap those who insured with them. The plain and obvious meaning of the whole clause is, that if the assured has anj- other policy or insurance upon the property, by assignment or otherwise, by which the interest intended to be insured is already- either wholly or partiallj' protected, he shall disclose that fact and have it indorsed on the policj-, or the insurance shall be void ; and the same where he shall make anj' subsequent insurance ; also, that in case of any such prior or subsequent insurance, although it is notified to the company and indorsed on the policy, the underwriters in the two policies shall contribute ratably to his loss, so that in no event he can recover more than the amount of his actual loss. I am satisfied, there- fore, that the policy was valid ; that the assured had an insurable in- terest to the value of the house which was burned ; and as the jury have found that value to be the whole amount underwritten in the policy, he was entitled to recover that amount, with the interest thereon, after the sixty daj-s, if the condition as to the proof of loss, &c., has been com- plied with by him according to the terms of the policj', or has been waived by the underwriters. The certificate of the magistrate was a part of the preliminary proofs as to the nature, circumstances, and extent of the loss which, by the express terms of the policy, the underwriters had the right to insist upon before any action could be sustained for such loss ; "^ . . . I am compelled, upon this point alone, to vote for a reversal of the judg- ment of the court below. If other members of the court, however, are capable of giving to the certificate the meaning which the counsel for the defendant in error insist it ought to bear, there is very little danger that injustice will be done to the underwriters, as the jurj- have decided that the loss actually sustained by Tj-ler upon the property in- sured was equal to the whole amount of the risk assured by these underwriters. On the question being put. Shall this judgment be reversed ? the members of the court voted as follows : — Jn the affirmative — The Chancellok and Senators Edwards, Hub- BAED, and Tract — 4. Til the negative — The President of the Senate, and Senators Arm- strong, J. Beardslet, L. Beaedslet, Beokwith, Griffin, Downing, Fox, Gansevoort, Huntington, H. F. Jones, J. P. Jones, Lacet, Lawyer, Loomis, Lounsberrt, Mack, Maison, Powers, Wager, Willis — 21. Whereupon the judgment of the Supreme Court was aflSrmed.^ 1 In the statement and in the opinion, matter as to the sufficiency of the magis- trate's certificate has been omitted. — Ed. 2 Compare Davis v. Phoenix Ins. Co., HI Cal. 409 (1896). — Ed. 896 HONE V. MUTUAL SAFETY INS. CO. [CHAP. VIIL HONE AND Another, Receiveks, v. MUTUAL SAFETY INS. CO. Superior Court op the Citt of New York, 1847. 1 Sandf. 137. This was an action of assumpsit on a polic3' of re-insurance, made bj- the defendants, in favor of The American Mutual Insurance Com- pany. The defendants pleaded the general issue, and gave notice that they would prove on the trial, that hy an universal usage among insurers in the city of New York, they were liable only for a sum, which should bear the same proportion to the amount of the property destroj'ed, as the policy of re-insurance bore to the original policj-. At the trial, in February, 1847, it appeared that the American Mu- tual Insurance Companj-, on the third day of May, 1845, executed a policy of insurance to Herckenrath and Van Damme, for one j'ear from May 4, for the sum of $22,000, against loss or damage by fire, on merchandise, hazardous and not hazardous, their own, or held bj* them in trust, or on commission, contained in the store No. 42 Broad Street. Of the sum insured, SoOO was to apply to office furniture. The policy was in the usual printed form of the New York fire policies, and the jjremium paid was forty cents on one liundred dollars. On the seventh day of May, 1845, the defendants executed a policy to the American Mutual Insurance Company, by which, in considera- tion of thirty-five dollars, they re-insured the latter, against loss or damage by fire to the amount of $10,000, on merchandise, hazardous and not hazardous, the property of Herckenrath and Van Damme, or held by them in trust or on commission, contained in the building No. 42 Broad Street, for one year from the fourth day of Maj'. By this polic}', the defendants promised and agreed to make good to ■ the American Mutual Insurance Company, all such loss or damage, not exceeding in amount the sum so insured, as should happen by fire to the property therein specified, during the year stipulated. The policy of re-insurance was in the usual printed form of a fire policy, with no change, except the insertion in writing of the prefix re-, before the word insure, in the commencement of the instrument. In the great fire in the city of New York, on the 19th day of July, 1845, the store 42 Broad Street, was consumed, and the property of Herckenrath and Van Damme, contained in the store and covered by their policy before described, was destroyed by the fire, to the extent of §14,373.36. Due and sufficient proofs of their loss were furnished by the primitive in- sured, to the American Mutual Insurance Company, who became liable to the former for the payment of such loss. On the first day of August, 1845, the preliminary proofs of the loss were presented to the defend- ants, by the American Mutual Insurance Companj-, in a manner which was conceded to be sufficient. Their losses by the fire of July, 1845, made the latter compan}' in- solvent, so that their assets were not sufficient to pay more than fifty SECT. II.] HONE V. MUTUAL SAFETY INS. CO. 897 cents on the dollar of their debts. The corporation was dissolved by an order of the Court of Chancerj-, and the plaintiffs were appointed receivers of its property and effects. The receivers had made one dividend amongst its creditors, amount- ing to twentj--five cents on the dollar. This was on the 22d day of April, 1846, on which occasion, Herckenrath and Van Damme received the sum of $3,593.34, an account of their loss.^ . . . A verdict for 810,962.11 was taken for the plaintiffs, subject to the opinion of the court. B. D. Silliman, for the plaintiffs. T. SedgioicJc, for the defendants. 0. Hoffman, in reply. Hy the court, Sandford, J.^ . . . The remaining question in the cause arises upon the defendant's objection, that the plaintiffs were bound to pay the loss, before they could maintain a suit, and that in no event can they recover more than the assets of the American Mu- tual Insurance Company will pay to the primitive insured. The latter proposition is surel3- unsound. The fact that the insurers were a corporation, does not affect the point. Their claim upon the re-assurers rests upon the liability' to pay the loss to the insured, not on their greater or less ability to paj* it in full. If the liability of the re-assurer depend upon the solvencj' or bankruptcy of the first insurer, in many cases he will not become chargeable at all, or but to a nominal amount, according to the extent of the first insurer's insolvenc}'. As to the other branch of the objection. It is true, the contract is one of indemnity. That is, the insurer is to be protected by the re- assurer, to the extent of his loss. But when the loss is incurred, the re-assurer, bj' the positive terms of the contract, is to pay the amount to the insurer within sixty days after the same is ascertained and proved. The re-assurer has nothing to do with the payment by the insurer. In the French policies, both to relieve the insurer from the trouble of going through all the proofs on a trial, and to save costs to the re-assurer, it has become customary to insert a provision, that the re-assurer shall paj', on proof of paj-ment by the insurer. And it is to this provision, that M. de Alauzet refers in his treatise cited by the defendants. But in France, when there is no such clause ; and uni- formly here, where it is as j'et unknown ; the insurer may at once resort to his action against the re-assurer ; taking upon himself the burthen of making out his claim with the same precision that the first insured would be required to do, in an action against him ; or he may await a suit by the first insured, give notice of it to his re-assurer, and on being subjected to the loss, recover it, with the costs of the litiga- tion against the latter. There is no authority for saying that he must pay the loss in the one instance, or the judgment against him in the 1 Passages on the usage among insurers hare been omitted. — Ed. 2 After stating the case, discussing the general nature of re-insurance, and decid- ing that evidence of the usage was inadmissible. — Ed. 57 898 HONE V. MUTUAL SAFETY INS. CO. [CHAP. VIIL Other, before enforcing his demand against the re-insurer. In Hastie V. De Pej-ster, 3 Caines, 190, cited to this point, by the defendants, the insurer had stood out a suit against him by the first insured, and it is inferable from the points raised, that he had paid the recov- ery ; but no such fact is stated, it is not discussed by the counsel, and the language of Chief Justice Kent, as well as Judge Livingston's, is unequivocal, that he may recover, not what he has paid, but all that he ought to pay, or has become liable to pay. The decisions in France, cited by Emerigon and Boulay Paty, fully sustain the principles laid down by those distinguished authors, which we have already noticed incidentallj-, in speaking of the extent of the re-assurer's liability. In one ease, adjudged in 1748, the re-assured became bankrupt, and was discharged, having paid the first insured sixty per cent of the loss. Nevertheless, the re-assurer, who thought he ought to pay only the same sixty per cent, was condemned to pay the bankrupt the entire sum re-assured. The other case was in 1780, in which the first insured claimed they ought to receive the amount of the loss from the re-assurer ; inst«ad of permitting it to go into the hands of the assignees of the insurer, who had become bankrupt. The claim of the first insured was over- ruled, and the re-assurers required to pay the whole sum to the assignees. Alauzet concurs with Emerigon, and cites a similar judgment in the court of Rennes. So in Marshall, it is laid down, that if the original insurer fail, so that his insured receive only a dividend, however small, the re-insurer can gain nothing by this, but must pay the full amount of the loss to the first insurer. And thus, he adds, stands the law in most of the maritime states of Europe. (1 Marsh, on Ins. 143.) To the same efiect is Park on Insurance, and 3 Kent's Comment- aries, 278. The interest and importance of the questions involved, have induced us to give our views more at large than is our custom ; and nothing remains but to say that we entertain no doubt on the subject, and that the plaintiffs are entitled to judgment for the whole amount of the re- insurance, with interest.'' 1 Affirmed, sub nom. Mutual Safety Ins. Co. v. Hone, 2 N. Y. 235 (1849). See Eagle Ins. Co. v. Lafayette Ins. Co., 9 lud. 443 (1857) ; Cashau v. Northwestern National Ins. Co., 5 Biss. 476 (D. S. C. C, E. D. Wis., 1873) ; Blackstone v. Alleman- nia Ins. Co., 56 N. Y. 104 (1874) ; Consolidated Real Estate and Fire Ins. Co., 41 Md. 69, 74 (1874) ; In re Eddystone M. Ins. Co., [1892] 2 Ch. 423 (a marine policy). — Ed. SECT. II.] INSUEAKCE COMPANY V. UPDEGRAFF. 899 INSURANCE COMPANY i: UPDEGRAFF. Supreme Court of Pejtnsylvania, 1853. 21 Pa. 513. Error to the Common Pleas of Lycoming Count}-. This was an action of assumpsit to December Term, 1851, by Abra- ham Updegraff for the use of A. A., Winegardner ik The State Mutual Fire Insurance Company. The plea was non-assumpsit, and payment with leave, &c. The action was brought upon a policj- of insurance No. 549, by which the said compau}-, " For and in consideration of the sum of ten dollars, and of the premium note of twenty dollars, hy the said compan}- re- ceived, do insure Abraham Updegraff of "Williamsport, in the count}- of Lycoming, and State of Pennsylvania, against loss or damage b}- fire, to the amount of one thousand dollars, on the following propert}', as described in application and survey No. 549, viz. : on his wooden block, S 1,000." ' • And the said company do hereb}' promise and agree, to and with the said insured, to make good unto him, his executors, administrators, and assigns, all such loss or damage, not exceeding in amount the sum insured, as shall happen b}' fire to the propertj- as above specified, during the term of two years from the seventh da}- of August, one thousand eight hundred and fifty, at 12 o'clock at noon, unto the seventh day of August, one thousand eight hundred and fifty-two, at 12 o'clock at noon ; the said loss or damage to be estimated according to the true and actual value of the said property, at the time the same shall happen, &c." In the application by UpdegrafiF, the plaintiff, which was given in evidence on the part of the plaintiff, on the trial, in answer to the questions: " Is it (the property) encumbered? If so, to what amount?" Updegraff answered, " Sold to Winegardner under contract to convey title when the purchase-money is paid, to be paid in annual instalments of S500 — 8500 paid on it." The premium note, dated August 7, 1850, for $20, was given by Updegraff. From a copy of articles of agreement between Abraham Updegraff and Abraham A. Winegardner, dated 15th Optober, 1849, given in evidence, it appeared, that on that day Updegraff entered into an agreement with Winegardner for the sale of the property insured, for the sum of $2,800 ; $500 to be paid on the 1st April, 1850, when posses- sion is to be given, and $500 on the 1st of each succeeding April, until $2,500 are paid, and $300 on the next April, which will be the last paj-ment." By the same agreement, Winegardner agreed to rent a part of the premises to Updegraff", then occupied by said Updegraff as a store, for 900 INSURANCE COMPANY V. UPDEGEAFF. [CHAP. VIII. two j-ears from the time he, Winegardner, got possession, for $100 per annum. The premises insured were entirelj' consumed bj' fire, on the 16th Jiil^', 1851. It was testified that the loss of the house was total. After the insurance, and before the fire, as appeared b3' indorse- ments on the articles of agreement above mentioned, UpdegrafT had received from "Winegardner, on the purchase-monej', $1,108, making the whole payment on account of it $1,618. One of the conditions of the policj' of insurance was in the following words: "The interest of the insured in this policy is not assignable, unless the assignee, before anj- loss happens, shall give notice in writ- ing of the assignment, in pursuance of the b3'-laws of this company, and have the same indorsed on, or annexed to this polic3'." Article 19, of extracts from the bj'-laws annexed to and printed on the same sheet with the polic3', is as follows : — " Article 19. In all cases when the polic3' is to be assigned, the assignee must sign the premium note — give a new note, or give securit3' for the payment of the same. The assignment should be made out on the back of the polic3', and sent to the secretary, or a true copy, with fift3- cents recording fees, to be approved by a director, and recorded on the policy assigned." It did not appear from the evidence in the case, that the policy on which suit was brought, had ever been assigned by Updegraff to Winegardner. On the part of the defendant it was proposed to ask a witness whether he knew how UpdegrafT held the propert3', whether as owner or tenant? The proposed evidence was overruled. First bill. Offer was also made to prove the value of the lot, after the building was burned. This was offered in order to show that Updegraff had not sustained any loss. Objected to because the lot was not insured, and as irrelevant. Objection sustained. Excepted to. Second bill. On the part of the plaintiff, it was testified under exception, by C. Lloyd, that he acted as agent of the company in efi"ecting the in- surance. He further testified : " I went to Updegraflf, and told him I thought the application should be made in his name ; that he was legal owner of the property. He said he had no objection to put his name to the note ; I should do as I thought best. I told Updegraff I would send an application in his name, stating in the application precisely how the propert3^ was situated ; if it was not right the compan3' would return it to me for correction ; if they approved of the application they would issue a policy, and it would be all right. I accordingl3' made out the application, which has been given in evidence here. I for- warded the application to the company ; the policy Issued on it to Updegraff ; can't recollect if it was sent to me or Updegraff. Updegraff disclosed to me all the facts." This was the third bill. SECT. II. J INSURANCE COMPANY V. UPDEGEAFF. 901 The defendant's counsel submitted points as follows : 1. That if the jury believe the value of the lot, after the destruction of the buildings, was sufficient to pay and satisfy' Updegraff the balance of the purchase-tnonej- due him at the time of the fire, then the said Updegraflf had no insurable interest at the time of the fire, and sus- tained no loss, and cannot recover in this»action. 2. That to entitle the plaintiff to recover, he must satisfj' the jury he had an interest at the time of the insurance, and at the time the fire happened ; and that, as the policy is strictly a contract of indemnity, he can only recover the value of his beneficial interest at the time of the fire, if any, in the property destroj'ed. 3. That if the plaintiff, Updegraff, is entitled to recover the loss which he has sustained, if anj', then the company have a right to be subrogated to all his securities as against his vendee, Winegardner. 4. That Winegardner having paid to Updegraff, subsequent to the insurance, the sum of $1,108, on the article of agreement for the sale of the premises, such payment reduces the liabilit3' of the company j)ro tanto. 5. That under all the circumstances in this case the plaintiff is not entitled to recover. Jordan, J., answered the foregoing points in the negative, and in- structed the jurj- that the plaintiff was entitled to recover. May 12, 1853, verdict for plaintiff, for $1,089.50. Error was assigned to the action of the court relative to the evidence offered, as stated in the three bills of exception ; and to the answers to the points, and the charge. Scates, with whom was Pollock, for plaintiff in error. Maynard and Armstrong, for defendant in error. The opinion was delivered, September 15, by Lewis, J. This was an action on a policy of insurance effected by the vendor after articles for the sale of the propertj' and before con- veyance. The sum due to the vendor, at the time of the insurance, was $2,300, which was reduced by paj-ments afterwards, so that the sum due to him at the time of the loss was onlj- $1,192. The verdict was in his favor for the sum of $1,080.50 ; a sum not sufficient to cover the whole extent of his interest. The house was destroj'ed b3' fire. The defence was that the lot is sufficieut security for the unpaid purchase-money, and that the insured has no insurable interest beyond. It is sometimes stated, in general terms, that by the contract of sale the purchaser of real estate becomes in equity the owner ; but this rule applies only as between the parties to the contract, and cannot he extended so as to affect the interests of others. The purchaser before the contract is carried into effect, cannot, against strangers to the contract, enforce equities attaching to the propertj'. Dart's Vend. & Purch. 115 ; 3 Mylne & Craig, 70. A stranger cannot set up the equitable title of the vendee to defeat an ejectment brought by the vendor against the clear equitable title of the vendee. At law the 902 INSURANCE COMPANY V. UPDEGEAFF. [cHAP. VIII. vendor, before payment of the purchase-monej' and delivery of the conveyance, is, to all intents and purposes, the owner of the estate. It is true that he is a trustee for the vendee, who, as between the parties to the contract, is bound to take the estate subject to every loss which maj' happen to it without the fault of the vendor, and is consequently entitled to evepj- benefit accruing to it after the agree- ment. Paine v. Meller, 6 Ves. Jun. 349 ; Sugden, 199. The right to tlie benefits of the purchase fix him with the losses which may happen to it ; but the latter branch of the proposition has not been established without reluctance, because there is a, hardship iu compelling paj'ment after the consideration fails. The vendee's liability to paj' for a house which was burnt down after the contract, and before the time appointed for payment of the purchase-monej', was at one time doubted : Stent V. Baily, 2 P. Wms. 220 ; at another time his liability was placed upon the special ground that he had been " infeft before the burning." Hunter v. Wilsons, and Atchison v. Dickson, Sugden on Vend. 200, n. 1. At another time it was held that, in the case of a sale before the master, he was not liable for a loss which happened after the report had been confirmed nisi: 11 Ves. Jun. 559 ; and a lessee was relieved because the fire happened before the time appointed for the commence- ment of the term, although after the date of the contract. Wood v. Hubbel, 6 Month. Law Eep. 237. These cases show that, notwith- standing the rule, the hardship of the case secures for the vendee the favorable consideration of the court, and that slight circumstances will be laid hold of for his relief. Following the spirit of these deci- sions, the courts will make no presurnptions, in the case of an insur- ance b}' the vendor, that it was his intention, in the event of a loss, that the vendee should bear not only the measure of it which fell upon him by the accident, but that he should also indemnif}- the insurance company. On the contrary-, as the vendor is a trustee for the vendee, ever}' act of his in relation to the estate will be presumed to be for the benefit of the vendee, subject of course to the prior claims of the vendor himself. This is reasonable, because, as the vendee must suflfer the losses which ma}' happen to the property, it is just that he should have the advantage of any benefits which accrue to it ; and, next to the security of his own interest, a trustee will be presumed to have in view the interest of the cestui que trust. Although the vendor is not bound to insure, or even to continue an insurance already made, he may, like any other trustee having the legal title, insure if he thinks proper, to the full value of the property. 1 Arn. 259, 2 B. & P. N. E. 324. It is true that in the case of a mortgagee of a ship he can only recover to the extent of his mortgage debt, unless it appears that in eflTecting the insurance he intended to cover, not his own interest only, but that of the mortgagor also. 2 B. & Ad. 193, 1 Moody & Rob. 153. If he intended to cover the whole interest, both legal and equitable, he may recover the whole amount of the insurance, under a trust, as to the surplus, to hold it for the mortgagor. Carothers v. Shedden, 6 Taunt. SECT. II.] INSUEAXCE COMPANY V. UPDEGEAFF. 903 17, 1 Arn. 252. The same rule applies to the case of an insurance bj- a vendor. There is this difference, however, that as the whole estate is at law in the vendor, and the vendee has onl3- a title to go into equitj", the insurance company cannot assert the rights of the latter, or go into equity- in respect to them, except upon principles of equity :»nd good conscience. An insurance upon a house, effected by the vendor, is prima facie an insurance upon the whole legal and equitable estate, and not upon the balance of the purchase-money. Where the form of the policj' shows it to be upon the house, and not upon the debt secured In* it, the burthen of showing that the insurance was upon the latter and not upon the former, rests upon the under- writers. There is no hardship in this. The premium paid, as com- pared with that usually charged where the insurance is upon houses, and not upon debts secured by them, is generalh' decisive of the ques- tion, and the rates of insurance are peculiarly within the knowledge of the insurance company. If the insurance was upon the whole estate, the premium would be according to the usual rates for houses of that description and location ; if it was only upon the debt due to the ven- dor, there would be a large reduction, on account of the responsibility of the vendee, and the value of the lot of ground included in the sale, because both of these would, in that case, stand as indemnities to the underwriters. They would be entitled to a cession of the vendor's claims, from which an ample indemnity' might be recovered. If the lot was worth the balance of the purchase-monej', there would be no risk whatever, and the premium would be quite insignificant. If the intention was to insure only the debt due to the vendor, and a full premium was charged, without deduction for the securities which the underwriters knew he held, a portion of the premium should have been returned, upon the principles which require a return of premium for short interest, for over insurance, and for double insurance. 11 Pick. 85, 1 Met. 16, 2 Arn. 1226. But there was no evidence tending to prove that the premium was less than the usual rates for houses of the description set forth in the policj', where the whole estate is insured. Nor was there any offer to return anj' portion of the premium. On the contrarj', all the evidence tended to show that the insurance company was fairly informed of all material facts — that its agent advised the insurance to be taken in the name of the vendor, because the latter were " the legal owners," and that the vendor replied that he had " no objection to sign the premium note." Unless the intention was to cover both interests, there was no ground for question, or for taking or giving advice in regard to which name should be used, or for the vendor's consideration whether he had or had not anj' objection to signing the premium note. The instrument before us is an open policy of limited extent. The underwriters agree to make good to the insured, not all his loss, but all such loss or damage, not exceeding the sum stated, as shall happen by fire to the property — the loss or damage to be estimated, not according 904 INSURANCE COMPAXY V. UPDEGEAFF. [CHAP. VIII. to the balance of purchase-money which may remain unpaid at the time of the damage, nor according to the probabilities of recovering such balance from the vendee, or from the lot, but "according to the true and actual value of the said property." The policy is in form an in- surance upon the house, and not upon the debt ; and no evidence whatever was given to change its character, or to show that anything more or less was intended by the parties. It follows that the plaintifE below was entitled to recover, under a trust, as to the surplus, for the benefit of the vendee. The underwriters have shown no equitable right to intermeddle between the vendor and the vendee. Under such cir- cumstances they must be content to respond to the partj- with whom they made the contract of insurance. In Smith v. Columbia Ins. Co., 5 Harris, 353, the insurance expressly included the lot, and was stated to be to cover a mortgage. As the insurance company, on such a policj', would have been entitled to a cession of the mortgage, upon payment of the amount, it was properly held that the concealment of prior encumbrances which made it worth- less, and would, if known, have enhanced the premium, was a good defence. But here the insurance is upon the building alone — it is not expressed to be to cover a debt — and the lot is not included. The underwriters are therefore not entitled to a cession of the vendor's title to the lot, or of his claim upon the vendee. The cession of a part of the house, according to the proportion of its value insured, would be all that could be demanded under such an insurance. But even this has become impossible bj"^ reason of its entire destruction. The testi- mony is, that it was a total loss — not a mere technical total loss, but an actual total loss — that it was entirely burnt down ; that " not one stick was left upon another." Where there is no vestige of the prop- erty left, or (which is the same thing) where it has been finally con- demned as lawful prize bj' the court of the last resort, the cession has nothing to operate upon. There is neither property nor spes recuper- andi, and the cession in such case would be an idle ceremony. 4 Bin. 462, 8 Johns. 245, 1 Pet. 215. The court was therefore correct in the instruction that the plaintifE was entitled to recover. We see no error whatever in the proceedings, and the judgment is therefore affirmed. Judgment affirmed} 1 See Pire and Marine Ins. Co. of Wheeling; v. Morrison, 11 Leigh (Va.), 354 (1840); TrnmbuU v. Portage County Mat. Ins. Co., 12 Ohio, 305 (1843); Boston & Salem lee Co. v. Royal Ins. Co., 12 Allen, 381 (1866) ; Waring v. Indemnity F. Ins. Co., 45 N. Y. 606 (1871) ; Wood w. North Western Ins. Co., 46 N. Y. 421 (1871) ; Col- lingridge v. Royal Exchange Assur. Corp., 3 Q. B. D. 173 (1877); Bnrson v. Fire Assn., 136 Pa. 267 (1890). In Keefer v. Phoenix Ins. Co., 26 Ontario App. 277 (1899), the plaintiff, the owner of buildings, procured from the defendant company a policy for 82,000, whereby the company agreed "to indemnify and make good unto the said assured, his heirs or assigns, all such direct loss or damage (not exceeding in amount the sum or sums in- sured as specified, nor the interests of the assured iu the property herein described). SECT. II.] WATERS V. MOXAECH FIEE AND LIFE INS. CO. 905 WATERS AND Another v. MONARCH FIRE AND LIFE INS. CO. QcEEs's Bench, 1856. 5 E. iSb B. 870.^ This was an action upon policies of fire insurance issued to the plaintiffs bj the defendant conipanj-. The defence was that the plain- tiffs were not, before or at the time of the loss, interested in the propert}- in the policies described beyond sums that were paid into court. The plaintiffs took the sums paid into court out of court, and on the trial, before Lord Campbell, C. J., at the Guildhall sittings, a verdict was fouud for the plaintiffs, subject to the opinion of the court on a case stating that the plaintiffs were flour merchants, warehouse- men, and wharfingers ; that they did not receive goods on consignment or commission ; that one policy described the plaintiffs as corn and flour factors and insured them against loss or damage bj' fire not ex- ceeding "£3,000 on stock in trade and utensils in their warehouse, . . . £400 on goods in trust or on commission therein," and other sums on other items ; that the other policj* was in similar form and insured " £2,000 on corn and flour, the propert}- of the assured or held by them in trust or on commission, on or in all of the public wharfs, quaj-s, warehouses, . . . situate within five miles of the Royal Exchange ; " that while the policies were in force the plaintiffs' warehouse was de- the amount of loss or damage to be estimated according to the actual cash value of the property." The loss was made payable to the Quebec Bank. The plaintiff had already entered into a written contract to sell the premises to one Cloy for S2,000, had made simultaneously an oral agreement to keep the premises insured to the extent of S2,000 until the purchase-money was fully paid, and had received S800 on account. The plaintiff did not disclose to the company any part of his contract with Cloy, nor did the company have any knowledge of such contract untU the day before the fire. Within the term of the policy the premises were damaged by fire to the extent of 51,740. Before the fire, 31,300 had been paid under the contract of sale. The defendant com- pany tendered S700 to the plaintiff before action, and paid that sum into court. In the High Court of Justice for Ontario, upon written admissions of fact signed by counsel, judgment was given for the plaintiffs for SI, 740, with interest and costs. 29 Ontario, 394 (1898). In the Court of Appeal of Ontario, four of the five justices con- curred in reversing this judgment and confining it to S700. Bukton', C. J., one of the majority, said : — "It is clear that a person having a limited interest in property may insure, never- theless, on the total value of the subject-matter of the insurance, and that he may recover the whole value, subject to this, that the form of the policy must be such as to enable him to recover the total value, and that it must have been the intention at the time, both of himself and the insurers, to insure the whole value. . . "The judgment below should be reversed and confined to the sum of S700, which, having been tendered before action, entitles the defendants to judgment in their favor with costs. "The case of Insurance Company v. UpdegraS (1853), 21 Pa. .513, has caused me to hesitate a good deal before finally coming to this conclusion, but on the whole I think that the inference cannot properly be drawn that the insurance company intended to insure anything beyond the owner's interest in the property. See CasteUain u. Preston (1883), 11 Q. B. D. 380." — Ed. 1 The statement has been rewritten. — Ed. 906 WATERS V. MONARCH FIRE AND LIFE INS. CO. [CHAP. Till. stroj'ed by an accidental fire, with all the goods therein ; that the warehouse, besides large quantities of goods belonging to the plain- tiffs, contained flour belonging to the plaintiffs' customers, which had been deposited with the plaintiffs as wharfingers and warehousemen for safe custod3- ; that the plaintiffs made no charge for insurance ; that the plaintiffs had no authority from their customers to insure, except as might be inferred from the fact that long before the fire they had told one of their customers, who had flour in their warehouse at the time of the fire, that the^' carried insurance on the goods of their cus- tomers ; and that the sums paid into court were sufficient to cover the plaintiffs' own goods and the plaintiffs' charges with reference to the goods deposited by their customers, to wit, charges for landing, wharf- age, and cartage. Mellish, for the plaintiffs. Lush, contra} Lord Campbell, C. J. After hearing the argument, I have come to the conclusion that the plaintiffs are entitled to judgment. The first question is whether, upon the construction of the contract, these goods were intended to be covered bj' the policy. I think in either policj- the description is such as to include them. What is meant in those policies by the words " goods in trust " ? I think that means goods with which the assured were intrusted ; not goods held in trust in the strict technical sense, so held that there was only an equitable obligation on the assured enforceable by a subpoena in Chancer}', but goods with which they were intrusted in the ordinary sense of the word. They were so intrusted with the goods deposited on their wharfs ; I cannot doubt the policy was intended to protect such goods ; and it would be very inconvenient if wharfingers could not protect such goods by a floating policy. Then, this being the meaning of the policy, is there anything illegal in it? It cannot now be disputed that it would be legal at common law ; and Mr. Lush properly admits that it is not pro- hibited by the terms of an}' statute. And I think that a person in- trusted with goods can insure them with orders from the owner, and even without informing him that there was such a policy. It would be most inconvenient in business if a wharfinger could not, at his own 1 In the course of this argument. Lord Campbell, C. J., said: "In mercantile usage merchants are likely to have in their custody goods on commission. Those are insured by name, and also goods in trust. What goods are those which in mercantile usage merchants are likely to hare, not being on commission, which can be called in trust, if the present are not ■? " Ckompton, J., said : " In the Factors' Acts (Stat. 4 6. IV. c. 83, Stat. 6 G. IV, c. 94, and Stat. 5 & 6 Vict. c. 39) the phrase, ' agents intrusted with goods,' is used, and certainly not confined to cases where the remedy is by a sub- poena in Chancery." Wishtman, J., said : " But, if the money is paid to the plain- tiffs, it will inure to the benefit of the owners of the goods." And again Lord Campbell, C. J., said : " It was not intended to limit the policy to the personal inter- est of the plaintifis ; for in this and all other floating policies the promise is to make good the damage to the goods. Such a contract was valid at common law. Dalby v. India and London L. Assur. Co., 15 C. B. 365. What statute do you rely upon as making it illegal "i" — Ed. SECT. II.] WATEKS V. MONARCH FIKE AND LIFE INS. CO. 907 cost, keep up a floating policy, for the benefit of all who might become his customers. The last point that arises is, to what extent does the policy protect those goods ? The defendants say that it was only the plaintiffs' personal interest. But the policies are in terms contracts to make good " all such damage and loss as ma}' happen bj- fire to tlie propert}' hereinbefore mentioned." That is a vahd contract; and, as the propert}' is wholly destroyed, the value of the whole must be made good, not merely the particular interest of the plaintiffs. Thej' will be entitled to applj- so much to cover their own interest, and will be trus- tees for the owners as to the rest. The authorities are clear that an assurance made without orders may be ratified by the owners of the propert}-, and then the assurers become trustees for them. (Coleridge, J., was absent.) WiGHTMAN, J. There are two questions. The first, Whether the goods destro}ed were covered at all by the policies. The policies are on various descriptions of goods ; and, amongst others, on goods " in trust." It seems clear to me that the goods in question were in trust. The plaintiffs are warehousemen and wharfingers ; and the goods were in their warehouse ; they had a lien on them, subject to which they were accountable to the owners who had intrusted them with the goods. So the goods lost were goods in trust. Then comes the question, Can the plaintififs recover their value? It seems to me that they may, un- less there be something making it illegal to insure more than the plaintifls' own interest. Mr. Lush does not contend that any statute applies. It has been decided that, if no statute applies, a person in- sured may recover the amount contracted for : and, that being so, I think the plaintiffs entitled to recover the whole value. Ckomptox, J. I cannot entertain the least doubt that in these policies the words " in trust " are used without any reference to a subpoena in Chancery. The parties meant to insure those goods with which the plaintiffs were intrusted, and in every part of which they had an interest, both in respect to their lien and in respect of their bailors. What the surplus after satisf3-ing their own claim might be, could only be ascertained after the loss, when the amount of their lien at that time was determined ; but they were persons interested in every par- ticle of the goods. Judgment for the plaintiffs?- 1 See De Forest v. Fulton F. Ins. Co., 1 Hall, 84 (1828) ; Eafel v. Nashville M. & F. Ins. Co., 7 La. Ann. 244 (1852) ; ^tna Ins. Co. v. Jackson, 16 B. Mon. 242 (18551; London & Northwestern Ry. Co. v. Glyn, 1 E. & E. 652 (1859) ; Stillwell v. Staples, 19 N. Y. 401 (1859); Waring u. Indemnity F. Ins. Co., 45 N. Y. 606 (1871); North British and Mercantile Ins. Co. o. Moffatt, L. R. 7 C. P. 25 (1871) ; Hough v. People's F. Ins. Co., 36 Md. 398 (1872) ; Ebsworth v. AUianee M. Ins. Co., L. R. 8 C. P. 596 (1873) ; s. c. reversed, by arrangement between the parties, 43 L. J. n. s. C. P. 394 (Ex. Ch., 1874), (a marine policy) ; Home Ins. Co, v. Baltimore Warehouse Co., 93 U. S. 527 (1876) ; North British and Mercantile Ins. Co. v. L., L. & 6. Ins. Co., 5 Ch. r).569 (C. A., 1877); Martineau v. Kitching, L. R. 7 Q. B. 436 (1878); California Ins. Co. ». Union Compress Co., 133 XJ. S. 387 (1890). In Stillwell V. Staples, supra, manufacturers procured insurance upon goods, " the property of the insured, or held by them in trust or on commission, or sold but not 908 ILLINOIS MUT. F. IXS. CO. V. AXDES INS. CO. [CHAP. VIIL ILLINOIS MUT. F. INS. CO. v. ANDES IXS. CO. Supreme Coukt of Illinois, 1873. 67 111. 362. "Writ of error to the City Court of Alton ; the Hon. Henry S. Baker, judge, presiding. Mr. Charles P. Wise, for the plaintiff in error. Messrs. Stuart, Edwards cfe Brown, and Mr. J. H. Tager, for the defendant in error. Mr. Justice Sheldon delivered the opinion of the court. The only question here presented for decision is, as to the amount of the recoverj'. The original insurer became liable to pay to the first assured the sum of 86,000 in consequence of the loss of the subject-matter of the first insurance ; but it actually paid only $600 in full discharge of the liabilit}'. The amount of the reinsurance was $2,000. Shall the rein- sured recover the full $2,000, or only §600, or a pro rata part of the latter sum? So far as we are aware, the contra'ct of insurance, or of reinsurance, against loss b}- fire, has uniforml}' been held to be a contract of indem- nity not exceeding the sum insured. In the case of an ordinary polic3' of insurance, and a loss, the sum insured is the extent of the insurer's liability, not the measure of the assured's claim. The contract being one of indemnitj-, he is entitled onlj' to that, and the actual loss sustained by the assured is the meas- ure of indemnity to which he is entitled where it is less than the sum insured. So, if the assured has parted with all his interest in the sub- delivered." TVhen a fire occnrred, the manufacturers collected the whole insurance, which was not enough to cover their own lo.ss. There had been no agreement with customers to insure, but one of the manufacturers' customers, discovering the form of the insurance after the settlement had been made thereunder, attempted — hj way of counterclaim iu an action brought by the manufacturers to recover a balance for manu- facturing — to set up a right to a proportionate part of the insurance. The attempt ultimately failed. Selden, J., for the court, said : — " In order to support the judgment iu this case, it must appear, either that the de- fendant had elected to adopt the policy, before its force as an insurance upon his goods had been in any degree impaired, by any act of the plaintifis ; or that the latter had actually received money from the insurance company on account of the defend- ant's goods . . . " At the time when the plaintiffs presented their claim to and settled with the in- surance companies, the defendant had acquired no interest whatever- in the policies. He had not then, so far a-s appears, ratified or adopted them. The plaintiffs, therefore, were at liberty to cancel or modify them at pleasure. It seems they presented no claim against the insurance companies for any loss upon the defendant's goods. The loss upon their own goods greatly exceeded the amount of all the policies, and they very naturally elected to claim for their own loss alone. This was equivalent to an elec- tion to cancel so much of the policy as purported to insure goods held by them in trust, which, as they were under no objection to insert that clause, and as their act in doing so had not been adopted, they were, as we have seen, at entire liberty to do." — Ed. SECT. II.j ILLINOIS JITJT. F. IXS. CO. V. ANDES 1X3. CO. 909 ject insured before the loss happens, he cannot recover, for the reason that the contract is regarded as one for an indemnitj', and he has sustained no loss or damage. Altliongh the original insurer here did become liable to pay the sum of 86,000, that did not turn out to be the amount of its actual loss. The actual loss and damage which it sustained was S600, the sum which it paid in full discharge of its liabilit}-. That sum, given to the reinsured, would make good the loss sustained b^- reason of the original insurance ; whereas, to allow a recover}- of §2,000, would enable it to realize a gain of $1,400 over and above the actual damage it has sus- tained. It is difficult to see how this can be done consistenth* with principle, under a contract which, we apprehend, this must be admitted to be, to indemnify the reassured against the loss it might sustain from the risk it had incurred in consequence of its prior insurance.-' . . . The precise point here involved is quite barren of the authority of adjudged cases. As the contract of reinsurance was virtualh' pro- hibited in England more than a centurj' ago — it having been there forbidden except where the insurer shall be insolvent, become bank- rupt or die, by the statute (19 Geo. TI. ch. 37, sect. 4) — that may account for the absence of the authoritj- in the English reports upon the point. What little authority is to be found, it must be confessed, is in sup- port of the view that, where the first insurer becomes insolvent, and, on a compromise with his creditors, paj's onh" a certain percentage of the loss sustained bj- the insured, the reinsurer is, nevertheless, bound to pay the reinsured the full amount of the reinsurance. Such was the decision of a French court of admiraltj- at Marseilles, made in 1748. In Howe v. Mutual Safety Insurance Co., 1 Sandf. 137, this subject is quite elaborate!}' considered, and the authorities bearing upon it adduced, and the doeti-ine laid down by the above Erench decision is recognized and adopted as the true rule of law which governs the ex- tent of the liability of a reinsurer. There are treatises on insurance where the same doctrine may be found to be laid down, but so far as they have, for its support, the autliority of adjudications, they seem to depend upon the two cases above cited. In Eagle Insurance Co. v. The Lafayette Insurance Co., 9 Ind. 443, the case in 1 Sandf. is, with seeming reluctance, barely recognized as authority. This comprises the sum of the authority of adjudged cases to which we liave been referred, or which have been brought to our notice in support of this doctrine of the reinsurer's liability for the fuU amount reinsured, as contended for by the appellee. 1 Here follo-wed qnotations from Bainbridge v. Neilson, 10 East, 329, 347 (1808), to the effect that a policy of insnrance is a contract of indemnity, and from Bainbridge v. Xeilson, 10 East, 329, 347 (1808), per Baylev, J., and from Hamilton v. Mendes, ante, pp. 829, 831 (1761), ;>cr Lord JIa.n'sfield, C. J. — Ed. 910 ILLINOIS MUT. F. INS. CO. V. ANDES INS. CO. [CHAP. TIIL "We can understand how the reinsured partj-, where the amount of his liability has been ascertained, may be admitted to recover to the full extent of the liability so long as the liabilitj' to pay continues, although he may not have made payment, or may be insolvent and unable to paj'. But where the liabihty has become actually discharged bj- the pa3-ment of a sum less in amount, it is difficult to perceive, on principle, why the sum paid in discharge of the liability should not be taken as the amount of damage sustained and as the measure of in- demnit}- to be recovered under a contract which is confessedly one of indemnity. Notwithstanding, then, the adverse authority that is to be found, we are disposed to hold, on principle, as we regard it, that $600, the sum paid by the reinsured company in discharge of its liability for $6,000, was the actual loss it sustained and the extent of the recovery which should be had. And in view of the following special clause in this policy of reinsurance, we are of opinion that the recovery in this case should be reduced even below that sum. The clause is this: "Loss, if anj-, payable pro rata, at the same time and in the same manner as the reinsured companj'." The only, construction we can well put on this clause and give it practical effect is this : that the Andes Insurance Company, the rein- surer, was only to pay at the same rate as the Illinois Mutual Fire Insurance Company, the reinsured, should paj- ; and as the latter com- pany paid only ten cents on the dollar of its insurance, the former companj' is only liable to paj' at the same rate, that is, ten cents on the dollar of the amount of its reinsurance, which would be $200. Appellee's counsel suggest that the clause has reference only to cases of double insurance. There is no warrant in the language of the clause for giving it such a reference. The policy of reinsurance is not before us. The case comes before us as a certified question of law, and this clause is the onlj- portion of the policy which is put into the case, . so that we have nothing, aside from the language itself, of the clause, to aid in its construction. We are of opinion the judgment should have been for $200 instead of $2,000. The judgment is reversed and the cause remanded. Judgment reversed. SECT. II. J EXCELSIOR FIRE IXS. CO. V. ROYAL INS. CO. 911 EXCELSIOR FIRE INSURANCE CO. et al., Respondents, v. ROYAL INS. CO., Appellants. CoTJET OF Appeals of New York, 1873. 55 N. Y. 343. ^ Appeal from a judgment of tlie General Term of the Supreme Court in the fourth judicial district, aifirming a judgment entered upon a verdict in favor of the plaintiffs. On Maj- 7, 1862, and August 1, 1865, James Connellj-, then being the owner of the property, mortgaged it to David Dows and others by two mortgages for $10,000 each. On July 23, 1870, Mary L. Connelly, the wife of the mortgagor, entered into a contract with the mortgagees, whereby, in consideration of $15,000 paid and agreed to be paid, the mortgagees agreed to assign to her the mortgages. Under this contract Mrs. Connelly paid $7,500. On December 7, 1870, Mrs. Connelly, through her husband, procured a polic}- in the Excelsior Fire Insurance Company upon her mortgage interest to the amount of $3,750, of which $1,250 was on the building, and $2,500 on the machinery and fixtures therein, and also a like policy in the Commonwealth Insurance Companj'. These companies wished these policies to be cancelled, but what actuallj' happened was that there was procured, on December 20, 1870, in Mrs. Connelly's behalf, a third policy, dated December 7, 1870, for $7,500, namely " $2,500 on her mortgage interest in the three-story stone flour mill, . . . and $5,000 on the machinery and fixtures therein." The property was destroyed by fire on December 22, 1870. On April 13, 1871, Mrs. Connelly assigned to the plaintiflTs — the Excelsior and the Commonwealth — her claim against the defendant — the Royal. In addition to the question as to the proper amount of recovery, there were questions not indicated bj' this statement. Amasa J. Parker, for the appellant. W. F. Cogswell, for the respondent. Folger, J. This case comes up on exceptions to a refusal of mo- tion for a nonsuit of the plaintiffs, made first at the rest of the plain- tiffs' case, and again at the close of all the proofs. The defendant, by making this motion, concedes that the court may pass upon the facts ; indeed, that there is no dispute as to the facts, and nothing therefore to Idc submitted to the jury. Winchell v. Hicks, 18 N. Y. 558. That they have presented in this court questions not made at circuit, cannot alter this rule. . . . Again, we are of the opinion that Mrs. Connelly had an interest as mortgagee in the property insured by the defendant to the full amount, 1 The statement has been rewritten. In making the statement and in reprinting the opinion, matters foreign to the amount of a mortgagee's recovery have been omitted. — Ed. 912 EXCELSIOR riEE INS. CO. V. ROYAL INS. CO. [CIIAP. VIIL at least, of their policy. Though the language of the description in the policy is involved, it must be taken to describe her mortgage interest not only in the mill but also in the machinery and fixtures, which, in legal contemplation, were included in the mortgage. Biglin V. N. Y. Cent. Ins. Co., 20 Barb. 635; Houses. House, 10 Paige, 158 ; Snedekeru. Warring, 2 Kernan, 170. And though the risk was divided upon the building and upon the machinery, etc., the loss upon each was greater than the amount named in this policy. She had, it is true, paid but a portion of the amount she had agreed to give in purchase of the mortgages, but she was entitled to seek indemnit}-, not onlj- to the extent to which she had paid, but the extent of the interest for which she had bargained and agreed to pay. This was the full amount secured and unpaid upon the mortgages. The defendants further claim that Mrs. Connelly having been insured upon her mortgage interest, the loss sustained by her thereon, for which a recover}- can be had, can be no more than that which the mortgaged propertj^ shall fail to secure of her debt ; and that, as it was proven that the mortgaged property after the fire was sold for $11,000, which was more than the amount she had paid on her contract to buy the mort- gages, she suffered no loss, and therefore has no claim against the defendants. We have already stated our opinion that her insurable mortgage interest, and hence the amount which she might lose, was not limited to the amount actually paid by her on that contract, but that it equalled the whole amount secured and unpaid upon the mortgages for which she was bound to pay. As there was due and unpaid upon the mortgages a sum of over $19,000, even if the premises had been available to her, at the price at which thej' sold after the fire, there was still a deficiency of more than the amount of the defendants' policy. To this the defendant says that if the plaintiffs' policies are available to Mrs. Connelly for one purpose, as she claims, they are available to the defendant for another. They then insist that those policies should share in the payment of the loss, if any there is ; and then, that if the insured must first exhaust her remedy against the mortgaged premises, the amount for the defendant to pay will be much less than the amount adjudged against them. If the premises of the defendants' argument are sound, they are right that such consequence would follow. Without deciding whether the policies of the plaintifl's are in existence, so as to be available to Mrs. Connell}' and also to the defendants for the pur- pose of this argument, we will dispose of the point upon the other branch of it. And this raises the question whether a mortgagee, who has in- sured his mortgage interest in buildings and fixtures and machinery at his own expense and for his own indemnity, with no agreement or understanding with the mortgagor, mus.t first exhaust his remedy on his mortgage before he can call upon the insurer to make good any part of the damage by fire to the property. The learned counsel SECT. II.] EXCELSIOR FIRE INS. CO. V. ROYAL INS. CO. 913 for the defendant cites, for the affirmation of this position, Flanders on Insurance (p. 360) and Angell on Insurance (§ 59). Flanders sajs of an insurance by a mortgagee : " It is not the specific propertj- which is insured, but its capacitj' to paj- the mortgaged debt." Angell saj's : " It is but an insurance of his debt ; and if his debt is afterward paid or extinguished, the policy from that time ceases to have anj' operation. And even if the premises are after that destroyed by fire he has nq right to recover for the loss, for he has sustained no damage thereby." These texts do not, in terms, sustain the propositions of the defend- ants ; and it is onlj- as a corollary, if at all, that it can be deduced from them. If it is the debt only which is insured, it may be said that until the debt, or some partof it, is lost, there is no loss upon the policj', and that the debt nor anj- part of it is lost until the mortgagee fails to obtain it from an enforcement of his mortgage. Neither of these writers cites anj' decision which sustains the proposition of the de- fendants, except perhaps one. There are dicta in several cases which will be referred to. The one case is Smith v. Col. Ins. Co., 17 Penn. St., 253.-' ... It is apparent that if it is the debt onlj- of the mort- gagee which is insured, and that he has no claim against the insurer until the mortgaged propertj' is exhausted, that the same rule will apply as to the obligation of the mortgage debtor, and that the remedj- against him must also be first exhausted. Yet this proposition does not seem to receive sanction. ^ ... In the absence of direct authority, how is the reason of this matter? Can it be said, in any strict or legal sense, that the defendants have contracted to indemnify Mrs. Connelly for a loss of her mortgaged debt? Whence is their power to guarantee the pa3"ment or collection of a debt ? Fire underwriters in these daj-s, in this State, are the creatures of statute, and have no rights, save such as the State gives to them. They ma^' agree that they will pay such loss or damage as happens by fire to propertj-. They are limited to this. It was not readily' that it was first held that thej' could agree, with a mortgagee or lienor of propertj', to reimburse to him the loss caused to him hy fire. He is not the owner of it; how, then, can he insure it, was the querj'. And the effort was not to enlarge the power of the insurer so tliat it might insure a debt, but to bring the lienor within the scope of that power, so that the property might be insured for his benefit. And it was done by holding that, as his security did depend upon the safety of the propertv, he had an interest in its pres- ervation, and so had such interest as that he might take out a policy upon it against loss by fire without meeting the objection that it was a wagering policj'. The policy did not, therefore, become one upon the debt, and for indemnification against its loss, but still remained one 1 Here Smith v. Columbia Ins. Co., 17 Pa. 253 (1851), was quoted and discussed; and various dicta were cited. — Ed. 2 Here were cited Hancox v. Fishing Ins. Co., 3 Sumner, 132 (1837); Russell v. Union Ins. Co., 1 Wash. C. C. 409 (1806), s. c. 4 Dallas, 421 ; and Godin u. London Assur. Co., 1 Burr. 489 (1758). — Ed. 58 914 EXCELSIOE FIEE INS. CO. V. EOYAL INS. CO. [CHAP. VIII. upon the property and against loss or damage to it. It is, doubtless, true, as is said by Gibson, J., in 17 Penn. (supra), lliat in effect it is the debt which is insured. It is only as an effect, however ; an effect resulting from the primary act of insurance of the property which is the security for the debt. It is the interest in the property which gives the right to obtain insurance, and the ownership of the debt, a lien upon the property creates that interest. The agreement is usually, as it is in fact, in this case, for insuring from loss or damage by fire the propertj-. The interest of the mortgagor is in the whole property, just as it exists, undamaged by fire at the date of the policy. If that property is consumed in part, though what there be left of it is equal in value to the amount of the mortgage debt, the mortgage in- terest is affected. It is not so great, or so safe, or so valuable as it was before. It was for indemnity against this very detriment, this vei-y decrease in value, that the mortgagee sought insurance and paid his premium. To sa}' that it is the debt which is insured against loss, is to give to most, if not all, fire insurance companies a power to do a kind of busi- ness which the law and their charter do not confer. They are privileged to insure propertj- against loss or damage by flre. They are not privi- leged to guarantee the collection of debts. If they are, thej' may insure against the insolvencj* of the debtor. No one wiU contend this : and, it will be said, it is not by a guaranty of the debt, but an indemnity is given against the loss of the debt by an insurance against the perils to the property by fire. This is but coming to our position, that it is the property which is insured against the loss by fire, and the protec- tion to the debt is the sequence thereof. As the property it is which is insured against loss, it is the loss which occurs to it which the insurer contracts to pay, and for such loss he is to pay within the limits of his liability, irrespective of the value of the property unde- stroyed. So as to the remark, that it is the capacity of the property to pay the debt which is insured. This is true in a certain sense ; but it is as a result and not as a primary undertaking. The undertaking is that the property shall not suffer loss by flre ; that is, in effect, that its capacity to pay the mortgaged debt shall not be diminished. "When an appreciable loss has occurred to the property from flre, its capacity to pay the mortgaged debt has been affected ; it is not so well able to pay the debt which is upon it. The mortgage interest, the insurable in- terest, is lessened in value, and the mortgagee, the insuree, is affected, and may call upon the insurer to make him as good again as he was •when he effected his insurance. Another consideration : It is settled that when a mortgagee, or one in like position toward property, is insured thereon at his own expense, upon his own motion and for his sole benefit, and a loss happens to it, the insurer, on making compensation, is entitled to an assignment of the rights of the insured. This is put upon the analogy of the situation of the insurer to that of a surety. If this analogy be made complete, SECT. II.j EXCELSIOR EIRE INS. CO. V. ROYAL INS. CO. 915 then has the insurer no more right to refuse paj-ment of the loss so long as the'insured has other remedy for his debt, than has the suretj-. One as well as the other, as soon as the creditor's right to make demand is fixed, must respond to it and seek his reimbursement through his riglit of subrogation ; and, indeed, the application of this equitable right of subrogation makes our view of this subject harmonious and consistent with all the rights and interests of all tlie parties. . . . The judgment should, therefore, be affirmed. All concur except Church, C. J., not voting. Judgment affirmed} 1 In Carpenter v. Providence Washington Ina. Co., 16 Pet. 495, 501 (1842), Stoey, J., for the court, said : — " No doubt can exist that the mortgagor and the mortgagee may each separately insure his own distinct interest in the property. But there is this important distinc- tion between the cases, that where the mortgagee insures solely on his own account, it is but an insurance of his debt ; and if his debt is afterwards paid or extinguished, the policy ceases from that time to have any operation ; and even if the premises insured are subsequently destroyed by fire, he has no right to recover for the loss, for he sus- tains no damage thereby ; neither can the mortgagor take advantage of the policy, for he has no interest whatsoever therein. On the other hand, if the premises are destroyed by fire before any payment or extinguishment of the mortgage, the under- writers are bound to pay the amount of the debt to the mortgagee, if it does not ex- ceed the insurance. But then, upon such payment the underwriters are entitled to an assignment of the debt from the mortgagee, and may recover the same amount from the mortgagor, either at law or in equity, accordmg to circumstances ; for the payment of the insurance by the underwriters does not, in such a case, discharge the mortgagor from the debt but only changes the creditor. " Far different is the case where an insurance is made by the mortgagor on the premises on his own account; for, notwithstanding any mortgage or other encum- brance upon the premises, he will be entitled to recover the full amount of his loss not exceeding the insurance ; since the whole loss is his own, and he remains personally liable to the mortgagee or other encumbrancer for the full amount of the debt or en- cumbrance." In Kernochan v. New York Bowery F. Ins. Co., 5 Duer, 1, 4-5 (1855), Duek, J., for the court, said : — " It is needless to cite authorities to prove that, by our law, a mortgagee has an in- surable interest, corresponding in its amount with that of the debt which the mortgage was intended to secure ; and we apprehend it to be equally certain that, in the event of a total loss, he is entitled to recover the whole amount insured, provided it does not exceed that which at the time of the loss was due upon the mortgage. We do not believe, and certainly have not been able to discover, that there is any adjudged case in which evidence has been admitted to show that the mortgaged premises, not- withstanding the loss, were still an ample security for the debt ; and we think ourselves warranted to affirm that in no text-writer, foreign or domestic, is any intimation to be found that such evidence can be received to defeat or diminish the recovery of the assured. Hence, were there no other defence in this case than that the plaintiff has not been damnified, we should have no difiiculty in holding that he is entitled to retain the judgment that has been rendered. " It is indeed true, as was insisted by the counsel for the defendants, that in this State, since wager policies have been abolished, the assured, whether in a marine or fire-policy, can never be permitted to recover more than a full indemnity for the losa which it is proved that he sustained; but it is a mistake to suppose that this salu- tary rule is violated by permitting the assured, when a mortgagee, to recover the sura insured, when it is proved that such was the amount of his debt and of the loss upon the property insured. Although his recovery under these conditions is allowed, there 916 MEEKETT V. FAIiMEKS' INS. CO. [CHAP. VUL MEREETT v. FAEMERS' INS. CO. Supreme Court of Iowa, 1875. 42 Iowa, 11. Appeal from Johnson District Court. Action upon a policy of insurance. Tiie cause was tried to the court without a jury, and a judgment rendered for plaintiff. Defend- ant appeals. Fairall S Bonorden, for appellant. Clark db Haddock, for appellee. Beck, J. The policy of insurance upon which suit is brought is against loss by fire and covers a dwelling and barn, and certain enu- is no case in which he will recover more than an indemnity for his actual loss, since, according to the nature of the contract and the intention of the parties the sum which he receives under the policy must either be applied to the satisfaction of the mort- gage or its payment by the insurers will operate as a transfer to them of his own interest in the debt and its securities. There is no casein which, after the payment of a loss, he will be allowed to enforce for his own benefit the payment of the debt. He can never recover from the mortgagor for his own benefit the sum which has been paid to him by his insurers." On the affirmance of Kernochau v. New York Bowery F. Ins. Co., supra, in the Court of Appeals, 17 N. Y. 428, 435-436 (1858), Stkong, J., for a majority of the court, said : — " The contract in terms expresses that the defendants insure the plaintiff, ' as mortgagee, against loss or damage byMre,' to the amount and on the buildings speci- fied ; and agree to make good to the plaiutiff ' all such loss or damage, not exceeding iu amount the sum insured, as shall happen by fire to the property as above specified,' during one year ; 'the loss to be estimated according to the true and actual value of the property.' The loss against which the plaintiff is insured is, by the very language of the contract, ' to the property insured ; ' the destruction iu whole or in part of the value of the property by th.e total or partial burning of the property. In case of such loss it is stated that it is 'to be paid within sixty days after due notice and proof thereof by the insured,' iu conformity to the policy. Whether the loss, by diminishing the mortgage security, endangers tiie collection of the debt, or the security remains ample, is not by the contract made of any importance ; iu either case it is insured against, and the amount of it is to be paid. Nothing Is said iu the policy in regard to the mortgage debt, nor is any allusion made to it further than by the statement that the plainti|E is insured as mortgagee. I think it apparent, therefore, on the face of the policy, that the contract is in its nature an insurance of the property mortgaged, and not of the debt of the plaintiff. The debt is important to an interest of the plaintiff in the property ; without an interest in the property the policy would he invalid, and the insurance is limited to that interest. The insurance thus has re- spect to the debt ; the mortgage lieu is the basis and extent of tlie right of the plain- tiff to insure ; but the insurance is upon the property, the subject of the lien. " If the insurance was of the debt, there should, to warrant a recovery, be a loss as to the debt, which has not occurred and cannot take place, as the mortgaged prop- erty still far exceeds in value the sum unpaid, and the debtors are solvent. Regarding the insurance as of the debt, no risk has been insured by the defendants ; the policy was not only of no possible benefit, but worse, it has been a constant source of expense." On the amount of recovery by a mortgagee, see also Sussex County Mut. Ins. Co. V. Woodruff, 26 N. J. L. (2 Dutch.) 541, 548-551 (1857) ; Harris w.Gaspee F. & M. Ins. Co., 9 K. 1.207 (1869) ; De Wolf v. Capital City Ins. Co., 16 Hun, 116 (1878). — Ei>. SECT. II.J MEKEETT V. FARMERS' INS. CO. 917 mei-ated articles of personal property. The dwelling and a part of the personal propertj- were destro^-ed hy fire, and, to recover the loss, this action is brought. The first question presented in the case is this : AYas plaintiff's interest in the house burned, insurable ? The house was occupied hy plaintiff and his wife as a homestead. It was built by the wife upon land in which she held a life estate and was occupied by her as a dwelling. Subsequently she married plain- tiff, and thereafter the house was occupied hy them and their familj'. The title, then, of the real property is in the wife, her interest therein was a life estate, and it was occupied by plaintiff and wife as a home- stead. It maj- be stated, besides these facts, that plaintiff made certain additions and improvements to the house. The policy was issued upon the application of plaintiff and in his name. I. What is an insurable interest ? An interest, to be insurable, does not depend upon title or ownership of the property ; it maj- be a special or limited interest, disconnected from title, lien, or possession. If the holder of an interest in property will suffer loss bj' its destruc- tion he may indemnify himself therefrom b^' a contract of insurance. The interest must be of such a character that the destruction of the property will have a direct effect upon it, not a remote or consequential effect. If, hy the loss, the holder of the interest is deprived of the possession, enjoj'ment, or profits of the propertj-, or of a security or lien resting thereon, or other certain benefits growing out of, or de- pending upon it, he holds an insurable interest. 1 Phillips on Insur- ance, §§ 175, 342, 346 ; Flanders on Insurance, p. 342; "Warren et al. V. The Davenport Fire Ins. Co., 31 Iowa, 464. II. The plaintiff held a homestead interest in the property, and was entitled to occupy it independent of the will of his wife. This right could only be terminated bj- her death. Whatever benefits flowed from such occupation, he enjoj-ed on account of his interest in the propertj-, and he could not be deprived of them except bj- his own act. Code§§ 1988, 2215. The destruction of the house deprived him of these benefits growing out of his interest in the propertj-. His interest then is clearlj* within the definition of an insurable interest above stated. III. It is insisted that the amount of the judgment is excessive ; it is the sum insured upon the propertj-, not exceeding two-thirds of its value. The judgment, it is claimed, should have been for the value of plaintiff's interest. It has been held in like cases that the right of recovery extends " to the amount of damages to the propertj- not exceeding the sum insured, without regard to the value of the assured's interest in the property." Franklin Ins. Co. v. Drake, 2 B. Mon. 47 ; Strong V. Manufacturers' Ins. Co., 10 Pick. 40; Insurance Co. v. Chase, 5 Wal. 509. IV. This question, it seems to us, is determined bj- the language of the policy which binds the defendant to paj' " the amount of the loss or damage, to be estimated according to the actual cash value of the 918 MERRETT V. FARMERS* INS. CO. [CHAP. VIII. property at the time of the loss," and to make good the loss or damage of assured, not exceeding in amount the sum insured. The loss or damage is determined b^- the contract, which provides that it shall be estimated upon the value of the property', not upon the value of in- sured's interest, to the extent of the sum insured. The value of the property' Insured and the sum insured thereon, mark out the limits of recover3' in all actions upon policies. If the policy holder has an insurable interest, no inquiry is made as to the value of that interest. All insurable interests, of those who may be called owners of propertj', are regarded alike by the law which will not per- mit an inquiry' into values to limit the obligation of the underwriter. The rule maj' be different in the case of mortgagees or lien holders. V. It is difficult to see how a sum less than the value of the prop- erty would compensate plaintiff for the loss sustained. The house was occupied as a homestead. Its destruction deprived him of the benefits which were derived from the possession of a homestead of that value. He ought to recover as compensation the sum that will enable him to regain the benefits he lost, to the extent thej' were covered by the insurance. Nothing less than an estimate based upon the value of the house will do this. VI. The court, against defendant's objection, permitted plaintiff to prove that the policy was issued at the request of his wife. It is now insisted that this was error. It is not necessarj' that we should pass upon the question. If the evidence had been excluded, the finding of the court could not have been different, and a judgment for defendant upon the other evidence would have been set aside as in conflict with the proof. No prejudice was, therefore, wrought defendant by the ad- mission of the evidence, should it be held incompetent. The foregoing discussion disposes of all questions in the case. Affirmed^'- 1 See Franklin M. &. F. Ins. Co. v. Drake, 2 B. Mon. 47, 50 (1841). In Trade Ins. Co. v. Barracliff, 45 N. J. L. (16 Vroom) 543, 545-546, 552-553 (1883), Dixon, J., for the Court of Errors and Appeals, said : — "The fourth exception is to the charge of the judge, that the plaintiff had an in- surable interest in the property and could recover for the whole damage occasioned by the fire, not exceeding the amount of the insurance. " The property insured consisted of the buildings and stock upon a farm whereon the plaintiff with his family resided. The title of the property, both real and personal, was vested in his wife, but he had the possession and enjoyment of it as the head of his household. The plaintiff and his wife had had living offspring of their marriage. The insurance was effected by the plaintiff with the authority of his wife, and the agent of the company who made the contract knew that the wife was the owner, at least of the realty. . . . " Having thus, then, concluded that the plaintiff had an insurable interest at the making of the contract and at the time of the loss, the next question is as to the amount of recovery. And, on this point, it will not be necessary to go so far as some of the cases already cited, and to say that no inquiry into the interest of the assured will be permitted ; but I think this principle may be justly laid down that the amount to be recovered wiU depend, not on the loss happening to the indi^dnal interest of the assured, but on the damage accruing to whatever interests are covered by the policy, so far as the assured represents those interests, whether as his own or by the precedent SECT. II.] MEREETT V. FARMERS' INS. CO. 919 authority or subsequent ratification of others. On this notion rest all the cases en- forcing insurance effected by consignees, factors, and other bailees and agents, to the full amount of the loss. It supports, too, the judgments in most of the cases already cited. . . " In the case before us there is no doubt that the plaintiff represented his wife's in- terest as well as his own, and that he intended to effect this insurance on behalf of both, and that such intention was known to the underwriters. This fact of represen- tation is not, indeed, expressly stated in the policy, hut it is no part of the law either of contracts or of evidence that the principal shall be disclosed on the face of the writing. . . . " The policy now under consideration clearly indicates a design to have the insur- ance cover the entire ownership. This would be inferred, at least for the purpose of supporting the contract, from the fact that no particular interest is mentioned as the subject-matter of the insurance, but it more expressly appears in the clause which pro- vide.^ for estimating the amount of loss or damage, according to the actual value of the insured property at tlie time of the fire, in that which requires the proof of loss to set forth the value of the property insured and the interest of the assured therein, and in that which gives to the company an option of replacing the property burned with other of the same kind and goodness. These expressions show that the property insured was not necessarily the interest of the assured alone. Waters v. Monarch F. & L. Assnr. Co., 5 E. &. B. 870; Merrett v. Farmers' Ins. Co., 42 Iowa, 11." In Welsh v. London Assur. Corp., 151 Pa. 607, 616-618 (1892), Mitchell, J., for the court, said : — " The substantial defence was upon the admitted fact that the insurance was on the full value of the fee in the land, while the plaintiff's interest was only a life estate. Unexplained this was a solid defence on the merits, and the burden of explanation was on the plaintiff. It was testified by Neeley that he wrote the application for in- surance for the plaintiff at her request, and that her interest in the house was correctly stated therein as ' a life lease.' This application was sent or given by Neeley to Bar- bour, who by his own testimony had authority to write up the policy by inserting the description of the insured interest in the land, and did so in this case. . . Upon the evidence, therefore, it was plain that the defendant had issued the policy with knowl- edge of the actual condition of the title, and the mistake in the description was that of its own agent which it could not set up as a defence. Bnrson i\ Fire Assn., 136 Pa. 267 ; Columbia Co. v. Cooper, 50 Pa. 331 ; Ins. Co. v. Webster, 59 Pa. 227 ; Meadow- craft V. Ins. Co., 61 Pa. 91 ; Eilenberger v. Ins. Co., 89 Pa. 464. . . " The question of the measure of damages is not free from diiEcnlty, owing to the meagreness of its presentation by both parties. Undoubtedly the general rule that the insured cannot recover more than his actual loss, or the value of his interest, would, without more, limit the recovery of a life tenant as of a lessee, to the value of his unexpired term. See Wood on Fire Ins. 481. But it is equally true that a carrier, or custodian, or agent may insure in his own name, and recover the entire loss, stand- ing as a trustee for all the amount recovered in excess of his interest. Wood on Fire Ins. 617, 632, 1121, and cases cited. . . In the present case Neeley testified that there was some talk with plaintiff as to the name in wliich the insurance should be taken, she saying that some one thought it had better be in the name of the executor or ad- ministrator, but she thought as she had control of it it had better be in her name. This, in connection with the fact that tlie full premium was paid and the policy issued for the full value of the fee, may fairly be taken to indicate the real intent of the par- ties to insure the whole for the benefit not only of the plaintiff as life tenant, but also of the remaindermen. The company is in no position to contest this intent. . . . On the other hand, the plaintiff, by suing for and recovering on this evidence the full value of the fee, has put herself in the position of trustee for the remaindermen as to the excess of the judgment over the value of her life interest." In Harrison v. Pepper, 166 Mass. 288 (1896), a biU in equity was filed to compel the defendant to place the proceeds of insurance, on premises of which she was life tenant, in trust for the plaintiff, as remainderman, until the decease of the defendant, 920 IXSUEAXCE COMPANY V. STINSON. [CHAP. VIIL INSURANCE COMPANY v. STINSON. Supreme Couet of the United States, 1880. 103 U. S. 25. Ekeoe to the Circuit Court of the United States for the District of Massachusetts. The facts are stated in the opinion of the court. Mr. Charles T. Mussell and Mr. Charles T. Russell, Jr., for the plaintiff in error. Mr. Robert D. Smith, contra. Mr. Justice Beadley delivered the opinion of the court This was an action on a policj' of insurance against loss or damage by fire. Stinson, the plaintiff below, had a contract to build a hotel to ■with income payable to the defendant for life. In holding the blU demurrable for want of equity, Moeton, J., for the court, said : — " If the amount received by the defendant did not exceed the value of her interest, then it is clear that the plaintiff has no right in equity to any portion of it. Eeiteu- bach V. Johnson, 129 Mass. 316; Martineau v. Kitching, L. R. 7 Q. B. 436; Stillwell V. Staples, 19 N. Y. 401. " But if we assume that the sum paid is equal to the total value of the dwelling- house, and exceeds the value of the defendant's interest, and that the bill fairly alleges this, still we do not think that the plaintiff is entitled to recover. . . . " In the absence of anything that requires it in the instrument creating the estate, or of any agreement to that effect on the part of the life tenant, we think that the life tenant is not bound to keep the premises insured for the benefit of the remainderman. Each can insure his own interest, but, in the absence of any stipulation or agreement, neither has any claim upon the proceeds of the other's policy, any more than in the case of mortgagor and mortgagee, or lessor and lessee, or vendor and vendee. Suffolk Ins. Co. V. Boyden, 9 Allen, 123; International Trust Co. v. Boardman, 149 Mass. 158 ; Bnrlingame v. Goodspeed, 153 Mass. 24 ; Warwicker v. BretnaU, 23 Ch. D. 188 ; Leeds v. Cheetham, 1 Sim. 146 ; Kayner v. Preston, 18 Ch. D. 1 ; Kearney v. Kear- ney, 2 C. E. Green, 59, 71. The contract of insurance is a personal contract, and inures to the benefit of the party with whom it is made, and by whom the premiums are paid. It is a contract of indemnity against loss. The sum paid ' is in no proper or just sense the proceeds of the property.' King v. State Ins. Co., 7 Cush. 1 ; Wilson V. Hill, 3 Met. 66; Suffolk Ins. Co. v. Boyden, 9 Allen, 123; Lerow m. "Wilmarth, 9 AUen, 382, 385; Columbia Ins. Co. u. Lawrence, 10 Pet. 507, 512. " It is not averred, and does not appear, that the defendant intended to make a present of the proceeds of the policy to the plaintiff, or was insuring for her benefit. Whether the amount of indemnity received by the defendant for her loss was more or less than the value of her interest cannot affect the plaintiff. Nor can the defendant be converted into a trustee for the plaintiff by the mere fact that the amount which she received was equal to the f uU value of the house. It was paid to and received by her as indemnity for the loss which she had sustained, and, as already observed, does not stand in the place of the property insured. . . . " The plaintiff argues that sound public policy requires that money received by a life tenant on a total loss by fire should be used in rebuilding, or should go to the remainderman, reserving the interest to the life tenant for life. This argument pro- ceeds on the assumption that the proceeds of the insurance take the place of the prop- erty insured, — a view which, as we have seen, is contrary to our own and other decisions." For the view opposed to Harrison <;. Pepper, supra, see Green v. Green, 50 S. Car. 514, 532-536 (1897). — Ed. SECT. II.] INSUKANCK COMPANY V. STINSON. 921 be called tbe "Webster House, at Marshfield, Plymouth County, Massachusetts, for the sum of $2o, 000, and had nearly completed it ; but, failing to get his payments from the owner, he stopped work and took the necessary steps for securing a mechanic's lien on the building. For this purpose he filed the required statement with the town clerk, and commenced an action to enforce his lien within the period prescribed by law. "Whilst that action was pending, in July, 1875, he procured the policy in question from the plaintiffs in error, the defendants below, insuring him for three months against loss or damage by fire to tlie amount of S5.000 on the building, — the policy stating his interest to be that of contractor and builder. The loss occurred during the con- tinuance of the policy, and due notice was given. After the fire the plaintiff did not further prosecute his action to enforce the lien ; but commenced the present action for the amount of his insurance. "When the building contract was entered into, and until the loss occurred, the property on which the building was erected was subject to a mortgage for a debt of $17,000 being the purchase-money which the owner had agreed to pay to the former owner ; and which is conceded to have been a lien on the whole property prior to that of the plaintiff. Two defences were made by the insurance company to the action : first, the failure of the plaintiff to prosecute his suit for enforcing his lien ; secondlj', want of insurable interest, from the alleged fact that the property, at the time of the loss, was not worth more than the amount of the prior mortgage. The court overruled these defences, and charged the jury substantially as follows, namely : that if the plaintiff bad a valid bujlder's lien when the policy was effected, which could have been enforced b}' the decree of the appropriate court against the equity of redemption of the property, and if it was a valid and subsisting lien at the time of the loss, it was immaterial whether he did or did not subsequentlj' perform those acts, the non-performance of which as con- ditions subsequent might have dissolved the lien. Tlie court further instructed the jury in substance that if the plaintiff had such builder's lien when the policy was effected, which could have been enforced by the decree of the appropriate court, and by virtue of which he could have recovered the equity of redemption on that propert}-, then he was entitled to recover, without regard to the ques- tion what his equity of redemption might or might not have realized at an auction sale ; that if a party has a valid and subsisting second securit\- for a given amount, and he enters into a contract of indemnity against the destruction of that security, and a loss bj' fire occurs, both parties having full knowledge of the state of the propertj- and the title when the contract is entered into, such insurance would cover that second securitj-, although by the subsequent course of events the older and prior security might have swept awaj- the value of the second ; and that if the jur}' found in this case that this plaintiff had a valid claim for a given amount subsisting at the time of the loss, and which he had done everything that was required of him to enforce up to the time of 922 INSURAXCE COMPANY V. STINSON. [CHAP. VIII. the loss, and that it was such a claim, for instance, as he could have recovered a judgment for §5,000 or $6,000 or $8,000, and a judg- ment against that equitj* of redemption on that propert}', that was, for the purposes of this trial, an insurable interest, and an interest which he had on that propertj-, whether by any course of events that property might have been by subsequent events more or less affected ; and for the purposes of this trial the court instructed the jurj- to so consider it. To this charge, and to the refusal to give instructions to the contrary, the defendants took a bill of exceptions. We think that the instructions were correct. As to the first point, based on the abandonment by the plaintiff, after the destruction of the building, of the proceedings to enforce his lien, it is apparent from the evidence adduced by the defendants themselves that it could not have injured them. But, aside from this consideration, if the plaintiff had an insurable interest at the time of issuing the policy and at the time of the loss, equal to the amount insured, he had a complete and abso- lute cause of action against the defendants ; and it was no concern of theirs whether he farther prosecuted his lien or not unless they desired to be subrogated to his rights, and gave him notice to that effect. Whether, if they had done this, and had offered to indemnify him against all costs and expenses, a refusal on his part to con- tinue the proceedings would have been a defence to this action, it is unnecessary to inquire. No such course was taken by the defend- ants. We maj' remark, however, that where a creditor effects insur- ance on property mortgaged or pledged to him as security for the payment of his debt, the insurers do not become sureties of the debt, nor do they acquire all the rights of such sureties. They are insurers of the particular propertj' onl^-, and so long as that property is liable for the debt, so long its destruction bj' fire would be a loss to the creditor within the terms of the policy. A surety of the debt might complain if the creditors should surrender to the debtor collateral securities ; but an insurer of property for the benefit of the mortgagee would have no just ground of complaint. True, after a loss has occurred and the insurance has been paid, suflBcient to discharge the debt, the insurers may be entitled to be subrogated to the rights of the creditor against the debtor, and to any collateral securities which the creditor may then hold and which are primarily liable for the debt before the insurers. But even then we do not think that the creditor is bound to take any active steps to realize the fruits of a collateral, or to keep it from expiring, unless the insurance be first paid and notice be given to him of a desire on the part of the insurers to be subrogated to his rights, with a tender of indemnity against expenses. We are aware that views somewhat differing from these have been held by respectable authority ; but we think without any sound reason. See May on Insurance, § 457 ; Insurance Company v. Woodruff, 2 Dutch. (N. J.) 541. To impose such restrictions and obligations upon the SECT. II.] INSURANCE COMPANY V. STINSON. 923 creditor would be to add to the contract of insurance conditions never contemplated bj- the parties, making of it a mere shadow of se- curit3-, and increasing the avenues of escape from obligation to paj', alread}- too numerous and oppressive. "When a building is insured in the interest of a mortgagee, the insurance company does not inquire ■nhat other collaterals he holds, and never reduces its premium on any such consideration. As to the other question, relating to the insurable interest of the plaintiff, we think that the charge given was equally free from excep- tion. There is no doubt that the owner of the propert}" had an insur- able interest to the extent of the value of the building notwithstanding the existence of a mortgage on the propert}^ of sufficient amount to absorb it. Leading authorities on the point may be found cited in May on Insurance, §§ 81, 82. The remarks of 'Mr. Chief Justice Marshall, in delivering the opinion of the court in Columbian Insurance Co. V. Lawrence, 2 Pet. 25, are apposite and illustrative. The assured in that case, though in possession, had only a contract for a purchase of the property, subject to a condition which had not been complied with, but of which the vendor had taken no advantage at the time of effecting the insurance, or at the time of the loss. The Ciiief Justice says: "That an equitable interest may be insured is admitted. We can perceive no reason which excludes an interest held under an execu- tor3- contract. "While the contract subsists, the person claiming under it has undoubtedlj' a substantial interest in the propert}'. If it be destroyed, the loss in contemplation of law is his. If the purchase- monej- be paid, it is his in fact. If he owes the purchase-money the property is its equivalent, and is still valuable to him. The embarrass- ment of his affairs ma}- be such that his debts may absorb all his property ; but this circumstance has never been considered as proving a want of interest in it. The destruction of the property is a real loss to the person in possession, who claims title under an executory con- tract, and the contingenc}* that his title may be defeated by subsequent events does not prevent this loss." The principle asserted in these remarks, as well as the reason of the thing, leads to the conclusion, that the owner of an equity of redemp- tion has an insurable interest equal to the value of the insurable propert}- embraced therein, whether he is personally liable for the mortgage debt or not. His interest arises from his ownership, carrying with it the incidental right of redeeming the property from the incum- brances on it. If he is also personally liable for such incumbrances, it onl}- makes his interest more direct and exacting. Such being the insurable interest of the owner of the equity of redemp- tion, it follows that one who has a mechanic's lien on the property by virtue of a contract with such owner, has an equal insurable interest, limited only by the value of the property and the amount of his claim. In the present case it is admitted that the value of the building insured exceeded the amount of the plaintiff's claim ; and that the latter was 924 FOLEY V. manufacturers', etc. fire ins. CO. [chap. viii. equal to the amount insured. The insurable interest of the lienholder arises from the nature of the lien, which is a jus ad, rem. All the owner's rights in the property are potentially his. They are under hypothecation to him for his security, and he can reduce them to pos- session if the debt be not paid. He is, therefore, directly interested in the propertj' to the extent of his demand, whatever other security he may hold ; and is entitled to insure to that extent ; and, if a loss occurs, to recover the full amount of his insurance, or so much thereof as may be necessary to satisfy his debt. We think that there is no error in the record. Judgment affirmed. FOLEY ET AL., Respondents, v. MANUFACTURERS AND BUILDERS' FIRE INS. CO., Appellants. Court of Appeals of New York, 1897. 152 N. Y. 131. Appeal from a judgment of the General Term of the Supreme Court in the fourth judicial department, entered November 30, 1894, which affirmed a judgment in favor of plaintiffs entered upon a verdict. This action was brought by plaintiffs upon a policy of insurance, to recover damages alleged to have been caused bj- fire to three dwelling- houses in process of construction for them. The facts, so far as material, are stated in the opinion. Frank Hiscock, for appellant. William P- GoodeUe, for respondents. Andrews, C. J. The sole question in this case is whether the plaintiffs had an insurable interest equal to the full value of the incom- plete buildings in course of construction on their lot when the fire occurred. It is the contention on the part of the defendant that, as the houses were being constructed under a contract by which the eon- tractors were to furnish the materials and build the houses (above the foundations), and to complete them by a time specified, which had not expired at the time of the fire, for a specified sum to be paid within ten days after their completion, the plaintiffs had no interest to protect in the structures while in their incomplete state, since their destruction by fire would be the loss of tlie contractors and not of the owners, wliose obligation to build and complete the houses, as the condition of payment, would continue after as before the fire. It may be admitted that the contractors would remain bound by the contract, notwithstand- ing the destruction of the buildings by fire, and that the owners would not be bound to pay for the work done or materials supplied up to the time of the fire. Tompkins v. Dudley, 25 N. Y. 272. The contention of the defendant rests upon a misconception of the insurer's contract and as to the insurable interest of the plaintiffs in the structures. The SECT. II.j FOLEY V. MANUFA.CTUKEKS', ETC. PIRE INS. CO. 925 defendant, bj- its contract, undertook to insure the plaintiffs against loss bj' fire, not exceeding the sum specified to the " described prop- erty," the loss or damage to be ascertained "according to the actual cash value" of the propertj' at the time of the fire. The parties hy this contract made the value of the property insured, within the limit, the measure of the insurer's liability. It is an undoubted principle in fire insurance that there must be fin insurable interest in the insured, or an insurable interest which he represents in the subject of insurance, existing at the time of the happening of the event insured against to enable him to maintain an action on a fire policy. This flows from the nature of the contract of fire insurance, which is a contract of indem- nit}' ; and where there is no interest there is no room for indemnitj'. The plaintiffs had an interest in the subject of insurance both at the inception Of the contract and at the time of the fire. They owned the land upon which the structures were being erected. They themselves had constructed the foundations of the buildings, and in describing the propert}- insured the foundations were specifically named. They were in possession of the premises, and the ownership of the fee of the land on which the contractors were erecting the buildings carried with it the ownership of the structures as thej- progressed, which, according to tiie general rule of law, became part of the realty hy annexation. It is not claimed, nor could it upon the evidence be claimed, that there was any intention either on the part of the owners or the contractors to sever the ownership of the structures from the ownership of the land while the work was in progress or that the contractors should re- tain title to the materials put into the buildings upon their completion. The defendant is compelled to admit that the loss sued for is within the exact terms of the policy. It is conceded that the recover}' does not exceed the propertj' loss occasioned by the fire, and if counsel can be deemed to have denied that the legal ownership of the structures was in the owners of the land at the time of the fire, the denial is very in- distinct and certainly is not justified by the facts or the law. The defence comes to this : That as the plaintiffs, bj- their contract with third persons, have imposed upon them the risk and expense of furnish- ing complete structures, and have assumed no liability until the struc- tures are completed, thej' had no insurable interest and have sustained no loss. But the contract relations between the plaintiffs and the con- tractxjrs is a matter in which the defendant has no concern. When the policy was issued it could not be known whether the contractors would perform their contract. If they abandoned it the owners would derive such advantage as would accrue from the partial construction of the buildings prior to such abandonment. It is possible that if the de- fendant is compelled to pay the policy the plaintiffs maj, if they insist upon their rights against the contractors, get double compensation unless they should be adjudged to hold the fund recovered for the con- tractors. But, however this may be, the owners had an insurable interest to the whole value of the buildings on their laud, and the de- 926 FOLEY V. MANUFACTUEEES', ETC. FIEE INS. CO. [CHAP. VIII. fendants neither can compel the plaintiflFs to put the loss on the con- tractors, nor can the3- resort to the terms of the building contract to diminish the liabilitj- for an actual loss within the terms of the policy. The fact that improvements on land may have cost the owner nothing, or that if destro3-ed bj' fire he may compel another person to replace them without expense to him, or that he maj- recoup his loss by resort to a contract liability of a third person, in no way affects the liability of an insurer, in the absence of any exemption in the policy. See Clover V. Greenwich Ins. Co., 101 N. Y. 277; Kernochan v. N. Y. Bowery F. Ins. Co., 17 N. Y. 428 ; Riggs v. C. M. Ins. Co., 125 N. Y. 7 ; International Trust Co. v. Boardman, 149 Mass. 158. The judgment should be affirmed. All concur, except Martin and Vann, JJ., not sitting. Judgment affirmed.''