A A — J SOUTH 7 ERNF mmm ~^^ o 4 lAL ID 2 Lib OD 9 1 9 4 = f} LITY THE LIBRARY OF THE UNIVERSITY OF CALIFORNIA LOS ANGELES SCHOOL OF LAW uv TREATISE MARINE, FIRE, LIFE, ACCIDENT AND ALL OTHER INSURANCES INCLUDING MUTUAL BENEFIT SOCIETIES, COVERING ALSO GENERAL AVERAGE, AND, SO FAR AS APPLICABLE, RIGHTS, REMEDIES, PLEADING, PRACTICE AND EVIDENCE. BY JOSEPH A. JOYCE. IN FOUR VOLUMES. VOL. I. SAN FRANCISCO: BANCROFT-WHITNEY COMPANY. 1S9 7. v/, T Entered according to Act of Congress in the year 1897 v By JOSEPH A. JOYCE, In the Office of the Librarian of Congress, at Washington Ban Francisco: The Kilmer-Rollins Klectrotype Company, i yl'uurapukrs a-sd stereotyrers. TO MY WIFE M. E. J. This Treatise is Dedicated as a tribute to her constant encouragement. ip rr " 72995b PREFACE. In the following volumes the writer has endeavored to give the profession not only a treatise, but a working book, which will meet the needs, lessen the labors, and save the time of all lawyers interested in questions re- lating to insurance, and to make it alike valuable to the practitioner who has access to large libraries and to the one who has not. The writer's experience in practice, coupled with what he has learned from judges and other members of the profession, convinced him that a work covering the whole law of insurances and its practice before the courts would be favorably received. He has, therefore, attempted to prepare a work present- ing, in a carefully and systematically arranged form, the principles underlying adjudged cases, the facts to which such principles have been applied, and the opin- ions of courts and text-writers upon conflicting questions of law. Having this purpose in view, the writer in 1889 commenced collecting the necessary material, since which time no labor has been spared in critically examining the authorities, systematically arranging them with reference to their underlying principles, and in noting as briefly and concisely as has been deemed ad- visable the facts of such important cases as will show the application of the governing principle therein, and the grounds of the decisions. If for other reasons than (v) VI PREFACE. a conflict of authority it has been impossible to formu- late any certain rule, the substance of the decision or de- cisions in point has been given. Where decisions have conflicted, the writer has endeavored to reconcile them and to state the weight of authority, and has called to his aid in numerous instances the opinions of other text-writers and of courts. It has not been the writer's plan to treat of the several kinds of insurances separately, but, on the contrary, to group decisions together with reference to the grounds on which the rulings have been based; where this has not been possible, owing to some technical doc- trine peculiar to a particular kind of insurance, as in case of abandonment and constructive total loss in marine assurance, the subject has been treated separately under that heading to which it belongs. This arrangement has made it possible to cover all kinds of insurances, includ- ing mutual benefit insurance. Much time and labor has been expended in arranging alphabetically the sec- tions of some chapters; but in no instance has this been done where it has not seemed more systematic, in view of the subject matter of such chapters, and better calcu- lated to aid the practitioner by facilitating speedy ref- erence. It is believed that no errors exist as to the authorities relied on, for they have not only been care- fully selected and fully and conscientiously examined before and during compilation, but the citations made have also been verified from the completed manuscript, Every effort has been made to bring this work up to that standard which the technical character of the subject and , the wants of the profession necessitate, and to make it one of value alike in the court room and the office. It is trusted that such effort has not been unsuccessful. A succinct account of the origin and sources of in- PREFACE. VII surances has been incorporated in the form of a "Pre- liminary Chapter." The adjudications have been brought down to the time of going to press, and cover not only those in this country, but also numerous English and Canadian cases. The writer has freely con- sulted the works of