- 1 For marine cases on limited interests, see ante, p. 857, n. — Ed. SECT. III.] GODSALL V. BOLDEEO. 927 SECTION III. Life Insurance. GODSALL AND Others v. BOLDERO anb Others. King's Bench, 1807. 9 East, 72. This was an action of debt on a policj' of insurance made the 29th of Xovember, 1803, under seal of the defendants, as three of the directors of the Pelican Life Insurance Companj-, on behalf of the companj-, -n-hich recited that the plaintiffs, coachmakers iu Long-acre, being interested in the life of the Eight Hon. William Pitt, and desir- ous of making an insurance thereon for seven years, had subscribed and delivered into the office of the company the usual declaration set- ting forth his health and age, etc., and having paid the premium of £15 15s. as a consideration for the assurance of £500 for one year from the 28th of November, 1803, it was agreed that in case Mr. Pitt should happen to die at an}' time within one j'ear, etc., the funds of the company should be liable to pay and make good to the plaintiffs, their executors, etc., within three months after his demise should have been dul}' certified to the trustees, etc., the sum of £500. And further, that that policy might be continued in force from j-ear to year until the expiration of the term of seven years, provided the annual premium should be duly paid on or before the 28th of November in each year. The plaintiffs then averred that at the time of the making of the said assurance, and from thence until the death of Mr. Pitt, thej' were inter- ested in his life to the amount of the sum insured ; and that they duly paid the annual premium of £15 15s. before the 28th of November, 1804, and the further sum of £15 15s. before the 28th of November, 1805 ; and that after that day and while the assurance was in force, and before the exhibiting the bill of the plaintiffs ; viz., on the 23d of Februarj-, 1806, Mr. Pitt died ; that his demise was afterwards duly certified to the trustees, etc. ; since when more than three months have elapsed before the commencement of this suit, etc. : but that the £500 has not been paid or made good to the plaintiffs. There were also counts for so much money had and received by the defendants to the plaintiffs' use, and upon an account stated. To this the defendants pleaded : first, nil debent ; secondly, that the plaintiffs, at the time of making the assurance, and from thence until the death of Mr. Pitt, were not interested in his life in manner and form as they have com- plained, etc. ; thirdly, as to the fii-st count, that the interest of the plaintiffs in the policy, and thereby intended to be covered, was a cer- tain debt of £500 at the time of making the policj-, due from Mr. Pitt to the plaintiffs, and no other ; and that the said debt afterwards, and 928 GODSALL V. BOLDERO. [CHAP. VIII. after the death of Mr. Pitt, and before the exhibiting of the plaintiffs' bill ; to wit, on the 6th of March, 1806, was fully paid to the plaintiffs bj- the Earl of Chatham and the Lord Bishop of Lincoln, executors of the will of Mr. Pitt. Issues were taken on the two first pleas ; and as to the last, the plaintiffs, protesting that their interest in the policy thereby- intended to be covered was not the said debt mentioned in that plea to be due to them from Mr. Pitt, and no other ; replied, that the said debt was not afterwards, and after the death of Mr. Pitt, and be- fore the exhibiting of their bill, fully paid to them by the Earl of Chatham and the Lord Bishop of Lincoln, executors of Mr. Pitt, in manner and form as alleged, etc. : on which also issue was joined. The defendants paid £31 into court upon the first count ; and on the trial of the cause before Lord Ellenboeough, C. J., at Guildhall, it was agreed that a verdict should be entered on the several issues, according to the direction of the court, on the following case reserved. The policy mentioned in the declaration was duly executed, and the premiums thereon were regularly paid. Mr. Pitt, mentioned in the policj-, died on the 23d of January', 1806, which event was duly certified in Februar}', 1806, to the trustees of the Pelican Life Insurance Com- panj'. The defendants, before Trinitj' Term last, were served with process issued in this cause on the 3d of June, 1806. Mr. Pitt was indebted to the plaintiffs at the time of the execution of the policy, and from thence up to and at the time of his death above £500, and died insolvent. On the 6th of March, 1806, the executors of Mr. Pitt paid to the plaintiffs out of the money granted bj' Parliament for the payment of Mr. Pitt's debts, £1,109 lis. 6d. as in full for the debt due to them from Mr. Pitt. The case was argued in the last term by Dampier, for the plaintiffs. Marryat, contra. Cur. adv. vult. Lord Ellenboeough, C. J., now delivered the judgment of the court. This was an action of debt on a policy of insurance on the life of the late Mr. Pitt, effected by the plaintiffs, who were creditors of Mr. Pitt for the sum of £500. The defendants were directors of the Pelican Life Insurance Company, with whom that insurance was effected. [His lordship, after stating the pleadings and the case, proceeded — ] This assurance, as every other to which the law gives effect (with the excep- tions only which are contained in the 2d and 3d sections of the Stat. 19 Geo. II. c. 27), is in its nature a contract of indemnity, as distin- guished from a contract by way of gaming or wagering. The interest which the plaintiffs had in the life of Mr. Pitt was that of creditors ; a description of interest which has been held in several late cases to be an insurable one, and not within the prohibition of the Stat. 14 Geo. III. c. 48. § 1. That interest depended upon the life of Mr. Pitt, in respect of the means, and of the probability, of payment which the continuance of his life afforded to such creditors, and the probabilitj- of loss which SECT. m.J BEVIN V. CONNECTICUT MUTUAL LIFE INS. CO. 929 resulted from his death. The event against which the indemnity was sought by this insurance, was substantially the expected consequence of his death as effecting the interests of these individuals assured in the loss of their debt. This action is, in point of law, founded upon a sup- posed damnification of the plaintiffs, occasioned by his death, existing and continuing to exist at the time of the action brought; and being so founded, it follows of course, that if, before the action was brought, the damage, which was at first supposed likely to result to the creditors from the death of Mr. Pitt, were wholly obviated and prevented by the payment of his debt to them, the foundation of anj' action on their part, on the ground of such insurance, fails. And it is no objection to this answer that the fund out of which their debt was paid did not (as was the case in the present instance) originallj' belong to the executors as a part of the assets of the deceased ; for though it were derived to them aliunde, the debt of the testator was equalh' satisfied hy them thereout ; and the damnification of the creditors, in respect of which their action upon the assurance contract is alone maintainable, was fully obviated before their action was brought. This is agreeably to the doctrine of Lord Mansfield in Hamilton v. Mendes, 2 Burr. 1210. The words of Lord Mansfield are : "The plaintiflTs demand is for an indem- nity : his action then must be founded upon the nature of the damnifi- cation as it really is at the time the action is brought. It is repugnant, upon a contract for indemnity, to recover as for a total loss when the event has decided that the damnification in truth is an average, or per- haps no loss at all. . . . Whatever undoes the damnification in the whole, or in part, must operate upon the indemnity in the same degree. It is a contradiction in terms to bring an action for indemnity where, upon the whole event, no damage has been sustained." Upon this ground, therefore, that the plaintiffs had in this case no subsisting cause of action in point of law, in respect of their contract, regarding it as a contract of indemnity, at the time of the action brought, we are of opinion that a verdict must be entered for the defendants on the first and third pleas, notwithstanding the finding in favor of the plaintiffs on the second plea. BEVIN V. CONNECTICUT MUTUAL LIFE INS. CO. Supreme Court of Connecticut, 1854. 23 Conn. 244.^ This was an action of assumpsit upon a policy of insurance in favor of the plaintiff on the life of George Barstow, for $1,000. The plain- tiff had paid, for four annual premiums and certain permits, $192.80. Before procuring the policy, the plaintiff had paid to Barstow $350 as consideration for an agreement that Barstow should go to California, 1 The statement has been rewritten, and matter foreign to the amount of recovery has heen omitted. — Ed. 59 930 BEYIN V. CONNECTICUT MUTUAL LIFE INS. CO. [CHAP. VIII. engage iu mining for gold, and divide equally with the plaintiff the pro- ceeds, less expenses, until Barstow should return home, which should be at least one year. After the issue of the policy, the plaintiff ad- vanced to Barstow personal property to the amount of $19. Barstow proceeded to California, for three years and upwards engaged in mining, in accordance with the agreement, and then died. There were questions in the case as to Barstow's proceeding to Cali- fornia by a prohibited route, and as to waiver. The court made a finding of facts and reserved, for the advice of this court, the question what judgment ought to be rendered. Bulkeley, for the plaintiff. W. D. Shipman, for the defe«dants. Ellsworth, J. Several questions of some practical importance are presented for our decision in this case. We have occasion to decide only some of them, in order to make an end of this case, and shall, therefore, allude to such only with particularitj'. It is said, first, that the plaintiff had no interest in the life of Barstow, when the policy was obtained, and if anj-, not the $1,000 stated in the policy. In marine and fire insurances the questions and rules for ascertaining interest are, in general, well settled and of ever3--day oc- currence. In them the rule is that the contract of insurance is one of indemnitj' only, recognizing policies being held to be illegal and void. The same is true, we suppose, in insurance on lives. In England the statutes of George II. and George III. declare all policies of insurance without interest to be null and void, and although the phraseology of the statute of George III. has given rise to distinctions there, in this country, we hold the English statutes to be in affirmance of the principle of the common law, that policies of insurance are contracts' of indem- nity only. Without deciding what is an insurable interest in the life of another, in every case — whether it must be one of a pecuniary value, or prop- erty, which the law recognizes as property, or may be something less or different, as the interest in one's relative, or in the life of another person — in this case we have no doubt there was an insurable interest;, and one which the parties could well value, to the extent it was valued in the policy. The plaintiff had advanced to Barstow the sum of $300, besides articles of personal property, to enable him to go to California and there labor, for at least one year, and to account to the plaintiff for one half of his gains in that business. He was the plaintiff's debtor and partner, giving to the plaintiff an interest in the continuance of his life, as by that means, through his skill and efforts, the plaintiff might expect not only to get back what he had advanced, but to acquire great gains and profits in the enterprise. All the books hold this to be a sufficient interest to sustain a policy of insurance. As to the value of this interest, we think it must be held to be what the parties agreed to consider it in the policy. This was the sum asked for by the plaintiff, and which the defendants agreed to pay in case of death, and for SECT. III.J BEVIN V. CONNECTICUT MUTUAL LIFE IKS. CO. 931 ■which they were paid in the premiums given by the insured. The policj- must, we think, be held to be a valued policy. If otherwise, and the question of interest is open for proof on the trial, to be deter- mined b}- the estimate which jurors ma}' put upon the value of Barstow's life, under the circumstances, the policy ma}' afford an inadequate and precarious security. Who can tell what the plaintiff would have gained if Barstow had lived and labored under his contract in Cali- fornia? The plaintiff declared in the policy that he had an interest in the life of Barstow of $1,000 ; the defendants received this declaration as true, and made it the basis of the insurance and of their premium ; now, without deciding that such a declaration is, in all cases, conclu- sive, as to the interest or damage, we hold that in cases like the present, where there is not a definite and specific interest, and much is to depend upon the character and continuance of the enterprise, such declaration, if honestly made, is the agreed value of interest. The de- fendants knew what was claimed to be the interest of the insured ; what the damages were estimated to be in case of death, and what amount the plaintiff wanted to secure, and the defendants agreed to this sum. It would be against good faith and against the meaning of the parties for the defendants now to refuse to pay as they agreed. In marine insurance policies on profits always are, and must be of necessitj-, valued. Muraford v. Hallet, 1 Johns. 433. In Lord v. Dall, 12 Mass. 115, a sister obtained an insurance on her brother's life, about going to sea, on whose generosity and assistance she was dependent for support. She recovered the whole sum ; no question seems to have been made as to the amount, but only whether it was an interest which the law would recognize. So, in everj' case ■where a person, on his own account, insures the life of a relative, if the sum named in the policj' is not to be the rule of damages, we inquire, what is? The impossibility of satisfactorily going into the question, in most cases, and especiall}' where there is nothing to guide the inquiry and everything is uncertain, would lead us to hold that a policy like this is a valued polic}', as most consistent with the understanding of the parties and the principles of law. 2 Phil. Ev. 52 ; Bury on Ins. 24 ; 3 Kent's Com. 219 ; Ang. Life Ins. 321 ; 12 Mass. 118. ^ . . . We advise judgment for the plaintiff. In this opinion the other judges concurred. Judgment for the plaintiff ^ 1 Passages foreign to the amount of recovery have been omitted. — Ed. 932 DALBY V. INDIA AND LONDON LIFE ASSUE. CO. [CHAP. VIIL t DALBY V. INDIA AND LONDON LIFE ASSURANCE CO. Exchequer Chamber, 1854. 15 C. B. 365. For a statement and part of the opinion, see ante, p. 108. Parke, B.^ . . . The question arises on the third clause. It is as follows: " And be it further enacted that, in all cases where the in- sured hath interest 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 part)' insuring has an interest when he effects the policy, his right to recover and receive is to be limited to that amount ; other- wise, 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 recover, therefore, is limited to the amount of the interest at the time of effecting the policj'. Upon that value the assured must have the amount of premium calculated ; if he states it trulj', no difficulty can occur ; he pays in the annuity for life the fair value of the sum pay- able at death. If he misrepresents, by over-rating the value of the interest, it is his own fault, in pajing more in the way of annuity- than he ought ; and he can recover onlj- the true value of the interest in re- spect 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 bar- gain is fixed as to the 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 section 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 cover 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 re- ceive 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 1 The immediately preceding parts of the opinion hare been reprinted ante, pp. 109- 111. — Ed. SECT. III.] DALBY V. IXDIA AND LONDON LIFE ASSUE. CO. 933 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 recov- ered 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 objection to an}' of these constructions. It is, that the written contract, 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 b}' this mode of construction completeh' altered in its terms and effect. It is no longer a contract to pay a cer- tain sum as the value of a then-existing interest, in the event of death, in consideration of a fixed annuity calculated with reference to that sum ; but a contract to paj-, contrarj- 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 3-et the price, or the premium to be paid, is fixed, calculated on the original fixed value, and is unvarjing ; so that the assured is obliged to paj- a certain premium everj- .year, calcu- lated on the value of his interest at the time of the polic}', in order to have a right to recover an uncertain sum, viz., 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 this sec- tion. TTe 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 interest at the time of the polic}-, it is not a wagering policy, and that the true value of that interest may be recov- ered, in exact conformity with the words of the contract itself The only effect of the statute is to make the assured value his inter- est at its true amount when he makes the contract. But it is said that the case of Godsall v. Boldero, 9 East, 72, has concluded this question. Upon considering this case, it is certain that Lord EUenborough 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, undoubtedh- are, and that the action was, in point of law, founded on the supposed damnification, occasioned bv the death of the debtor, ex- isting at the time of the action brought ; and his Lordship relied upon the decision of Lord Mansfield in Hamilton v. Mendes, 2 Burr. 1270, that the plaintiff's demand was for an indemnitj" 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 of 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 934 DALBY V. INDIA AKD LONDON LIFE ASSUE. CO. [CHAP. TIIL common law ; and if it is made b}- a person having an interest in the duration of the life, it is not prohibited by the statute 14 G. III. c. 48. But, though we are quite satisfied that the case of Godsall v. Boldero was founded on a mistaken analogy- and wrong, we should hesitate to overrule it, though sitting in a court of error, if it had been constantly approved and followed, and not questioned, though many opportunities had been offered to question it. It was stated that it had not been disputed in practice, and had been cited by several eminent judges as established law. The judgment itself was not, and could not be, ques- tioned in a court of error ; for one of the issues, nil debet, was found for the defendant. Since that case we know practicallj', and that circumstance is men- tioned by some of the judges in the cases hereinafter referred to, that the insurance ofllees, generall}' speaking, have not availed themselves of the decision, as they found it very injurious to their interest to do so. Thej' have therefore, generally speaking, paid the amount of their life-insurances, so that the number of cases in which it could be ques- tioned is probably very small indeed. And it maj- truly be said that, instead of the decision in Godsall v. Boldero being uniformly acqui- esced in, and acted upon, it has been uniformlj- disregarded. Then as to the cases. There is no case at law, except that of Bar- ber V. Morris, 1 M. & Rob. 62, in which the case of Godsall v. Boldero was incidentally noticed as proving it to be necessarj' that the interest should continue till the death of the cestui que vie. Is was proved in that case to be the practice of the particular office in which that assur- ance was made, to paj- the sums assured, without inquiry as to the ex- istence of an insurable interest ; and on that account it was held that the polic}', though in that case the interest had ceased, was a valuable policy, and the plaintiff could not recover, on the ground that the de- fendant, the vendor of it, was guilty of fraudulent concealment in not disclosing that the interest had ceased. This was the point of the case ; and though there was a dictum of Lord Tenterden that the payment of the sum insured could not be enforced, it was not at all necessary to the decision of the case. The other cases cited on the argument in this case were cases in equity, where the propriety of the decision of Godsall v. Boldero did not come in question. The questions arose as to the right of the creditor and debtor, inter se, where the offices have paid the value of a policy, in Humphrey v. Arabin, 2 Lloyd & G. 318, Henson v. Blackwell, 4 Hare, 434, cor. Sir J. Wigi-am, V. C, PhilKps v. Eastwood, 1 Lloyd & G. (Cas. temp. Sug- den) 281, where the point decided was that a life policy, as a security for a debt, passed under a will bequeathing debts, the Lord Chancellor stating that the offices found it not for their benefit to act on the rigid rule of Godsall v. Boldero. In these cases the different judges con- cerned in them do not dispute, — some, indeed, appear to approve of, — the case of Godsall v. Boldero ; but it was not material in any to SECT. III.J DALBY V. INDIA AND LONDON LIFE ASSUK. CO. 935 controvert it ; and the questions to be decided were quite independent of the authoritj- of that case. We do not think we ought to feel ourselves bound, sitting in a court of error, by the authority of this case, wliieh itself could not be ques- tioned by writ of error ; and as so few, if anj', subsequent cases have arisen in which the soundness of the principle there relied upon could be made the subject of judicial inquiry, and, as in practice, it may be said that it has been constantlj- disregarded. Judgment reversed, and venire de novo} 1 In Law V. London Indisputable L. Policy Co., 1 K. & J. 223 (1855), s. c. 3 Eq. 338, the plaintifi was entitled by purchase from his son to a legacy of £3,000, which had been bequeathed to the son at the age of thirty and was contingent upon his attaining that age ; and when the son lacked twenty months of thirty years the plaintiff pro- cured insurance for £2,999 on his son's life for two years. The plaintiff paid two annual premiums of £39 each. The sou died after attaining the age of thirty years, but before the expiration of the policy. The plaintiff received the legacy in full, and it was held that he was entitled to recover £2,999 from the insurance company. Wood, V. C, said : " Policies of insurance against fire or marine risli are contracts to recoup the loss which parties may sustain from particular causes. When such loss is made good aliunde, the companies are not liable for a loss which has not occurred ; but in a life policy there is no such provision. The policy never refers to the reason for effecting it. It is simply a contract that, in consideration of a, certain annual payment, the company will pay at a future time a fixed sum, calculated by them with reference to the value of the premiums which are to be paid, in order to purchase the postponed payment. Whatever event may happen meanwhile is a matter of in- difference to the company. They do not found their calculations upon that, but simply upon the probabilities of human life, and they get paid the full value of that calculation. On what principle can it be said that, if some one else satisfies the risk, on account of which the policy may have been effected, the company should be released from their contract ? The company would be in the same position whether the object of the insured were accomplished or not ; whether he were in a better or worse posi- tion, that could have no effect upon the contract with the company, which was simply calculated npon the value of the life which they had to insure." In Connecticut Mut. L. Ins. Co. v. Schaefer, 94 U. S. 457 (1876), s. c. in part, ante, p. 110, n., husband and wife procured a policy on their joint lives, payable to the sur- vivor. The parties were divorced, and alimony was decreed and paid to the wife. Each party married again. After the death of one of the parties, the other, who had paid the premium that became due after the divorce, brought action upon the policy, and recovered. Bradley, J., for the court, said ; — " The policy in question might, in our opinion, be sustained as a joint insurance, with- out reference to any other interest, or to the question whether the cessation of interest avoids a policy good at its inception. We do not hesitate to say, however, that a poHcy taken out in good faith, and valid at its inception, is not avoided by the cessation of the insured's interest, unless such be the necessary effect of the provisions of the policy itself. Of course, a colorable or merely temporary interest would present circumstances from which want of good faith and an intent to evade the rule might be inferred. And in cases where the insurance is effected merely by way of indemnity, as where a creditor insures the life of his debtor for the purpose of securing his debt, the amount of insurable in- terest is the amount of the debt. " But supposing a fair and proper insurable interest, of whatever kind, to exist at the time of taking out the policy, and that it be taken out in good faith, the object and purpose of the rule which condemns wager policies is suflBciently attained ; and there is then no good reason why the contract should not be carried out according to its terms. This is more manifest where the consideration is liquidated by a single premium paid in advance than where it is distributed in annual payments during the 936 DALBY V. INDIA AND LONDON LIFE ASSUE. CO. [CHAP. VIH. insured life. But, in any case, it would be very difficult, after the policy had con- tinned for any considerable time, for the courts, without the aid of legislation, to at- tempt an adjustment of equities arising from a cessation of interest in the insured life. A right to receive the equitable value of the policy would probably come as near to a proper adjustment as any that could be devised. But if the parties themselves do not provide for the contingency, the courts cannot do it for them." And see Trenton Mut. L. & F. Ins. Co. v. Johnson, 24 N. J. L. (4 Zab.) 576, 582- 58.3, 586-587 (1854), a. c. in part, ante, p. 22, n. ; Sides v. Knickerbocker L. Ins. Co., 16 Fed. R. 650 (C. C, W. D. Tenn., 1883). — Ed. SECT. I.] RANDAL V. COCKEAN. 937 CHAPTER IX. SUBROGATION. SECTION I. Marine Insurance. RANDAL V. COCKRAN. Chancery, 1748. 1 Ves. Sr. 98. The king having granted general letters of reprisal on the Spaniards for the benefit of his subjects, in consideration of the losses they sus- tained by unjust captures, the commissioners would not suffer the in- surers to make claim to part of the prizes, but the owners onlj-,-' although the}' were already satisfied for their loss by the insurers ; who thereupon brought the present bill. Lord Chancellor^ was of opinion that the plaintiflFs had tlie plain- est equity that could be. The person originallj' sustaining the loss was the owner, but after satisfaction made to him, the insurer. No doubt but from that time, as to the goods themselves, if restored in specie, or compensation made for them, the assured stands as a trustee for the insurer, in proportion for what he paid ; although the commissioners did right in avoiding being intangled in accounts, and in adjusting the proportion between them. Their commission was limited in time ; they see who was owner ; nor was it material to them to whom he assigned his interest, as it was in effect after satisfaction made.' 1 See post, p. 950, u. — Ed. 2 Lord Hakdwicke. — Ed. ' Acc.i Blaauwpot v. DaCosta, 1 Eden, 130 (1758), where 'Lord Keeper Henley said ; — " I am of opinion that upon the policy, and the peril happening, and the payment of the money by the underwriters, the whole rights of the assured Tested in them. The assured had this right of restitution vested in them against the Spanish captors, which was afterwards prosecuted by the Crown by reprisals. Satisfaction having been made in consequence of that capture, I think the plaintiffs are entitled to that benefit, and that it was received by the executors of Elias DePaz [one of the persons insured] in trust for them." And see Comegys v. Vasse, 1 Pet. 193, 213-217 (1828).— Ed. 938 ATLANTIC INS. CO. V. STOEROW AND BOYD. [CHAP. IX. ATLANTIC INS. CO. v. STORROW and BOYD. Court of Chancery of New York, 1835. 5 Paige, 285. This was an appeal from a decree of the Vice Chancellor of the First Circuit. The facts of the case, as they appeared from the bill and answer, were as follows: In February, 1831, the complainants insured the defendant Storrow upon a box of specie, laden on board the " Charles Carroll," from New York to Havre, for which specie a bill of lading in the usual form had been signed by the master of the vessel. A day or two after the underwriting of the policy, but after the com- mencement of the risk, the specie was stolen from the ship while she lay at the wharf in New York, in the absence of the master and ship's crew, wherebj- Storrow claimed a total loss. On the 9th of March, 1831, he abandoned to the underwriters, who being ad^dsed that thej' were not liable for a loss accruing at the place of lading, declined paying the same. Storrow thereupon commenced a suit upon the polic}-, in the Superior Court of the city of New York, in May term of the same year. In the progress of the suit, and before the trial, the complainants obtained an order from the Superior Court against the plaintiff and his assignee, for a discovery on oath, of all receipts, instruments of assign- ment and of compromise relating to the specie insured, and to the claim of the plaintiff in that suit. Under that order the plaintiff and John I. Boyd, his assignee, produced the original bill of lading, and an absolute assignment from Storrow to Boyd, of the policy of insurance, and of sums of mone}', interest, benefit, and advantage then due, or thereafter to rise. The assignment appeared to be for the sole benefit of Boyd, and was without date. Storrow and Boj'd also accompanied these documents by their affidavit, sworn on the 14th of Julv, 1831, that these were all the papers relating to the insurance and the transfer of the plaintiffs interest therein. Shortly after this the complainants wrote to Storrow, that being unable, in the suit conducted in his name, to as- certain and establish the fact that he had transferred his right to the bill of lading and recourse against the shipowners, thej' should, in case of a recovery against the company in that suit, expect to receive, on his abandonment, ever}' necessary document to enable the compan}' to en- force their remedy against the shipowners in his name ; and should hold him responsible therefor, if the company was made liable for the loss. To this letter Storrow answered, that upon being reimbursed the amount of specie shipped on board the " Charles Carroll," he assigned to the owners all claims against the companj' ; in consequence of which assign- ment he had no longer any interest in the matter, nor had he any docu- ment which could aid in the suit which the companj- might bring against the shipowners. On the daj' after the receipt of this answer, the com- pany again wrote to Storrow: " It is necessary that 3-ou should fully understand the situation in which we stand as to the specie by the SECT. I.] ATLANTIC INS. CO. V. STORKOW AND BOYD. 939 'Charles Carroll.' If jou have, either before or after the abandon- meat, received from the owners of the vessel the amount of the subject insured, we shall look to j-ou, in case of our being subjected to pay a loss on the policy to you or your assignee, for full reimbursement. We have not as yet been able to procure proof of the owners' having paid the claim to you, and therefore are unable to protect ourselves from re- covery on that ground, although we hope to do so upon others." After a recover}' was had against the company in the suit prosecuted in the name of Storrow, the complainants wrote to him and the attorney in that suit, stating their readiness to paj- the amount of such recovery, provided the bill of lading of the specie should be assigned to them, with suitable covenants that the remedy against the ship master or ship owners was not impaired ; and that unless that should be done, the complainants would be compelled to seek relief in this court ; and in that case would claim the costs to which they should necessarily be subjected. In reply, the attorney in the suit informed the complainants that the bill of lading had " long since been delivered up by Storrow to the master of the ' Charles Carroll,' to be cancelled." And Storrow also referred the complainants to the attorney in the suit, for an answer. The complainants alleged, in their bill, that until the receipt of those answers, they were ignorant that the bill of lading had been cancelled, or otherwise discharged, but supposed it was still outstanding, and assigned to Boyd. By the answer of the defendants, it appeared that the bill of lading was in the hands of Bojd, the assignee of the policy, at the commencement of the suit ; and that the same was delivered up to the master of the ship and cancelled, after the judgment was ren- dered in that suit. The Vice Chancellor decided that the underwriters were, by the loss and by the abandonment, entitled to be subrogated to the rights of the assured, if they paid the loss. And he made a decree that the com- j)laiuants be allowed the amount which the master or shipowners would have been liable for, and that the judgment should only be enforced for the residue, if anything. He also charged the defendants with the costs of the suit in this court. From the whole of this decree the de- fendants Boyd and Storrow entered a joint appeal. J. Antlion, for the appellants. D. Lord, Jr., for the respondents. The Chajjcellor.^ ... It is insisted, however, on the part of the respondents, that, although they have succeeded in satisfying the Supe- rior Court that this was a loss for which the underwriters were liable on this policy, it was a case in which the underwriters and shipowners were equally liable, and that the equities of both were equal as to the assured. Even if this were so, it does not follow that the assured had a right to receive the amount of tlie loss from either, and assign over to the one from whom it was received the right to claim the full amount 1 Hon. Redbex H. Walworth. A passage on loss by theft has been omitted. — Ed. 940 ATLANTIC INS. CO. V. STORROW AND BOYD. [CHAP. IX. from the other party. It would rather present a case of equitable con- tribution, in which each should contribute a moiety towards the loss, as in the case of a double insurance. The insurers, however, are not liable to contribute for a loss, for which the master or ship owners are also liable to the assured. The contract of insurance is a mere contract of indemnity to the assured against such losses as he may actual!}' sustain by reason of any of the perils assured against. And upon an abandon- ment and payment, or upon a recoverj', as for a total loss, the under- writers are entitled to subrogation, at least in equity, to all the rights and remedies which the assured has to the property which is not actu- ally destroyed, including the spes recuperandi from any other source; unless the underwriters have relinquished that right by a stipulation in the policy. On this question, I fully concur with the Vice Chancellor in the conclusion at which he arrived, and also as to the reasons and ■weight of authority upon which his decision was based. If it had ap- peared upon the trial of the suit at law that the assured had received a compensation for his loss from the shipowners, or the master, and that the assignment was made for their benefit merely, to enable them to re- cover back the amount of the insurance from the underwriters on the policj', there can be no reasonable doubt that it would have been a good defence at law, at least to the amount thus received. And the result would have been the same, if it had appeared that Boyd, the as- signee, had received such compensation after the assignment of the policj' to him. The defence would have been equally available, if the underwriters could have shown that Storrow, or his assignee, had can- celled the bill of lading, or otherwise discharged his claim against the master and shipowners. The particular manner in which the matter has been managed, prob- ablj' with a view to defraud the underwriters of their remedy over against the shipowners or master, cannot, in this court, vary the rights and equities of these parties. It was stated, in the letter of Storrow to the underwriters, in the latter part of Julj- previous to the trial, that he assigned to the ship owners all claims against the company, upon being reimbursed bj' them the amount of the specie shipped on board the " Charles Carroll." But before that time the complainants had been furnished with his affidavit, and a copy of the assignment ; by which it appeared that he had assigned the polic}- absolutely to Boyd, and in his own right. The letter of the nominal plaintiff could not, therefore, have been used as evidence on the trial to defeat the rights acquired by the assignee, under the previous assignment. Neither could Storrow himself have been a witness to prove the facts stated in his letter ; as he w.as the nominal plaintiff in the suit. Even if the facts stated in that letter were true, therefore, I do not see how the complainants could have availed themselves of them, as a defence on the trial at law. Whether Boyd was in fact a bona fide assignee of the policy, or only took the assignment under a fraudulent arrangement entered into be- SECT. I.] AMAZON INS. CO. V. STEAMBOAT IKON MOUNTAIN. 941 tween the shipowners and Storrow, for the purpose of depriving the underwriters of legal and equitable right of subrogation, does not ap- pear from the pleadings in this suit. The complainants do not pretend to know how the fact really was ; and the defendants are entirely silent on the subject. They simplj' admit the writing of the letters referred to in the bill ; but without saying whether the information contained therein was true or otherwise. In the absence of all proof on this sub- ject, I must therefore presume, from the assignment itself, notwith- standing what was stated in the letters, that there was a bona fide assignment to Boyd, who had a legal right to recover upon the policy, by being substituted in the place of the assignor. But bj- giving up the bill of lading to the master to be cancelled, after the judgment was obtained, the complainants were deprived of their remedy over against the shipowners ; and standing merely in the character of sureties, to indemnify the assured against actual loss, the judgment must, in equitj', be considered as satisfied pro tanto. The Vice Chancellor has therefore very properly directed that the amount which the master and shipown- ers would have been liable for upon the bill of lading, should be de- ducted from the amount of the judgment, instead of decreeing a perpetual injunction against the collection of the whole debt and costs."^ . . . AMAZON INS. CO. v. STEAMBOAT IRON MOUN- TAIN ET AL. Circuit Cotibt of the United States foe the SotrrHEKN District OP Ohio, 1876. 1 Flippin, 616. The facts are fully stated in the opinion of the court. Mbulton, Johnson & Levy, for libellant. Soadly, Johnson & Colston, for respondents. Swing, J. The libel filed in this case seeks to recover for the value of one hundred and twenty-five barrels of flour alleged to have been lost through the negligence or wrongful act of respondents, as owners of the steamboat "Iron Mountain "and barge " Ironsides No. 3," on which flour libellant had insured the owner, to whom it paid the insurance; he having abandoned to it the property upon the happening of the accident entailing the loss. The bill of lading contracted to carry the flour from the port of Mt. Vernon, Ind., at which port it was shipped, to the port of New Orleans, La., and the insurance by libellant was upon the flour in transit between these points, to be transported by the boat and barge named, against the usual risks of river navigation, excepting, however, such losses for which the carrier would be liable to the owner of the insured propertj'. The respondents — owners of the 1 A passage on costs has been omitted. — Ed. 942 AMAZOX IXS. CO. V. STEAMBOAT IRON MOUNTAIN. [CHAP. IX. boat and barge — file exceptions to the libel, claiming, first, that the action should have been brought in the name of the owner of the flour ; and, second, that the libel cannot be maintained bj' the insurance com- panj' in its own name. The exceptions cannot be sustained. In Propeller Monticello v. Mollison, 17 How. 152, the Supreme Court say: "It is true that in courts of common law the injured party alone can sue for a trespass, as the damages are not legally assignable, and if there be an equitable claimant, he can sue only in the name of the injured party, whereas in Admiralt}-, the person equitably entitled maj- sue in his own name." In the case of The Manistee, 5- Biss. 381, the libel was filed by the insurance company in its own name in an action similar to the present, and it seems to have been conceded that it was properh' brought. To the same effect, see Insurance Co. v. The C. D. Jr., 1 Woods, 72. The second exception to the libel is, that, inasmuch as the loss happened during an unlawful deviation on the part of the carrier, or was caused by improper conduct of the master, the insurance company was not legally liable to the insured for the loss, and the payment by it of the insurance was but voluntary ; hence, subrogation to his rights to recover from the carrier did not arise, and consequently libellant has no remedy over against the owners of the boat and barge for the loss. The same objection was made, and the question expressly raised, in the case of The C. D. Jr., above cited, where Judge Woods summarih^ disposed of it in the following brief sentences : " Respondents further claim, that, having shown by the testimony, as they allege, that the insurance company was not legallj' bound to indemnify the insured for the loss the latter sustained by the collision, therefore the libellants have no cause of action against tlie respondents, although they have paid the loss. But I am of opinion that the authorities are adverse to this claim, and adopt the conclusion of the district judge, and refer to the case of Monticello v, Mollison, 17 How. 152." Respondents' solicitors, however, suggest that perhaps the point was not fully considered by Judge Woods ; but it appears to me that the contrary inference can onlj- be drawn from the report, as the learned judge states his opinion as the " result of the authorities," which must have been cited pro and con by the counsel for the respective parties. Besides, it is evident that the question had been fullj' argued before the district judge, who had decided it in the same way, and the counsel for the respondents, in the case before me, have failed to cite any authority' to sustain the opposite view, and I have not been able to find any which gives it support. In Monticello v. Mollison, vbi supra, it was held that, while in courts of Admiralty, in contradistinction to those at common law, " the person equitabl}- entitled maj- sue in his own name, yet that the same reasons whj* the wrong doer cannot be allowed to set up as a defence the equities between the insurer and the insured, equally apply to both courts." " The respondent," the court proceed to say, "is not presumed to know or bound to inquire as to SECT. I.J AMAZON INS. CO. V. STEAMBOAT IRON MOUNTAIN. 943 the relative equities of parties claiming the damages. He is bound to make satisfaction for the injury he has done. When he has once made it to the injured party, he cannot be made liable to another suit at the instance of anj- merely equitable claimant. If notified of such a claim before payment, he maj- compel the claimants to interplead ; otherwise, in making reparation for a wrong done, he need look no further tliau to the party injured." Again, the same court, in Hall et al. v. Rail- road Company, 13 Wall. 367, pertinently say : " It is too well settled bj- the authorities to admit of question, that, as between a common carrier of goods and an underwriter upon them, the liability to the owner for their loss or destruction is primarily upon the carrier, while the liability of the insurer is only secondary. The contract of the carrier may not be first in order of time, but it is first and principal in ultimate liability. In respect to the ownership of the goods, and the risk incident thereto, the owner and the insurer are considered as one person, having together the beneficial right to the indemnity due from the carrier for a breach of his contract, or for non-performance of bis legal dutj-. Standing thus, as the insurer does, practically in the position of a surety, stipulating that the goods shall not be lost or injured in consequence of the peril insured against, whenever he has indemnified the owner for the loss, he is entitled to all the means of indemnity which the satisfied owner held against the party primarily liable. His riglit rests upon familiar principles of equity. It is the doctrine of subrogation, dependent not at all upon privity of contract, but worked out through the right of the creditor or owner." In the case of The Manistee, uM su]}ra, it was contended on behalf of the carrier, " that the insurance policy was void, because it veas issued in disregard of the requirements of the laws of the State." But the learned judge held that, "in his opinion, the carrier should not be permitted to make that defence," adding, "that the shipper might have brought a libel for the use of the company (the underwriter), and if the use were not expressed in the record, the court would protect the compauj- even after a decree in favor of the libellant." The result from these principles and authorities seems plainly to be that the carrier in this class of cases cannot set up any different defence against the underwriter than he could have against the owner of the goods lost, were the action brought by the latter. Substantially the action is to be considered and treated as though prosecuted by and in the name of the insured owner or shipper for the use of the underwriter, to be defended on the same grounds, and determined by the observance of the same rules, and the application of the same legal principles. It would be an anomaly indeed, if, in a case where it was admitted, the owner could recover against the carrier for the use of the underwriter, the latter having paid the loss, and suing directly in his own name in Admiralty, as he may, thus standing, as we have seen, substantially in the place of the owner, could not recover. Such a result would be extremely inconsistent and illogical. The carrier has all the privileges 944 SIMPSON 4 CO. V. THOMSON, BUERELL ET AL. [CHAP. IX. and immunities, to whicli he is justly entitled wlien he is allowed to interpose the same defences against the underwriter which he could against the owner, no more nor less, however. No privity of contract existing, as has beea shown, he cannot be permitted to inquire into the equities which may have existed between the underwriter and the owner, and thus divert the issue to be tried from the question of his unlawful acts or negligence to that of the liability or non-liability of the underwriter to the owner. What he must negative, is his liability to the owner, not that of the insurer to the owner. "^ The exceptions will be overruled. SIMPSON & CO. ET At., Appellants, v. THOMSON, BUERELL ET AL., Respondents. House of Lords (Scotch), 1877. 3 App. Gas. 279. » The steamship " Dunluce Castle " was run down by the steamship " Fitzmaurice," owing to the negligence of those in charge of the latter. Both vessels belonged to Burrell. The underwriters on the " Dunluce Castle," paid Burrell £6,000 as for a total loss. Burrell petitioned the court under the Mercantile Shipping Acts, 17 & 18 Vict. c. 104, § 514, and 25 & 26 Vict. c. 63, § 54, to limit to £3,590, being the value of the ship in fault at £8 per ton, his liabilit}', as owner of the " Fitz- maurice," to those who had suffered from the collision, including Simp- son & Co., owners of the cargo lost with the "X)unluce Castle." In the same suit, Thomson and the other underwriters on the " Dunluce Castle " claimed to rank with Simpson & Co. and the other claimants upon the fund of £3,590. The First Division of the Court of Session pronounced an interlocutor, allowing this claim of the underwriters ; and the interlocutor was confirmed, the court repelling the objection of Simpson & Co., that the underwriters were not entitled to rank pari passu with them. 4 Session Cases, Fourth Series, 177 and 1133. On appeal to the House : — Mr. Watkin WiUiams, Q. C, and Mr. J. 0. Mdthew, for the appellants. Mr. Benjamin, Q. C, and Mr. M Clarlcson, for the respondents. The Lord Chancellor,' ... I know of no foundation for the right of underwriters, except the well-known principle of law, that where one person has agreed to indemnify another, he will, on making good the iudemnitj', be entitled to succeed to all the ways and means by 1 Ace. .- Pearse v. Quebec Steamship Co., 24 Fed. R. 285 (D. C, S. D. N. Y., 1885) — Ed. ^ The statement has been rewritten, and only a small part of each opinion has been reprinted. — Ed. ^ Lord Calens. — Eep. SECT. I.] SIMPSON & CO. V. THOMSON, BUEEELL ET AL- 945 which the person indemnified might have protected himself against or reimbursed himself for the loss. It is on this principle that the ■underwriters of a ship that has been lost are entitled to the ship in specie if they can find and recover it ; and it is on the same principle that they can assert an}' right which the owner of the ship might have asserted against a wrong-doer for damage for the act which has caused the loss. But this right of action for damages tiiey must assert, not in their own name, but in the name of the person insured, and if the per- son insured be the person who has caused the damage, I am unable to see how the right can be asserted at all. . . . The right of the underwriters is merely to make such claim for dam- ages as the insured himself could have made, and it is for this reason that (according to the English mode of procedure) they would have to make it in his name ; and if this is so, it cannot of course be made against the insured himself. . . . Lord Penzance. ... In answer to this objection it seems to have been considered by the Court below that by the payment of a total loss and the cession or transfer to the underwriters of the vessel (or whatever might remain of her) which followed thereupon by operation of law ; some new right of action sprung up, or was created, against the owner of the wrong-doing ship in favor of the underwriters. I say " new " right of action, because the right of action contem- plated is something different from, and other than, the right of action which resided in the owner of the injured ship, the benefit of which could onlj- be made available to the underwriters by transference from that owner, and consequently could onl}' be insured in his name. My Lords, I entirely agree with the reasoning of the Lord Chancellor upon this head, and am of opinion that there is no warrant to be found in the existing decisions for such a proposition. . . . Lord Blackburn. ... In England, the action must be in the name of the shipowner, not of the underwriters. I think this material, as showing that it is the personal right of action of the shipowner, the benefit of which is transferred to the underwriters. In other systems of jurisprudence, or it may be in our own as altered hereafter, the assignee of such a right may be able to sue in his own name. The important question will still remain : Is it a transfer of a right of action, which cannot be transferred unless it already exists ; or a fresh right created ? The whole reasoning of the court below is applicable to the case of a total loss, and of a total loss only. It would not be applicable to the case of a partial loss of 99 per cent or even more. I think, however, the reason of the law is not more applicable to those who have indemnified for a total loss than to those who have indemnified for a partial one. . . . Lord Gordon. . . . The view which I take of the case is a very short one, and it is this : I think the case must be looked at as if the owner of the "Dunluce Castle" had not been insured. His having effected insurances was a very proper and prudent act, but he did it 60 946 BURNAND V. EODOCANACHI. [CHAP. IX. for his own benefit, and the underwriters cannot complain that they have had to meet the risk against which they insured. Now I think it is clear that if the owner of the " Dunluce Castle " had not been insured he could have had no claim against himself as the owner of the " Fitz- maurice," which caused the injur3- to the "Dunluce Castle." The injurj- to that ship was substantiallj- caused by its own owner, and he could not be liable to himself for the damage so caused. And if he could not be liable to himself, he could not assign an3- right, either expressly or by implication of law, to any third person, as he had none to convey. No doubt the rights of underwriters are well established, and it is one of these that on payment of the risk as for a total loss the3- are entitled to all the rights in the injured ship which belonged to its owner ; but they are not entitled to more. And if the owner of the "Dunluce Castle" had no right to sue the owner of the " Fitz- maurice," neither can the underwriters on the " Dunluce Castle," whose rights were derived from the owner of that vessel. . . . Declared, That the objections . . . ought not to have heen re- pelled ; and . . . Ordered, That the cause be remitted back} . . . BURNAND (on behalf of himself and all other the under- writers UPON THE POLICIES OF INSURANCE ON TOBACCO PER " LAMP- LIGHTER " EFFECTED BY THE DEFENDANTS), APPELLANT, V. EODO- CANACHI SONS & CO., Respondents. House of Lords, 1882. 7 App. Cas. 333. Appeal from a judgment of the Court of Appeal in favor of the respondents ^ reversing a judgment of Lord Coleridge, C. J., in favor of the appellant.' The facts are fully set out in the report of the case below.* The defendants effected with the plaintiffs, who are underwriters, two valued policies for £7,500 each on tobacco valued in the policies at £15,000, which formed the cargo of the " Lamplighter," a United States merchant ship, on a vo3-age from New York to Genoa. The insurance included war risks, and afterwards, during the insured voyage, the cargo was totally destroyed by the " Alabama," a cruiser of the Confederate States of America, then at war with the United States. The plaintiffs accordingly paid the defendants £15,000, the 1 Ace. : Globe Ins. Co. v. Sherlock, 25 Ohio St., 50, 68. (1874). Ed. 2 6 Q. B. D.. 63.3. — Rep. 8 5 C. P. D. 424. — Rep. * The following statement has heen reprinted from the report in the Court of Appeal, 6 Q. B. D. 633 (1881). — Ed. SECT. I.] BUKNAND V. KODOCANACHI. 947 sum insured as for a total loss of the said cargo. The actual value of the cargo exceeded such sum by £6,557 7s. 3d. The loss of the cargo of the " Lamplighter " formed one of the items of claim made by the United States against Great Britain in respect of the damage done by the " Alabama" and other Confederate cruisers, and which, pursuant to a treaty between the two sovereign States, made at Washington in 1871, was referred to arbitration, which resulted in an award under which Great Britain paid the sum awarded to the United States in satisfaction of such claim. Afterwards, namelj- in June, 1874, the United States passed an Act of Congress ^ for constituting a court for the distribution of such sum amongst the subjects of the United States who had been injured by the Confederate cruisers, and whose claims should be allowed by that court under the provisions of such act, amongst which was section 12, as follows : " No claim shall be admissible or allowed by said court for any loss or damage for or in respect to which the party injured, his assignees, or legal representatives shall have received compensation or indemnity from anj- insurance company, insurer, or otlierwise, but if such compensation or indemnity so received shall not have been equal to the loss or damage so actually suffered, allowance may be made for the difference. And in no case shall any claim be admitted or allowed for or in respect to unearned freights, gross freights, pro- spective profits, freights, gains, or advantages, or for wages of officers and seamen for a longer time than one year next after the breaking up of a voyage bj- the acts aforesaid : And no claim shall be admissible or allowed by the said court by or on behalf of any insurance company or insurer, either in its or his own right, or as assignee or otherwise in the riglit of a person or party insured as aforesaid, unless such claimant shall show, to the satisfaction of said court, that during the late rebellion the sum of its or his losses in respect to its or his war risks exceeded the sum of its or his premiums or other gains upon or in respect to such war risks ; and, in case of any such allowance, the same shall not be greater than such excess of loss : and no claim shall be admissible or allowed by said court arising in favor of any in- surance company not lawfuUj- existing at the time of the loss under the laws of some one of the United States. And no claim shall be admissible or allowed by said court arising in favor of any person not entitled at the time of his loss to the protection of the United States in the premises, not arising in favor of any person wlio did not, at all times during the late rebellion, bear true allegiance to the United States." The defendants claimed in the court so constituted, under the Act of Congress, the difference between the actual value of the said cargo of the " Lamplighter" and the sum so insured, and such claim was 1 The Court of Commissioners of Alabama Claims was created by Acts of the Forty-third Congress, First Session, chap. 459, approved June 33, 1874. 18 U. S. Statutes at Large, part 3, p. 245. — Ed. 948 BUKNAND V. KODOCANACHI. [CHAP. IX. allowed, but iu consequence of some heavy deductions for commissioa and expenses in prosecuting and establishing such claim, the actual sum received by the defendants was only £2,803 17s. 2d. The plaintiffs alleged that they had, by payment of the total loss under the policies, become subrogated to the position of the defendants, and were therefore entitled to the sum which the defendants had so received from the United States Government. Jiutt, Q. C, and Cohen, Q. C, {Sbllams with them), for the aj)pellant. Sir IT. James, A. G., and Hon. A. E. Gathorne Hardy, for the respondents, were not heard. Lord Selborne, L. C. My Lords, this is a short but interesting and important question. Your Lordships have heard a very able argument, and have had the benefit of considering the able opinions of the learned judges in both the courts below, and I believe there is no doubt in the minds of any of your Lordships that the judgment under appeal is right. Now, if I may venture to do so, with that sincere respect which I alwaj's feel for everything which falls from judges so eminent as Lord , Coleridge and Baggallay, L. J. , I will indicate what I think is the fallacy in the reasoning of those learned judges. It is this : they have taken the valuation of the policy as conclusive and as operating by way of estoppel between these parties for a purpose for which, as it appears to me, it is not conclusive and does not estop them. For the purpose of the contract of insurance and for the purpose of all rights arising from that contract, it may well be that the valuation in a valued policy is conclusive, and the effect of it may be that fpr those purposes the assured is not entitled to saj' " My loss has been greater than that which was covered by the policy." He cannot say that, for the pur- pose of withholding from the insurer any indemnity or right by way of subrogation or substitution to which b3' the true legal result of the contract the insurer is entitled. Whenever it is sought to set up an estoppel founded upon the valuation for anj' purpose going beyond that which I have endeavoured to indicate, the law does not justify such a use of it. It is admitted that that is the English law when it is attempted to use the valuation for the purpose of determining what is and what is not a constructive total loss. Now it appears to me that for every other purpose collateral to the contract, for the purpose of every question as to whether a particular claim to something which has arisen aliunde is or is not within those rights which result in law from the contract, there is no more reason for holding the valuation to be conclusive between the parties or to operate by way of estoppel than there is in the case in which it is admitted that in England it does not so follow. The title to a particular indemnity granted in particular terms out of a particular fund at the disposal of the United States of America by an Act of the supreme legislature of the United States is not a title which I think can possibly result SECT. I.] BUENAND V. EODOCANACHI. 949 in law from the contract itself. If such a right exists, it must exist by the combined effect of the contract between tlie assurer and the assured, and the Act of Congress. It cannot follow from the contract of in- surance alone without the Act of Congress. If the Act of Congress is consistent with such a right, having regard to the contract of insurance, still more if the Act of Congress fairly and equitably interpreted confers such a right, there is no reason whatever wh}' the right should not receive full effect. But how is it possible that such an effect can be produced as to a right which could have no existence apart from the Act of Congress, if the Act of Congress itself expressly excludes it? I cannot for a moment under- stand the doctrine of moral right and obligation or implied trusts affecting supreme governments and independent states, as applied to a question of this kind. The rights resulting from the contract must be such as in point of law the contract makes : the rights resulting from the Act of Congress must be such as according to its true con- struction and legal effect the Act of Congress makes ; and the rights resulting from both together must be such as are consistent with and flow from the legitimate operation of the whole. Here it is admitted that there is in the Act of Congress everything said and done which a supreme legislature could possiblj' say or do for the purpose of exclud- ing the present claim and attributing that fund which has been appro- priated in this case to the sufferers by the capture, not to the valued part but to the unvalued part of the loss. That distinction, which in my opinion does exclude for this purpose the part covered by the valuation of the policj- of insurance, is made by the Act of Congress. It was a true and bona fide valuation, but it did not cover the actual loss. The fund awarded bj' the Act of Congress of the United States is only for that part of the actual loss which the valuation did not cover and which the insurers have not paid. Whatever views of moral obligation may be entertained with regard to the Act of Congress, I think it is correctlj' described b}- Brett, L. J. , as an act of pure gift from the American Government. 6 Q. B. D. 643-5. We cannot go behind it and inquire into the motives for an act of a supreme legislature on a matter within their legislative powers ; and that being so, I am entirely unable, for any practical purpose, to distinguish this case — in which the supreme Government of the United States having absolute power of disposition over this fund have bj' a solemn Act of their Congress declared that it should be given, not in respect of the loss which had been indemnified as between the assurers and the assured, but in respect of the loss which the assured had suffered bej-ond that amount — from the case of a volun- tary gift by an individual in the same terms. Mr. Butt, in his able argument, which was as candid I think as it was able, admitted that if a member of the family of the shipowner who had suffered the loss, or the owner of the cargo, had, after the insurers had paid the loss, made a will in the precise terms of this Act of the Congress of the United 950 BUENAND V. EODOCANACHI. [CHAP. IX. States, and had given a fund, over which he had absolute control, for the purpose of indemnif^'ing his relatives or his friends for that portion of the loss which the insurance had not covered, the insurers could not have claimed the gift. I am unable to see, for a.ny legal purpose, a distinction between such a case and the present. It is a satisfaction to me to find that in taking that view of the matter I only differ from Baggallat, L. J., so far as this : he thought that the cases of Eandal v. Cockran ^ and Blaauwpot v. Da Costa ^ before Lord Hardwicke and Lord Northington, under the Order in Council of the 18th of June, 17-41, were authorities in point and cover- ing the present case. With the greatest respect for that very learned judge I am unable to agree in that conclusion. I should not have had any difficulty at all in this case in upholding the claim of the appellant if the Act of Congress of the United States had been in terms similar to the terms of that proclamation.' The difference is that when the king of Great Britain came to distribute the fund which arose from the seizures of goods which had been taken, by way- of reprisal, from Spain, the Crown directed it to be divided into moieties : one moiety was to go to the officers and sailors of the ships that had made the captures, but the other moietj- was to be paid to and amongst such of His Majesty's subjects as had suffered bj- the unjust seizures and depredations of the Spaniards. There was no such exclusion of insurers as there is in the present case ; in point of law and equity too, the true result of the contract of insurance was that the insurers had 1 Ante, p. 937 (1748). — Ed. = j^^te, p. 937, n. (1758). — Ed. 8 During the argument Lord Selboejte, L. C, sent for the London Gazette Xo. 8024, June 16 to June 20, 1741, -which contained the proclamation dated 18 June, 1741. It ■was headed " By the Lords Justices, a Declaration appointing the distribution of Prizes taken by way of reprisal before His Majesty's declaration of War." It recited (inter alia) that -whereas the king, having taken into consideration the depredations and unjust seizures by Spanish ships contrary to the law of nations and in violation of the treaties between Great Britain and Spain, whereby the king's " trading subjects had sustained great losses," and having determined to take measures for vindicating the lionor of his Crown and " for procuring reparation and satisfaction to his injured subjects," was pleased with the advice of his Privy Council on the 10th of July, 1739, to order that general reprisals should be granted against the ships' goods and subjects of the king of Spain ; and whereas between that date and the king's declaration of war on the 19th of October following the king's ships had taken several ships, vessels, and goods belonging to the king of Spain or his subjects or inhabitants, the property •whereof became rested in the king ; the Lords Justices having taken the same into consideration, "together with the great losses the king's subjects had sustained by the repeated depredations by the Spaniards for many years past for which they had received no reparation ; " declared that the net produce arising from the sale or disposal of all the ships, vessels, and goods which had been so seized and taken and which had been or should be condemned, should be divided into two moieties, one " to be paid to and amongst such of the king's subjects as had suffered by the unjust seizures and depredations of the Spaniards, and to be distributed in such manner and proportion^ and under such regulations as the king should thereafter be pleased to appoint ; " the other moiety to be paid to and amongst the officers and sailors of the king's ships who were concerned in the captures, to be divided in the manner provided. — Kep. SECT. I.J BUKNAND V. KODOC.^NACHI. 951 taken the loss upon thennselves and were entitled to all indemnities received in respect of the loss ; they were sufferers in equity at all events if not in the strictest legal sense from those depredations ; they were to talie the place of the original sufferers, and to have all their rights, and therefore, according to the true effect of that proclamation, ' it was a grant bj' the Crown in their favor. If anything of the same sort had been done by the Act of Congress in the present case, it would be very probable that your Lordships would come to the same conclusion. I see that Brett, L. J., expresses some hesitation upon that subject. It is not necessarj' for me to say more about it, excepting that I do not myself share that hesitation, I put the matter entirely upon the ground that the tei-ms of the grant in the cases whicli have been referred to not onl3' impliedlj' but actuallj", according to their fair and legitimate construction in law and equity, operated in favor of the insurers, who having paid the loss were entitled to be recouped. Those cases, then, appear to me to be clearly and broadly distin- guishable from the present case. I think that the view taken by the majoritj' of the Court of Appeal is correct, and therefore I move your Lordships to dismiss this appeal with costs. Lord Blackburn. My Lords, I am of the same opinion. The point, when one comes at it (and I should saj-, in justice to Mr. Butt, that he has avoided making any false points, and has brought it to us ver}- clearly), is a very short one, and one upon which I have no doubt at all. The general rule of law (and it is obvious justice) is that where there is a contract of indemnitj- (it matters not whether it is a marine policj-, or a policj' against fire on land, or any other contract of in- d€mnity) and a loss happens, anything which reduces or diminishes that loss reduces or diminishes the amount which the indemnifler is bound to pay ; and if the indemnifler has already 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 indemnit}^ is entitled to be recouped bj- having that amount back. The first question is this. There had been a policy of insurance and a total loss by capture and destruction of the propert}- insured and a payment of the full value insured — a paj-ment of the total loss under that polic3-. Subsequently to that paj'ment there came the Treaty of Washington ; and afterwards, in consequence of an Act of Congress, a sum of money was paid to the persons who had received payment under the policy; and the question, I apprehend, comes to be, "Was that sum or was it not paid so as to be a reduction or diminu- tion of their loss ? The cases which have been cited, Randal v. Cockran^ and Blaauwpot V. Da Costa, ^ bear* this resemblance to the present case, that after the loss had occurred there was a sum of money coming into the hands of 1 Ante, p. 937 (1748). — Ed. ' Ante, p. 937, u. (1758). — En 952 BUENAND V. RODOCAJIACHI. [CHAP. IX. the English Government; and the king was ple9.sed (for I think it is clear that he was not bound) to say that half of that money should be applied to those who had suffered from the captures. It was, certainly, I think, a voluntary gift on the part of the Crown, and was for the •benefit of the sufferers. But then I think that that gift being made, as it was made, for the benefit of those who had suffered from the cap- tures, and the money being paid for that purpose, it did diminish the loss ; and consequently the benefit of it enured to the persons who were bound to indemnifj- ; and it was so decided in those two cases. It was not because the king was bound to pay the money — he was not : it was not because there was a moral obligation to pay it — as if it had been said that our Government would have been shabby if they had not done it : it was because de facto there was a paj'ment which pre- vented, or diminished jpro tanto, the loss against which the insurers were bound to indemnify the assured. There was a subsequent case, which has not been cited, which pro- ceeded upon an error and has been since reversed (I mean the case of Godsall V. Boldero ^) where a person had insured the life of Mr. Pitt, having no other interest in his life than as a creditor of Mr. Pitt, which gave him an interest, and the House of Commons voted out of pure grace and favor a large sum of monej' to pay Mr. Pitt's debts, and the executors paid this debt. The insurance company set up the defence that this was a contract of indemnity and that Mr. Pitt's debt having been paid there could not be a right to recover against them. Lord Ellenborough falling into a blunder which has been since corrected thought that the contract of life assurance was a contract of indemnitj-, and accordingly held that that was a good defence on the part of the insurance companj'. I have been told bj- people connected with in- surance companies and other people with whom I have been brought into contact in the course of my professional experience, that no sooner had that been done than there was such an outcry that every one said he would never insure with a company wliich was capable of doing such a shabby thing. Consequently the insurance compan3- instantly paid the whole loss and the whole of the costs, and published everywhere that they had done so. Nevertheless Lord Ellenborough's decision stood until it was decided in the Exchequer Chamber ^ that that case went altogether upon a mistaken idea that a contract of life insurance was a contract of indemnity, whereas it was nothing of the sort. But if it had been a contract of indemnity the grant of Parlia- ment to pay Mr. Pitt's debts would have prevented the man's sustain- ing any loss by the death of Mr. Pitt, and consequently the decision would have been right. I mention this merely to show that the ques- tion is not whether the money was voluntarily paid or not voluntarily paid, but whether de facto the money which was paid did reduce the loss. 1 Ante, p. 927 (1807). — Ed. 2 Dalby o. India and Loudon Life Assur. Co., ante, p. 932 (Ex. Ch., 1854). Ed. SECT. I.J BURNAND V. EODOCANACHI. 953 In the present case the Government of the United States did not pay it with the intention of reducing the loss. Lord Coleridge saj-s in liis judgment, and says very truly, that the Government of the United States cannot by any action of theirs deprive a man suing in this country of any right which he has. I quite agree in that ; but I think that Lord Coleridge, if he had taken the same view as I do of the matter, would have seen that an Act of Congress of the United States might effectually prevent any such right arising. If once the right had vested to recover any such sum, of course an Act of Congress could not take it away ; but when Congress in express terms saj-, " We do not pay the money for the purpose of repaying or reducing the loss against which the insurance company have indemnified, but for another and a different purpose," it effectually prevents the right arising. Bramvtell, L. J., in his judgment has used the phrase, " It was not given as salvage." 6 Q. B. D. 640. I should myself prefer to use my own phrase expressing the same idea and to say that it was not paid in such a manner as to reduce the loss against which the plaintiffs Lad to indemnify the defendants ; it is the same thing but rather differently expressed. That, I think, would dispose of the case if it were not for a point which Mr. Butt has urged, or rather submitted (for I do not think he argued very strongly in favor of it), namelj-, that because this was a valued polic}' of insurance, the value being put at £15,000, the defend- ants could never under any circumstances, as against the plaintiffs, set up the fact, which is a fact, that the value of the property exceeded £15,000. Upon the statement of that point it looks so artificial when applied to these facts that one might almost rest there and sa}-, " It cannot be." I think it is plain that the reasons for which the value has been held to be conclusive extend no further than this, that for the purposes of the contract between the parties the policy may be valued at so much. "Whether the principle was rightly applied in the case of the North of England Insurance Association v. Armstrong ^ it is not necessary now to say. I own that if I had a similar case to decide sitting in the Court of Error, I should pause before I said that it was rightly decided, but whether that decision was right or wrong it is not at all necessary to consider here. It is plain to my mind that the valuation being only for the purpose of the policy of insurance and for 1 In North of England Iron Steamship Ins. Assn. v. Armstrong, L. R. 5 Q. B. 244 (1870), an insurance company issued a policy of .£6,000 on the steamship " Hetton," which was valued in the policy at the same sum. The real value was £9,000. The " Hetton " was run down by the steamship " Uhlenhorst " and totally lost. The insurance company paid the policy in full. By litigation after this payment the owners of the " Hetton " recovered from the owners of the " Uhlenhorst " upwards of £5-,000, the amount thus recovered being the limit of the " Uhlenhorst's " liability under the Merchants Shipping Act. The insurance company brought action to recover from the owners of the " Hetton " the amount realized from that litijiation, except certain sums belonging to the ma.ster and crew and the owners of the cargo and freight. It was held that the insurance company was entitled to recover. — Ed. 954 BUENAND V. EODOCANACHI. [CHAP. IX. the purpose of binding tlie defendants to admit it in favor of the plain- tiffs, this sum was not paid in such a way as to reduce the loss against which the plaintiffs had contracted to indemnify them. The circum- stance that by agreement between the parties the amount they had contracted to pay was not to exceed £1-5,000 appears to me quite immaterial. For these reasons I agree that the judgment as it stands is right and ought to be affirmed. Lord Watson. My Lords, I have come to the same opinion as your Lordships upon this point, which is one of novelty but not of great difficulty, and which arises, I think, entirely upon the terms of the Act of Congress. If compensation has, under that statute, been awarded by the American Congress to the respondents in respect of their losses, then I take it that the same rule would be followed as was adopted bj' the courts in the two eases which have been referred to of Kandal V. Cockran^ and Blaauwpot v. Da Costa.^ In that case the money voted would have been received bj' the respondents towards indemnifi- cation for the loss against which they were insured ; and upon the principle that one who has been already indemnifled against that loss must impart to those who have indemnified him any benefits which he subsequently obtains of that description the appellant would have been entitled to judgment. But in this case the Act of Congress declares in verj' express terms, when j'ou take the whole of section 12 together, in the first place that no compensation is to be given bj- the com- missioners on account of loss which has been insured against or covered by insurance, and secondly' that underwriters are not to re- ceive any benefit from the funds distributed under the Act, and that the compensation given to any claimant must be given to compensate him for any loss either from want of insurance or from being under- insured. In the present case it is perfectly obvious from the state- ments made bj' the parties, upon which they agreed, that compensation was awarded to the respondents upon the second of these grounds, namely, in respect that the insurance which they effected fell short of protection against the whole loss which they sustained. It is conceded that compensation might be given to the respondents in these very terms and upon this footing by anj- benevolent individual, ■who being under no obligation to give it, chose to indemnify' the re- spondents ; and it is conceded that in the event of his doing so no claim would lie to that money at the instance of the underwriters. Why the American Congress were not in a position to do the same as any third party might have done, not being under any obligation to do so, I have not been able to understand in the course of this argument ; and I do not think that any cause whatever has been shown why they should not do so. Legal obligation is out of the question ; but we have heard something about moral obligation. I do not at all under- stand what that means. I think that this fund was entirel3' at the 1 Ante, p. 937 (1748). — Ed. " Ante, p. 937, n. (1758). —Ed. SECT. I.J EUKNAND V. EODOCANACIII. 955 disposal of the legislature of the United States, that it was an act of grace on their part to assign it, and give it either to one or to the other of the losers b}- the, acts of the " Alabama," and that in giving it as they have done, thej- were attaching a condition to the gift, which condition was not onh' entire!}- within their power but which they might attach without violating any legal responsibility or moral obligation. Those being my views, I entirely concur in the disposal of this case in the manner which j-our Lordships suggest. Lord Fitzgerald. My Lords, I concur in the judgment pronounced bj- the noble and learned Lord on the woolsack, and in the reasons he has pressed for that judgment. I adopt also his criticisms on the authorities cited and his limitation to. the rule which was contended for by the appellant as the result of some of those authorities, viz., that is that on a valued policy the value agreed on was as between the parties conclusive under all circumstances and for all purposes, whether in- cidental to the contract or collateral and subsequent. I hope that I am not exceeding my province in saying that I should have thought this a ver\- plain case if it had not been that I was induced to hesitate on reading the judgments of Lord Coleridge and Baggallay, L. J., whose opinions are of such weight and justly entitled to so much respect. The case presented itself to my mind thus — this is really the old action for money had and received. The parties have expanded by their pleadings the facts on which they respectively rest. The plaintiff alleges that the defendant has received a sum of monej' which in equity and good conscience he ought not to retain, but should pay over to the plaintiff. The defendant admits he received the sum in controversy through the judgment of the American tribunal, but denies the plaintiffs equity. I have been wholly unable to discover on what the plaintiffs sup- posed equity rests. I agree with Beett, L. J., that the United States Government might have done as it pleased with the whole £3,100,000, and that when it was devoted to the purposes specified in the Act of Congress it may be regarded as a free gift for those purposes. The 12th section prohibits its application to such a claim as the plaintiffs'. The whole matter is well expressed bj' Bramvfell, L. J., when he says in effect that the defendant received the money under the Act of Congress and judgment of the American court to keep for him- self, and not to pay it over to the plaintiff. Order appealed from affirmed ; and appeal dismissed with costs} 1 Contra, on the relation between subrogation and agreed valuation : The St. Johns, 101 Fed. R. 469 (D. C, S. D. N. Y., 1900). — Ed. 956 PHCENIX INS. CO. V. ERIE TEANSPOKTATION CO. [CHAP. IX. PHCENIX INSUEANCE CO. v. ERIE AND WESTERN TRANSPORTATION CO. Supreme Court of the United States, 1886. 117 U. S. 312. Appeal from the Circuit Court of the United States for the Eastern District of Wisconsin. This was a libel in admiraltj' against a common carrier by an insur- ance company which had insured the owners upon the goods carried, and had paid them the amount of the insurance, and claimed to be subrogated to their rights against the carrier. The defence relied on was that, by a provision of the contract of carriage, the carrier was to have the benefit of any insurance upon the goods. The District Court held that this provision was valid, and therefore no right of subrogation accrued to the libellant, and entered a decree accordingly-. The libel- lant appealed to the Circuit Court,^ . . . and ... to this court. Mr. Geo. D. Van Byhe for appellant (Mr. Geo. A. Black also filed a brief for same) . Mr. Geo. B. Hibbard, for appellee. Mr. Justice Gray ^ . . . delivered the opinion of the court The policj' of insurance contains no express stipulation for the assign- ment to the insurer of the assured's right of action against third per- sons. In the bills of lading, it is expressly stipulated that the carriers whose railroad or vessels form part of the line of transportations, shall not be liable for loss or damage by fire, collision, or dangers of naviga- tion ; and that each carrier shall be liable onlj* for a loss of the goods while in its custody, " and the carrier so liable shall have the full bene- fit of any insurance that may have been effected upon or on account of said goods." The question is, whether under these circumstances the insurer, upon payment of a loss, became subrogated to the right to recover damages from the carrier. "When goods insured are totally lost, actuallj- or coustructivelj-, by perils insured against, the insurer, upon payment of the loss, doubtless becomes subrogated to all the assured's rights of action against third persons who have caused or are responsible for the loss. No express stipulation in the policy of insurance, or abandonment by the assured, is necessary to perfect the title of the insurer. From the very nature of the contract of insurance as a contract of indemnity, the insurer, when he has paid to the assured the amount of the indemnity agreed on between them, is entitled, by way of salvage, to the benefit of anj-- thing that may be received, either from the remnants of the goods or from damages paid by third persons for the same loss. But the 1 Only a part of the statement has been reprinted. — Ed. 2 In reprinting the opinion, some passages foreign to subrogation have been omitted. — Ed. SECT. I.] PHCENIX INS. CO. V. EEIE TEANSPORTATIOU CO. 957 insurer stands in no relation of contract or of privity witli such persons. His title arises out of the contract of insurance, aud is derived from the assured alone, and can onlj- be enforced in the right of the latter. In a court of common law, it can only be asserted in his name, and, even in a court of equity or of admiraltj', it can onlj- be asserted in his right. In any form of remedj-, the insurer can take nothing b}- subro- gation but the rights of the assured. Comegj's v. Vasse, 1 Pet. 193, 214; Fretz v. Bull, 12 How. 466, 468; The Monticello, 17 How. 152, 155; Garrison v. Memphis Ins. Co. 19 How. 312, 317; Hall «. Eail- road Cos., 13 Wall. 367, 370, 371 ; The Potomac, 105 U. S. 630, 634, 635; Mobile & Montgomery Railway v. Jurey, 111 U. S. 584, 594; Clark ('. Wilson, 103 Mass. 219 ; Simpson v. Thomson, 3 App. Cas. 279, 286, 292, 293. That the right of the assured to recover damages against a third person is not incident to the property in the thing insured, but only a personal right of the assured, is clearly shown by the fact that the insurer acquires a beneficial interest in that right of action, in proportion to the sum paid bj' him, not onlj' in the case of a total loss, but likewise in the case of a partial loss, and when no inter- est in the property is abandoned or accrues to him. Hall v. Railroad Cos., The Potomac, and Simpson v. Thomson, above cited. The right of action against another person, the equitable interest in which passes to the insurer, being only that which the assured has, it follows that if the assured has no such right of action, none passes to the insurer ; and that if the assured's right of action is limited or re- stricted by lawful contract between him and the person sought to be made responsible for the loss, a suit by the insurer, in the right of the assured, is subject to like limitations or restrictions. For instance, if two ships, owned by the same person, come into collision by the fault of the master and crew of the one ship and to the injur}' of the other, an underwriter who has insured the injured ship, and received an abandonment from the owner, and paid him the amount of the insurance as and for a total loss, acquires thereby no right to recover against the other ship, because the assured, the owner of both ships, could not sue himself. Simpson v. Thompson, above cited; Globe Ins. Co. v. Sherlock, 25 Ohio St. 50, 68. Upon the same principle, any lawful stipulation between the owner and the carrier of the goods, limiting the risks for which the carrier shall be answerable, or the time of making the claim, or the value to be recovered, applies to any suit brought in the right of the owner, for the benefit of his insurer, against the carrier ; as, for instance, if the contract of carriage expressly exempts the carrier from liability for losses by fire : York Co. v. Central Railroad, 3 Wall. 107 ; or requires claims against the carrier to be made within three months : Express Co. V. Caldwell, 21 Wall. 264 ; or fixes the value for which the carrier shall be responsible: Hart v. Pennsylvania Railroad, 112 U. S. 331. So the stipulation, not now in controversy, in the bills of lading in the present case, making the value of the goods at the place and time of 958 PHCEXIX INS. CO. V. ERIE TKA^■SPORTATIO^' CO. [CHAP. IX. shipment the measure of the carrier's liability, would control, although in the absence of such a stipulation the carrier would be liable for the value at the place of destination, as held in Mobile & Montgomery Railway v. Jurey, 111 U. S. 584. The stipulation in these bills of lading, that the carriers " shall not be liable for loss or damage by fire, collision, or the dangers of naviga- tion," clearly does not protect them from liability for any loss occa- sioned by their own negligence. By the settled doctrine of this court, even an express stipulation in the contract of carriage, that a common carrier shall be exempt from liabilitj- for losses caused by the negli- gence of himself and his servants, is unreasonable and contrary to public policy, and therefore void. Railroad Co. v. Lockwood, 17 Wall. 857 ; Railroad Co. v. Pratt, 22 AVall. 123 ; Bank of Kentucky «. Adams Express Co., 93 U. S. 174 ; Railroad Co. v. Stevens, 95 TJ. S. 655. And it ma}- be that, as held by Judge Wallace in a case in the Circuit Court, a stipulation that " no damage that can be insured against will be paid for " would not protect the carrier from liabilit}- for his own negligence, because that would be to compel the owners of the goods to insure against the negligence of the carrier. The Hadji, 22 Blatchf. 235. But the stipulation upon the subject of insurance, in the bills of lad- ing before us, is governed b}- other considerations. It does not compel the owner of the goods to stand his own insurer, or to obtain insurance on the goods ; nor does it exempt the carrier, in case of loss bj- negli- gence of himself or his servants, from liability to the owner, to the same extent as if the goods were uninsured. It simply provides that the carrier, when liable for the loss, shall have the benefit of any insurance effected upon the goods.^ . . . As the carrier might lawfully himself obtain insurance against the loss of the goods by the usual perils, though occasioned bj- his own negligence, he may lawfull}- stipulate with the owner to be allowed the benefit of insurance voluntarilj- obtained by the latter. This stipulation does not, in terms or in effect, prevent the owner from being reimbursed the full value of the goods ; but being valid as between the owner and the carrier, it does prevent either the owner himself, or the insurer, who can only sue in his right, from maintaining an action against the carrier upon an}- terms inconsistent with this stipulation. Nor does this conclusion impair any lawful rights of the insurer. His right of subrogation, arising out of the contract of insurance and paj-ment of the loss, is only to such rights as the assured has, by law or contract, against third persons. The policy containing no express stipulation upon the subject, and there being no evidence of any fraud- ulent concealment or misrepresentation b}- the owner in obtaining the 1 Here followed passages to the efEect that an owner of a ship or of goods may- procure insurance against the result of his own negligence, and that any one who has simply made himself responsible as an insurer or a warehouseman or a carrier may do the like. — Ed. SECT. I.] WILLIAMS V. HAYS. 959 insurance, the existence of the stipulation between the owner and the carrier would have affordecf no defence to an action on the pollc}', according to two careful judgments rendered in Juno last and inde- pendently- of each other, the one bj- the English Court of Appeal, and the other by the Supreme Judicial Court of Massachusetts. Tate v. Hyslop, 15 Q. B. D. 368 ; Jackson Co. v. Boylston Ins. Co., 139 Mass. 608.1 _ _ _ It may be added that our conclusion accords with the decision of Judge Shipman in Rintoul v. New York Central Railroad, 21 Blatchf. 439, as well as with those of Judge Dyer in the District Court, and Judge Drummond in the Circuit Court, in the present case. 10 Biss. 18, 38. See also Carstairs v. Mechanics' & Traders' Ins. Co., 18 Fed. Eep. 473 ; The Sidney, 23 Fed. Eep. 88 ; Mercantile Ins. Co. V. Calebs, 20 N. Y. 173. Decree affirmed. Mr. Justice Bradley dissented.^ WILLIAMS, Appellant, v. HAYS, Respondent. Supreme Court of New York, First Department, General Term, 1892. 64 Hun, 202.^ The Phenix Insurance Compan}- issued a policj' to Parsons & Loud, part owners, upon their share in the brig " Emilj- T. Sheldon." The brig was lost, and the loss was caused, as alleged, bj- the negligence, misconduct, and improper navigation of Hays, who was charterer, master, and part owner. The companj- paid Parsons & Loud's loss, and assigned to Williams its claim by way of subrogation against Hays, and thereupon Williams brought this action. The defence was that Hays had had separate insurance upon his share in the brig from the same company, that he had brought action against the company for the same loss, that the issues in that action, so far as the loss of the brig was concerned, were the same as in this, and that in that action, Hajs had a verdict and judgment, which had been affirmed b^- the Court of Appeals.' Upon the trial at the New York Circuit the court directed a verdict for the defendant ; and from the judgment on this verdict this appeal was taken. G. A. Black, for the appellant. W. W. Goodrich, for the respondent. 1 Here these cases were summarized. — Ed. 2 The dissenting opinion may be found in 118 U. S. 210»— Ed. ' The statement has been rewritten. — Ed. * That litigation may be found in Hays v. Phenix Ins. Co., 25 Jones & Spencer, 199 (1889)j 8. 0. affirmed, 127 N. Y. 656 (1897). — Ed. 960 WILLIAMS V. HAYS. [CHAP. IX. Van Brdnt, P. J.^ . . . The single question presented is whether the plaintiff is estopped by the judgment fa the case of the defendant against the Phenix Insurance Compauj' above referred to. Undoubtedlj-, a recovery bj' the defendant in his action against the Pheuix Insurance Company upon his policy of insurance is a bar against the insurance company' from setting up, in its own right, anj* claim against the defendant because of the loss of the vessel, because a recovery upon the policy is inconsistent with the existence of such right of action. Doty v. Brown, 4 N. Y. 71 ; Castle v. Noyes, 14 N. Y. 329; Gates v. Preston, 41 N. Y. 113. But the plaintiff in this action does not represent anj' claim which the insurance company had as against the defendant, but that which Parsons & Loud had as part owners of the vessel. Such being the case, therefore, the judgment rendered in the case of Ha3's V. Phenix Insurance Company in no waj- operated as an estoppel against Parsons & Loud from maintaining an action upon the same ground upon which the insurance company based its defence. This is clearly so, because estoppels to be available must be mutual. Law- rence V. Campbell, 32 N. Y. 455. If, therefore. Parsons & Loud were not precluded from maintaining an action against the defendant, their assignees are endowed with all the rights which they themselves possessed. It being, therefore, the claim of Parsons & Loud which is sought to be enforced in this action, and the plaintiff being merelj- their successor in interest, he would seem to be entitled to all the rights which they could have enforced against the defendant. The mere fact that the intermediary was the Phenix Insurance Companj' in no way affects this right, because he represented a different and distinct interest from that which the insurance company represented in the ac- tion of Hays against it. Mersereau v. Pearsall, 19 N. Y. 109. We think, therefore, that the previous judgment did not operate as an estoppel, and the plaintiff had a right to try the issue presented only upon the merits. The judgment should be reversed and a new trial ordered, with costs to appellant to abide event. O'Beibn and Andrews, JJ., concurred. Judgment reversed and new trial ^ ordered, with costs to appel- lant to abide event." 1 After stating the case. — Ed. 2 The result of the new trial may be found in Williams v. Hays, 143 N. Y. 442 (1894). — Ed. ' On the general topic of subrogation in marine insurance see also : — Yates V. Whyte, 4 Bing. N. C. 272 (1838), s.c. 5 Scott, 640 ; White V. Dobinsou, 14 Sim. 273 (1844) ; Clark V. Wilson, 103 Mass. 219 (1869) ; Mercantile M. Ins. Oo. v. Clark, 118 Mass. 288 (1875) ; Sea Ins. Co. v. Hadden, 13 Q. B. D. 706 (C. A., 1884). — Ed. SECT. II.] MASON V. SAINSBURY. 961 SECTION II. Fire Ins^irance. MASON V. SAINSBURY and Another. King's Bench, 1782. 3 Doug. 61.^ This was an action on the riot act, to recover damages sustained bj- the demolition of a house in the riots of 1780. There was a verdict for the plaintiff, with £259 damages, subject to the opinion of the court, on a case which stated that the plaintiff had insured the house in the Hand-in-Hand fire office, which had paid the loss ; and that this action was brought in the plaintiff's name, and with his consent, for the benefit of the insurance office. The case was argued in Hilary Term, hy Mingaj- for the plaintiff, and b}' Davenport for the defendants. The court, considering it to be a case of great imoortance. directed another argument, which came on in this term. Wallace, A. G., for the plaintiff. Adair, Sergeant, contra. Lord Mansfield. The facts of this case lie in a narrow compass. The argument turns much on want of precision in stating the case, as most alignments do. The office paid without suit, not in ease of the Hundred, and not as co-obligors, but without prejudice. It is, to all intents, as if it had not been paid. The question, then, comes to this, Can the owner, having insured, sue the Hundred? Who is first liable? If the Hundred, it makes no difference ; if the insurer, then it is a satisfaction, and the Hundred is not liable. But the contrary is evident from the nature of the contract of insurance. It is an indemnity. Every day the insurer is put in the place of the insured. In every abandonment it is so. The insurer uses the name of the insured. The case is clear : the act puts the Hundred, for civil purposes, in the place of the trespassers ; and, upon principles of policy, as in the case of other remedies against the Hundred, I am satisfied that it is to be con- sidered as if the insurers had not paid a farthing. WiLLES, J. I am of the same opinion. I cannot distinguish this from the case of the escape. The Hundred is not answerable criminally, but they cannot be considered as free from blame. Thej' may have been negligent, which is partly the principle of the act. AsHURST, J. At all events the plaintiff must have a verdict for the amount of the premium, as to which he has received no compensation. But, on the larger ground, I agree with my lord, that it is like the case of an abandonment. They are not to be in a worse condition by pay- ing without a suit. 1 s. 0. Marshall on Ins. (2d ed.) 794. — Ed. ei 962 HAET V. WESTERN EAILKOAD COEPOKATION. [CHAP. IX. BuLLER, J. Whether this case be considered on strict legal prin- ciples, or upon the more liberal principles of insurance law, the plaintiff is entitled to recover. Strictly, no notice can be taken of an3-thing out of the record. Taken in its narrow form, the contract is only a wager ; more liberally construed, it is an indemnity. Still, upon the words, and as to third persons, it is only a wager, of which third persons shall not avail themselves. It has been admitted, and rightly, that the Hun- dred is put in the place of the trespassers. How could they have availed themselves of this defence ? By plea of accord and satisfaction ? It was not paid as satisfaction, and the evidence would not have supported such a plea. In the case put of the escape, the recovery is not a satis- faction, and the sheriff may sue. The better way is to consider this as a contract of indemnity. The principle is, that the insurer and insured are one, and, in that light, paying before or after can make no difference. I am, therefore, clearly of opinion that the Hundred cannot avail themselves of this defence. Postea to the plaintiff.''- HART AND Others v. WESTERN RAILROAD CORPORATION. Supreme Judicial Court of Massachusetts, 1847. 13 Met. 99. This was an action of trespass upon the case, founded on St. 1840, c. 85, to recover the amount of a loss which the plaintiffs sustained by a fire alleged to have been communicated to their dwelling-house by a locomotive engine of the defendants. The parties submitted the case to the court, on the following agreed facts : — On the 9th of July, 1845, a carpenter's shop, owned \>y William W. Boj'ington, adjoining the railroad track of the defendants, near their passenger depot in Springfield, was destroyed by fire communicated by the locomotive engine of the defendants. There was a high wind, which 1 In London Assur. Co. v. Sainsbury, 3 Dong. 245 (Ex. Ch., 1785), the insurance company brought action in its own name against the Hnndred. The declaration stated that the plaintiff had insured Langdale, that divers persons destroyed the house and goods by fire, and that the plaintiS paid to Langdale its share of the loss. The plea was the general issue, and also that Langdale had brought action against the Hundred and had had a verdict, which still remained in force. The plaintiff replied that it paid Langdale before Langdale brought his action ; that in that action the jury deducted from the damages the amount of the insurance and did so declare to the court at the time of giving the verdict ; and that the damages sustained by Langdale amounted in fact to the aggregate of that verdict and the sum paid by the insurance company. Upon demurrer, judgment was rendered in the King's Bench for the defendants by a divided court ; and in the Exchequer Chamber this judgment was unanimously affirmed. In Clark v. Inhabitants of Blything, 2 B. & C. 254 (182.3), the owner of property maliciously burnt brought action against the Hundred ; and it was held on the authority of the principal case that he could recover, although he had collected from an insurance office the full amount of his loss. — Ed. SECT. II.] HAKT V. WESTERN RAILKOAD COKPOEATION. 963 wafted sparks from this shop, while it was burning, over Lj-man Street, sixtj- feet, upon the dwelling-house of the plaintiffs, and set it on fire, whereby it was partiallj- consumed. " The plaintiffs were insured by the Springfield Mutual Fire Insur- ance Company, who requested the plaintiffs to commence a suit against the defendants, to compel pa3-raent bj' them of the plaintiffs' loss, and offered to indemnify the plaintiffs from costs, and to save them harm- less, in reference to said suit. The plaintiffs refused to commence a suit, as requested, but demanded the amount of their loss of the said insurance compan3% who paid the same, first notifj'ing to the defend- ants that they did not intend thereby to relinquish any claim which the}- might have against the defendants for the amount, in their own or in the plaintiffs' names. The insurance company, in the name of the plaintiffs, then brought this action to recover the amount paid by said companjf to the plaintiffs. After the action was commenced, and before the entry of the writ, the plaintiffs executed an instrument, de- claring that they had received paj'ment of their loss, of the insurance companj- ; that they had no claim against the defendants ; that they (the plaintiffs) had not authorized the commencement of this action against the defendants, and did not wish to have it prosecuted ; and fully releasing any claim which they might have against the defendants on account of said loss. " At the May term of this court, in 1847, the case was opened to the jury, and the defendants presented the aforesaid release from the plain- tiffs, and contended that the insurance companj-, in consequence of this release, could not maintain this action. The court ruled, that receiving payment of the loss b}- the plaintiffs of the insurance company consti- tuted an equitable assignment, by the plaintiffs, to the company, of any claim thej' might have had. Whereupon the parties agreed the facts before recited in relation to the origin of the fire. "In case the court are of opinion that receiving payment hy the plaintiffs, of the insurance company, amounted to an equitable assicn- inent by them of any claim they might have had against the defendants ; that the release referred to was in fraud of the insurance company ; and that the defendants are liable for the loss, on the facts stated, the plaintiffs are to have judgment for the sum of $623.65 damages, and interest on this sum, from the 14th of November, 1845. Otherwise the plaintiffs are to become nonsuit." J. WiUard and R. A. Chapman, for the plaintiffs. Phelps, for the defendants. Shaw, C. J. This is an action of first impression, and is, we be- lieve, the first brought upon the St. of 1840, c. 85, involving the present question. The action is brought, in fact, by the Springfield Mutual Fire Insurance Company for their own benefit, in the name of the present plaintiffs, under the circumstances mentioned in the agreed statement of facts, on which the case was submitted to our decision.' . . . 1 Passages foreign to subrogation have been omitted. — Ed. 964 HAKT V. WESTERN EAILROAD CORPORATION. [CHAP. IX. The next question is, whether the insurance company, having, pur- suant to their contract of indemnity, paid the loss to the plaintiffs, are entitled to maintain this suit in the plaintiffs' name, but for their own benefit, to recover the damages to which the defendants are liable by the statute. We consider this to be a statute purely remedial, and not penal. Railroad companies acquire large profits by their business ; but their business is of such a nature as necessarily to expose the property of others to danger ; and j-et, on account of the great accommodation and advantage to the public, companies are authorized by law to main- tain them, dangerous though they are, and so thej' cannot be regarded as a nuisance. The manifest intent and design of this statute, we think, and its legal effect, are, upon the considerations stated, to afford some indemnitj' against this risk to those who are exposed to it, and to throw the responsibility upon those who are thus authorized to use a somewhat dangerous apparatus, and who realize a profit from it. This indemnitj', provided by law against a special risk, may be considered as a quality annexed to the estate itself, and passing with it to any and all persons who may stand in the relation of owners, howeyer divided and distributed such ownership ma}- be. The effect of the statute is to diminish the specific risk to which such buildings may be exposed from their proximity to the railroad, and in this respect to put them upon an equality with other risks. Now, when the owner, who prima facie stands to the whole risk, and suffers the whole loss, has engaged another person to be at that par- ticular risk for him, in whole or in part, the owner and the insurer are, in respect to that ownersliip and the risk incident to it, in effect one person, having together the beneficial right to an indemnity provided by law for those wlio sustain a loss by that particular cause. If, there- fore, the owner demands and receives payment of that very loss from the insurer, as he ma^', by virtue of his contract, there is a manifest equitj' in transferring the right to indemnit}-, which he holds for the common benefit, to the assurer. It is one and the same loss, for which he has a claim of indemnit}-, and he can equitably receive but one sat- isfaction. So that if the assured first applies to the railroad companv, and receives the damages provided, it diminishes his loss pro tanto, by a deduction from, and growing out of, a legal provision attached to, and intrinsic in, the subject insured. The liabilitj* of the railroad com- pany is, in legal effect, first and principal, and that of the insurer secondaiy ; not in order of time, but in order of ultimate liabilit}'. The assured may first apply to whichever of these parties he pleases ; to the railroad company, by his right at law, or to the insurance company, in virtue of his contract. But if he first applies to the railroad company, who pay him, he thereby diminishes his loss, by the application of a sum arising out of the subject of the insurance, to wit, the building in- sured, and his claim is for the balance. And it follows, as a necessarj' consequence, that if he first applies to the insurer, and receives his SECT. II.J KING V. STATE MUTUAL FIRE INS. CO. 965 Tvliole loss, he holds the claim against the railroad company- in trust for the insurers. Where such an equity exists, the p&vty holding the legal right is conscientiously bound to make an assignment in equity to the person entitled to the benefit ; and if he fails to do so, the ceshd que trust maj- sue in the name of the trustee, and his equitable interest will be protected. But we think this position is exceedingly well sustained by author- ities.^ . . . In regard to the right of the insurance company to sue in the name of the assured, we think the cases fully affirm the position, that by ac- cepting paj'ment of the insurers, the assured do implicitly assign their right of indemnity, from a partj' liable, to the assured. It is in the nature of an equitable assignment, which authorizes the assignee to sue in the name of the assignor for his own benefit ; and this a right which a court of law will support, and will restrain and prohibit the assignor from defeating it bj- a release. The formal discharge, therefore, given bj- the nominal plaintiflfs, is not a bar to the action. See Paj'ne v. Eogers, 1 Doug. 407; Whitehead v. Hughes, 2 Crompt. & Mees. 318; PhilHps V. Clagett, 11 Mees. & Welsh. 84; Timan v. Leland, 6 Hill, 237 ; Browne on Actions, 105. Judgment for the plaintiffs.'^ KING V. STATE MUTUAL FIRE INS. CO. Supreme Judicial Court of Massachusetts, 1850. 7 Cush. 1.^ Assumpsit on a policy of fire insurance, submitted to the Court of Common Pleas and, on appeal, to this court. J. A. Andrew, for the plaintiff. 0. S. Keith, for the defendants. Shaw, C. J. Tliis case comes before the court on a statement of facts. The statement is not very full and exact. We understand, from the statement and from the policj-, which is made part of it, that the plaintiff made the insurance in his own name and for his own bene- fit, not describing his interest as that of a mortgagee, and paid the pre- mium out of his own funds. The insurance was for $300, on his interest in a two-storj- wooden barn. That interest, in fact, as it ap- pears in the statement of facts and the mortgage deed produced, was that of a mortgagee under a deed previously made to him, by one Murphy, conditioned for the payment of $400, which debt was out- 1 The discussion of the authorities has teen omitted. — Ed. 2 See Monmouth County Mut. F. Ins. Co. v. Hutchinson, 21 N. J. Eq. (6 C. E. Green) 107 (1870) ; Connecticut F. Ins. Co. v. Erie Ry. Co., 73N. Y. 399 (1878). — Ed. 3 The reporter's statement has been omitted. — Ed. 966 KING V. STATE MUTUAL FIRE INS. CO. [CHAP. IX. standing and unpaid at the time of making the policj-, the fire, and the demand of payment. The defendants admit the loss bj' fire, within the time, and admit their liability, unless they have a right, as a pre- liminary condition to such payment, to demand an assignment of the plaintiff's mortgage interest, as set forth in the statement of facts, or such proportion thereof, as the amount so to be paid by them would bear to the whole mortgage debt. The plaintiff declined making such assignment, and brought tiiis action to recover a total loss. The court ai-e of opinion tliat the plaintiff having insured for his own benefit, and paid the premium out of his own funds, and the loss hav- ing occurred by the peril insured against, he has, prima facie, a good right to recover ; and having the same insurable interest at the time of the loss which he had at the time of the contract of insurance, he is entitled to recover a total loss. The court are further of opinion that, if the defendants could have any claim, shonld the plaintiff hereafter recover his debt in full of the mortgagor, it must be purely equitable ; that tlie defendants can have no claim until such money is recovered, if at all ; and, therefore, that they have no right to demand the partial transfer of the mortgage debt, by them required, as a condition to their liability to pay, pursuant to the terms of their policy-. This considera- tion is perhaps decisive of the present case ; but the question having been argued upon broader grounds, and some authorities cited to sus- tain the claim of the defendants, which may give rise to further litiga- tion, we have thought it best to consider the other question now. We are inclined to the opinion, both upon principle and authoritj-, that when a mortgagee causes insurance to be made for his own bene- fit, paying the premium from his own funds, in case a loss occurs be- fore his debt is paid, he has a right to receive the total loss for his own benefit ; that he is not bound to account to the mortgagor for anj- part of the money so recovered, as a part of the mortgage debt ; it is not a payment in whole or in part ; but he has still a right to recover his whole debt of the mortgagor. And so, on the other hand, when the debt is thus paid by the debtor, the money is not, in law or equit}-, the money of the insurer who has thus paid the loss, or money paid to his use. The contract of insurance with tlie mortgagee, is not an insurance of the debt or of the payment of the debt ; that would be an insurance of the solvency of the debtor ; of course, as a contract of indemnity, it is not broken by the non-payment of the debt, or saved b^- its payment. It is not, strictly speaking, an insurance of the property, in the sense of a liabilit}' for the loss of the property bj- fire, to any one who may be the owner. It is rather a personal contract with the person having a proprietary interest in it, that the property shall sustain no loss by fire within the time expressed in the policy. It is a personal contract, which does not pass to an assignee of the property. Lynch v. Dalzell, 3 Bro. P. C. 497; Columbia Ins. Co. v. Ijawrence, 10 Pet. 507. A mortgagee has a proprietary interest, a title as owner, iu the mortgaged property SECT. 11.] KING V. STATE MUTUAL FIRE INS. CO. 967 not indeed absolute, but defeasible ; still, it is a proprietary interest in that property, and the insurer guarantees to him, that the subject in which he has such interest shall not be destroj-ed or diminished by the peril insured against. There is no privity of contract or of estate, in fact or in law, between the insurer and the mortgagor; but each has a separate and independ- ent contract with the mortgagee. On what ground, then, can the money thus paid by the insurer to the mortgagee be claimed by the mortgagor? But if he cannot, it seems a fortiori, that the insurer can- not claim to charge his loss upon the mortgagor, which he would do, if he were entitled to an assignment of the mortgage debt, either in full or pro tanto. The better to understand the precise case under consideration, it may be well to distinguish it from some, which may seem like it, but depend on other principles. If the mortgage debt is paid, and the mortgage discharged before the loss by fire, it may well be held, that the mortgagee, the assured, can- not recover ; not merely because the debt is paid, but because the mort- gage is therebj' redeemed, and revested in the mortgagor ; and the pro- prietar}' interest of the assured in the property insured, in respect to which alone he had anj' insurable interest, is determined. And it is a fixed rule of law, that, to make a policj' valid, and enable the assured to recover a loss, he must have an interest in the subject, when the contract is made, and when the loss occurs. He must have such an interest when the contract is made, otherwise it is a wager policy, and void ; and when the fire occurs, otherwise he sustains no loss by any damage done by the fire to the thing insured, and he has no claim on the con- tract of indemnitj-. So, if an owner insure his house, which is burnt within the time limited ; if he has sold his house in the meantime, he has no legal claim to recover.^ . . . But it is said, and in this certainly lies the strength of the argument, that it would be inequitable for the mortgagee first to recover a total loss from the underwriters, and afterwards to recover the full amount of his debt from the mortgagor, to his own use. It would be, as it is said, to receive a double satisfaction. This is plausible, and requires consideration ; let us examine it. Is it a double satisfaction for the same thing, the same debt or duty? The case supposed is this : A man makes a loan of money, and takes a bond and mortgage for security. Say the loan is for ten years. He gets insurance on his own interest, as mortgagee. At the expiration of seven years the buildings are burnt down ; he claims and recovers a loss to the amount insured, being equal to the greater part of his debt. He afterwards receives the amount of his debt from the mortgagor, and discharges his mortgage. Has he received a double satisfaction for one and the same debt? He surely may recover of the mortgagor, because he is his debtor, 1 The omitted passages discussed the mortgagor's rights. — Ed. 9G8 KING V. STATE MUTUAL FIKE INS. CO. [CHAP. IX. and on good consideration has contracted to pay. The money received from the underwriters was not a payment of his debt ; there was no privity between the mortgagor and the underwriters ; he had not con- tracted with them to pay it for him, on anj- contingencj- ; he had paid them nothing for so doing. They did not pay because the mortgagor owed it ; but because they had bound themselves, in the event which has happened, to pay a certain sum to the mortgagee. But the mortgagee, when he claims of the underwriters, does not claim tlie same debt. He claims a sum of money due to him upon a distinct and independent contract, upon a consideration, paid by him- self, that upon a certain event, to wit, the burning of a particular house, they will pa}- him a sum of money expressed. Taking the risk or re- moteness of the contingency into consideration (in other words, the computed chances of loss), the premium paid and the sum to be re- ceived are intended to be, and in theor}- of law are, precisely equiva- lent. He then pays .the whole consideration, for a contract made without fraud or imposition ; the terms are equal, and preciselj' under- stood by both parties. It is in no sense the same debt. It is another and distinct debt, arising on a distinct contract, made with another partj-, upon a separate and distinct consideration paid by himself. The argu- ment opposed to this view seems to assume that it would be inequitable, because the creditor seems to be getting a large sum for a very small one. This may be true of any insurance. A man gets $1,000 insured for $5, for one year, and the building is burnt within the year ; he gets $1,000 for $5. This is because, by experience and computation, it is found that the chances are onlj- one in two hundred that the house will be burnt in any one j'ear, and the premium is equal to the chance of loss. But suppose — for in order to test a principle we may put a strong case — suppose the debt has been running twenty years, and the premium is at five per cent, the creditor maj- pay a sum, equal to the whole debt, in premiums, and j-et never receive a dollar of it from either of the other parties. Not from the underwriters, for the contin- genc}' has not happened, and there has been no loss by fire ; nor from the debtor, because, not having authorized the insurance at his expense, he is not liable for the premiums paid. What, then, is there inequitable, on the part of the mortgagee, towards either part}', in holding both sums? They are both due upon valid contracts with him, made upon adequate considerations paid by himself There is nothing inequitable to the debtor, for he pays no more than he originall}- received, in money loaned ; nor to the under- writer, for he has only paid upon a risk voluntarily taken, for which he was paid by the mortgagee a full and satisfactorj- equivalent.^ 1 Dicta ace: Suffolk F. Ins. Co. r. Boyden,9 AUen, 123, 12.5-127 (1864), per Hoae, J. ; International Trust Co. v. Boardman, 149 Mass. 158, 161 (1889), per C. Allen, J. Dicta contra : Mtna, F. Ins. o. Tyler, ante, p. 890 (1836), per Walworth, C. ; Car- penter V. Providence Washington Ins. Co., anfe, p. 915, n. (1842), per Stoky, J.; Smith V. Columbia Ins. Co., 17 Pa. 253, 260-261 (1851), per Gibson, J.; Kernochan v. SECT. II.J KING V. STATE MUTUAL FIRE INS. CO. 969 It may be said, that, upon these grounds a wager policy might be held valid, and a good ground of action. We suppose a wager policy is not held void because it is without consideration, or unequal between the parties; but because it is contrary' to public policy, and prohibited b}' positive law. But, independentlj' of considerations of public policy, if an insurance were made on a subject in which the assured has no pecuniary interest — although in other respects he may be deeply con- cerned in it, and on that ground be willing to pay a fair premium — made with a full knowledge of all the circumstances, by both parties, without coercion or fraud, we cannot perceive why it would not be valid as between the parties. But upon the strong objections, on grounds of public policy, to all gaming contracts, and especially to contracts which would create a temptation to destroy life or property, such policies, without interest, are justlj- held to be void. We are not unaware, that there are verj' respectable authorities op- posed to the views of the law above taken. Mr. Phillips, in treating of the rights of parties after an abandon- ment, seems to put the rights of the underwriter, who has paid a loss, on the ground of subrogation, and then adds : " Where a policj- against fire is effected b}- a mortgagee for his own benefit, in case of loss, and payment by the underwriters, they thereby become entitled to a propor- tional interest in the debt secured by the mortgage." 2 Phil. Ins. (2d ed.) 419. In support of this position, the learned author cities several authorities, which we propose to examine. Robert v. Traders' Ins. Co., 17 Wend. 631. We think this case does not support the position for which it is cited.^ . . . Mr. Phillips also cites Tyler v. ^tna Ins. Co., 16 Wend. 385. Some portion of the language of the chancellor, in giving the judgment of the Court of Errors, in that case, is certainh- more in point.^ . . . Looking at the analogies and illustrations on which the reasoning of the learned chancellor is founded, it may be a question, whether he has not relied too much on the cases of marine insurance, in which the doc- trines of constructive total loss, abandonment, and salvage, are fully acknowledged, but which have slight application to insurances, against loss by fire. We are then brought to the case of Carpenter v. Providence Wash- ington Ins. Co., 16 Pet. 495. The language of Mr. Justice Story, in New York Bowery F. Ins. Co., 5 Duer, 1, 5-6 (1855), per Duek, J.; Sussex County Mut. Ins. Co. V. Woodruff, 26 N. J. L. (2 Dutch.) 541, 554-558 (1857), per William- son, C. ; Honore v. Lamar F. Ins. Co., 51 III. 409, 414 (1869), per Lawrence, J. ; Washington F. Ins. Co. v. Kelly, 32 Md. 421, 441-444 (1870), per Stewart, J.; Thomas v. Montank F. Ins. Co., 4.3 Hun, 218, 220-221 (1887), per Bradley, J. Compare Clark v. Wilson, 103 Mass. 219 (1869), a marine case; Mercantile M. Ins. Co. V. Clark, 118 Mass. 288 (1875), also a marine case. See Kernochan v. New York Bowery F. Ins. Co., 17 N. Y. 428, 436 (1858); Pear- man u. Gould, 42 N. J. Eq. (15 Stew.) 4, 9-10 (1886); Nelson v. Bound Brook Mut. F. Ins. Co., 43 N. J. Eq. (16 Stew.) 256 (1887) ; Phenix Ins. Co. v. First' Nat. Bank, 85 Va. 765 (1889). — Ed. 1 The discussion of this case has been omitted. — Ed. 970 TKASK V. HAETFOED AND NEW HAVEN EAILEOAD. [CHAP. IX. giving the opinion of the court in that case, is certainly very strong ; but the part of it which bears upon the point of the present case was not necessar}- to the judgment of the court.^ . . . It is obvious to remark, as the result of all these cases, concurring with many others, that a mortgagee has an insurable interest ; that he may insure generally on the propertj', and need not disclose the pecul- iar nature of his interest, unless inquired of; that, before payment of liis debt, he may recover and receive to the amount of his debt ; and that it is no defence for the underwriter, that the plaintiff holds a de- feasible, and not an absolute, title to the property insured. Some other cases are referred to, a^ analogous, but the analogy is not very clear or direct.^ . . . On a view of the whole question, the court are of opinion, that a mortgagee who gets insurance for himself, when the insurance is gen- eral upon the property, without limiting it in terms to his interest as mortgagee, but when, in point of fact, his only insurable interest is that of a mortgagee, in case of a loss by fire, before the payment of the debt and discharge of the mortgage, has a right to recover the amount of the loss for his own use. Judgment /or the plaintiff. TRASK V. HARTFORD AND NEW HAVEN RAILROAD CO. Supreme Judicial Coukt of Massachusetts, 1861. 2 Allen, 331. Tort to recover damages for the destruction of the plaintiff's dwell- ing-house and shed by fire communicated, by the locomotive engine of the defendants. At the trial in the superior court, it appeared that heretofore the plaintiff recovered judgment against the defendants for the loss of a shop by fire from the same cause, and that the house and shed took fire from the burning of the shop. At the time of the fire, he held a policy of insurance on the dwelling-house, issued by the Merchants and Farmers' Mutual Fire Insurance Company, the amount of which they afterwards paid to him, and thereupon caused this action to be brought and prosecuted for their benefit. Morton, J., ruled that the former judgment was a bar to this action, and a verdict was ac- cordingly returned for the defendants. The plaintiff alleged exceptions. S. Morris, for the plaintiff. iV; A. Leonard, for tlie defendants, was not called upon. Merrick, J.' It is an established principle of law, that judgment in a civil suit upon a certain alleged cause of action is conclusive upon the parties in relation to it, and that another suit for the same cause 1 The discussion of this case has been omitted. — Ed. 2 The omitted passages dealt chiefly with Godsall v. Boldero, anJe, p. 927 (1807). — Ed. 8 Dewet, J., did not sit in this case. — Rep. SECT. II.] TEASK V. HARTFOED AND NEW HAVEN EAILROAD. 971 cannot be maintained for any purpose whatever. No man is liable to be twice charged, or to be a second time proceeded against in a civil action, for the same unlawful act, if the first has been pursued to final judgment. 1 Stark. Ev. (4th Amer. ed.) 196; Eastman v. Cooper, 15 Pick. 276. This doctrine was affirmed, explained, and enforced by this court, in the recent case of Bennett v. Hood, 1 Allen, 47 ; and in its proper application to the facts disclosed in the bill of exceptions is decisive of the present action. The tortious act of the defendants, which is stated and complained of in the writ and declaration, is the setting fire hy one of their locomotive engines to the shop of the plain- tiff, by means of which his dwejling-house and shed were burnt and consumed. This same cause of action was set forth in the former suit, a copy of the judgment in which was produced bj' the plaintiff on the trial of this. As to that cause of action, therefore, the judgment was final and conclusive upon both of the parties. The loss of the shop and of the dwelling-house and shed were distinct items or grounds of damage, but they were both the result of a single and indivisible act. The plaintiff therefore does not sliow anj- right to maintain another action to recover additional damages merelj' by showing that, in con- sequence of his omission to produce upon the trial all the evidence ■which was admissible in his behalf, he failed to obtain the full amount of compensation to which in that event he might have been entitled. Having chosen to submit the determination of the issue upon the evi- dence which he did in fact produce, he is bound to abide by the verdict which was rendered, and to accept the judgment in full satisfaction of his claim. It would be unjust, as well as in violation of the fixed rule of law, to allow him to subject the defendants to the hazard and ex- penses of another suit to obtain an advantage wliich he lost either by his own carelessness and neglect, or by an intentional withholding of a part of his proof. Nor can it make any difference that the Merchants and Farmers' Insurance Company had an equitable interest, as insurers of the dwelling-house and shed lost by the fire, in the damages which the plaintiff might have recovered for the destruction of that property. To protect their interest, the insurance company should have season- abl}' intervened and supplied, or caused to be supplied, the evidence which would have shown that the plaintiff ought to recover compensa- tion as well for the burning of the dwelling-house and shed as for the shop ; both having been destroyed at the same time, by one and the same tortious and unjustifiable act of the defendants. The fact there- fore that the insurance company had an equitable interest, which the law will protect — Hart v. Western Railroad, 13 Met. 99 — in a part of the damages which the plaintiff was entitled to recover against the de- fendants, affords no reason why they should be deprived of the benefit of the general principle of law wliich protects all parties against the unnecessary multiplication of suits, and the hazard, vexation, and charges which unavoidably attend them. The presiding judge sus- tained this principle, and the exceptions taken ou this account must therefore be overruled. 972 HALL & LONG V. THE EAILEOAD COMPANIES. [CHAP. IX. HALL & LONG v. THE RAILROAD COMPANIES. Supreme Court of the United States, 1871. 13 Wall. 367. Error to the Circuit Court for the Middle District of Tennessee. Hall & Long allowed this suit in their names, for the use of certain insurance companies, against the Nashville and Chattanooga Railroad Company, to recover the value of cotton shipped by them on the road of the defendant as a common carrier, which was accidentally consumed by fire, while being transported, and " became and was a total loss." The cotton had been insured by Hall & Long against loss by fire, in the companies for whose use the suit was brought, and these companies had paid the amount insured by them, respectively. On demurrer the question was whether the underwriter who insures personal property against loss by fire, and pays the insurance upon a total loss b3' acci- dental burning, while in transition, can bring an action in the name of the owner, for his use against the common carrier, based upon the common-law liability of such common carrier. The court below ad- judged that he could not, and the plaintiffs brought the case here oa error. Mr. Henry Cooper, in support of the judgment below. Mr. W. Atioood, contra. Mr. Justice Strong delivered the opinion of the court. It is too well settled by the authorities to admit of question that, as between a common carrier of goods and an underwriter upon them, the liability to the owner for their loss or destruction is primarily upon the carrier, while the liabilitj' of the insurer is onl3' secondary. The con- tract of the carrier ma}' not be first in order of time, but it is first and principal in ultimate liabilitj'. In respect to the ownership of the goods, and the rislf incident thereto, the owner and the insurer are considered but one person, having together the beneficial right to the indemnity due from the carrier for a breach of his contract or for non-performance of his legal duty. Standing tlins, as the insurer does, practicallj-, in the position of a surety, stipulating that the goods shall not be lost or injured in consequence of the peril insured against, whenever he has indemnified the owner for the loss, he is entitled to all the means of indemnity which the satisfied owner held against the part}' pi-imarily liable. His right rests upon familiar principles of equitj-. It is the doctrine of subrogation, dependent not at all upon privity of contract, but worked out through the right of the creditor or owner. Hence it has often been ruled that an insurer, who has paid a loss, may use the name of the assured in an action to obtain redress from the carrier whose failure of duty caused the loss. It is conceded that this doctrine prevails in cases of marine insurance, but it is denied that it is appli- cable to cases of fire insurance upon land, and the reason for the supposed difference is said to be that the insurer in a marine policy SECT. II.J HALL & LONG V. THE RAILROAD COllPANIES. 973 becomes the owner of the lost or injured property by abandonment of the assured, while in land policies there can be no abandonment. But it is a mistake to assert that the right of insurers in marine policies to proceed against the carrier of the goods, after they have paid a total loss, grows wholly, or even principally, out of anj' abandonment. There can be no abandonment where there has been total destruction. There is nothing upon which it can operate, and an insured party maj' recover for a total loss without it. It is laid down in Phillips on Insurance, § 1723, that " a mere payment of a loss, whether partial or total, gives the insurers an equitable title to what may afterwards be recov- ered from other parties on account of the loss," and that " the effect of a payment of a loss is equivalent in this respect to that of abandon- ment." There is, then, no reason for the subrogation of insurers by marine policies to the rights of the assured against a carrier by sea ■which does not exist in support of a like subrogation in case of an in- surance against fire or land. Nor do the authorities make any distinc- tion between the cases, though a carrier maj-, b}- stipulation with the owner of the goods, obtain the benefit of insurance.^ . . . It has been argued, however, that these decisions rest upon the doc- trine that a wrong-doer is to be punished ; that the defendants against ■whom such actions have been maintained were wrong-doers ; but that, in the present case, the fire by which the insured goods were destroj'ed was accidental, without fault of the defendants, and, therefore, that they stood, in relation to the owner, at most in the position of double insurers. The argument will not bear examination. A carrier is not an insurer, though often loosely so called. The extent of his responsi- bilitj- may be equal to that of an insurer, and even greater, but its nature is. not the same. His contract is not one for indemnit}-, inde- pendent of the care and custodj' of the goods. He is not entitled to a cession of the remains of the propert}-, or to have the loss adjusted on principles peculiar to the contract of insurance ; and when a loss occurs, unless caused hy the act of God, or of a public enemy, he is alwaj's in fault. The law raises against him a conclusive presumption of mis- conduct, or breach of duty, in relation to every loss not caused by excepted perils. Even if innocent, in fact, he has consented by his contract to be dealt with as if he were not so. He does not stand, therefore, on the same footing with that of an insurer who may have entered into his contract of indemnity, relying upon the carrier's vigi- lance and responsibility. In all cases, when liable at all, it is because he is proved, or presumed to be, the author of the loss. There is nothing, then, to take the case in hand out of the general rule that an underwriter, who has paid a loss, is entitled to recover what he has paid by a suit in the name of the assured against a carrier ■who caused the loss. Judgment reversed, and the cause remanded for further pro- ceedings. 1 Here followed a discussion of authorities. — Ed. 974 CASTELLAIN V. PRESTON. [CHAP. IX. CASTELLAIK v. PRESTON. CoiTRT OF Appeal, 1883. 11 Q. B. D. 380. Appeax of the plaintiflf from the judgment of Chittt, J., in favor of the defendants. The facts are fully stated in the report of the proceed- ings before Chittt, J. (8 Q. B. D. 613), and it is necessarj' here only to briefly recapitulate them. The plaintiff sued on behalf of the London, Liverpool, and Globe Insurance Company to recover a sum of £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 payment of the premiums until after the fire hereinafter mentioned occurred. The policy was in the usual form, giving the insurers the option of reinstating the propertj'. On the 31st of Julj-, 1878, the defendants contracted to sell the land and the buildings to their tenants, Messrs. Raj-ner, for the sum of £3,100, and they received a deposit. The contract provided that the time of the completion should be such da^^ 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 2otli of September, 1878, bj' the insurers, Tvho were at that time ignorant of the existence of the contract for sale. On the 25th of March, 1879, the defendants named the 5th of May as the dg^' of com- pletion, and on the following 12th of December the conveyance was executed and the balance of the purchase-mone3- paid. The present action was commenced on the 31st of October, 1881. Charles Hassell, Q. C, and A. AspinaU Tobin, for the plaintiff. Gully, Q. C, and W. R. Kennedy, for the defendants. 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 company to the defendants on account of the loss by fire of a building. The defendants were the owners of property consisting partly at all events of a house, and the defendants had made a contract of sale of that property with third per- sons, which contract, upon the giving of a certain notice as to the time of payment, would oblige those third persons, if they fulfilled the con- tract, 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 per- sons, and before the day of payment, the house was burnt down. The SECT. II.J CASTPLLAIN V. PKESTON. 975 vendors, the defendants, having insured the house in the ordinary form with the plaintiff's company, it is not suggested that upon the house being burnt down the defendants had not an insurable interest. Thej' 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 vendors, 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 repre- sented 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 fuU amount of the purchase-money was paid by the third persons to the defendants notwithstanding the fire. Under those circumstances the plaintiff representing the insurance company brings this action. I do not saj' that he brings it to recover back the money which has been paid by the insurance company (for that ex- pression of opinion would rather interfere with the form of the action), but he brings the action in respect of that monej'. The question is whether this action is maintainable. The case was tried before Chittt, J., and he, in a very careful and elaborate judg- ment (8 Q. B. D. 613, at p. 615), has come to the conclusion that the insurance company cannot recover against the defendants in respect of the money paid by them. It seems to me that the foundation of his judgment is this, that he considers 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 con- sider whether I can agree with him. In order to give mj^ 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 insurance law. The very foun- dation, in mj' opinion, of every rule which has been applied to insurance law is this, namely, that the contract of insurance contained in a ma- rine or fire policy is a contract of indemnity, and of indemnity onl}', 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 faWy indemnified. That is the fundamental prin- ciple of insurance ; and if ever a proposition is hffought forward which is at variance with it, that is to ea,y, 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 certainlj' 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 constructive total loss originated solelj- to carry out the fundamental rule which I have mentioned. It was a doctrine introduced for the benefit of the assured ; for, as a 976 CAS^ELLAIN V. PEESTON. [CHAP. IX. 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 indemnit3-. But grafted upon tlie doctrine of constructive total loss came the doctrine of abandonment, which is a doctrine in favor of the insurer or under- writer, 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 engrafted upon it were invented or promulgated for the purpose of making a policy of marine insurance a contract 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 prin- ciple ; it was introduced rather as a matter of justice in favor of the underwriters, so as to prevent the assured from obtaining by fraud more than a full indemnitj*. That doctrine is to a certain extent tech- nical ; that is to say, although the assured has in reality suffered a constructive total loss, and although he is upon general principles entitled to recover, nevertheless he must fail unless he has given a notice of abandonment. I suppose that the doctrine of notice of aban- donment was originally introduced by merchants 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 pur- pose 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 carrj'ing 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 underwriters 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 indemnitj-. But it being admitted that the doctrine of subrogation is to be applied merelj' for the purpose of preventing the assured from obtaining more than a full indemnity, the question is whether that doctrine as applied in insur- ance 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 limitation 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 Chitty, it seems to me that that is the fault of his judgment. He has by his judg- ment limited this doctrine of subrogation to placing the insurer in the SECT. II.J CASTELLAIN V. PRESTON. 977 position of the assured only for the purpose of enforcing a right of action to which 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 endeavor 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 unful- filled, or in remedy for tort capable of being insisted on or already insisted on, or in any other right, whether bj' way of condition or other- wise, 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 fundamental 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. Eodocanachi,^ 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 which 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 had 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 insur- ance, 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 doctrine of subrogation, shows that, in ray opinion, it goes much further than a mere transfer of those rights which may at anj' time give a cause of action either in contract or in tort, because if upon the happening of the loss there is contract between the assured and a third person, and if that contract is imme- diately fulfilled by the third person, then there is no right of action of an\' kind into which the insurer can be subrogated. The right of action is gone ; the contract is fulfilled. In like manner if upon the happen- ing of a tort the tort is immediatelj' 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 subrogated. It will be said that there did for 1 Ante, p. 946 (H. L., 1882).— Ed. 62 978 CASTELLAIN V. PRESTON. [CHAP. IX. 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 subro- gated, 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 b}' 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 thej' 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 ful- filled. The assured have had the advantage therefore of that right, and by that right, not by a gift which the purchasers could have de- clined to make, the assured have recovered, notwithstanding the loss, from the purchasers, the very sum of monej- which they were to obtain whether this building was burnt or not. In that sense I cannot con- ceive that a right, by virtue of which the assured has his loss dimin- ished, is not a right which, as has been said, affects the loss. This right, which was at one time merelj- in contract, but which was after- wards fulfilled, either when it was in contract only, or after it was ful- filled, does affect the loss ; that is to saj-, it affects the loss by enabling the assured, tlie vendors, to get the same monej- which they would have got if the loss had not happened. While I am applying the doctrine of subrogation which I have en- deavored to enunciate, I think it due to CHirrr, J., to point out what passages in his judgment require some modification (8 Q. B. D. at p. 617). I find him reading this passage : " I know of no foundation for the right of underwriters, except the well-known principle of law, that where one person has agreed to indemnif3' another, he will, on making good the indemnity, be entitled to succeed to all the ways and means by which the person indemnified might have protected himself against or reimbursed himself for the loss." That is a quotation from Lord Cairns in Simpson v. Thomson.^ 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 1 Ante, p. 944 (H. L. Sc, 1877) Ed. SECT. II.J CASTELL.UH V. PKESTON. 979 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 contract or in tort. I should venture to add this: "And if the assured enforces or receives the advantage of such remedies, the in- surers are entitled to receive from the assured the advantage of such remedies." Then when we come to this illustration, " Where the land- lord insures, and he has a covenant bj' the tenant to repair, the insurance office, on payment in lilie manner, succeeds to the right of the landlord against his tenant," I would add this, — "and if the tenant does re- pair, 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. Eodocanachi,^ the learned judge cites the opinion of Bramwell, L. J. (8 Q. B. D. at p. 618). He sa3-s that Bramwell, L. J., in his judgment, held that it was not salvage, but "that in the circumstances the sum received by the shipowner was but a pure gift, and there was no right on the part of the insurers to recover an}- 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 govern- ment." There was no right to demand it ; it was bestowed and received as a pure gift. Darrell v. Tibbitts-' 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 remedj-, but what they were subrogated into was the right to receive the advantage of the remedy which had been applied, whether it had been enforced or voluntarily administered b^- 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 polic}-, 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 b}' 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 aflfected by the loss or safety 1 Ante, p. 946 (H. L., 1882). — Ed. 2 In Darrell v. Tibbitts, 5 Q. B. D. .560 (C. A., 1880), an insurance society paid a landlord a loss under a policy, and later discovered that the tenants had repaired the damage, as was required by their lease ; and it was held tliat the insurance society was entitled to recover from the landlord the sum paid by it. — Ed. ' Per Beett, L. J., in Darrell v. Tibbitts, supra. — Ed. 980 CASTELLAIN V. PKESTON. [OHAP. IX. 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 Chittt, 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 " (8 Q. B. D. at p. 625). There I agree with him, onh' 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 third parties, it must be confined to the case of a contract relating to the subject-matter of the insurance, which entitled the in- surers 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 proposition 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 con- tract 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. There- fore, according to the true principles of insurance law, and in order to carrj- out the fundamental doctrine, namely', that the assured can re- cover a full indemnity, but shall never recover more, except, perhaps, in the case of the suing and laboring clause under certain circum- stances, it is necessary that the plaintiflf in this case should succeed. The case of Darrell v. Tibbitts * 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 insured a house belonging to the defendants, and before there was any loss by firethe defendants sold the house to certain purchasers. Afterwards there was a fire, and an agreed sum was paid hy the insurance oflSce to the defendants in respect of the loss. The appellant apparently seeks to recover the sum which the office paid to the defendants, and if the plaintiffs claim could be shaped only in this form, I think my opinion would be against him. The plaintiff's claim may be treated in sub- stance 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 pur- chasers. In my opinion the plaintiff is right in that contention. I think that the question turns on the consideration of what a policy of insurance against fire is, and on that the right of the plaintiff depends. 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 1 Ante, p. 979, n. (C. A., 1880). — Ed. SECT. II.] CASTELLAIM' V. PRESTON. 981 which has happened, and from that it follows, of course, that as it is only a contract of indemnitj', it is onlj' to pay that loss which the assured maj' have sustained by reason of the fire which has occurred. In order to ascertain what that loss is, everything must be taken into account which is received bj* 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 diminution 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 bj' the case of Dar- rell V. Tibbitts that the insurance companj- is entitled to that benefit, whether or not before they pay the money they insist upon a calcula- tion 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 monej', 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, j-et when it has been received it must be brought into account ; and if it is not a sum of mone}', but a benefit, that has been received, its value must be estimated in money. Now, Lord Blackburn, in the case of Burnand v. Rodocanachi,^ states the principle in these words : " The general rule of law (and it is ob- vious 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 indemnitj-), and a loss happens, anything which reduces or diminishes that loss reduces or diminishes the amount which the inderanifier is bound to pay ; and if the indemnifier has already 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 re- couped by having that amount back." In Darrell v. Tibbitts, '^ to which I have already referred, the question which we had to consider was whether the insurance oflSce was entitled to the benefit produced in consequence of a covenant 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 bj- the policy. That was what was before this court in that case, and undoubtedly expressions do occur as to a contract relating to 1 Ante, p. 946 (H. L., 1882). —Ed. 2 Ante, p, 979, n. (C. A., 1880). — Ed. 982 CASTELLAIN V. PEESTON. [CHAP. IX. the loss or affecting the loss, but the principle was not limited to con- tracts. The principle which I have enunciated goes further ; and if there is a money or an}' otlier 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 indemnit}' is given, the indemniflev ought to be allowed to take advantage of it in order to calculate what the real loss is, even although the benefit 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 estimating that loss against which tlie insurer has agreed to indemnif}-, and we have been pressed in argument with many difficul- ties. 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-monej' is to be taken into account, why is a gift not to be taken into account? That maj' be 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 diflferent person. That really was what was decided in Burnand v. Kodocanachi."^ There the money bestowed, not as a matter of right but as a gift, was intended to benefit the assured be^'ond the amount which they had got in consequence of anj' insurance. There is another ground which may possibly exclude gifts. It ma}' 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 indemnitj-, is confined to that which is a right or other incident belonging to the person insured, as an incident of the property at the time when the loss takes place. This definition would not include a sum subsequently bestowed on the assured by way of gift, for it can in no wa}' be said to have been apper- taining 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 incident 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 un- dertaken 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 property 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. 1 Ante, p. 946 (H. L., 1882). — Ed. SECT. 11.] CASTELLAIN V. PRESTON. 983 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 the^' 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 extin- guishes 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 the}' have paid, j'et they are entitled to take into account the money subsequently received under a contract for the sale of the prop- erty 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. Tibbitts,^ 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 ac- count. 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 payment of which was existing at the time, must be brought into account bj' the assured, because it diminishes the loss against which the insurance office merely undertook to indemnify them. In my opin- ion, therefore, the decision below was erroneous. I think Chittt, 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 immaterial to decide that question, because the vendors have exercised their right to insist upon the completion of the purchase. BowEN, L. J. I am of the same opinion. The answer to the question raised before us appears to me to follow as a deduction from the two propositions, first, that a fire insurance is a contract of indemnity ; and, secondl}', that when there is a contract of indemnity no more can be recovered by the assured than the amount of his loss. First of all, is a fire insurance a contract of indemnity? It appears to me it is quite as much a contract of indemnitj' as a marine insurance is ; the difl'erences between the two are caused by the diversity of the subject-matters. On a marine policy a ship may be insured which is at a distance and movable, or goods may be insured on board of vessels which are at a distance, and on a fire policy a house is insured which is fixed to the land ; but both are contracts of indemnity. Only those can recover who have an insurable interest, and they can recover only to the extent to which that insurable interest is damaged by the loss. I Ante, p. 979, n. (C. A., 1880). 9S4 CASTELLAIN V. PKESTOK. [CHAP. IX. In the course of the argument it has been sought to establish a distinc- tion between a fire policy and a marine policy. It has been urged that a fire policy is not quite a contract of indemnit}', and that the assured can get something more than what he has lost. It seems to me that there is no justification in authorit3-, and I can see no foundation in rea- son, for any suggestion of that kind. What is it that is insured in a fire policy ? Not the bricks and the materials used in building the house, but the interest of the assured in the subject-matter of insurance, not the legal interest only, but the beneficial interest ; and I do not know any reason whj' there should be a different definition of what is an insurable interest in fire policies from that which is well known as the established definition in marine policies, allowance being made for the difllerences of the subject-matter. It seems to me that it is an ocular illusion to suppose that under anj' circumstances more maj- be obtained by the assured than the amount of the loss. I think this illusion can be detected if it is recollected what are the ordinary business rules according to which insurances are made. It is well known in marine and in fire insurances that a person who has a limited interest may insure nevertheless on the total value of the subject-matter of the insur- ance, and he may recover the whole value, subject to these two provi- sions : First of all, the form of his policy must be such as to enable him to recover the total value, because the assured may so limit him- self by the wa}- in which he insures as not really to insure the whole value of the subject-matter ; and, secondly, he must intend to insure the whole value at the time. When the insurance is effected he cannot recover the entire value unless he has intended to insure the entire value. A person with a limited interest may insure either for himself, and to cover his own interest only, or he may insure so as to cover not merely his own limited interest, but the interest of all others who are interested in the propertj'. It is a question of fact what is his intention when he obtains the policy. But he can only hold for so much as he has intended to insure. Let us take a few of the cases which are most commonly known in commerce of persons who insure. There are per- sons who have a limited interest and yet who insure for more than a limited interest, who insure for the total value of the subject-matter. There is the case, which is I suppose the most common, of carriers and wharfingers and commercial agents, who have an interest in the adven- ture. It is well known what their rights are. Then, to take a case which perhaps illustrates more exactly the argument, let us turn to the case of a mortgagee. If he has the legal ownership, he is entitled to insure for the whole value ; but even supposing he is not entitled to the legal ownership, he is entitled to insure prima facie for all. If he intends to cover only his mortgage, and is only insuring his own in- terest, he can only in the event of a loss hold the amount to which he has been damnified. If he has intended to cover other persons beside himself, he can hold the surplus for those whom he has intended to cover. But one thing he cannot do, that is, having intended only to SECT. II.] CASTELLAIN V. PEESTON. 985 cover himself, and being a person whose interest is only limited, he cannot hold anything beyond the amount of the loss caused to his own particular interest. Suppose for a moment the case of a ship and a mortgagee who has lent £500 on the ship. The ship is worth £10,000. If he insures for £10,000, meaning only to cover his own interest and not the interest of anybody besides, can it for a moment be supposed that the mortgagee who insures under those circumstances can hold the £10,000? That would be an over insurance, and to treat it in any other way would be to make a marine policy not a contract of indem- nity, but a wager, a speculation for gain. Suppose, again, there are several mortgagees for small sums, can they all recover and hold (having ex hypothesi insured their separate interests only) the entire value of the ship? It seems to me they cannot. They can recover only what they have lost. That being, as I apprehend, the law about mortgages of ships, is there any real distinction between that and the mortgagee of a house? I can see none. It seems to me that the same principle applies, and here, as in many other problems of insurance law, tlie problem will be solved by going back and resting upon the doctrine of indemnity. Let us take another instance which has been much pressed upon -us in the course of the argument, the case of a tenant for years or a tenant from j-ear to year. We have been asked to hold that a tenant from 3-ear to year can always recover the full value of the house from the insurance compan}-, although he has intended to insure onl}- his limited interest in it. There is some justification for that in the language of James, L. J., in Rayner v. Preston.^ He says this : " In my view of the case it is perhaps unnecessary to refer to the Act of Parliament as to fire insurance. But that Act seems to me to show that a policy of insurance on a house was considered hy the legislature, as I believe it to be considered by the universal consensus of mankind, to be a policy for the benefit of all persons interested in the property ; and it appears to me that a purchaser having an equitable interest under a contract of sale is a person having an interest in the house within the meaning of the Act. I believe that there is no case to be found in which the liability of the insurance office has been limited to the value of the interest of the insured in the house destroyed. If a tenant for life having insured his house has the house destroyed or damaged by fire, I have never heard it suggested that the insurance office could cut down his claim by showing that he was of extreme old age or suffering from a mortal disease." Now, with the greatest 1 In Eayner v. Preston, 18 Ch. D. 1 (C. A., 1881), vendees brought action against vendors to establish a right to a sum received by the vendors from underwriters upon insurance written before the contract of sale was made. The contract contained no reference to insurance. Between the date of the contract and the time for com- pletion, the buildings purchased were injured by fire. It was held by the majority (Cotton, L. J., and Bbett, L. J., but Jambs, L. J., dissenting) that the action did not lie. — Ed. 986 CASTELLAIN V. PEESTON. [CHAP. IX. possible respect and reverence for all that is left to us of the judg- ments of a great judge like James, L. J., I confess I do not follow that. I have no doubt the insurance offices seldom take the trouble to look to the exact interest of the tenant who insures, and perhaps of the landlord who insures, and for the best of all reasons, because it is generally intended that the insurance shall be made not merely to cover the limited interest of the tenant, but also to cover the interest of all concerned. In most cases the covenants as to repair throw liability on one side or the other, and in a large class of leases the liability to repair is by the provisions of the lease thrown upon the tenant. There- fore in these cases no question ever can arise between the insurance office and the tenant from j-ear to year, or the tenant for j-ears, as to the amount which the insurance office ought to pay. But if a tenant for a j'ear, or a tenant for six months, or a tenant from week to week, insures, meaning only to cover his interest, does anybody really sup- pose that he could get the whole value of the house ? It is true that in most cases the claim of the tenant from j-ear to j'ear, or for j-ears, cannot be answered by handing over to him what may be the market- able value of his propertj' ; and the reason is that he insures more than the marketable value of his property, and he loses more than the mar- ketable value of his property ; he loses the house in which he is living, and the beneficial enjoj'ment of the house as well as its pecuniary value. That I think is all that was meant by the Vice-Chancellor in Simpson v. Scottish Union Insurance Co., 1 H. & M. 618, at p. 628. I will pass on to the case of a life tenant. I will take the case of a life tenant who is a very old man, and whose house is burnt down, but who has intended only to insure his own interest. I am far from saying that he could not under any conceivable circumstances be en- titled to have the house reinstated. A man cannot be compensated simply by paying him for the marketable value of his interest. But it does not follow from that that he gets or can keep more than he has lost. I very much doubt whether if a life tenant, having intended to insure only his life interest, dies within a week after the loss by fire, the court would award his executors the whole value of the house. In all these difficult problems I go back with confidence to the broad prin- ciple of indemnity. Apply that and an answer to the difficulty will always be found. The present case arises between vendors and ven- dees. That does not fall within the category of the cases which I have been discussing, where a person with a limited interest intends only to cover his own interest. But can it be any exception to the infallible rule that a man can only be indemnified to the extent of his loss? What is really the interest of the vendors, the assured? Their insur- able interest is this : they had insured against fire, and they had then contracted with the purchasers for the sale of the house, and after the contract, but before the completion, the fire occurred. Their interest, therefore, is that at law they are the legal owners, but their beneficial interest is that of vendors with a lien for the unpaid purchase-money ; SECT. II.] CASTELLAIN V. PKESTON. 987 thej- would get ultimately all the purchase-money provided the matter did not go off owiug to defective title. Such persons in the first in- stance can obviously recover from the insurance company the entire amount of the purchase-money. That was decided in the case of Col- lingridge v. Eoyal Exchange Assurance Corporation ; ^ but can they keep the whole, having lost only half ? Surely it would be monstrous to say that thej- could keep the whole, having lost only half. Suppose for a moment that only £50 remained to be paid of the purchase-mone}-, and that a house had been burnt down to the value of £10,000, would it be in accordance with anj- principle of indemnity that persons who were only interested, and could onlj- be interested to the extent of £50, could recover £10,000 ? They would be getting a windfall by the fire ; their contract of insurance would not be a contract against loss ; it would be a speculation for gain. Then what is the principle which must be applied ? It is a corollarj' of the great law of indemnitj-, and is to the following effect : That a person who wishes to recover for and is paid by the insurers as for a total loss, cannot take with both hands. If ho has a means of diminishing the loss, the result of the use of those means belongs to the underwriters. If he does diminish the loss, he must account for the diminution to the underwriters. In Simpson v. Thomson,^ it is said by Lord Cairns, L. C. : "I know of no foundation for the right of underwriters, except the well-known principle 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 waj-s and means by which the person indemnified might have protected himself against or reimbursed himself for the loss." Is there any real distinction here between fire policies and marine policies? It seems to me that the learned judge below, and the Amer- ican authorities on which he relies, have fallen into the mistake of supposing that the distinction which obtains as to certain incidents of marine policies and fire policies, is derived from a difference of prin- ciple, and not from the diversit}- of the subject-matter. In any case the principle of indemnity is the same, and there is no departure from it. I will make plain what I mean by reading the language of Chitty, J. He says (8 Q. B. D. 618) : "An obvious distinction exists between the case of marine insurance and of insurance of buildings 1 In CoUingridge v, Eoyal Exchange Assnr. Corp., 3 Q. B. D. 173 (1877), action was brought upon a policy of insurance by an owner whose buildings, after the making of the policy, had been required by the Metropolitan Board of Works for the purpose of making new streets and other improvements. After the value of the property had been determined by arbitration and the title had been approved by the Board, but before payment or conveyance, the buildings were destroyed by fire. The under- writers contended that they were not liable to pay anything, and that, if they were liable to pay at all, the only loss was incurred by the Board, and that, as the premises would be pulled down upon conveyance, the amount of recovery could not exceed the damage done to the buildings, considered as old materials. It was held that the owner was entitled to recover, and that the underwriters must pay the damage to the buildings, considered as buildings. — Ed. 2 Ante, p. 944 (H. L. Sc, 1877). — Ejd. 988 CASTKLLAIN V. PIIESTON. [CHAP. IX. annexed to the soil. In the case of marine insurance where there is a constructive total loss, the thing is considered as abandoned to the underwriters, and as vesting the property directly in them. But this doctrine of abandonment cannot be applied to the insurance of build- ings annexed to the soil; although the buildings annexed are destroyed, there cannot be a cession of the right to the soil itself." It seems to me, if I may venture to say it of so experienced a judge, that there is an ambiguity in the way in which he is dealing with the doctrine of con- structive total loss. The doctrine of abandonment is itself based upon the principle of indemnitj*. It is well known, historieall3', that that is so, and in reason it must be so. It is onlj- since marine policies have ceased to be wager policies throughout the world and become contracts of indemnit}', that the doctrine of abandonment has become universal ; and so far from its constituting a difference of principle between ma- rine insurance law and fire insurance law, it is the same principle of indemnitj', only worked out diflferently, because what happens at sea is the loss of a ship, and what happens on land is the loss of a house. It is true that the doctrine of abandonment, is inapplicable. But if the buildings annexed to the soil are destroj-ed, it is not a question of con- structive total loss, it is a question of actual total loss. The same ambiguity, I think, is to be found in the language of the American case'' which Chittt, J., cites at page 624. The learned judge in that case saj's : "It may be a question whether he" (the Chancellor) "has not relied too much on the cases of marine insurance in which the doc- trine of constructive total loss, abandonment, and salvage are fully acknowledged, but which have slight application to insurance against loss by fire." Slight application it is true, but not because the doctrine of indemnity is not to be carried out to its extreme in case of loss by fire, but because the subject-matter in the one case is the vessel lost at sea, and in the other the house burned, which is annexed to the soil. Chittt, J., goes on to discuss the case on the basis of what he calls the principle of subrogation. I will add verj' little to what Bkett, L. J., has said about that. It seems to me that a good deal of confusion would be caused if one were to suppose that insurers are in the position of sureties. A surety is a person who answers for the default of an- other, and an insurer is a person who guarantees against loss bj- an event. The default or non-default of another, as between that other and the person who is insured, may diminish or increase the loss ; but what the insurer is guaranteeing is not the default of that person ; he is guaranteeing that no loss shall happen by the event. And subroga- tion is itself only the particular application of the principle of indemnity to a special subject-matter, and there, I think, is where the learned judge has gone wrong. He has taken the terra "subrogation" and has applied it as if it were a hard and fast line, instead of seeing that it is part of the law of indemuit}-. If there are means of diminishing the loss, the insurer may pursue them, whether he is asking for contracts i.King V. State Mut. F. las. Co., ante, p. 965 (1850). — Ed. SECT. II.] CASTELLAIN V. PRESTON. 989 to be carried out in the name of the assured, or whether he is suing for tort. It is said that the law onlj- gives the underwriters the right to stand in the assured's shoes as to rights which arise out of, or in consequence of, the loss. I venture to think there is absolutely no authority for that proposition. The true test is, can the right to be insisted on be deemed to be one the enforcement of which will diminish the loss? In this case the right, whatever it be, has been actually enforced, and all that we have to consider is whether the fruit of that right after it is enforced does not belong to the insurers. It is insisted that only those payments are to be taken into consideration which have been made in respect of the loss. I ask whj', and where is the au- thoritj' ? If the payment diminishes the loss, to my mind it falls within the application of the law of indemnity. On this point I should like to pause one instant to consider the definition which Bkett, L.J., has given. It does seem to me that, taking his language in the widest sense, it substantiallj^ expresses what I should wish to express, with one small appendage that I desire to make. I wish to prevent the danger of his definition being supposed to be exhaustive by saying that if anjthing else occurs outside it the general law of indemnity must be looked at. With regard to gifts, all that is to be considered is, has there been a loss, and what is the loss, and has that loss been in substance reduced by anything that has happened? Now, I admit that, in the vast ma- joritj' of cases, it is difficult to conceive a voluntarj- gift which does reduce the loss. I do not think that the question of gift was the root of the decision in Burnand v. Rodocanachi,^ although it seems to me that it was a very essential matter in considering the case. I think the root of the decision in Burnand v. Rodocanachi was that the paj-- ment which had been made did not reduce the loss, not having been intended to do so. The truth was that the English government and the American government agreed that the sums which were to be paid were to be paid not in respect of the loss, but in respect of something else, and therefore the payment could not be a reduction of the loss. Suppose that a man who has insured his house has it damaged by fire, and suppose that his brother offers to give him a sum of money to assist him. The effect on the position of the underwriters will depend on the real character of the transaction. Did the brother mean to give the money for the benefit of the insurers as well as for the benefit of the assured? If he did, the insurers, it seems to me, are entitled to the benefit ; but if he did not, but only gave it for the benefit of the assured, and not for the benefit of the underwriters, then the gift was not given to reduce the loss, and it falls within Burnand v. Rodocan- achi. If it was given to reduce the loss, and for the benefit of the insurers as well as the assured, the case would fall on the other side of the line, and be within Randal v. Cockran,'' to which allusion has been made. In the present case the vendors have been paid the whole of 1 Ante, p. 946 (H. L., 1882). — Ed. « Ante, p. 937 (1748). — Ed. 990 CASTELLAIN V. PEESTON. [CHAP. IX. their purchase-money. Even if thej* had not been paid, but had still the purchase-money outstanding, they would have had some beneficial interest in the nature of their vendors' lieu. An unpaid vendor's lien is worth something, I suppose. I do not say that it is necessary to decide the point, and I only mention it to make more clear my view of this case, not as laying down the law for future occasions. But if an unpaid vendor's lien is worth something, on what principle could a vendor keep the unpaid vendor's lien and be paid for it bj- the insurers ? In such a case he would be taking with both hands. Now, whj- should not underwriters be entitled at all events to insist on the vendor's lien ? As to specific performance I say nothing. I am not familiar, as Cot- ton, L. J., is, with that branch of the law, and there may be some special reasons why the insurers should not be able to insist upon specific performance ; but why should not they insist upon the unpaid vendor's lien ? The vendor, if he did not exercise it for their benefit, would be trying to make the contract between himself and the insurers more than a contract of indemnit}'. Chittt, J., seems to think that in this instance it is necessary to recollect that the contract of sale was not a contract, either directlj' or indirectly, for the preservation of the buildings insured ; that the contract of insurance was a collateral con- tract wholl}- distinct from and unaffected by the contract of sale. What does it matter? The beneficial interest of the vendors in the house depends on the contract being fulfilled or not, and the fulfilment of the contract lessens the loss, its non-fulfilment affects it. Chittt, J., indeed, says further, that "the attempt now made is to convert the insurance against loss by fire into an insurance of the solvency of the purchaser " (8 Q. B. D. 621). That may be answered in the same waj-. It is not that the solvencj' of the purchaser is guaranteed, but that the vendors are guaranteed against the loss which is diminished or in- creased according as the purchaser turns out to be solvent or not. The solvency of the purchaser affects the loss ; that is the onl3' way in which it touches the insurance ; it is not because the insurance is directly an insurance of his solvencj'. Finally (and this is the last observation that I wish to make upon the judgment of Chitty, J.), he puts the case of a landlord insuring, and the tenant under no obliga- tion to repair. He takes a case " where, under an informal agreement evidently drawn by the parties themselves, the large rent of £700 was reserved, and the tenant, notwithstanding the fire, was bound to pay the rent." He saj-s : "Assume that the building in such a case was ruinous, and would last the length of the term only. Could the insurers recover a proportionate part of each payment of rent as it was made, or could they wait until the end of the term, and then say in effect, ' You have been paid for the whole value of the building, and therefore we can recover against you' ?" That seems to me at first sio-ht to look as if it were a very difficult point ; but I think this difficulty diminishes, if it does not vanish, as soon as it is considered what are the conditions of the hypothesis. Is the learned judge supposing that the landlord, SECT. II.J CASXELLAIN V. PEESTON. 991 who is a person with a limited interest, did intend to insure all other interests besides his own ? The landlord can do so if he so intended ; the question is, has he done so ? If the landlord intended to insure all other interests besides his own, the difficulty dissipates itself into thin air. If he did not, it would be a very odd case, and perhaps one might ride safely at anchor by sajing that one would wait till it arose. But I am not desirous of being over cautious, because I am satisfied to rest on the broad principle of indemnity, and I say, "Apply the broad principle of indemnity, and you have the answer." The vendor cannot recover for greater loss than he suffers ; and if he has only a limited interest in the subject-matter, and only intends to insure that interest, I know of no means in law or equit}- by which he is entitled to obtain anything else out of the insurance oflSce except what is measured by the measure of his loss. As to the form of action, I need add nothing to what has fallen alread}' from the other members of the court. I am so much in accord with their views that I should not have added a judgment as long as mine has been if it were not for the great impor- tance, to my mind, of keeping clear in these insurance cases what is really' the basis and foundation of all insurance law. Judgment reversed} ^ On the topic of this section, see also: — Rockingham Mut. F. Ins. Co. v. Bosher, 39 Me. 253 (18.55); Midland Ins. Co. v. Smith, 6 Q. B. D. 561 (1881) ; Niagara F. Ins. Co. „. Fidelity Title & Trust Co., 123 Pa. 516 (1889); Ins. Co. of North America v. Fidelity Title & Trnst Co., 123 Pa. 523 (1889) ; West of England F. Ins. Co. v. Isaacs, [1897] 1 Q. B. 226 (C. A., 1896) ; United States v. American Tobacco Co., 166 U. S. 468 (1897) ; Farmers' F. Ins. Co. v. Johnston, 113 Mich. 426, 429-430 (1897) ; Lake Erie & Western Eailroad Co. v. Falk, 62 Ohio St. 297 (1900). — Ed. 992 CONN. MUX. LIFE INS. CO. V. N. Y. & N. H. R. K. [CHAP. IX. SECTION III. Life Insurance. CONNECTICUT MUTUAL LIFE INS. CO. v. NEW YORK AND NEW HAVEN EAILROAD CO. Supreme Court of Connecticut, 1856. 25 Conn. 265.* Action on the case. On demurrer to the plea, the questions of law were reserved for the advice of this court. Hunger ford and W. D. Shipman, for the plaintiffs. Haldwin, for the defendants. Storrs, J. The defendants, a railroad company are charged with having negligent!}' occasioned the death of one Dr. Beach, by which event the plaintiffs, a life insurance companj-, have been compelled to pay to his representatives the amount of an insurance effected upon his life, of which amount a recovery is sought in this action. A plea in bar sets forth a paj'ment to the administratrix of the deceased of the damages of which the defendants' negligence had rendered them legall}' liable, and also a discharge by her. This plea and the demurrer thereto require no examination, as they are immaterial in the view which we talce of the declaration. It is clear from the declaration, that a pecuniary injury has been sus- tained bj- the plaintiffs, in consequence of the unlawful conduct of the defendants. If the injury thus set forth be actionable, or an injury in a legal sense, there must be a recovery. But we are of the opinion, that the wrong complained of is not the proper subject of a suit at law, both for reasons appertaining to the peculiar nature of the injury, and to the manner in which its consequences are brought home to the party claiming redress. The act complained of is the producing of death. We are at once met with the inquiry, whether under the common law S3-stem, a party is liable, civiliter, for the destruction of human life, whatever the nature of the consequences may be, or however clearly such a wrong may in- volve pecuniary damage.'' . . . We have no inclination to abrogate the common law doctrine, that the death of a human being, whatever may be its consequences in a pecuniary or in any other aspect, is not an actionable injury. The other branch of our inquiry, relating to the manner in which the injury complained of was brought home to the party claiming to have suffered by it, concerns principles of great practical interest and novel in their present application. The plaintiffs sustain no relations to the authors of the wrong other than that of mere contractors with 1 The reporter's statement has not been reprinted. — Ed. ' The discuBsion of this question has been omitted. — Ed. SECT. III.] CONN. MUT. LIFE INS. CO. V. N. Y. A N. H. K. E. 993 the part}' injured ; and their contract liability is the medium through which the injury is brought home to them. They justly say, that their loss is in fact distinctly traceable and solely due to the miscon- duct of the defendants ; that the death of Dr. Beach, caused by the defendants, in a legal sense determined the only contingency out of which their liabilitj' grew, and brought upon them the consequences of that liabilitj-, which, through the defendants' unlawful acts, had now become fixed. Still the question remains, notwithstanding this precise exhibition of cause and effect, whether these consequences, of which the deceased was primarily the subject, and which affected the plaintiffs only because they had put themselves into the position of contractors with him, were in a legal view brought home to the plaintiffs, directly or indirectlj-. The completeness of the proof of connection between the acts of the defendants and the loss of the plaintiffs, does not vary, although it may tend to confuse the aspects of the case. The single question is, whether a plaintiff can successfully claim a legal injury to himself from another, because the latter has injured a third person in such a manner that the plaintiffs' contract liabilities are therebj' affected. An individual slanders a merchant and ruins his business ; is the wrong doer liable to all the persons, who, in consequence of their relations by contract to the bankrupt, can be clearly shown to have been damnified by the bankruptcy? Can a fire insurance compan}', who have been subjected to loss bj' the burning of a building, resort to the responsible author of the injurj-, who had no design of affecting their interest, in their own name and right? Such are the complica- tions of human affairs, so endless and far-reaching the mutual promises of man to man, in business and in matters of money and property, that rarely is a death produced by a human agency, which does not affect the pecuniary interest of those to whom the deceased was bound by contract. To open the door of legal redress to wrongs received through the mere voluntary and factitious relation of a contractor with the immediate subject of the injury, would be to encourage collusion and extravagant contracts between men, by which the death of either through the involuntary default of others, might be made a source of splendid profits to the other, and would also invite a system of litigation more portentous than our jurisprudence has j'et known. So self-evident is the principle that an injury thus suffered is indirectly brought home to the party seeking compensation for it, that courts have rarely been called upon to promulgate such a doctrine. The case, however, of Anthony v. Slaid, 11 Mete, 290, referred to at the bar, is in point. A contractor for the support of paupers had been subject to extra expense by means of a beating which one of those paupers had received, and he sought from the assailant a recovery of the expenditure. But the court held that the damage was remote and indirect ; having been sustained not by means of any natural or legal relation between the plaintiff and the party injured, but by means of the special contract by which he had undertaken to support the town paupers. 994 CONN. MTJT. LIFE INS. CO. V. N. Y. & N. H. E. E. [OHAP. IX. The case, however, would present a different aspect, if, by virtue of the contract between the railroad companj' and the deceased, a direct relation was established between the former and the insurers. If the contract for the transportation of Dr. Beach safely, either in its terms, or through its necessary legal incidents, or bj' fair inference as to the intent of the parties, devolved upon the railroad company, a duty to- wards the present plaintiffs, the latter might sue for a violation of that duty. An obligation thus imposed will not always require a suit for its breach to be brought by a partj' to the contract ; an independent right of action resides in the party to whom the duty was to be per- formed. In this respect there is no difference between an obligation imposed by law and by contract. Where the dutj' of keeping a high- way is lodged in a certain quarter by statute, the way is to be kept in repair by the public, for everybodj', and when any person is injured by its defects, the breach of duty is to him, and he has an action for the violation of his right. If a stage coach proprietor agrees with a master to carry his servant, and injures the latter on the road, he is liable directly to the servant ; for although undertaken at the request of and by agreement with another, the duty was directly to the party injured. Longmeid and ux. v. Holliday, 6 Eng. Law & Eq. R. 563. But it is evident that the present case cannot be brought within the principle of such decisions. It would be unfair to argue, that when two parties make a contract, they design to provide for an obligation to any other persons than themselves and those named expressly there- in, or to sucli as are naturally within the direct scope of the duties and obligations prescribed by the agreement. On this point it is enough to say, that when an agreement is entered into, neither party contem- plates the requirement from the other, of a duty towards all the persons to whom he may have a relation by numberless private contracts, and who maj' therefore be affected by the breach of the other's undertakings. "We cannot find that any public law charged the present defendants with any duty to the plaintiffs regarding Dr. Beach's life ; nor can we see that Dr. Beach exacted, either expressly or by reasonable intendment, any obligation from the defendants towards the insurers of his life, when he contracted for his transportation to New York. Had the life of Dr. Beach been taken with intent to injure the plaintiffs through their contract liability, a different question would arise, inas- much as every man owes a duty to every other not intentionally to injure him. We decide, that in the absence of any privity of contract between the plaintiffs and defendants, and of any direct obligation of the latter to the former growing out of the contract or relation between the in- sured and the defendants, the loss of the plaintiffs, although due to the acts of the railroad company, being brought home to the insurers only through the artificial relation of contractors with the party who was the immediate subject of the wrong done by the railroad companj', was a remote and indirect consequence of the misconduct of the defendants, and not actionable. SECT. III.J CONN. MUT. LIFE INS. CO. V. N. Y. & N. H. K. K. 995 Since the determination of tliis case we have observed a decision recently made in Maine, Rockingham M. F. Ins. Co. v. Bosher, 89 Maine R. 253, fully confirming the legal theory which we have ad- vanced. The suit was brought against a party who had wilfully fired a store, by the insurance companj-, who had paid the consequent loss, and in their own name. The court dismissed the action on demurrer ; taking the same view of the common law doctrine which we have expressed, relative to the indirect and remote manner in which the interests of the insurer were prejudiced by the misconduct of the wrong doer. The cases in which insurers have been permitted to recover against the authors of their losses, are not in contravention of these principles. They have recovered, not by color of their own legal right, but under a general doctrine of equity jurisprudence, commonly known as the doctrine of subrogation, applicable to all cases, wherein a party, who has indemnified another in pursuance of his obligation so to do, suc- ceeds to, and is entitled to a cession of, all the means of redress held by the party indemnified against the party who has occasioned the loss. In some instances the doctrine has been carried so far, that an insurer has been permitted to recover from the insured such com- pensation as the latter has subsequentlj- obtained from the wrong doer ; as if the money paid bj' the tort feasor, under such circumstances, was reallj' paid for the use of the insurer. By virtue of this doctrine, there is no doubt of the right of an insurer, who has paid a loss, to use the name of the insured, in order to obtain redress from the author of the wrong ; a right to be exercised for the benefit of the party equitably- entitled to its benefits, not to be enforced by its possessor in his own name, but by him as the successor to the remedies of the person whom he has indemnified. Having no independent claim on the wrong doer, he might be successfully met by the superior equities of the wrong doer, such for instance as a payment to the party directlj' injured, without notice of the insurer's claim to be subrogated. Nothing can be plainer than that an indirect liability of this kind is an argument rather against the claim of a direct responsibility of the wrong doer, than a sugges- tion in its favor. The views taken hy courts in recognizing the insur- er's right of subrogation, tend to sustain the principle which we now maintain. [See case of Propeller Monticello, 17 How. R. 154. Mason V. Sainsbury, 26 E. C. L. R. 36 ; Yates v. White, 33 E. C. L. R. 349 ; Quebec Fire Ins. Co. v. St. Louis, 22 Eng. Law & Eq. Rep. 73 ; Hart V. W. B. R. Co., 13 Met. 99.] We advise the superior court to render judgment for the defendants. In this opinion, the other judges, Waite and Hinman, concurred. Judgment for defendants.^ 1 Ace. . Insurance Co. v. Brame, 95 U. S. 754 (1877). See Harding v. Town of Townshend, 43 Vt. 536 (1871) ; Bradburn v. Great Wes- tern Ry. Co., L. R. 10 Ex. 1 (1874) r Grand Trunk Ky. Co. t. Jennings, 13 App. Cas. 800 (P. C, 1888). —Ed. 996 LENOX V. UNITED INS. CO. [CHAP. X. CHAPTER X. CONDITIONS APPLICABLE AFTER LOSS. SECTION I. Marine Insurance} LENOX V. UNITED INS. CO. Supreme Couet of New York, 1802. 