Emerigon, Marshall, Arnould, Duer, and others, and has carefully endeavored to give full credit to all from whom any information has been ob- tained. The writer also acknowledges his indebtedness to his brother, Mr. Howard C. Joyce, for assistance ren- dered during a part of the time. Credit is also due Mr. Howard K. James for aid in helping verify some of the citations; and the unfailing courtesy of Mr. James H. Deering and Mr. Lloyd Conkling of the San Francisco Law Library extended to the writer is acknowledged by him with great pleasure. If the purpose of this treatise and the choice of the plan have been fortunate and the work is otherwise meritorious, the writer is content to leave it in the hands of the profession. JOSEPH A. JOYCE. San Francisco, Cal., August, 1897. CONTENTS. TITLE I. PRELIMINARY CHAPTER. THE SOURCES AND ORIGIN OF INSURANCES. § I. Sources of insurance. § II. Origin of insurance generally. § III. Origin of marine insurance. § IV. Adoption of marine insurance in modern times, § V. Origin of the mutual insurance system. § VI. Origin of fire insurance. § VII. Origin of life insurance. § VIII. Origin of accident insurance. § IX. Origin of guarantee, fidelity guarantee, real estate title, etc. insurances. § X. Origin of other insurances. TITLE II. GENERAL TERMS AND DEFINITIONS. CHAPTER I. TERMS AND DEFINITIONS. § 1. "Insured" and "assured" synonymous. § 2. Definition of insurance. § 3. Contract to indemnify assured for bank's default is contract of insurance. § 4. Sanitary inspection of buildings, etc., is not insurance. (IX) X • CONTENTS. § 5. Definition of marine insurance. § 6. Definition of fire insurance. § 7. Definition of life insurance. § 8. Definition of accident insurance. § 9. Definition of casualty insurance. § 10. Definition of endowment insurance. § 11. Definition of Tontine insurance. § 12. Definition of guarantee insurance. § 13. Definition of real estate and title insurance. TITLE III. CONTRACT AND POLICY. CHAPTER IJ. NATURE OF THE CONTRACT. § 16. Risk is an essential element. § 17. Division and distribution of loss are essential. § 18. Insurance is an aleatory contract. § 19. Insurance is a voluntary contract. § 20. Insurance is an executory contract. § 21. The contract is synallagmatic. § 22. Insurance is a conditional contract. § 23. Insurance is a personal contract. § 24. Insurance other than that of life and accident Is a contract of indemnity. § 25. Indemnity stipulation as to value in policy. § 26. Life insurance is not a contract of indemnity. § 27. Accident insurance is not a contract of indemnity In all cases. § 28. Reinsurance is a contract of indemnity. § 29. Other incidents of the doctrine of indemnity. CHAPTER III. PAROL CONTRACTS. 31. Contract need not be in writing: Parol contract and rule In England. ?,2. Same: The common-law rule. 33. Same: Statutory regulations— English Stamp Acts. 34. Parol contracts— Mutual benefit societies. CONTENTS. XI 35. Parol contracts— Statutory or charter provisions. 36. Parol contracts— Statutory or charter provisions— continued. 37. Parol contract for insurance subject to usual provisions of policy. 38. Parol agreement for insurance may be specifically enforced, or court may award damages. 39. Parol contract— Statute of frauds. 40. How far parol contract merged in written agreement. 41. Parol contract— Renewal. CHAPTER IV. REQUISITES OF VALID CONTRACT— COMPLETION OF CON- TRACT. SVBDIV. I. Requisites of Valid Contract. II. Completion of Contract: Proposal and Acceptance. III. Completion of Contract: Prepayment of Premium. IV. Completion of Contract: Delivery of Policy: Knowledge of Loss. SUBDIV. I. Requisites of Valid Contract. § 43. Requisites of a valid contract of insurance. § 44. Requisites of a valid parol contract of insurance. § 45. Minds of the parties must meet on all essentials of contract. § 46. Essentials need not be expressly agreed upon— Prior course of dealing, custom, etc. § 47. The usual rate of premium will be presumed to have been intended. § 48. Both the rate of premium and the duration of the risk may be understood. § 49. The rate of premium and amount may be understood § 50. Whether a contract exists may be governed by custom or usage of the parties or of the insurance business at a place. SUBDIV. II. Completion of Contract: Proposal and Acceptance. § 53. Completion