3 Johns. Cas. 224. This was an action on a policy of insurance, dated the 13th March, 1800, on three boxes of muslins, on board of the vessel called the " Eambler," at and from New York to Monte Christo, etc. The goods were valued at $2,610, the sum insured. The vessel was captured by the French during the voyage, and the plaintiff abandoned for a total loss. By the policy, the loss was made payable "thirty daj-s after proof thereof." The plaintiff, at the time he abandoned and claimed a total loss, exhibited to the defendants the customary protest of the master, stating the loss, and the bill of lading and invoice of the goods. The two latter were not sworn to, and the defendants refused to admit the invoice, without the oath of the plaintiff, which he declined to give, as not requisite on his part. At the trial, the interest, loss, and abandonment were fully proved by the plaintiff, and the jury found a verdict for the plaintiff for a total loss. A motion was made to set aside the verdict, and for a new trial. Hamilton, for the plaintiff. Harrison and Troup, contra. Thompson, J. The true question arising out of the above case, and which is submitted to the decision of the court, appears to be to deter- mine what is the construction to be given to that part of the policy which declares "that the loss is made payable in thirty daj's after proof thereof." On the part of the defendant it is contended that proof of loss is a condition precedent ; that the plaintiff commenced his action prematurely, without producing to the underwriters the kind of proof contemplated by the policy ; that the proof previously necessary to be exhibited, must be proof of interest as well as loss, and that by wit- nesses, or at least by the oath of the party himself. In the present 1 For notice of abandonment, as a step toward a claim for constructive total loss, see ante, Chap. VIII., Sect. I., (C). — Ed. SECT. I.] LENOX V. UNITED INS. CO. 997 case, no such proof was oflfered before the commencement of the plain- tiffs action. The evidence of loss and interest exhibited to the defend- ants consisted of the customary protest, and the bill of lading, and invoice of the muslins ; but the bill of lading was not sworn to. On the part of the plaintiffs it is contended that these were all that were uecessar}- to be offered, in order to satisfy the terms of the contract. It is a governing rule, in expounding policies of insurance, as well as other contracts, that the intent of the parties ought to be sought after and carried into effect where it can be discovered from the instrument itself. Proof, in strict legal construction, means evidence before a court or jur^-, in a judicial waj'. It is certain, however, that such could not have been the understanding of the parties to this contract as to the meaning of the term. And it was not contended by the defendants' counsel that such kind of proof was contemplated ; but that proof col- lateral, and out of court, would satisfy the terms of the contract ; that this proof must be either by witnesses, or by the affidavit of the plaintiff. The parties to a contract have undoubtedly a right to modify it as thej' think proper, and to impose on each other such restrictions as they shall choose, if not illegal. So that, if it was clearlj' inferrible from the instrument, that it was the intent of the parties, that before the loss was payable, proof by witnesses, or hy the oath of the party, of both loss and interest, must be exhibited to the underwriters, the contract ought to be so construed as to carry that intention into effect. But I think the terms do not necessarily warrant such an inference, and all rational presumption is against such conclusion. It is not fairly to be presumed that the plaintiff would lay himself under restrictions that might totally prevent a recovery in case of a loss ; and such might be his situation in case it was necessary for him to produce proof by witnesses, of his interest and loss, before he could bring his action, as no mode is pro- vided in the law to compel witnesses to appear before any officer or magistrate to attest to such facts. Although it was in the power of the plaintiff, by his own affidavit, to attest to his interest, yet, in my judg- ment, that ought not to be required, unless it was essential, in order to satisfy the terms of the contract. And although I do not think it necessary, for the purpose of deciding the present question, to deter- mine how far voluntary oaths ought to be tolerated, j-et I do not hesitate to say they ought, very rarely, if ever, to be administered. It is a circumstance worthy of notice that by this policj' the loss is made payable in thirty days after proof of loss only, and not after proof of loss and interest ; and although on the trial it is incumbent on the insured to prove his interest as well as loss, yet he would be bound to do this, independent of this clause in the policy. This is a clause peculiar to our own policies, and I cannot think it ought to receive a construction that will impose on the insured the necessity of producing the same proof preliminarilj', that would be requisite on tlie trial, to en- title him to recover. Admitting, therefore, that proof necessarily im- 998 LENOX V. UNITED INS. CO. [CHAP. X. plies evidence under oath, still, as to loss (which is all that is expressly required bj' the policy), the protest of the captain furnishes that species of proof. It was stated in argument bj' the plaintiffs counsel, and not denied by the defendants, that policies had lately undergone an altera- tion in this clause ; that formerly the loss was made payable in so many days after proof of loss and interest, but that lately the word interest had been expunged. Taking this, then, as a fact, it would afford a strong inference that it was the intention of the parties to dis- pense with any proof of interest, as a preliminary step under this clause; at all events, that nothing more should be required than the usual docu- ments, to wit, the invoice and bill of lading. The interest of commerce, as well as the convenience of parties, demands this construction, unless forbidden by the terms of the contract, and more especially as the clause is peculiar to our own policies. One of the principal objects of this clause, no doubt, was to give the underwriters time to determine, after being apprized of the loss, whether they would pay without a suit ; and for the purpose of furnishing them with evidence on which to ground their determination, they ought to have offered what may afford them a reasonable satisfaction, according to the course of mercantile busi- ness. I am, therefore, of opinion that the documentary proof, to wit, the protest, bill of lading, and invoice of the goods insured, were all the preliminary proofs necessary for the plaintiff to exhibit to the under- writers, previous to his bringing his action, according to the legal import and true interest and meaning of this clause in the policj' ; and more espcciallj', in the present case, as it is stated, that the plaintiff's interest and loss were fully proved on the trial, and the only possible benefit resulting to the defendants from the contrary construction, would be to turn the plaintiff round to bring a new snit. This consideration ought not, however, to influence the decision, if it was clearly made necessary by the contract that the preliminary proof should be different from that offered. But as I do not think that requisite, I am of opinion the ver- dict ought not to be set aside. Eadcliff, J.^ The question is whether by the terms of the policy the plaintiff was obliged to make oath of his interest in the cargo before he was entitled to demand payment of the defendants. . . . The ex- pression is general, "thirty days after proof of loss." It must be taken in connection with the subject-matter, and according to the usual course of such proceedings. The loss itself is usually proved by the protest of the captain. ... As far as proof of interest may be required, independent of the captain's protest, I think it can only be construed to mean the usual documentary proofs attending the subject, the bill of lading, invoice, and other papers, if there be any. These satisfy the terms of the expression, granting that proof of loss also implies proof of interest, which may admit of some question. The parties in this case could not mean legal proof, which can only be taken in a course of legal proceeding. They plainly referred to a different mode of proof, 1 The greater part of this opinion has been omitted. — Ed. SECT. I.J LENOX V. UNITED INS. CO. 999 before the commencement of any legal process, and I think could only have contemplated the production of that species of evidence which would satisfy a reasonable mind. . . . Upon the whole, I am of opinion that there is no adjudged case which is decisive of the question before us, and that on principle and reason, and according to the usual course of such proceedings, the proof offered by the plaintiff was sufficient. Kent, J. The onlj' question raised in this case is, whether the plaintiff produced to the defendants proof of loss, before bringing his suit, sufficient to entitle him to recover ? The plaintiff exhibited the protest, bill of lading, and invoice. This species of proof has been aptly termed documentary evidence. The interest of the assured may be proved by such documents. The bill of lading is always received as a document of the goods laden on board, and in the present case, the authenticity of the handwriting of the master was not questioned. The protest is, in mercantile understand- ing, high evidence of loss ; and it maj' well have been intended by the parties, since the strict proof requisite on a trial was surely never within their contemplation. As long as the words of the policy can be satisfied, by furnishing the papers that were produced, we ought not to extend them so far as to include proof by the oath of witnesses, or the oath of the party, which seems to have been required in the present case. The law will not sanction an oath administered, at the instance of an individual, when there is not a lis pendens, unless there be a positive provision for the case. Many difficulties would arise under the construction, that the parties intended proof bj' witnesses. These difficulties are avoided by confining the words to the vouchers respect- ing the property on board, and as to the loss ; and such vouchers are to be furnished to the insurer, not in the light of proof, technically con- sidered, but as reasonable information or notice, upon which he is to act.i . . . I am of opinion, accordingly, that the plaintiff is entitled to judg- ment. Livingston, J., dissented. Lewis, C. J. , not having heard the argument, gave no opinion. Judgment for the plaintiff ."^ 1 Here followed a discussion of authorities. — Ed. 2 See Talcot v. Marine Ins. Co., 2 Johns. 130, 136 (1807). In Barker v. Phoenix Ins. Co., 8 Johns. 307, 317-318 (1811), Kent, C. J., for the court, said : " The act of abandonment, under the general law of insurance, and the furnishing the preliminary proofs, under the special stipulation in the policy, are dis- tinct acts, and must not be confounded. The clause in the policy, that the loss is to be paid thirty days after proof thereof, gave rise to what is termed in our books the pre- liminary proofs ; and as its object was only to furnish reasonable information to the insurer, so that he might be able to form some estimate of his rights and duties, before he was obliged to pay, it has always been liberally expounded, and is construed to re- quire only the best evidence of the fact that the party possesses at the time." In Lawrence v. Ocean Ins. Co., 11 Johns. 241 (1814), the insurance was on goods, and the defendants objected to the sufficiency of the preliminary proof, because the 1000 LENOX V. UNITED INS. CO. [CHAP. X. proof of loss was only a copy of a letter from merchants to the owners of the ship, enclosing a letter which thay had received from the master to the effect that the ship had been captured and condemned as prize ; and it was held that the preliminary proof of loss was sufficient. Thompson, C. J., for the court, said : " The objection to the sufficiency of the preliminary proofs was properly overruled. The usual and cus- tomary documents, accompanied with an affidavit showing the interest of the assured, were exhibited to the underwriters, together with a copy of a letter from the master . . ., received from Messrs. Parish & Co., and which was the only evidence of loss in their possession; and this was all that could be req^uired." On the topic of this section, see also :_ — Abel V. Potts, 3 Esp. 242 (1800) ;' Ruan V. Gardner, 1 Wash. C. C. 14."), 148-149 (1804) ; Haff V. Marine Ins. Co., 4 Johns. 132 (1809); Craig V. United Ins. Co., 6 Johns. 226 (1810) ; Allegre v. Maryland Ins. Co., 6 H. & J. 408, 410-412 (1825) ; Pacific Ins. Co. v. Catlett, 4 Wend. 75, 83-84 (1829); Child !). Sun Mut. Ins. Co., 3 Sandf. 26, 41-42 (1849) ; Savage v. Corn Exchange F. & Inland Navigation Ins. Co., 4 Bosw. 1, 12-13 (1858); Peoria M. & F. Ins. Co. v. Walser, 22 Ind. 73, 84-85, 87 (1864) ; Fuller V. Detroit F. & M. Ins. Co., 36 Fed. R. 469, 474 (C. C. N. D. 111., 1888). — Ed. SECT. II.J WORSLEY V. WOOD. 1001 SECTION II. Fire Insurance. WOESLEY -y. WOOD and Others, Assignees. King's Bench, in Error, 1796. 6 T. E. 710. This was an action of covenant brought in the Court of Common Pleas.^ The declaration stated that by a policy of insurance made before Lockyer and Bream became bankrupts, name!}', on the 9th of March, 1792, it was witnessed that Lockyer and Bream had paid £11 16s. to the Phoenix Companj', and liad agreed to pay to them, at their office, the sum of £11 16s. on the 25th of March, 1793, and the like sum j'early on the said daj' during the continuance of the policy for insurance from loss or damage by fire, not exceeding the sum of £7,000. That Worsley covenanted with L. and B. that so long as the assured should paj' the above premium, the capital stock and funds of the Phffinix Company should be liable to pay to the assured any loss that the assured should suffer bj' fire on the property therein mentioned, not exceeding £7,000, according to the tenor of the printed proposals deliv- ered with the policy. That in the printed proposals referred to by the policy it is declared that the company would not be accountable for any loss by fire caused by foreign invasion, civil commotion, etc. ; and also that all persons assured sustaining any loss by fire should forthwith give notice to the company, and as soon as possible after deliver in as particular an account of their loss as the nature of the case would admit, and make proof of the same by their oath and by their book of accounts or other vouchers as should be reasonably required ; and should procure a certificate under the hands of the minister and church- wardens and of some reputable householders of the parish not concerned in the loss, importing that they were acquainted with the character and circumstances of the person insured, and knew or believed that he by misfortune and without any kind of fraud or evil practice had sus- tained by such fire the loss and damage therein mentioned ; and in case any difference should arise between the assured and the company touching any loss, such diflference should be submitted to the judgment of arbitrators indifferently chosen, whose award should be conclusive, etc. ; and when any loss should have been duly proved, the assured should immediately receive satisfaction to the full amount of the same. The declaration then stated that on the 1st of July, 1792, a loss hap- pened by fire in the house of L. and B., in which all their books of account were destroyed to the amount of £7,000. That L. and B. on the same day gave notice of it to the company, and on the same day 1 Reported in the Common Pleas, sub. nom. Wood v. Worsley, 2 H. Bl. 574 (1795). — Ed. 1002 WORSLEY V. WOOD. [CHAP. X. delivered to the compan}' as particular an account of their loss as the nature of the case admitted, and were then and there also readj' and willing and then and there tendered to make proof of the loss by their oath, and to produce such vouchers as could be reasonably' required in that behalf ; that on the same day they procured and delivered to the said company a certificate under the hands of four reputable house- holders of the parish, to the effect required in the printed proposals, and applied to E. Embry, the minister, and H. Hutchins and J. Bellamy, the churchwardens of the parish, to sign such certificate, but that they without any reasonable or probable cause wrongfully and un- justly refused and have ever since refused to sign it. The declaration then stated that the funds of the company were sufficient to pay this loss, yet the company have not paid it either to the bankrupts or to their assignees ; nor have the company submitted the said difference to the judgment of such arbitrators, etc' . . . The defendant pleaded (to the first count) that the bankrupts were not interested in the house or goods, etc. , at the time of the loss ; on which issue was taken in the replication. 2dly. That the loss was occasioned by the fraud and evil practice of the bankrupts ; on which issue was taken, etc. 3dly. That the minister and churchwardens did not refuse wrongfully and injuriouslj- and without any reasonable or probable cause to sign the certificate ; on which issue was taken. . . . To the last of these pleas the plaintiffs replied that the bankrupts as soon as possible after the loss, namel}', on the 1st of July, 1792, pro- cured and delivered to the company such certificate as is required in the printed proposals under the hands of four respectable inhabitants, etc., but that the minister and churchwardens wrongfully refused to sign it without any reasonable or probable cause for so doing. The rejoinder stated that the minister and churchwardens did not wrongfully refuse, etc. ; on which issue was taken in the surrejoinder. The jury found all the issues for the plaintiffs, and gave a verdict for £3,000. The defendant below removed the record into this court by writ of error, and assigned for error that the declaration, the replication, and the other pleadings of the plaintiffs below were not sufficient in law to maintain the action. This case was twice argued in this court, the first time in last Easter term by Wood for the plaintiff in error and Lambe for the defendants, and now by Law for the former and Oibbs for the latter. Lord Kenyon, C. J.'* . . . This case requires our serious considera- tion, because the Court of Common Pleas have already given their opinion on it in favour of the plaintiff's claim, though it has been suggested that it was not the unanimous opinion of that court' We are called upon in this action to give effect to a contract made between 1 In reprinting the statement, passages as to a second count have been omitted. — Ed. " A passage on the second count has been omitted. — Ed. * Mr. Justice Heath differed from the rest of the Court of C. B. — Rep. SECT. n.J WOESLEY V. WOOD. 1003 these parties; and if from the terms of it we discover that they intended that the procuring of the certificate by the assured should precede their right to recover, and that it has not been procured, we are bound to give judgment in favor of the defendant below. These insurance com- panies, who enter into very extensive contracts of this kind, are liable (as we but too frequently see in courts of justice) to great frauds and impositions ; common prudence therefore suggests to them the propriety of taking all possible care to protect them from frauds when they make these contracts. The Phoenix Company have provided, among other things, that the assured should, as soon as possible after the calamity has happened, deliver in an account of their loss and procure a certifi- cate under the hands of the minister and churchwardens and of some reputable householders of the parish, importing that they knew the character and circumstances of the assured, and believed that they had sustained the loss without any kind of fraud. That' this is a prudent regulation this very case is sufficient to convince us ; for it appears on the record that soon after the fire the assured delivered in an account of their loss which they said amounted to £7,000, that the}' obtained a certificate from some of the reputable inhabitants that the loss did amount to that sum, and that the jury after inquiring into all the cir- cumstances were of opinion that the loss did not exceed £3,000, and j'et it is also stated that the minister and churchwardens, who refused to certify that they believed that the loss amounted to £7,000, wrong- full}" and without any reasonable or probable cause refused to sign such certificate. The great question here is, Whether or not it was the in- tention of these parties that that certificate should precede payment by the insurance office ; now it seems to me from the printed proposals that it was their intention that it should precede payment. What is a condition precedent or what a condition subsequent is well expressed by my brother Ashhurst in the case of Hotham v. The East India Com- panj-,^ to which I refer in general. If there be a condition precedent to do an impossible thing, the obligation becomes single ; but however improbable the thing may be, it must be complied with, or the right which was to attach on its being performed does not vest. If the condition be that A. shall enfeoff' B., and A. do all in his power to perform the condition, and B. will not receive livery of seisin, yet from the time of Lord Coke to the present moment it has not been doubted but that the right which was to depend on the performance of that con- 1 In Hotham v. East India Co., 1 T. R. 638, 645 (1787), the action being covenant on a charter-party, AsHHnEST, J., for the court, said : " There are no precise technical words required in a deed to make a stipulation a condition precedent or subsequent ; neither doth it depend on the circumstance , whether the clause is placed prior or posterior in the deed, so that it operates as a proviso or covenant. For the same words have been construed to operate as either the one or the other, according to the nature of the transaction. The merits therefore of the question must depend on the nature of the contract, and the acts to be performed by the contracting parties, and the subse- quent facts disclosed on the record, which have happened in consequence of this contract."— Ed. 1004 WOESLEY V. WOOD. [CHAP. X. dition did not arise. In the ease of Hesketli v. Gray,^ which has been cited as a determination in this court, there was also an application to the great seal at the time when Lord Ch. J. Willes was the first com- missioner to dispense with the condition, which was that the Bishop of Chichester should accept the resignation of a living; but it was held that there was no ground for a Court of Equity to interfere. This court also held, when the case came before them, that it was a condi- tion precedent and must be performed. In tills case, however, it is said that, though the minister and church- wardens did not certify, some of the inhabitants did certify, and that that was sufficient, it being a performance of the condition cy pres. But I confess I do not see how the terms cy pres are applicable to this subject ; the argument for the plaintiflfs below goes to show that if none of the inhabitants of this parish certified, a certificate by the in- habitants of the next or of any other parish would have answered the purpose. But the assured cannot substitute one thing for another. In the case of Campbell v. French,^ we explained the grounds of this doc- trine, and said that the party who had not complied with the condition could not substitute other terms or conditions in lieu of those which all the parties to the contract had originally made. So here it was com- petent to the insurance oiHce to make the stipulations stated in their printed proposals, they had a right to say to individuals who were desirous of being insured, " Knowing how liable we are to be imposed upon, we will, among other things, require that the minister, churcli- wardens, and some of the reputable inhabitants of your parish shall certify that they believe that the loss happened by misfortune and with- out fraud, otherwise we will not contract with you at all." If the assured say that the minister and churchwardens may obstinately refuse to certify, the insurers answer, " We will not stipulate with you on any other terms." Such are the terms on which I understand this insur- ance to have been effected ; and therefore I am clearly of opinion that there is no foundation for the action, and that the judgment below must be reversed.^ Judgment reversed.^ 1 Sayer, 185 (1755). — Ed. 2 6T. R. 200 (1795).— Ed. 8 Concurring opinions by Ashhukst, Grose, and Lawbence, JJ., have not been reprinted. — Ed. * Other early cases on provisions as to certificates are : Oldman v. Bewicke, 2 H. Bl. 577, n. (1785) ; Routledge w. Burrell, 1 H. Bl. 254 (1789). See London Guarantie Co. d. Fearnley, 5 App. Gas. 911, 916, 918 (1880). — Ed. SECT. II.] MASON V. HAETEY. 1005 MASON V. HARVEY. ExcHEQDEK, 1853. 8 Exch. 819. Assumpsit on a policy of insurance effected bj' the plaintiff, a pawn- broker, with the Norwich Union Fire Insurance Society. The declara- tion stated the insurance to be (inter alia) £150 on the shop of the plaintiff, and £1,000 on pledges received under the 39 & 40 Geo. III. c. 99 ; also that there was indorsed on the policy the following (among other) conditions'': — "Eighth: Whenever any fire shall happen, the partj' insured shall give immediate notice thereof to one of the secretaries or agents of the society, and within three calendar raonths deliver to such secretarj- or agent, under his or her hand, ac- counts exhibiting the full particulars and amount of the loss sustained, estimated with reference to the state in which the property destroj-ed or damaged was immediatelj* before the fire happened ; and such ac- counts shall, if required by the directors, be supported by the oral testimony, and by the depositions or affirmations in writing of the claimant, and of his or her servants, and bj' the production of his or her books and vouchers." The declaration alleged that, whilst the propertj' continued so insured, the " said shop and divers pledges received under the 39 & 40 Geo. III. c. 99, and then being in the said shop, were damaged and destroyed by fire," etc. — Breach, that the loss which so happened has not been made good to the plaintiff. Plea, that the plaintiff did not, within the period of three calendar months after the said shop and pledges were so damaged and destroyed by fire, deliver to any secretary or agent of the said society, under his hand, anj' such accounts as are in and by the eighth condition men- tioned and required, exhibiting the full particulars and amount of the loss sustained bj' the plaintiff as alleged, estimated with reference to the state in which the property damaged and destroj'ed was immediately before the fire happened by which the property was so damaged and destroyed. Demurrer and joinder. TTnthanh, in support of the demurrer. The plea is bad in substance. A compliance with the requisitions of the condition in question is not a condition precedent to the plaintiff's right to sue on the policj', but onl}' renders him liable to an action for his breach of duty. The case falls within the principle of the decisions, that, where a person takes an estate or benefit under a contract, subject to a duty, the law will imply an undertaking to perform it ; for the breach of which an action may be maintained : Burnett v. Lynch, 5 B. & C. 589. The language and sense of the condition are alike opposed to its construction as a condi- tion precedent ; and, moreover, it would be unjust so to construe it. 1 Some of the conditions expressly dedared that, in case of non-compliance with their requisitions, " the policy will become void." — Rbp, 1006 MASON V. HARVEY. [CHAP. X. Suppose the plaintiff delivered particulars of his loss, but some few of the pledges were omitted, is he on that account to be deprived of the whole benefit of the policy ? [Pollock, C. B. The term " full par- ticulars " must mean the best particulars the assured can reasonably give ; otherwise it might happen that, if by some inadvertence a dupli- cate was omitted, or mentioned as lost when in fact it was not, the assured could not recover at all. J The only case on the subject is that of Worsleyw. Wood, 6 T. R. 710; s. c, in error, 2 H. Blac. 574, where one of the conditions of the policy was, that persons insured should procure a certificate of the minister, churchwardens, and some reputable housekeepers of the parish, importing that they were ac- quainted with the character of the assured, and believed that he had really sustained the loss without fraud ; and it was held that the pro- curing such certificate was a condition precedent to the right of the assured to recover ; and that it was immaterial that the minister and churchwardens wrongful!}- refused to sign the certificate. In that case, however, the same injustice would not arise from construing the stipu- lation as a condition precedent, since it might be complied with at any time. [Platt, B., referred to Oldham v. Bewicke, 2 H. Blac. 557, note.] Crowder (Brewer with him) contra. The delivery of particulars of the loss is a condition precedent to the right of the assured to recover. Worsley v. Wood in effect decides this case. The assured is bound to give the best particulars which he can under the circumstances. He was then stopped by the court. Pollock, C. B. By the contract of the parties, the delivery of the particulars of loss is made a condition precedent to the right of the assured to recover. It has been argued that such a construction would be most unjust, since the plaintiff might be prevented from recovering at all by the accidental omission of some article. But the condition is not to be construed with such strictness. Its meaning is, that the assured will, within a convenient time after the loss, produce to the company something which will enable them to form a judgment as to whether or no he has sustained a loss. Such a condition is, in sub- stance, most reasonable ; otherwise a partj' might lie by for four or five years after the loss, and then send in a claim when the company per- haps had no means of investigating it. The plaintiff may have liberty to amend by withdrawing the demurrer, otherwise judgment for the defendant. Alderson, B., Platt, B., and Maetin, B., concurred. Amendment accordingly.^ 1 See Inman v. Western F. Ins. Co., 12 Wend. 452 (1834) ; Davis v. Davis, 49 Me. 282 (1862) ; Doyle v. Phoenix Ins. Co., 44 Cal. 264 (1872) ; Home Ins. Co. v. Lindsay, 26 Ohio St. 348 (187,5) ; Baker v. German F. Ins. Co., 124 Ind. 490 (1890); Peabody V. Satterlee, 166 N. Y. 174, 179-180 (1901). —Ed. SECT. II.] PEOTECTION INS. CO. V. PHERSON. 1007 PROTECTION INS. CO. v. PHERSON. Supreme Court of Indiana, 1854. 5 Ind. 417. Error to the Shelby Circuit Court. Davison, J. Assumpsit by George Pherson, surviving partner of the late firm of J. and G. Pherson, against the Protection Insurance Compan}- of Hartford, Conn., upon a policy of insurance against fire for $2,500 on a stock of goods at Boggstown, Shelby Countj-. The policy was issued to J. and G. Pherson, on the 26th of February, 1851, for one year from that date, and on the 31st of March, in the same year, the storehouse, with all the goods insured, was consumed by fire. Plea, the general issue. Verdict for the plaintifl!'. New trial refused, and judgment on the verdict. The company, in her defence to the action, set up : 1. That threats had been made against George Pherson, which induced him to fear that the store would be fired ; and to provide against danger in that respect, the insurance was effected, without notifying the company's agent that such threats had been made. 2. That the plaintiff himself had burned or connived at the burning of his own goods. 3. That the plaintiff had failed to procure the certificate of a magistrate or notary, as required by the eighth condition of the policj'. The first and second points raised no question of law. They were properly left to the consideration of the jury, and the verdict, so far as it relates to them, was, in our opinion, supported by the weight of evidence. But the policy contained a clause, designated as its eighth condition, which provided that " all persons insured bj' said coropanj' and sustain- ing loss or damage bj' fire, shall, if the property insured is situated one mile from the city of Cincinnati, forthwith procure a certificate under the hand of a magistrate or notary public (most contiguous to the place of the fire and not concerned in the loss or related to the insured) that he has made due inquiry into the cause of the fire, and also as to the value of the property destroyed, and is acquainted with the character and circumstances of the person insured, and does believe that he really and by misfortune, and without fraud or evil practice, hath sustained, by such fire, loss and damage to the amount claimed," etc. It was proved that one John McCounell, at the time of the fire, was an acting justice of the peace, who resided and kept his office within thirty rods of the place where the fire occurred, and that he was not concerned in the loss, or related to the insured ; that Pherson called on said justice and requested of him a certificate, pursuant to the above condition, but he declined giving it ; and that afterwards, on the 9th of April, 1851, the requisite certificate was obtained from William A. Stewart, a justice whose residence and oflSce were at least a mile and a 1008 PEOTECTTON INS CO. V. PHERSOy. [CHAP. X. half from the place of the fire ; and that on the 1st of July in the same year, Pherson procured another certificate from James Harrison, a notary public, who kept his oflSce and resided nine miles from the place ■where the goods were consumed. The court, upon this branch of the case, charged the jury as fol- lows : — " It may not be so manifest that the plaintiff ought to fail if the magistrate or notary most contiguous to the place of the fire, not con- cerned in the loss, or related to the insured, should refuse to give the certificate contemplated by the eighth condition annexed to the policy ; yet such is the law. It is more than the law. It is the express contract of the parties. Consequently, if at the time of the fire and afterwards, the residence and usual place of business of Justice McConnell, who declined giving the certificate, was materially nearer to the place of the fire than was the residence and usual place of official business of Justice Stewart or Kotar\- Harrison, whose respective certificates have been produced, the verdict must be for the defendant." These instructions are not strictly correct. The word " matenally," in the connection in which it is used by the court, produces a miscon- struction of the condition above quoted. That clause in the policy plainly designates the magistrate or notary whose residence was near- est the place of the fire, and disinterested and not related to the assured, as the person alone competent to make the requisite certificate. The condition, in that respect, is sufficiently explicit. It shows the intent of the parties, and that intention must govern its construction. Any difference in point of distance, from the place where the fire occurred, between the residence of McConnell and Stewart, was material. But it was made so by express contract, and the jury were bound to regard such difference in distance as material, without any further inquiry on their part. If McConnell was qualified to act under the condition, and resided "most contiguous" to the place where the goods were con- sumed, nothing short of his certificate would authorize a recovery in this case. It is said in argument, that " in determining the contiguit}- of the magistrate, distances will not be nicely calculated." 25 Wend. 374.* Suppose that position to be correct, its force, when applied to 1 In Tnrley v. North American P. Ins. Co., 25 Wend. .374, .3TS (IS+l), Nelsox, C. J., for the conrt, said. "It seems the residence of a notary happens to be a few feet nearer the fire . . . and we are asked to go into nice calculation of distances and settle the point npon the laws of mensnration. De minimis, etc., is a sufficient answer to this objection. The spirit of the condition requires no such mathematical precision from the assured." In American Central Ins. Co. i Rothchild, 82 111. 166 (1876), Scott, J., for the conrt, said : " We will enter into no calculations to ascertain whether the office or residence of the officer who made the certificate . . . was )., 13 Me. 265 (1836), the two nearest magistrates re- fused a certificate, for a reason not known, but the next nearest magistrate gave a certificate; and this was held fatal. In Johnson c Phcemx Ins. Co., 112 Mass. 49 (1873), two magistrates were appealed to for a certificate, bnt it was not obtamed ; and this was held fatal. In Gilligan r. Commereial F. Ins. Co, 20 Hun, 93 (ISSO), s. c. affirmed, without opinion, 87 X. T. 626 (1S5U, the certificate was from an officer whose office was about twentr-five rods from the fire, although other officers had places of business at least ten rods nearer, and the insurance company pointed out that the certificate was not from the nearest office ; and this defect was held fatal. In Logan c. Commercial Union Ins. Co., 13 Can. S. C. 270 ( 1 SS6), the policy required a certificate from two sugistrates most contiguous to the pla<^e of the fire. The two most contiguous magistrates refused a certificate, but a certificate was obtained from two others ; but this was held fatal. In Agricultural Ins. Co. r. Bemiller, 70 Md 400 (1SS9), the officer living nearest the fire gave a certificate containing all essential facts, except the amount of loss, and stating ignorance of the amount, bnt the officer having an office nearest the fire gave a complete certificate; and it was held that there was a fulfilment of the requirement of a certificate from the officer " living nearest the place of fire." In Kellv r. Sun Ftre Office, 141 Pa. 10, 19-21 (1891), it was held that the piOTisioD 64 1010 KNICKERBOCKER INS. CO. V. GOULD. [CHAP. X. KNICKERBOCKER INS. CO. v. GOULD et al. Supreme Codrt of Illinois, 1875. 80 111. 388. Writ of error to the Circuit Court of DuPage County ; the Hon. SiLVANCs Wilcox, Judge, presiding. Mr. A. C. Story, for the plaintiffs in error. Mr. J3. B. Magruder, for the defendant in eiTor. Mr. Justice Craig delivered the opinion of the court. This vras an action of assumpsit, brought by John S. and William Gould, in the Superior Court of Cook Count.v, against the Knicker- bocker Insurance Company of Chicago, on a policy of insurance of $2,500, on certain goods contained in the mill of the plaintiffs, located at the corner of Beach and Polk Streets, in Chicago, which was de- stroyed by the Chicago fire of October, 1871. On the motion of the defendant, the venue of the cause was changed to DuPage County-, where a trial was had before a jury, resulting in a verdict and judgment in favor of the plaintiffs for $2,905.41. It is first urged, that the judgment cannot be sustained because timely notice of the loss was not given by the insured to the companj-. The policy provides, that "in case of loss, the assured shall give immediate notice thereof in writing, and shall render to the company a particular account of said loss, in writing, under oath, staling the time, origin, etc." The goods mentioned in the policy were burned on the 8th or 9th of October, 1871. After the fire, an inventory of the goods destroyed was made out and delivered to the secretary of the companj' on the 13th day of November following. No objection whatever was made by the company in regard to the form of the proof, nor was any as to the magistrate's certificate is yalid ; and the court's earlier views to the contrary were disapproved. In Lane v. St. Paul F. & M. Ins. Co., 50 Minn. 227 (1892), the plaintiff alleged that the nearest magistrates on account of groundless prejudice refused to give the certifi- cate ; and it was held that nevertheless the failure to furnish the certificate was fatal. In iEtna Ins. Co. v. People's Bank, 8 U. S. App. 554 (C. C. A. Fourth Circuit, 1894), s. c. 10 C. C. A. 342, the policy contained a provision that, if required, the in- sured should " furnish a certificate of the magistrate or notary public (not interested in the claim as a creditor or otherwise, nor related to the insured) living nearest the place of the fire." Without being requested to do so, the insured attempted to get the certificate of one ofiicial, and finally filed a certificate from a notary who was related to himself, though having married his cousin. The company notified the insured that the certificate was defective ; but no other certificate was furnished. It was held that this was fatal. In Home F. Ins. Co. u. Hammang, 44 Neb. 566, 576-578 (1895), and German- American Ins. Co. u. Norris, 100 Ky. 29, 33-34 (1896), the provision requiring an officiars certificate was held to be invalid; and in Lang v. Eagle F. Co., 12 N. Y. App. Div. 39, 46 (1896), it was held that the provision is satisfied by obtaining the certificate of the nearest official who is willing to act. — Ed. SECT. II.] KNIGKEEBOCKEE INS. CO. V. GOULD. 1011 objection interposed that previous notice of the loss had not been given, but the proofs of loss were retained. Nothing Tvas paid on the policj-, nor did the compauj- take any action in regard to the claim. It will be observed, that the language emploi'ed in the policy in re- gard to notice and proof of loss is peculiar : " In case of loss, the as- sured shall give immediate notice thereof, in writing, and shall render to the company a particular account of said loss, in writing." The language used would seem to indicate that it was the intention that notice of loss and proofs of loss should be furnished the compan)- at the same time, unless the two portions of the sentence are closely connected by the word " and." It is not indicated in the first clause to whom the notice shall be given, nor is there anj* time specified in the last clause when proof of loss shall be rendered. If this construction be the correct one, then the word " immediate " mast receive a liberal construction, in order to carrj' out the manifest intent of the parties, as it is apparent that it was impossible imme- diatelj- to furnish proofs of loss. This view seems more reasonable bj' referring to another provision in the policj', which is as follows : ' ' Do insure, etc., to the amount of 82,500, against all such immediate loss or damage as may occur by fire, etc., to be paid sixtj' days after due notice and proofs of the same, made by the assured, are received at the office of this companj-." Here the words "due notice," not "immediate notice," are used, and the loss that may occur is to be paid sixty daj-s after notice and proofs are received. If it had been within the contemplation of the contracting parties not to require notice and proofs of loss to be given at the same time, it is but reasonable to presume the payment of loss would have been specified to be made sixty days after notice of loss given or sixty days after proof of loss. When all the provisions of the policj' are considered together, we feel warranted in giving the word "immediate" a liberal construction. This, too, is in harmony with the authorities. In the Peoria Marine and Fire Ins. Co. v. Lewis, 18 111. 553, where the question arose whether the notice of loss had been given within the time required by the conditions of the policy, it was said: " The pro- visions in the conditions that notice is forthwith to be given of the loss, means within a reasonable time under the circumstances — the use of due diligence." ]\ray, in his work on Insurance, states the rule in regard to notice of loss thus: "If the notice be required to be forthwith, or as soon as possible, or immediately, it will meet the requirements if given with due diligence under the circumstances of the case, and without un- necessary and unreasonable delay, of which the jurj- are ordinarily to be the judges." Under the rule here announced, which is substantially the same as held by this court in the case cited supra, the question presented is, 1012 KNICKEKBOCKER INS. CO. V. GOULD. [CHAP. X. •whether the notice given under the circumstances was a substantial compliance with the provision of the policy. The fire which consumed plaintiffs' property was a general con- flagration. It spread over and consumed mpre then one hundred acres of the principal business portion of the city of 'Chicago. Business of all kinds was demoralized, and, to great extent, suspended. The office of the defendant, together with its books and papers, was destroyed. The plaintiffs, who had been engaged in a large manufacturing busi- ness, held a large number of policies of insurance on their property. Time was absolutelj' necessary for them to arrange their papers, pro- cure the necessary blanks, and learn the location of the offices of the insurance companies, before they could give notice of loss and furnish proofs. Under all the circumstances of the case, we cannot say there was an unreasonable delay. To give the word " immediate " a literal interpretation would defeat the ends of justice, and, in a case of this kind, require of the insured an impossibility, as the office of the company had been de- stroj'ed, and the plaintiffs had no information as to the location of the officers or agents of the companj-, and hence it was impossible, forth- with, to give the notice and furnish proof of loss. It is also urged that the averments of the declaration were not suf- ficient, as to the value of the property destroyed and the amount of other insurance on the same. Whether the declaration would have been regarded sufficient on demurrer, is a question that does not arise, as no demurrer was inter- posed. We perceive no variance between the proof introduced and the declaration, and we are aware of no ground upon which the court could have sustained the motion of the defendants to exclude the evidence from the jury. Had the defendants regarded the declaration insufficient, the proper mode to reach the defect was by demurrer. It is also claimed, that the court erred in permitting the proofs of loss to be introduced as evidence of the kind, value, and amount of property destroyed. Upon an examination of the record, we do not find the proofs were introduced for the purpose indicated. The record discloses the fact, that the proofs were offered in evidence ; for what purpose, however, the record is silent. They were objected to, but upon what grounds does not appear. The objection was overruled and the evidence was admitted to the jury. It was proper to introduce, in evidence, the proofs of loss, for the purpose of establishing the fact that such proofs were made and de- livered to the companj- as was required by the terms of the policy, and such, no doubt, was the object and purpose of the evidence. SECT. II.] KNICKERBOCKER INS. CO. V. GOULD. 1013 The amount of actual loss seems to have been fully established by testimonj' entirely independent of the proofs of loss. In Lycoming Ins. Co. v. Rubin, 79 111. 402, a contrary doctrine seems to have been impliedlj* approved. But in that case the insur- ance company insisted it was error to allow such proofs to go to the jury. The party insured conceded, in the argument, that this was error ; but insisted that the supposed error was cured by instructions. The court, assuming that it. was error, held it was not cured by in- structions, and reversed the judgment upon the ground that, aside from the proofs referred to, the amount of tlie damages in the case could not be supported by the other evidence. The true rule is, that the proofs of loss are proper to show a compliance with the terms of the policy, but are not to be considered in ascertaining the amount of damages. Nor do we see any force in the objection, that parol proof was admitted of the amount of insurance held by the plaintiffs on the property in other companies. It was certainl}' competent to establish, by parol proof, the fact that plaintiffs were insured in other companies, and the evidence of the amount of such insurance cannot be said to be proving the contents of a writing by parol. There was no issue involved which required the production of the policies held in other companies. Their terms and conditions were of no importance, and it was not necessary to establish their contents. It is next urged that the court erred in giving plaintiffs' third and fourth instructions, which were as follows : — "3. If the jury believe, from the evidence, that there was such a loss of the property described in the declaration herein as is therein set out, then they are authorized in determining for themselves, from all the facts and circumstances of this case, as developed by the evidence, whether or not, after said loss, the plaintiffs gave immediate notice thereof in writing to defendant. "4. If the jury believe, from the evidence, that there was a loss of the propert}' described in the declaration, as therein stated, and that after said loss the plaintiffs did not give immediate notice thereof in writing, yet if they, at the same time, find, from the evidence, that on or about November 13, 1871, the plaintiffs submitted to defendant proofs of said loss, as required by the policj' of insurance herein introduced, and defendant accepted the same, and retained the pos- session thereof from thence thereafter, and made no objection to the plaintiffs not having given immediate notice of said loss in writing, either at the time said proofs were submitted, or at any time thereafter, then the jiirj' are authorized in finding that defendant waived such immediate notice in writing, as is above mentioned." Whether due diligence has been used, in giving the required notice, may be regarded as a question of fact, which is ordinarily left to the jury, to be determined from all the circumstances in the case bearing 1014 KNICKERBOCKER INS. CO. V. GOULD. [CHAP. X. upon the question. Ma}' on Insurance, sec. 462 ; Edwards v. Baltimore Ins. Co., 3 Gill(Md.), 176. But where there is no dispute in relation to the facts and circum- stances bearing upon the question of diligence in giving the notice, then the question may be regarded one of law for the court. May on Insurance, sec. 462 ; Kimble v. Howard Fire Ins. Co., 8 Gray, 33. The facts in regard to the diligence used in this case were not con- ceded, but were controverted before the jury, and therefore we see no error in the third instruction. As to the fourth instruction, we are satisfied it is erroneus. If a notice of loss was given, defective in form, and the company received it, and pointed out no defect, and made no objection thereto, such would, no doubt, be regarded as a waiver of a sufficient notice ; but a failure to give notice in time, rests entirely upon a different ground from a failure to give notice in due form. The reason is obvious. Where a defective notice is given, if the company points out the defects, the insured can supply them by a new notice, and if the company fails to point out the objections, they may very properly be regarded as waived. But a notice not served in time, rests on a different principle. If the company makes objection, the insured cannot remedy the defect. It is too late, and hence there is neither reason nor necessity for the company to speak or be concluded bj' its silence. We do not think that an insurance company is concluded by a notice of loss not served in time, for the reason that no objection is interposed at the time service is made ; and therefore the instruction, as given, was not correct. But while the instruction failed to lay down the rule correctl}^ it could do no injury to the defendant, as notice of loss was, under all the circumstances, given within the time required by the policy. We cannot, therefore, reverse on account of the error contained in the instruction. The first instruction of plaintiffs is objected to because it authorized the recovery of interest, in case the verdict should be in favor of the plaintiffs. After the amount of money named in the policy became due, we are aware of no reason why it would not draw six per cent interest. The policy was a contract, providing for the payment of money at a certain time, and as such, it was proper for the jurj', in fixing the amount of the verdict, to allow interest. This point was ex- pressly decided in the Peoria Marine and Fire Ins. Co. v. Lewis, 18 111. 553, and we observe no reason to change the rule there announced. The last point relied upon by the defendant is, that the court erred in refusing a new trial on the ground of newly discovered evidence. Upon an examination of the affidavits presented on the motion, we are satisfied the testimony newly discovered is, in part, in the nature of impeaching evidence, and the rest is merely cumulative. We understand the rule to be well settled, that a new trial will not be granted where the evidence is of that character. SECT. II.] DOLLOFF V. PHCENIX INS. CO. 1015 After a careful examination of the whole record, we are satisfied it contains no substantial error. The judgment will, therefore, be affirmed. Judgment affirmed} DOLLOFF V. PHCENIX INS. CO. DOLLOFF V. GERMAN-AMERICAN INS. CO. ScpREME Court of Maine, 1890. 82 Me. 266. On exceptions. These were actions of assumpsit on two policies of fire insurance brought to recover the aggregate sum of $4,000. The plaintiff had one policy of insurance for $2,000 in each of the defendant companies, each policy covering both buildings and personal property. Plea, general issue with a brief statement of forfeiture of the polic}' through fraud, attempted fraud, and false swearing by the plaintiff in his proof of loss, and examination thereunder. This defence was relied on at the trial, in the Superior Court for Kennebec County, especially fraud and false swearing as to the personal propertj' set forth in the proof of loss. On this point the defendants offered evidence to prove (1) the false and fraudulent insertion of articles which the plaintiff knew were not in the house at the time of the fire ; (2) false and fraudulent exaggeration of quantities of such classes of articles as were in the house ; (3) false and fraudulent exaggeration of the value of the articles destroyed. The plaintiff's proof of loss contained 564 distinct items or classes of items, and aggregating $6,800. He claimed the value of the build- ings was $3,200, and that their contents — the household goods and farming implements — was $3,600. Upon these issues of fraud, attempted fraud, and false swearing by the plaintiff, the presiding justice instructed the jury as follows : — 1. " That if the plaintiff knowingly put a false and excessive valua- tion on any single article, or put such false and excessive valuation on the whole as displaj-s a reckless and dishonest disregard of the truth in regard to the extent of the loss, such knowing over-valuation is itself fraudulent and the plaintiff cannot recover at all." 2. " That if the plaintiff falsel}' and knowing]}' inserted in his sworn schedule of loss, as burned, any single article which in fact was not in the house, or was not burned, this would constitute a fraud on the company, and the plaintiff cannot recover anything on his policy." 1 Ace. : Niagara F. Ins. Co. v. Scammon, 100 111. 644 {1881 ) ; Solomon v. Continental F. Ins. Co., rtO N. Y. 595 (1899). See Inman w. Western F. Ins. Co., 12 "Wend. 452, 460-461 (1834); Edwards w. Balti- more F. Ins. Co., 3 Gill, 176, 186-189 (1845) ; St. Louis Ins. Co. v. Kyle, 11 Mo. 278, 289-291 (1848); Harnden v. Milwaukee Mechanics' Ins. Co., 164 Mass. 382 (1895). Compare Matthews v. American Central Ins. Co., 154 N. Y. 449 (1897). —Ed. 1016 DOLLOFF V. PHCENIX IXS. CO. [CHAP. X. 3. " That any wilfully false or fraudulent statement in regard to the loss of its amount, would avoid the policj- whether the actual loss was greater or less than the amount claimed by the insured." 4. " That if the jury find that the plaintiff knowingly claimed in his sworn proof of loss more goods than were actually destroyed by fire, that would constitute the fraud, — I should rather say constitute the attempt at fraud, — and false swearing mentioned in the contract." 5. "That it is not necessarj- that the fraud should be to the full extent of the proof of loss, but that if in an}- respect the plaintiff pur- posely and designedly made a false statement in regard to the proof of loss, of what his loss was, although it might have been one of small amount, it defeats the policy for the full amount, both as to personal property and the buildings." The jurj' returned a verdict for the defendants, and the plaintiff excepted to these instructions. Each policy of insurance contained the following provision : — "Any fraud or attempt at fraud, or false swearing on the part of the assured shall cause a forfeiture of all claim under this. policy." E. W. Whitehouse, tor plaintiff. JBaker, Baker and Cornish, for defendants. EiiERT, J. The plaintiff procured of the defendant insurance com- pany a policy of fire insurance for S2,000 upon his home buildings and contents, each building being separately valued, and the contents also having a separate valuation. The policy of insurance contained the following stipulation : " Any fraud, or attempt at fraud, or false swear- ing on the part of the assured shall cause a forfeiture of all claims under this policy." The buildings and contents were consumed by fire, and the plaintiff, as required by the policy and also by statute (R. S., c. 49, § 21), notified the company of the loss, and delivered to them a written statement on oath, purporting to be a particular account of the loss and damage. In this instrument called " proof of loss," the plaintiff, as the jury have found, knowingly and purposSy made false statements on oath of some pretended losses which he did not in fact sustain. He contended, however, that his actual losses, throwing out his pre- tended losses, exceeded the whole amount of the policy, and that eon- , sequently the defendant company were not and could not be harmed bj- his false statement of additional losses, and should paj' him his actual loss. His argument was, that these false statements of additional losses did not increase the risk or the liability- of the company, — that the true statements showed a loss of over §2,000, and hence the false statements did no fraud, nor harm. The presiding justice overruled this contention, and instructed the jvtry to the opposite effect. The verdict being against him, the plaintiff excepted, and his exceptions present substantially this question : "When the actual losses, truly stated in a proof of loss, exceed the whole amount of the insurance, will a knowingly and purposely false statement on oath in the proof of loss, SECT. II.] DOLLOFF V. PHCENIX INS. CO. 1017 of other pretended losses, destroy the plaintiff's claim for his actual losses under such a policy as this? We cannot doubt that it will. The parties stipulated that it should. It is so provided in the contract, and it is a lawful provision. The contract of insurance is one of indemnity onl}'. The sole lawful object of obtaining a policy of insurance is to secure simple reimbursement for actual loss. Any purpose of making a profit on the part of tlie assured is unlawful, and wUl vitiate the contract. Such being the nature of the contract, it requires good faith on the part of the assured toward the insurers. Especiall}- is this so in the adjustment of a loss after a fire. It is impracticable for the insurers to ascertain for them- selves the extent of the losses, particularly where the contents of a dwelling-house and barn are insured, as in this case. The assured and his family or servants are usually the only persons who can give a true account of the losses. The insurers therefore usually, as in this policj-, required from the assured a detailed statement on oath of such losses, as a necessarj" preliminary to the payment of the indemnity. The statute also requires this (R. S., c. 49, § 21). The statute and the policy both make this statement a necessary preliminary to a right of action on the policy, and they both contemplate of course a true state- ment. The demand of the statute and of the policy for such a state- ment is addressed to his conscience, like a bill for discovery. When, therefore, he meets this demand with knowinglj- false statements of losses he did not sustain, in addition to those he did sustain, he ought to lose all standing in a court of justice as to any claim under that policy. The court will not undertake for him the offensive task of separating his true from his false assertions. Fraud in any part of his formal statement of loss taints the whole. Thus corrupted, it should be wholly rejected, and the suitor left to repent that he destroyed his actual claim by the poison of his false claim. Claflin v. Insurance Co., 110 U. S. 81 ; Sleeper v. Insurance Co., 56 X. H. 401 ; Wall v. Insurance Co., 61 Maine, 32. We have not overlooked the case of Shaw v. Insurance Co., 1 Fed. Eep. 761, where Judge LoweU makes the distinction contended for by the plaintiff here. There the stipulation in the policy was : " All fraud or attempt at fraud by false swearing, etc." Here the words are, •' An}- fraud, or attempt at fraud, or false swearing, etc." It might be that there, harmful fraud should appear, while here, false swearing by itself is made a cause for forfeiture. But it will be seen that the U. S. Supreme Court in Claflin v. Insurance Co., supra, three years after Judge Lowell's opinion, considered the same question, and decided it the other waj-, holding that false swearing alone, without its operating as a fraud upon the company, forfeited the policy. The plaintiff invokes section 20 of chapter 49 (the Insurance Law) R. S., but that does not rescue him. It does not purport to save the assured from the consequences of his own fraud. It simply provides 1018 HAET V. citizens' IXS. CO. [CHAP. X. that immaterial and innocent misstatements shall not avoid the policy. If the statements called for in that section are material or fraudulent, they are fatal. But that section has reference only to statements made in procuring the policj' of insurance. It does not apply to statements made after the loss, in the proof of loss. No allusion was made to this statute in Wall v. Insurance Co. , sup^'a, but it is uncertain whether the decision was before or after the enactment of the statute. It was in- timated in Ballatty v. Ins. Co., 61 Maine, 414, some time after the passage of the statute, that fraud in the proof of- loss, if established, would bar the suit. While in Williams v. Insurance Co., 61 Maine, 67, the jury negatived an}- fraud or false swearing, in the over-valua- tion of the goods, it was assumed that fraud or false swearing, if established, would forfeit all claim under the policy. It is further suggested by the plaintiff, that the buildings having been separately valued in the policy, the insurance on them is not affected by any false swearing as to the personal property. The policy of insurance, however, is an entire, single contract, to stand or fall as a whole, so far as fraud or false swearing is concerned. Barnes v. In- surance Co., 51 Maine, 110. Exceptions overruled.^ Peteks, C. J., Walton, Viegin, Fostee, and Haskell, JJ., con- curred. HAET, Appellant, v. CITIZENS' INS. CO., Respondent. Supreme Couet of Wisconsin, 1893. 86 Wis. 77. Appeal from the Circuit Court for Douglas County. Action upon a policj- of insurance against fire. The facts are stated in the opinion. The plaintiff appeals from a judgment in favor of the defendant. For the appellant there was a brief by Reed, Grrace, RocJc & Reed, and oral argument by M. R. Ghace. J. B. Douglas, for the respondent. 1 Ace. . Sleeper v. New Hampshire F. Ins. Co., 56 N. H. 401 (1876). Contra: Springfield F. & M. Ins. Co. v. Winn, 27 Xeb. 649 (1889). Other cases on what constitutes fraud or false swearing are : Helbing v, Srea Ins. Co., 54 Cal. 156 (1880) ; Carson t/. Jersey City Ins. Co., 43 N. J. L. (14 Vroom) 300. 310-311 (1881) ; Claflin v. Commonwealth Ins. Co., 110 U. S. 81, 94-97 (1884) ; Lion F. Ins. Co. V. Starr, 71 Tex. 733 (1888) ; Deitz u. Providence Washington Ins. Co., 33 W. Va. 526 (1890) ; Pencil v. Home Ins. Co., 3 Wash. 485 (1892); ObersteUer v. Commercial Assur. Co., 96 Cal. 645 (1892) ; Commercial Bank v. Firemen's Ins. Co., 87 Wis. 297 (1894) ; Home Ins. Co. v. Winn, 42 Neb. 331 (1894); Commercial Ins. Co. V. Friedlander, 156 111. 595 (1895) ; Linscott v. Orient Ins. Co., 88 Me. 49 (1896) ; Dohmen Co. v. Niagara F. Ins. Co., 96 Wis. 38, 53-57 (1897) ; Davis v. Guardian Assur Co., 155 N. Y. 682 (1898), affirming, without opinion, 87 Hun, 414 (1895) ; Worachek v. New Denmark Mut. Home F. Ins. Co., 102 Wis. 88 (1899) ; Fowler v. Phoenix Ins. Co., 35 Ore. 559 (1899).— Ed. SECT. II.J HAET V. CITIZENS' INS. 00. 1019 WiNSLOw, J. The action is upon a policy of insurance issued by defendant, November 11, 1890, upon plaintiffs dwelling-house. There is no dispute as to the facts. The house was burned March 5, 1891. Proofs of loss were served May 1, 1891, being within the time required hy the policj'. The defendant refused payment Maj' 9, 1891, and plaintiflF commenced this action May 3, 1892, nearly fourteen months after the fire. The polic}' contained provisions requiring immediate notice of loss, proofs within sixty days after the fire, examination of the assured under oath if desired, and appraisal in case of disagreement as to amount of loss ; also the following: " This company shall not be held to have waived anj- provision or condition of this policy, or any forfeit- ure thereof bj' anj' 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, ascer- tainment, 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. No suit or action on this policy for the recovery of any claim shall be sustained in any court of law or equitj' until after full compliance by the insured with all the foregoing require- ments, nor unless commenced within twelve months next after the fire." It was held by the Circuit Court that the action was barred because not commenced within twelve months next after the date of the fire, and plaintiff appeals. It is well settled that a clause in a contract limiting the time within ■which an action may be commenced thereon to a time shorter than that allowed hy the statute of limitations is valid. The question here is whether the expression " twelve months after the fire" means what it says, or something else. It is to be noticed that the parties here have not used the expression "after the loss occurs." Had this been the language used, it might reasonablj- be claimed, upon authorit)', that the " loss occurs," not at the date of the fire, but when the loss is as- certained and established and the right to bring an action exists. The decisions in favor of this do'ctrine are numerous. Steen v. Niagara F. Ins. Co., 89 N. Y. 315 ; Spare v. Home Mut. Ins. Co., 17 Fed. Eep. 568; Chandler v. St. Paul F. & M. Ins. Co., 21 Minn. 85; EUis v. Council BluflTs Ins. Co., 64 Iowa, 507; Miller v. Hartford F. Ins. Co., 70 Iowa, 704 ; German Ins. Co. v. Fairbank, 32 Neb. 750 ; Barber v. Fire & M. Ins. Co., 16 W. Va. 658. There are, however, many decisions to the contrary : Chambers v. Atlas Ins. Co., 51 Conn. 17 ; Johnson v. Humboldt Ins. Co., 91 III, 92 ; Fullam V. New York Union Ins. Co., 7 Gray, 61 ; Glass v. Walker, 66 Mo. 32 ; Bradley v. Phoenix Ins. Co., 28 Mo. App. 7 ; Virginia P. & M. Ins. Co. V. Wells, 83 Va. 736 ; Peoria Sugar Eeflning Co. v. Canada F. & M. Ins. Co., 12 Ont. App. 418 ; Blair v. Sovereign Ins. Co., 19 N. S. 372 ; Travelers' Ins. Co. v. California Ins. Co., 1 N. Dak. 151 ; Schroe- der V. Keystone Ins. Co., 2 Phila. 286. 1020 HAKT V. citizens' INS. CO. [CHAP. X. Other cases, bearing more or less direct!}- on tbe question, might be cited upon either side of the proposition. It seems apparent that it can hardlj- be said that the great weight of authority is on either side. It is a case where there are two directly opposing lines of authorities, both very respectable in numbers and weight. It was claimed by ap- pellant that this court had substantially approved of the affirmative view of the proposition in Killips u. Putnam F. Ins. Co., 28 "Wis. 472, and Black v. Winneshiek Ins. Co., 31 Wis. 74. Examination of these cases shows that this court expressly declined to pass upon this ques- tion. The principle laid down in them is simply that if the insurance company, by its acts, induces the insured to suspend his proceedings and delay action on the policy, the time elapsing during such delay so caused should not be reckoned as a part of the time limited for the bringing of the action. It is an application of the familiar principle of estoppel. Doubtless the tendency of so many courts to construe the term "loss" as meaning the time when liability was fixed, induced many insurance companies to substitute the word " fire," as in the policy before us. It would seem as if the phrase " twelve months next after the fire " was susceptible of but one meaning ; yet the courts have dis- agreed upon this question also. In the following cases it has been held that the word " fire " is to be construed as meaning, not tbe date of the flre, but the time when liability is fixed and an action accrues to the insured. Friezen v. Allemania F. Ins. Co., 30 Fed. Rep. 352 ; Hong Sling v. Royal Ins. Co., 7 Utah, 441 ; Case v. Sun Ins. Co., 83 Cal. 473. On the other hand, the following cases hold that the limitation be- gins to run from the date of the fire. Steel v. Phenis Ins. Co., 47 Fed. Rep. 863 ; State Ins. Co. v. Meesman, 2 Wash. 459 ; McElroy v. Continental Ins. Co., 48 Kan. 200 ; State Ins. Co. v. Stoffels, 48 Kan. 205 ; King v. Watertown Ins. Co., 47 Hun, 1. It is noticeable that all of the three cases above cited which hold that " fire " means the time when liability is fixed rely for authority upon the cases which construe the word " loss" as having such mean- ing. No attention seems to have been given to the fact that the word " flre " has been substituted for the word " loss." It is also noticeable that in the case of Case v. Sun Ins. Co., 83 Cal. 473, the facts were that the insured was compelled to submit to examination by the com- pany, and to produce books, bills, and invoices, and that he complied with these requirements as rapidly as he was able, but was unable to fuUj' comply therewith until more than thirteen months after the fire, or a month after the expiration of the time limited for bringing suit Here, certainly, was a clear case of estoppel. The company, bj- its own acts, had postponed the time when a cause of action accrued until after the limitation had run, and should clearly be denied the right to rely upon the limitation. See, to this efiect, Thompson !■. Phenix Ins. Co., 136 U. S. 287. The cases of Friezen v. Allemania F. Ins. Co., 30 SECT. II.] HAKT V. CITIZENS* INS. CO. 1021 Fed. Eep. 352, and Hong Sling v. Eoyal Ins. Co., 7 Utah, 441, are, however, direct authorities to the effect that " twelve months after the fire " means twelve months after the liability is fixed. The argument in support of this view is briefly that all clauses of the polic}' must be construed together ; that there are clauses which necessitate the mak- ing of proofs, the submission of the assured to examination if required, the production of books and papers, and the submission of the question of the amount of loss to appraisers, all of which things will consume time ; and, furthermore, the loss not being paj'able until sixty daj's after the amount is fixed, it may happen that more than twelve months may elapse after the date of the fire before the company can be sued ; and thus the plaintiff's action maj- be cut off entirely if a literal mean- ing is to be given to the words. The deduction is that the parties can- not have meant what thej- said in the clause under consideration, but must have meant something else, which they did not say. We cannot assent to this line of reasoning. It does violence to plain words. It smacks too stronglv of making a contract which the parties did not make. It construes where there is no room for construction. Plain, unambiguous words which can have but one meaning are not subject to consti-uction. " Twelve months next after the fire " has one certain meaning and but one. It can have no other. It may well be that the insurer ma}' \>y his acts waive the limitation, or estop himself from insisting on it, as held in the cases of Killips v. Putnam F. Ins. Co., 28 Wis. 472, Black v. Winneshiek Ins. Co., 31 Wis. 74, and Thompson v. Phenix Ins. Co., 136 U. S. 287 ; but the invocation of this principle does no violence to the contract of the parties. There is no element of estoppel present here, however. The defendant company have done nothing which has induced the insured to suspend proceed- ings or dela}- his action. They notified him at once on the receipt of his proofs that they denied liability. They did not require him to do anything. He had nearly ten months in which to bring his suit By failing to do so he must be held to be barred by his contract. The provision of section 1975, R. S., to the effect that no insurance policj' shall contain a provision that no action or suit shall be brought thereon, is not applicable, because the clause under consideration is plainly not such a provision. Judgment affirmed.^ 1 Contra: Sample v. London and Lancashire F. lus. Co., 46 S. Car. 491 (1895); Insurance Companies o. Scales, 101 Tenn. 628, 640-642 (1898). On the effect of war, see Semmes v. Hartford Ins. Co., 13 Wall. 158 (1871). On what constitutes the commencing of an action, see Peck v. German F. Ins. Co., 102 Mich. 52 (1894) ; Rogers v. Home Ins. Co., 3.^ C. C. A. 402 (Second Circuit, 1899) ; FarreU v. German-American Ins. Co., 175 Mass. 340 (1899). On the topic of this section, see also : — Norton v. Rensselaer and Saratoga Ins. Co., 7 Cow. 645 (1827) ; Cornell V. Le Roy, 9 Wend. 163 (1832) ; Mechanic's F. Ins. Co. e. Nichols, 16 N. J. L. (1 Harr.) 410 (1838) ; Lycoming Ins. Co. v. Schreffler, 42 Pa. 188, 191 (1862) ; 1022 HAET V. citizens' INS. CO. [CHAP. X. ^tna Ins. Co. u. Stevens, 48 111. 31, 34 (1868) ; Insurance Companies v. Boykin, 12 WalL. 433 (1870); Parmelee v. Hoffman F. Ins. Co., 54 X. Y. 193 (1873) ; Smith 0. Commonwealth Ins. Co., 49 Wis. 322, 326-327 (1880); Waldeck v. Springfield F. & M. Ins. Co., 53 Wis. 129 (1881); Central City Ins. Co. v. Gates, 86 Ala. 558 (1888) ; Hamilton v. Liverpool, London, and Globfe Ins. Co., 136 U. S. 242 (1890) ; Hamilton v. Home Ins. Co., 137 XT. S. 370, 385 (1890); Quinlan v. Providence Washington Ins. Co., 133 N. Y. 356, 362 (1892) ; Steele v. German Ins. Co., 93 Mich. 81 (1892) ; McNally i>. Phoenix Ins. Co., 137 N. Y. 389, 397-398 (1893) ; "White V. Eoyal Ins. Co., 149 N. Y. 485 (1896) ; Hicks V. British America Assur. Co., 162 N. Y. 284 (1900). — Ed. SECT, in.3 TATLOK V. MTSA. LIFE INS. Ca 1023 SECTION in. Life Insurance. TAYLOR V. ^TNA LIFE INS. CO. SuPKEME JiTDicaAi, CouRT OF MASSACHUSETTS, 1859. 13 Gray, 434. Actios of contract on a policy of insurance on the life of Andrew Taylor, for seven years from the 11th of April, 1855, in the sum of §700, payable " within ninety days after due notice and proof of the death of said Andrew Taylor, if within the term of this policy." ^ . . . Answer, 1st. That the plaintiffs never " furnished to the defendant sufficient, due, and proper preliminary proofs of the death of the said Andrew Taylor, and of the time, circumstances, and occasion of his said death, if the same occurred, nor anj- such as by law and usage in such case are reasonably required and by the terms of said policy pro- vided for." . . . The parties submitted the case to the court upon the following agreed statement: — "Upon the first ground of defence stated in the answer, it is ad- mitted by the plaintiff that no affidavit or certificate of the attending physician, as to the circumstances and occasion of the death of Andrew Taylor, was ever furnished to the defendants ; although the plaintiff was informed, at the time he gave the notice and furnished certain other proofs of such death, that the defendants held such certificate or affidavit to be essential, and that, until furnished, the proof would not be considered complete, nor the loss payable. It is admitted that the ship's physician was present and attending during the sickness and at the time of the death of said Taylor ; and the plaintiff offers no excuse for not furnishing such certificate, except the inconvenience and expense of sending to the Pacific coast to obtain it. " The defendants admit that notice and proofs of the fact of the death of said Andrew Ta^-lor were furnished to them by the plaintiff on the 10th of February, 1856, which were deficient only by reason of the absence of such certificate or affidavit of the attending physician ; and the defendants claim that by the terms and reasonable intendment of the contract, and by the usage and understanding of this and other life insurance companies, such affidavit or certificate is a requisite and essential part of the preliminary proof, to be supplied by parties de- manding the amount of the policy, under the circumstances aforesaid, and without which no recovery can be had by suit at law. . . . " Upon the foregoing statement, it is agreed that the court shall 1 In reprinting the statement and the opinion, matter foreign to proof of death has been omitted. — Ed. 1024 TAYLOE V. JETNA LIFE INS. CO. [CHAP. X. enter such judgment as either party may be entitled to, and as law and justice require ; it being understood and provided, however, that if the court shall be of opinion that proof of such understanding and usage as the defendants allege would be competent and material to the proper decision of the controversy, the case shall be remitted to the proper court for trial of such questions by a jury ; and further, that if the court shall be of opinion that the plaintiff ought not to recover without furnishing the affidavit or certificate of the physician, he shall be allowed the opportunity to obtain and supply the same, or a sufficient excuse for its absence, with the same effect upon this suit as if furnished originally-, except that such equitable adjustment of the costs or interest shall be made upon the final result, as the court may direct." J. Wells, for the plaintiff. F. Chaniberlin, for the defendants. Metcalf, J. 1. By the terms of the policy, the sum insured was paj-able in ninety days " after due notice and proof of the death" of Andrew Taylor. Such notice and proof were therefore prerequisite to the maintenance of this action. The defendants, in their answer, deny that they were furnished by the plaintiff with such proof. They admit, however, in the statement of facts, that there was no defect in the proof of said Taylor's death, unless, in order to constitute due proof thereof, it was necessary to produce a sworn certificate, such as is hereinafter mentioned, of the ph3-sician who attended the deceased in his last sick- ness. The ground taken by the defendants is, that such certificate is a requisite and essential part of the preliminary proof of the death, and made so, not only by the terms and reasonable intendment of the con- tract contained in the policy, but also by their own usage and under- standing, and the usage and understanding of other life insurance companies. To support this ground of defence, the defendants have introduced (the plaintiff's counsel consenting) a pamphlet issued by them, which they were accustomed to give to claimants on their policies, and which, it is admitted by the plaintiff, was given to him by the defendants at the time when he presented to them his proof of Andrew Taylor's death. Under the head of ' ' Proofs of Death Required, " that pamphlet contained, among other required proofs, the following : " 1st. A cer- tificate from the physician who attended the party during his last sick- ness, stating particularly the nature of the disease, its duration, and the time of death." It was also a part of said required proof that the certificate " should be sworn to before a magistrate or other officer qualified to administer an oath or affirmation." As this matter is not contained in the statement of facts, we have taken it into consideration soleh' upon the consent of the plaintiff's counsel that we might. But, after adding this to the facts regularly agreed upon, we find no defence to the action. The policy does not embody nor refer to any by-law, requisition, usage, or understanding of the defendants as to the kind SECT, m.] TAYLOR V. ^TNA LIFE INS. CO. 1025 of proof, whicli they should require, of the death of Andrew Taj-lor. Whatever, therefore, might be such by-law, requisition, usage, or under- standing, the plaintiff would not be bound thereby. He is bound onh- by the policy itself; that is, to furnish " due proof" of the death. If the defendants would have bound the plaintiff \>y their by-laws, etc., they should have made the policy, in terms, subject to those by-laws, etc., or in some way have made them a part of the contract contained in the policy. Kingsley v. New England Mutual Fire Ins. Co., 8 Gush. 393, 403. The question, what is due proof, is to be determined by the court, according to the rules of evidence, and npt by the defendants nor by any other life insurance companies. We are not informed what proof of death was presented to the defendants, and it is not necessarj- that we should know ; for it is conceded by them that the proof was suffi- cient, if the physician's certificate was not a requisite part of it. The usage of the defendants to require certain specified proof of death has been relied on in ai^ument. In the first place, no such usage is dulj- shown. In the next place, if it were so shown, there is no pre- tence that the plaintiff had any notice of it when he took the policy. He therefore, for that reason, if for no other, could not be bound by it. . . . Jfudgment for tJie plaintiff .^ 1 In Biannstein v. Accidental Death Ins. Co., 1 B. & S. 782 (1861), Wightmax, J., said: — " The qnestion in this case is, What effect is to be given to a clause in a deed of settlement, which is incorporated by one of the terms of the policy in the policy itself, ' that before payment of the sum insured by any policy, proof satisfactory to the direc- tors of the company should be furnished by the claimant of the death or accident.' And then there is this addition, ' together with such further evidence or information, if any, as the said directors shall think necessary to establish that daim.' " Xow it is said that, by virtue of this danse, the directore have the power, if they please, wholly to withhold payment by capriciously, as asserted in the replication, and without any reasonable ground whatsoever, requiring further evidence perfectly imma- terial to the matter in dispute. The question is, whether, giving a reasonable construc- tion to the intention of the parties when the danse was introduced by reference into the ])olicy, it can be understood that the assured did agree that, upon any ground whatso- ever, capridously or otherwise, which the directors, who are the parties to the suit, might think fit to urge, their decision should be binding ? The danse must receive a reasonable construction, and the parties must be taken to have had in view any further evidence which the directors might reasonably require; such a construction would fulfil all the terms of that danse." And Crompton, J., said : — " The real qnestion in aU cases of this nature is that stated by Ashhorst, J., in Hotham v. East India Co., 1 T. R. 638, 645, — what was the intention of the parties ? Now I cannot conceive that any company would put before a person desir- ous of effecting an insurance with them a stipulation that, in order to establish the occurrence of an accident insured against, their own directors might require any evi- dence, however chimerical, capricions, and unjust the asking for it might be. The putting such a construction on a stipulation like this is opposed to the general rule, that when it is agreed that an act is to be done to the satisfaction of a party it must be understood to mean nasonatli/ to his satisfaction. The cases where it is agreed between two parties that a disputed matter shall be determined by the certificate of a third person differ from the present, for there the act is to be done bj a third person, 65 1026 TAYLOR V. JETSK LIFE INS. CO. [OHAP. X whereas here it is to be done by one of the parties. The language of Tindal, C. J., in Dallmau v. King, 4 Bing. N. C. 105, is very important where he says that stipulEt- tions in a contract going to the destruction of the contract are inoperative." And Blackbuen, J., said : — " I quite admit that parties may make what they please a condition precedent, bnt it must be shown that they so intended. Here the stipulation is the language of one party, the company, and ' verba fortius accipiuntur contra proferentem.' No doubt they might have stipulated that no money should be payable under a policy unless the directors obtained any evidence they chose to ask for, but it would require very dis- tinct language, and much stronger than any used here, to show that the parties so intended." And see ClufE w. Mutual Benefit L. Ins. Co., 99 Mass. 317,323-324 (1868); O'Reilly V. Guardian Mut. L. Ins. Co., 60 N. Y. 169 (1875) ; Insurance Co. v. Rodel, 95 U. S. 232 (1877) ; Supreme Council v. Forsinger, 125 Ind. 52 (1890) ; Buffalo L. T. & S. Co. V. Knights Templar and Masonic Mut. Aid Assn., 126 N. Y. 450 (1891) ; Jarvis v. Northwestern Mut. Relief Assn., 102 Wis. 546 (1899) ; Potter v. Union Central L. Ins. Co., 195 Pa. 557 (1900). On the topic of this section, see also : — Jackson v. Southern Mut. L. Ins. Co., 36 Ga. 429 (1867) ; Semmes v. Hartford Ins. Co., 13 WaU. 158 (1871) ; Connecticut Mut. L. Ins. Co. v. Siegel, 9 Bush, 450 (1872) ; McFarland v. United States Mut. Ace. Assn., 124 Mo. 204 (1894) ; McFarland o. Railway 0. & E. Ace. Assn., 5 Wyo. 126 (1894) ; Hanna v. Connecticut Mut. L. Ins. Co., 150 N. Y. 526 (1896) ; Harrison v. Masonic Mut. Ben. Soc, 59 Kans. 29 (1898) ; Kettenring v. Northwestern Masonic Aid Assn., 96 Fed. R. 177 (C. C, N. D. 111., 1899) ; Lewis V. Metropolitan L. Ins. Co., 178 Mass. 52 (1902). — Ed. SECT. I.] ATHERTON V. BKOWN. 1027 CHAPTER XI. WAr\'ER AND ESTOPPEL. SECTION I. Marine Insurance. ATHEKTON v. BROWN. Supreme Judicial Court of Massachusetts, 1817. 14 Mass. 152. Assumpsit on a policj* of insurance, whereby the defendant insured 8200 for the plaintiff, on " property- on board the Spanish brig ' New Constitution,' from the Havana to her port of discharge in the United States." In a case stated for the consideration of the court, it was agreed that the plaintiflF was interested to the amount insured bj- the policj- in propertj- on board the American brig " Stranger," of Portland, which was at the Havana when news of the war between the United States and Great Britain was received here ; that, for the purpose of eluding capture by the enemy, the agent of the owners of the vessel and cargo, through the intervention of a Spanisli house, procured papers for said vessel and cargo from the custom-house at the Havana, making the vessel ostensibly Spanish, although still the property, in fact, of her original owners in the United States ; and altered her name to the "New Constitution," and put on board her a Spanish captain and crew. On her passage for the United States, she was captured and condemned, with the cai-go on board. I It was admitted by the defendant that the plaintiff's agent, who pro- cured the insurance, a credible witness, whose testimony could not be disproved, would testify, if admissible, that, at the time of eflFecting the insurance, he informed the defendant that the vessel on board of which the property was to be shipped was the brig " Stranger " aforesaid, and that her real American character was not to be changed ; but that she was to be rendered ostensibly Spanish, for the sole purpose of avoiding capture bj^ the enemy. Judgment by default or nonsuit was to be rendered in the action, as the opinion of the court should be on the foregoing statement. Whitman, for the defendant Todd, for the plaintiff'. Per Curiam. The question is, whether the words in the policy, viz., the Spanish brig "New Constitution," amount to a warranty that the 1028 SILLOWAT V. NEPTUNE INS. CO. [CHAP. XI. vessel was Spanish ; or whether they may be considered as merelj' descriptive of the vessel, or as the name of the vessel. We are of opinion that the description of the vessel, as contained in this policy, includes her national character, and that it amounts to a warranty that she was, in fact, a Spanish vessel. Parol evidence of what was within the knowledge of the underwriters was not admissible. It being agreed that the vessel was not Spanish, but American, the warranty was not complied with ; and the defendant is not liable in this action. Plaintiff nonsuit} SILLOWAT AND Others v. NepTUNE IKS. CO. Supreme Judicial Court of Massachusetts, 1858. 12 Graj-, 73. Action of contract upon a policy of insurance, dated March 6, 1852, insuring " Daniel Sillowaj- & Co. for whom it concerns, payable to D. S. & Co.," 82,500 on one half of the schooner Atlantic, S2,300on one half of her cargo, and §350 on one half of " the freight on board said schooner," at and from Portsmouth, N. H., to Gua3-ama, Porto Rico, and thence to port of discharge in the United States." ^ . . . Trial at November Term, 1854, before Metoalf, J., who reported to the full court the following case : — 1 Contra: Bidwell v. North "Western Ins. Co., 24 N. T. 302 (18G2). See Weston v. Ernes, 1 Taunt. 1 15 (1808) ; Coles v. Marine Ins. Co., 3 Wash. C. C. 159, 163 (1812); Redman i;. Lowdon, 5 Taunt. 462 (1814), s. c. sub nom. Redman v. Loudon, 1 Marsh 136. In Odiorne v. New England Mnt. M. Ins. Co , 101 Mass 551 (1869), a policv on a vessel for one year from Feb. 26, 1867, said : " Prohibited from . . . Cape Breton . . . between October 1 and May 1 ." Within the prohibited months the vessel used a port in Cape Breton and departed in safety. An action was brought because of a subsequent loss. It was held that there could be no recovery and that oral testimony on the part of the plaintiff would not be admissible to prove " that, when the policy was delivered to the plaintiff's agent, he objected to the clause above given, and stated to the presi- dent of the defendants that the vessel would probably want to use some of the prohib- ited ports, and the president replied that the effect of the clause was to exclude risks in such ports only, but not to vitiate the policy, and in that case he could come in and make an agreement for an additional premium, or take the risk himself while in such ports ; that a custom exists with the underwriters of Boston to construe said clause as excluding any risks in the prohibited ports, but not that such use vitiates the policy ; that for the year previous to Feb. 26, 1867, the plaintiff insured the same vessel with the defendants, by a policy containing the same clause as the one quoted, and, when the insurance was effected, the vessel was in Sydney, a prohibited port, and it was so stated in the application for insurance, and the defendants issued their policv, and at the end of the year demanded and collected of the plaintiff the premium for such year." — Ed. " In reprinting the statement, passages foreign to deviation have been omitted. — Ed. SECT. I.J SILLOWAY V. NEPTUNE INS. CO. 1029 The plaintiffs were permitted ... to introduce a charter-party of the vessel to them from David S. Poor, the owner. . . . The vessel was laden in Februarj^ 1852, at Ncwbur^port, where the owners resided. . . . She met with an accident in loading at Newburj'- port, and was despatched thence to Portsmouth, for the purpose of being . . . repaired. The shipwrights who made the repairs testified that a small portion of her sheathing only was taken off; that her butts and seams were found verj' open ; and that in their opinion, in order to make her seaworthy, her whole sheathing should have been removed and all her butts and seams tried and recaulked ; that they so informed Currier, one of the plaintiffs. . . . But this evidence was contradicted by witnesses who examined her at Newbur^-port ten da3's afterwards, and by her officers and some of her crew, who testified that she was seaworthy when she left Portsmouth. This question was submitted to the jury, who returned a verdict for the plaintiffs. The vessel sailed from Portsmouth for Gua3-ama on the morning of the 5th of March. The next day Currier applied to the defendants for a policj". . . . The vessel about nine o'clock in the evening after her departure from Portsmouth encountered stroug gales with a dense fog and heavy sea ; about midnight she sprung a leak, and half an hour afterwards the master tacked ship, and put into Gloucester in distress, arriving there earlj' the next morning. The master went to Newburyport for orders, and by direction of the owners returned to Gloucester, and sailed on the 7th for Newburj-port, arrived there on the 8th, and re- ceived some dam^e in coming to the wharf. A claim was made on the defendants for this loss, which was adjusted bj' an agent sent by the defendants to Newburj-port to investigate the matter, and the amount paid by the defendants ; and by indorsement on the policv, '•' liberty is given for the schooner ' Atlantic ' to make her present voyage on a single bottom." The defendants introduced evidence, which was not contradicted, that the vessel could have been repaired at Gloucester as well as at Newburyport. On the 1st of April, after the vessel had been repaired and her cargo reladen, she again sailed on her voyage. She encountered severe gales, and arrived at Guayama on the 24th of April, much damaged. The cargo, excepting a part of tlie deck load, which had been lost overboard, was delivered to the consignees ; and both the vessel and the cargo, after being surveyed, were sold at auction. . . . The defendants stated the following points of defence, which were resented for the determination of the whole court : . . . 2d " That the removal of the schooner from Gloucester to Newbur3-- port was a deviation which discharged the underwriters." . . . It was agreed that the whole court might draw such inferences as a jury would be warranted in drawing, or submit the case to a jury upon any point, if they should see fit ; and that the verdict, if sustained at all, should be reformed, if necessarj-, by an assessor, upon principles to be settled by the court 1030 SILLOWAY V. NEPTUNE INS. CO. [OHAP. XI. E. Merwin, for the plaintiffs. S. Jiartlett, for the defendants. BiGELOw, J.^ . . . We doubt verj- much whether these facts do constitute even a technical deviation sufficient to discharge the policj-. The master was full}- justified in seeking a port in consequence of sea damage, but he was not absolutely obliged to remain there and make the needful repairs. If, in the exercise of good judgment and sound discretion, and acting in good faith, he deemed it expedient for the in- terest of all concerned to go to an adjoining port, the home of the owners, where the vessel could be refitted with greater convenience and less expense, and without incurring any actual increase of risk, we are strongly inclined to the opinion that he might do so without discharg- ing the underwriters on the ground of an unlawful or unjustifiable variance from the course of the voyage ; and under similar circum- stances that the owners might direct the master to take the vessel into her home port. But however this may be, we are clearly of opinion that the defend- ants are estopped in the present case from alleging the supposed devi- ation as a ground of defence to this policy. It appears bj- the evidence, that the fact of her having put into Gloucester before she went into NewburN-port was f UII3' known to the defendants' agent, who went to the latter place for the purpose of examining the vessel and adjusting the loss which had then happened ; and that subsequenth' to this they not onlj- paid the amount of the loss, but also gave liberty to the owners, hy an indorsement in wi'iting on the policy, to proceed to sea with the vessel on a single bottom. The defendants thus recognized the validitj' of the policy as a subsisting contract, with a full knowledge of the alleged deviation, and they allowed the plaintiffs to send the vessel to sea, not only without an}- suggestion that the}- had forfeited their right to hold the insurers liable, but in the belief that she was covered by a policy the validity of which was not denied or doubted by the de- fendants by reason of any preexisting fact. The plaintiffs, under these circumstances, had a right to regard any objection on the ground of the supposed technical deviation to have been waived. Certainly it can- not be allowed as a defence to this action, without operating as in the nature of a fraud on the plaintiffs, who have acted on the belief that the policy was in force during the prosecution of the residue of the voyage. . . . Unless the parties agree on the sum due under the policies, the case must be sent to an assessor to determine the amount according to the rules and principles hereinbefore stated. Judgment on the verdict.'^ ' In reprinting the opinion, passages stating the facts, or dealing with matters for- eign to waiver of deviation, have been omitted. One of the omitted passages may be found ante, p. 60, li. — Ed. ^ Other cases on waiver of deviation are : Crowninshield v. New York Ins. Co. 3 Johns. Cas. 142 (1802) ; Coles u. Marine Ins. Co., 3 Wash. C. C. 159, 163 (1812); SECT. I.] THEBAUD V. GKEA.T WESTEEN INS. CO. lO'M THEBAUD KT XL., Respondents, v. GREAT WESTERN INS. CO., Appellant. CoTORT OF Appeals op New York, 1898. 155 N. Y. 516. Appeal from a judgment of the late General Term of the Supreme Court in the first judicial department,^ entered February 20, 1895, upon an order overruling defendant's exceptions, ordered to be heard in the first instance at General Term, and directing judgments upon a verdict in favor of plaiutiflf. The nature of the action and the facts, so far as material, are stated in the opinion. Prescott Sail Butler, for appellant. JEsek Cowen and Everett Masten, for respondents. O'Brien, J. This was an action by the owners of a steamboat upon a policy of marine insurance. The issues in the case were tried before a jury, and the plaintiff recovered. On the 28th of June, 1884, the steamer "Dos Hermanos" was in process of construction at the port of Philadelphia for use as a river steamer at or near Frontera, Mexico. She was not constructed or in- tended for use upon the open sea, but for service upon the rivers or other inland waters of the country where she was destined for use. On the day mentioned, the defendant issued to the plaintiff its policy of marine insurance upon this steamer to cover the voyage from Philadel- phia, the place where it was built, to Frontera, Mexico, the place where it was intended for use. The policy related only to this voj-age, part of which was, as all parties knew, upon the sea. The defendant, by the terms of the policy, undertook to pay to the plaintiffs the sum of S5,000 in case of loss upon this voyage, including what is known as the mechanic's risk while in port, meaning that at the time of the execution of the contract the steamer had not been completed, and, in fact, the voyage did not commence untU the 27th of August thereafter. The policy, by its terms, indemnified the owners against loss from the usual perils of the sea covered by policies of marine insurance. The steamer, while on the voyage, was lost at sea, near the coast of North Carolina, on the night of the 13th of September, 1884. , The defence to the action may be arranged under three general heads : (1) That the steamer was not seaworthy, and, hence, that the implied warranty of seaworthiness, which it is insisted enters into and forms a Kedman ». Lowdon, 5 Taunt. 