of contract: Mutual benefit societies. § 54. Completion of contract: Proposal or application. § 55. Completion of contract: Acceptance, generally. § 56. Qualified acceptance — Condition precedent. § 57. Acceptance — Delay in acting on application. § 58. When applicant is not bound to accept policy: Effect of reten- tion of policy by applicant. § 59. Agent's agreement— Liability not to attach till approval. § 60. Approval may be implied from the circumstances. § 61. Oral agreement of agent may be controlled by application. § 62. Completion of contract: Negotiations through mail. XU CONTENTS. § G3. No contract where acceptance mailed differs in terms from proposal. § 64. Agent's receipt pending approval or issuance of policy. § 65. Same subject: Effect of memorandum— Binding slip, in- dorsement, etc. § 66. Completion of contract, marine and fire: Binding slip. SUBDIV. III. Completion of Contract: Prepayment of Premium. % 70. Prepayment of premium: Condition precedent. § 71. Actual prepayment of premium not in all cases essential to validity of contract. § 72. Prepayment of premium: Oral agreement. § 73. Prepayment of premium to agent or broker. § 74. Effect of part payment. § 75. Payment by third person. § 76. Prepayment of premium may be waived. § 77. Waiver of prepayment by agent. § 78. Renewal — Waiver of prepayment of premium. § 79. Prepayment of premium— Effect of delivery of policy. § 80. Prepayment— Credit may be given. § 81. Prepayment— Mutual credits— Application on agent's debt. § 82. Where there are mutual credits. § 83. Crediting premium on agent's indebtedness to applicant. § 84. Prepayment— Course of dealings allowing credit. § 85. Prepayment of premium — Evidence of waiver. § 86. Effect of receipt in policy for premium. SUBDIV. IV. Completion of Contract: Delivery of Policy: Knowledge of Loss. § 90. Delivery of policy not necessary to complete contract. § 91. Actual or manual delivery of policy not necessary to com- plete contract. § 92. Agreement to deliver policy— Demand unnecessary. § 93. There may be a constructive delivery. § 94. Delivery— Possession of policy by the assured. § 95. Neglect of assurer to deliver policy. § 96. Conditional delivery. § 97. Parol evidence admissible to show conditional delivery. § 98. When actual delivery of the policy necessary. § 99. Delivery: Misrepresentation or fraud. § 100. Delivery: Notice to assured of execution of policy. § 101. Delivery to agent of insured or to third person. § 102. Delivery by or to agent— Policy held by agent. § 103. Delivery: Agreemenl completed before loss. § 104. Delivery: Agreement incomplete at time of loss. § 105. Loss before date of contract— Retroactive policy. § 100. Where both parties know of loss when contract made or executed. CONTENTS. xiii § 107. Knowledge of loss by assured before and after risk attaches. § 108. Assured uot obligated to notify company of loss before de- livery of policy where risk has attached. CHAPTER V. REINSURANCE. § 112. Reinsurance defined. § 113. Nature of contract. § 114. Reinsurance: Validity of contract. § 115. Reinsurance: Validity of company's acts— Its powers. § 116. Reinsurance: Not within statute of frauds. § 117. Relations between parties and between insured and reinsurer. § 118. Insurable interest of reinsurer. § 119. Reinsurance: The risk. § 120. Duration of risk may be controlled by original insurance. § 121. Custom of underwriters may affect risk. § 122. Limitation of risk may be specified date— Change of risk. § .123. Limitation of risk to particular locality. § 124. Condition as to assignment. 8 ll*5. Condition as to other insurance. § 126. Conditions: Time limit for suing— Award. § 127. Amount of reinsurance. § 128. Representations and warranties in reinsurance. § 129. Abandonment unnecessary in reinsurance. § 130. Proofs of loss in reinsurance. § 131. Extent of reinsurer's liability. § 132. Agreements affecting reinsurer's liability. § 133. Reinsurer's liability: Pro rata clause. § 134. Reinsurer's liability: Compromise: Insolvency of Insurer. § 135. When suit may be brought against reinsurer: Rights of origi- nal insured. § 136. Reinsurance: Recovery: Evidence. § 137. Reinsurer bound by judgment: Notice to defend. § 138. Defenses available to reinsurer. CHAPTER VI. THE POLICY— ITS FORM AND REQUISITES. § 145. Policy defined. § 146. Certificates in mutual benefit societies or associations. § 147. Division and kinds of policies. § 148. Wager policies. § 149. Wager policies, valid at common law, now void. XIV CONTENTS. § 150. Wager policy: Conflict of laws. .§ 151. Wager, valued policy may be shown to be a wager. § 152. Policy valid at inception cannot become wager. § 153. Wager policies: Loss should be total. § 154. Wager policies: What are and are not. § 155. Interest policy defined. § 156. Open policy defined. § 157. Running policies: Blanket policies: Floating policies. § 15S. Open policies— What are. § 159. Valued policy defined. § 160. Valued policy: What the valuation includes. § 161. Valued policy: How far valuation is conclusive. § 162. Valued policy: Effect of overvaluation: Fraudulent valua- tion. § 163. Valued policies: Statutory regulations. § 164. Valued policies: Partial loss. § 165. Valued policies: Pro raita recovery. § 166. Valued policies: "Valued at" not inclusive. § 167. Valued policies: Prior insurance. § 16S. Valued policies: What are. ?• 1C9. Mixed policies defined. § 170. Time policies defined. v 171. Time policies: Computation of time. § 172. Time policies: Trading voyage: Nature of contract. § 173. Time policies: Continuance after expiration of time. § 174. Voyage policies defined. § 175. Voyage policies: Voyage must conform to course fixed by usage. § 176. The form of the policy. § 177. The policy— What it usually contains. § 17S. Execution of the policy. § 179. Execution of the policy: Affixing date. § ISO. Execution of the policy: Affixing seal. § 181. Requisites of a valid policy. CHAPTER VII. CONSTRUCTION— WHAT IS PART OF THE POLICY. § 1S5. What is part of the policy: General rule: Parol evidence. § 186. When application is part of the policy. § 187. When application is not part of the policy. § 1SS. When charter and by-laws are and are not part of contract. § 189. Effect of subsequent amendment of by-laws or enactment of new by-laws. § 190. Application and by-laws, when part of contract: Statutory provisions. § 101. When other papers are and are not part of policy. CONTENTS. XV § 192. Whether prospectus or pamphlet part of policy. § 193. Same subject: The cases. § 194. Whether common and statutory law part of contract. § 195. Indorsements: Marginal references— When part of policy— When not. § 19G. Conditions annexed to policy— When and when not part of same. § 197. Whether premium note part of policy. § 198. Usage— How far part of policy. CHAPTER VIII. CONSTRUCTION OF POLICY. $ 205. Construction generally. § 206. Whether same rules govern marine, fire, and life policies. § 207. Construction: Mutual companies: Benefit societies. | 208. Policies are construed like other written contracts. § 209. Construction: Intention of parties governs. § 210. Construction: Reference must be had to nature of risk and subject matter. § 211. Construction must be reasonable. § 212. Contract should be given effect if possible. § 213. Construction: Rejection of words and clauses. § 214. General and special clauses. § 215. Construction will be given to uphold the law. § 216. Words are to be construed in ordinary and popular sense. § 217. Construction: Technical, etc., words. § 218. Addition of words by construction. § 219. Courts cannot extend or enlarge by construction. § 220. Forfeitures and exceptions not favored by construction. § 221. Construction should be liberal in favor of assured and for benefit of trade. § 222. Same subject: The rule contra proferentem. § 223. The written controls printed part of policy. § 224. Same subject: Cases. § 225. Construction: Lex loci contractus. § 226. Same subject: Cases. § 227. Same subject: Exceptions to the rule. § 228. Same subject: Mutual benefit societies. § 229. When place where policy is countersigned is place of con- tract. § 230. When place of delivery is place of contract. § 231. When place of acceptance and mailing is place of contract § 232. Assignment: Lex loci contractus. XVI CONTENTS. CHAPTER IX. CONSTRUCTION— USAGE. § 237. Usage generally. § 238. Usage part of the common law. § 239. Presumption as to knowledge of usage. § 240. Usage must be general. § 241. Usage must be well established and notorious. § 242. Usage may be of recent origin. § 243. Usage must be reasonable. § 244. Usage must be uniform. § 245. Parties may by express contract include or waive usage. § 246. Usage admissible where contract ambiguous or obscure. § 247. Usage inadmissible to contradict or substantially vary the plain terms of policy. § 248. Same subject: Cases and authorities. § 249. Whether usage controls the plain legal import of words of policy. .