462 (1814), s. c. sab nom. Bedman v. Loudou, 1 Marsh. 136: Wi^in v. BoEtrdman, 14 Mass. 12 (1817); Glidden v. Manufacturers' Ins. Co., 1 Sumner, 232 (1832); Warren v. Ocean Ins. Co., 16 Me. 439 (1840); Keed u. McLaughlin, 2 Hannay, N. B. 128 (1870).— Ed. 1 Reported 84 Hun, 1 (1895).— Ed. 1032 THEBAUD V. GEEAT WESTERN I^'S. CO. [CHAP. XI. part of every marine insurance upon a ship or vessel, was broken, and for that reason the plaintiff is not entitled to recover. (2) That in making the V03-age there was a voluntary deviation from the usual course of the voyage from Philadelphia to Frontera. (3) That the steamer was not lost by the perils of the sea, or by any casualty covered by the terms of the polic}', but in consequence of the unseaworthi- ness and unfitness of the vessel to make the yoyage covered by the contract. It is no doubt the general rule that in all contracts of marine insur- ance upon vessels there is an implied warranty that the subject of the insurance was at the time seawortb3-, or, in other words, reasonably fit and capable of making the voyage. But in this case both parties knew that the vessel was not intended for service upon the open sea. She was not built or constructed for any such purpose, but, on the contrarj-, for the river service. Before the defendant entered into the contract the plans and specifications with reference to the construction of the " Dos Hccmanos " had been submitted to its agents. Thej- put the de- fendant in possession of all information concerning the character and construction of the craft. The defendant's marine engineer, who had had considerable experience, assured the broker who took the risk " that she was built for the river trade, and he did not consider that she was just the thing to attempt all weathers on the coast going around there, but if properlj' handled she might get there, provided she took the inland course as far as possible." The defendant thereupon con- cluded to write the risk, but exacted therefor double the usual premium for marine insurance on ordinary seagoing vessels. The steamer was not then completed, and hence the provision in the policj' covering the mechanic's risk while in port, including the privilege of mechanics to work upon the vessel. Before starting on her vo3-age for Frontera two trial trips were taken by direction of the engineer, one up and one down the Delaware River. Neither of these trips, however, extended beyond the limits of the port of Philadelphia, and we do not understand that it is seriously claimed that these trips constituted a deviation from the usual voj-age. They were merely preliminary in order to test the capacity of the vessel to make the voyage. It was competent for the jury to find upon the evidence that the vessel was sufficiently provided with a crew and proper equipments. There is evidence tending to show that suitable precautions were taken before leaving Philadelphia for the ocean voyage to make her as sea- worthj- as a vessel of her class could be made ; that her machiner}- was tried and the boilers inspected in the usual manner. The voyage was commenced, after leaving Philadelphia, by taking what is known as the inside course through the canals and bays, and the sea voyage was noc actuall)' commenced until she reached Fort Macon. Before reachinof that point, however, it seems that an accident occurred to the vessel by a collision with a submerged stump in one of the canals, and, hence, there was a stop at Baltimore for repairs, where some further precau- SECT. I.] THEBAUD V. GREAT WESTEKN INS. CO. 1033 tions were taken in order to protect the steamer from the perils of the sea voj-age. Another stop was made at Norfolk, in order to procure a pilot to take her through the Chesapeake and Albemarle canal and other waters to Fort Macon. This was all inside navigation, and on reach- ing the point last mentioned it became necessary to go outside upon the open sea, and shortly afterwards the steamer was lost. That the " Dos Hermanos " was not a seaworthy vessel, in the sense in which these terms are applied to seagoing vessels, is made quite clear by the evidence. It was undoubtedl3' competent for the jury to so find and for the court below to so decide, but in this court the ques- tion alwaj's is, upon an issue of this character, not upon which side the evidence preponderates, but whether there is anj* evidence to support the verdict. The parties knew perfectly well that the subject of the insurance was not a seagoing vessel, but, for the purposes of the trip the defendant was evidentl}' willing to take the risk, in consideration of the payment of a double premium, and after inspecting the vessel and acquiring full knowledge as to her construction and capacity. In view of the proof in the case tending to show what was done in order to fit the steamer for her voj-age, we do not think it can be said in this court that the verdict of the jury is without any evidence to sustain it. Generally, the question as to whether a vessel, covered by a policy of marine insurance, was, or was not, at the time seaworthj", is one of fact for the jury. Surges >■. Wickham, 3 Best & Smith, 669 ; Clap- ham r. Langton, 5 Best & Smith, 729 ; TurubuU i'. Jansou, 36 L. T. R. 635 ; Bouillon v. Lupton, 15 C. B. (x. s.) 113. It is difficult to see how such a question, from its very nature, can, in practice, be deter- mined otherwise, except, possibly, in a very clear case. But we do not regard that question as controlling, since, as alreadj' stated, both parties to the contract knew that the vessel was not a seagoing craft, or suitable for the navigation of the high seas, and, under the circum- stances, the implied warranty upon which the defendant relies should not be construed in such a way as to be repugnant to the general pur- pose which the parties had in view at the time of the execution of the contract. We can discover no reason why the general rule applicable to risks in fire insurance policies does not apph* to this case. As was said by this court in the case of Bidwell v. North Western Ins. Co. {■24: X. Y. 302) : " Indeed it is not easy to perceive why an insurance company, b}- reason of the formal words or clauses (of a general and comprehensive nature), inserted in a policy intended to meet broad classes of contingencies, should ever be allowed to avoid liabilitj' on the ground that facts, of which the company- had full knowledge at the time of issuing the polic\", were then not in accordance with the formal words of the contract, or some of its multifarious conditions. If such facts are to be held a breach of such a clause, the}' are a breach eo in- stanti of the making of the contract, and are so known to be b}' the company as well as the insured. And to allow the company to take the premium without taking the risk would be to encourage a fraud." 1034 THEBAITD V. GREAT WESTERN INS. CO. [CHAP. XI. This rule, which is clearly applicable to express warranties in contracts of insurance, should, in reason and justice, be applicable to the implied warrant}' of seaworthiness in policies of marine insurance. That such is the well-settled rule in this court, with reference to express war- ranties in contracts of fire insurance, covering conditions with respect to which the underwriter had full knowledge, cannot now be questioned. Van Schoick v. Niagara Ins. Co. , 68 N. Y. 434 ; Bennett v. Buchan, 76 X. Y. 386 ; McNally v. P. Ins. Co., 137 N. Y. 389; Forward v. C. Ins. Co., 142 N. Y. 382 ; Robbins v. Springfleld Ins. Co., 149 N. Y. 477. So we think the defendant must fail in defeating the recovery on the ground that there was a breach of the implied warranty of sea- worthiness. Whether the vessel was unseaworthj' or not bj' reason of insufficient crew, or insufficient machinery, or the absence of a pilot during certain parts of the voyage was, under the circumstances, a question for the jur}'. The master of the vessel was himself a competent navigator, and whether, after reaching Fort Macon and going into the open sea a pilot was usual and necessar}' for the rest of the voyage, is not a matter of law, hut of fact, and the burden of proof showing negligence on the part of the plaintiff in this respect was, we think, upon the defendant. 1 Phil, on Ins. (5th ed.), §§ 712, 713. Nor do we think it can be said, as matter of law, that there was such a deviation from the usual course of the voyage as to absolve the de- fendant from the obligations of the contract. A deviation is a volun- tary and inexcusable departure from the usual course, and whether the departure amounts to a deviation must be determined by the motive, consequences, and circumstances of the act. Hence, in its nature it is a question of fact. Where the circumstances are such as to leave no alternative to a reasonable and prudent man, exercising a sound judg- ment, and acting for the best interests of all concerned, it is not a deviation. 1 Arnold on Ins., §§ 151, 152. This proposition covers the argument in behalf of the defendant with respect to the inside voy- age through canals and the stops made at the various points already referred to. We have already intimated that the trial trips cannot, in any just sense, be considered a deviation. Moreover, where a vessel is insured for a voyage " at and from " a port a reasonable time will be allowed while there engaged in the business of preparing for her voyage. Snj'der v. Atlantic Mut. Ins. Co., 95 N. Y. 196 ; Fernandez V. Great Western Ins. Co., 48 N. Y. 571. The subject of the insurance in this case was a new craft, and the trial trips were reasonably necessary in order to determine, before undertaking the voyage, whether the vessel was suitable for that pur- pose. Hence these trips may reasonably be regarded as a part of the preparation for the voyage. The delay in commencing the voyage may also be imputed to the same cause, viz., the preparation necessary previous to sailing. The SECT. I.] THEBAUD V. GREAT WESTERN INS. CO. 1035 vessel was not completed when insured. The underwriter is not dis- charged b}' a delay incurred for the purposes of the voj-age, thougli its absolute duration be ver3- considerable. There must be a clear imputa- tion of waste of time, and whether the delay be reasonable or not must be determined, not by any positive or arbitrary rule, but by the circum- stances existing at the time. Arnold v. Pacific Mut. Ins. Co., 78 N. Y. 16, 17. The defendant knew the condition of the vessel, and could form a judgment for itself as to the time when she would be read}' to sail, and the insurance covered the chances of delay. On all the facts the jury had the right to find that the delay was not unreasonable. The subject of the insurance was a non-seagoing vessel. It is rea- sonable to suppose that the parties intended that in making the voynge the open sea should be avoided as much as possible ; hence, what was called the inside course was taken. Considering the character of the steamer and the purpose for which she was built, it cannot be said, as matter of law, that avoiding the sea until Fort Macon was reached, by the inside course, was a deviation from the usual course for vessels of that character. The ruling of the trial court submitting the question to the jurj' was quite as favorable to the defendant as it was entitled to. It was for the jur3- to saj- whether, under all the circumstances, the delaj- in the canal at night, the stop at Baltimore and Norfolk, the delay at Fort Macon and the anchoring off Smitliville was a deviation. The defence that the loss was not from the perils of the sea, but through inherent wealfness, or defects, or faulty construction, presented upon the proofs a question of fact. On the part of the defendant it was claimed that the steamer foundered in a calm sea ; while the plaintiffs insisted that she was lost in a northeast gale. The jur}- having sus- tained the plaintiff's contention, we cannot say that the verdict in that respect is unsupported by evidence. The question was for the jurj-, and the finding is not open for review here. It appears from the evi- dence that this vessel was ninetj- feet long, twentj'-two feet beam, with from twelve to eighteen inches of freeboard, flat bottom, drawing about three feet of water. It is obvious that it would not require the severest tempest to sink such a craft. The risk was doubtless an unusual one, and for that reason an unusual premium was asked and obtained. Ic ma}' be that the regular seagoing vessel would have weathered the gale. But the real question presented to the defendant, when the ap- plication for insurance was made, was wliether this boat, as she was known b}' both parties to be, could make the transit from the port of departure to her destination. The defendant concluded to take that risk in consideration of a double premium, and to permit it now, after receiving the premium, to defeat a recover}-, on the ground that she was not seaworth}' in consequence of alleged defects of construction, known to it at the time of taking the risk, would scarcelj- be consistent with commercial moralitj'. It seems to us that the question was properly submitted to the jury, and upon a careful examination of the exceptions taken during the 1036 THEBAUD V. GREAT WESTEKN INS. CO. [CHAP. XI. trial, and to the charge, we are of opinion that none of them present any question of law that would warrant us in disturbing the verdict. The judgment should, therefore, be affli-med. All concur, except Paeker, C. J., not sitting. Judgment affirmed} 1 Other cases on waiver of unseaworthiness are : Weir v. Aberdein, 2 B. & AM. 320 (1819) ; Parfitt !'. Thompson, 13 M. & W. 392 (1844) ; Hoxie v. Home Ins. Co., 32 Conn. 21, 39-41 (1864) ; Marine F. Ins. Co. u. Burnett, 29 Tex. 433, 445-447 (1867) ; Western Assur. Co. u. Sonthern Cotton OQ Co., 30 U. S. App. 376 (Fifth Circuit, 1895), s. c. 16 C. C. A. 67. In Quebec M. Ins. Co. w. Commercial Bank, L. R. 3 P. C. 234. 244 (1870), Lord Penz.ixce, for the Judicial Committee, said : — " The case of Weir v. Aberdein did not proceed upon the language that is attributed to Lord Tenterden — whether he was fully and rightly reported or not — but the judg- ment proceeded, as it appears to their Lordships, distinctly npon the principle that the underwriters had been aware of the unseaworthiness, and had assented to the Tessel putting back to the port to cure herself of the defect, and therefore they were held responsible." On the topic of this section see also : — Vos o. Robinson, 9 Johns. 192 (1812) ; Morrison v. Universal M. Ins. Co., L. R. 8 Ex. 197 (Ex. Ch. 1873) ; Enterprise Ins. Co. o. Parisot, 35 Ohio St. 35 (1878) ; Reck V. Phenix Ins, Co., 130 N. Y. 160, 165 (1891).— Ed. SECT. II.] McMASTERS * BRrCE V. -WESTCHESTER CO. INS. CO. 1037 SECTION II. Fire Insurance. (A) As TO Conditions applicable aftek Loss. McMASTERS axd BRUCE i: WESTCHESTER COUNTY MUTUAL IXS. CO. SrpREME CorsT OF Xew York, 1841. 25 "Wend. 379. This was an action on a policj' of insurance, tried at the TTestchester Circuit, iu April, 1840, before tlie Hon. Charles H. Ruggles, one of the circuit judges. The plaintiffs were insured against loss by fire to the amount of S4.000, upon a stock of joiner's tools and other propertj', in a work- shop attached to the state-prison at Sing Sing for the period of one j-ear from the 12th December, 1837. On the 1st July, 1838, the shop took fire, and property insured, to a large amount, was destroyed. On the 13th July, the plaintiffs gave notice of the loss to the defendants. Repeated interviews were had between McMasters, one of the plaintiffs, and certain agents of the defendants, from the time of the fire down to the 26th day of July, when the latter, believing that the ownership in the property had been changed since the polic}' was effected, by Bruce selling out his interest to McMasters, and the latter transferring the share so acquired to one of his sons, ceased farther intercourse with McMasters, and recommended to him to take such course in the prem- ises as should be advised by counsel. On the 27th Juh', McMasters served upon the secretary of the company an account of the loss, an affidavit made by hira verifying the account, and stating the amount of the loss, and a certificate of the justice of the peace that he was ac- quainted with the character and circumstances of McMasters (saying nothing as to Bruce), and certifying the loss at -Si, 000. A seal was not attached to this certiflcate, which was given under a condition in the policy in the usual form, requiring an account of loss and a certifi- cate of a magistrate, and that the latter should be under the hand and seal of the magistrate. On the trial of the cause, the above facts were shown, and the plaintiffs also produced a letter from the president of the companj-, dated 21st December, 1838, addressed to McMasters, in these words : "To yours of the 10th inst., received yesterday, I reply that your letter of the 29th July last, stating that you had sustained damage by fire, was laid before the committee for advisement, and that committee reported that in its opinion your claim was invalid, and ought not to be paid. You are therefore left to pursue such course in the premises as you may be ad^'ised." Upon this evidence the plain- tiffs rested, and the defendants moved for a nonsuit, on the ground of 1038 McMASTERS & BRUCE V. WESTCHESTER CO. INS. CO. [CHAP. XI. the insufficiencj- of the preliminary proofs ; which motion was denied. Evidence was then given on both sides in respect to the transfer of the interest of Bruce to McMasters, and of the assignment of the same by the latter to his son. The questions arising upon the preliminary proofs were submitted by tlie counsel of both parties to the jurj'. The judge charged the jury that the plaintiffs were bound to use due diligence in giving notice of the loss, and submitted to them to determine whether, under the circumstances of the case, there had been an unreasonable delay ; as to the want of a seal to the certificate of the magistrate, he deemed the defect fatal, could it not be considered as waived, and he submitted the question to the jury whether this and all other defects in the preliminary proofs might not be so considered. In relation to the transfer to McMasters, of Bruce's interest in the propertj^ insured, he expressed the opinion that if made, it was not such a change of interest as to affect the plaintiflEs' right to recover ; but if the property had been subsequently transferred to McMasters' son^ the defendants were en- titled to the verdict. The judge also submitted the following questions to the jury, and requested that they might be answered separately in the verdict which they should render, viz : 1. Was the notice of loss given in due time ? 2. Was there a waiver by the company of any irregularity in the preliminarj* proofs ? 3. Was the partnership be- tween the plaintiffs dissolved before the fire ? 4.- Did McMasters purchase the whole interest of Bruce ? 5. Did the son of McMasters become a partner with his father ? The jury, on their return into court, answered the two first interrogatories in the afHrmative, and the others in the negative, and found a verdict in favor of the plaintiffs for $4,355.53 damages, including interest. The defendants having excepted to the charge and objected to the questions being submitted to the jury, which had been answered by them, moved for a new trial. M. T. Reynolds, for the defendants. T. H. Lee, for the plaintiffs. By the Court, Nelson, C. J. Whether the learned judge was correct or not, in charging that the plaintiff, McMasters, was entitled to recover for the whole loss in the names of the plaintiffs, if he had purchased the share of his co-partner before the fire, is a question not material to decide ; because he submitted the distinct fact to the jurj-, upon which the point of law rested, and they have found that no such purchase was made. This finding renders the opinion expressed wholly unim- portant in the case. The course the judge took on the trial in submitting certain questions to the jury, with a view to avoid the necessity of a second trial, was objected to : but such course is not uncommon at the circuits where a doubt is entertained upon the law ; it cannot operate to the prejudice of either party, and frequently avoids the trouble and expense of a new trial. It is in the nature of a special verdict, which the jury may always find. 2 R. S. 421. I think the judge was right, also, in submitting to the jury whether SECT. II.] McMASTEES & BRDCE V. -^ESTCHESTEE CO. 1X5. CO. 1039 the company were not concluded from taking exceptions to the prelimi- nary proofs. Altliongh repeated communications had taken place with the officers and agents of the company, and in some instances, in pur- suance of directions from the board, after the preliminary proofs were delivered, no such ground was taken. On the contrary, the fair infer- ence from all the proof in the case is, that other grounds were put forth and mainly relied upon to defeat the recover}*. The law is well settled, that if there be a formal defect iu the preliminary proofs, which could have been supplied had an objection been made by the underwriters to payment on that ground, if they do not call for a document, for instance, or make objection on the ground of its absence or imperfection, but put their refusal upon other grounds, the production of such further prelimi- nary proofs will be considered as waived. 16 Wend. 401 ; 10 Pet. 507. There are few cases that come before us presenting stronger claims to the application of this rule than the present one, or that bet- ter exemplify its propriety and justice. The agents were neighbors of the assured, in daily communication with him on the subject of his claim ; some of them obviously seeking for the means of defeating it by inquiries into the situation and title of the property destro3-ed, and by interrogation of the parties, and yet no distinct objection taken as to the preliminary steps, that might now be regarded as fatal. Had the objection been made in the course of these interviews, the defects might at once have been remedied, as is obvious from the authorities already referred to. 2iew trial denied.^ 1 Ace. : As to the eHect of stating other groimds for lefnsing to pay : Tavloe v. Merchants' P. Ins. Co., 9 How. 390, 403 (1850); Phillips v. Protection Ins. Co., li Mo. 220 (1S51) ; Bnmstead r. Difidend Mut. Ins. Co., 12 X. T. SI (1S54) ; Piremen's Ins. Co. r. CrandaU, 33 Ala. 9 (185S) ; Xoyes v. Washington County Mnt. Ins. Co., 30 Tt. 639 (155S» ; Franklin P. Ins. Co. c. Coates, 1-t Md. 286 (1859) ; Peoria M. & P. Ins. Co. r. 'Whitehin, 25 HL 466, 470 (1861) ; Cobh v. Insurance Co., post, p. 1064 (.1573) ; State Ins. Co. v. Jlaactens, 38 N. J. L. (9 Vroom) 564 (1S76) ; Walsh ». Ver- mont Mut. P. Ins. Co., 54 Vt. 351, 358 (1SS2) ; Hahn v. Guardian Assur. Co., 23 Oregon, 576 ^1893); Home P. Ins. Co. r. PaUon, 45 Xeb. 554 (1895). Compare Edwards r. Baltimore F. Ins. Co., 3 GiU, 176, 180-1 SI, 186-187 (1845) ; Spooner r. Termont >Int. P. Ins. Co., 53 Vt. 156 (ISSO) ; Hicks v. British American Assur. Co, 162 ^". T. 2J4 (1900). Ace .- As to the effect of silence after receipt of proofs : Great Western Ins. Co. v. SKiaden, 26 Bl. 360 (1861) ; Works r. Farmers' Mnt. F. Ins. Co., 57 Me. 281 (1869) ; Home Ins. Co. o. Cohen, 20 Grat. 312 (IS71) ; Taylor r. Roger WiBiams Ins. Co., 51 X. H. 50 (1S71); Jones v. Mechanics F. Ins. Co., 36 X. J. I,. (7 Vroom) 29, 36-40 (1S72) ; Hibemia Mut. F. Ins. Co. i-. Meyer, 39 X. J. L. (10 Vroom) 4S2 (1S77) ; Kee- ney v. Home Ins. Co., 71 X. T. 396, 403.^04 (1877); Susquehanna Mnt. P. Ins. Co. r. Cnsick, 109 Pa. 1.57 (1885) ; Cayou o. Dwelling House Ins. Co., 6S Wis. 510 (1887) ; Vangindertaelen i. Phenix Ins. Ck)., 82 Wis. 112 (1S92); Alston v. Phenix Ins. Co., 100Ga.(lS97). See Patrick p. Farmers' Ins. Co., 43 X. H. 62 (1862) ; Madsden v. Phtenix F. Ins. Co.. 1 S. Car. 24 (1868) ; Myers r. CotmcU Bluffs Ins. Co., 72 Iowa, 176 (1887) ; Davis Shoe Co. r. Kittanning Ins. Co., 138 Pa. 73 (1S90). In Citizens' F. Ins., S. & L. Co. o. DoU, 35 Md. 89 (1S71), it was held that defects in the proofe of loss were not waived by the insurance company's letter, worded thus : " The proofs of loss furnished by you to this company are wholly unsatisfactory, as to 1040 BLAKE V. EXCHANGE MUTUAL INS. CO. [CHAP. XL BLAKE V. EXCHANGE MUTUAL INS. CO. Supreme Judicial Court of Massachusetts, 1858. 12 Gi'aj', 265. Action of contract upon a polic3' of insurance against fire,^ . . . any loss or damage " to be paid within ninety daj-s after notice, proof and adjustment thereof in conformity to the conditions annexed to this policy." . . . " It is also declared that this policy is made and ac- cepted in reference to the written and printed application whereon it is issued, and also to the conditions hereto annexed, which are hereby made a part of this polic}-, and to be used and resorted to in order to explain the rights and obligations of the parties hereto, in all cases not herein otherwise specially provided for. And it is also agreed and declared b}' the parties aforesaid, that no condition, stipulation, cov- enant, or clause hereinbefore contained shall be altered, annulled, or waived, or an}- clause added to these presents except bj' writing in- dorsed hereon or annexed hereto by the president or secretarj-, with their signatures affixed thereto." On the third page of the policy were printed " conditions of insur- ance," . . . and the twelfth condition required persons sustaining loss bj- fire and claiming indemnity under this polic)' to give notice and proofs of loss as therein particularly directed. At the trial in the Superior Court of Suffolk, . . . before Nash, J., the plaintiff . . . proved that the property was destroj-ed bj' fire on the 21st of January, 1856, and put in evidence certain notices and pre- liminary proofs sent bj' him to the defendants, which the judge ruled were insufficient to comply with the terms of the policy. After the introduction of evidence tending to prove the facts assumed in the fol- lowing instructions, the judge instructed the jur}', that the preliminary proofs could be waived or the defendants estopped to avail themselves of defects in them otherwise than in writing indorsed on or annexed to the policy ; that if the by-laws and conditions of insurance required the amount of the claim, even if the company be responsible at all. The company, however, denies any responsibility by reason of material misrepresentations as to the title and property being untrue, and for other reasons. With a reservation of all ob- jections to your recovering in any form, and without waiving any of the rights of the company under the policy, we leave you to pursue such a course as you may deem expedient." Contra, Sun Mut. Ins. Co. v. Mattingly, 77 Tex. 162 (1890). Other cases on the effect of certain forms of letters are : Edwards v. Baltimore F. Ins. Co., supra (1845) ; Blossom v. Lycoming F. Ins. Co., 64 N. Y. 162 (1876) ; Deitz V. Providence Washington Ins. Co., 33 W. Va. 526, 532, 536, 544 (1890) ; Schmurr v. State Ins. Co., 30 Oregon, 29 (1896). See Robinson v. Pennsylvania F. Ins. Co., 90 Me. 385 (1897) ; Phoenix Ins. Co. v. Minner, 64 Ark. 590 (1898) ; Merchants' Ins. Co. v. Nowlin, 56 S. W. Rep. 198 (Tex. Civ. App., 1900). — Ed. 1 In reprinting the statement and the opinion, passages foreign to the proofs of loss have been omitted. — Ed. SECT, n.] BLAKE V. EXCHANGE MUTUAL IXS. CO. 1041 certain preliminary proofs and notices to be given in a certain manner, and with certain particulars and details, and certain preliminarj- proofs and notices were given, not containing all the formal requisites, and, after receiving such proofs and notices, the defendants' president and secretary examined the premises, and had interviews with the plaintiff before the expiration of the time for giving said notices, and neither they then, nor the defendants afterwards, made any objection to the form or sufficiency of the preliminary proofs while any defects therein might have been remedied, and put their refusal to pay on other and distinct grounds, then such conduct might be considered a waiver of any defects in the preliminary proofs, or so far an estoppel that the defendants should not be allowed to avail themselves thereof, notwith- standing the provisions of the policy. . . . The jury returned a verdict for the plaintiff accordinglj-, and the defendants alleged exceptions. r. T. jRu^seil, for the defendants. a. M. Dana, Jr., and H. TT. Muzzey, for the plaintiff. Thomas, J. ... 3. The question as to the waiver of any defects in the plaintiff's notice and proofs of loss is one of more difficulty. There can be no doubt that the conduct of the defendants would amount to a waiver, except for the last clause in the policy, by which it is •' agreed and declared by the parties aforesaid, that no condition, stipulation, covenant, or clause hereinbefore contained shall be altered, annulled, or waived, or any clause added to these presents, except b}' writing indorsed hereon or annexed hereto by the president or sec- retary, with their signatures affixed thereto." There is a previous pro- vision that in case of loss the money is '■ to be paid within ninety days after notice, proof, and adjustment thereof in conformity to the con- ditions annexed to the policy." The provisions for notice and proofs of loss are contained in the twelfth of the by-laws. The entire bj'-laws are printed under the heading "conditions of insurance." The policy is declared to be made and accepted in reterence to the conditions thereto annexed, which are made part of the policy. How far the pro- visions as to the form of the notice and proofs of loss, after a valid contract has been made and a loss taken place under it, can be regarded as conditions of the contract itself, it is not necessarv to determine, nor whether their being classed under the designation of conditions of insurance could change the nature and purpose of the stipulations themselves ; for it seems to us that the question is not as to the pro- visions of the contract, but as to the performance of the provisions. The plaintiff is not seeking to set up a contract from which a material provision has been omitted by the oral consent of the officers of the company. The policy contained the usual provisions as to notice and proofs of loss. Upon the happening of the loss, the plaintiff sent to the defendants certain notices and proofs in pursuance of the requisi- tion of the by-laws upon the subject. If the notices were defective, good faith on the part of the underwriters required them to give notice 66 1042 BLAKE V. EXCHANGE MUTUAL INS. CO. [CHAP. XI. to the insured. If they failed to do so, if they proceeded to negotiate with the plaintiff without adverting to the defects, if, still further, they put their refusal to pay on other and distinct grounds, they are, upon familiar principles of law, estopped to set up and rely upon the defec- tive notices ; the law assumes that the notices were correct, and will not listen to the defendant when he seeks to show the contrary. Vos V. Robinson, 9 Johns. 192; ^tna Fire Ins. Co. v. Tyler, 16 Wend. 401 ; Heath v. Franklin Ins. Co., 1 Cush. 257 ; Clark v. New England Mutual Fire Ins. Co., 6 Cush. 342. If the defendant relied upon any exemption from the obligations of the policj', or any modification of them by the agents or officers of the company, or any addition, he must show such exemption, modification, or addition, by indorsement upon the policy. But the question whether a stipulation as to notice and proofs of loss has been fulfilled, or whether the defendant is in a condition to be heard upon that question, must be tested b}- the ordi- nary rules of law. There is a time when objections in matters of form must be taken. If they are not then made, thej- never can be made. The law does not say the procedure was perfect, but that the question is not open. The adherence to and liberal application of this principle are necessary to the maintenance of good faith and fair dealing in judicial proceedings. . . . The court erred in instructing the jury that no abatement of the amount to be recovered of the defendants could be made.^. . . . If the parties cannot agree upon the amount, or upon an assessor to fix it, the case must go to a new trial, limited to the question of dam- ages only. Exceptions sustained.^ 1 The omitted passage dealt with the apportionment of the loss among several pol- icies. — Ed. ^ On estoppel and waiver as to conditions applicable after loss, see also : — Atlantic Ins. Co. v. Wright, 22 lU. 462, 472-473 (1859) ; Patrick v. Farmers' Ins. Co., 43 N. H. 621 (1862) ; Cornell v. Milwaukee Mnt. F. Ins. Co., 18 Wis. 387 (1864) ; Davis V. Western Massachusetts Ins. Co., 8 R. I. 277 (1866) ; Daniels v. Equitable F. Ins. Co., 50 Conn. 551 (1883) ; Carroll v. Girard F. Ins. Co., 72 Cal. 297 (1887) ; Central City Ins. Co. v. Gates, 86 Ala. 558 (1888) ; Wainer v. Milford Mut. F. Ins. Co., 153 Mass. 335 (1891) ; Warshawky v. Anchor Mut. F. Ins. Co., 98 Iowa, 221, 224 (1896) ; Euthveu V. Americau F. Ins. Co., 102 Iowa, 550 (1897). — Ed. SECT. II.J FKOST V. SARATOGA MUTUAL IN'S. CO. 1043 SECTION II. {continned). (B) As TO Defescjes arising befoke Loss. (a) The insurev''s conduct after the issuing of the policy and cfter the arising of the defence. FROST V. SARATOGA MUTUAL INS. CO. Supreme Court of New York, 1848. 5 Denio, loi. Assumpsit on a policy of insurance, against loss by fire, tried in February, 1847, at the Tompkins Circuit, before Gray, Cir. J. The plaintiff was nonsuited on the trial. The facts are suflicientl}- stated in the opinion of the court. The plaintiff moves for a new trial on a bUl of exceptions. O. D. Beers, for the plaintiff. i\T Hill, Jr., for the defendants. B\j the Court, Beardsley, C. J. A new question is presented in this case, and one, it must be admitted, of some novelty- in its applica- tion to a case like this, and which has therefore been examined and considered with more than ordinary care and attention. The contract of insurance between these parties was entered into in September, 1838, and I assume that the plaintiff, bj- his application for insurance, which was made a part of the contract, engaged that there was no building within less than ten rods of the store insured, except those mentioned in said application. This was in law an express war- ranty to that effect bj- the plaintiff, and which is shown to have been untrue in point of fact, for there was at least one building, and it would seem more than one, within the distance stated, of which no mention was made in the application. If this fact, which constitutes a breach of the warrant^-, is to be taken as a part of the case, the plaintiff can- not recover. Of this no doubt can be entertained. But tiie plaintiff insists that the defendants, by certain ads on their part, acquiesced in and acted on by him, have precluded themselves from setting up this breach of warranty as a ground for holding the contract of insurance void ab initio. The fire occurred in the spring of 1840. In the course of that year, the defendants were full}' apprized that the application for insurance did not trulj' describe all the buildings within the prescribed distance, but had omitted to make mention of one or more such build- ings ; j'et subsequently, and in eighteen hundred fortv-one, two and three, the defendants made assessments on the premium note of the plaintiff, given when the policj' was issued, and which several assess- ments were thereupon paid by the plaintiff. This, he insists, should estop the defendants from showing the facts constituting this breach of the warranty on his part, and if they appear by the evidence given in 1044 FROST V. SARATOGA MUTUAL INS. CO. [CHAP. XI. the case, the defendants should not be allowed to set them up as a defence to an action on the policj-. I regard it is clear that if the policy was originall3- void, on the ground now taken by the defendants, that is, a breach of the plaintiflTs contract of warranty, the premium note was also invalid. The only consideration for the note, as is expressed on Its face, was this policv, and if that was void there remained not a scintilla of consideration, and the note, consequent!}-, could not be enforced. The plaintiff was onl}' liable on this note as a member of the corpora- tion — the Saratoga Count}' Mutual Fire Insurance Compan}-; he not being one of the persons named in the charter, nor the heir, executor, administrator, or assignee of any person who had been a corporator, and he could only become such member " hy effecting insurance " in the compan}-. (Laws of 1834, 530, act of incorporation.) For this purpose a valid contract of insurance, including botli policj- and note, one being the consideration for the other, was indispensable. If, for any cause, one was invalid in its inception, so was the other, and no membership could be acquired. But if both were valid, membership was secured, and the part}' insured not only was bound to make pay- ment of his premium note as the directors might deem requisite (§ 4;, but the property insured also became thereby pledged to the company for the payment of all losses as specified in the act of incorporation (§§ 5, 8). These are burdens to which the member subjects himself; in return for whicli he has the policy of insurance on his property and the right to his proportion of whatever profits may be made by the company. But the policy being originally void, no membership could be thereby created, and no right to profits could arise. It would seem to follow that in such a case, the premium note must be held invalid for the want of a legal consideration to uphold the promise. The charter of the company contemplates, and good faith and fair dealing require, that the entire contract of insurance, including the premium note on the one hand and the policy of insurance on tiie other, with all their necessary concomitants and consequences, should exist or fall together. The note cannot be valid unless the policy also was so in its inception ; and unless both were so originally in this case, no membership was acquired by the plaintiff. All this I hold to be clear upon the terms and spirit of 'the charter of incorporation, and the true nature of the contract between the parties. The defendants, with full knowledge of the facts invalidating the policy, have chosen to act upon the premium note of the plaintiff, as an available security in their favor and wliich he was bound to pay. Several sums have accordingly been assessed by the directors of the company, and payment thereof required on said note. These payments have been made by the plaintiS', and the question is presented, can the defendants, who have thus affirmed the original and continuing validity of the premium note, in which the plaintiff has fully acquiesced, be allowed to set up that this policy, which formed the only consideration SECT. II.] FKOST V. SARATOGA MUTUAL INS. CO. 1045 for the note, was never valid ; and that, on the sole ground of a breach of warrant}- on the part of the plaintiff, the facts constituting such breach of warrantj- being as well known to the defendants when they exacted and received payments on the note, as they are at the present time? This is the point to be determined, and I should certainly with great reluctance come to the conclusion that the defendants can be allowed to occupy the position they now assume. It is whollj' incon- sistent with the ground taken bj- them when they called for payments on the premium note, and I think common justice forbids au}- cliange of position in this respect. "It is a question of ethics," as was said in Dezell v. Odell, 3 Hill, 225, and morality requires tliat these defend- ants should be held strictly to the ground they have chosen to assume for themselves. An estoppel, according to Lord Coke, is where '• a man's own act or acceptance stoppeth or closeth up his mouth to allege or plead the ti-uth." Co. Lit. 352, a. Estoppels are of three kinds, viz., by matter of record, bj- deed, and in pais ; but our present con- cern is with the latter class onl}'. Such an estoppel arises where one pereon is induced bj- the assertion of another, to do that which would be prejudicial to his own interest, if the person by whom he had been induced to act in this manner was allowed to contradict and disprove what lie had before affirmed. In the case of Pickard v. Sears, 6 A. & E. 469, the principle is thus stated bj- Lord Denman : " The rule of law is clear, that where one by his words or conduct wilfully' causes another to believe the existence of a certain state-of things, and induces him to act on that belief, so as to alter his own previous position, the former is concluded from averring against the latter a dififerent state of things as existing at the same time." In the case of Dezell v. Odell, supra, Cowen, J., said : " "We then have a clear case of an admission hy the defendant intended to influence the conduct of the man with whom he was dealing, and actually leading him into a line of conduct which must be prejudicial to his interest, unless the defendant be cut ofif from the power of retraction. This I understand to be the very definition of an ' estoppel in pais." The estoppel is allowed to prevent fraud and injustice, and exists wherever a party cannot in good conscience gain- say his own acts or assertions. The authorities upon this point are numerous and all speak the same language. Gregg v. Wells, 10 A. & E. 90 ; Coles v. The Bank of England, 10 A. & E. 437 ; Sandys v. Hodgson, 10 A. & E. 472 ; Stephens i: Baird, 9 Cow. 274 ; The Welland Canal Co. V. Hathaway, 8 Wend. 480 ; 2 Smith's Lead. Cas., 458, 467, notes ; 1 Greenlf. Ev. §§ 22, 27, 204, 207. " It makes no difference in the operation of this rule whether the thing admitted was true or false : it being the fact, that it has been acted npon, that renders it conclusive." 1 Greenlf. Ev. §§ 208, 209. Here the defendants in affirming the validitj- of the premiam note, necessarily affirmed that the policy was ako originallj' valid. This affirmation was acted npon by the plaintiff, for he advanced money in consequence of its being made, and the defendants shall not now be allowed to set up any fact dehors the 1046 TIELE V. GEEMANIA IXS. CO. [CHAP. XI. policy, in order to impeach the original validitj- of the contract of insurance. Qui sentit commodum, sentire debet et onus. The defend- ants have derived advantage from this contract and the}' should now bear its burden. I think the nonsuit should be set aside and a new trial ordered. No objection is made in the points submitted on behalf of the defendants that the declaration was not adapted to the case as proved, although a suggestion to that effect was made at the circuit. I have not examined that question. Looking onl}- at what appears on the face of this policy it is unobjectionable, for nothing there appears to impeach it. The conclusion at wiiich I have arrived does not, however, rest on the idea that the policy Vvas certainly valid in its inception, but on the ground that these defendants have precluded themselves from setting up any fact out of the policy to show that it was originally- void. iVew trial ordered.''- VIELE V. GERMA.XIA INSURANCE CO. Supreme Court of Iovta, 1868. 26 Iowa, 9. Appkal from Scott District Court. Action upon a policj- of insurance, which, so far as it is material to an understanding of the case, and is not set out in the opinion of the court, is in the following words : — " The Germania Fire Insurance Company, the Hanover Fire Insur- ance Company, the Niagara Fire Insurance Company, and the Republic Fire Insurance Compan\', all of the city of New York, each acting and contracting for itself, and not one for the other or others, in considera- tion of one-fourth part of the sum of eight hundred and twenty-five dollars, to each of them paid b}- the assured hereinafter named, do each insure Charles Viele, of Evansville, Indiana, against loss or damage by fire, to the amount of one-fourth part of the sum of fifty -five thousand dollars, for the term of one year, upon the ' Le Claire row ' and ' Post- Offlce block.' . . . Each of said companies agrees to make good to the assured, his executors, administrators, and assigns, all such immediate loss or damage, not exceeding in amount the sum insured bj- such com- pany' as aforesaid, as shall happen by fire to the propertj' above speci- fied, from the first day of Januar}-, 1865, at noon, to the first day of January, 1866, at noon. ... In witness whereof, the said companies have respectively caused these presents to be signed by their respective ^' Ace. : Keenan v. Dubuque MiU. F. Ins. Co., 1.3 Iowa, 37.5 (1862). Compare Allen v. Vermont Mut. F. Ins. Co., 12 Vt. 366 (1840) ; Neely v. Onondaga Mut. Ins. Co., 7 Hill, 49 (1844). See North Berwick Co. v. New England F. & II Ins. Co., 52 Me. 336 (1864). — Ed. SECT. II.] VIELE V. GEEMANIA INS. COi 10-47 presidents and attested by their respective secretaries, in the city of New Yorlv. "Countersigned by the agent of the%bove named companies, at Davenport, Iowa, this first day of January, 1865. " R. Simpson & Co., Agents. " II. HiLGER, President, " John Edw. Paetl, Secretary, " 7'he Germania Fire Insurance Co. "Doras L. Stoxe, President, " R, S. "Walcott, Secretary, " Tlie Hanover Fire Insurance Co. " Jonathan D. Steele, President, " Peter Notman, Secretarj', " The Niagara Fire Insurance Co. " RoBT. S. Howe, President, "D. F. CnRRT, Secretarj^ " The Republic Fire Insurance Co." The answer of tke defendant admits the issuing of the policy, the loss by fire, notice of loss to defendant, ownership of property in plaintiff, and tliat there was no further insurance, but sets up the following special defence : That, at the time the policy was issued, the building lost by the fire was used for mercantile purposes, and for " manufac- ture of materials which were not of an extra combustible nature ; " that, after the contract of insurance was entered into, and before the fire, the plaintiff leased portions of the building, to be used for the manu- facturing therein of ' ' rustic window-shades," without having obtained the written consent of defendant, and contrarj' to the terms of the policy ; that, in the manufacturing of said rustic window-shades, pine slats and splinters of wood, benzole, benzine or naptha, varnish, paints, etc, are used, and large quantities of shavings were constantly being made, and other combustible substances created, greatly increasing the risk and hazard of the building insured in said policy ; that such risk and hazard was not covered by the policy, and continued to the time of the fire ; that plaintiff paid uo additional premium on said policy on account of said increased risk, and defendant waived no rights accruing on account of the same ; that, contrary to the terms of the policy, plaintiff permitted benzine to be kept upon the premises ; whereby plaintiff lost all right to recover under said policy, and it has become void, etc. The defendant filed an admission that the burden of proof is on defendant, and that without any proof plaintiff would be entitled to judgment on the pleadings.^ . . . Before the trial, plaintiff filed an admission to the effect that, after the execution of the policy, and before the loss, the plaintiff, without the consent of defendants in writing on the policj^, leased a part of one * A passage on practice has been omitted. — Ed. 1048 VIELE V. GERMANIA INS. CO. [CHAP. XI. of the buildings to be used for the manufacture of rustic window-shades, and that it was so used and occupied at the time of the loss, and the risk was thereby increased, ^rhis admission closes with an averment that plaintiffs will rel^' upon proving matter in avoidance of the defence therein admitted, which will estop defendants setting up the same. This admission, in the body thereof, sets out that it is " for the pur- poses only of the trial of the cause at the present term, and for no other purpose." Defendant moved to strike from the files this admission, and for judgment thereon, and that parts thereof be stricken out. These motions were severally overruled and exceptions taken thereto. The instructions given and refused are sufficiently referred to in the opinion of the court. Upon motion of plaintiff, the following question was submitted to the jurj', and they were instructed to answer the same as a special find- ing, viz. : — " Did the defendant, by its agent Verder, with knowledge of all the facts claimed by defendant to constitute breaches of the conditions of the policy sued on, b}- its conduct and language to the plaintiff, or his agent, recognize and treat said policj' and the insurance thereb\' made, as still continuing and in force, and induce the plaintiff, or his said agent, so to regard it?" To which the jury answered: "Yes." The defendant asked the following questions to be submitted to the jury for special findings, and they were answered accordinglj', viz. : — " 1. Was benzine kept on the premises in question, after the policy was made, and without the written consent of defendant, in cans for use?" To which the jury answered: "Yes." " 2. Was any additional consideration paid or agreed to be paid by the plaintiff to the defendant on account of the increase of the risk to the building in question?" Answer: "No." " 3. Was any additional premium paid or agreed to be paid by the plaintiff to the defendant for the privilege of keeping benzine on the said premises after the issuing of the policy?" Answer: "No." " 4. Did the defendant, after the increase of the risk as admitted by the plaintiff, conditionally consent to the continuance of the insurance on the building in question? and, if so, was one of such conditions that a new stove and zinc under it should be put in the room, in said build- ing used as a tobacco factory?" Answer : " Yes." "5. If such was one of the conditions, was such condition complied with b}' the plaintiff, before the fire in question ? " Answer : " Yes." " 6. Did the defendant, after the increase of the risk as admitted by the plaintiff, condition all3' consent to the continuance of the insurance on the building in question ? and, if so, was one of such conditions that an iron door should be put in a room occupied by one of the rustic win- dow-shade factories, in the fourth story of the building in question? Answer; " Yes." "7. If such was one of the conditions, was it ever complied with by the plaintiff before the fire ? " Answer : " No." SECT, n.] VIELE V. GEEMAXIA ISS. CO. 1049 The court, upon its own motion, required of the jury answers to the following questions, viz. : — ••1. If Tou answer the first question in relation to keeping benzine on the premises • yes,' then you will also answer the following ques- tions : — '• 2. TVas benzine a necessary or usual article in the manufacture of rustic window-shades?" Answer: '-Yes." " 3. "Was it kept in small quantities for daily use, or was it kept in large quantities? State the quantities usually kept on hand." Answer: '• lu small quantities, from one to two gallons." >• 4. Did the agent of the insurance company give any directions as to the manner of keeping benzine, and, if so, was it kept as he directed?" Answer: " Tes." "5. If you answer the seventh and last question submitted by the defendant 'no.' you will then answer the following question : Had said iron door been ordered, and had all reasonable efforts been made to have it put up before the fire ? " Answer : ' ■ Tes." Plaintiff moved tlie court to set aside the special verdict of the jury upon question Xo. 6, because the finding is contrary to the evidence, and also moved for judgment on the general verdict Defendant moved the court to set aside the special findings upon questions asked by plain- tiff numbered one. two. four, and five, and upon question five submitted by defendant, and also the general verdict ; because, first, such findings are contr:\ry to the evidence ; second, because of errors of law in the instructions of the court : third, the verdict and special findings are contrary to law ; fourth, because of error in refusing to submit to the jury other questions requested by defendant ; fifth, because of error in refusing certain instructions requested by defendant. The defendant also moved for judgment upon the special findings. The motions of de- fendant were overruled and exceptions taken thereto. The motion of plaintiff to set aside the special finding was also overruled and excep- tions taken, and judgment rendered upon the general verdict against defendant for the sum of 83,421.80. Plaintiff appeals from the decision of the court upon his motion to set aside the special verdict of the jury in response to question sis of defendant. Defendant appeals from the rulings, orders, and final judgment of the court. Davison ds True, James T. Lane, and ^. B. Paul, for the appel- lant. JPirtnam tfe Sogers, for the appellee. Beck. J.^ . . . III. The solution of one question will dispose of many points made by defendant relating to the admission and exclu- sion of evidence, and the giving and refusing of instructions to the jury. The question is this : Can the breach of the conditions of the policy against the increase of the risk, without the written consent of 1 Passages on pleading and piactice have been omitted. — Ed. 1050 VIELE V. GEEMANIA INS. CO. [CHAP. XI. the insurers, whereby the instrument became forfeited, be waived by parol or by the acts of defendant? The plaintiff admitted the increase of the risk by the use of a part of the building insured for the manufacture of rustic window-shades, but sought to avoid the forfeiture, which otherwise would have resulted, by evidence tending to show the consent of the agent of defendant to such use, his acts and declarations recognizing the contract of insurance, after the increase of the risic, and his admission that the building con- tinued to be covered by the policj'. This evidence was given to the jury against the objection of defendant, and the court held, in the in- structions to tlie jurj', that such facts, if proved, would operate as a waiver of the forfeiture and entitle plaintiff to recover. The following are among the conditions of the polic}- : — " If the above mentioned premises shall be used or occupied so as to increase the risk, or become vacant and unoccupied, or the risk be increased bj' the erection of adjacent buildings, or bj' anj- other means whatever, witliin the control of the assured, without the assent of the companies indorsed hereon ; ... or if the assured shall keep upon the said premises gunpowder or phosphorus, or petroleum, or rock or earth oils, or benzole, benzine or naptha, or anj- explosive substance, or shall keep or use upon the said premises camphene, spirits, gas or chemical oils, without written permission on this policy", then, and in every such case, this policy shall be void." The question above stated is fairlj' presented by the record, and is of ver}- great importance, not only in its relation to this case, but to the business of insurance generall}'. We have endeavored to give it the careful and patient consideration, aided by the able argument of the counsel for the respective parties, which its importance demands. The policy which is the foundation of this action, though a unilateral contract in form, contains covenants of the assured as well as of the underwriters, and mutual agreements of the parties. Some of those covenants on the part of the assured are in the nature of warranties, and conditions precedent ; others are in the nature of obligations im- posed by the conditions limiting or measuring the liability of the under- writers. The covenants of the insurers are mostl}-, if not all, dependent upon the obligations or covenants of the insured, expressed or implied in the policy. The policy, though subscribed only by the underwriters, is evidence of the contract entered into bj' both parties, and binds both. 2 Parsons' Maritime Law, 27 ; Parsons' Mercantile Law, 404. Contracts of this character, binding the obligor upon conditions to be performed by tlie obligee, but subscribed only by the obligor, are not uncommon. Those for the sale of real estate are often in this form. The language used to express the idea that the obligor is not bound to perform his covenant, until the conditions imposed upon the other party are performed, or, in other words, that the obligor's covenants are de- pendent, is usually a recital of the conditions which are to be performed by the obligee, following with the declaration that if they are not per- SECT. II.] TIELE V. GERMAXIA ISS. CO. 1051 formed, the instrument shall become void, or forfeited. The policy under consideration is in this form. It declares, that if the risk is in- creased b}- means within the control of the assured, without the assent of the underwriters, it " shall be void." Bj' the conditions expressed, the assured is prohibited from increasing the risk, and he obligates himself that it shall not be increased in the manner prohibited. This is his undertaking, and, as we have seen, he is bound thereby as though he had subscribed the policj'. This is obvious ; but a word or two more may express the idea more clearly. The underwriters obligate themselves to paj- a certain sum in case of the loss of the building hy fire, with the condition, however, that the risk shall not be increased in the manner prohibited. To this condition the assured assents bj- the acceptance of the contract, and he thus obligates himself and becomes bound bj- the policy, that the risk shall not be increased. If he permits it to be in- creased, his covenants are broken. The condition which he is bound to perform is precedent to the underwriters' covenant. The under- writers are, therefore, not liable on the policy, which ceases to bind them, and to that extent the policy becomes void. Unsound conclusions in the argument of defencjant's counsel result from an improper understanding of the expression "shall be void," used in the condition above quoted from the policj'. It is insisted, that the instrument, by force of these words, upon the increase of the risk, became absolutely null and void. The phrases and words used to con- vey the idea are, ■■ipso facto void;" '-dead;" "extinct;" "de- funct ; " of no effect," etc., etc. ; meaning there bj- that the instrument has no force or effect, in the sense of these terms when applied to in- struments void in law, as the deeds of parties having no legal capacity to contract, or contracts against public policy, etc. But the term " void," as used in the policy, has no such meaning. It simply means that the underwriters, upon the violation of his covenants bj- the as- sured, shall cease to be bound by their covenants in the policy ; and this is in accordance with the true definition of the word, and its com- mon use in like connections. The policy does not cease to have a legal existence, it is the only competent evidence of the contract it em- bodies, and in truth is not void except so far that the underwriters are no longer bound thereby. Xeither will they be discharged therefrom unless they plead the fact that the insured failed to perform his cove- nants contained in the policj-. Their silence would waive the default of the opposite party. The position of defendant's counsel, which is supported by several authorities, is to the effect that upon a breach of the conditions of the policy by the assured, which would defeat recovery thereon, it becomes absolutely void — as it were, dead — aud that nothing short of a new creation could impart vitality to it. This doctrine is certainly unsound when applied to other contracts ; for, on the coutrarj-, after default in the conditions by one party, the other may waive the forfeiture and treat the instrument as of binding forc-e upon himself. No reasons can 1052 VIELE V. GERMANIA INS. CO. [CHAP. XL be given to except policies of insurance from the operation of this rule. The party in default cannot defeat the contract ; the part}- for whose benefit the conditions are introduced maj- waive the forfeiture. It fol- lows, therefore, that the instrument is forfeited at the option of the innocent party ; and if he waives the forfeiture, the contract stands as if no breach had occurred. In Williams v. Bank of the United States, 2 Pet. 102, the doctrine is announced in these words : " If a party to a contract, who is entitled to the benefit of a condition, upon the performance of which his responsibility is to arise, dispenses with, or by any act of his own prevents, the performance, the opposite party is excused from proving a strict compliance with the condition.'' "We conclude, therefore, that the forfeiture of the policj' on account of the breaches of the conditions thereof, could have been waived by the defendant, and if waived, the policy continued of the same binding force which it originally possessed. This view is sustained by the fol- lowing authorities: Keenan w. Mo. State Mut. Ins. Co., 12 Iowa, 126; David V. The Hartford Ins. Co., 13 Iowa, 69 ; Carpenter v. The Prov. AVash. Ins. Co., 16 Pet. 509 ; Coursen v. Penn. Ins. Co., 46 Penn. St. 323 ; Atlantic Ins.. Co. v. Goodale, 35 N. H. 328 ; Frost v. Saratoga Ins. Co., 5 Den. 154 ; Clarke. Jones, 1 Den. 516 ; Cartwright v. Gard- ner, 5 Cush. 281 ; North Berwick Co. i'. Ins. Co., 52 Maine, 336 ; War- ner V. Peoria Ins. Co., 14 Wis. 323 ; Smith v. Gugerty, 4 Barb. S. C. 614 ; N. E. F. & M. Ins. Co. v. Schettler, 38 111. 166 ; Viall v. Ins. Co., 19 Barb. 440 ; Ins. Co. v. Stockbower, 26 Penn. St. 199 ; Buckbee v. Life Ins. Co., 18 Barb. 541; Beal v. Park Ins. Co., 16 Wis. 241; Wing V. Harvey, 27 Eng. Law & Eq. 140 ; Peoria F. & M. Ins. Co. v. Hall, 12 Mich. 202. IV. We are next led to inquire as to the manner of the waiver of the forfeiture, whether it must be in writing or ma}' be by parol, and what acts of the defendant will amount to a waiver. Parol evidence is not admissible to contradict or alter a written in- strument, but this rule does not exclude such evidence when adduced to prove that a written contract is discharged, or that the damages for non-performance were waived, or that performance of a part of the con- tract was dispensed with. 1 Greenleaf's Ev. §§ 302-304; 2 Phil. Ev. (Cowen & Hill's and Edwards' Notes) 692 and note 505 ; 2 Starkie's Ev. 574 ; Fleming v. Gilbert, 3 Johns. 528 ; Merrill v. Ithaca & Oswego R. R. Co., 16 Wend. 586. These exceptions to the rule, or rather the rule admitting parol evi- dence for these purposes, may not apply to specialities ; but a contract of insurance need not be by specialt}-, or even in writing. It seems to be the better opinion that it may be oral onlj'. Parsons' Mercantile Law, 403 and notes ; 2 Parsons' Maritime Law, 19 and notes ; City of Davenport V. Peoria Ins. Co., 17 Iowa, 276; Commercial Ins. Co. v. Union Ins. Co., 19 How. 321 ; Baptist Church v. Brooklyn Ins. Co., 19 N. y. 305. We need not, then, inquire whether a policy executed b}- an incorporation and attested by its corporate seal is a specialty, for SECT. II.] VIELE V. GERMANIA INS. CO. 1053 the policy sued on is not sealed by the companies, and is therefore a simple contract and not a specialty. The rule therefore will not in this suit exclude parol evidence for the purposes above mentioned. The cases which we will hereafter cite, in considering what acts may amount to a waiver of conditions or forfeiture on account of breaches of conditions, support this doctrine and will illustrate its application. It is argued that the condition in the policy, to the effect that an increase in the risk avoids the contract on the part of the underwriters, unless consent thereto be had in writing, implies that such consent can be given in no other way. It will be at once remarked, that this re- striction is itself a condition,' and is just as capable of being waived or dispensed with as any other condition of the instrument and in the same way. There is nothing in the terms of this condition prohibiting its waiver. But the conditions of the policy became broken b}' an increase of 4;he risk, without written consent, and there at once hap- pened a forfeiture wherebj- defendant was discharged from the con- tract. Now, as a matter of fact, the waiver was not of the written consent, but of the forfeiture. V. What will amount to or have the effect of a waiver of a forfeiture of the policy, or a dispensation of the performance of its conditions? The party for whose benefit a condition is introduced in a contract may determine whether it shall or shall not be enforced, and, as we have seen, ma}- waive or dispense with its performance. It seems reason- able that the same character of evidence will establish a waiver or dis- pensation of conditions that is sufficient to prove the existence of a contract. An express agreement to that effect will of course be suffi- cient- Circumstances pro^•ing that the party treated the contract as subsisting and not forfeited, a course of dealing consistent only with that hypothesis, and acts and declarations whereb}- the other party was induced to believe that the condition was dispensed with or forfeiture waived, will be sufficient to preclude the setting up of the breaches of the condition as a defence to the contract of the party bound thereb\-. Thus the receipt of premium upon a policy after forfeiture is a waiver thereof. North Berwick Co. v. Insurance Co., 52 Maine, 336; New York Insurance Co. i: National Prot. Ins. Co., 20 Barb. 468 ; Liddle v. Market Fire Insurance Co., 29 N. T. 184 ; Ames v. New York Union Ins. Co., 26 N. Y. 263: Bochen v. Williamsburgh Ins. Co., 3o N. Y. 131; Goit r. National Prot. Ins. Co., 25 Barb. 189 ; Viall i: Genesee Mutual Ins. Co., 19 Barb. 446; Frost v. Saratoga Mutual Ins. Co., 5 Den. 154 : Lycoming Ins. Co. r. Stockbower, 26 Penn. St. 199 ; Wing V. Harvey. 27 Eng. Law & Eq. 140. So the taking of an additional risk on the same policy will waive a for- feiture, existing at the time, for breach of condition. Eathborn v. City Ins. Co., 31 Conn. 193.^ . . . It will be observed that the waiver of the condition or forfeiture, under these authorities, is not required to be supported b}- a eonsidera- 1 A passage presenting other anthorities has been omitted. — Ed. 1054 VIELE V. GERMANIA INS. CO. [CHAP. XI. tion. In the cases where it is held that the pa^-ment of premium upon a policy forfeited for breaches of condition is a waiver of forfeiture, the pa3-raent was not made in consideration of the waiver, but for the renewal or continuance of the insurance. The waiver or dispensation is not in the nature of a contract which requires the support of a con- sideration, but rather of an estoppel, whereby tlie underwriter is pre- cluded from denj-ing the validit}' of the contract, on account of acts or admissions either recognizing it as of binding force after the forfeiture, or holding out to the assured that the performance of the condition is dispensed with. It is not an accurate use of terms to saj' that the condition of a con- tract must be supported by a consideration. The contract itself must be, but the condition is a mere incident thereto, and its sufficiency, validity, or force is in no way affected or dependent upon the considera- tion. It is true the condition may influence the parties in fixing the amount of the consideration, but the law will not, in the absence of fraud, inquire into its sufflcienc}-, nor hold a contract invalid because a full or just value has not been received bj- the obligor. The case of a policy of insurance illustrates the point. The underwriter is bound thereby to paj- the assured the amount of any loss by fire which ma3' happen to his property within a certain time. The consideration of this contract is the premium received by the underwriter. The assured is bound not to permit the risk to be increased ; this obligation is the condition of the polioj-, and with it we can associate no idea of consid- eration. It may enter into the contemplation of the underwriter when fixing the value of the risk which may be worth a greater premium without tlie condition in the polic3', but the adequacj' of the considera- tion, as we have remarked, is not a matter of inquir}-, and the consid- eration itself no element of the condition. We conclude, therefore, that, as the condition is not dependent upon nor supported bj- the con- sideration, it may be waived or dispensed with even by an agreement without consideration. VI. We approach the consideration of the questions involving the power of the agent of the defendant to dispense with the conditions of the policy or to waive the forfeiture resulting from the breach thereof. Defendant's counsel contend that, as shown b}' the policy, the agent possessed no power to assent to an increase of risk except in writing, and that, in order to bind the company bj' his acts, declaration, or agreement, dispensing with the conditions or waiving the forfeiture, his authority so to do must be expressly proved. There was evidence tending to prove that the agent had full power to effect contracts of insurance, to fix rates of premium, to give con- sent to the increase of risk and change of occupation of buildings in- sured, to cancel policies in his discretion, and that in the prosecution of their business it was the custom of agents of insurance companies to exercise supervision over property covered by policies issued at their respective agencies during the term of insurance. SECT. II.J VIELE V. GERMANIA INS. CO. 1055 The instructions to the juiy, and the rulings upon objections to evi- dence, in effect, hold, that the authority of the agent to waive forfeitures and dispense with conditions may be sufficiently shown by proof of the possession and exercise of the powers above stated, and that express authority need not be shown in order to bind the defendant thereby. This we conceive to be the law. By proof of the possession of the powers aforesaid, the authority of the agent is shown to be in fact of the broadest and most plenary char- acter. It is difficult to conceive of an act in the prosecution of the business of insurance which the officers of the companies can do that cannot be done b}' the agent. He is provided with blank policies whereb}' he is enabled to enter into the contract of insurance. These blank instruments are in no sense contracts until signed by him, for it is expresslj' provided therein that they " shall not be valid unless countersigned by the duly authorized agent of said companies at Dav- enport, Iowa." Such is the express provision of the policy upon which this suit is brought, and there is not one word of limitation upon the authority of the agent contained in it. No attempt was made to prove knowledge on the part of the assured of anj' limitation of the power of the agent, further than bj' the policy itself, and a general custom or rule of insur- ance companies and agents that no change can be made by agents in the printed conditions of the policy. The effect of such limitation will be hereafter noticed. The powers of the agent, then, are those of a general agent, and the companies are bound by his acts which are within the scope of the general authoritj' he possesses, even though he violates limitations upon that authority which are not brought home to the knowledge of the party with whom he deals. Story on Agenc}', §§ 126, 134 ; Keenan v. Mo. State Mut. Ins. Co., 12 Iowa, 131 ; City of Daven- port w. Peoria Ins. Co., 17 Iowa, 276; Warner j). Peoria Ins. Co., 14 Wis. 318, 323 ; North Berwick Co. v. N. E. F. & M. Ins. Co., 52 Maine, 336 ; Post V. ^tna Ins. Co., 43 Barb. 351 ; Sheldon v. Atlantic Ins. Co., 26 N. Y. 460. VII. This brings us to inquire what powers may be exercised by the agent within the scope of his general authority. Under this general authoritj' he has power to conduct the business of insurance of his principals at the city of Davenport. This is the aggregation of all his powers, and he possesses implied authority to do all things proper and necessary in the prosecution of that business, subject of course to limi- tations imposed by his principals and known to those with whom he deals. These incidental powers may be numerous, and their enumera- tion is not necessarj'. Among others he has the power to assent to the increase of the risk, and to a change of occupancy of property insured, and to cancel policies on account of increase of risks or for any other reason. In the exercise of these powers he is guided by his own dis- cretion, which it is presumed will be exercised for the best interests of his principals. He has, also, all the powers which by the usages of the 1056 VIELE V. GERMANIA. INS. CO. [CHAP. XL business are properly and ordinarily exercised by agents engaged therein. Story on Agency, §§ 77, 106. It appears that insurance agents usually exercise supervision over the property insured by them, and this necessarily results from the character of the business and their authority to cancel policies on ac- count of increase of risk. 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 policj' and put an end to the contract. This involves the necessity- of exami- nation of the condition of the insured property during the life of tlie policy, and constant watchfulness to protect the interest of the under- writers. If he determines that the risk is increased, such determination is final, for it seems the assured has no appeal therefrom and no redress for loss that may be sustained thereby. Such being the great, and in some respects extraordinar}^ powers of the agent, it follows that he is clothed with the power to dispense with conditions and waive the effects of breaches thereof, in contracts of insurance made by him. These powers are necessary incidents of his general authorit}', and without their exercise he could not act to its full extent. If he can determine that the conditions of the contract have been broken, surely he can also determine that they have not been broken. If he can put an end to the contract because of the increase of the risk, and the consequent forfei- ture, certainly he can waive that forfeiture. If, possessing such full au- thority to make the contract, determine that it is performed, and to put an end to it, he can not dispense with its conditions after it is executed, the rules of law controlling agents generallj', and all kinds of contracts, must be held not applicable to insurance policies and insurance agents. These companies have no waj" of dealing with their customers and the public, except through their agents. They are incorporations existing under the laws of another State. Practically those powers can only be exercised by agents. They are inherent in the corporations, whose in- terest as well as fair dealing toward others (as it did in the case before us), may require their exercise. The agents, therefore, must be held to have full authority to dispense with the conditions of policies, after their execution, and to waive forfeitures for breaches thereof. As we have already intimated, the law, in its application to other kind§ of contracts, and to agents transacting other kinds of business, fully sustains the doctrines we have announced. This may readily be illustrated by facts disclosed by the record. The owner of the property upon which the policy in question was issued was a non-resident of the State, and the business was transacted for him by an agent, who, it seems, exercised general powers in all matters pertaining to the prop- erty. Now, suppose this agent had executed a contract for the rebuild- ing of the property burned, or his principal had executed it, and it was delivered by the agent, blanks being filled by him under proper author- ity, with the name of the other contracting party, sums to be paid, etc. This contract contained many conditions, as we may suppose, for the SECT. II.] VIELE V. GERMANIA INS. CO. 1057 benefit of the property owner, and the agent was authorized to assent in writing to the dispensation of certain of them, and the power to put an end to the contract in case of the failure of the other party to com- ply with its conditions. During the progress of the work, questions arose whether certain things done, or omitted to be done, by the builder, were in violation of the conditions of the contract. The agent, as to whose power not one word of limitation existed in the contract, or was otherwise known to the builder, asserts that the matters in question are not in violation of the contract, and treats it as complied with, or verbally assents to the dispensation of certain conditions. When the building is completed, in accordance with the contract as thus modified, the principal refuses to pay the sum agreed on, because of non-compli- ance on the part of the builder with the conditions thus waived b}' the agent. Upon no recognized rules of law could this defence be sus- tained, and we would have no difficulty in finding ample authorities in support of the doctrine that the waiver of forfeitures by reason of the breaches of the conditions, and the dispensation of the conditions by the agent, were binding on the principal. This supposed case is not distinguishable upon principle from the case disclosed by the record."^ . . . While it is true that these companies transact business only through their agents at distant points, it is also true that much of their busi- ness is acquired through the diligence, skill, and capacity of these agents, and that parties effecting insurance relj' in a great measure upon the representations made by them as to the rights and obligations of the respective parties to the policies, and are controlled in the care of the insured property hy their directions. The acts of these agents, in all matters pertaining to the proper business the}' are appointed to transact, should bind their principals, unless contrary to restrictions of their powers, brought to the knowledge of those with whom they deal. It is argued that, inasmuch as by the restrictions imposed on the power of the agent by custom, as well as by the rules of the company, he can make no change in the printed conditions of the policy, there- fore he had no authority to waive a forfeiture of such terms, or dis- pense with their performance. Without determining whether this could be done by agreement at the time the policy was Issued, we are clearly of the opinion that such restriction of authority in no way affects his power so to do after the policy is issued, in a proper case, and without fraud on his part, or by the assured. The distinctions between omitting a condition required by the terms of his authority and by custom, to be introduced into the policj-, and the waiver of such condition for a proper cause, after the policy had been executed, are obvious. It has been held that an agent intrusted with blank policies, to be 1 Passages presenting authorities hare been omitted. — Ed. 67 1058 YIELE V. GEEMANIA INS. CO. [CHAP. XL filled up and countersigned by him, may bind the underwriter by new clauses or conditions inserted by the agent before issuing the policy. 2 Phillips' Ins. 528, § 1877 ; Gloucester Manufacturing Co. v. Howard, 5 Gray, 497. VIII. By the terms of the policy the underwriters reserved the right to cancel it upon the risk being increased, or for any other cause, " by pa3ing to the assured the unexpired premium pro rata." The point is made by the plaintiff, that if the risk be increased, of which the under- writers have notice, and the right to cancel is not exercised, this amounts to a waiver of the forfeiture incident to a breach of the condition against increase of risk. The decision of this question is not necessary, as the case is determined without it. But, for m3"self, I am free to admit the force of the position, in view of the peculiar facts of the case, and that I believe it is supported by sound reason.^ . . . IX. It is argued by the defendant's counsel, that the waiver of the breach of the condition of the policy, on account of the rustic window- shade manufactorj', extended only to the acts in violation of the terms of the policy done before such alleged waiver, and that the condition continued to be daily violated by the continuance of the cause of the increase of risk ; and that, as it is not pretended that there was any waiver of the breaches resulting therefrom, the policy is thereby avoided. The error of this argument is apparent. The waiver ex- tended to all breaches resulting from the manufacture of rustic window- shades in the building insured, and the parties in all their intercourse concerning the increase of the risk, and bj' their acts touching the same, had reference to the continuation of the manufactory, and of course contemplated the waiver of the breaches resulting therefrom, and the dispensation of the conditions of the policy prohibiting it. X. The policy expressly prohibited the keeping of benzine upon the premises insured, f here was evidence tending to prove that this fluid was necessary in the preparation of the paints and varnishes used in the manufacture of rustic window-shades, and that, at the time of tiie fire, it was kept for that purpose upon the premises, in tin cans, in quantities not exceeding two gallons. The evidence also tended to prove that the agent gave permission for keeping benzine for the pur- poses and in the manner and quantities aforesaid. This permission was given, as it is claimed, at the time the alleged consent was given to the continuation of the window-shade manufactoiy. The court instructed the jury, substantially, that a consent to the occupation of the building for the manufactory implied a consent to the use of such articles as were necessary to be used in the business. This instruction was clearly correct. The consent to the manufacture of the window-shades im- plied a consent to the use of benzine if it was necessar}- or commonly used in making those articles ; otherwise a direct permission to con- tinue the manufactory would be defeated by the prohibition in the policy. 1 The discussion of this question has been omitted. — Ed. SECT. II.] VIELE V. GERMAXIA IXS. CO. 1059 This permission operated to dispense with the prohibition.' . . . XI. The evidence tended to prove that the agent of the underwriters, at the time he made an examination of the building, directed a certain iron door to be put up, and that either the tenants or the agent of the plaintiff agreed to comply with this requirement. It seems that no time was specified in which it should be done. An order was given for the door, but it was not completed and put up at the time of the fire. Upon this evidence are based the sixth and seventh interrogatories to the jury by the defendant, and the fifth propounded by the court. The special finding in response to the sixth question of defendant, while it makes the continuance of the insurance conditional upon the door being put in, fixes no time when it was to be done. It simply shows that the agent agreed to carr}- the risk if an iron door should be put in. The agreement to put in the door was not a condition prece- dent to the continuance of the insurance. Of course the plaintiff had a reasonable time in which to comply with his agreement, and the re- sponse to the fifth question shows that he had used all reason.ible efforts to do so before the fire, and had, therefore, sufficiently complied with his part of the agreement These findings are consistent with each other, and not inconsistent with the general verdict. Plaintiff's motion to set aside the finding upon the sixth question of defendant was prop- erly overruled. In the light of the doctrines above announced, we find no error in the rulings of the court upon the admission of evidence and the sub- mission of questions to the jury for special findings. It is not neces- sarj- to state the special questions raised, or evidence admitted or excluded. Xeither do we find error in the giving or refusal to give in- structions asked by the parties. Those given are in harmony with the principles of this opinion ; those refused are not. It would answer no useful purpose to refer to them more fullj'. The verdict, as well as the special findings, are well supported by the evidence. The motions to set them aside were properl}- overruled. Affirmed.^ 1 A passage presenting antliorities on this point has been omitted. See Harper v. Albany Mat. Ins. Co., ante, p. 530 (1858) ; and JFaust v. American I'. Ins. Co., ante, p. 540(1895). — Ed. 2 See Bersche r. Globe Mnt, Ins. Co., 31 Mo. 546 (1862) ; Pratt v. New York Cen- tr.il Ins. Co., 55 N. T. 505 (1874): Titns v. Glens Falls Ins. Co., 81 N. Y. 410, 418-419 (ISSO); Oakes v. Manufectuiers' P. & M. Ins. Co., 135 Mass. 248 (1SS3). — Ed. 1060 PENNSYLVANIA FIEE INS. CO. V. KITTLE. [CHAP. XI. PENNSYLVANIA FIEE IXS. CO. v. KITTLE. Supreme Couet of Michigan, 1878. 39 Mich. 51. Eekoe to Superior Court of Detroit Assumpsit. Defendant brings error. D. C. Solbrook, for plaintiff in error. Julian G. Dickinson and Theodore Romeyn, for defendant in error. CooLET, J. No question is made in tliis case upon the policy issued by the plaintiff in error to Mrs. Kittle, or upon the loss by fire of the property insured. It is claimed, however, that the policy became void by the taking out of another insurance on the same property without the consent of or notice to the plaintiff in error, and also that the proofs of loss are insufficient. Some errors in the admission of evi- dence are also assigned. I. The date of the policy in suit was February 4, 1876, and it con- tained a provision that it should become void in case of subsequent insurance not assented to. The plaintiff below put in evidence a policy covering the same property, issued b^' the Citizens' Fire Insurance Company of New Jersey-, dated November 1, 1876."^ . . . III. The court instructed the jury that the taking out of the second policy avoided the first unless the breach of the condition on that sub- ject was waived by the Pennsylvania company afterwards. . . . IV. The question of waiver was submitted to the jury as one of fact, and they appear to have found that there was a waiver. The facts submitted were that after the loss the adjusting agent of the defendant called upon the plaintiff, and after investigation made an offer to pay, by way of compromise, 8375, at the same time objecting to the taking out of the second insurance ; that this offer was declined, and the agent went away, and soon after wrote the plaintiff that she might go on and make out her proofs, and the matter would then be taken into con- sideration ; that subsequent correspondence took place between the agent and the plaintiff respecting the proofs, the former demanding more particularity in what was furnished ; and it was not untQ six months after the offer for a settlement was made that the agent notified the plaintiff, who in the meantime had been endeavoring to make the proofs satisfactory, and to overcome the objections he was making thereto, that "in addition to the objections heretofore made," the defendant would insist upon the forfeiture because of the second insurance. We think the jury were warranted in finding that the defendant, by calling upon the plaintiff to go on and make out her proofs, and by requiring her to be at the trouble and expense of correcting these to ^ In reprinting the opinion, several passages foreign to waiver have been omitted. — Ed. SECT. II.] JOHSSOX V. AMEKICAN INS. CO. 1061 satisfy the criticism made by the agent, without giving her to under- stand the company would rel^- upon the forfeitui'e, should be held to have waived it ; and that if it was the purpose all the while to insist upon it, tlie agent did not act towards her in good faith. We also think the jury would have a right to infer from the final letter of the agent that he understood the objection of forfeiture had not been insisted upon previousl}-. Gans v. Insurance Company, 43 Wis. 108. .. . We think the case was fairlj- tried and no harmful errors committed, and the judgment must be affirmed with costs.^ The other justices concurred. JOHNSON i: AMERICAN INS. CO. Supreme Court of MmwESOTA, 1889. 41 Minn. 396. Actios on a fire insurance policy, brought in the District Court for Eock Countv, to recover $2,975.66, the amount of loss as fixed by ap- praisers chosen by the parties in accordance with the policy. De- fence (among others) that the contract was void because (1) when the policy was procured the plaintiff was not sole owner but onlj- part owner of the property, which fact was material to the risk and was concealed from defendant ; and (2) that after the issue of the policy the defendant procured other insurance on the property without notice to and consent of defendant. At the trial before Perkins, J., the plain- tiff had a verdict. The defendant appeals from an order refusing a new trial. The second assignment of error was based on an instruction (duly excepted to) to the effect that if one Joles had an interest in the insured property, j-et, if defendant, with full knowledge of the facts in relation thereto, required plaintiff to submit to an exami- nation on oath, under the policy, and to enter into an appraisal, the defendant thereby waived any right to claim that the policy was void on account of Joles's interest. Litsk cb Bunn, for appellant. P. E. Brown, for respondent. Dickinson, J. The appellant must be sustained in its first assign- ment of error. By the teims of the conti-act of insurance it was pro- vided that "if differences shall arise between the parties hereto touching any loss or damage, . . . the matter shall, at the written request of either party, be submitted to impartial arbitrators, mutually chosen, whose award in writing shall be binding on the parties as to 1 Ace.: Cannon c. Home Ins. Co., 53 "Wis. 585, 593-596 (1881); Silverberg u. Phenix Ins. Co., 67 Cal. 36 (1885). See Webster v. Phoenix Ins. Co., 36 Wis. 6" (1874) ; Northwestern Mut. L. Ins. Co. V. Germania P. Ins. Co., 40 Wis. 446 (1876); Titus v. Glens Falls Ins. Co., 81 N.T. 410, 418-419 (ISSO). — Ed. 1062 JOHNSON V. AMERICAK INS. CO. [CHAP. XI. amount of such loss or damage, hut shxill not decide the liability of the company under this ■policy." The charge of the court was, in sub- stance, that an arbitration pursuant to the contract and at the request of the defendant, solely as to the amount of the loss, the plaintiff being thereb3' subjected to some necessar}' expense, was effectual as a waiver on the part of the defendant of all right to claim that the policy was void bj' reason of any facts of which it then had knowledge. This is opposed to the express agreement of the parties, as we construe that part of the policy above referred to. The contract contemplates and gives to either party the right to demand an arbitration and final ad- justment of the amount of the loss merelj', distinct from any question which may arise as to the legal liabilitj- of the insurer, leaving that to be determined in some other manner. The language which we have italicized was employed with obvious reference to an arbitration and award as to the amount of loss or damage, and was intended to have some practical effect in such a case. Yet it would be practically nulli- fied if it were held that the mere fact of submitting the question of the amount of the loss to arbitration would be effectual to preclude the insurer from thereafter bringing in question its legal liability under the policy. It is apparent from the terms of the contract that such was not the intention of the parties. There is no natural or necessary relation between the amount of the loss suffered from a fire and the legal construction or the validity of a contract of insurance upon which the sufferer may rely for indemnitj- ; nor is there any reason in the nature of the subject why, if the parties so agree, a disputed claim as to the extent of the damage may not be adjusted by arbitration or otherwise, without either party being thereby precluded from question- ing the legal effect or validit}' of the alleged contract. On the con- trary-, considerations of expediency might well prompt the parties to agree upon a speedy examination and appraisal by arbitrators as to the amount of the loss merely, at a time and under circumstances which might be most favorable for such purposes, without waiting until a determination could be secured as to the legal rights and obli- gations of the parties under the contract. The error involved in this instruction may have affected the result, and a new trial must be allowed. The second assignment of error raises the question of the sufficiency of evidence to justify a finding that, at the time when the defendant required the plaintiff to submit to an examination under oath respect- ing the loss, the defendant had notice of the fact, now relied upon to avoid the contract, that another person than the assured had a pro- prietary interest in the property. In view of our decision upon the first assignment of error, we need not say more upon this point than that we think there was evidence proper for the consideration of the jury. The policy contained a provision that it should be void if other in- surance should be secured " without notice to and consent of this com- SECT. II.] JOHNSON V. AMERICAN INS. CO. 1063 pany, in writing liereon." It also contained a clause authorizing the defendant to terminate the contract at any time, at its option, bj' giv- ing notice and refunding a ratable proportion of the premium for the unexpired term. Other insurance was effected, and there was evi- dence that notice of this was communicated orally to the defendant's agent long before the fire. The court charged the jur_v, in substance, that if such were the case it became the duty of the defendant to elect whether it would cancel the policy or continue it in force, and that, if it failed to cancel the poliej' after such notice, it must be held to have elected to retain the contract in force, and to have waived compliance with the specified condition. This, we think, was not an accurate state- ment of the law, and may have been misleading. The provision in the policj' authorizing the company to terminate the contract at any time, at its option, bore no special relation to that concerning other insurance. By the plain terms of the policj', other insurance without the consent of this company would ipso facto avoid the contract ; and in the case of a contract thus avoided, it would not be obligatory upon the insurer to repay any of the unearned premium ; nor would he be required to give notice that he should insist upon and avail himself of the proper legal effect of the agreement. It required no affirmative act of election on the part of the companj- to make operative the clause avoiding the contract whenever the specified conditions should occnr.^ Its obligations ceased unless, being informed of the fact, it consented to the additional insurance, or in some manner waived the forfeiture. It is not, however, contended that consent may not be shown in some other manner than that specified in the policj'. The fault in the charge is in the proposition that the failure to cancel the policy bj' the aflSrmative action of the company after it had notice of additional insurance, would of itself be effectual as an election to con- tinue the policy in force. Robinson v. Fire Association, 63 Mich. 90, 29 X. W. Rep. 521. Order reversed. 1 Ace. : Robinson v. Fire Assn., 63 Mich, 90 (1886) ; Goldin v. Northern Assnr. Co., 46 Miim. 471 (1891) ; Carey v. German American Ins. Co., 84 Wis. 80 (1893) ; Homo Ins. Co. u. Scales, 71 iliss. 975, 980 (1894). — Ed. 1064 COBB V. INSURANCE CO. OF NORTH AMERICA. [CHAP. XL (b) The insurer's conduct after the issuing of the policy and at or before the arising of the defence. * COBB BT AL. V. INSURANCE COMPANY OF NORTH AMERICA. Supreme Court of Kansas, 1873. 11 Kan. 93. Error from Shawnee District Court. On the 27th of May, 1867, the defendant in error, The President and Directors of the Insurance Compan3- of North America, issued its policy of insurance to one G-. F. Bernstein to insure him on his stock of goods in Council Grove to the amount of $6,000. Afterward the policy was reduced by the agent of the defendant to $3,000. On the 12th of March, 1868, and during the lifetime of the policy, the goods of Bern- stein covered by the policy were entirely destroyed by fire. Bernstein assigned the policj', and his claim thereon, to Cobb, Stribling & Co., on the 27th of June, 1868. This action was commenced in the District Court for Shawnee County on the 10th of March, 1869. The pleadmgs consisted of the petition, the answer, a replj', and a general demurrer to the reply. The averments of the pleadings suflSciently appear in the opinion of the court. The action was heard upon the demurrer at the June Term, 1870, of the District Court, and judgment upon the plead- ings was given in favor of the Insurance Companj', and plaintiffs bring the case here on error. W. P- Bouthitt, and C. M. Foster, for plaintiffs. A. L. Williams and Lewis Sanback, for defendant. The opinion of the court was delivered by Brewer, J. The plaintiffs brought their action on a policy of fire insurance issued by defendant. Judgment was entered in favor of the defendant on the pleadings, and of this judgment plaintiffs now com- plain. Two questions are presented for our consideration. First, Was the action prematurely brought? The policy provided that the loss should " be paid sixty days after due notice and proofs of the same, made by the assured and received at this office." The petition was filed March 10, 1869. The answer alleged that proofs of loss were not received at the company's office until January 26, 1869, less than sixty days prior to the commencement of the suit. The reply admitted this, but averred that subsequently, and on the 19th of February, 1869, the defendant, after consulting with its western agent, denied all liability under the policy, and "refused to pay the loss or any part of it on the ground that the circumstances attending the fire were such as to justify their refusal to pay the same," and also requested that suit be brought in Kansas instead of Philadelphia. That a stipulation like the one in SECT. II.] COBB V. INSURANCE CO. OF NOETH AMERICA. 1065 question is valid, and that, when the company recognizes or does not deny its liability under the policy for the loss, an action before the ex- piration of the stipulated time is prematurely brought, is well settled. It is simply a contract for so much credit, and is no more to be ques- tioned than a contract for like credit in the sale of goods. It is equally well settled that the right to notice and proofs of loss is a right which the company may waive, and that when the company denies all liability for the loss, and refuses to pay for the same, and places that denial and refusal upon grounds other than the failure to give notice or to furnish proofs, such denial and refusal avoid the necessity of notice and proofs, and are a waiver of them. Vas v. Robinson, 9 Johns. 192 ; Thomas v. The Ocean Ins. Co., 6 Cow. 404 ; McMasters v. The Westchester Co. Mutual Ins. Co., 25 Wend. 379 ; O'Neal v. Tlie Buifalo Fire Ins. Co., 3 Comst. 122 ; Peoria M. & F. Ins. Co. v. Whitehill, 25 111. 466 ; The President and Directors of the Ins. Co. of N. A. v. McDowell, 50 111. 120 ; Schenck v. The Mercer Co. M. & F. Ins. Co., 4 Zabr. 447 ; Graves V. The Washington M. Ins. Co., 12 Allen, 391 ; Allyn v. The Maryland Ins. Co., 6 Har. & Johns. 408 ; Ta3-lor v. Merchants Fire Ins. Co., 9 How. 390. It would seem to follow that when the company by denial of its liability relieves the assured from the necessity of giving notice and proofs, it also waives the right to claim sixty da3's from notice and proofs for payment. Shall it be permitted to deny all liability under the contract for the loss, and at the same time have all the benefits of the stipulations of the contract as to time and mode of paj'ment ? A distinction should perhaps be noticed to guard against misapprehension. A mere waiver by the companj- of one provision of the policy intended for its benefit is not a waiver of the others. It may for instance for- mally waive notice of proofs, and still be entitled to the sixty daj's after such waiver for payment. In such ease the waiver stands simply in lieu of the notice and proofs, and the time begins to run from the waiver. In all this the companj- recognizes its ultimate liability for the loss, and simply relieves the assured from some one or more of the steps neces- sar}- to fix that liabilitj-. But a denial of all liability places the parties in a different attitude. In effect the company says to the assured. Not- withstanding 3-0U give us notice and furnish proofs, and wait the sixty daj's, and comply with all the provisions inserted in the policy for our benefit, still we shall not recognize your claim, nor pay for the loss. Why compel a party to do that for the company, which when done the company wholly disregards? After having done all, he is no nearer paj'ment than before, and must still appeal to the courts. Counsel seeks to parallel this with the case of a promissory note, and asks if, in case the company had given a note payable in sixty days, an action thereon in thirty days would not have been premature, even though the company, subsequently to the execution of the note, denied all liability thereon. The parallel is not good. The latter is wholly a unilateral contract, with rights and liabilities fixed and determined, and without anything for adjustment, and without occasion for act or waiver by 1066 COBB V. INSURANCE CO. OF NORTH AMERICA. [CHAP. XI. either party. To change the liability requires a new promise, not a denial or waiver. The decisions have all been in harmony with the views herein expressed. Columbia Ins. Co. v. Catlett, 12 Wheat. 383 ; jEtna Ins. Co. v. McGuire, 51 111. 312 ; Phillips v. Protection Ins. Co., 14 Mo. 220 ; Allyn v. Maryland Ins. Co., 6 Harris and Johns. 408 ; The N. & N. Y. Trans. Co. v. Western Mass. Ins. Co., 34 Conn. 561, or 6 Blatcbf. C. C. 241. Counsel contends that there is a distinc- tion to be drawn between some at least of these cases and the present, in this, that in them the language of the stipulation was " sixty daj-s after proof and adjustment," while in this it is " after due notice and proofs made by the assured and received at the office " — as though the former required mutual action, and the latter only action on the part of the assured. Some of the cases cited are exactly parallel. In the Illi- nois case the language is, "after the loss shall have been ascertained and proved." In the Missouri case, "after the loss shall have been ascertained and proved, and the proof received at the office." And in the Connecticut case, "after sixt}- daj's from notice, and the furnishing of preliminary proofs of loss to the underwriters." But even under the policy in this case there is to be mutuality of action. The proofs are for the purpose of an adjustment. The mere production of these proofs does not determine the amount of the loss. It furnishes a basis for the action of the parties in adjusting this amount as well as the extent of the liability of the company. We conclude, then, that the action was not prematurely brought.^ Was the liabilitj' of the defendant destroj-ed by the additional insur- ance taken out on the stock of goods covered by this policy? The policy stipulated that it should be avoided if the assured made any other insurance on the property " without notice to and consent of this com- pany in writing." The answer alleged a subsequent insurance without such notice and consent. The reply admits a subsequent insurance, and then alleges that this policj- was originally for $6,000, but was re- duced by defendant to $3,000 ; that at the time of such reduction the defendant in consideration thereof requested the assured to take out a policy of $3,000 in the Home Ins. Co. ; that in pursuance thereof the assured took out such policy, which was the additional insurance ; that the defendant had due notice thereof, and that this policy was delivered to the defendant's agents for the purpose of having this consent indorsed in writing, and the assured being ignorant of the mode of transacting such business relied wholly upon defendant and its agents to have the business correctly done ; and that the defendant and its agents, con- triving and intending to cheat and defraud the assured, negligently and fraudulently omitted to indorse the consent in writing. Upon these facts was the policy rendered null and void ? It will be noticed that the reply alleges notice, and that the additional insurance was at the request, which implies the consent, of the defendant ; so that to this 1 Ace: Home F. Ins. Co. u.PaUon, 45 Neb. 554 (1895); Insurance Co. v. Hancock, 106 Tenn. 513 (1901). — Ed. SECT. II.J COBB V. INSUKANCE CO. OF NORTH AMERICA. 1067 extent the requirements of the policy were complied with. The only thing lacking is the written evidence of the consent. The clause re- quiring consent in writing is a condition for the benefit of the insurer. Like any other condition of a contract it may be waived by the party in whose favor it exists. By what kind of testimony such waiver must be proved, is a question we need not consider. Certain facts are alleged, and for the purpose of the case, as it now stands before us, must be taken as proved and true. Do these facts amount to a waiver ? or per- haps more correctly, is the insurance company estopped by its conduct from insisting on a breach of this condition as a ground of forfeiture? The defendant reduced its policy from 86,000 to $3,000, and requested the insured to take out a policy of 83,000 in a particular company ; and when in obedience to this request he had taken out such policj', intend- ing to cheat and defraud him, fraudulently omitted to indorse its consent in writing upon the policj- when presented for that purpose. The ques- tion of the power of an agent does not come in here, for though some of the acts are alleged to have been done by and through an agent, yet the acts are aU charged to have been the acts of the defendant. The case stands as though the transactions were wholly' between two indi- vidual principals. The companj', when it requested the insured to take out the additional insurance, placed itself under obligations to give its consent in writing, and to do all other acts which might be necessary to prevent such additional insurance from injuriously affecting the riglits of the insured in its own policj'. It could not subject him to the labor, annoj-ance, and expense of taking out a new policj', and then refusing its consent insist that its policy was avoided, and the premium forfeited. Tlie law will not tolerate such unconscionable dealing ; and that which it cannot do directly, bj- refusal, it cannot do indirectlj' by fraud. Upon this question therefore we hold against the defendant.* These being the only questions presented for our consideration we shall be compelled to order a reversal of the judgment of the District Court, and remand the case for further proceedings. It is perhaps fit- ting to saj' that there is another question upon which counsel informs us the decision of the District Court was placed, but which somehow does not appear in the record as it comes to us. Of course, therefore, it would be improper for us to express any opinion concerning it. The judgment wiU be reversed. All the justices concurring. 1 Seo Maryland F. Ins. Co. c. Gnsdorf, 43 Md. 506 (1875) ; Westchester F. Ins. Co. V Earle, 33 Mich. 14.3 (1876) ; AUemania F. Ins. Co. v. Hurd, 37 Mich. 11 (1877). Compare Cleaver v. Traders' Ins. Co. 65 Mich. 527 (1887); Moore v. Hanover F. Ins. Co., 141 N. Y. 219 (1894). — Ed. 1068 HOME PROTECTION V. AVERT. [CHAP. XI. HOME PROTECTION v. AVERT. Supreme Court of Alabama, 1888. 85 Ala. 348. Appeal from the Circuit Court of Tallapoosa. Tried before the Hon. James W. Lapsley. Action on policy of insurance against fire, commenced October 1, 1886 ; plea of general issue, and special plea of forfeiture ; verdict and judgment for plaintiff, under charges of court, which are now assigned as error, with rulings in admission of evidence. The opinion states the material facts, and makes it unnecessary to set out the numerous rulings to which exceptions were reserved. S. A. Gurrett, with whom was Jas. E. Cobb, for appellant. Jno. M. Chilton, contra. Stone, C. J. It is shown in the record before us that the appellee, a married woman, took out three policies in the appellant corporation, a fire insurance company. Two of them were against losses by fire or lightning, and the third one against losses by storms. Only one of the policies is before us, and it is the foundation of the present action. It bears date November 27, 1883, was to run five j-ears from date, and was based on a gross premium of forty-four dollars, one-fifth of which — $8.80-100 dollars — was paid in advance, and the remaining four- fifths were to be paid in instalments of the same amount, on the 15th day of March, severally, in the j-ears 1885-6-7-8. This policy insures two separate barns, with their contents of hay and grain, each sepa- ratel}' valued. The number of this policy is 50,835. The barns and their contents were destroyed by fire, December 4, 1885. The defence was rested alone on the fact, not disputed, that the assured had failed to pay the instalment of premium — $8.80-100 — due March 15, 1885. One clause of the policy of insurance is in this language : " This company shall not be liable for any loss or damage under this policy, if default shall have been made in the paj-ment of any instalment of premium due by the terms of the instalment note. On payment by the assured of all instalments of premiums due under this policy, and the instalment note given thereon, the liability of this company on this policy shall again attach, provided written consent of the secretary of this company be first obtained ; and the policy [shall] be in force from and after such payment, unless this policy shall be void and inoperative from some other cause. But this company shall not be liable for any loss happening during the continuance of such default of payment. . . . It is further provided that no attempt by law or otherwise to collect any note given for the cash premium, or any instalment of premium due upon any instalment note, shall be deemed a waiver of any of the conditions of this policy, or shall be deemed in any manner to revive the policy ; but upon payment by the assured or his assignee of the full amount due upon such note, and costs, if any there be, this policy shall SECT. II.] HOME PKOTECTION V. AVERY. 1069 thereupon be in full force, unless the same be inoperative or void from some other cause than the non-paj-ment of note." The application for the policy, and which is made a part of the con- tract of insurance, contains a stipulation similar to that above. It is contended for appellee, that the insurance company waived all ground of forfeiture in this case, and several grounds are urged in sup- port of this contention : First, it is claimed that it was the custom of the insurance company to notify its customers when their premium notes fell due, and that it failed to do so in this case ; second, that the company never gave notice of anj- claim that the polic}' was forfeited until after the destruction of the property- by fire ; third, that after the company had notice of the loss, it informed the assured, by letter from its secretary, that its adjuster would be around soon and adjust the amount of the damage. Testimony was oflfered tending to show it was the custom of the appellant insurance company to give notice to its customers when their instalments of premium would mature. There was testimony that such had been the practice of this compan}' in prior dealings with the ap- pellee and with other persons who held its policies. And there was testimony, not denied, that the Home Protection Company had given notice of the time when premiums would mature on the other two poli- cies held by the appellee, and that such maturing premiums had been promptlj- paid. It was testified that no such notice had been given as to this policj-, and if notified the assured was able and would have paid it. This testimony was not controverted, and no explanation was offered why notice was given in the one case and not in the other. Almost the only questions presented for revision in this case grow out of the admission of the foregoing testimou}- against appellant's objec- tion and charges of the court based upon it, to which exceptions were also reserved. There were many charges. The substance of them was, that •' If, by the statements of its authorized agent after the making of the policy, and by its course of business with plaintiff and others, her neighbors, she was induced to believe that defendant would notify her of the time of paj-ment, and would not insist on a forfeiture in case of an unintentional failure to pay the premium note, and she did unin- tentionalh- fail to paj- the note, then the defendant cannot in good conscience be allowed to set up the non-payment as a defence." The rule and its exception are correctly stated in May on Insurance, § 356, as follows: '']S!"o notice is required from the insurer to the insured that the premium or note given for premium is about to be- come due unless the custom and course of dealing between them has been such as to justify the insured in the belief that such notice would be given, and induce him to rely upon it to his prejudice." Helm v. Phila. Life Ins. Co., 31 Penn. St. 107 ; Union Cen. Life Ins. Co. v. Bernard, 33 Ohio St. 459. See also, as to waiver of forfeiture, Boulton V. Amer. Mut. Life Ins. Co., 25 Conn. 542 ; McAllister v. N. E. Mut. Life Ins. Co., 101 Mass. 558 ; Buckbee v. U. S. Ins. An. & Tr. Co., 1070 HOME PKOTECTION V. AVEKT. [CHAP. XI. 18 Barb. 541 ; Mut. Life Ins. Co. v. French, 30 Ohio St. 240 ; Brook- lyn Life Ins. Co. v. Bledsoe, 52 Ala. 538 ; P. & A. Life Ins. Co. v. i'oung, 58 Ala. 476. It is not our intention to deny that, if a policy stipulate that it shall be void on non-payment of premium, and there is nothing else in the transaction, such forfeiture will be enforced. "What we do decide is, that if an insurance company, by its habits of business, create in the mind of a polic^'-holder the belief that paj-ment may be delaj-ed until demanded, or otherwise waive the right to demand a forfeiture, this is binding on the companj', notwithstanding the express letter of the policj' may not have been conformed to. Mut. Ben. Life Ins. Co. v. Jarvis, 22 Conn. 133 ; Amer. Ins. Co. v. Henly, 40 Ind. 515 ; Williams V. Albany Ins. Co., 19 Mich. 451 ; Amer. Ins. Co. v. Stoy, 41 Mich. 385 ; Howell v. Knickerbocker Life Ins. Co., 44 N. Y. 276; Schmidt V. Peoria Mar. & Fire Ins. Co., 41 111. 295 ; Garlick v. Miss. Val. Ins. Co., 44 Iowa, 553; Taylor v. Mer. Fire Ins. Co., 9 How. U. S. 390. See also, as to waiver of written terms of contract, Liddell v. Chidester, 84 Ala. 508. •The rulings in this ease are in substantial conformitj' with the prin- ciples declared above, and we find no error of which appellant can complain. Affirmed.^ 1 In Alexander v. Continental Ins. Co., 67 "Wis. 422, 427-428 (1886), Tatlob, J., for the court, said : — " The insured had taken a policy in which there is a condition that the policy shall terminate if any instalment on the premium note is not paid promptly on or before the day it becomes due. The company has no place in the vicinity of the insured where the money can be paid. The agent says to the insured : ' True, the policy says the liability of the company shall cease immediately if the money be not paid on the day, but I say to you, as agent of the company, that I will give you notice when pay- ment is required.' The insured, relying upon this promise of the agent, does not pay on the day. Two months or more after the day, the agent appears and demands payment, and payment is made. No claim is made that there has been a forfeiture of the policy, or that it is necessary to have the policy renewed by procuring the written consent of the company in the manner prescribed in the contract, and the agent re- news his promise to give notice when the next and subsequent instalments should become due, and says he will call upon her personally for payment. No notice is afterwards given, and no one calls for the money. The note is retained by the com- pany, and not presented for payment, nor payment thereof demanded in any way, and in the meantime a loss occurs. " The condition or forfeiture in the policy having been once waived, and the in- sured having been led to believe that it would not be thereafter enforced, the company cannot enforce it except by an actual demand of payment of the money due on the note and a neglect or refusal to pay the same, or by a return of the note to the insured with notice that the company insists upon the condition in the policy. See Marcus v. St. L. Mut. L. Ins. Co., 68 N. Y. 625 ; Dilleber w. K. L. Ins. Co., 76 N. Y. 567 ; Sheldon V. A. r. & M. Ins. Co., 26 N. Y. 460, 465; Goit v. Nat. P. Ins. Co., 25 Barb. 189; Devine v. Home Ins. Co., 32 "Wis. 471, 477; Howell v. K. L. Ins. Co., 44 N. Y. 276, 283." Compare Garlick v. Mississippi Valley Ins. Co., 44 Iowa, 553 (1876). — Ed. SECT. II.J BAKEETT V. UNION MUTUAL FIEE IXS. CO. ] 071 (c) I7ic insurer's conduct at or before the issuing of the policy and at or before the arising of the defence. BAREETT asd Others v. UXIOX MUTUAL FIRE INSURANCE CO. Supreme Judicial Court of Massachusetts, 1851. 7 Gush. 175. This was an action of assumpsit by the plaintiffs, as the commis- sioners of the sinking fund of the "VTestern Raih-oad Corporation, against the defendants, a mutual fire insurance company, established in Boston, on a policy of insurance against fire, originally issued in favor of Henry "W. Nelson, and payable, in case of loss, to Josiah Quincy, Jr. The policy witnessed that, in consideration that said Nelson, a member of the corporation, "agreeably to the by-laws of said com- pany, hereunto annexed," had paid a certain sum and had bound and obliged himself to pay all sums assessed upon him, pursuant to the by-laws, he was insured on certain buildings therein described, against loss or damage by fire, under the conditions and limitations expressed in the by-laws, and subject to the lien given by the thirtj'-seventh chapter of the revised statutes upon the buildings and the land under and belonging to the same, the sum of 82,600. In the margin of the policy was a memorandum that 82,600 on the same premises was insured with the State Mutual Fire Insurance Company. The charter and by-laws of the defendants were annexed to the policy. The fourteenth article of the b^'-laws provided, in conformity with the Rev. Sts. c. 38, § 28, that " not more than three-fourths of the value of any building shall be insured by this companj-, and as much less as may be agi'eed upon." The fifteenth article provided as follows : ' • All policies which may issue from this companj-, to cover property previously insured, shall be void, unless such previous insurance be expressed in the policy at the time it be issued." On the policy was indorsed a relinquishment, by Josiah Quincy, Jr., of his interest therein, and also the following : " Pay the within, in case of loss, to the commissioners of the sinking fund of the Western Rail- road Corporation, as mortgagees. H. W. Nelson. Consent, Enoch HoBART, President." At the trial before the jurj', on the opening of the plaintiffs' case, it appeared that at the time of the execution and delivery of the policy" ia suit, there was a prior insurance in favor of Henry W. Nelson, then existing and in force, and intended to be kept in force, to the amount of 82.000. Upon this fact appearing, the defendants insisted that as it was not 1072 BAKEETT V. UNION MUTUAL FIEE INS. CO. [CHAP. XI. mentioned in this policy, the policy was void by the terms of it, according to the by-laws of the defendants referred to therein. In answer to this ground of defence, the plaintiffs offered to prove by parol, that the fact of the existence of such prior insurance and its amount, and the understanding of the party insured, that such prior insurance was to stand and remain in force upon the property, were made known to the defendants, and assented to by them, prior to the making of this policj-, and pending the negotiation therefor, and down to the time of tlie execution and delivery thereof; that this policy was prepared by the defendants, and delivered to the assured, as he supposed, in execution of and according to the intention aforesaid ; that he did not read the policy at the time of taking it, nor afterwards ; that nothing was said to him about the fact of such prior insurance not being stated in it, and that neither he nor the plaintiffs knew that such fact was not stated in the policy, until after the loss ; and that the amount agreed to be insured by the defendants and by the State Mutual Company, mentioned on the margin of the policy sued upon, together with the amount of such prior insurance so notified to the defendants, did not exceed the value of the property insured. The defendants objected that such testimony was incompetent and inadmissible. It was agreed that after the application for insurance in the present case, the president of the defendants, and the president of the State Mutual Fire Insurance Company (which gave a similar policy), exam- ined the buildings to be insured, and informed the applicant that the amount of $5,200, insured by both policies, was the highest valuation which they could put upon three-fourth parts thereof, and was therefore all the risk which they could take upon the same. The case was submitted upon the foregoing statement, with the agreement that if the court should be of opinion, that the foregoing evidence would be competent, the case was to be sent to a jur}- upon the facts ; but if the court should be of a different opinion, or that the plaintiffs could not maintain any action on this policy, by reason of their not being in law members of the company, or insured by the policy declared on, or otherwise, then the plaintiffs were to become nonsuit, and judgment be rendered for the defendants. H. Ghoate and Ellis G. Loring, for the plaintififs. G. Q. Loring, for the defendants. Fletcher, J. It is maintained by the defendant, that this policy is void, because there is no mention in it of the prior policj-^ of $2,000, as is expressly required by the fifteenth article of the by-laws to which reference was made in the policy. That the existence of this prior policy was a very material fact, there can be no doubt. The defendants are restrained by their own by-laws, as also by the statute, from insuring more than three-fourths of the value of any building ; for the purpose, and with the design, of leaving the insured his own insurer for the remaining quarter part. It is manifestly im- portant to the insurers, that the insured should thus have a common SECT. II.] BARRETT V. UNION MUTUAL TIRE INS. CO. 1073 interest with them in the preservation of the property. It is therefore expressly provided, by the fifteenth article of the by-laws of the defend- ants, that all policies issued by them upon property previously insured shall be void, unless such previous insurance is mentioned in the policy at the time it is issued. These by-laws of the defendants are annexed to the policy, and are expressly referred to as proving the conditions and limitations upon which the insurance is made, and thus expressly form a part of the contract of insurance. Now, in point of fact, at the time when this poUcy was issued, there was a previous insurance which was not expressed, nor in any way mentioned or referred to in the policj\ By its own express terms, therefore, this policy is void. The position, that the policy is thus void, upon the facts stated, is sustained by numerous and decisive authorities. Jackson v. Mass. Mut. Fire Ins. Co., 23 Pick. 418 ; Liscom v. Boston Mut. Fire Ins. Co., 9 Met. 205 ; Holmes v. Charlestown Mut. Fire Ins. Co., 10 Met. 211 ; Roberts V. Chenango County Mut. Ins. Co., 3 Hill, 501 ; Carpenter v. Provi- dence Washington Ins. Co., 16 Pet. 495 ; Jennings v. Clienango County Mut. Ins. Co., 2 Denio, 75. In truth, the counsel for the plaintiffs do not deny, but admit, that the policy is void, unless the omission to state the previous insurance in the policy can be supplied or remedied by parol evidence. The principal question, therefore, in this case is, whether or not the parol evidence offered by the plaintiffs for this purpose was admissible. The decision of this question depends upon a ver}' familiar and well-settled principle of law. It is a general rule, that parol evidence can never be received to contradict or materially vary the terms of a written agreement. This is undoubtedly a wise and salutary rule, though if it be understood in too literal and broad a sense, it may exclude the admission of parol evidence, in eases in which it is usually received, to justify a construction which could not otherwise have been adopted. In all cases, where a sensible interpre- tation can be put upon the policy without the aid of parol evidence, the effect of such evidence is materially to vary the legal construction of the contract of the parties. The true meaning of the rule excluding parol evidence is, that such evidence shall never be used to show that the intention of the parties was directly opposite to that which their language expresses, or sub- stantially different from any meaning that the words thej' have used, upon any construction, will admit or convey. In the present case, it is quite clear that the parol evidence is offered to show that the intention of the parties was substantially different from any meaning that the words they have used, upon any construction, will admit or convey. The manifest effect was to substitute an oral contract for that which is contained in the written instrument. The evidence was not offered for the purpose of aiding in putting a construction upon the policy, as it is, according to its true intent and meaning ; but to show that the inten- tion of the parties was materially different from any meaning that the words which they have used, upon any construction, will admit of or 68 1074 BAERETT V. UNION MUTUAL FIEE INS. CO. [OHAP. XI. import. This would in fact be substituting an unwritten in the place of the written contract ; the unwritten differing essentially from the written one. It was said in the argument, that there was a mistake or fault, on the part of the defendants ; that the policy was prepared by the (iefend- ants ; and that they should have expressed it in the prior policy, and omitted to do so hy design or bj" wilful negligence ; and that the assured did not read it, but supposed that the prior policy was expressed. The assured certainl}' had abundant opportunit3- to read the policy, and need not have accepted it, if it was not satisfactory to him, according to the agreement of the parties. If the assured accepted the policj", without looking at it, or knowing what it was, he would seem himself to be liable to the charge of culpable negligence made against the defendants. But if from mistake or fraud an agreement is so defective, that instead of convej-ing the meaning of the parties, it expresses a different or opposite intent, if relief can be given at all, it must be sought exclusively in a court of equit}'. A court of law must act on tlie agreement as it is ; it cannot strike out or change any part or add anjthing to it, so as to contradict or vary the agreement contained in the written instrument. The parol evidence offered in this case was therefore clearly not admissible ; and taking the policy as it is, the plaintiffs cannot recover. The plaintiffs, being assignees of the policy, can have no better right to recover than the original party insured. It is unnecessary to decide the question whether the plaintiffs can maintain tliis action in their own name. But as the plaintiffs had an insurable interest in the property, and took the policy with the consent of the defendants to pay the loss to them, there would not seem to be any reason whj^ they should not recover the loss, in this form of action. But if they could not recover in this form of action on the policy, it would seem that they might recover in their own names upon a proper count upon the express promise of the defendants to pay the loss to them, if the defendants were liable to pay the loss to any one. Plaintiffs nonsuit} 1 Ace: Jennings v. Chenango County Mut. Ins. Co., 2 Denio, 75 (1846), (but, for the present doctrine in New York, see the later cases in this subdivision) ; Dewees i'. Manhattan Ins. Co., 35 N. J. L. (6 Vroom) 366, 371-376 (1872) ; Franklin Ins. Co. v. Martin, 40 N. J. L. (U Vroom) 568, 573-581 (1878) ; Batchelder v. Queen Ins. Co., 135 Mass. 449 (1883) ; Bennett v. St. Paul F. & M. Ins. Co., 55 N. J. L. (26 Vroom) 377 (1893) ; Thomas v. Commercial Union Assur. Co., 162 Mass. 29 (1894) ; Northern Assnr. Co. v. Grand View Building Assn., 22 S. C. Rep. 133 (1902). Compare Carson v. Jersey City Ins. Co., 43 N. J. L. (14 Vroom) 300 (1881). In Batchelder v. Queen Ins. Co., supra (1883), Holmes, J., for the court said : — " The policy sued upon was conditioned to be void in case of other insurance, and the plaintiff's evidence showed that there was other insurance outstanding when the policy was delivered. But there was also evidence tending to show that the breach of condition was known to the defendant at the same time ; and the plaintiff argues that he was at least entitled to ask the jury to iind that the breach had been waived. However the law may be elsewhere, it is settled the other way in Massachusetts. A breach of condition, happening after a policy is issued, may be waived, no doubt ; but SECT. II.] PLUMB V. CATTAEAUGUS CO. MUTUAL INS. CO. 1075 PLUMB V. CATTAEAUGUS COUNTY MUTUAL INS. CO. Court of Appeals of New York, 1858. 18 N. Y. 392.^ Appeal from the Supreme Court. The plaintiff was the assignee of one Henry, to whom a policy had been issued upon an application filled out bj' Ide, the surve3-or and agent of the defendant. The policj' referred to the application as forming a part of the contract. The application was a printed form. It contained this interrogatory : "5. Relative situation as to other buildings; distance from each within ten rods; for what purpose occupied?" The answer to this interrogatory enumerated and described several buildings, and said : " All of the exposures within ten rods are mentioned." Upon the trial, which was before Mr. Justice Johnson, the defendant proved when the breach exists at the moment when, if ever, the contract comes into existence, it must be waived at that moment, if ever, and at that very instant the writing purports to establish and insist upon the condition. In Bennett v. St. Paul F. & M. Ins. Co., supra (1893), Beaslet, C. J., for the court, said : — " The suit is on a policy of fire insurance, the declaration being in the usual form. To the cause of action thus laid the defendant, in its second plea, defends on the ground that the policy declared on was subject to a certain condition, to wit, that " this entire policy, unless otherwise provided by agreement indorsed thereon, or added hereto, sliall be void if the insured now has, or shall hereafter make or procure any other contract of insurance, whether valid or not, on the property," &c. This state- ment is followed by an averment " that at the time said policy was made " the plaintiff held another policy on the property. In answer to this the plaintiff, in substance, stated that at the time the policy was made and the premium paid the defendant had notice and knew of the antecedent insurance indicated in the plea, and with this knowledge issued the policy sued on. The demurrer before us is to this replication. " In looking over the arguments urged in the brief of the counsel of the plaintiff in support of the replication here challenged, it is obvious that they all proceed on the theory that the written contract embodied in this policy can be altered by parol testimony coincident with its inception. The written agreement declares that the policy shall be void in case the assured has any existing insurance on the property. This stipulation is neither obscure nor uncertain, and yet it is now urged that the court should circumscribe its expressed force. This contention is based on the idea that neither of the parties could have intended that the policy should be void by reason of the existence of an insurance that was then known to both of them. But the conclusive answer to this is that such is their agreement so plainly expressed that a doubt upon the subject would be absurd. It is true that the stipulation is so unrea- sonable that if the language were at all ambiguous or uncertain, or were it inconsist- ent with any part of the context, a court might well struggle to eliminate it by construction. But a contract clearly expressed in writing must be enforced in a court of law according to its terms, and this without reference to the real but unexpressed intentions of the parties to it. If it is, in any respect, to be modified, resort must be had to a court of equity." — Ed. 1 The statement has been partly rewritten. For some facts the original statement referred to Chaffee u. Cattaraugus County Mut. Ins. Co., 18 N. T. 376 (1858), and Brown V. Cattaraugus County Mut. Ins. Co., 18 N. Y. 385 (1858). Those facts have been inserted in the statement given here, — Ed. 1076 PLUMB V. CATTAKAUGUS CO. MUTUAL INS. CO. [CHAP. XI. that there were several buildings situated within less than ten rods of the property insured, and which exposed it to injury and loss by fire, which were not mentioned in the application for insurance, and also that one of the buildings therein described as distant eight rods was in fact but six rods distant ; and that another, a planing mill and turning-shop, described as two rods distant, was in fact distant but eighteen feet. The plaintiff, under exception by the defendant, was permitted to prove the following facts : Ide was the agent and sur- \e\ov of the defendant, and he resided at Gowanda, where the build- ings were situate ; and it was Ide's business, as such agent, to solicit insurances, to sign applications, and to forward them to the office of the defendant in EUicottville, receive policies from the defendant and deliver them to the applicants, and talie their premium notes and the cash per cent thereon, and as such surveyor to survey the property and premises proposed to be insured, to take the measurement of the distances from all other buildings contiguous and within ten rods therefrom, to take the size of the buildings proposed to be insured, the number of chimneys, etc., and ascertain the relative situation of the buildings insured to any other buildings, for what purpose occu- pied, and generally to ascertain all about the property to be insured, material to the risk. The plaintiff also gave evidence tending to prove that in making out the application Ide acted as the agent and surveyor of the company ; that he called upon Henry, with a printed blank ap- plication, and solicited him to effect insurance with the defendant's companj- ; told him that he was going to the office of the company that day and that it was necessary to make out the application that day ; Henry replied that his clerks were all absent and he was alone in the store and could not attend to the business ; that if Ide insisted on taking the application that day he must get along alone and act on his own responsibility. Ide replied that that was what he was ap- pointed agent and surveyor for, and that all Henry had to do was to say what property he wanted insured, and he (Ide) would take care of the rest and fill out the blank. Henry suggested that some measure- ments ought to be taken, and furnished a tape line for that purpose, which Ide took and went out of the store. He soon returned, filled out the application, and stated to Henry that it was all right and just as it should be. Henry looked over it hastily and without an}' par- ticular examination as to the statement of the distance and relative situation of other buildings ; told Ide that upon his representations and statements he should sign it, and thereupon did sign and paid the premium required. To the admission of all this evidence the defend- ant's counsel took an exception: Neither party desired that any ques- tion of fact should be submitted to the jury, and the judge directed a verdict for the plaintiff, to which direction the defendant took an ex- ception. The judgment thereupon entered having been affirmed at general term in the eighth district, the defendant appealed to this court. The cause was submitted on printed arguments. SECT. II.] PLUMB V. CATTAEAUGUS CO. MUTUAL INS. CO. 1077 A. G. nice, for the appellant. O. C. Torre7ice, for the respondent. Pratt, J. As no point was made upon the trial or upon this appeal that the agent Ide was not clothed with all the power which he pro fessed to have, it may be assumed that what he did in making the sur- vey and measurements and in filling out the application was strictly within the line of his duty as surveyor and agent of the company. If, therefore, he acted within the scope of his authoritj- in making these surveys and measurements and in preparing the applications, I do not see why the question is not the same in principle as if the same thing had been done by the company- itself. Suppose an individual insurer had himself assumed to make the survey and measurements, and, as in this case, had filled up a blank application and had represented to the applicants that his survey and measurements were correct, and that upon the faith of such representations, and with no knowledge of the facts themselves, the insured had signed the application and thus made the statements their own. Although they had thus been led into a warranty of what was not true, thej' could not, undoubtedly, change the contract b}- parol testimonj-. The writing must still be held to express the contract between the parties. And neither party can insist that the contract is other than what the writing expresses. But when the party through whose acts and representations the other part}- was induced to enter into the contract claims the right to show that the facts were different from what he had represented them to be, for the purpose of sliowing a breach of the warrant}-, and thus avoiding what would otherwise be a binding contract, and escaping its obligations, I cannot discover why the doctrine of estoppel may not justly be applied to him, and he be precluded from denying what he once asserted. It presents, I think, the precise case for the appli- cation of the doctrine of estoppel in pais, as defined in the cases. Lord Denman, in Pickard v. Sears, 6 Ad. & E. 469, 474, saj-s : " The rule of law is clear, that, where one bj- liis words or conduct wilfully causes another to believe the existence of a certain state of things, and induces him to act on that behalf, so as to alter his own previous position, the former is concluded from averring against the latter a different state of things as existing at the same time." Substantially the same rule, but in still more explicit terms, was laid down by Bronson, J., in Dezell v. Odell, 3 Hill, 215, 222 : "It must appear, (1) That he has made an admission which is clearly in- consistent with the evidence he proposes to set up ; (2) That the other party has acted upon the admission ; and (3) That he will be injured by allowing the truth of the admission to be disproved." The same rule was laid down by Nelson, J., in Welland Canal Co. v. Hathawaj-, 8 Wend. 480, 483. The rule thus laid down precisely fits this case, and surely the equities of a cause never called more persuasively for the application of the rule than they did in this' case. I tliiuk, there- fore, the court were right in ordering a verdict for the plaintiffs upon 1078 WHITE V. CONNECTICUT TIRE INS. CO. [CHAP. XI. the evidence, and the judgment of the Supreme Court should be affirmed. Johnson, C. J., Denio and Strong, JJ., dissented for reasons stated in the opinion of the latter in Brown v. Cattaraugus County Mut. Ins. Co., 18 N. Y. 385. Judgment affirmed. "WHITE V. CONNECTICUT FIRE INSURANCE CO. Supreme Judicial Court op Massachusetts, 1876. 120 Mass. 330. Contract upon a policy of insurance against fire. At the trial in the Superior Court, Pitman, J., bj- agreement of the parties, after verdict for the plaintiff, reported the case to this court, the verdict to stand, if upon the evidence reported the jury would be authorized to return such verdict ; otherwise, judgment for the defendant. The evidence suffl- cientl}' appears in the opinion. /S. Soar, for the defendant. A. Wellington, for the plaintiflF. Colt, J. The policy in this case was obtained for the plaintiff by Hunt, an insurance broker, through the defendant's general agent, Darling. It contained provisions, among others : 1st, That the com- pany should not be liable by virtue of the policy until the premium therefor was actually paid ; 2d, That the insurance might be terminated bj' the company on notice to that effect, and on refunding a ratable proportion of the premium for the unexpired term of the policy ; 3d, That any person who had procured the insurance, other than the as- sured, should be deemed to be the agent of the assured, and not of the companj', "in any transaction relating to this insurance;" and 4th, That nothing less than a distinct agreement, indorsed on the policy, should be construed as a waiver of anj' restriction or condition con- tained in it. The defence is that there had been no actual payment of the premium, made necessary b}' the terms of the polic}' as a condition precedent to its validity ; and that the risk was terminated before the fire by notice from the company. The defendant offered no evidence, and the only question is whether the plaintiff's evidence, as reported, would justif}' a jury in finding a verdict in the plaintiff's favor. If so, as agreed at the trial, judgment must be entered for him. We are of opinion that there is evidence derived from the relations of the several parties, the transactions between them, the course of business and the delivery of the policy, which would justify a finding that the company accepted the credit given to the broker. Hunt, indi- Tiduall^', as a payment of the premium, within the meanino' of the SECT, n.] WHITE V. CONNECTICUT FIKE INS. CO. 1079 terms of the policy. It was according to their course of business for the general agent of the eompanj' to deliver policies to Hunt without requiring cash payment of premiums. Instead of that, he charged Hunt in account individually, and rendered to him monthly bills, de- ducting an agreed commission allowed him for obtaining risks for this company. The policy in this case was so delivered, witliout demand for payment of money. A large number of the defendant's policies containing these same clauses had, with the defendant's knowledge, been issued by Darling to insurance brokers in the same way, without objection on the part of the defendant, and losses had been paid on many of them, but no cases were shown where the loss happened before an actual payment of premium. There was evidence from Hunt, that, in his monthly settlements with Darling, he paid the premiums charged to him, whether he had collected them or not, and offered to pay this premium at his settlement in January, next after the date of the policj', and after the fire ; that he had been in the habit of obtaining insurance for the plaintiff and keeping his policies for him, and frequently had funds of the plaintiff in .his hands, and had never demanded of him the payment of this premium, altliough the evidence was that he had in- formed the plaintiff, before the fire, that his insurance had been pro- cured, and he would call on him the first of the following month, with the assurance that he need have no uneasiness about the matter. The company notified Darling, before the fire, that it did not wish the risk at the rate taken, but said nothing as to payment of premium. It is a fair inference from all this, that the dul}- authorized agent of the company had accepted the individual credit of Hunt as a payment of the required premium. It is not a question of waiver, by parol agree- ment, of an express stipulation in a written contract within the cases cited b}- the defendant. It is rather a compliance with the condition required to give validity to the policy, within a large class of cases in which it is held suflScient. Tayloe v. Merchants' Ins. Co., 9 How. 390, 402; Miller i: Life Ins. Co., 12 Wall. 285, 303; Sheldon r. Atlantic Ins. Co., 26 N. Y. 460 ; Sheldon v. Connecticut Life Ins. Co., 25 Conn. 207 ; Bouton v. American Life Ins. Co., 25 Conn. 542.^ Assuming that the contract of insurance was perfected, so that the risk attached, the defendant fails to show a termination of the insurance before the fire, in accordance with the terms of the policy. The pro- vision is that "the insurance may be terminated at anj- time at the option of the company, on giving notice to that effect, and refunding a ratfible proportion of the premium for the unexpired term of the polic}-." The letter of the general agent to Hunt, giving him notice that the eompanj' did not wish the risk at the rate named, and demanding a 1 Aa:.: Sheldon v. Atlantic F. & M. Ins. Co., 26 N. Y. 460 (1863) ; Washoe Tool Mfg. Co. V. Hibernia F. Ins. Co., 66 N. Y. 613 (1876) ; Farnum r. Phcenix Ins. Co., 83 Cat 246 (1890). Compare Wood v. Ponghkeepsie Mnt. Ins. Co., 32 N. Y. 619 (1865). For life insurance cases, see post, p. 1109, n. — Ed. 1080 VAN SCHOICK V. NIAGARA FIRE INS. CO. [CHAP. XI. return of the policy, without an offer to return any part of the premium, was not suflScient. The facts do not conclusively show that Hunt was the agent of the plaintiff to receive notice of a termination of the risk, and the provision in the policy making the person who procures the insurance " the agent of the assured in all transactions relating to the insurance," cannot be construed to mean that such person shall be agent to receive notice of the termination of the insurance at an}' time during the life of the policy ; it plainly refers to the original transactions con- nected with obtaining it. Judgment on the verdict. VAN SCHOICK, Respondent, v. NIAGARA FIRE INSURANCE CO., Appellant. Court or Appeals of New York, 1877. 68 N. T. 434. Appeal from judgment of the General Term of the Supreme Court, in the third judicial department, in favor of plaintiff, entered upon an order denying a motion for a new trial and directing judgment upon a verdict. The nature of the action and the facts appear sufficiently in the opinion. Wm. C. Ruger, for the appellant. T. F. Sus\ for the respondent. FoLGER, J. This was an action upon a policy of fire insurance. It contained this condition : " Any interest in property insured not abso- lute, or that is less than a perfect title, or if a building is insured that is on leased ground, the same must be specifically represented to the company, and expressed in this policy' in writing, otherwise the insur- ance shall be void." The fact is, that part of the property described in the policj', as subject of the insurance, was a building on leased ground. That fact was not expressed in writing in the policy. The defendant claims that thereby the insurance was void, and puts itself thereon as a defence to the action. It is to be observed of this condition, that it is not one of those which are subsequent to the formation of the contract, a breach of which may occur after there has been a valid contract made and entered into, and continued in existence for a part of its prescribed term. It is a condition precedent, lying at the threshold of the making of the contract, and which if not then performed, or not then obviated, prevents the formation of an enforceable contract. It is obvious, that this building being on leased ground, the very moment that the policy passed from the defendant to the plaintiff, the insurance on it was void, if the condition holds. They were concurrent acts, the deliverj' of the contract, and a breach of this condition ; so that at the same instant SECT. II.] VAN SCHOICK V. NIAGAEA FIKE IKS. CO. 1081 that the defendant said we insure this building, at the same instant the condition was broken and the insurance was void. So that if nothing is shown to break the rigid effect of this condition, there never was any insurance bj' this defendant upon that building. We would scarce ex- pect two parties to go through so senseless and trifling an act, if the facts were known to each at the time, but would rather conclude that they had by words or act agreed that the condition should not be con- sidered as binding. "If these defendants were an entity, and could have stood near to that building, when the oral negotiation for insur- ance was made and completed, and have seen " and known that it was upon leased ground ; " could it fairly be contended that they would have offered to the plaintiff, or that he would knowingly have received, as the correctly written evidence of the contract, this policj*, with the condition in question, contained in it as an operative and binding clause ? "We cannot suppose that either plaintiff or defendant would do the ut- terly absurd thing of making, with deliberation and knowledge, a con- tract that was void from inception, and was in contradiction of the facts and statements of the negotiation." It is plain that the plaintiff and the agent meant to contract and did contract for the insurance of that building, as a building on leased land. Cone v. Niag. F. Ins. Co., 60 K. T. 619. Hence we are not surprised ; that the plaintiff claims that the fact that the building was on leased ground, was made known to the defendant when the policy was applied for ; and that the policy was delivered and the premium accepted hy them, without insisting upon the fact and the condition. He makes that action of the companj-, with that knowledge, his reply to their defence based on that condition and its breach. We must first inquire, whether the plaintiff is right as to the fact of the prior knowledge of the defendant that the building was upon leaspJ ground. It is shown that at a time previous to the issuing of this pol- icy, the facts in relation to the title of the property, just as they were (that the land was owned by one person, and the building by another, and the contract between them), were told to one Lewis, an insurance agent. This Lewis, when the policy in suit was issued, having this in- formation, and with a view to this insurance, asked if there was any change in the property, and was told that there was not. So that at the time of the issuing of this policy, Lewis was informed of the fact, that this building was within the scope of this condition. It is now to learn, if Lewis was the agent or substantially so of the defendant. It is shown that one Doolittle was the commissioned and ostensible agent of the defendant, but that Lewis and he were in partnership in the busi- ness of soliciting and procuring insurance ; that Lewis did with assent of Doolittle so act as to this defendant ; that such action was known to defendant and not disapproved of by it ; that a joint commission had for some time been promised by the defendant to those two as its agents, which was delayed, but finally issued before the delivery of this policy. Bodine v. Exchange F. Ins. Co., 51 N. Y. 117. We think that the facts 1082 VAN SCHOICK V. NIAGAEA FIKE INS. CO. [CHAP. XI. bring the case within that decision. So that, as the information of the agent is the information of his principal, the defendant when it accepted this risk, had information that this building stood upon leased ground. Besides that, in stating these facts, as they appeared to him, on the motion of the defendant that the court direct a verdict for it, the learned judge who held the circuit assumed or found that Lewis had the relations of an agent to the defendant. Xo objection was made by the defendant to this, nor any request to go to the jury upon it as a question of fact. So it must be taken as a conceded fact in the case. Tallman v. Atlantic Ins. Co., 3 Kej-es, 87. And so again comes up the oft-recurring and still vexed question, between insurance companies and their policy-holders ; whether a fact, thoroughly well known and comprehended bj' both sides to the contract before it is delivered, maj-, by force of some condition, crouched unseen in the jungle of printed matter with which a modern policy is overgrown, make a defence for the compan}-, after the catastrophe and damage has happened against which it professes to guard. It is to be confessed, that the decisions in this State do not, upon a cursory perusal at least, seem strictly in harmonj' in regard to it. There are cases which hold that where an application is made a part of the policj- b3' the terms of it, and some false assertion has been inserted in the application by the agent, when the truth has been at the same time well known to him, that the insured shall not be prejudiced thereby. Rowley v. The Em- pire Ins. Co., 3 Keyes, 557 ; Plumb v. Catt. Ins. Co., 18 N. Y. 392 ; Ames V. N. Y. Ins. Co., 14 N. Y. 253. There are others, where the fact fell within the condemnation of some condition of the policy ; yet as the fact as it existed was known to the company, it was held to be estopped from setting up the condition against a recovery. 14 N. Y. sujyra ; Bidwoll v. N. W. lus. Co., 24 N. Y. 302 ; Bodine v. Exchange Ins. Co., 51 X. Y. 117. There are others, in which there was a suit in equity, seeking a reformation of the contract, and it was held that the facts showed unmistakably that the parties never meant to enter into a con- tract with such a condition or description in it as was set up against a recovery. Cone r. Niagara Ins. Co., 60 N. Y. 619 ; Mahar v. Hibernia Ins. Co., 67 N. Y. 283. In the latter case, the facts made a clear estoppel en pais against the company. It has also been held, that a warranty, part of the printed matter of the policy, has been dispensed with by the oral ao-reement of the parties made before the delivery of the policy. McCaU V. Sun Mut. Ins. Co., 66 N. Y. 505. On the other hand, in an action at law, it has been held, that where the terms of the policy are clear and unambiguous, parol proof is inadmissible to vary them, or to show that either or both parties were not aware that they were exchang- ing a contract such as was requested, and as agreed with the facts in the situation of the property. Pindar v. Resolute Ins. Co., 47 N. Y. 114 ; see also Rohrback v. Germania Ins. Co., 62 N. Y. 613. And so it has been held that parol proof is not admissible to show that botli par- ties knew that a statement in an application for a policy was not true. SECT. n.J TAN SCHOICK I'. XIA.GAEA FIRE IXS. CO. 1083 Eipley v. jEtna Ins. Co., 30 X. T. 136. Other cases bearing upon the subject might be cited — quantum s^uff. There is no doubt but that, ordinarily considered, this condition in the policy was a warranty that the building did not stand upon leased land ; and that the truth of that warranty became a condition precedent to an}- liability on the part of the defendant. Yet there is no doubt, too, that a condition in a polic}' maj' be waived b}' the insurer, or, as some cases put it, he be estopped from setting it up, and that such re- sult may be worked by parol, or by act without words. It has been held over and over, that the customarj- clause in a policy, that it will not be binding upon the insurer until the premium is paid in fact, may be waived by parol, or bj- act, and the policy may be delivered and be- come a binding contract upon the insurer, without payment in hand of the premium. Trustees, etc. c. Br. Ins. Companj-, 19 X. Y. 305 ; Sheldon V. Atlantic F. Ins. Co., 26 X. Y. 460; Wood v. Po. Ins. Co., 32 X. Y. 619 ; Boehen v. Wms. B. City Ins. Co., 35 X. Y. 131 ; Bodine v. Ins. Co., 5 1 X. Y. 117. As to other waivers, see Lud wig u. Jersey Cit}' Insurance Company, 48 X. Y. 384, and cases there cited ; Shearman v. Xiagara Fire Insur- ance Company, 46 X. Y. 532. Xow, in this first class of eases, it has been thought that the fact that the insurer delivered to the insured the written contract, as the consummated agreement between them, and did not then exact present pa3-ment of the premium as a necessary prece- dent to delivery, was too plainly in contradiction with the condition for prepayment, for it to be supposed that it was meant by the insurer or supposed by either party that it was intended to make that condition a potent part of the contract. Such a provision, it is said, could have no effect upon the delivered and perfect contract in which it was con- tained (19 X. Y. supra). It would be imputing a fraudulent intent to the defendant in this case to say or to think that they did not mean, when they delivered this policy to the plaintiff, to give him a valid and binding contract of insurance, or that they did not mean that he should believe that he had one, or that they did not suppose that he did so be- lieve. And such imputation can be avoided only by supposing that it had overlooked this condition, and so forgotten to express the fact as to the building, in writing, upon the policy ; or that it waived the con- dition, or held itself estopped from setting it up. The condition of prepayment of premium is, hke this under consideration, one at the threshold of the making of the contract, and if it is not observed, no valid contract is made unless it is stepped over or thrust aside. It is consistent with fair dealing and a freedom from fraudulent purpose to hold that one or the other was done ; that is, that there was waiver, or is estoppel. There are other conditions precedent which may be waived. Thus, in Myere v. Life Insurance Company, 27 Penn. St. 268, it is said that the countersigning by the agents is under some circumstances not essen- tial, though required by condition. The ground there stated is, that on an epuitable interpretation of the whole contract, it may become the 1084 VAU SCHOICK V. NIAGAEA FIRE INS. CO. [CHAP. XI. duty of the court to dispense with a portion of the forms of the contract, if it can find any reliable substitute for them ; on the principle that cures defective execution of powers, where the intention to execute is sufficiently plain. The contract was to be complete when delivered by the agents, and countersigning bj' them was to be the appointed evi- dence of its proper deliverj-. There may be other evidence, to be re- garded as equivalent. So here, it was not that the defendant would not at all insure a building on leased lands. They did agree to take a risk upon it. But to have it insured by them, the fact of it bein^ on leased land must be expressed to them. This was done. As evidence that it was done, it must, they said in the policy afterwards delivered, appear in writing on the policj*. This is, like countersigning by agent, but one of the forms of making the contract. That the policy was de- livered, and the premium received, with full purpose of insuring that building, with full purpose of making a valid and obligatory contract, is evidence that through neglect or forgetfulness one of the forms was not observed ; or that it was waived by tlie parties. This case is to be distinguished from that of Pindar (47 N. Y. 114). There, Pindar asked a policy in a certain form of words. The insurer issued it to him in a different form, and in such form as would not cover certain classes of goods, and as, by the presence of those classes in the store, rendered the whole policy void. It was not proposed to show that the insurer knew that the very class of goods on which insurance was sought was in the store, and that the policy was delivered with the purpose to insure that class, and with the mutual understanding that b}- the policy it was insured. Hence that case differs from this, and it was properly held that Pindar was bound by his contract. In Eohrbach's Case {supra), the decision went upon the effect of a peculiar clause in the policy, and in that fact is quite different from this. Chase V. Hamilton Insurance Compan}', 20 N. Y. 52, is put upon a ground verj- like that in Rohrbach's Case ; that it was printed in the applica- tion that the company would not be bound bj' knowledge of the agent, and that the company could not be held thereby, unless there was fraud, or prevention of the application from making a true statement. Kipley V. The JEtna Insurance Company, 30 N. Y. 136, is to be distinguished from this in hand. There the representation or warranty was promis- sory. It was an agreement by the applicant that he would thereafter keep a watchman in his mill, of niglits. This looked to the future con- duct on his part. It was not a part of the form of the contract. And though the agent of the insurer knew the custom of the applicant had not been to keep a watchman in his mill fi-om midnight on the last day of the week till midnight of the first day of the next week, that did not affect his promise thereafter to do differently. It is also said in that case, that there maj- be a waiver of conditions, but only on an agree- ment founded on a valuable consideration, or when the act relied upon as a waiver is such as to estop a party from insisting on the condition. In the case in hand, there is a consideration in the premium paid, which SECT. U.] VAS SCHOICK V. NIAGARA FIRE INS. CO. 1085 ■would not have been done with an understanding that the condition should remain and be enforced, thus making the payment futile. In the purview of some of the cases there is also an estoppel. It is difficult to make all the cases upon this subject harmonize ; but by the force of authority, we are constrained to hold, that such a con- dition as this may be waived by the insurer, by express words to that effect, or by acts done under such circumstances as would otherwise impute a fraudulent purpose, and as wUl estop htm from setting up the condition against the insured. There is another defence relied upon by the defendant. It arises in this wise : TThen the defendant decided upon taking the risk, it was with this condition, that the plaintiff would agree to keep a certain quantity of water in the building and under conditions to keep it from freezing, and that this was made known to the plaintiff at or before the issuing of the j)olic}% The facts of the case do not sustain this ground of defence. Though the defendants put upon their agents the dutj- of affixing to the contract the requirement that water should be kept standing in the building, there is no proof that it was made known to the plaintiff as a requirement. It never came to the personal knowledge of the plaintiff. If it ever came to the knowledge of Stanton, and Stanton is to be regarded as the agent of the plaintiff at that time, it did not come to him as a re- quirement, conditioned upon the observance of which the policy was to be valid. It reached him as a request, obedience to which was not obligatory, but gratuitous or courteous. It is quite doubtful, if as such even, it reached him before the issuing of the policy and the delivery of it to the plaintiff. We, therefore, conclude that the judgment appealed from should be affirmed. Chuech, C. J., AsDREWs and Mtt.t.kr, J J. , concur ; Aixex, SAPAiio, and Eart., JJ., dissent Judgment affirmed.^ 1 Aec : Atlantic Ins. Co. c. Wright, 22 IlL 462 (1859) ; Peoria M. & F. Ins. Co. v. Hall, 12 Mich. 202, 214 (1S64) ; Franklin r. Atlantic F. Ins. Co, 42 Mo. 456 (1868) ; Commercial Ins. Co. v. Spankneble, 52 Dl. 53 (1869) ; Pitney v. Glens Falls Ins. Co., 65 N. Y. 6 (1875) ; Pechner v. Phoenix Ins. Co., 65 N. T. 195 (1 875) ; Union Ins. Co. u. McGookey, 33 Ohio St. 555 (187S) ; Bennett v. North British and Mercantile Ins. Co., 81 X. T. 273 (1S50) ; Insnrance Co. r. Williams, 39 Ohio St. 584 (1883); Bennett v. Agricultural Ins. Co., 106 N. Y. 243 (1887) ; Germania F. Ins. Co. v. Hick, 125 lU. 361 (ISiS) : Crescent Ins. Co. c. Camp, 71 Tex. 503 (18SS); Insurance Co. n. Brodie, 52 Ark. 11(1S59); Crouseo. Hartford F. Ins. Co., 79 Mich. 249 (1890); Michigan Shingle Co. V. State Inrestment & Ins. Co, 94 Mich. 3S9 (1892) ; Mesterman e. Home Mnt. Ins. Co, 5 Wash. 524 (1893) ; McMnrray r. Capital Ins. Co, 87 Iowa, 453 (1893) ; Morotock Ins. Co. r. Pankey, 91 Va. 259 (1895) ; IJTerpool and London and Globe Ins. Co. v. Fams. worth, 72 iliss. 555 (1895) ; Khode Island Underwriters' Assn. p. Slonarch, 98 Ky. 305 (ISSS) ; Wood r. American F. Ins. Co, 149 N. Y. 382, 385-386 (1896), s. c. in part, ante, p. 6.32 ; Bobbins v. Springfield F. & M. Ins. Co., 149 N. Y. 477 (1896) ; Schultz v. Cale- donian Ins. Co., 94 Wis. 42 (1896) ; Hartford F. Ins. Co. c. Kearing, 86 Md. 130 (1897) ; Sl Clara Female Academy p. Northwestern National Ins. Co., 98 Wis. 257 (1898) ; Riss- 1086 GRAY V. GEEMANIA FIEE IXS. CO. [CHAP. XL GRAY AND Another, Respondekts, v. GEEMANJA FIRE INSURANCE CO., Appellant. Court of Appeals of New York, 1898. 155 N. Y. 180. Appeal from a judgment of the late General Term of the Supreme Court in the second judicial department, entered February 27, 1895, affirming a judgment in favor of plaintiffs entered upon a verdict. The action was upon a policy of fire insurance for one thousand dollars, issued by the defendant October 1, 1892, insuring the goods of the plaintiffs in their store at Haverstraw, N. Y. It was a New- York standard policy, and prohibited other insurance unless the consent of the company was indorsed thereon. It also provided that none of its agents should have power to waive any of its provisions except by a written indorsement on the policy. The defendant's agent applied to the plaintiffs to insure their goods. They informed him of their intention to procure insurance to the amount of three thousand dollars in three different companies, and permitted him to write a policy for one thousand dollars in the defendant com- pany. When the policy was delivered the agent, in answer to an in- quiry of the plaintiffs, stated that it was correct. They subsequently obtained two other policies upon the property' insured, one for seven hundred dollars and the other for one thousand dollars. The defend- ant's agent had power to issue policies and to indorse permission for other insurance. But no such indorsement was made upon the policy in suit. ler V. American Central Ins. Co., 150 Mo. 366 (1899) ; Clapp v. Farmers' Mnt. F. Ins. Co., 126 N. Car. 388 (1900) ; Insurance Co. c. Hancock, 106 Tenn. 513 (1901). See Harper v. Albany Mut. Ins. Co. ante, p. 530 (1858), and cases cited thereunder; Conch V. City F. Ins. Co., 37 Conn. 248 (1870). Compare North American F. Ins. Co. u. Throop, 22 Mich. 146, 149-152 (1871); Blooming Grove Mut. F. Ins. Co., 102 Pa. 335 (1883). In Pitney v. Glens Falls Ins. Co., supra (1875), Dwight, Com., for the majority of the court, said : — " It has been plausibly objected that the view of the subject herein taken ... is opposed to the rule that parol evidence is inadmissible to afiect a written instniment. The objection, however, proceeds upon a misconception of the effect of that rule. That is but a canon of construction applied to ascertain the meaning of an instrument con- ceded to be valid. This has no bearing upon the point now under discussion. That concerns the validity or existence of an instrument. The defendant urges that there is a condition precedent in the instrument which, by reason of non-performance, makes the contract utterly void. The plaintiff says, in substance : ' That I admit, but it has been dispensed with, and the instrument is valid.' The question is accordingly not one of construction, but of validity. Nothing is better settled than that the existence of a written instrument may be established or overturned by parol evidence. There is no question of construction in such a case. It is a preliminary one, whether there is any contract to interpret or construe. It is of the nature of a condition precedent to be subject to waiver, and that may be in general either oral or written. When the waiver is established, the contract takes effect free from the condition." — Ed. SECT. II.J GRAY V. GERMANIA. FIEE INS. CO. 1087 Ernest Hall, for appellant. Sidney H. Stuart, for respondents. Maetix, J. The onlj- question we are called upon to determine in this case is whether the knowledge of the defendant's agent that the plaintiffs intended to procure other insurance upon the property cov- ered by the defendant's policj* constituted a waiver of the provision therein prohibiting other insurance without the indorsement upon the policy of an agreement to that effect. The courts below have so held. This conclusion was based upon the theory that as the defendant's agent knew that the plaintiffs intended to procure other insurance when the policy in suit was issued, and delivered it with that knowl- edge, it constituted a waiver of its provision as to other insurance. Manifestlj', this theory cannot be sustained. It is well settled in this State that where an insurance compau}- issues a polic}', with full knowl- edge of facts which would render it void in its inception if its provi- sions were insisted upon, it will be presumed that it by mistake omitted to express the fact in the policj', waived the provision or held itself estopped from setting it up, as a contrar}- inference would impute to it a fraudulent intent to deliver and receive paj' for an invalid instrument. Van Schoick v. Niagara F. Ins. Co., 68 N. Y. 434 ; Whited v. Germania F. Ins. Co., 76 N. Y. 415 ; Richmond v. Niagara F. Ins. Co., 79 N. Y. 230 ; Woodruff v. Imperial F. Ins. Co., 83 N. Y. 133; Short v. Home Ins. Co., 90 N. Y. 16; Forward v. Continental Ins. Co., 142 N. Y. 382 ; Wood v. American F. Ins. Co., 149 N. Y. 382 ; Eobbins v. Spring- field F. & M. Ins. Co., 149 N. Y. 477, 484. But it is manifest that that principle has no application to the facts in this case. When the defendant's policj^ was delivered neither of the other policies had been issued, but were subsequently obtained. Con- sequentlj', the defendant's policy was valid in its inception. If it became invalid it was by the act of the plaintiffs in subsequentl3' pro- curing additional insurance, without obtaining an indorsement upon the policy of the defendant's consent. As the defendant issued to the plaintiffs a policy which was valid when delivered, the fact that the}' informed the defendant's agent of their intention to subsequently pro- cure other insurance was insufficient to justify the courts below in holding that there was a waiver of that condition, or that the defendant was estopped from insisting upon it. Baumgartel v. Providence- Wash- ington Ins. Co., 136 N. Y. 547 : Moore v. H. F. Ins. Co., 141 N. Y. 219 ; McNierney v. Agricultural Ins. Co., 48 Hun, 239. The distinction between the knowledge of an existing fact which renders a policj' void when delivered and the omission of the insured to give notice of and procure the required consent to a subsequent act, which, hy its conditions invalidated it, although previously consented to, was clearly pointed out in the authorities cited. The decisions of the courts below are at variance with the principle that written contracts cannot be controlled or varied bj- oral evidence, and that a written instrument must be regarded as the receptacle of the 1088 GKAY V. GERMANIA FIRE INS. CO. [CHAP. XI. entire contract between the parties, and merges all previous oral agree- ments in it. Nor do we think the contention of the respondents, that they were entitled to recover upon a parol contract of insurance, made with the agent, can be sustained. There was no proof that the defendant's agent ever agreed to issue a policy different from the one delivered, or that he agreed that other insurance might be procured without the in- dorsement required. It is manifest that this action was upon the policy issued by the defendant, and was not based upon any other agreement between the plaintiffs and the agent of the defendant. The judgment of the General Term and of the trial court should be reversed and a new trial granted, with costs to abide the event All concur, except Gbat, J., absent. Judgment reversed.^ 1 Ace: Hartford F. Ins. Co. v. Dayenport, 37 Micli. 609 (1877). See Walion v. Agricultural Ins. Co., 116 N. Y. 317 (1889); England v. West- chester F. Ins. Co., 81 Wis. 583 (1892) ; Connecticut F. Ins. Co. v. TiUey, 88 Va. 1024 (1892). Compare Harper v. Albany Mut. Ins. Co., ante, p. 530 (1858), and cases cited there- under; Michigan Shingle Co., v. State Investment and Ins. Co., 94 Mich. 389 (1892) ; Mitchell V. Mississippi Home Ins. Co., 72 Miss. 53 (1895) ; liverpool and Loudon and Globe Ins. Co. v. Farusworth, 72 Miss. 555 (1895). — Ed. SECT. III.] WING V. HARVEY. 1089 SECTION III. Life Insiii-anee. WING i: HAEVEY. Chancekt, 1854. 5 De G., M. & G. 265. This was a claim which came on to be heard original!}' before their Lordships b}' arrangement. The plaintiff was the assignee of a policy for £300, on a life which had determined, and he sought payment of the insurance moneys, or a return of his premiums. The policy was effected in 1829, by William Bennett, of Rougham, on his own life, with "The Norwich Union Societ}-," which was represented by the defendant. On the policy was indorsed the following condition : — " If the part}- upon whose life the insurance is granted shall go beyond the limits of Europe without the license of the directors, this pohcy shall become void : the insurance intended to be herebj- effected shall cease, and the money paid to the society become forfeited to its use." The policy was effected at a branch office at Bury St. Edmunds, at which a Mr. Lockwood was the agent of the societj', and the premium, on effecting it, was paid to Mr. Lockwood. In October, 1829, the policj- was assigned by Mr. Bennett to the plaintiff, as a security' for an annuity. A subsequent grant of an annuity was made by Mr. Bennett to the plaintiff, and another polic}- effected and assigned to the plaintiff, and notice of the assignment given at the branch office. The annual pre- miums of £6 6s. and £4 5s. 6d., payable on the policies, were regularly paid bj' the plaintiff or his solicitor to Mr. Lockwood, who transmitted them to the head ofQce at Norwich. In June, 1835, Mr. Bennett went to Canada, where he continued to reside till Julj", 1849, when he died. Upon Mr. Lockwood applj-ing for some of the premiums upon the policies, after June, 1835, the plaintiff informed him of Mr. Bennett's residence in Canada, and asked whether it would be safe to paj' the premiums. Mr. Lockwood answered that the policies would be per- fectly good provided the premiums were regularly paid. The premiums were accordinglj- paid and transmitted to the head office at Norwich, whence, in the j'ears 1842 and 1847, certificates of bonuses declared in respect of the policies were< forwarded to the plaintiff, as the owner of them, through Mr. Lockwood. In 1847, Mr. Lockwood died, and Mr. John Thompson was ap- pointed in his place by the societj', as their agent at Bury St. Edmunds. He also received and ti-ansmitted to the head office the premiums paid 1090 WING V. HA.EVET. [CHAP. XL by the plaintiff. Mr. Bennett's absence was stated to Mr. Thompson, on his applying for the premiums. Mr. Bennett died in 1847, where- upon the plaintiff demanded the insurance moneys with the bonuses, which had been appropriated to the policies. The society refused pay- ment on tlie ground of Mr. Bennett's residence in Canada. They offered, however, to repay the premiums which had been paid since Mr. Bennett left Europe, with interest at £4 per cent The present claim was then filed, seeking payment of the insurance inone3-s and bonuses, or in the alternative the repayment of all the premiums which had been paid from the beginning upon the policies, with interest at £5 per cent. The above facts were verifled b}' affidavits, and affidavits were also filed in support of the claim, to show that the head office at Norwich had notice, independently of the notice given to their local agent, that Mr. Bennett was residing in Canada. B}' them it appeared that a will of a person named Younge, who died in Canada, was produced at the head office, and appeared to have been attested there by Mr. Bennett, described as formerly of Eougham ; and further, that in 1848, the secretary of the society at the head office received a letter, in which Mr. Bennett was referred to as the only person from Burj- St. Ed- munds whom the writer knew in Canada. Mr. Olasse and Mr. Fooks, for the plaintiff. Mr. Malins and Mr. Sogers, for the defendant. The Lord Justice Knight Bruce. If the directors, represented by the defendant, had themselves personally received the premiums which Mr. Lockwood received, with the same knowledge that he had, there certainly would have been a waiver of the forfeiture, and the defence in this case would have been ineffectual. But he was their agent for the purpose of receiving premiums at least on subsisting policies. The premiums in question were paid to him on the faith of the policies con- tinuing valid and effectual notwithstanding Mr. Bennett's departure for Canada and residence there, — a faith in which Mr. Lockwood know- ingly acquiesced, and to which he expressly acceded. The premiums thus paid having been transmitted by Mr. Lockwood from time to time to the directors, and retained by them without objection, I think that whether Mr. Lockwood informed or did not inform them in fact of the true state of circumstances in which the premiums were paid to him, the directors became, and that they are, as between them and the plaintiff, as much bound as if he had paid the premiums directly to themselves, they knowing at the time, on each occasion, the place of Mr. Bennett's residence. The directors, taking the monej-, were and are precluded from saying that thej' received it otherwise than for the purpose and in the faith, for which and in which Mr. Wing expressly paid it. See Story Agency (6th ed.), §§ 140, 451; 2 Lead. Cas. in Eq. (3d Am. ed.), 146 et seq., 163, 164, and cases cited. If, how- ever, it were important for any purpose of this suit to determine whether it ought to be inferred, that the directors received from Mr. SECT. III.] INSUEAXCE CO. V. WILKINSON. 1091 Lockwood some at least of the premiums, with actual, direct, and personal notice of Mr. Bennett's foreign residence, I should hold, upon the materials before the court, an affirmative answer to be the correct answer to that question. It is unnecessarj- to refer to the case of the Duke of Beaufort v. Neeld (2 CI. & Fin. 248) as decided by the House of Lords, I think, in 1845, though perhaps the principles on which that decision proceeded are not inapplicable to the present controvers}'. The Lord Justice Tdrxer.^ . . . The office undoubtedly received the money from their agents to whom it had been paid upon ex- press terms and conditions, and the office, having held out Mr. Lockwood and Mr. Thompson to the world as their agents for the pur- pose of receiving the premiums, I think it became the duty of Mr. Lockwood and Mr. Thompson, and not that of the plaintiff, to com- municate to the head office at Xorwich the circumstances under which those premiums had been paid to and received by them, and the repre- sentations which were made on the occasions of such paj-ments and receipts. Upon these grounds my opinion is, that these policies must be considered to have been continuing policies, and that this claim must therefore be allowed.^ INSUEANCE COMPANY v. WILKINSON. ScPKEME Court of the United States, 187L 13 Wall. 222. Ix error to the Circuit Court for the District of Iowa : the case being thus : — The L'nion Mutual Insurance Company, of Maine, insured the life of Mrs. Malinda "Wilkinson in favor of her husband. Both husband and wife, prior to the rebellion, had been slaves, and the husband came to Keokuk, Iowa, from Missouri. The company did business in Keokuk (where the application was made and the policy delivered), through an agent, one Ball, to whom it furnished blank applications. The mode of doing business appeared to have been that the agent propounded certain printed questions, such as are usual on applicatious for insur- ance on lives, contained in a form of application, and took down the answers ; and when the application was signed by the applicant, the friend and physician forwarded it to the company, and if accepted, the policy was returned to this agent, who delivered it and collected and transmitted the premiums. 1 After discnssing the facts. — Ed. 2 See Armstrong v. Tnrquand, 9 Irish C. L. 32, 45-61 (1858) ; Hodsdon v. Guard- ian L. Ins. Co., 97 Mass. 144 (1867) ; Walsh v. ^tna L. Ins. Co., 30 Iowa, 133 (1870) ; Rice 1-. New England Mnt. Aid Assn., 146 Mass. 248 (1888) ; McGurk v. Metropolitan L. Ins. Co., 56 Conn. 528 (1888). — Ed. 1092 INSURANCE CO. V. WILKINSON. [CHAP. XL On this form of application were the usual questions to be answered by the person proposing to effect the assurance ; and by tlie terms of the policy it became void if any of the representations made proved to be untrue. Among the questions was this one : — " Has the party ever had any serious illness, local disease, or personal injurj- ; if so, of what nature, and at what age?" And the question was answered : "No." So, too, after an interrogator3' as to whether the parents were alive or dead, — they being, in the case of Mrs. Wilkinson, both dead, — were the questions and answers : ' ' Q. Mother's age, at her death ? "^. 40. " §. Cause of her death ? ''A. Fever." Mrs. Wilkinson having died, and the company refusing to pay the sum insured, Wilkinson, the husband, brought suit in the court below to recover it. The defence was that the answers as above given to the questions put were false ; that in regard to the first one, Mrs. Wilkin- son, in the year 1862, had received a serious personal injurj-, and that in regard to the others, the mother had not died at the age of forty, but at the earlier age of twent^'-three, and had died not of fever but of consumption.^ . . . As to the other matter, the age at which the mother died and the disease which caused her death, evidence having been given by the defendant tending to show that she died at a much j'ounger age than fortj' 3-ears, and of consumption, the plaintiff, in avoidance of this, was permitted (under the plaintiff's objection and exception) to prove that the agent of the insurance eompanj-, who took down the answers of the applicant and his wife to all the interrogatories, was told by both of them that they knew nothing about the cause of the mother's death, or of her age at the time ; that the wife was too joung to know or re- member anything about it, and that the husband had never known her ; and to prove that, there was present at the time the agent was taking the application, an old woman, who said that she had knowledge on that subject, and that the agent questioned her for himself, and from what she told him he filled in the answer which was now alleged to be untrue, without its truth being affirmed or assented to by the plaintiff or the wife. This the jurj' found in their special verdict, as thej' had the other facts, and found that the mother died at the age of twenty-three ; did not die of consumption ; and that the applicant did not know when the application was signed how the answer to the question about the mother's age and the cause of her death had been filled in. . . . ^ Passages on the personal injuij' hare been omitted in reprinting the statement and the opinion. — Ed. SECT. III.] INSURANCE CO. V. WILKINSON. 1093 On the second branch — that relating to the age of the mother — the court said to the jurj-, that if the applicant did not know at what age her motlier died, and did not state it, and declined to state it, and that her age was inserted b}- the agent upon statements made to him by others in answer to inquiries he made of them, and upon the strength of his own judgment, based upon data thus obtained, it was no defence to the action to show that the agent was mistaken, and that the mother died at the age of twentj'-three j^ears. Verdict and judgment having gone for the plaintiff, the insurance company brought the case here on error. Messrs. G. G. Wright, Gilmore, and Anderson, for the plaintiff in error. Messrs. McOrary, Miller, and ATcCrari/, contra. Mr. Justice Miller delivered the opinion of the court. . . . Passing then to the second branch of the case. The defendant ex- cepted to the introduction of the oral testimony regarding the action of the agent, and to the instructions of the court on that subject; and assigns the ruling of the court as error on the ground that it permitted the written contract to be contradicted and varied bj' parol testimonj'. The great value of the rule of evidence here invoked cannot be easily overestimated. As a means of protecting those who are honest, accur- ate, and prudent in making their contracts, against fraud and false swearing, against carelessness and inaceuracj', by furnishing evidence of what was intended bj- the parties, which can alwaj's be produced without fear of change or liability to misconstruction, the rule merits the eulogies it has received. But experience has shown that in reference to these verj- matters the rule is not perfect. The written instrument does not alwaj-s represent the intention of both parties, and sometimes it fails to do so as to either ; and where this has been the result of accident, or mistake, or fraud, the principle has been long recognized that under proper circumstances, and in an appropriate proceeding, the instrument maj- be set aside or reformed, as best suits the purposes of justice. A rule of evidence adopted by the courts as a protection against fraud and false swearing, would, as was said in regard to the analogous rule known as the statute of frauds, become the instrument of the verj- fraud it was intended to prevent, if there did not exist some authority to correct the universality of its application. It is upon, this principle that courts of equity proceed in giving the relief just indicated; and though the courts, in a common law action, ma}- be more circumscribed in the freedom with which thej' inquire into the origin of written agreement, such an inquiry is not always forbidden by the mere fact that the party's name has been signed to the writing offered in evidence against him. In the case before us a paper is offered in evidence against the plain- tiff containing a representation concerning a matter material to the contract on which the suit is brought, and it is not denied that he signed the instrument, and that the representation is untrue. But the 1094 INSURANCE CO. V. WILKINSON. [CHAP. XI. parol testimony makes it clear be3-ond a question, that this party did not intend to make that representation when he signed the paper, and did not know he was doing so, and, in fact, had refused to make any statement on that subject. If the writing containing this representa- tion had been prepared and signed by the plaintiff in his application for a policy of insurance on the life of his wife, and if the representa- tion complained of had been inserted by himself, or by some one who was his agent alone in the matter, and forwarded to the principal oflSce of the defendant corporation, and acted upon as true, by the officers of the company, it is easy to see that justice would authorize them to hold him to the truth of the statement, and that as they had no part in the mistake which he made, or in the making of the instrument which did not trul}' represent what he intended, he should not, after the event, be permitted to show his own mistake or carelessness to the prejudice of the corporation. If, however, we suppose the party making the insurance to have been an individual, and to have been present when the application was signed, and soliciting the assured to make the contract of insurance, and that the insurer himself wrote out all these representations, and was told by the plaintiff and his wife that they knew nothing at all of this particular subject of inquir}', and that they refused to make any statement about it, and j'et knowing all this, wrote the representation to suit himself, it is equally clear that for the insurer to insist that the polic}' is void because it contains this statement, would be an act of bad faith and of the grossest injustice and dishonesty. And the reason for this is that the representation was not the statement of the plaintiff, and that the defendant knew it was not when he made the contract ; and that it was made bj- the defendant, who procured the plaintiff's signature thereto. It is in precisely such cases as this that courts of law in modern times have introduced the doctrine of equitable estoppels, or, as it is sometimes called, estoppels in pais. The principle is that where one party has by his representations or his conduct induced the other party to a transaction to give him an advantage which it would be against equity and good conscience for him to assert, he would not in a court of justice be permitted to avail himself of that advantage. And al- though the cases to which this principle is to be applied are not as well defined as could be wished, the general doctrine is well understood and is applied by courts of law as well as equity where the technical advan- tage thus obtained is set up and relied on to defeat the ends of justice or establish a dishonest claim. It has been applied to the precise class of cases of the one before us in numerous well-considered judgments by the courts of this countrj'.^ Indeed, the doctrine is so well understood and so often enforced that, if in the transaction we are now consider- ^ Plumb V. Cattaraugus Ins. Co., 18 N. Y. 392 ; Rowley v. Empire Ins. Co., 36 N. T. 5.50; Woodburj Savings Bant v. Charter Oak Ins. Co., 31 Conn. 526; Combs «. The Hannibal Savings and Ins. Co., 43 Mo. 148. — Rep. SECT. III.] INSURANCE CO. V. WILKINSON. 1095 ing, Ball, the insurance agent, who made out the application, had been in fact the undei-vvriter of the polic}-, no one would doubt its appli- cabilitj' to the present case. Yet the proposition admits of as little doubt that if Ball was the agent of the insurance company, and not of the plaintiflF, in what he did in filling up the application, the company must be held to stand just as he would if he were the principal. Although the very well-considered brief of counsel for plaintiff in error takes no issue on this point, it is obvious that the souudness of the court's instructions must be tested mainly by the answer to be given to the question, "Whose agent was Ball in filling up the application ? " This question has been decided differently bj' courts of the highest respectability in cases precisely analogous to the present. It is not to be denied that the application, logically considered, is the work of the assured, and if left to himself or to such assistance as he might select, the person so selected would be his agent, and he alone would be re- sponsible. On the other hand, it is well known, so well that no court would be justified in shutting its e3-es to it, that insurance companies organized under the laws of one State, and having in that State their principal business office, send these agents all over the land, with directions to solicit and procure applications for policies, furnishing them with printed arguments in favor of the value and necessity of life insurance, and of the special advantages of the corporation which the agent represents. They pay these agents large commissions on the premiums thus obtained, and the policies are delivered at their hands to the assured. The agents are stimulated by letters and instructions to^activity in procuring contracts, and the party who is in this manner induced to take out a policy-, rarelj' sees or knows anything about the companj- or its officers to whom it is issued, but looks to and relies upon the agent who has persuaded him to effect insurance as the full and complete representative of the company, in all that is said or done in making the contract. Has be not a right to so regai'd him ? It is quite true that the reports of judicial decisions are filled with the efforts of these companies, by their counsel, to establish the doctrine that they can do all this and j-et limit their responsibility for the acts of these agents to the simple receipt of the premium and delivery of the polic}', the argument being that, as to all other acts of the agent, he is the agent of the assured. This proposition is not without support in some of the earlier decisions on the subject ; and, at a time when insurance companies waited for parties to come to them to seek assurance, or to forward applications on their own motion, the doctrine had a reasonable foundation to rest upon. But to applj' such a doctrine, in its full force, to the sj-stem of selling policies through agents, which we have de- scribed, would be a snare and a delusion, leading, as it has done in numerous instances, to the grossest frauds, of which the insurance corporations receive the benefits, and the parties supposing themselves insured are the victims. The tendency of the modern decisions in this 1096 INSUEANCE CO. V. WILKINSON. [cHAP. XI. country is steadily in the opposite direction. Tlie powers of the agent are, prima facie, co-extensive witli ttie business intrusted to his care, and will not be narrowed by limitations not communicated to the per- son with whom he deals.^ An insurance company, establishing a local agenc}', must be held responsible to the parties with whom they trans- act business for the acts and declarations of the agent, within the scope of his employment, as if they proceeded from the principal.^ In the fifth edition of American Leading Cases,' after a full con- sideration of the authorities, it is said : — " By the interested or officious zeal of the agents employed by the insurance companies in the wish to outbid each other and procure customers, they not unfrequently mislead the insured, by a false or erroneous statement, of what the application should contain, or, taking the preparation of it into their own hands, procure his signature by an assurance that it is properly drawn, and will meet the requirements of tlie policj'. The better opinion seems to be that, when this course is pursued, the description of the risk should, though nominally proceed- ing from the insured, be regarded as the act of the insurers." * The modern decisions fully sustain this proposition, and they seem to us founded in reason and justice, and meet our entire approval. This principle does not admit oral testimonj- to vary or contradict that which is in writing, but it goes upon the idea that the writing offered in evidence was not the instrument of the party whose name is signed to it ; that it was procured under such circumstances by the other side as estops that side from using it or relying on its contents ; not that it may be contradicted by oral testimony, but that it may be shown by such testimony that it cannot be lawfully used against the party whose name is signed to it. Judgment affirmed.^ 1 Bebee v. Hartford Ins. Co., 25 Conn. 51 ; The Lycoming Ins. Co. v. SchoUenber- ger, 8 Wright, 259 ; Beal v. The Park Ins. Co., 16 Wis. 241 ; Davenport v. Peoria Ins. Co., 17 Iowa, 276. — Rep. 2 Savings Bank v. Charter Oak Ins. Co., 31 Conn. 517 ; Horwitz v. Equitable Ins. Co., 40 Mo. 557 ; Ayres v. Hartford Ins. Co., 17 Iowa, 176 ; The Howard Ins. Co. i;. Bruner, 1 1 Harris, 50. — Eep. 8 Published A.D. 1872, vol. ii. p. 917. — Rep. " Rowley v. Empire Ins. Co., 36 N. Y. 550. — Rep. 5 Ace. : Insurance Co. v. Mahone, 21 Wall. 152 (1874) ; New Jersey Mnt- L. Ins. Co. V. Baker, 94 U. S. 610 (1876) ; MiUer v. Phoenix Mut.L. Ins. Co., 107 N. Y. 292 (1887). See Parsons v. Bignold, 13 Sim. 518 (1843) ; Massachusetts L. Ins. Co. v. Eshelman, 30 Ohio St. 647 (1876) ; Schwarzbach v. Ohio Valley Protective Union, 25 W. Va., 622, 661-665 (1885); EoUette v. United States Mnt. Ace. Assn., 107 N. Car. 240 (1890), s u. at a later stage, sub nom. Eollette v. Mutual Ace. Assn., 110 N. Car. 377 (1892) ; Bawden v. London, Edinburgh and Glasgow Assor. Co., [1892] 2 Q. B. 534 (C. A.) ; Bennett t>. Massachusetts Mut. L. Ins. Co., 64 S. W. Rep. 758 (Tenn. 1901). — Ed. SECT. III.] EYAN V. WORLD MUTUAL LIFE INS. CO. 1097 EYAN V. WOELD MUTUAL LIFE INSURANCE CO. Supreme Court of Connecticut, 1874. 41 Conn. 168. Assumpsit on a policj- of insurance on the life of Patrick Rjau, for the benefit of the plaintiff ; brought to the Superior Coiu't in New Lon- don County, and tried to the juiy before Foster, J. Verdict for the plaintiff, and motion for a new trial b}- the defendants for error in the rulings of the court and on the ground that the verdict was against the evidence. The case is sufficiently stated in the opinion. W. P. Prentice, of New York, and S. C. Dunham, in support of the motion. Pratt and Ripley, contra. Cakpenter, J. This is an action on a policy of life insurance. The policy is expressed to be " in consideration of the representations, declarations, and covenants contained in the application therefor, to which reference is here made as a part of this contract," etc. It is fur- ther declared that " This policy is issued and accepted on the following express conditions and agreements : First, That the statements and declarations made in the application therefor, and on the faith of which it is issued, are in all respects true," etc. The application therefore is a part of the polic}" ; and the plaintiff's agreements therein contained are warranties, and, if not true, she cannot recover, unless there has been a waiver 'by the defendants or under the circumstances they are estopped from denying their truth. In the application are the following questions and answers : "12. Has the party ever had auj- of the following diseases" — (naming a long list of diseases, and among them,) "bronchitis, con- sumption, spitting of blood, or any serious disease ? " — " None of these." "17. Has the party had during the last seven years any severe sickness or disease ? If so, state the particulars, and the name of the attending phj-sician who was consulted and prescribed." — "No." " 25. Has the party employed or consulted any physician? Please answer this yes or no. If yes, give name or names and residence." — "No." " 27. Has anj' previous examination or application been made for assurance on the life proposed ? " — " No." ' ' Has any companj- declined to issue a policy for the party ? " — "No." Upon_ the trial the plaintiff offered to prove, not that the above an- swers were true, but that different answers were in fact given, both by herself and the insured, and that the answers were wrongly written by the local agent of the defendants without the knowledge or consent of the plaintiff or her husband. Aside from the claim that the defend- 1098 BTAN V. WORLD MUTUAL LIFE INS. CO. [CHAP. XL ants are responsible for the conduct of their local agent, this is merely an attempt to substitute for a part of the written contract declared on, a different parol contract ; for the representations and warranties of the plaintiff contained in the written agreement, oral representations and warranties of an entirely different character. It requires no argu- ment to show that this cannot be done. But the plaintiff claims that truthful answers having been given to each interrogator}-, and the incorrect answers contained in the appli- cation being there by the sole act of the agent, the defendants are bound by the answers as written, and are precluded from denying their truth. Whether this is so or not depends upon the extent of the agent's authority. It must be admitted that the express authority of the agent was limited to receiving the application, forwarding it to the home office, receiving, countersigning, and delivering the policy, and collecting the premiums. The courts in this State have construed the powers of these agents liberally, and extended them somewhat by implication. Thus it has been held that in writing. the application, and explaining the interrogatories and the meaning of the terms used, he is to be re- garded as the agent of the company-. In The Union Mutual Ins. Co. V. Wilkinson, 13 Wall. 222, it was held where an agent by mis- take, or acting upon information derived from others which proved to be incorrect, inserted an answer not true in fact, that it was the act of the insurers and not of the insured. In this case we are asked to go further than any case has j-et gone, and clothe the agent with an authority not given him in fact, and to hold the principal responsible for an act which could not by anj- pos- sibility have been contemplated as being within the scope of the agency. In most, if not in all, of the cases in which the act of the agent has been regarded as the act of the principal, the act has been the natural and probable result of the relations existing between the parties, or so connected with other acts expressly authorized as to afford a reasonable presumption that the principal intended to au- thorize it. But it cannot be supposed that these defendants intended to clothe this agent with authority to perpetrate a fraud upon them- selves. Tliat he deliberately intended to defraud them is manifest He knew well that if correct answers were given no policy would issue. Prompted bj' some motive he sought to obtain a policy by means of false answers. His duty required him not only to write the answers truly as given by the applicant, but also to communicate to his prin- cipal any other fact material to the risk which might come to his knowledge from any other source. His conduct, in tliis case, was a gross violation of duty, in fraud of his principal, and in the interest of the other part}-. To hold the principal responsible for his acts, and assist in the consummation of the fraud, would be monstrous injustice. When an agent is apparently acting for his principal, but is reall}- act- ing for himself, or third persons, and against his principal, there is no SECT, in.] KYAN V. WOELD MUTUAL LIFE INS. CO. 1039 agency in respect to that transaction, at least as between the agent himself or the person for whom he is reallj' acting and the principal. The principal reason urged for holding the defendants liable in this case is the one suggested in the argument, that when one of two in- nocent persons must suffer bj' the fraud, negligence, or unauthorized act of a third, he who clothed the third with the power to deceive or injure must be the one. Our answer is, in the first place, that this is not exactlj' a case in which one of two innocent persons must necessarilj- suffer. There is no absolute loss for us to determine on whom it shall fall. If the plaintiff faUs to recover she sustains no pecuniary loss, except the premium paid, nor that even if she is innocent and the law is so that she can recover it back on the ground that there was a failure of con- sideration. It is unlike a case of fire insurance. Nearly all property may be insured at some rate, if not in one office in another. But in this case the plaintiff's husband was not an insurable subject. His situation was such that one compau}' had rejected him, and but for the aid of fraud neither this nor anj- other company would have accepted him. Had the truth been stated no policy would have issued, and as she would have had no better success probably' with other companies we cannot see that she has been misled to her prejudice except in relation to the premium, which is comparative!}' a small matter. In the second place, if the rule is to be applied to this case it is by no means certain that it wiU aid the plaintiff. The fraud could not be perpetrated by the agent alone. The aid of the plaintiff or the insured, either as an accomplice or as an instrument, was essential. If she was an accomplice, then she participated in the fraud, and the case falls within the principle of Lewis v. The Phoenix Mutual Life Ins. Co., 39 Conn. 100. If she was an instrument, she was so because of her own negligence, and that is equally a bar to her right to recover. She says that she and her husband signed the application without read- ing it and without its being read to them. That of itself was inex- cusable negligence. The application contained her agreements and representations in an important contract. When she signed it she was bound to know what she signed. The law requires that the in- sured shall not only, in good faith, answer all the interrogatories cor- rectly, but shall use reasonable diligence to see that the answers are correctly' written. It is for his interest to do so, and the insurer has a right to presume that he will do it. He has it in his power to prevent this species of fraud and the insurer has not. But more than this. The conduct of the plaintiff at the time and subsequently, is not entirely free from suspicion. There is some evi- dence tending to prove that she knew of the deception. She testifies that her husband, at the time the application was signed, told the agent several times that he had been rejected bj' the Massachusetts Mutual, but that the doctor told him to sa}' nothing about it. After the doctor had paid the premium, she hesitated about repaying him, fearing that 1100 RYAX V. WORLD MUTUAL LIFE IXS. CO. [CHAP. XL the policy would not be good, and even sent her daughter to request him to take the policy away. Thereupon the doctor and the agent assured her that it was all right in the application. Upon that assurance she paid the premium. This, if it falls short of proving actual collusion, shows clearlj' that she comprehended the importance of the answers, and exhibits her negligence in a stronger light. On the whole we think that she, quite as much as the defendants, clothed this agent with the power to perpetrate the fraud. Courts should never extend by im- plication the power of an agent except to carry into effect the probable intention of the parties, or to prevent third persons dealing with the agent from being misled to their injury. In this case there is no ground for the supposition that the defendants ever intended to au- thorize the agent to act directly contrary to their interests ; and if the plaintiff has been deceived her own negligence at least materially con- tributed to it. "We need not enlarge upon the evils necessarily resulting from hold- ing insurance companies liable for such acts of their agents. The question is vital to the insurance interests of the country. The insured no less than the insurers are deepl3' interested in it. If this verdict is sustained it will tend to establish a principle fraught only with mis- chief. Every life insurance compan}' in this country, and to some ex- tent the fire insurance companies, will be at the mercy of their agents. A door will be open to fraud, collusion, and legal robberj', unprece- dented in the history of jurisprudence. In view of the probable con- sequences of such a principle — evils co-extensive almost with the magnitude of the interests involved — we ought to pause and consider well before extending the doctrine of some of the modern cases to a case like this. We are constrained therefore to hold that a limited agency in a case of life insurance will not be extended by operation of law to an act done by the agent in fraud of his principal, and for the benefit of the insured, especially where it is in the power of the insured by the use of reasonable diligence to defeat the fraudulent intent. The court very properly instructed the jury that " an untrue or fraudulent statement or denial made by the applicant of a fact material to the risk to induce the issuance of a policy will prevent the policy from taking effect as a valid contract, unless the insurer has in some way waived or estopped himself from relying upon such misstatement to avoid the policy. This waiver, to be effectual, must be made by an officer of the company authorized to make it. If there has been no evidence of any waiver except by a medical examiner of the compan}-, or by a local agent, there must be additional proof of specific authority given them or the company will not be bound." Some of the cases cited by the plaintiff are cases of fire insurance, in which the agents were intrusted with blank policies, signed by the president and secretary, and had full power to fill up and issue the same without referring the application to the home oflBce. In such SECT, in.] EY.A.X I'. -WOELD MUTUAL LIFE INS. CO. 1101 cases the corporation contracts solely by its agent. The acts and knowledge of the agent are the acts and knowledge of the corporation, and there is a manifest propriety in holding the corporation liable accordingl}'. This court has held that in writing the answers to the interrogatories in the application, the agent is to be regarded as the agent of the com- panj' rather thaa the agent of the insured. We do not question the propriety of those decisions, considering the circumstances of the cases in which they were made ; but we cannot regard them as establishing an inflexible rule of law applicable to all cases. A brief reference to some of the cases wiU illustrate the distinction which we make. When the applicant stated full}- and ti'uthfuUy the circumstances relating to the title to the property insured, and the agent, knowing all the facts, but for the sake of convenience, stated the title incorrectly and issued a policy, it was held that the company could not take advantage of it. The court regarded the transaction as equivalent to an agreement that, for the purpose of the insurance, the title should be considered as it was stated to be by the agent. Peck c. New London County Jlutual Insurance Company, 22 Conn. 575. See also TVoodbury Savings Bank v. Charter Oak Insurance Company, 31 Conn. 517. When the applicant answered the interrogatory, " Is a watch kept on the premises during the night?" by stating the facts, and the agent wrote the answer, " Watchman till 12 o'clock," which answer was not strictly true, it was held that the company was bound by it. Malleable Iron "Works v. Phoenix Ins. Co., 25 Conn. 465. See also Beebe v. Hartford County Mut. Fire Ins. Co., 25 Conn. 51 ; Hough i'. City Fire Ins. Co., 29 Conn. 10. The case before us is a case of life insurance. The power of the agent was in fact limited. He had no power to issue policies. The terms of his agency conferred no authoritj* to waive conditions or for- feitures, or to agi'ee to false and fraudulent answers to any of the in- terrogatories, or to make any other contract to bind the company. Presumptively the insured and the plaintiff knew aU this before paj-ing the premium ; for the printed policy, which was in their hands for sev- eral days, contained at the bottom this note : " The president and secretary are alone authorized to make, alter, or discharge contracts, or to waive forfeitures." The jury then were correctly told that " there must be additional proof of special authority given them," (the local agent and the medical examiner,) "or the company will not be bound." The jury found such special authority. But we look through the record in vain to find any evidence to support such a finding. The verdict was manifestly against the evidence, and justice requires that it should be set aside and a new trial awarded.^ 1 Ace. : New York L. Ins. Co. v. Fletcher, 117 TJ. S. 519 (1886). See Xational L. Ins. Co. c. Minch, 33 N. T. 144 (1S73) ; McCollum i'. Mutual L. 1102 MATEE V. MTJTUAL LIFE INS. CO. [CHAP. XI. MATER V. MUTUAL LIFE INSURANCE CO. ScPKEME CouET OF lowA, 1874. 38 Iowa, 304. Appeal from Clinton District Court. Action for tiie recovery of one tliousand dollars upon a policy of insurance on the life of Michael Mayer, who died on the aeth day of August, 1872. The premium upon the policy became due on the 22d of August, and was unpaid at the time of his death. Upon this ground the defendant seeks to avoid liability. Jury trial. Verdict and judgment for plaintiff for one thousand dollars. Defendant appeals. The material facts are stated in the opinion. Walter I. Hayes, George B. Young, and X T. McGruire, for ap- pellant. W. E. Leffingwell & Bro., for appellee. Dat, J. The policy bears date of the 22d of November, 1869, and insures the life of Michael Mayer for the term of fiftj'-six years, in con- sideration of an annual premium to be paid to said company on or before, or within thirtj' days after the 22d of November. This policy amongst other conditions contains the following : — " 2. That this policy shall not take effect until the payment of the premium hereon has been made during the lifetime of the person whose life is hereb}- insured, or if any premium note given on account of this policj' be not paid, with interest, on or before the date when due, then this policy shall cease and determine ; and in every case in which this policy shall cease and determine, all payments thereon shall be forfeited to said companj', and the company shall not be liable for the paj-ment of the sum insured thereon, nor any part thereof, except as hereinafter provided." " 5. That if, after the payment of two or more full annual premiums on tliis policy, the same shall cease and determine, by default in the payment of any subsequent premium when due, j-et, notwithstanding such default, this policy shall continue and hold good, subject to all the above conditions and agreements, except as to further payments of premiums, for an equitable portion of the amount originallj- insured, provided application for the same be made within thirty days after said premium was due and not paid." The policy contains a provision that the annual premium may, by permission of the compan)-, be paid semi-annuallj- in advance with interest. Immediatel}' after the policj' was effected the parties, by Ins. Co., 55 Hun. 103 (1889) ; 8. c. affirmed withont opinion, suh nom. McCollum v. New York Mat. L. lus. Co., 124 N. Y. 642 (1891). Compare McArthar v. Home L. Assn., 73 Iowa, 336 (1887) ; O'Brien v. Home Ben- efit Society, 117 N. Y. 310 (1889) ; Bawden v. London, Edinburgh and Glasgow Assur. Co., [1892] 2 Q.B. 534 (C. A.). — Ed. SECT. III.] MAYER V. MUTUAL LITE INS. CO. 1103 agreement, changed the time of the payment of the premiums to quarter-annual pa3'ments, to be paid upon the same terms and con- ditions, and with the same force and effect as the semi-annual premiums mentioned in said policy. George Oatman was hired by Leadbetter, the general agent of the defendant at Clinton, as book-keeper and clerk, and received his paj- from defendant. He was instructed by Leadbetter to coUect premiums and take insur- ance. He collected the last five premiums which were paid upon the policy in suit, and delivered receipts therefor, which he countersigned with the name of Leadbetter, the general agent. These five payments were made as follows: the one due May 22, was paid on the 13th day of June ; that due August 22, was paid August 25 ; that due Novem- ber 22 was paid November 28 ; and those due February 22 and May 22, 1872, were paid when due. Two other receipts were in evidence, showing that the premium due 22d of November, 1870, was paid on the 24th of November, and that the one due 22d of February, 1871, was paid on the 13th of February. Oatman testified substantially as follows : " At the time I collected the money expressed in receipt No. 10, May 22, 1872, Mayer said, ' I suppose my notices go to Clinton, as my policj' is dated there, and I want it changed to Lyons.' I told him that was not necessary, as we had a complete record in the office, and when a policy holder changed his post-office address, we noted it. I told him not to be uneasy, as I would be around to collect it. I did not do so, as I quit work the week after collecting said pve- miam above mentioned. " Tbe witness further testified that he never told any one connected with defendant that he had this conversation with Mayer, and that he made no note of the change of residence in the register, but that the fact of such change was understood in the office. It was also proved that the custom of defendant as to notifying policy holders at and around Clinton of the time premiums became due, was to send notices from the general office to Clinton, and from there to the policy hohlers. The notice for the August premium was sent to Mayer at Clinton, and being nncalled for, was returned. The court gave the following instructions, which were excepted to, and the giving of which is assigned as error : — " 2. The policy in suit was delivered at the city of Clinton, and that city, at the time of such delivery, it is admitted, was the residence and post-office of the plaintiff and the deceased, and such residence was then noted on the books of defendant's agent at the said city of Clinton. If it was the custom of the agent of the defendant at Clinton to advise by letter through the post-office or otherwise, parties insured at that agency, of the time when their premiums would become due, in order that they might be paid in season, and the policy thus preserved from forfeiture, and such had been the custom with respect to this particular policy, then the plaintiff, unless otherwise advised by the defendant, had the right to expect that the custom would be observed in regard to 1104 MAYER V. MUTUAL LITE INS. CO. [CHAP. XL the payment due August 22, 1872, and to be advised of such payment in season to make it. And if you find that the plaintiff and the de- ceased, previous to the 22d of August, had removed to the city of Lyons, in said county, and the deceased about the time of, or shortly after such removal, informed a clerk who was then in the office and in the employment of the agent at Clinton, and who previousl3- collected pre- miums on this policy of the deceased, then this would be notice to defendant of this change of residence ; and it would be the duty of the defendant to either address or send word to the plaintiff at Lj-ons, and a letter addressed in Clinton would not be sufficient ; and if the failure to pay the premium at the time it was due, was owing to the fact that defendant had failed to give the deceased its usual and customary' notice, then the non-payment of the premium at the time it was due, would not work a forfeiture of the polic3', or the right to recover on it." " 3. If jou find that the witness Oatman was employed in the office of the general agent at Clinton, and had been in the habit, with the knowledge and assent of such general agent, of collecting premiums on this particular policy, and had, bj' the said general agent, been per- mitted by the said agent to procure insurance risks, &c., and the said Oatman received from the deceased premiums several days after they had become due, without anj' objection, and as though such payments had been made on the daj'^ of their maturity, and the payments as made were authorized bj- the defendant, without any objection communicated to the deceased or the plaintiff, then it maj' be fairl3- inferred that the said Oatman was acting with the concurrence of the defendant, and as its agent. So, too, if before the maturity of the premium payable on the 22d of August, 1872, the said Oatman, while employed in the office of the said general agent, had informed the deceased that he would call at the residence or place of business of the deceased and collect such jDremium, and deceased depended on such call being personallj- made on him, this would excuse the deceased from going to such office and paying such premium the day that it was due, if, in addition to this promise on the part of the said Oatman, you find that he had at various times called upon and collected from the deceased previous premiums on said policy, with the authority to collect such premiums. If, how- ever, the said Oatman left the emploj-ment of the said general agent previous to the said 22d day of August aforesaid, and this was known to the deceased or to the plaintiff, then the plaintiff can claim no ad- vantage from the promise or offer so made." "5. If you find that the premium due August 22 was offered to and refused by the defendant on the 26th of August, the defendant would be justified in then refusing it, unless you find from the other facts in the case that the defendant, b}' the declaration and conduct of its agent, had given the deceased or the plaintiff reasonable grounds to believe that it waived a strict performance with respect to time of pay- ment, and if j'ou find that such declarations and conduct were such as would reasonably lead the deceased or plaintiff to believe that these SECT, m.] MATER V. MUTUAL LIFE JNS. CO. 1105 Strict conditions would be waived and not be insisted on, then the offer to pay would be iu time, although the assured was then dead. These instructions, we think, are right. The vast increase in the business of insurance, and the man3' interests which it involves, have demonstrated that manj- of the decisions heretofore made respecting it are unwise, and have created a necessity for innovation. Every law should be reasonable, and it is reasonable only when it is adapted to human conduct. Courts should not so administer the law as to require of individuals a course of conduct which, to a majoritj* of reasonable and right-minded men, is unusual and unnatural. Indeed, it would be impossible long to maintain a law which is at variance with the judg- ment and sense of justice of a majority of those upon whom it operates. Now it must strike everj- reasonable mind, that a majorit}' of ordi- narily prudent persons, who had been customarilj' notified of the time when premiums upon their policies became due, and who had received no notice of an intention to abandon the customary course, would in a particular case expect and await a like notice. And if such is the reasonable and natural result of the previous dealings of the company, it must govern its future conduct so as to accord with the reasonable expectation thus created. That is, having furnished a policy holder reasonable ground for ex- pecting that he wiU be advised when his premium becomes due, the company must continue to give such notice until it furnishes the assured notice that he need no longer expect it An\' other construc- tion would make the law a trap to ensnare the unwary. For a person thus accustomed to notice and, not accustomed to charge his memory with the day when his premium became due, would be very likely, in the absence of notice, to allow the day for making payment to pass by, in utter forgetfulness of the premium, or to suppose that the local office had received no estimate from the general office of the amount due, and hence was not ready to receive it. See Buckbee V. United States Ins. Co., 18 Barb. 541 ; Thompson v. St. Louis Mutual Life Ins. Co., Ins. Law Journal, 1873, p. 422.^ And the foregoing remarks are all applicable to so much of the third instruction as refers to the habit of receiving premiums on this policy after they became due, as well as to the fifth instruction. As to the remainder of this instruction it is conceded that the ten- dency of late decisions is to hold insurance companies liable for the acts of their agents. Viele v. Germania Ins. Co., 26 Iowa, 9 ; Miller v. the Mutual Ins. Co., 31 Iowa, 216. It is claimed, however, that Oatman was not in such sense an agent of the company that he could bind it by his acts. "We think otherwise. He was employed in the office of the general agent and paid by the companj-. He called in person upon the deceased and collected from him the last five premiums. Three of these he collected after the day fixed for their payment. No question 1 S. 0. 52 Mo. 469 (1873). — Ed. 70 1106 CLEMENT V. IXSUEANCE CO. [CHAP. XI. was ever made as to his authoritj- to act in this capacity. The company b}- so holding him forth and permitting him to act, has recognized liim as its agent for the collection of premiums at least. It is clear that if he had appropriated to his own use the premiums paid, the assured could have claimed the benefit of the paj-ments made. He had the receipts of the company, countersigned by the general agent, and thus was, by the direct act of the companj-, clothed with the insignia of agency. And whilst engaged in the business of the compan3-, and within the scope of his employment he had, it seems to us, authority to bind the company by his agreement that he would do respecting the premium falling due August 22, 1872, as he had done with reference to the five preceding ones, namely, call at the residence or place of business of the deceased and collect it. Objection was made to the testimony of the witness Oatman, as to the custom of defendant respecting notice to f>olicy holders, also with reference to what passed between him and Mayer at the time the last premium was paid. We have already determined the admissibility of this evidence, in what we have said respecting the instructions. Affirmed} CLEMENT V. INSURANCE CO. Supreme Couet of Tennessee, 1898. 101 Tenn. 22. Appeal from Chancery Court of Obion County, John S. Cooper, C. Caldwell <& Lowe, for Clement. Turley S Wright and Moore ; Symonds r. Northwestern, etc. Ins. Co., 23 Minn. 491. There is no pretence that the assignee made any misrepresentation concerning the condition of the risk at the time the companj' gave its assent to the assignment. The rule applicable is that a failure or neglect on the part of the insured to make known facts which the insurer may regard as material to the risk, is not a breach of a condition in the policj', avoiding it in case of an}' omission to make known every fact material thereto, because the insured has a right to suppose that the insurer will make proper inquiries concerning all facts except such as are supposed to be known, or are regarded as immaterial. Short v. Home Ins. Co., 90 N. Y. 16; Burritt v. Sai-atoga, etc. Ins. Co., 5 Hill, 188; Clark v. Manufacturers' Ins. Co., 8 How. 235. In the case last cited the court said : " As to the ordinarj- risks con- nected with the propert}- insured, if no representations whatever are asked or given, the insurer must, as before remarked, be supposed to assume them ; and, if he acts without inquir}- anj-where concerning them, seems quite as negligent as the insured, who is silent when not re- quested to speak." An applicant for insurance is not bound, unless inquired of, to dis- close whether or not the property insured is encumbered. As the pub- lic records usually give information in reference to such matters, he maj- assume that the insurer knew of an}' existing encumbrances, or deemed it immaterial whether or not the property was encumbered. These conclusions lead to an affirmance of the judgment. Judgment affirmed, with costs.^ 1 Ace. : Ellis v. Ins. Co. of North America, 32 Fed. K 646 {C. C, S. D. Iowa, I8S7) ; HaU V. Niagara F. Ids. Co., 93 Mich. 184 (1892). Compare ilcCluskey v. Providence Washington Ins. Co., 126 Mass. 306 (1879) i Fire Assn. v. Flournoy, 84 Tex. 632 (1892). On assignees, see also : — Brichta v. New York Lafayette Ins. Co., 2 Hall, 372 (1829) ; Birdsey i-. Citv F. Ins. Co., 26 Conn. 165 (1857) ; Mellen v. Hamilton F. Ins. Co., 17 N. Y. 609 (1858) ; Ellis V. Krentzinger, 27 Mo. 311 (1858) ; Minturn v. Manufacturers' Ins. Co., 10 Gray, 501, 505 (1859) ; Bergson v. Builders' Ins. Co., 38 Cal, 541 (1869) ; Bates V. Equitable Ins. Co , 10 Wall. 33 (1869) ; Hall V. Dorchester JIut. F. Ins. Co., Ill Mass. 53 (1872) ; Griawold v. American Central Ins. Co., 1 Mo. App. 97 (1876), s. c. affirmed, 70 Mo. 654 (1879); Davis V. German American Ins. Co., 135 Mass. 251 (1883) ; Biddeford Saving's Bank v. Dwelling House Ins. Co., 81 Me. 566 (1889) ; Bullraan v. North British and Mercantile Ins. Co., 159 Mass. 118, 122-123 (1893). — Ed. 1134 GEOSVENOR V. ATLANTIC FIRK INS. CO. [CHAP. XII. SECTION II. (contimied). (B) Beneficiaeiks. GROSVENOR v. ATLANTIC FIRE INS. CO. Court of Appeals of New York, 1858. 17 N. Y. 391. Appeal from the Superior Court of New York Citj-. The action was upon a policy whereby the defendant did "insure Eugene W. McCartj' against loss or damage by flre, to the amount of $7,000 on his bricli dwelling-house, etc., until November 14, 1854. Loss, if anj', payable to Seth Grosvenor, mortgagee." The policy contained a con- dition that in case of anj' transfer, or termination of tlie interest of the assured in the property insured or in the polic}-, either by sale or other- wise, without the consent of the company manifested in writing, the policj' should from thenceforth be void. At the trial before Mr. Justice Slosson and a jury, the plaintiff proved the policy, the loss, and the service of preliminary proofs thereof. He then proved a mortgage of the insured property made by Eugene McCarty to Edward Kellogg, and its assignment by the latter to the plaintiff before the date of tlie polic}-. Tlie defendant's counsel offered to prove, and the plaintiff's counsel admitted it to be true, that in January, 1854, one month be- fore the flre, McCartj-, the person named in the policy as the assured, sold and conveyed the property therein described to one Bostwick. The judge decided that the evidence was inadmissible, and the defend- ant's counsel excepted. A verdict was rendered for the plaintiff, sub- ject to the opinion of the court at general term, and judgment having been ordered for the plaintiff, the defendant appealed to this court. William C. Noyes, for the appellant. Daniel Lord, for the respondent. Harris, J. The contract of insurance is a contract of indemnity. To sustain an action upon such a contract, it must appear that the party insured has sustained a loss. This involves the necessity of an insurable interest at the time of the alleged loss. "Without such in- terest, the party insured cannot be damnified. In this case, the contract was between the defendants and McCart}'. The agreement was to insure Eugene W. McCarty against loss or dam- age by fire, to the amount of S7,000, on his three-story brick dwelling- house. But after the contract was made, and before the allecred loss, McCarty had sold and convej-ed the property insured. At the time of the flre he had no insurable interest ; of course, he has no claim for indemnity. No action, therefore, could be maintained upon the policy by McCarty. SECT. II.J 6R0STEX0R V. ATLANTIC FIRE IN'S. CO. 1135 But at the time the insurance was effected, the plaintiff in this ac- tion, Giosvenor, was the holder of a' mortgage upon the premises insured. As such mortgagee, he, too, had an insurable interest. The extent of that interest was the amount of his debt. To that extent he might have contracted with the defendants to indemnify him against loss bj- fire. The paj-ment of his debt would as completelj- terminate the contract to insure as would the alienation of the property, when the contract is made with the owner. The important inquiry in this case is, to which of these classes does the contract in question belong? The action was brought by the plain- tiff as mortgagee. The contract was made with McCarty, the mortga- gor. But the policy provides that in case of loss, such loss should be payable to the plaintiff. "What is the legal effect of this provision ? Without it the plaintiff could have had no claim against the defendants for indemnity-. Is this provision to be regarded as an appointment of the plaintiff to receive anj- money which might become due from the insurers by reason of anj- loss sustained by the mortgagor, or has it the effect to render the policy, which would otherwise be a contract to indemnify the mortgagor against a loss, a contract to indemnif)' the mortgagee? A determination of this question will also determine the rights of the parties to this action. Were it not for one or two decisions in this State bearing upon the question, I should have little diflBcultj- in pronouncing in favor of the former of these propositions. It seems to me to be verj- clear that it was the intention of all the parties that the interest of the mortgagor, and not that of the mortgagee, should be insured. It is stated in the policy that the property insured is the propertj- of McCarty, and that he is the person insured. McCart}- paid the premium. He made the contract. His interest as owner, and not that of the plaintiff as mort- gagee, was the subject of the insurance. The plaintiff was merely the appointee of the party insured to receive the money which might be- come due him from the insurers upon the contract. The provision in the policj" in this respect had no more effect upon the contract itself than it would if it had been provided that the loss for which the insur- ers should become liable should be deposited in a specified bank to the credit of the partj- insured. Supposed that the plaintiff, although described in the policy as a mortgagee, had, in fact, held no mortgage, could it be pretended that the defendants might have avoided the policy on the ground that the plaintiff had no insurable interest? Or, suppose again, that after the contract had been made, the mortgage had been paid, could it be claimed that the contract to insure had also ceased? I presume none will deny that, in either case, the contract would have continued in force for the benefit of the owner of the property insured. If so, it must have been because the interest of the mortgagor, and not that of the mortgagee, was the thing insured. I agree with the court below that " there is nothing in the language of the policy on which the court 1136 GEOSVEN"OR V. ATLANTIC FIEE INS. CO. [CHAP. XII. can adjudge that in legal effect it is a contract insuring the interest of the mortgagee as such, except in the provision which declares that the loss, if any, which occurs under the contract insuring the mortga- gor's interest, shall be paj'able to the mortgagee. That provision merel3' designates a person to whom such loss is to be paid, and shows that he is a person who may have an interest in its being so paid." The undertaking to pay the plaintiff was an undertaking collateral to and dependent upon the principal undertaking to insure the mortgagor. The effect of it was, that the defendants agreed that whenever an}- money should become due to the mortgagor upon the contract of insur- ance, they would, instead of paj-ing it to the mortgagor himself, pa)- it to the plaintiff. The mortgagor must sustain a loss for which the in- surers were liable, before the partj' appointed to receive the money would have a right to claim it. It is the damage sustained bj- the party insured, and not by the partj' appointed to receive payment, that is recoverable from the insurers. Macomber v. The Cambridge Mutual Fire Ins. Co., 8 Cush. 133. The insurance being upon the interest of the mortgagor, and he having parted with that interest before the fire, no loss was sustained bj- him, and, of course, none was recoverable by his assignee or appointee. The right of such a party being wholly derivative, cannot exceed the right of the party under whom he claims. Carpenter v. The Providence Washington Ins. Co., 16 Pet. 495 ; Foster v. The Equitable Fire Ins. Co., 2 Gray, 216. I agree with the learned judges who delivered opinions upon the decision of this case in the court below, that there is no just ground for discrimination between this case and that of an assignment of the policy to a mortgagee to be held by him as collateral security for his debt, with the consent of the insurer. In either case the insurance is upon the interest of the mortgagor. The terms and conditions upon which indemnity may be claimed are agreed upon, and then the origi- nal parties further agree that when, by the terms and conditions of the contract, the insurers shall become liable by reason of a loss sustained by the party insured, the money shall be paid, not to the party who has sustained the loss, but to his appointee or assignee for his benefit. Such an appointm'ent or assignment ought not to be construed so as to vary, In any respect, the liabilities of the insurers upon their original contract. It is certainly true, as was said by Mr. Justice "Woodruff, that, " when applied to other agreements for the payment of money, an assignment does no more than direct to whom it shall be paid when it shall become due." The case of The Traders' Ins. Co. v. Robert, 9 Wend. 404, was, in my judgment, erroneously decided.* . . . Upon the merits of the question I have already sufficiently expressed the convictions of my own judgment. The defendants contracted with McCarty, and not the plaintiff. They agreed, upon the performance of certain conditions, to pay for him to the plaintiff certain money. Some 1 The discnssion of the authorities has been omitted. — Ed. SECT. II.] HATHAWAY V. ORIENT INS. CO. 1137 of these conditions were positive in their character; others negative. Certain things were to be done bj- the assured, and other things were not to be done. If all these conditions were performed, then, if a loss occurred, the defendants agreed to indemnif}' him against that loss, to the extent specified in the policj-, and he appointed the plaintiff, his creditor, to receive from the defendants the amount for which they were thus contingently liable. The terms of this contract have never been waived, relaxed, or modified. The defendants have shown an ex- press violation of one or more of the conditions upon which their liabil- ity was to depend. And yet it has been adjudged, although it is evident that it has been done with reluctance and against the better judgment of the court making the decision, that the proof of these violations constituted no defence to the action. The judgment should be reversed, and a new trial gi-anted, with costs to abide the event. EoosEVELT, J., dissented ; Selden and Strong, JJ., concurred in the reversal, distinguishing this from the case where a policy is assigned with the assent of the insurers to a mortgagee ; they were of opinion that in such case a privity of contract exists between the mortgagee and insurers, and the doctrine of The Traders' Insurance Company v. Robert should be maintained. Judgment reversed, and new trial ordered.^ HATHAWAY, Respondent, v. ORIENT INS. CO., Appellant. CouKT OF Appeals of New York, Second Division, 1892. 134 N. Y. 409. Appeal from judgment of the general term of the Supreme Court in the fifth judicial department, entered upon an order made October 23, 1890, which affirmed a judgment in favor of plaintiff entered upon the report of a referee. This action was brought by plaintiff, as assignee of a mortgage, 1 Ace. : Franklin Savings Institution v. Central Mat. F. Ins. Co., 119 Mass. 240 (1«76) • Moore v. Hanover F. Ins. Co., 141 N. Y. 219 (1894). See Illinois Mnt. F. Ins. Co. v. Fix, 53 HI. 151 (1870) ; Gillett v. Liverpool and London and Globe Ins. Co., 73 Wis. 203 (1888); Union Bldg. Assn. i. Kockford Ins. Co., 83 Iowa, 647 (1891) ; Hocking v. Insurance Co., 93 Tenn. 729 (1897). On the special agreement commonly called the " mortgagee clause," see Hastings v. Westchester F. Ins. Co., 73 N. Y. 141 (1878) ; Maxey v. New Hampshire F. Ins. Co., 54 Minn 272 (1893) ; Eddv v. London Assur. Corp., 143 N. Y. 311, 321-324 (1894) ; Svndicate Ins. Co. v. Bohn, 27 U. S. App. 564, 575-583 (C. C. A., Eijrht Circuit, 1894), s. c. 65 Fed. R. 165, 172-178. Kase v. Hartford F. Ins. Co., 58 N. J L. (29 Vroom) 34 (1895); Palmer Savings Bk. I'.Ins. Co. of North America, 166 Mass. 189 (1896) ; Planters' Mut. Ins. Assn. v. Southern Savings Fund & Loan Co., 68 Ark. 8 (1900). — Ed. 1138 HATHAWAY V. OEIENT INS. CO. [CHAP. XU. which contained a covenant that the buildings upon the mortgaged property should be kept insured against damage bj' fire for the benefit of the holder of the mortgage, to recover his interest in a policy for 81,900 issued thereon by defendant, 81,200 of which was on the build- ings destroyed and their contents, and $700 on machinery in the build- ing, which plaintifi" claimed was attached to and formed part of the realt}'. In said policy the loss, if any, was made payable to plaintiff " as his mortgage interest may appear." The property insured was destroyed by fire, and subsequently the owner and defendant, without plaintifi"s knowledge or consent, estimated the loss upon the buildings, including machinery and personal property, at §1,200, S700 of which was paid to the owner and §500 sent to plaintiflF, who refused to accept it, and brought this action to recover the amount of his interest in the property destroyed, which he alleged to be $r,574.70. Further facts are stated in the opinion. Michard Crowley, for appellant. S. E. Filkins, for respondent. FoLLETT, C. J. The mortgage held by the plaintiff contained a covenant that the buildings should be kept insured against damage by fire for the benefit of its holder. Pursuant to this covenant Breckon, the owner of the fee, procured the policj- on which the action was brought, by the terms of which the defendant " does insure T. W. Breckon." . . " Loss, if anj-, paj-able to A. B. Hathawaj', as his mortgage interest may appear." The owner of the fee and the mort- gagee each had an insurable interest in the property which could have been protected by separate policies, or by a single one as they and the insurer might agree. The polic}' describes Breckon as the owner and Hathaway as mortgagee, and provides that in case of loss the damages shall be "payable to Hathaway as his mortgage interest may appear." It is said that Hathaway is the appointee of Breckon. He is, but he is not a mere appointee of Breckon, and without a vested interest in the policy. He acquired his right to recover the damages, not solely by the appointment of Breckon, but by the policy, a contract entered into between the insurer, the owner of the fee, and the mortgagee. Had this policy provided that in case of loss the damage should be paid to a person having no interest in the insured propert3-, such per- son would have been a naked appointee, the same as thouo'h the damages had been directed to be paid to a bank or to any collecting agent, and the owner could have settled the loss and released the in- surer on his own terms. It may be that the same rule would have been applicable, as between the insurer and the appointee, had the loss been payable "to A. B. Hathawaj-," having an insurable interest, which was neither known to nor described by the insurer la its policy. The rights of an appointee, an agent, or the trustee of an express trust, who has no interest in a contract which he may enforce, are quite dif- ferent from those of a person having a vested legal interest in a con- tract created by the concurrent action of all the parties to it. SECT. II.] HATHAWAY V. ORIENT INS. CO. 1139 The questions decided in Traders' Ins. Co. v. Roberts, 9 Wend. 404; Tillou c. Kingston :Mutual Ins. Co., 5 N. Y. 405 ; Grosvenor V. Atlantic Fire Ins. Co., 17 X. Y. 391; and Buffalo Steam Engine Works r. Sun Mutual Ins. Co., id. 401, are not involved in the case at bar, and it is unnecessary to attempt to harmonize those and kindred decisions. In the cases cited the owners of property insured it in their own names, the loss, if any, payable to mortgagees, or the insurance was assigned, with the assent of tire insurer to the mortgagees for their securitj-, and before a loss occurred, and while the contract of insurance was in part executory, the owner increased the risk or did a prohibited act, or omitted to perform some act required by the policy. The question in these cases was whether the violation of the contract by the owner was a defence to an action by or for the benefit of the mortgagee. No such question is involved in the case at bar. The liability of the insurer is admitted, and the question here is whether the owner of the property and the insurer may, without the concurrence of the mortgagee, effect an accord and satisfaction without the assent of the latter. It is a general rule that where a demand is owned bj' several by such an unity of interest that all must be joined as parties in a strictlv personal action for its recoverj-, that a release of the claim by one of the owners is as effectual as the release of all. Austin v. Hall, 13 Johns. 286 ; Decker v. Livingston, 15 Johns. 478 ; Osborn r. Martha's Vineyard, etc., 140 Mass. 549. But this rule has its excep- tions. Gock v. Keneda, 29 Barb. 120 ; Upjohn v. Ewiug, 2 Ohio State 13 ; 1 A. & E. Encyc. 106. Breckon the owner was not a necessary party plaintiff to an action for tbe recovery of the amount due from the defendant, for the whole amount was recoverable by an action brought b}- the mortgagee indi- vidually. Dakin v. Liverpool, London, & Globe Ins. Co., 77 X. Y'. 600, though a joint action by the owner and the mortgagee could have been maintained. Winne v. Niagara Fire Ins. Co., 91 N. Y". 185. In case a claim arises in favor of A. and B., against C, out of a contract entered into by the three, to which claim bj- the contract A. has the prior and B. the subsequent right, C. & B. cannot without the consent of A., effect an accord and satisfaction which will cut otf the right of A. Ennis r. Harmony Fire Ins. Co., 3 Bosw. 516 ; Cromwell V. Brooklyn Fire Ins. Co., 44 X. Y^ 42 ; Reid v. McCrum, 91 X. Y. 412 ; Baltis v. Dobin, 67 Barb. 507. In Cromwell's case a house and lot had been sold under an execu- torv contract b}' which the vendee covenanted to insure the house for the vendor's benefit The vendee went into possession and insured the house under a policy payable to the vendor in case of loss. On the expiration of this policy the vendee took out a new one payable to him- self, and during its life the house was burned. The vendor had as- signed his interest in the contract, and the assignee, Cromwell, the plaintiff in the action, notified the insurer of his rights under the con- tract, demanded pavment of the loss and forbade its payment to the 1140 HATHAWAY V. OEIEXT INS. CO. [CHAP. XII. vendee. The insurer, disregarding the demand and notice, paid the amount due under the policy to the vendee. In an action brought by Cromwell, the assignee of the vendor, it was held that he was entitled to recover, notwithstanding the accord and satisfaction between the in- sured and the vendee. The principle upon which this decision rests is that the vendee and insurer could not effect an accord and satisfaction which would bar an action by one having a prior equitable right to the money due under the contract. Reid v. McCrum, supra, is, in its facts, a stronger authority in support of the judgment in the case at bar. In that case the owner of realtj- mortgaged it covenanting to keep the buildings insured and the polic3' assigned to the mortgagee. Afterwards Hugh McCrum acquired the title to the propertj' subject to the mortgage, and obtained policies of insurance on the buildings, which were indorsed by the insurers : "Loss, if anj-, paj-able to John Reid, mortgagee." Subsequently McCrum procured the insurers to cancel the indorsement and to write on the policies : " The mortgagee's interest having ceased, the loss, if anj', is now payable to Hugh McCrum as owner." The mortgagee's interest had not terminated and he had no knowl- edge of the change. After this the buildings were destro3-ed by fire, and the mortgagee began an action to foreclose his security, making McCrum and the insurers parties defendant, asking that McCrum be compelled to assign the insurance and the insurers required to pay the loss to the plaintiff. It was held that the policies could not be legally changed without the assent of the mortgagee, and that he was entitled to recover the loss from the insurers. Upon principle and authority it seems to be clear that the defendant in this case had no authority to agree with the owner as to the amount of the damages, and determine as between him and the mortgagee what sum was payable to each, and the accord and satisfaction entered into between the insurer and the owner is not a bar to a recovery by the mortgagee of his damages. The judgment should be affirmed with costs. All concur. Judgment affirmed} 1 See Grange MiU Co. v. Western Assnr. Co., 118 DL 396 (1886) ; Edwards v. Agricultural Ins. Co., 88 Wis. 450 (1894); Security Co. u. Panhandle Nat. Bk., 93 Tex. 575 (1900). When a policy insures a mortgagor, but is payable, in case of loss, to a mortgagee, the anthorities do not agree as to the person who may maintain an action. To the efiect that the action may be brought by the mortgagee, see : Cone ». Niagara F. Ins. Co., 60 X. T. 619 (1875) ; Chamberlain v. N. H. F. Ins. Co., 55 N. H. 249, 258 (1875) ; State Ins. Co. ». Maackens, 38 X. J. L. (9 Vroom) 564 (1876) ; Donaldson i-. Ins. Co. 95 Tenn. 280 (1895) ; Palmer Savings Bank ». Ins. Co. of North America, 166 Mass. 1S9 (1896). To the effect that the action may be brought by the mortgagor, see: Martin v. FranklinF. Ins. Co., 38 N. J. L. (9 Vroom) 140 (1S75), (where the policy was under seal) ; Hartford F. Ins. Co. v. Davenport, 37 Mich. 609 (1877) ; Friemansdorf V. Watertown Ins. Co., 9 Biss. 167 (1879) ; Fire Ins. Companies v. Felrath 77 Ala. 194, 19a-199 (1884) ; Williamson e. Michigan F. & 11. Ins. Co., 86 WLs. 393 (1893)! To the effect that the action may be brought by mortgagor and mortgagee jointly SECT. II. J HATHAWAY T. ORIENT INS. CO. ll-il see: Home Ins. Co. v. Oilman, 112 Ind. 7 (1887) ; Williamson t: Michigan F. & M. Ins. Co., supra (1893). On policies worded " loss, if any, payable to " some beneficiary, see also : — Minturu v. Mauufactnrers' Ins. Co., 10 Gray, 501, 505 (1859) ; Frink v. Hampden Ins. Co., 45 Barb. 384 (1865) ; Bates 1-. Eqnitable Ins. Co., 10 Wall. 33 (1869) ; Griswold r. American Central Ins. Co., 1 Mo. App. 97 (1876), s.c. aSirmed, 70 Mo. 654(1879); Davis V. German American Ins. Co., 135 Mass. 251 (1883) ; Parks V. Connecticut F. Ins. Co., 26 Mo. App. 511 (1887). — Ed. 1142 ASHLEY V. ASHLEY. [CHAP. Xn. SECTION III. Life Insurance. (A) Assignees. ASHLEY V. ASHLEY. CHASCERr, 1829. 8 Sim. 149. In 1802 William Heath insured his life, in the Equitable Insurance Office, for £1,000. By a deed poll, dated the 10th of March, 1810, Heath, in consideration of 5s, and for divers other considerations him thereunto moving, assigned the policy to James Hodsoll. In October, 1810, Hodsoll died. In February, 1815, a decree was made in a suit instituted b3- Heath and others, against Hodsoll's executors, under which the policj- was sold to General Ashle}-, for £320 ; and in Aug- ust of the same year, the executors assigned the policy to General Ashlej-. In August, 1817, General Ashley" died. In 1829 the policy was sold to Charles Farebrother, under the decree in a cause instituted by General Ashle3''s widow, against his executors. An order was afterwards made, on the application of Farebrother, for a reference to the master to inquire and state whether a good title could be made to the policj'. The master reported in favor of the title. Farebrother excepted to the report ; and General Ashlej-'s executors presented a petition praying that the report might be confirmed ; and that Fare- brother might be ordered to pay his purchase money into court, in trust in the cause. The exceptions and petition were heard at the same time. Tlie Solicitor- General'^ and Mr. Duckworth, for C. Farebrother. Assurances are annual contracts between the assurers and the as- sured. Heath had an interest in insuring his own life ; but when it became a contract between Hodsoll and the office, Hodsoll had no in- terest, and therefore it was void ; or, at all events, he had no interest beyond the 5s paid by him as the consideration for the assignment. Godsall V. Boldero, 9 East, 72. If a person having an interest in a life, insures it, and then sells the policy, and afterwards his interest in the life ceases, the assignee would not be able to recover a single shilling upon the policj-. Next, it is not disputed that the assignment bj' Heath to Hodsoll was voluntary ; and, therefore, Heath's creditors would be entitled to set it aside at anj- time. Mr. Pepys and Mr. Parker, for the petitioners. The Vice-Chancellor.^ Unless this transaction is affected by the act of Parliament, no objection can be made to it. By the lith Geo. 1 Sir E. B. SuGDEN. — Ed. 2 Sir I/ANC£LOT Shadwell. — Ed. SECT. III.] AVARNOCK V. DAVISj 1143 III. c. 48, it is enacted, etc. [His Honor here read the three first sec- tions of 14: Geo. III. 0. 48.] Now there is not a word said here as to the assignment of poUcies. This policy was good at the time it was effected. Bj- an instrument of the 10th of March, 1810, an assign- ment of it was made ; and, subsequently, the parties who had become entitled to the policy, sold it for a valuable consideration, under a decree of the court ; so that some person became entitled to bring an action on the policy, in the name of the assured ; and if such an action had been brought, there is not a word in the act of Parliament to de- feat it. The question is whether the dealing with the policy has been such as that a court of equity would compel the assured to permit the assignee to use his name in bringing an action on the policy. It ap- pears to me that a purchaser for valuable consideration is entitled to stand in the place of the original assignor, so as to bring an action in his name for the sum insured.^ The case cited is not applicable ; for there the action was brought by the assured ; and, at the time of the action brought, his interest had ceased ; and therefore it came within the third section of the act of Parliament. WAENOCK V. DAVIS. Supreme Couet of the United States, 1881. 101 U. S. 775.^ Error to the Circuit Court of the United States for the Southern District of Ohio. This was an action by TVarnock, administrator of the estate of Grosser, deceased, against Davis and others, partners, doing business under the name of the Scioto Trust Association, for part of the pro- ceeds of a policy in the Protection Life Insurance Company, issued to Grosser on his own life, and by Grosser assigned to the defendants. Grosser applied for this policy' on February 27, 1872 ; and on the same day he entered into a written agreement with the Scioto Trust Association, to the following effect : — " This agreement, by and between Henry L. Grosser, of the first part, 27 j-ears old, tanner by occupation, residing at town of Spring- ville, countj' of Greenup, State of Kentucky, and the Scioto Trust Association, of Portsmouth, Ohio, of the second part, witnesses : Said partv of the first part having this day made application to the Protec- tion Life Insurance Company-, of Chicago, Illinois, for policy on his life, limited to the amount of 85,000.00, hereby agrees to and with the Scioto Trust Association that nine-tenths of the amount due and payable on said policj- at the time of the death of the party of the first 1 Brown v. Carter, 5 Ves. 862 ; Prodgers v. Langham, 1 Sid. 133. — Kep. 2 The statement has been rewritten. — Ed. 1144 WARNOCK V. DAVIS. [CHAP. XII. part shall be the absolute property of, and be paid by, said Protection Life Insurance Company to said Scioto Trust Association, and shall by said party of the first part be assigned and transferred to said Scioto Trust Association, and the remaining one-tenth part thereof shall be subject to whatever disposition said party of the first part shall make thereof in his said transfer and assignment of said policj' ; that the policy to be issued on said application shall be delivered to and forever held by said Scioto Trust Association, said party of the fiirst part hereby waiving and releasing and transferring and assigning to said Scioto Trust Association all his right, title, and interest what- ever in and to said policj', and the moneys due and paj'able thereon at the time of his death, save and except the one-tenth part of such moneys being subject to his disposition as aforesaid ; also, to keep the Scioto Trust Association constantly informed concerning his residence, post-office address, and removals ; and further, that said party of the first part shall pay to the said Scioto Trust Association a fee of $6.00 in hand on the execution and deliver^' of this agreement, and annual dues of $2.50, to be paid on the first of July of every year hereafter, and that in default of such payments the amounts due by him for fees or dues shall be a lien on and be deducted from his said one-tenth part. " In consideration whereof the said Scioto Trust Association, of the second part, agrees to and with said party of the first part to keep up and maintain said life insurance at their exclusive expense, to pay all dues, fees, and assessments due and payable on said policy, and to keep said party of the first part harmless from the payment of such fees, dues, and assessments, and to procure the payment of one-tenth part of the moneys due and payable on said policy after the death of said party of the first part, when obtained from and paid bj' said Pro- tection Life Insurance Company, to the party or parties entitled thereto, according to the disposition made thereof by said partj' of the first part in his said transfer and assignment of said policj', subject to the afore- said lien and deduction. " It is hereby expressly understood and agreed by and between the parties hereto, that said Scioto Trust Association do not in any manner obligate themselves to said party of the first part for the performance by said Protection Life Insurance Company of its promises or obliga- tions contained in the policy issued on the application of said party of the first part and herein referred to. " Witness our hands, this 27th day of February, A. D. 1872. "Henky L. Crossek. "The Scioto Tecst Association, " By A. McFarland, President, " George DavIs, Treasurer." The policy was issued to Grosser on the same day, and on the next day he executed a Written assignment to the Scioto Trust Association, in accordance with the terms of the agreement. SECT. III.j -WAENOCK V. DAVIS. 1145 Grosser died on September 11, 1873. The Scioto Trust Association collected the amount of the polic}-, and paid one-tenth, less certain charges provided for in the agreement, to Crosser's widow, in ac- cordance with the disposition made b}- Grosser in the instrument of assignment. This action was brought for the remainder of the amount of the polic}-. The answer was composed of three defences. The first de- fence was a general allegation of assignment for valuable considera- tion ; and the other defences contained the agreement and the assignment. The case was tried without the intervention of a jur}- ; and the evidence consisted of the policy, the agreement and assign- ment, the proofs of death, and the Scioto Trust Association's receipt for the amount of the policj-. The court found for the defendants ; whereupon the plaintiff excepted, and, after entry of judgment for the defendants, brought the case to this court for review. Mr. tT. B. Foraker, for the plaintiff in error. Mr. A. C. Tliompson, for the defendants in error. Mr. Justice Field, after stating the facts, delivered the opinion of the court, as follows : — As seen from the statement of the case, the evidence before the court was not conflicting, and it was only necessar}' to meet the gen- eral allegations of the first defence. All the facts established by it are admitted in the other defences. The court could not have ruled in favor of the defendants without holding that the agreement between the deceased and the Scioto Trust Association was valid, and that the assignment transferred to it the right to nine-tenths of the money col- lected on the policy. For alleged error in these particulars the plaintiff asks a reversal of the judgment. The polic}' executed on the life of the deceased was a valid contract, and as such was assignable by the assured to the association as security for any sums lent to him, or advanced for the premiums and assess- ments upon it. But it was not assignable to the association for any other purpose. The association had no insurable interest in the life of the deceased, and could not have taken out a policy in its own name. Such a policy would constitute what is termed a wager policj', or a mere speculative contract upon the life of the assured, with a direct interest in its early termination.-' . . . The assignment of a policy to a party not having an insurable inter- est is as objectionable as the taking out of a policy in his name. Nor is its character changed because it is for a portion merely of the in- surance money. To the extent in which the assignee stipulates for the proceeds of the policy bej-ond the sums advanced by bim, he stands in the position of one holding a wager policy. The law might be readily evaded, if the policy, or an interest in it, could, in consideration of paying the premiums and assessments upon it, and the promise to pay upon the death of the assured a portion of its proceeds to his represen- 1 The passage here omitted will be found ante, p. 118, n. — Ed. 1146 WARNOCK V. DAVIS. [CHAP. XII. tatives, be transferred so as to entitle the assignee to retain the whole insurance money. The question here presented has arisen, under somewhat different circumstances, in several of the State courts ; and there is a conflict in their decisions.^ . . . Although the agreement between the Trust Association and the assured was invalid as far as it provided for an absolute transfer of nine-tenths of the proceeds of the policy upon the conditions named, it was not of that fraudulent kind with respect to which the courts regard the parties as alike culpable and refuse to interfere with the results of their action. No fraud or deception upon any one was designed by the agreement, nor did its execution involve any moral turpitude. It is one which must be treated as creating no legal right to the proceeds of the policy beyond the sums advanced upon its security ; and the courts will, therefore, hold the recipient of the moneys be3-ond those sums to account to the representatives of the deceased. It was lawful for the association to advance to the assured the sums pa3'able to the insurance company on the policy as they became due. It was, also, lawful for the assured to assign the policy as security for their paj-- ment. The assignment was only invalid as a transfer of the proceeds of the policy beyond what was required to refund those sums, with in- terest. To hold it valid for the whole proceeds would be to sanction speculative risks on human life, and encourage the evils for which wager policies are condemned. The decisions of the New York Court of Appeals are, we are aware, opposed to this view. They hold that a valid policy of insurance effected by a person upon his own life, is assignable like an ordinary chose in action, and that the assignee is entitled, upon the death of the assured, to the full sura pa3-able without regard to the consideration given by him for the assignment, or to his possession of any insurable interest in the life of the assured. St. John v. American Mutual Life Insurance Company, 13 N. Y. 31 ; Valton v. National Loan Fund Life Assurance Company, 20 N. Y. 32. In the opinion in the first case the court cite Ashley v. Ashley, 3 Sim. 149, in support of its conclusions ; and it must be admitted that they are sustained by many other adjudi- cations. But if there be any sound reason for holding a policy invalid when taken out hy a party who has no interest in the life of the as- sured, it is diflBcult to see why that reason is not as cogent and opera- tive against a party taking an assignment of a policy upon the life of a person in which he has. no interest. The same ground which invali- dates the one should invalidate the other — so far, at least, as to restrict the right of the assignee to the sums actuall3' advanced b3- him. In the conflict of decisions on this subject we are free to follow those which seem more fully in accord with the general policy of the law against speculative contracts upon human life. 1 Here were stated Franklin L. Ins. Co. v. Hazzard,41 Ind. 116 (1872), and Stevens -r. 'Warren, 101 Mass. 564 (1869). —Ed. SECT. III.] MUTUAL LIFE IXS. CO. V. ALLEN. 1147 In this conclusion we are supported by the decision in Cammack v. Lewis, 15 Wall. 643. There a policy of life insurance for $3,000, pro- cured by a debtor at the suggestion of a creditor to whom he owed §70, was assigned to the latter to secure the debt, upon his promise to pay the premiums, and, in case of the death of the assured, one-third of the proceeds to his widow. On the death of the assured, the assignee collected the money from the insurance company and paid to the widow $950 as her proportion after deducting certain payments made. The widow, as administratrix of the deceased's estate, subsequently sued for the balance of the money collected, and recovered judgment. The case being brought to this court, it was held that the transaction, so far as the creditor was concerned, for the excess bej-ond the debt owing to him, was a wagering policy, and that the creditor, in equity and good conscience, should hold it onlj- as security for what the debtor owed him when it was assigned, and for such advances as he might have afterwards made on account of it ; and that the assignnient was valid only to that extent. This decision is in harmony with the views expressed in this opinion. The judgment of the court below will, therefore, be reversed, and the cause remanded with direction to enter a judgment for the plaintiff for the amount collected from the insurance companj-, with interest, after deducting the sum already paid to the widow, and the several sums advanced by the defendants ; and it is « So ordered} MUTUAL LIFE INS. CO. v. ALLEN and Another. SXTPREME JCDICIAL CoUET OF MASSACHUSETTS, 1884. 138 Mass. 24. Bill of interpleader, flled October 22, 1881, b}- a corporation organ- ized under the laws of the State of New York, against George Allen and Catherine Fellows, to determine which of the defendants was entitled to the proceeds of a policy of insurance, issued by the plaintiff on July 25, 1855, upon the life of Israel Fellows, in the sum of $2,000. The bill alleged the following facts : — Bv the terms of the policj' it was issued " for the sole use of Cath- erine Fellows," and the plaintiff promised and agreed "to and with the said assured, her executors, administrators, and assigns, well and truly to paj-, or cause to be paid, the said sum insured to the said assured, her executors, administrators, or assigns, for her sole use, within sixty davs after due notice and proof of the death of the said Israel Fellows. And, in case of the death of the said Catherine Fellows before the de- 1 See Helmetag v. Miller, 76 Ala. 183 (1884) ; Roller w. Moore, 86 Va. 512 (1889) ; Cawthon v. Perry, 76 Tex. 383 (1890) ; Hays v. Lepeyre, 48 La. Ann. 7-49 (1896).— Ed. 1148 MUTUAL LIFE INS. CO. V. ALLEN. [CHAP. XII. cease of the said I. Fellows, the amount of the said insurance shall be payable after her death to her children, for their use, or to their guardian, if under age, within sixtj' daj'S after due notice and proof of the death of the said I. Fellows, as aforesaid." The policj' also con- tained this clause: " N. B. If assigned, notice to be given to this companj-."^ On Januarj- 1, 1881, Israel Fellows, Catherine Fellows, and their two children, who were then of age, by two instruments in writing under their hands and seals, duh' executed and delivered in this Com- monwealth, assigned and transferred the policy of insurance to the defendant Allen, together with all their respective claims and demands under the same.^ On March 7, 1881, Israel Fellows died, leaving his widow, Catherine Fellows, surviving him. Proof of his death was duly made. His widow made a demand upon the plaintiflf for the payment of the policy, and brought an action upon the policy la the Supreme Court in New York. In August, 1881, Allen also brought an action on the polic}' in this Commonwealth, in the name of Catherine Fellows, for his own benefit. The answer of Allen admitted the allegations of the bill ; and averred that Allen bought the policy for a good and valuable consideration. The answer of Mrs. Fellows admitted the allegations of the bill ; and averred that the assignment was invalid under the laws of the State of New York, and that Allen had no insurable interest in the life of Israel Fellows. The case was heard by Holmes, J., who reported it for the consid- eration of the full court, in substance as follows : — The plaintiff paid the money into court. The policy was delivered by the plaintiflT in this Commonwealth. At that time, and when the assignment was made, the law of New York was as set forth in the Laws of 1840, c. 80,^ and in the cases of Eadie v. Slimmon, 26 N. Y. 1, and Barry v. Equitable Assur. Society, 59 N. Y. 587. " The amount of premium annually paid upon the policy did not exceed $300. There was some evidence that the defendant Fellows 1 The policj was signed by the president and secretary, but the place of signing was not stated in the policy, in the pleadings, or in the report o£ the case ; nor did the policy state where the sum insured was to be paid. — Kef. 2 The substance of these assignments is stated in the opinion. Rep. 5 " Section 1. 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 her husband, 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 represen- tatives of her husband, or of any of his creditors ; but such exemption shall not apply where the amount of premium annually paid shall exceed .^SOO. " Section 2. In case of the death of the wife, before the decease of her husband the amount of the assurance may be made payable after her death to her children for their use, and to their guardian, if under age." — Eep. SECT. III.] MUTUAL LIFE INS. CO. V. ALLEN. 1149 did not expect that her assignment, although absolute in form, was to be used, except as security for a loan of §1,000 to her husband ; but there was no evidence which satisfied me that there was any restriction upon his power to deliver it as an absolute transfer ; and I found that the policy was assigned in ]SIassachusetts to the defendant Allen by the defendant Fellows (both being then residents of IMassachusetts), in consideration of $1,000 paid to her husband by said Allen, and the discharge of certain notes held by said Allen amounting to §470.79. If the transfer was valid in manner and form as agreed, Allen ceased from that moment to have an insurable interest in the life of said Fel- lows as a creditor, and he had no other." The judge ruled that, so far as the present question was concerned, the transfer was governed by the law of Massachusetts, and that, by the law of ^Massachusetts, it was not void for want of an insurable in- terest in the transferee ; and found for Allen. Such decree was to be entered as justice and equity required. J. F. Colby, for Allen. W. S. Slocum, {W. F. Slocum with him,) for Mrs. Fellows. "W. Allex, J. The contract of insurauce was made and was to be performed in this State, and the monej- due upon it has been paid into court here ; aud the contract of assignment was made in this State between parties domiciled here. The validity" and effect of the assign- ment, and the capacitj- of the parties to it, must be governed by the laws of this State. The only question which requires discussion is, whether, b\- that law, the assignment is void for want of interest of the assignee in the life insured. The policy, in consideration of an annual premium to be paid by Mrs. Fellows, assured the life of her husband for her sole use, and for her children if she should not survive her husband. The promise was to the assured, her executors, administrators, and assigns. The policy contained no reference to an assignment except the following : " N. B. If assigned, notice to be given to this company." The policy was is- sued in 1855. In 1881, an assignment in the words following, signed by Mrs. Fellows, her husband and children (who were all of age), was indorsed upon the policy: "I hereby assign, transfer, and set over unto George Allen, of Boston, all my right, title, and interest in and to the within policy of life insurance, and all right that may at any time be coming to me thereon." A more formal instrument of assignment, with a power of attorney to receive " all sums of money that may at an\- time hereafter be or become due and payable to us, or either of us, by the terms of said policy," was also executed by the same parties. The policy and assign- ments were delivered to the defendant Allen, and notice thereof given to the plaintiff. The consideration of the assignment was the payment of a sum of money by the assignee, and the discharge of certain notes held by him against Mr. Fellows. It is to be assumed, on the report, that the transaction was not, in the intention of the parties, a wagering 1150 MUTUAL LIFE INS. CO. V. ALLEN. [CHAP. XII. contract, but an honest and bona fide sale of the equitable interest in the policy. The defendant Allen had no insurable interest in the life of Mr. Fellows except as his creditor, and that interest ceased when he ceased to be a creditor by accepting the assignment in satisfaction of his debt, so that he is in the position of a bona fide assignee of the pol- icj- for valuable consideration without interest in the life insured, and the question between him and the assignor is which has the equitable interest in the policy. The policy is a common form of what is called life insurance, and is a contract by which the insurer, in consideration of an annual payment to be made loy the assured, promises to paj- to her a certain sum upon the death of the person whose life is insured. To prevent this from being void, as a mere wager upon the continuance of a life in which the parties have no interest except that created by the wager itself, it is necessary that the assured should have some pecuniarj- interest in the continuance of the life insured. It is not a contract of indemnity for actual loss, but a promise to pay a certain sum on the happening of a future event from which loss or detriment ma}" ensue, and if made in good faith for the purpose of providing against a possible loss, and not as a cloak for a wager, is sustained bj' any interest existing at the time the contract is made. See Loomis v. Eagle Ins. Co., 6 Graj-, 396, and Forbes v. American Ins. Co., 15 Gra}-, 249. Mrs. Fellows had an in- surable interest in the life of her husband, and the policy to her was a valid contract to paj- the sum insured to her upon the event of his death. This contract was a chose in action assignable by her. Palmer V. Merrill, 6 Cush. 282. The policy was not negotiable, and her assignment could not, in this State, pass the legal, but only the equitable, interest in the contract. The assignment was a contract between her and her assignee, to which the insurer was not a part}'. It purported to give to the assignee only the equitable interest of the assignor in the contract, — tiie right to recover in the name of the assignor the sum which should become due to her under the contract. The direction in the policj-, that notice of an assignment of it should be given to the insurer, had no effect upon the character of the assign- ment, however its operation might have been limited had notice not been given. The assent of the insurer to the assignment would not make a new contract of insurance. Its only effect would be to enable the assignee to enforce in his own name, instead of the name of the assignor, the right she held under the contract. McCluskey v. Provi- dence Washington Ins. Co., 126 Mass. 306. This distinction between the assignment of the interest of the insured in a policy, which is a contract between the assignor and the assignee only, and the transfer or renewal to a third person of a policy, which is a contract to which the insurer is a part}-, is illustrated in the case of fire insurance. That is strictly a personal contract of indemnity to the assured, and he, or his assigns in his name, can recover only an SECT. III.] MUTUAL LIFE INS. CO. V. ALLEN. 1151 indemnity for actual loss to him. If he has no interest in the propeity insured at the time of the loss, he can recover nothing, and if he parts ■with his interest before a loss, he becomes incapacitated to recover upon the polic\-, and it ceases to insure anything and becomes void. "Wilson (•. Hill, 3 Met. 66. It follows that, where a purchaser of insured prop- ertj" would have the benefit of an unexpired term of insurance, it must be by a new contract with the insurer, and not by assignment from the insured. This is usually provided for in the policy, so that by its terms an assignment bj- the insured with the assent of the insurer will con- tinue the polic}' to the purchaser ; but in such a case there is a new contract of insurance with the purchaser upon his newly acquired inter- est, and he becomes the assured. But the assured in a fire policj' can, while his insurance continues, assign his rights under the policy in the same manner as the insured in a life policy can do. In Fogg v. Middle- sex Ins. Co., 10 Cush. 337, Chief Justice Shaw sa3's, after referring to the kind of transfer just mentioned: " But there is another species of assignment, or transfer it may be called, in the nature of an assignment of a chose yi action ; it is this : ' In case of loss, pay the amount to A. B.' It is a contingent order or assignment of money, should the event happen upon which monej' will become due on the contract. If the insurer assents to it, and the event happens, such assignee ma}' maintain an action in his own name, because, upon notice of the assign- ment, the insurer has agreed to pay the assignee instead of the assignor. But the original contract remains ; the assignment and assent to it form a new and derivative contract out of the original. But the contract remains as a contract of guarant}' to the original assured ; he must have an insurable interest in the property, and the property must be his at the time of the loss. The assignee has no insurable interest, prima facie, in the property burnt, and does not recover as the party insured, but as the assignee of a party who has an insurable interest and a right to recover, which right he has transferred to the assignee, with the consent of the insurers." See also Phillips v. Merrimack Ins. Co., 10 Cush. 350. If Mrs. Fellows had surrendered or forfeited her policy, and the con- tract between her and the insurer had become null, a new contract, by which the defendant Allen should have become the assured instead of Mrs. Fellows, might have required an insurable interest in him, though in the form of an assignment and a renewal or revival of the original policy. But the original policy has not been surrendered or forfeited, nor the contract in any way changed. Mrs. Fellows is still the assured, and the policy is supported by her interest in the life, and is in form pavable to her. If the assignment is valid, it is payable to her in trust for the assignee ; if void, for her own use. In no respect can the as- sio-nment affect the validity of the contract of insurance, or taint that as^a wao-ering policy. The only question that can be raised is as to the assignment itself, — whether, as between the parties to it, it is void as a gaming contract. 1152 MUTUAL LIFE INS. CO. V. ALLEN. [CHAP. XIL That a right to receive money upon the death of another is assign- able at law or in equity will not be questioned. The right of Mrs. Fel- lows, under our law, to assign the equitable interest in the policy in question is not denied ; but it is contended that she can assign it only to some one who has an insurable interest in the life of Mr. Fellows. We find no reason for this exceptional limitation of the right of assign- ment, which would allow Mrs. Fellows to assign her policy to Mr. Fel- lows, or his creditors or dependant relatives, but would forbid her to pledge it for her own debts, or sell it for her own advantage. If there is anj- such reason, it must be found in the contract of assignment it- self, and irrespective of the rule that the original contract must be sup- ported by an interest in the life insured. That rule was satisfied. Whether a similar rule affects the contract between the assignor and assignee must depend upon considerations applicable to that contract alone. One objection urged is, that it gives to the assignee an interest in the death of the person whose life is insured, without a counterbal- ancing interest in his life. It is true that every person vijho is in ex- pectation of property at the death of another has an interest in his death, but it does not follow, and is not true, that the law does not allow the possession and assignment of such expectations, nor that an insurable interest is required in a life insurance for the purpose of pro- tecting the life insured. The objection applies with equal force to the assignment of a provision made for one upon the death of another by deed or will as to the assignment of a like provision in the form of a life insurance. The other objection urged is, that such transactions may lead to gaming contracts. This does not meet the question, which is whether such an assignment is in itself illegal as a wagering contract. Most contracts have an element of gambling in them. There is uncertainty' . in the value of any contract to deliver propertj' at a future day, and great uncertainty in the present value of an annuity for a particular life, or of a sum payable in the event of a particular death, and such contracts and rights are often used for gambling purposes. The ques- tion is whether the right to a sum of monej-, paj'able on the death of a person under a contract in the form of an insurance polic}', has any special character or quality which renders it less assignable than the right to a sum payable at the death of the same person under an}- other contract or assurance, or than a remainder in real estate expectant on such death. We see nothing in the contract of life insurance which will prevent the assured from selling his right under the contract for his own advantage, and we are of opinion that an assignment of a policy made by the assured in good faith for the purpose of obtaining its present value, and not as a gaming risk between him and the as- signee, or a cover for a contract of insurance between the insurer and the assignee, will pass the equitable interest of the assignor ; and that the fact that the assignee has no insurable interest in the life insured SECT. III.] MUTUAL LIFE INS. CO. V. ALLEN. 1153 is neither conclusive nor prima facie evidence that the transaction is illegal.^ ... The general rule laid down in Stevens r. Warren, 101 Mass. 564, " that no one can have an insurance upon the life of another, unless he has an interest in the continuance of that life," and from which the inference that an assignee of a partv must have an insurable interest seems to have been drawn, we think, is not strictU- accurate, or may be misleading. An insurable interest in the assured at the time the polic}- is taken out is necessary to the validity of the policy, but it is not nocessarv to the continuance of the insurance that the interest should continue ; if the interest should cease, the policy would con- tinue, and the insured would then have an insurance without interest. Dalby r. India & London Assur. Co.. 15 C. B. 365, and Law v. London Policy Co., 1 Kay & Johns. 223, cited in Loomis v. Eagle Ins. Co., 6 Gray, 396 ; Connecticut Ins. Co. v. Schaefer, 94 U. S. 457 ; Eawls r. American Ins. Co., 27 N. Y. 282 ; Provident Ins. Co. v. Baum, 29 Ind. 236. The value and permanenc}- of the interest is material only as bearing on the question whether the policy is taken out in good faith, and not as a gambling transaction. If valid in its inception, it will not be avoided by the cessation of the interest. The mere fact that the assured himself has no interest in the life does not avoid or annul the policy. We think that the second ruling was correct, and that the fact that the assignee had no insurable interest in the life does not avoid the assignment It is one circumstance to be regarded in determining the character of the transaction, but is not conclusive of its illegalit}-. Decree for the defendant AUen? ^ Passages discussing the authorities have been omitted. — Ed. ^ Acc: St. Johu 17. American Mat. L. Ins. Co., 2 Duer, 419 (1853), s. c. aflSrmed, 13 X. Y. 31 (1855) ; Clark v. Allen, 11 R. I. 439 (1S77) ; Eckel v. Reuner, 41 Ohio St. 232 (1884), (where the assignment was without consideration) ; Bursinger v. Bank of Watertown, 67 Wis. 75 (1886); Murphy v. Red, 64 Miss. 614 (1887); Fitzpatrick t-. Hartford L. & Annuity Ins. Co., 56 Conn. 115 (1888) ; Souder v. Home Friendly So- cietr, 72 Md. 511 (1890); Nye v. Grand Lodge, 9 Ind. App. 131 (1893) ; Steinback v- Diepenbrock, 158 N. Y. 24 (1899) ; Chamberlain v. Butler, 86 X. W. Rep. 481 (Neb., 1901). Contra : Missouri Valley Ins. Co. v. Sturges, 18 Kans. 93 (1877) ; Basye v. Adams, 81 Kv. 368 (1883) ; Gilbert v. Moose, 104 Pa. 74 (1S83) ; Downey v. HofEer, 110 Pa. 109 (1885) ; Alabama Gold L. Ins. Co. v. Mobile Mut. Ins. Co., 81 Ala. 329 (1886) ; Missouri Valley L. Ins. Co. v. McCrum, 36 Kans. 146 (1887) ; Price v. Knights of Honor, 68 Tex. 361 (1887) ; Cawthon v. Perry, 76 Te.x. 383 (1890). But see Cheeves a. Anders, 87 Tex. 287 (1894) ; McHale v. McDonnell, 175 Pa. 632, 646 (1896). On what constitutes an assignment, see HamOton i;. Baldwin, 15 Beav. 232 (1852) ; Hewins v. Baker, 161 Mass. 320 (1894). — Ed. 1154 LEMON V. PHCENIX MXTTUAL LIFE INS. CO. [CHAP. XIL SECTION III. (continued). (B) Beneficiaeies. LEMON V. PHCENIX MUTUAL LIFE INS. CO. and Another. ScPEEME Court of Connectiotjt, 1871. 38 Conn. 294. Bill in equity to compel the Phcenix Mutual Life Insurance Com- pany to pay to the petitioner the amount of a policy of life insurance ; brought to the Superior Court, and referred to a committee who found the following facts : — On the 1st of January, 1868, the respondents, the Phoenix Mutual Life Insurance Companj-, a corporation established by this State, were doing business by their agent in this State and in Canada, and have so continued to do business ever since. On the 9th of January, 1868, George C. Peterson, of Canada, made application to the company, through their agents at Montreal, for a policy of insurance on his life, termed an endowment policy, payable at fifty j-ears of age, or at his death if earlier. On the 13th of January, 1868, in pursuance of this application, the company issued a policy upon Peterson's life for $3,000, payable to himself, which was sent to the company's agent at Montreal for his counter-signature and delivery to the assured. In November, 1868, Peterson applied to the Montreal agents to have his policy changed and made payable to the petitioner, but made no new application, nor did the company ever make any new examination of Peterson, nor was his health such as to enable him to pass the necessary medical exami- nation for a new policy in November, 1868, or afterwards. The agents wrote to the company on the 24th of November, and im- mediately as is supposed after Peterson's request, returning the policy, saying that Peterson " wants a policy payable to Miss Elizabeth Lemon, Stamford, Ontario." The company on the 27th of November wrote a new policy payable to the petitioner, bearing the same date and number and for the same amount as the original policy, which they cancelled. This policy was duly sent to the company's agents at Montreal, where it remained until the loth of December, 1868. Peterson requested the agents to forward the policy to Charles Lemon, the brother of the peti- tioner. He also wrote to Lemon that he had done so ; and the ao-ents forwarded the policy to Charles Lemon on the 15th of December, 1868. Peterson also informed Miss Lemon of what he had done. Peterson went south for his health, which was failing, starting November 30 1868, nor was he able to do business after that time until his death. Lemon received the policy in the ordinary course of the mails, probably on the 16th or 17th of December. On the 16th of December, 1868 Peterson wrote from Aiken, South Carolina, to the agents at Montreal SECT. III.] LEMON V. PHCENIX MUTUAL LIFE INS. CO. 1155 asking them to have his policy changed from the favor of Miss Eliza- beth Lemon to that of his brother Peter Alexander Peterson, Stamford, Ontario, saying, "After the policy is changed please return the same to Mr. Geo. P. MacPherson, who will hand you this with the policy." George Peterson sent a letter to Lemon from Aiken, dated December 14, 1868, saying, "Please send the policy I advised you would be sent to you to George P. MacPherson, Montreal." Lemon sent the policy to MacPherson forthwith, and MacPherson look it to the agents, who sent it to the home office. The company in January, 1869, on surrender to them of Lemon's policy, cancelled it, and wrote another policy numbered and dated as the others had been, and similar to the Lemon policy, excepting that Peter A. Peterson's name appeared in the place of Miss Lemon's. Miss Lemon had no knowledge of the transfer to Peter A. Peterson, and gave no consent thereto. Charles Lemon had no knowledge of the transfer until after George Peterson's death. Before the first change in the polic}', when Peterson had expressed to Lemon his intention of changing it to her benefit, she suggested to him the propriety of giving it to her brother. George C. Peterson died October 19, 1869, and Peter A. Pe- terson furnished due proofs of his death to the companj'. The last pol- icy was found with George G. Peterson's effects. Peter had not seen it until after George's death. Neither Charles nor Elizabeth Lemon made anj' inquiries about the policy after its change to Peter's favor, during George's life, nor did either of them paj', or take any measures to pay, the premium upon it. Miss Lemon and George C. Peterson promised marriage to each other in 1867, which promise was binding at the time of issuing all the policies. Miss Lemon had no other interest in George's life. Peter A. Peterson advanced money to George to take care of him in his sickness, and went south with him in November, 1868 ; and George was in Peter's debt in November, 1868, and alwa3-s after- wards, to a considerable amount, although not to the full amount of the policy. George had the policy changed from Miss Lemon's benefit to Peter's, to secure him for his existing and anticipated debts, intending to make the policy solely beneficial to Peter, who relied upon the policy for his security for his advances. The company were not aware that either of the policies had ever gone out of George's possession when they wrote the one beneficial to Peter. Had they known it, they would have required, in addition to its surrender, a written assignment from INIiss Lemon. George paid the two premiums upon the policy, but Peter furnished him the money which he used to pay the second pre- mium. George left a small estate, outside of this policy, not enough to pay his brother's advances.^ . . . Peter A. Peterson, who resided in Canada, was made a party to the bill, and pursuant to an order of court service was made on him by mail, but he made no appearance. The Superior Court accepted the 1 A passage foreign to the rights of the beneficiary has been omitted. — Ed. 1156 LEMON V. PHCENIX MUTUAL LIFE INS. CO. [CHAP. XIL report of the committee, and reserved the question what decree should be passed for the advice of this court. 0. E. Perkins, for the petitioner. Goodman, for the Phoenix Mutual Life Insurance Co. Seymour, J.^ . . . The leading question in this case is whether the petitioner became the owner of this second polic}'. It is not claimed that the mere fact of making the policy paj-able to Miss Lemon, without more, vested in her a complete title. It is con- ceded that so long as Mr. Peterson retained it in his own possession, he might control it as his own. On the other hand, it is not doubted that, if Mr. Peterson delivered it to Miss Lemon as a gift to her, such deliv- ery would vest in her a complete title. The difficulty in the case is in determining whether, on the facts found, the policy may properly be regarded as having been in legal effect delivered to her. This is so much a mere matter of fact that the committee should have distinctly found it the one way or the other, but, instead of a direct finding, we have a special statement of facts bearing on the question, and it is left to the court to decide the ultimate facts, by inference from this special statement. Neither the petitioner nor the respondent saw fit to remon- sti-ate against the acceptance of the report of the committee. On the contrarjs the report is accepted without objection from either party; and we must dispose of the question as best we may with the light we have. First, the fact that Mr. Peterson caused the policy to be made pay- able to Miss Lemon, indicates a settled purpose in his mind that she should have the benefit of it ; and his acts immediately after will natu- rally be construed as intended to carr3' out such purpose. Second, when therefore the policy is by Mr. Peterson's order sent to Miss Lemon's brother, we naturally regard it as sent to him for her, as depositarj" for her, and for her benefit, rather than as depositarj' for Mr. Peterson himself. Third, it appears from the committee's report that the in- tended change in the policy for her benefit was communicated to her before it was made, and that it was upon her suggestion that the policy was placed in the hands of her brother. Fourth, after the policj- was changed and made payable to Miss Lemon, and sent to her brother, she was informed bj' Mr. Peterson of what he had done. Upon these considerations, in view of all the facts in the case, we think we must find that there was an executed gift of the policy to Miss Lemon, and that the delivery to her brother was as depositarj- for her. . . . It is clear that the consideration for policy number three was the surrender of policy number two. Mr. Peterson's health was such that number three would not have been issued, if the company had not been bound by number two. And inasmuch as policy number two belonged to the petitoner, it was her property that, without her consent, was used . 1 In reprinting the opinion, passages stating the facts hare been omitted, as well as passages on insurable interest and procedure. — Ed. SECT, in.] LEMON V. PHCENIX MUTUAL LIFE INS. CO. 1157 to procure number three. She is therefore equitably entitled to the benefit of this policy. Mr. Peterson's money, however, to the extent of the premium paid in January, 1869, is represented in policy number three ; and to that extent Miss Lemon has no interest ; and from the §3,000 due on the policy the amount of that premium and interest on it should be de- ducted, and the balance paid to the petitioner. . . . We advise the Superior Court to pass a decree in favor of the peti- tioner, to the extent and in the manner above specified. We ought, however, to say that it has not escaped our attention that the bill is not in its allegations precisely adapted to the facts as found by the com- mittee, nor precisely to the grounds upon which relief is granted. But no point was made by the respondent on this account, and if any ques- tion had been made, we probably should have advised, as has been done in similar cases, that the bill be amended to correspond with the case as shown bj- the report of the committee.^ In this opinion the other judges concurred; except Caepenter, J., who dissented. 1 Ace. Gosling!). Caldwell, 1 Lea (Tenn.), 454 (1878); Fowler u. Butterlv, 78 N. T. 68 (1879) ; Robinson v. Duvall, 79 Ky. 83 (1880) ; Allis v. Ware, 28 Minn. 166 (1881 ) ; Weisert v. Muehl, 81 K_v. 336 (1883) ; Wilmaser v. Continental L. Ins. Co., 66 Iowa, 417 (18S5) ; Connecticut Mut. L. Ins. Co. v. Baldwin, 15 E. 1. 106 (1885) ; City Savings Bank V. 'Whittle, 63 N. H. 587 (1885). Contra: Estate of Breitnng, 78 Wis. 33 (1890). See Eadie v. Slimmon, 26 N. Y. 9 (1862) ; Gould v. Emerson, 99 Mass. 154 (1868); Knickerbocker L. Ins. Co. v. Weitz, 99 Mass. 157 (1868) ; Chapin v. FeUowes, 36 Conn. 132 (1869) ; Landmm v. Knowles, 22 N. J. Eq. (7 C. E. Green), 594 (1871) ; Potter v. Spilman, 117 Mass. 322 (1875) ; Eicker i>. Charter Oak L. Ins. Co., 27 Minn. 193 (1880); WabuTu i:. Wilbum, 83 Ind. 55 (18S2); /ii re Richardson, 47 L. T. Rep.N. s. 514 (1882); Manhattan L. Ins. Co. v. Smith, 44 Ohio St. 156 (1886) ; National L. Ins. Co. u. Haler, 78 Me. 26S (1SS6) ; Ferdon v. Canfield, 104 N. T. 143 (1887) ; Pingrey v. National L. Ins. Co., 144 Mass. 374 (1SS7) ; Garner v. Germania L. Ins. Co., 110 N. Y. 266 (1888); Central Bank v. Hume, 128 U. S. 195, 206 (1888) ; Millard v. Brayton, 177 Mass. 533 (1901). Compare Miles v. Connecticut Mut. L. Ins. Co., 147 U. S. 177 (1893). As to the certificates of mutual benefit societies, compare the following cases, to the effect that under the language usual in snch certificates, and under the usual rales or statutes governing snch societies, a beneficiary can be changed : Masonic Mut. Benefit Society i: Burkhart, 110 Ind. 189 (1886); Martin v. Stubbings, 126 El. 387 (1888); Supreme Conclave v. CappeUa, 41 Fed. R. 1 (C. C, E. D. Jlich., 1890) ; Smith v. Na- tional Benefit Society, 123 N. Y. 85 (1890) ; Thomas r. Grand Lodge, 12 Wash. 500 (1895) ; Schoenan d. Grand Lodge, 88 N. W. Eep. 999 (Minn., 1902). — Ed. 1158 HAULEY V. HEIST. [CHAP. XIL HARLEY, Administratoe, v. HEIST. SuPEEME Court of Ikdiana, 1882. 86 Ind. 196. From the Kosciusko Circuit Court. W. Olds, M. Sickafoose, and H. S. Biggs, for appellant. J. S. Frazer arid W. D. Frazer, for appellee. ZoLLARS, J. The record in this case presents in different forms the following material facts : — On the 1st daj- of February, 1867, in consideration of the payment of a premium of .$70.20 by David Snj'der, and the same amount there- after to be paid annnall}', the Connecticut Mutual Life Insurance Company executed and delivered to said David Snyder a policy of insurance upon his life, in which it agreed to pay $2,000 upon due proof of his death. That portion of the policy which is material to the parties in this controversy is as follows : " And the said company do hereby promise and agree with the said assured, his heirs, executors, administrators, and assigns, well and truly to paj', or cause to be paid, at the city of Hartford, the said sum insured to the said assured, his executors, administrators, or assigns, within ninety days after due notice and proof of the death of the said David Snyder, for the benefit of and payable to Wilhelmina E. Snyder, wife of the said David Snyder, deducting therefrom all notes taken for premiums unpaid at that date. And it is hereby conditioned and agreed, that if at any time after three premiums have been paid on this policy, it shall be surrendered while yet in force, the company will issue a paid-up, non-forfeiture policy therefor, for such an amount as the then present value of this policy would purchase, as a single premium." The wife, Wilhelmina, died intestate in December, 1869, and left surviving her, her husband, David, and their two minor children. On the 20th day of February, 1871, said David Snj'der, being in- debted to appellee, assigned the policy to him by indorsing upon it the following : — " ConTMBiA City, February 20, 1,S71. " For value received, I herewith assign my interest to the within policy to Henry Heist. David Snyder." In the month of November, 1874, David Snyder died intestate. Up to the time of the assignment and delivery of the policy to appellee, said David Snj'der paid the premiums as stipulated for in the policy. After the assignment, appellee paid the premiums, viz. : On the 24th day of January, 1872, S 18.70; on the 24th day of January, 1873, S46.20 ; and on the 24th day of January, 1874, S46.55. In 1875, after appellant had been appointed administrator of the estate of said Wilhelmina, the insurance company filed its complaint in SECT. III.J HARLEY V. HEIST. 1159 the Whitley' Circuit Court against the parties to this cause, asking that they be required to set up their respective claims to the policy and the money due thereon. After appellee had filed his answer and cross complaint, the insur- ance company, by agreement of the parties, and an order of the court, paid to the clerk §1,909.73, being the amount due on the policy, less an unpaid premium note, and interest on the same, amounting in all to §127.68. We are not informed by whom this note was executed. After this, the venue was changed to the Kosciusko Circuit Court. In that court appellant filed his answer and cross complaint, to each paragraph of which, except the general denial, a demurrer by appellee was sustained, and appellant excepted. The cause was then submitted to the court, and after the finding of facts, and conclusions of law on the same, a judgment was rendered, giving to appellee the full amount of money so paid over by the insurance company, the same not exceeding the amount of the premiums paid by him with interest, and the amount due him from Snyder for which the policy was assigned. From this judgment appellant appeals. Was the policy the personal property of the wife Wilhelmina in such a sense that, upon her death, it went to her heirs at law as a part of her estate, or was it upon her death the property of the husband, so that his assignment transferred the legal title to the same to appellee? This is the important question presented bj' the record, the determina- tion of which, counsel agree, will be decisive of this controversj-. That the policy was personal property, under our statute (2 R. S. 1876, p. 314), we think there can be no question. In consideration of the paj'ment of the annual premiums, it contained a definite and fixed promise to pay a definite and fixed amount of money, upon the happen- ing of an event, which was uncertain in nothing except the time at which it might occur. Such a policy of insurance is a chose in action, governed by the same principles applicable to other agreements involv- ing pecuniary obligations. Bliss Life Insurance, 2d ed., p. 540; Hutson V. Merrifield, 51 Ind. 24 (19 Am. R. 722). The policy in this case, by its terms, was executed for the benefit of the wife, and, upon a fair construction, was paj-able to her, and not to the personal representatives of the husband. Upon its execution, the title vested in the wife, and not in the husband. By the procurement of the husband, the wife became the owner of the policy and entitled to collect the amount that might become due on the same upon the death of the husband. Had the wife procured the policy to be issued, and paid the premiums, no one could doubt as to the ownership of the policy, and the right to collect the money due thereon. We are unable to see, in this case, why there should be any difference m the owner- ship and title of the policy by reason of the application having been made and premiums paid by the husband. Had the policy been made payable to the husband, he doubtless might have given it to the wife, and, by proper indorsements thereon, conveyed to her the legal title 1160 HAELEY V. HEIST. [CHAP. XII. to the same. In such case it would have become her separate propertj', by gift from her husband ; and so, too, he had the legal right, in the first instance, to make the application, pay the premiums, and have the policy made payable to the wife for her benefit, and thus vest in her the legal title and ownership of the policj-, as her separate property. The title and ownership of the policy being vested in the wife hy gift from the husband, it was her separate property, to be disposed of under the statute, which provides that the personal propertj' of the wife, acquired during coverture, by descent, devise, or gift, shall remain her own separate property, to the same extent and under the same rules as her real estate so remains, and, on her death -before the husband, shall be distributed in the same manner as her real estate descends, and is apportioned under the same circumstances. 1 R. S. 1876, p. 412 ; E. S. 1881, § 2488. Personal property thus acquired by the wife, upon her death, de- scends to her heirs at law, as does her real estate, except for the purpose of paying debts and costs of administration, the title vests in the administrator, if one be appointed. In this ease the policy of insurance, upon the death of the wife Wilhelmina, descended to her heirs at law ; the undivided one-third to the husband, David Snyder, and the other two-thirds to the minor children, subject to the rights of the appellant, as the administrator of her estate, who, for the purpose of paying debts and costs of administration, has the right to collect the money due upon the policy, to the exclusion of all others. If there had been no need of administration, and no administrator had been appointed, the heirs at law of the wife might have collected the money. Subject to this right of the administrator, the husband had the legal right to assign his interest in the policy, as he did, to the appellee. Upon such assignment appellee became the owner of, and entitled on distribution to, one-third of the amount due upon the policy, after the payment of debts and costs of administration.'^ . . . It is maintained by the learned counsel for appellee, that Snyder, having paid the premium, had the right, after the death of the wife, to omit the payment, and thus let the policy forfeit ; and that, to avoid this loss, he had the right to change the beneficiary, or constitute himself such, by the assignment. If the policy was personal property-, and the title thereto was vested in the wife, we are unable to under- stand how the husband, by anj- act of his, without the consent of the beneficiary, could change the ownership. The property, under the statute, passed at once upon the death of the wife to her heirs at law, and the husband had no more control over it than before her death. True, he could not have been compelled to pay the premiums, or provide for the payment, but having paid them by himself and his assignee, the policy did not lapse, and the title to and ownership of the same did not change. . . . . 1 Here and ekewhere in the opiuion, passages discussing the authorities have not heen reprinted. — Ed. SECT. III. J AMICK V. BUTLER. 1161 It is said further, that to den}- to the husband who has paid the premiums the right to dispose of the poliej' to his own use, after the death of the wife, imposes upon him a hardship and wrong. A suf- ficient answer to this is, that if he wishes to retain to himself the control and ownership of the policy in such case, he maj' so provide in the policj-. It was to avoid this so-called wrong, that the Wisconsin court l>as held that the person procuring the policj- ma}- dispose of it without the consent of his nominee. Such a view, we think, is not consistent with legal principles, is in conflict with former rulings of this court, and against the weight of the authorities in the other States. The appellee, having in good faith paid the premiums since the assignment of the policy, is entitled to have the amount so paid, with interest at sis per cent, refunded to him out of the money paid over b}- the insurance company. It follows from the conclusion we have reached, that the court below was in error in rendering judgment for appellee, and in its rulings upon demurrers to pleadings. The judgment is therefore reversed, at the costs of appellee, with instructions to the court below to overrule appellee's demurrers to the first, second, fourth, fifth, and sixth para- graphs of appellant's answer and cross complaint, to sustain the demurrer to appellee's answer and cross complaint, and to proceed in accordance with this opinion.-' AMICK V. BUTLEE, ADinxiSTRATOR. Sttpbejie Coijet of Isdiaxa, 1SS7. Ill Ind. 578. Frost the Jennings Circuit Court. J'. Overmyer. for appeUant. T. C. Batchdor. for appellee. Mitchell, J. Suit by Butler, administrator of the estate of Frazee, deceased, against Amiek, to recover part of the amount which the latter received on a policy of life insurance which had been effected on the life of the plaintiff's decedent. The facts most favorable to the plaiutiff's theory are comprised in the following statement: On the 23d day of March, 1877, Decatur M. 1 Aac: Brown r. Jlurray, 54 N. J. Eq. (9 Dick.) 594 (1896). Contra : Ryan r. Kothweiler, 50 Ohio St. 595 (1893). See Swan v. Snow, 11 Allen, 224 (1865) ; Hutson v. Merrifield, 51 Ind. 24 (1875) ; Anderson'. Estate. SnPa.202 (1877) ; JliUard .-. Brayton, 177 Mass. 533, 542 (1901) ; In re Scottish Equitable L. Assnr. Society, [1902] 1 Ch. 282 (1901). Compare the foUowing cases on endowment policies : Tennes v. Northwestern Mut. L Ins. Co ^ Minn. 271 (1879) ; Tompkins r. Levy, 87 Ala. 263 (1888) ; Lambertou V RoTOrt 46 Minn. 409 (1891) ; Bancroft v. KnsseU, 157 Mass. 47 (1892). On Wfit ce^ficatei see Haskins v. KendaU, 158 Mass. 224 (1893); Thomas .. CochraD, S9 Md. 390 (1S99).— Ed. 1162 AMICK V. BUTLER. [CHAP. XII. Frazee was indebted to Amick in the sum of about six hundred dollars. By agreement with Amick, Frazee made an application to the U. B. Mutual Aid Society of Pennsylvania, a mutual life insurance company, for membership in that society. Upon due examination he was ad- mitted as a member, receiving a certificate in which Amick, his heirs and assigns, were designated as the beneficiaries, and were to become entitled upon the death of Frazee to two thousand dollars, upon condi- tion that the terms and conditions of the certificate of membership should be complied with. Amick was designated in the application and in the certificate of membership as a creditor. The amount of the indebtedness was erroneously stated in the application at two hundred and fifty dollars. The proof showed that it was about six hundred dollars. All the expenses incident to the issuance of the certificate, and all the annual paj'ments and assessments stipulated in the certifi- cate of membership to be paid by Frazee, were to be and were paid b}' Amick. At the time the polic3' was issued it was orally agreed that if Frazee should at any time thereafter pay his indebtedness, and reim- burse Amick for the cost of obtaining the policy and carrying the insur- ance, the latter would turn over the policy to the former. On the 16th day of April, 1879, Frazee died without having paid any part of his debt, and without having paid any part of the cost of pro- curing and continuing in force the certificate of membership. The society, upon due proof of the death of Frazee, paid to Amick about nineteen hundred and sixty-three dollars, in discharge of its liability upon the certificate. After deducting the amount of the in- debtedness and the sums advanced for the insurance, it was found that there remained of the sum received from the society twelve hundred and fifty-nine dollars and fifty-eight cents, which the administrator of Frazee had demanded from Amick. The latter having refused pay- ment, the court gave judgment in favor of the administrator for the amount. The propriety of the conclusion of the learned court on the foregoing facts involves all the questions in the record. In support of the judgment so given, it is contended that the right of a creditor in the proceeds of a policy of insurance upon the hfe of his debtor, is limited to the amount of the debt and necessary expenses on account of which the insurance was taken out and maintained. When the debt and expenses are extinguished, the argument is, the excess belongs to the legal representative of the deceased debtor, and may be recovered from the creditor, to whom payment has been made, as money had and received to the use of the debtor's representative. This conclusion is predicated upon the rule, the effect of which is that one having no insurable interest in the life of another may not, by means of insurance, speculate upon the life of the person insured. The insurable interest can not, it is contended, exceed the amount of the debt; hence, the person obtaming the insurance must account for the excess. SECT, m.] AMICK V. BDTLER. 1163 Upon considerations of public policj', the general rule has long pre- vailed that insurance taken out and obtained by one upon the life of another, in whose life the person procuring the insurance had at the time no insurable interest, is invalid. Elkhart, etc. Ass'n v. Hough- ton, 103 Ind. 286, 53 Am. R. 514 ; Continental Life Ins. Co. v. Vol- ger, 89 Ind. 572, 46 Am. R. 185. A policy taken upon the life of another, for speculative purposes merely, is regarded as nothing more than a wager on the life of the person insured. Such a transaction is assigned a place in the catalogue of gambling, and is justly condemned by the law. Ruse v. Mutual Benefit, etc. Co., 23 N. Y. 516 ; Brockway v. Mutual Benefit, etc. Co., 9 Fed. Rep. 219; Bliss Life Ins., § 9. No one can have the benefit of an insurance effected by himself upon the life of another, unless he has an insurable interest in the life insured. Where money has been collected upon a policy which had its incep- tion in a scheme of mere speculation upon the life of the person who is the subject of insurance, or where insurance is taken out by a debtor as a security for the benefit of his creditor, the expense of procuring and continuing the policy being borne by the former, the authorities justify the conclusion in either case that the amount collected, less the debt secured or the sums advanced in obtaining and keeping the policy in force, may be recovered bj* the personal representatives of the person insured. Gilbert v. Moose, 104 Pa. St. 74, 49 Am. R. 570 ; Cammack V. Lewis, 15 Wall. 643 ; Page v. Burnstine, 102 U. S. 664 ; Warnock v. Davis, 104 U. S. 775 ; Dutton v. Willner, 52 N. Y. 312 ; Drysdale V. Piggott, 8 DeGex, M. & G. 546 ; Lea v. Hinton, 5 DeGes, M. & G. 823. In case the polic}- originates in a transaction which the Jaw con- demns, or where the debtor, having taken insurance on his own life, at his own expense, merely pledges the policy as a security for an existing debt, the holder, whether by assignment or otherwise, who receives the entire proceeds, will be regarded as a trustee of the representatives of the insured for the amount received, less the amount of his debt, or the sum advanced ou the policj*. American Life, etc. Co. v. Robert- shaw, 26 Pa. St 189 ; Matthews v. Sheehan, 69 N. Y. 585. Thus, in Bruce v. Garden, 5 Ch. App. C. 32, the language of Lord Hatherley is : " The court requires distinct evidence of a contract — that the creditor has agreed to effect a policy, and that the debtor has agreed to pay the premiums, and in that case the policy will be held in trust for the debtor." The case under consideration is not within the facts, and hence is not governed b}- the principles which ruled the cases above mentioned. This is a case in which a debtor, presumably at the solicitation of his creditor, effected an insurance on his own life for the benefit of his creditor, the latter being designated in the policy as the beneficiary, and ao^reeing to pay the expense of effecting the insurance and of keeping the policy in force. It was also agreed that the debtor might at any 1164 AMICK V. BDTLEE. [CHAP. XII. time pay the debt, and reimburse tlie creditor for outlays in effecting and maintaining tlie insurance, and thereby entitle himself to an assign- ment of the polic}-. It has never been seriously questioned but that a person may insure his own life, and by the terms of the policy appoint another to receive the money, upon the event of the death of the person whose life is insured ; or, having taken a policj"^, valid in its inception, that he ma}' in good faith assign his interest in such policy, as in any other chose in action. Hutson v. Merrifield, 51 Ind. 24 (19 Am. K. 722) ; Franklin Life Ins. Co. v. Sefton, 53 Ind. 380 ; Ashley v. Ashley, 3 Sim. 149 ; Mutual Life Ins. Co. v. Allen, 138 Mass. 24; Clark v. Allen, 11 R. I. 439, 23 Am. R. 496. See also note to Clark v. Allen, supra, 17 Am. Law Reg. 86 ; New York Mut. Life Ins. Co. v. Armstrong, 117 U. S. 591 ; Archibald o. Mutual Life Ins. Co., 38 Wis. 542 ; Eckel v. Renner, 41 Ohio St. 232. In either case the essential point is that the transaction be bona fide, and not merely a cover for obtaining wagering or merely speculative insurance, and a device to evade the law. Provident, etc. Co. v. Baum, 29 Ind. 236 ; Olmsted v. Keyes, 85 N. Y. 593 ; Campbell v. New Eng- land M. L. Ins. Co., 98 Mass. 381 ; Connecticut Mut. Life Ins. Co. v. Schaefer, 94 U. S. 457 ; Guardian M. L. Ins. Co v. Hogan, 80 111. 35, 22 Am. R. 180 ; Murphy v. Red, 35 Alb. Law Jour. 490 ; Cunningham V. Smith, 70 Pa. St. 450. The cases which hold invalid the taking or assignment of insurance policies turn upon the fact that in each case the transaction was found to be merely colprable, and a scheme to obtain speculative insurance. Franklin Life Ins. Co. v. Hazzard, 41 Ind. 116, 13 Am. R. 313; Cammack v. Lewis, supra ; "Warnock v. Davis, supra. Where the person whose life is insured is the real contracting part}-, and continues to pay the premiums, it is of no consequence that the beneficiary, or appointee in the policy, has no Insurable interest in the life of the insured. In such a case the policy is valid in any event, and if the beneficiary or assignee be a creditor, and holds the policy as a security merel}', he will be a trustee for the excess, as is any other creditor who holds securities for a debt. In case, however, the party insured is only nominally the contracting party, while the beneficiary named in the policy, or the assignee, has in reality procured the insur- ance, and paid the premiums, then, in order that the transaction may be taken out of the category of wagering contracts, the beneficiary must have had an insurable interest of a pecuniar}' character or of that nature, either present or prospective, at the time the policy had its inception. A policy so taken is the property of the beneficiary, who occupies in that event no trust relation to the debtor. Hine & Nichols Life Ins. 75. That a creditor has an insurable interest in the life of his debtor has never been controverted. It is universally allowable that a creditor may in good faith take insurance upon the life of his debtor, either by procuring a policy in which he is designated as the beneficiary, or by SECT. III. J AMICK r. BUTLEE. 1165 assignment. VTe know of no authority to the contrary of this. While this IS true, the amount of the insurance obtained must bear some just proportion to the debt, or the extent of the obligation assumed by the beneficiary, and the probable contingencies attending the future maintenance of the policy. The circumstances must be such as not to raise the presumption that the transaction on its face was a mere speculation. As was said by the learned judge in Fox v. Penn M. L. Ins. Co., 4 Big. L. & A. Ins. Rep. 458 : "If a man should owe me $10, I can not go and insure his life to the extent of §10,000." Mowry v. Home Life Ins. Co., 9 E. I. 346. The policy can not, however, be limited to the amount of the debt. If it were otherwise the creditor would inevitably be compelled to lose whatever sums he might be required to pay in effecting the insurance and paying premiums. The beneficiary takes the chances of all future contingencies, includ- ing the continued solvency of the company ; or if it be a company in ■which the fund is to be accumulated by assessments upon the members, that a sufficient number will continue therein to pay the debt and reim- burse him for his advances. Xo general rule applicable to all cases can be laid down, except that the interest must be of a substantial character, and such as, under all the circumstances, to take from the transaction the suspicion of mere •wagering. Connecticut Mutual Life Ins. Co. v. Luchs, 108 U. S. 498. In the case before us the application for membership shows that the person whose life was insured was within a few months of forty-nine years old, and in good health. The certificate of membership required the payment of sixteen dollars into the treasury of the society the first year, ten dollars annually for the ensuing four j-ears, and four dollars annually thereafter during the lifetime of the member, besides paying into the treasury, upon the death of each member, his pro rata mor- talitj- assessment. In consideration of the agreement to comply with these, among other conditions, the society agreed to pay the beneficiary named, absolutely, upon the death of the member, the sum of two thou- sand dollars. In the language of the court in Bevin v. Connecticut Mutual Life Ins. Co., 23 Conn. 244 : "All the books hold this to be a sufficient interest to sustain a policy of insurance. . . . The policy must, we think, be held to be a valued policy." See note to Currier v. Continental Life Ins. Co., 52 Am. Eep. 134. The transaction being thus relieved from any features of a merel}- speculative character, the policv vested an absolute right in the beneficiary named therein to collect from the societj- upon the death of the member the full amount stipulated to be paid, and the amount thus collected became the property of the beneficiarj-, unless the parol agreement to turn the policj- over to the debtor upon the conditions already stated affected the creditor with an enforceable trust in favor of the personal representative. We can discover no principle upon which a trust can be maintained in the 1166 AMICK V. BUTLER. [CHAP. XII. absence of any offer by the debtor in bis lifetime to pay the debt and reimburse the creditor for his advances. The right to the insurance vested absolutelj- in the beneficiary as soon as the contract of insurance was consummated. "The moment this policy was executed and de- livered, it became property, and the title to it vested in some one. It will not be claimed that it vested in the person whose life was insured. It must have vested then in all or in a part of the payees." Continental Life Ins. Co. v. Palmer, 42 Conn. 60. The transaction had none of the characteristics of a mortgage. It was entirely at the option of the debtor whether or not he would reim- burse the creditor for the sums expended in procuring the insurance. Whatever the creditor might have done in respect to the collection of his debt, it was beyond his power to compel the insured to reimburse him for his advances in procuring and maintaining the policy. The debtor had not agreed to repay advances voluntarily' made. The ad- vances having been made for the creditor's own benefit, he had no remedy against the debtor or his legal representative to recover them. The rule in cases involving analogous principles is that where the owner of property vests the title absolutely in another in pursuance of an agreement which gives the grantor the option to repurchase or not, at his election, the transaction does not create a mortgage. Voss v. EUer, 109 Ind. 260 ; Hays v. Carr, 83 Ind. 275. The right to the policy and to the benefits to be derived therefrom, was absolute in the beneficiarj' until both the debt and the advances were paid, even conceding that the oral agreement referred to would have been enforceable in the lifetime of the insured. The beneficiary in a life policy, who has an insurable interest in the life of the insured, at the inception of the policy, maj- enforce paj-ment for the full amount, notwithstanding the debtor, on whose life it runs, may have paid the debt. "Any interest suflScient to justify the insur- ance, and relieve it of the gambling aspect, will render it valid, and such policy will continue valid in the hands of a beneficiary or assignee, re- gardless of the cessation of interest, provided the facts show entire good faith and a sufficient justification." Hine & Nichols Life Insurance, 82; Olmsted v. Keyes, svpra ; Connecticut Mut. Life Ins. Co. v. Schaefer, supra. Perhaps, owing to the peculiar nature of contracts such as we are considering, it' the debtor, in his lifetime, had tendered the amount of the debt and the advances, the claim of the legal representative micht be supported. But, in the absence of an offer to comply with his agree- ment, we can discover no rational ground upon which the court can now compel the appellant to surrender money to which, according to every principle of law, he has a perfect title, and in which neither the debtor nor his representatives ever had any interest, legal or equitable. A distinguishing element in the determination of cases of this char- acter is, whether the one whose life is insured so contracts himself to pay the premiums that an action could be maintained against him by SECT. III.J SCHNEIDER V. UNITED STATES LIFE INS. CO. 1167 the creditor for that amount. If such a contract is shown, then the policy is to be regarded as a collateral security, and the debtor is en- titled to it upon the extinguishment of the principal debt ; while, on the other hand, if the creditor pays the premiums, and the debtor is under no obligation to repay them, the right of the creditor is absolute. Freme r. Brade, 2 De Gex & J. 582; Knox v. Turner, Law Kep., 5 Ch. App. 515; Gottlieb v. Craneh, 4 De G., M. & G. 440; Godsal v. Webb, 2 Keen, 100. As has already been seen, the debtor neither paid nor was he under any obligation to pay the premiums. Within all the rules, therefore, the appellant became the absolute owner of the policy, without any outstanding equity in the debtor or his representative, until such payment was made or tendered according to the contract. Judgment reversed with costs.^ SCHNEIDER, Respondents, v. UNITED STATES LIFE INSURANCE CO., Appellant. CouKT OF Appeals of New York, 1890. 123 N. Y. 109. Appeal from judgment of the General Term of the Supreme Court in the first judicial department,'' entered upon an order made March 29, 1889, which affirmed a judgment in favor of plaintiff entered upon a decision of the court on trial at special term. The action was upon a policy of life insurance. The facts, so far as material, are stated in the opinion. O. P. Buel, for appellant. Lucius McAdam, for respondents. O'Brien, J. In the year 1861, upon the application of the plaintiffs husband, Henry Schneider, the defendant issued its policj' insuring his life for the benefit of the plaintiff. The policy contained the usual stipulation that in case the assured should fail to pay any quarterly premium when the same became due the policj' should lapse and be- come null and void. The husband retained the policy in his posses- sion and paid the premiums as they became due up to and including the premium payable January 17, 1886. On the 15th day of March, 1886, the defendant duly served the notice required by the statute that another premium would fall due the 17th of April following. This notice was served upon the husband who had the policy in his posses- 1 Ace. : Rittler v. Smith, 70 Md. 261 (1889). Contra : Cheeves v. Anders, 87 Tex. 287 (1894). See Grant v. Cline, 115 Pa. 618, 625 (1887) ; Ulrich v. Eeinoehl, 143 Pa. 238 (1891 ) ; McHale v. McDonnell, 175 Pa. 632, 646 (1896) ; Exchange Bank v. Loh, 104 Ga. 446, 4.5+-t58 (1898). — Ed. 2 Reported in 52 Hun, 130. — Ed. 1168 SCHNEIDER V. UNITED STATES LIFE INS. CO. [CHAP. XII. sion, and who was the agent of his wife for the purpose of receiving the notice. Laws of 1877, chap. 321.^ This premium was not paid, and no notice was thereafter served by the defendant. On the 29th of March, 1886, while the policy was in force, the "husband produced and surrendered the policy to the defendant and received $525, the sur- render value, from the defendant, which was paid by its check to the joint order of the husband and the wife. The check was presented, indorsed in proper form, paid by the bank and charged to defendant. At the same time the husband presented and delivered to the defendant a paper under seal, purporting to be signed by the wife and duly acknowledged before a commissioner of deeds, containing a request to accept the surrender of the policy and a release discharging the de- fendant from all further liability thereon. The company, relj-ing upon this paper, paid the surrender value as above stated. The husband died in September, 1886, and until after that the wife had no knowledge of the existence of the policy and her signature to the paper containing the surrender and release, and the indorsement of her name upon the check was forged. She received no part of the $525 paid on the sur- render of the policy. She demanded pa3'ment of the policy, and, upon refusal, presented proofs of the death, and then brought this action. It was found at the trial, as matter of law, that the surrender was void, and the contract to pay in case of death was unaffected thereby. The plaintiff recovered, and the judgment was sustained by the General Term. The conclusion of the trial court that the surrender was, as against the plaintiff, null and void, and which is clearly correct, renders it necessary for the plaintiff, in order to sustain the recovery, to meet and answer another objection that confronts her. The premium due on the 17th of April, 1886, was not paid. The notice required by the statute was served on the 15th of March preceding, and the existence of the policy as a valid contract of insurance, and the liability of the defendant thereon, depended upon the performance of this condition. The fraudulent surrender of the policy by the husband before the April premium became due, in no way excuses the failure to paj' the pre- mium, unless the defendant was in some way connected with that fraud, or guilty of some negligent act in regard thereto. There is no proof and no finding that it was. On the contrary the defendant seems to have been the innocent victim of a fraud perpetrated upon it bj- the husband, who was the plaintiff's agent in procuring the policj', paj'inf the premiums and receiving the statutory notice as to when they were 1 " No life insurance company doing business in the State of New York shall have power to declare forfeited or lapsed any policy hereafter issued or renewed by reason of non-payment of any annual premium or interest, or any portion thereof, except as hereinafter provided. ... A written or printed notice . . . shall be duly addressed and mailed to the person whose life is assured, or the assignee of the policy, if notice of the assignment has been given to the company, at his or her last known post-office address, postage paid by the company. ..." N. Y. Laws of 1877, chap. 321, § 1. Ed. SECT, ni.] SCHNEIDER V. UNITED STATES LIFE INS. CO. 1169 due. The paper purporting to be signed by the plaintiff requesting the defendant to accept the surrender and releasing it from further hability, , was in proper form. There was attached to it the certificate of an officer authorized to take and certify acknowledgments that the plain- tiff appeared before him and dul}- acknowledged the instrument, and there was no circumstance that could warrant the defendant in doubt- ing its genuineness. It has been found that the defendant relied upon it, and neither in the findings nor the evidence is there anything to be found to justify a suspicion of bad faith. It cannot be held that the transaction between the defendant and the husband, which resulted in the payment to him of the surrender value of the policy and upon which the defendant relied, was void, and at the same time relieve the plaintiff from the effect of a failure to perform the conditions upon which the existence of the contract depended. The plaintiff cannot claim the benefit of a contract made in her behalf but, as it appears, without her knowledge, without at the same time assuming all the responsibility of a failure to perform its essential conditions. In those cases where a recovery has been permitted by the beneficiar}-, notwith- standing a surrender and release such as appears in this case, the party seeking to recover, was able in some way to connect the company with the fraud, or to show some fault or negligent act on its part that ex- cused the payment of the premium. "Whitehead v. N. Y. L. Ins. Co., 102 N. T. 143 ; Frank v. M. L. Ins. Co., id. 266 ; Knapp v. H. M. L. Ins. Co., 117 U. S. 411. The husband had the possession of the policy, and in dealing with the defendant in regard to it was treated as plaintiff's agent, and the rule that when one of two innocent parties must sustain a loss from the fraud of a third, such loss shall fall upon the one whose act enabled the fraud to be committed, applies to this case. The judgment should be reversed and a new trial granted, costs to abide the event. All concur. Judgment reversed} 1 See Mutnal L. Ins. Co. v. HiU, 178 U. S. 347 (1900). Compare Manhattan L. Ins. Co. v. Smith, a Ohio St. 156 (1886). On the rights of beneficiaries, see also : — Drake r. Stone, 58 Ala. 133 (1877) ; Eobinson v. Dnvall, 79 Ky. 83 (1880) ; Pullis V. Kobison, 73 Mo. 201 (1880) ; Macaulay v. Central Nat. Bank, 27 S. Car. 215 (1887) ; Hooker «. Sugg, 102 N. Car. 115 (1889) ; Glenn v. Burns, 100 Tenn. 295 (1898) ; Union Central L. Ins. Co. v. Boxer. 62 Ohio St. 385 (1900).— Ed. 74 APPENDIX. SOME FORMS USED IN THE UNITED STATES. SECTION I. Marine Insurance^ (A) A POLIOT ON Cabgo. By the Insurance Company. SCM ISSITKED, s [No. ] 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 a . „ 5S Do 4 5 6 7 make Insurance, and cause 8 1 3 to be insured, lost or not lost, at and from 9 °= 10 as upon all kinds of lawful goods and merchandises, ii «^ laden or to be laden on board the good 12 '>.S called the whereof is master for 13 ■g J this present voyage, or whoever else 14 J » shall go for master in the said vessel, or bj' what- 15 J:^ ever other name or names the said vessel, or the 16 g § master thereof, is or shall be named or called. 17 S^ Beginning the adventure upon the said goods 18 a g and merchandises, from and immediately following 19 ~ the loading thereof on board of the said vessel, at 20 ~ as aforesaid, and so shall continue and endure until 21 £ the said goods and merchandises shall be safel3- 22 landed at as aforesaid. And it shall 23 1 In the United States the marine insurance forms are not statatory. Each com- pany has forms of its own. Most of the differences are verbal rather than substan- tial. — Ed. PBEMItTM, 1172 FORMS. [aPP. and may be lawful for the said vessel, in ner voyage, to proceed and i sail to, touch and stay at, any ports or places, if thereunto obliged 2 by stress of weather, or other unavoidable accident, without prejudice 3 to this insurance. The said goods and merchandises, hereby insured, 4 are valued (premium included) at 5 6 Touching the adventures and perils which the said In- 7 suRANCE CoMPANT is Contented to bear, and takes upon itself in 8 this vo3'age, they are of the seas, men-of-war, fires, enemies, pirates, 9 rovers, thieves, jettisons, letters of mart and countermart, repri- lo sals, takings at sea, arrests, restraints and detainments of all ii hings, princes or people of what nation, condition or quality soever, 12 barratry of the master and mariners, and all other perils, losses and 13 misfortunes, that have or shall come to the hurt, detriment or dam- 14 age of the said goods and merchandises, or any part thereof. And 15 in case of any loss or misfortune, it shall be lawful and necessary to 16 and for the assured, factors, servants and assigns, to sue, 17 labor and travel for, in and about the defence, safeguard and recov- 18 ery of the said goods and merchandises or anj' part thereof, without 19 prejudice to this insurance ; nor shall the acts of the insured or insur- 20 ers, in recovering, saving and preserving the property insured, in 21 case of disaster, be considered a waiver or an acceptance of an aban- 22 donment ; to the charges whereof, the said Insurance Company will 23 contribute according to the rate and quantitj' of the sum herein in- 24 sured, having been paid the consideration for this insurance, by the 25 assured or assigns, at and after the rate of 26 27 And in case of loss, such loss to be paid in thirty days after proof 28 of loss, and proof of interest in the said (the amount of 29 the Note given for the premium, if unpaid, being first deducted), but 30 no partial loss or particular average shall in any case be paid, unless 31 amounting to five per cent. Provided always, and it is hereby 32 further agreed. That if the said assured shall have made any other 38 assurance upon the premises aforesaid, prior in day of date to this 34 policy, then the said Insurance Company shall be answerable 35 only for so much as the amount of such prior assurance may be 36 deficient towards fully covering the premises hereby assured ; and 37 the said Insurance Company shall return the premium upon 38 so much of the sum by them assured, as they shall be by such 39 prior assurance exonerated from. And in case of any insurance 40 upon the said premises, subsequent in day of date to this policj-, 41 the said Insurance Company, shall nevertheless be answer- 42 able for the full extent of the sum by them subscribed hereto 43 without right to claim contribution from such subsequent assurers 44 and shall accordingly be entitled to retain the premium by them 45 •received, in the same manner as if no such subsequent assurance 46 had been made. Other insurance upon the premises aforesaid 47 SECT. I.] FORMS. 1173 1 of date the same day as this policj-, shall be deemed simulta- 2 neous herewith, and the said Insurance Company shall not 3 be liable for more than a ratable contribution in the proportion 4 of the sum by them insured to the aggregate of such simul- 5 taneous insurance. It is also agreed, that the property be war- 6 ranted by the assured free from any charge, damage or loss, which 7 may arise in consequence of a seizure or detention, for or on ac- 8 count of any illicit or prohibited trade, or any trade in articles 9 contraband of war. 10 Warranted not to abandon in case of capture, seizure, or detention, 11 until after condemnation of the property insured ; nor until ninety 12 daj's after notice of said condemnation is given to this Company. 13 Also warranted not to abandon in case of blockade, and free from 14 any expense in consequence of capture, seizure, detention or block- 15 ade ; but in the event of blockade, to be at liberty to proceed to an 16 open port and there end the voyage. 17 In vtitness wheeeop, the President or Vice-President of the said 18 Insueajsicb Company hath hereunto subscribed his name, and 19 the sum insured, and caused the same to be attested by their 20 Secretary, in New York, the day of one 21 thousand nine hundred and 22 Memoraitocm. It is also agreed, that bar, bundle, rod, hoop and 23 sheet iron, wire of all kinds, tin plates, steel, madder, sumac, wicker- 24 ware and willow (manufactured or otherwise) , salt, grain of all kinds, 25 tobacco, Indian meal, fruits (whether preserved or otherwise), cheese, 26 drj- fish, hay, vegetables and roots, rags, hempen j'arn, bags, cotton 27 bagging, and other articles used for bags or bagging, pleasure car- 28 riages, household furniture, skins and hides, musical instruments, 29 looking glasses, and all other articles that are perishable in their own 30 nature, are warranted bj' the assured free from average, unless gen- 31 eral ; hemp, tobacco stems, matting and cassia, except in boxes, free 32 from average under twenty per cent unless general; and sugar, flax, 33 flax-seed and bread, are warranted by the assured free from average 34 under seven per cent unless general ; and coffee in bags or bulk, 35 pepper in bags or bulk, and rice, free from average, under ten per 36 cent, unless general. 37 WaiTanted by the insured free from damage or injury, from damp- 38 ness, change of flavor, or being spotted, discolored, musty or mouldy, 39 except caused by actual contact of sea water with the articles dam- 40 acred, occasioned by sea perils. In case of partial loss by sea 41 damage to dry goods, cutlery or other hardware, the loss shall be 42 ascertained bj- a separation and sale of the portion only of the con- 43 tents of the packages so damaged, and not otherwise ; and the same 44 practice shall obtain as to all other merchandise as far as practicable. 45 Not liable for leakage on molasses or other liquids, unless occasioned 46 by stranding or collision with another vessel. 47 If the voyage aforesaid shall have been begun and shall have ter- 1174 FOKMS. [aPP. minated before the date of this policy, then there shall be no return . i of premium on account of such termination of the voyage. 2 In all cases of return of premium, in whole or in part, one^halfper 3 cent, upon the sum insured, is to be retained by the assurers. 4 >i $ 6 Secretary. President. 7 (B) Some Clauses in the Maegin op Policies on Vessels. g Machinery. 9 It is understood that this Company is not liable for any injuries lo to, or derangement of, or breakage of the machinery, or bursting of il the boilers, unless occasioned by stranding ; but if she takes fire, 12 and anj' part of the machinery or boilers be damaged thereby, this 13 Companj- is to be liable therefor. It is also understood that the 14 Company is not liable for fuel, wages and provisions, nor for any 15 expense of any delay consequent upon repairs of an3' kind. 16 Collision. 17 And it is further agreed, that if the vessel hereby insured shall in 18 consequence of collision with another vessel, become liable to pay, 19 and shall paj', any sum or sums for damages resulting therefrom to 20 said other vessel, her freight or her cargo, in such case this Com- 21 pany will contribute towards the payment of three-fourths of the 22 total amount of said damages, in the proportion that the sum in- 23 sured under this policy bears to the total valuation of the vessel as 24 stated herein, provided that this Company shall not in any event be 25 held liable under this agreement for a greater sum than three-fourths 26 of the amount insured under this Policy. 27 And it is also agreed that this Company will bear a like propor- 28 tionate share of the costs and expenses that may be incurred in con- 29 testing the liability resulting from said collision, provided the 30 written consent of the Company to such contest be first obtained. 31 But under no circumstances shall this Company be held liable for 32 any contribution in respect of any sum that the assured may be held 33 liable to pay, by reason of loss of life or personal injurj' to Individ- 34 uals in any cause whatsoever. * 35 Hepairs. 36 In case of claim for loss or damage, a deduction of one-third from 37 the cost of repairing or replacing the same shall be made, after de- 38 ducting the value of the old materials, except in the case of anchors, 39 and of sheating of copper or other metal ; a deduction of one-fortieth 40 from the expense of repairing or replacing the metal sheating, or 41 SECT, l] forms. 1175 1 anj' part thereof, (after first deducting the value of the old metal and 2 nails), shall be made for every month since the vessel was last 3 sheathed until the expiration of forty months, after which , time the 4 cost of re-metalling or repairing the same shall be wholly borne by 5 the assured. If a technical total loss be claimed, similar deductions 6 shall be made from the estimated repairs, and unless the net cost 7 thereof would exceed a moiety of the insured value of the vessel, as 8 expressed in this policy, after making such deductions, the loss shall 9 be deemed partial only. 1176 FORMS. [aPP. SECTION IL Fire Insurance. {A) The Massachusetts Standabd Policy.* 1 No.— $ 2 [Corporate name of the company or association ; its principal 3 place or places of business.] 4 This company shall not be liable beyond the actual value of the 5 insured property at the time any loss or damage happens. 6 In consideration of dollars to it paid by the insured, herein- 7 after named, the receipt whereof is hereby acknowledged, does in- 8 sure and legal representatives against loss or damage 9 bJ^ fire, to the amount of dollars. lo (Description of property insured.) ii Bills of exchange, notes, accounts, evidences and securities of 12 property of every kind, books, wearing apparel, plate, monej', 13 jewels, medals, patterns, models, scientific cabinets and collections, 14 paintings, sculpture and curiosities are not included in said insured 15 propertj', unless especially mentioned. 16 Said property is insured for the term of , beginning on the 17 day of , in the j'ear nineteen hundred and , at 18 noon, and continuing until the day of , in the year nine- 19 teen hundred and , at noon, against all loss or damage by fire 20 originating from any cause except invasion, foreign enemies, civil 21 commotions, riots, or any military or usurped power whatever ; the 22 amount of said loss or damage to be estimated according to the 23 actual value of the insured property at the time when such loss or 24 damage happens, but not to include loss or damage caused by ex- 25 plosions of any kind unless fire ensues, and then to include that 26 caused by fire only. 27 This policy shall be void if any material fact or circumstance 28 stated in writing has not been fairly represented by the Insured, — 29 or if the insured now has or shall hereafter make any other insur- 30 ance on the said property without the assent in writing or in print 31 of the company, — or if, without such assent, the said property 32 shall be removed, except that, if such removal shall be necessary for 33 the preservation of the property from fire, this policy shall be valid 34 without such assent for five daj's thereafter, — or if, without such 35 assent, the situation or circumstances affecting the risk shall, by or 36 with the knowledge, advice, agency or consent of the insured, be so 37 altered as to cause an increase of such risks, or if, without such as- 38 1 Ab provided in Revised Laws of Massachusetts, 1902, chap. 118, sect. 60. Eo. SECT. II.] FOEMS. 1177 1 sent, the said property shall he sold, or this policy assigned, or if 2 the premises herebj* insured shall become vacant by the removal of 3 the owner or occupant, and so remain vacant for more than thirty 4 days without such assent, or if it be a manufacturing establishment, 5 running, in whole or in part, extra time, except that such establish- 6 ments may run, in whole or in part, extra hours not later than nine 7 o'clock P.M., or if such establishments shall cease operation for more 8 than thirtj' days without permission in writing indorsed hereon, or 9 if the insured shall make any attempt to defraud the companj' 10 either before or after the loss, — or if gunpowder or other articles 11 subject to legal restriction shall be kept in quantities or manner dif- 12 ferent from those allowed or prescribed bj^ law, — or if camphene, 13 benzine, naphtha, or other chemical oils or burning fluids shall be 14 kept or used by the insured on the premises insured, except that 15 what is known as refined petroleum, kerosene or coal oil, may be 16 used for lighting, and in dwelling houses kerosene oil stoves may be 17 used for domestic purposes, — to be filled when cold, by daylight, 18 and with oil of lawful fire test only. 19 If the insured property shall be exposed to loss or damage by fire, 20 the insured shall make all reasonable exertions to save and protect 21 the same. 22 In case of any loss or damage under this policy, a statement in 23 writing, signed and sworn to by the insured, shall be forthwith 24 rendered to the company, setting forth the value of the property 25 insured, the interest of the insured therein, all other insurances 26 thereon, in detail, the purposes for which and the persons by whom 27 the building insured, or containing the property insured, was used, 28 and the time at which and manner in which the fire originated, so far 29 as known to the insured. The company may also examine the books 30 of account and vouchers of the insured, and make extracts from the 31 same. 32 In case of any loss or damage, the company, within sixty days 33 after the insured shall have submitted a statement, as provided in 34 the preceding clause, shall either pay the amount for which it shall 35 be liable, which ammint if not agreed upon shall be ascertained by 36 award of referees as hereinafter provided, or replace the property 37 with other of the same kind and goodness, — or it may, .vithin 38 fifteen days after such statement is submitted, notify the insured of 39 its intention to rebuild or repair the premises, or any portion thereof 40 separately insured by this policy, and shall thereupon enter upon 41 said premises and proceed to rebuild or repair the same with reason- 42 able expedition. It is moreover understood that there can be no 43 abandonment of the property insured to the company, and that the 44 company shall not in any case be liable for more than the sum 45 insured, with interest thereon from the time when the loss shall 46 become payable, as above provided. 47 If there shall be any other insurance on the property insured, 1178 FORMS. [APP. whether prior or subsequent, the insured shall recover on this policy 1 no greater proportion of the loss sustained than the sum herebj' 2 insured bears to the whole amount insured thereon. And whenever 3 the companj' shall pay any loss, the insured shall assign to it, to the 4 extent of the amount so paid, all rights to recover satisfaction for 5 the loss or damage from any person, town or other corporation, 6 excepting other insurers ; or the insured, if requested, shall prose- 7 cute therefor at the charge and for the account of the companj'. 8 If this policy shall be made payable to a mortgagee of the insured 9 real estate, no act or default of any person other than such mortgagee 10 or his agents, or those claiming under him, shall affect such mort- ii gagee's right to recover in case of loss on such real estate : provided, 12 that the mortgagee shall, on demand, pay according to the estab- 13 lished scale of rates for any increase of risks not paid for by the in- 14 sured ; and whenever this company shall be liable to a mortgagee for 15 any sum for loss under this policj', for which no liability exists as to 16 the mortgagor, or owner, and this company shall elect by itself, or 17 with others, to pay the mortgagee the full amount secured by such 18 mortgage, then the mortgagee shall assign and transfer to the com- 19 panics interested, upon such payment, the said mortgage, together 20 with the note and debt thereby secured. 21 This policy may be cancelled at any time at the request of the 22 insured, who shall thereupon be entitled to a return of the portion 23 of the above premium remaining, after deducting the customary 24 monthly short rates for the time this policy shall have been in force. 25 The company also reserves the right, after giving written notice to 26 the insured, and to any mortgagee to whom this policy is made pay- 27 able, and tendering to the insured a ratable proportion of the pre- 28 mium, to cancel this policy as to all risks subsequent to the expiration 29 of ten days from such notice, and no mortgagee shall then have the 30 right to recover as to such risks. 31 In case of loss under this policy and a failure of the parties to 32 agree as to the amount of loss, it is mutually agreed that the amount 33 of such loss shall be referred to three disinterested men, the com- 34 pany and the insured each choosing one out of three persons to be 35 named by the other, and the third being selected by the two so 36 chosen ; the award in writing by a majority of the referees shall be 37 conclusive and final upon the parties as to the amount of loss or 38 damage, and such reference unless waived by the parties shall be a 39 condition precedent to any right of action in law or equity to re- 40 cover for such loss ; but no person shall be chosen or act as a referee, 41 against the objection of either party, who has acted in a like capacity 42 within four months. 43 No suit or action against this company for the recovery of any 44 claim by virtue of this policy shall be sustained in any court of law 45 or equity in this Commonwealth unless commenced within two years 46 from the time the loss occurred. ' 47 SECT. II.J FORMS. 1179 1 In witness whereof the said company has caused this policy 2 to be signed by its president and attested by its secretary [or by such 3 proper oflScers as may be designated], at their offlce in 1 5 [date]. 6 (B) The Standabd Fike Insurance Polict or the State of New Yokk.i 7 (a) Policy. 8 No. $ 9 In consideration of the stipulations herein named and of 10 dollars premium does insure for the term of from 11 the day of 18 , at noon, to the i day of 12 18 , at noon, against all direct loss or damage by fire, 13 except as hereinafter provided, to an amount not exceeding 11 dollars, to the following described property while located 15 and contained as described herein, and not elsewhere, to wit: 16 This company shall not be liable beyond the actual cash value of 17 the property at the time an3- loss or damage occurs, and the loss or 18 damage shall be ascertained or estimated according to such actual 19 cash value, with proper deduction for depreciation however caused, 20 and shall in no event exceed what it would then cost the insured 21 to repair or replace the same with material of like kind and quality ; 22 said ascertainment or estimate shall be made by the insured and 23 this company, or, if they differ, then by appraisers, as hereinafter 24 provided ; and, the amount of loss or damage having been thus 25 determined, the sum for which this company is liable pursuant to 26 this policy shaU be pa3'able sxKiy dAys, after due notice, ascertain- 27 ment, estimate, and satisfactorj- proof of the loss have been received 28 by this company in accordance with the terms of this policy. It 29 shall be optional, however, with this company to take all, or any 30 part, of the articles at such ascertained or appraised value, and also 31 to repair, rebuild, or replace the property lost or damaged with 32 other of like kind and qualitj' within a reasonable time on giving 33 notice, within thirty daj'S after the receipt of the proof herein re- 34 quired, of its intention so to do ; but there can be no abandonment 35 to this company of the property described. 36 This entire policy shall be void if the insured has concealed or 37 misrepresented, in writing or otherwise, any material fact or cir- 38 cumstance concerning this insurance or the subject thereof; or if 39 the interest of the insured in the property be not truly stated herein ; 40 or in case of any fraud or false swearing by the insured touching 1 See Laws of Kew York, 124th Session, 1901, chap. 5ia — Ed. 1180 FORMS. [APP. any matter relating to this insurance or the subject thereof, whether i before or after a loss. 2 This entire policy, unless otherwise provided by agreement in- 3 dorsed hereon or added hereto, shall be void if the insured now has 4 or shall hereafter .make or procure any other contract of insurance, 6 whether valid or not, on property covered in whole or in part by this 6 policy ; or if the subject of insurance be a manufacturing establish- 7 ment and it be operated in whole or in part at night later than ten 8 o'clock, or if it cease to be operated for more than ten consecutive 9 days ; or if the hazard be increased by any means within the control 10 or knowledge of the insured ; or if mechanics be emploj'ed in build- li ing, altering, or repairing the within described premises for more 12 than fifteen days at any one time ; or if the interest of the insured 13 be other than unconditional and sole ownership; or if the subject of 14 insurance be a building on ground not owned by the insured in fee- 15 simple ; or if the subject of insurance be personal property and be 16 or become incumbered by a chattel mortgage ; or if, with the knowl- 17 edge of the insured, foreclosure proceedings be commenced or notice 18 given of sale of any property covered by this policy by virtue of anj- 19 mortgage or trust deed ; or if any change, other than by the death 20 of an insured, take place in the interest, title, or possession of the 21 subject of insurance (except change of occupants without increase of 22 hazard) whether by legal process or judgment or by voluntary act of 23 the insured, or otherwise ; or if this policy be assigned before a loss ; 24 or if illuminating gas or vapor be generated in the described build- 25 ing (or adjacent thereto) for use therein ; or if (any usage or custom 26 of trade or manufacture to the contrary notwithstanding) there be 27 kept, used, or allowed on the above described premises, benzine, 28 benzole, dynamite, ether, fireworks, gasolene, greek fire, gunpowder 29 exceeding twent3'-five pounds in quantity, naphtha, nitro-glycerine 30 or other explosives, phosphorus, or petroleum or any of its products 31 of greater inflammability than kerosene oil of the United States 32 standard, (which last maj' be used for lights and kept for sale accord- 33 ing to law but in quantities not exceeding five barrels, provided it be 34 drawn and lamps filled by daylight or at a distance not less than ten 35 feet from artificial light) ; or if a building herein described, whether 36 intended for occupancy by owner or tenant, be or become vacant or 37 unoccupied and so remain for ten daj-s. 38 This company shall not be liable for loss caused directly or in- 39 directly by invasion, insurrection, riot, civil war or commotion, or 40 military or usurped power, or by order of any civil authority ; or by 41 theft ; or by neglect of the insured to use all reasonable means to 42 save and preserve the property at and after a fire or when the prop- 43 erty is endangered by fire in neighboring premises ; or (unless fire 44 ensues, and, in that event, for the damage bj' fire onlj') by ex- 45 plosion of any kind, or lightning ; but liability for direct damage by 46 lightning may be assumed by specific agreement hereon. 47 SECT. 11.] FORMS. 1181 1 If a building or any part thereof fall, except as the result of fire, 2 all insurance bj' this policy on such building or its contents shall 3 immediately cease. 4 This company shall not be liable for loss to accounts, bills, 5 currency, deeds, evidences of debt, money, notes, or securities ; 6 nor, unless liability is specifically assumed hereon, for loss to awn- 7 ings, bullion, casts, curiosities, drawings, dies, implements, jewels, 8 manuscripts, medals, models, patterns, pictures, scientific appara- 9 tus, signs, store or office furniture or fixture, sculpture, tools, or 10 property held on storage or for repairs ; nor, beyond the actual 11 value destroyed by fire, for loss occasioned by ordinance or law reg- 12 ulating construction or repair of buildings, or by interruption of busi- 13 ness, manufacturing processes, or otherwise; nor for any greater 14 proportion of the value of plate glass, frescoes, and decorations 15 than that which this policy shall bear to the whole insurance on 16 the building described. 17 If an application, survey, plan, or description of property be re- 18 ferred to in this policy it shall be a part of this contract and a 19 warranty by the insured. 20 In any matter relating to this insurance no person, unless duly 21 authorized in writing, shall be deemed the agent of this company. 22 This policy may bj"^ a renewal be continued under the original 23 stipulations, in consideration of premium for the renewed term, pro- 24 vided that any increase of hazard must be made known to this com- 25 pany at the time of renewal or this policy shall be void. 26 This policy shall be cancelled at any time at the request of the in- 27 sured ; or by the company by giving five days' notice of such cancella- 28 tion. If this policy shall be cancelled as hereinbefore provided, or 29 become void or cease, the premium having been actually paid, the 30 unearned portion shall be returned on surrender of this policy or last 31 renewal, this company retaining the customary short rate; except 32 that when this policy is cancelled by this company by giving notice 33 it shall retain only thep7-o rata premium. 34 If, with the consent of this company, an interest under this policy 35 shall exist in favor of a mortgagee or of any person or corporation 36 having an interest in the subject of insurance other than the in- 37 terest of the insured as described herein, the conditions hereinbefore 38 contained shall apply in the manner expressed in such provisions 39 and conditions of insurance relating to such interest as shall be 40 written upon, attached, or appended hereto. 41 If property covered by this policy is so endangered by fire as to 42 require removal to a place of safety, and is so removed, that part of 43 this policy in excess of its proportion of any loss and of the value of 44 property remaining in the original location, shall, for the ensuing 45 five days only, cover the property so removed in the new location ; 46 if removed to more than one location, such excess of this policy 47 shall cover therein for such five days in the proportion that the value 1182 FORMS. [aPP. in any one such new location bears to the value in all such new loca- 1 tions; but this company shall not, in any case of removal, whether 2 to one or more locations, be liable beyond the proportion that the 3 amount hereby insured shall bear to the total insurance on the whole 4 property at the time of fire, whether the same cover in new location 5 or not. 6 If fire occur the insured shall give immediate notice of any loss 7 thereby in writing to this company, protect the property from further 8 damage, forthwith separate the damaged and undamaged personal 9 property, put it in the best possible order, make a complete inven- 10 tory of the same, stating the quantity and cost of each article and 11 the amount claimed thereon ; and, within sixtj' days after the fire, 12 unless such time is extended in writing by this company, shall 13 render a statement to this company, signed and sworn to by said 14 insured, stating the knowledge and belief of the insured as to the 15 time and origin of the fire ; the interest of the insured and of all 16 others in the property; the cash value of each item thereof and the 17 amount of loss thereon ; all incumbrances thereon ; all other insur- 18 ance, whether valid or not, covering any of said property ; and a 19 copy of all the descriptions and schedules in all policies ; any 20 changes in the title, use, occupation, location, possession, or ex- 21 posures of said property since the issuing of this policy ; by whom 22 and for what purpose anj- building herein described and the several 23 parts thereof were occupied at the time of fire ; and shall furnish, if 24 required, verified plans and specifications of any building, fixtures, 25 or machinery' destroj-ed or damaged; and shall also, if required, fur- 26 nish a certificate of the magistrate or notary public (not interested 27 in the claim as a creditor or otherwise, nor related to the insured) 28 living nearest the place of fire, stating that he has examined the 29 circumstances and believes the insured has honest!}' sustained loss 30 to the amount that such magistrate or notar}' public shall certify. 31 The insured, as often as required, shall exhibit to any person 32 designated by this company all that remains of anj- property herein 33 described, and submit to examinations under oath by any person 34 named by this companj', and subscribe the same ; and, as often as 35 required, shall produce for examination all books of account, bills, 36 invoices, and other vouchers, or certified copies thereof if originals be 37 lost, at such reasonable place as may be designated bj- this com- 38 pany or its representative, and shall permit extracts and copies 39 thereof to be made. 40 In the event of disagreement as to the amount of loss the same 41 shall, as above provided, be ascertained by two competent and dis- 42 interested appraisers, the insured and this company each selecting 43 one, and the two so chosen shall first select a competent and dis- 44 interested umpire; the appraisers together shall then estimate and 45 appraise the loss, stating separately sound value and damage, and, 46 failing to agree, shall submit their differences to the umpire ; and the 47 SECT. II.] FORMS. 1183 1 award in writing of any two shall determine the amount of such loss ; 2 the parties thereto shall pay the appraiser respectively selected by 3 them and shall bear equally the expenses of the appraisal and 4 umpire. 5 This company shall not be held to have waived any provision or 6 condition of this policy or any forfeiture thereof by any require- 7 ment, act, or proceeding on its part relating to the appraisal or to 8 any examination herein provided for ; and the loss shall not become 9 payable until sixty days after the notice, ascertainment, estimate, 10 and satisfactory proof of the loss herein required have been received 11 by this company, including an award by appraisers when appraisal 12 has been required. 13 This company shall not be liable under this policy for a greater 14 proportion of any loss on the described property, or for loss by and 15 expense of removal from premises endangered by Are, than the 16 amount hereby insured shall bear to the whole insurance, whether 17 valid or not, or by solvent or insolvent insurers, covering such prop- 18 erty, and the extent of the application of the insurance under this 19 policy or of the contribution to be made by this company in case of 20 loss, may be provided for by agreement or condition written hereon 21 or attached or appended hereto. Liability for re-insurance shall be 22 as specifically agreed hereon. 23 If this company shall claim that the fire was caused by the act or 24 neglect of any person or corporation, private or municipal, this 25 company shall, on payment of the loss, be subrogated to the extent 26 of such payment to all right of recovery bj- the insured for the loss 27 resulting therefrom, and such right shall be assigned to this company 28 by the insured on receiving such paj-ment. 29 No suit or action on this policy, for the recovery of any claim, so shall be sustainable in any court of law or equity until after full com- 31 pliance by the insured with all the foregoing requirements, nor unless 32 commenced within twelve months next after the fire. 33 Wherever in this policy the word " insured " occurs, it shall be 34 held to include the legal representative of the insured, and wherever 35 the word " loss " occurs, it shall be deemed the equivalent of " loss 36 or damage." 37 If this policy be made by a mutual or other company having spe- 38 cial regulations lawfully applicable to its organization, membership, 39 policies or contracts of insurance, such regulations shall apply to and 40 form a part of this policy as the same may be written or printed 41 upon, attached, or appended hereto. 42 This policy is made and accepted subject to the foregoing stipula- 43 tions and conditions, together with such other provisions, agreements, 44 or conditions as may be indorsed hereon or added hereto, and no 45 officer, agent, or other representative of this company shall have 46 power to waive any provision or condition of this policy except 47 such as by the terms of this policy may be the subject of agree- 1184 roEMS. [app. ment indorsed hereon or added hereto, and as to such provisions i and conditions no officer, agent, or representative shall have such 2 power or be deemed or held to have waived such provisions or 3 conditions unless such waiver, if any, shall be written upon or at- i tached hereto, nor shall any privilege or permission affecting the in- 6 surance under this policy exist or be claimed by the insured unless 6 so written or attached. 7 In witness wheeeof, this company has executed and attested 8 these presents this day of ,18 9 (b) Forms on the Bach of the Policy. lo ASSIGNMENT OF INTEREST BY INSURED. 11 The interest of as owner of property covered by this 12 Policy is hereby assigned to subject to the consent 13 of 14 [Signature of the Insured] 15 Dated 16 [Note. — To secure Mortgagees, if desired, the Policy should 17 be made payable on its face to such Mortgagee as follows : Loss, 18 if any, payable to John Doe, Mortgagee.] 19 CONSENT BT COMPANY TO ASSIGNMENT OF INTEREST. 20 hereby consents that the interest of as 21 owner of the property covered by this Policy be assigned to 22 [Signature for Company.] 23 Dated 24 (c) Some Permissible Clauses or Miders.^ 25 AVERAGE CLAUSE. 26 This Company shall not be liable for a greater proportion of any 27 loss or damage to the property described herein than the sum hereby 28 insured bears to per centum ( %) of the actual 29 cash value of said property at the time such loss shall happen. 30 If the insurance under this policy be divided into two or more 31 items this Average Clause shall apply to each item separately. 32 1 Erom New York Insurance Report, 1902, Part I., pp. xxiv.-xxx. — Ed. SECT. II.] FORMS. 1185 1 APPLICATION AND SURVEY CLAUSE. 2 This policy is based upon an application and survej- of the prop- 3 ert3' on file which is herebj' referred to as forming part of this policy. i Date of Application 5 Where filed 6 Attached to and forming part of Policy No. 7 [Signature for Company.] 8 PERCENTAGE VALUE CLAUSE. 9 If at the time of fire the whole amount of insurance on the property 10 covered bj' this policy shall exceed per cent of the actual cash 11 value thereof, this Companj' in case of loss or damage shall not be 12 liable to pay more than its pro rata share of said per cent 13 of the actual cash value of such property ; and should the whole in- 14 surance at the time of the fire exceed the said per cent, a pro rata 15 return of premium on such excess of insurance from the time of the 16 fire to the expiration of this policy shall be made on surrender of the 17 policj'. 18 Attached to and forming part of Policy No. 19 [Signature for Company.] 20 CO-INSURANCE CLAUSE. 21 If at the time of fire the whole amount of insurance on the 22 property covered by this policy shall be less than the actual cash 23 value thereof, this Company shall, in case of loss or damage, be 24 liable for such portion only of the loss or damage as the amount in- 25 sured by this policy shall bear to the actual cash value of such prop- 26 erty. 27 Attached to and forming part of Policy No. 28 [Signature for Company.] 29 PERCENTAGE CO-INSURANCE CLAUSE. 30 If at the time of fire the whole amount of insurance on the prop- 31 erty covered by this policy shall be less than per cent of 32 the actual cash value thereof, this Company shall, in ease of loss or 33 damage, be liable for only such portion of such loss or damage as 34 the amount insured by this policy shall bear to the said 35 per cent of the actual cash value of such property. 36 Attached to and forming part of Policy No. gj ' [Signature for Company.] 75 1186 FORMS. [APP. MORTGAGEE CLAUSE. 1 Loss or damage, if any, under this policy, shall be payable to 2 as mortgagee [or trustee], as interest may 3 appear, and this insurance, as to the interest of the mortgagee [or 4 trustee] only therein, shall not be invalidated by any act or neglect 5 of the mortgagor or owner of the within described property', nor by fi foreclosure or other proceedings or notice of sale relating to the 7 property, nor by any change in the title or ownership of the prop- 8 erty, nor by the occupation of the premises for purposes more 9 hazardous than are permitted by this policy ; provided, that in case 10 the mortgagor or owner shall neglect to pay any premium due under 11 this policy, the mortgagee [or trustee] shall, on demand, pay the 12 same. 13 Provided, also, that the mortgagee [or trustee] shall notify this 14 Company of any change of ownership or occupancy or increase of 13 hazard which shall come to the knowledge of said mortgagee [or 16 trustee], and, unless permitted by this policj', it shall be noted 17 thereon and the mortgagee [or trustee] shall, on demand, paj' the 18 premium for such increased hazard for the term of the use thereof ; 19 otherwise this policy shall be null and void. 20 This Company reserves the right to cancel this policy at any time 21 as provided by its terms, but in such case this policy shall continue 22 in force for the benefit only of the mortgagee [or trustee] for ten 23 days after notice to the mortgagee [or trustee] of such cancellation 24 and shall then cease, and this Company shall have the right, on like 25 notice, to cancel this agreement. 26 Whenever this Company shall pay the mortgagee [or trustee] any 27 sum for loss or damage under this policj' and shall claim that, as to 28 the mortgagor or owner, no liability therefor existed, this Company 29 shall, to the extent of such payment, be thereupon legally subrogated 30 to all the rights of the party to whom such payment shall be made, 31 under all securities held as collateral to the mortgage debt, or may 32 at its option, pay to the mortgagee [or trustee] the whole principal 33 due or to grow due on the mortgage with interest, and shall there- 34 upon receive a full assignment and transfer of the mortgage and of 35 all such other securities ; but no subrogation shall impair the right of 36 the mortgagee [or trustee] to recover the fuU amount of 37 claim. 38 Dated, 39 Attached to and forming part of Policy No. 40 [Signature for Company.] 41 SECT. III.] FORMS. 1187 SECTION III. Zdife Insurance?- NUMBER AGE TEARS ANNUAL PREMIUM FOR LIFE, 1 A Policy, with the accompantikg Provisions, Application, and 2 Medical Examiner's Report. The Life Insurance Company of New Yorrc 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 In Consideration of the application for this Policy, which is hereby made a part of this contract, promises to pay at its Head Office in the City of New York, unto of in the County of State of executors, administrators or assigns, Dollars, upon acceptance of satisfactory proofs at its Head Office of the death of during the continuance of this Policy, upon the following condition ; and subject to the provisions, requirements and benefits stated on the back of this Policy, which are hereby referred to and made part hereof : The annual premium of Dollars and Cents shall be paid in advance on the delivery of this Policy, and thereafter to the Company at its Head Office in the City of New York, on the day of in every year during the con- tinuance of this contract. The receipt of the first payment of premium hereon is acknowl- edged. In Witness Whereof, the said The Life Insurance Company of New York has caused this Policy to be signed by its President and Secretary at its office in the City of New York, the day of A. D. one thousand eight hundred and ninety-nine. Secretary. President. 1 There are no statutory forms for life insurance policies. The differences between the policies of Tarious companies are both verbal and substantial. — Ed. 1188 FORMS. [aPP. Provisions, Hequirements, and benefits. 1 Premiums. — Each premium is due and paj-able at the Head Office 2 of the Company- in the City of New York, but will be accepted else- 3 ■where when duly paid in exchange for the Company's receipt signed i by the President or Secretary. That part of the year's premium, if 5 any, not due and unpaid at maturity of this policy shall be deducted 6 from the amount of the claim. 7 Grace in Payment of Premiums. — After this policy has been in 8 force one year, thirty- days of grace will be allowed in payment of pre- 9 miums, with interest for the time taken at the rate of 5 % per annum, 10 during which time this policy shall remain in force for the full amount, ii Automatic Paid-up Insurance. — After three full years' premiums 12 have been paid, this policy, upon the non-payment of any subsequent 13 premium, will become a non-participating policj' for paid-up insur- 14 ance, for the amount stated in the table below, for the end of the last 15 j-ear for which complete annual premiums have been paid ; provided 16 there be no unpaid loan hereon. 17 Extended Insurance. — After three full j'ears' premiums have 18 been paid, upon the non-paj-ment of any subsequent premium, within 19 the thirt}- days of grace, or on satisfactorj- medical examination within 20 twelve months from the due date of premium, if this policy be sur- 21 rendered, the Company will issue in lieu thereof a non-participating 22 policy for paid-up insurance for the full amount, to cease after the 23 number of years and months stated in the table below for the end of 24 the last j'ear for which complete annual premiums have been paid ; 25 provided there be no unpaid loan hereon. 26 Cash Surrender Value. — After three full j'ears' premiums have 27 been paid, upon the non-payment of any subsequent premium on the 28 date called for in the policj' and within sixty daj-s thereafter, this 29 policy maj' be surrendered and the Company will pay therefor, within 30 sixt}' days from the date of such surrender, the amount stated in the 31 table below for the end of the last j'ear for which complete annual 32 premiums have been paid, deducting anj' unpaid loan hereon. 33 Loans. — After this policy shall have been in force three full years, 34 the Company, within sixtj- Aa.ys after written application, and upon 35 the assignment of this policy as security, will, in conformity with its 36 rules then in force, loan amounts within the limits of the cash sur- 37 render value, with interest in advance, at the rate of five per cent 38 per annum, provided : (1) that premiums be fullj- paid to the end of 39 the policy year in which the loan falls due ; (2) that in any settle- 40 ment of this policj- all outstanding indebtedness must be paid. 41 Surplus. — At the expiration of each period of five j-ears from 42 date, a distributive share of surplus shall be apportioned to this 43 policy, if in force, in additional paid-up insurance for the amount 44 purchasable by such share, or the surplus may be drawn in cash at 45 the end of each period, or may at any time be used in payment of 46 premiums on this policy. 47 SECT. III.] FORMS. 1189 1 Hesidence, Travel mid Occupation. — This policy is free from re- 2 striotions as to residence, travel and occupation, after two j-ears from 3 date, except military or naval service in time of war, for which per- 4 mission must be obtained, at the Company's regular rates. 5 Admission of Age. — The Company will admit the age of the in- 6 sured upon satisf actor}- proof ; failing such proof, if the age sliall 7 have been understated, the amount of insurance or other beneflt will 8 be equitably adjusted.] 9 Incontestabiliti/. — After two 3-ears from the date of issue, this 10 policy shall be incontestable if the premiums have been duly paid. 11 Notice. — No person, except an Executive OfHeer of the Company 12 or its Secretar}' at its Head Office in New York, has power on be- 13 half of the Company to make, modify or alter this contract, to extend 14 the time for paj'ing a premium, to bind the Company by making any 15 promise or hy accepting any representation or information not con- 16 tained in the application for this contract. Any interlineations, ad- 17 ditions or erasures must be attested by the signature of one of the 18 above named officers. Proofs of death will be required on the forms 19 prescribed by the Company which will be furnished on request. 20 Assignments. — The Company declines to notice any assignment 21 of this policy until the original assignment, or a duplicate or certified 22 cop}- thereof, shall be filed in the Company's Head Office. The Com- 23 pany will not assume any responsibility for the validity of an assign- 24 ment. 25 Table. FOR END OP AUTOMATIC PAID-UP INSURANCE Extended Insurance form date op non-payment of Premium CASH SURRENDER TEAR Tears Months VALUE 3d 4th 5th 6th 7th 8th 9th 1 0th 11th 12th 13th 14th 15th 16th 17th 18th 19th 20th 21at 22d 23d 24th 2oth 26th 27th 28th 29th 30th 1 1190 FORMS. [aPP. {Copy of the Application for this Policy.) i This Application 2 Made to The Life Insurance Company of New York 3 is the basis and a part of a proposed Contract for Insurance, subject 4 to the Charter of the Companj' and the laws of the State of New 5 York. I hereby agree that all the following statements and answers, 6 and all those that I make to the Compan3''s Medical Examiner, in 7 continuation of this application, are by me warranted to be true, and 8 are offered to the Company as a consideration of the contract, which 9 I hereby agree to accept, and which shall not take effect until the lo first premium shall have been paid, during my continuance in good li health, and the policy shall have been signed by the Secretarj' of the 12 Company and issued. I further agree that in anj' distribution of 13 surplus, the principles and methods which may then be in use by the 14 Company for such distribution, and its determination of the amount 15 apportioned to such policy shall be and are hereby ratified and ac- 16 cepted by and for every person who shall have or claim any interest 17 in the contract. 18 1. My full name is 19 2. I reside at 20 In the City of 21 County of State of 22 3. My former residences were 23 4. My place of business is 24 5. My P. O. address is 25 6. My present occupation is in the 26 following branch of business or trade 27 7. My other occupations are 28 8. My former occupations have been 29 9. The full name of the person to whom the insurance is pay- 30 able is 3i 10. Residing in 32 11. The relationship of said Beneficiary to me is 33 (The Children or Executors, if any are named, are the Children 34 or Executors of ) 35 12. The insurable interest of the said Beneficiary in the life pro- 36 posed for insurance, other than that of family relation- 37 ship, is 38 13. I hereby apply for insurance on my life on the 39 plan Years' Payments Year Distribution. 40 14. Amount, % 41 Contingent Additions ") 42 or >■ $ Deferred Annuity, $ 43 Mortuary Allotment. 3 44 15. The Premiums are to be paid annually for 45 46 SECT. III.J FORMS. 1191 1 16. I was born on the daj' of 18 2 iu 3 17. I am a citizen or subject of 4 18. I have been accepted for insurance under the following policies 5 in this Compan}' : 6 19. I am insured in other Companies and Associations, as fol- 7 lows : 8 and in no others. 9 20. No application has ever been made to any Company or Asso- 10 ciation for insurance upon my life on which a policy has 11 NOT been issued on the plan and premium rate originally 12 applied for, except to the following Companies or Asso- 13 ciations : li and no such application is now pending or awaiting decis- is ion in any corporation. 16 I HEREBY WARRANT AND AGREE that during the next two years fol- 17 lowing the date of issue of the Contract of Insurance for which appli- 18 cation is hereby made, I will not travel or reside in any part of the 19 Torrid Zone, or North of the parallel of 60° North Latitude, and will 20 not engage in anj- of the following extra hazardous occupations or 21 employments ; retailing intoxicating liquors, handling electric wires 22 and dynamos, blasting, mining, sub-marine labor, aeronautic ascen- 23 sions, the manufacture of highly explosive substances, service upon 24 any railroad train or track or in switching or in coupling cars, or on 25 any steam or other vessel, unless written permission is expressly 26 granted by the Company. 27 I FURTHER WARRANT AND AGREE that I will not engage in any mili- 28 tary or naval service in time of war, during the continuance of the 29 said contract, without first obtaining written permission from the 30 Company. 31 I ALSO WARRANT AND AGREE that I wlll not die by my own act, 32 whether sane or insane, during the period of one year next following 33 said date of issue. 34 I have paid $ to the subscribing Soliciting 35 Agent, who has furnished me with a binding receipt therefor, signed 36 by the Secretary of the Company, making the insurance in force from 37 this date, provided this application shall be approved, and the policy 38 duly signed hy the Secretary at the Head Office of the Company and 39 issued. 40 Dated at 1899. 41 Signature of person whose Life is proposed for insurance, 43 (Signed) 44 I have known the applicant for and saw 45 him sign this application 46 (Signed) Soliciting Agent. 1192 I-OEMS. [app. Medical Examiner's Report. 2 1. What is your full name ? Age years. 2. Are you married or single? 3 3. Have you ever had any of the following diseases? (Yes or No.) 4 (Of each illness state date, number of attacks, duration, severity, 5 complications and result.) 6 A. Dizziness, unconsciousness, epilepsy or convulsions of any 7 sort ? Paralysis ? Apoplexy ? or any diseases of the nervous 8 sj'stem ? 9 B. Headaches, — severe, protracted, or frequent? 10 C. Sunstroke? 11 D. Discharges from ear or any other chronic discharges ? 12 E. Chronic or persistent cough or hoarseness, or spitting or cough- 13 ing of blood, asthma or shortness of breath, or any chest or 14 lung disease? 15 F. Disease or any functional disturbance of the heart ? 16 G. Dj'spepsia or Indigestion ? 17 H. Chronic or habitual Diarrhoea ? 18 I. Severe, protracted or repeated intestinal colic? 19 L. Colic, due to renal or hepatic stone, or other derangement of the 20 liver? 21 M. Hemorrhoids, fistula or other diseases of the rectum ? 22 N. Gravel, bladder or kidney disease ? 23 O. Syphilis or other venereal disease ? 24 P. Stricture ? 25 Q. Malarial or other fever? 26 E. Rheumatism or gout? 27 5. Any chronic disease of the skin ? 28 T. Cancer or tumors or ulcers of any kind ? 29 4. What are the full particulars of any other illness, constitutional 30 diseases or injury you have had, giving date, duration and re- 31 maining effects, if any ? 32 6. Has your weight recently increased or diminished, and from 33 what cause? 34 6. Are you on the U. S. invalid pension roll — if so, for what dis- 35 ability? 36 7. Give name and address of physician last consulted 37 When and for what complaint ? 38 8a. What were your past and what are your present habits in the use 39 of alcoholic or other stimulants ? 40 b. In the use of chloral, morphine and other narcotics? 41 9. Have you ever been under treatment at any asylum, cure or 42 sanitarium ? If so, when, how long and for what? 43 SECT, in.] FORMS. 1193 1 10. Are j-ou now in good health so far as you know or believe? 2 11. Family record of the Applicant. LlTINQ. Dead. Age. Health. Age. Specific cause of death? How long sick? Health previous to last illneas? Name and P. 0. address of each living member of family. FATHER, FATHER'S FATHER, FATHER'S MOTHER, MOTHER, MOTHER'S FATHER, MOTHER'S MOTHER, 1= 1 living. ■si S .b R P3 Number g.l| m dead. Is g S . Number 1 g 1 living, !5 QQ Number dead, 3 Dated at 4 the 5 Witness : 6 (Signed), State of day of 1899 M.D. 7 I certify that my answers to the foregoing questions are correctly 8 recorded by the Medical Examiner. 9 10 (Signed), Signature of the person examined. INDEX. Aban'donmekt, 829-857, 999, u. Accident, 783-797. Admiralty, 941-944, 956-959. Agents of underwriters, 104(i-1059, 1091-1096. "Alienated," 599-602. "Allowed," 543-545. Amount of recovery, in marine insurance, general principles, especially as to partial losses, 798-814. valued policies, 815-828. total losses, actual and constructive, 829-857. in fire insurance, general principles, 858-883. limited mterests, 884-926. in life insurance, 927-936. Application for life insurance, 1190-1193. Apportionment among insurers, 803, 810-814, 823-828, 879-881. Apportionment clause, 810-814, 879-881. Arbitration, 1061-1063. Arson, 721-725. •'As interest maj' appear," 585-588. Assignees and beneficiaries in marine insurance, 1110-1114. in fire insurance, assignees, 1115-1133. beneficiaries, 1134-1141. in life insurance, assignees, 1142-1153. beneficiaries, 114-115, 779-782, 1154. 1169. And see Fokms. Auction, 869-871. Baekatry, 671-676. Beneficiaries. See Assignees. Benefit societies, 1157, n., 1161, n. Buildings, loss on, 881-883. Capture, 829-833, 836-840. Casaregis, quoted, 4. Cause of loss. See Peril and Pkoximate Cause. " Change in interest," 625-639. "Change of title," 610-625. Change of voyage. 432-434, 442-443. Co-insurance, 803-804, 861-865, 1185. Collision, 665, 697-703, 707-714, J 174. Commissioners, Court of the, 1. Concealment, general theory of, 125-135. application of the theory in marine insurance, 136-168. in fire insurance, 169-190. in life insurance, 191-211. And see Waiveb. Conditions applicable after loss, in marine insurance, 996-1000. in fire insurance, 1001-1022. in life insurance, 1023-1026. And see Waiver. Conditions in fire insurance applicable before loss, prohibiting the keeping of certain things, 523-545. prohibiting increase of hazard, 546-560. prohibiting vacancy and the like, 561-578. as to ownership at the inception of the con- tract, 579-598. prohibitmg aleniation, ' ' aleniation ; sale ; conveyance ; trans- fer," 599-610. "sale, transfer, or change in title or possession," 610-625. "change in interest, title, or posses- sion," 625-639. And see Waiver. Conditions in life insurance applicable before loss because of misstatements, 391-424. because of going to forbidden place, 640- 641. because of non-payment of premiums, 641- 658. And see Waiver. Consignee, 25-26, 59-60. Constructive total losses. See Amount of Recovkky. Court of the Commissioners, 1-3. Creditor, 25-26, 64-66, 101, 107-108, 927-929, 932-936, 1161-1167. Death of assured, as affecting fire policy, 635, n. Death of beneficiary, as affecting life policy, 1158-1167. Delay, as deviation, 434-436, 443-444. Delay, as a peril of the sea, 690-693. Detached, 373-376. Deviation, 430-468, 1028-1031. " Die by his own hand." See Suicide. Double "Insurance, 803, 810-814. Estoppel. See Waiver. Execution as cause of death, 760-761. Execution, levy and sale on, 679, 625-629, 632-634. Explosion, 671-676, 680-681, 729-738. " False swearing," 1015-1018. Father's interest in life of son, 104-106, 111- 115 113. 1196 INDEX. "Fee simple," 594-596. Fifty per cent rule, 834-836, 847-853. Foreclosure, 611, 614, 889-890. Forms, in marine insurance, 1171-1175. in fire insurance, 1176-1186. in life insurance, 1187-1193. Fraud, 178-185, 205-211, 242-244, 267-274, 289-292, 391-398, 417-424, 721-725, 822- 823, 1015-1018, 1106-1109. Guidon de la Mer, quoted, 1. Health, 389-390, 424-428. Homestead intej'est, 916-918. Husband's interest in life of wife, 122. Husband's interest in wife's property, 91-92, 916-920. Illegality of business in case of fire insur- ance, 512-522. Illegality of vovage, 498-511. Incontestability, 1106-1109, 1189. Increase of hazard, 546-560. Insanity. See Suicide. Insuralile Interest. See Interest. Insurance, defined, 1. Interest, insurable, as affecting the validity of the policy, why requisite, 4-23. satisfying the requirement. in marine insurance, 24-66, 137-139, in fire insurance, 67-100, in life insurance, 101-124, 1106-1109. Interest, limited, as connected with amount of recovery, 857, n., 884-936. Interest, limited, as connected with conceal- ment and representation, 137-139, 170-172, 264-265, 274-276. And see Interest. Interest, limited, as connected with express conditions, 579-639. "Kept," 523-524, 528-530, 540-543. Laws and ordinances as related to cause and amount of loss, 697-703, 707-714, 747-750, 760-761. Leasehold, 583-585, 884-888. Lienholder, 81-87, 920-924. Life tenant, 596-597, 916-920. Lightning, 717-719. Limitation of action, 1018-1021. Limited interest. See Interest. Loss. See Peril and Amount. "Loss, if any, payable," 1134-1141. " Lost or not lost,"" 42-47. Machinery, 874-877, 1174. Magistrate's certificate, 1001-1004, 1007-1010. Manufacturer, measure of recovery bv. 877- 879. ■' Materialitv, 125-137, 148-156, 176-178, 181- 185, 188-192, 199-204, 227-229, 237-239, 247-251, 292-294, 300-303. Misrepresentation. See Representation. Mortgagee, 76-77, 911-916, 920-924, 965-970. Mortgagee clause, 1137, n., 1186. Mortgagor, 41, 264-265, 589-591, 611-614, 618-620, 634-638, 889-890. Negligence, 665, 671-675, 707-714,719-721, 784-786, 941-946, 959-960. Non-disclosure. See Concealment. Notice of death, 1026, n. Notice of fire, 1010-1015. ONE-third off new for old, 807-810, 847-853, 1174-1175. Partial loss, 803-804. Partition-sale, 610-611. Partner, 70-71,929-931. Partnership, 615-617, 621-622. Part owner, 592-594, 959-960. Patented articles, 874-877. Peril insured against in marine insurance. the kind of peril insured against, 659- 696. the connection between peril and loss, 697-714. in fire insurance, the kind of peril insured against, 715- 728. the connection between peril and loss, 729-759. in life insurance, death, 760-782. accident, 783-797. Phvsician's certificate, 1023-1025. Pleading, 47, n., 1140, n. Policy forma in marine insurance, 1171-1175. in fire insurance, 1176-1186. in life insurance, 1187-1193. Premium, 644-658, 1068-1071, 1078-1080, 1109, n. Profits, insurance on, 26-30, 48-51, 867-868. Proofs of loss in marine insurance, 996-1000. in fire insurance, 1001-1022, 1037-1042. in life insurance, 1023-1026. And see Waiver. Proper vice, 690-696. Proximate cause, 697-714, 729-759. Ratification of unauthorized procuring of insurance, 38-41 . Rebuilding, 865-867, 871-873. Reinsurance, 31-35, 108-111, 172-175, 196-198 294-299, 896-898, 908-910. Removal, loss by, 751-754. Replace, or reinstate, election to, 865-867, 871- 873. Representation in marine insurance, 212-248. in fire insurance, 247-283. in life insurance, 284-303. And see Waiver. Roccus, quoted, 430. INDEX. 1197 Santeksa, quoted, 1. Seaworthiness. See Uksea worthiness. Sister's interest in life of brotlier, 101-103. "Sold," 602-610. Son-in-law's interest in life of mother-in-law, 119-121. Son's interest in life of father, 117-118. Spontaneous combustion, 693-696. Standard policies. See Forjis. Statutes. 43 Eliz. c. 12 (1601), 1-3. 19 Geo. 11. c. 37, §§ 1-3 (1746), 6-8, 33, u. 14 Geo. III. c. 48 (1774), 8-9. 8 & 9 Vict. c. 109, § 18 (1845), 9, n. 27 & 28 Vict. c. 56, § 1 (1864), 33, n. 29 & 30 Vict. c. 42 (1866), 9, n. Valued policy laws, 866, n. Massachusetts standard policy law, 1176, n. Kew York standard policy law, 1179, n. Stockholder, 72-75. Straccha, quoted, 1, 798. Subrogation in marine insurance. 937-960. in lire insurance, 188-190, 961-991. in life insurance, 992-995. Suicide, 762-782, 786-788. Sundav, 641-644. Sunstroke, 783-784. Theft, 697, 739-747, 938-941. Time policy, 475-487, 491-497. Total loss, actual, 829-833, 840-846. Total loss, constructjye, 829-857. " UsoccupiED," 562-578. Unseaworthiness, 469-497. 676-679, 1031-1036. " Used," 524-527, 530-537, 540-543. "Vacant," 561,564-578. Valued policies, 815-828, 847-853, 858-861, 865-866, 946-955. Valued policy laws, 866, n. Vendee, 60-61, 67-68,78-80, 594-696,890-895, 911-916, 974-991, 1115-1117, 1124-1133. Vendor, 580-583, 629-632, 899-905, 974-991, 1115-1117, 1124-1133. Wager policies. See Interest. Waiver and estoppel in marine insurance, 125-136, 1027-1036. in fire insurance, as to conditions applicable after loss, 1037-1042. as to defences arising before loss, the insurer's conduct after the is- suing of the policy and be- fore the arising of the defence, 1043-1063. the insurer's conduct after the is- suing of the policy and at or be- fore the arising of the delence, 1064-1070. the insurer's conduct at or before the issuing of the policy, and at or before the arising of the defence, 1071-1078. in life insurance, 198-199, 1089-1109 War, 644-653, 661-663, 1021, n. Warehouseman, 906-908. Warranty in marine insurance, 212-216, 304-324, 1027-1028. in fire insurance, 325-388. in life insurance, 389-429. And see Waiver. Wear and tear, 659-661, 685-690. " Whom it may concern," 38-41, 1114, ii.