§' 250. Same subject: Opinions and cases. § 251. Same subject: Conclusion. ,§' 252. Usage cannot legalize an illegal act. §' 253. Particular usage may control general usage. .§ 254. Usage controls implied limitations. § 255. Usage of another similar trade or place or of another com- pany. § 25G. Evidence of usage: Liberal construction. § 257. What is sufficient evidence of usage. § 258. Evidence of usage, when admissible: Cases. § 259. Evidence of usage, when inadmissible: Cases. CHAPTER X. THE POLICY— ALTERATION AND MODIFICATION. § 205. Material alteration without consent avoids contract. § 200. Immaterial alteration does not avoid contract. § 207. Alteration when contract is inchoate. § 208. Alteration by a third party. § 209. Alteration by the insurer. § 270. Material alterations may be made by consent. § 271. Same subject: Decisions. j 272. Alteration of contract by parol. § 273. Same subject: Decisions. § 274. Alteration with intent to obtain insurer's consent. § 275. Same subject: Decisions. fc 270. Alteration: Substitution of parties. CONTENTS. XV11 CHAPTER XI. WAR— ALIEN ENEMIES. § 281. Effect of war generally. § 282. Insurances on enemies' property formerly upheld. § 2S3. Insurances on enemies' property now illegal. & 2S4. Same subject: Early decisions. § 2S5. Trading with enemy, mistake or ignorance no excuse. & 2S6. Defense of alien enemy. § 287. Binding force here of laws of belligerent nations. § 2S8. Alien enemies— Life insurance. § 289. Effect of war on pre-existing valid contract. § 29(5. Same subject: Loss before war. § 291. Same subject: That war merely suspends the contract. § 292. Right of citizen to bring property from enemy's country. i 293. War: License to trade. § 294. Who are alien enemies: Domicile. & 295. Alien enemy: What constitutes domicile. § 29G. Residence with intent to return. § 297. Change of domicile. 5' 298. Alien enemy: What is enemy's country. §' 299. Alien enemy: Commencement and cessation of hostilities. TITLE IV. PARTIES— AGENTS— BENEFICIARIES. CHAPTER XII. PARTIES TO THE CONTRACT— THE INSURED. & 305. Who may be parties to the contract. § 306. Who are not parties. § 307. Parties— Infants. § 308. When aliens may be insured. $ 309. Relations of insurer and insured. J 310. Name of assured need not be set out. § 311. Name: Evidence admissible to show actual party In Interest. Joyce, Vol. L— B Xvill CONTENTS. CHAPTER XIII. PARTIES— MEMBERS OF MUTUAL INSURANCE COMPANIES. § 316. Parties: Members of mutual insurance companies. § 317. Membership exists when contract is completed. § 318. Obligations and rights of members generally. § 319. Relations of members of mutual companies: Partnership. CHAPTER XIV. PARTIES— THE INSURER. § 325. Insurer defined. § 326. Stock insurance companies defined. | 327. Legislation concerning insurance companies. § 328. Same subject: Foreign companies. § 329. Foreign company: Retaliatory and anti-compact laws. § 330. Foreign companies: What constitutes "doing business," etc. § 331. Foreign company estopped to avoid contract by setting up noncompliance with statute. § 332. When contract valid although company has not complied with statute. § 333. When contract not valid where company has not complied with statute. § 334. Charter: Corporate powers: Ultra vires. § 335. Forfeiture of charter. CHAPTER XV. PARTIES— MUTUAL COMPANIES. 8 340. Mutual insurance companies defined. 8 341. Mutual companies: Capital stock: Fund for payment of losses. § 342. Kinds of mutual insurance companies. § 343. Plans of mutual insurance companies. § 344. When mutual societies are and are not Insurance companies. § 345. What societies are not insurance companies: Cases. § 340. What societies are insurance companies: Cases. CONTENTS. Six CHAPTER XVI. PARTIES— MUTUAL COMPANIES, CONTINUED. § 350. Powers of mutual companies affecting the contract— Ultra vires. § 351. Same subject: Guarantee fund. § 352. Benevolent and fraternal organizations subject to laws of state and jurisdiction of courts. § 353. Absolute right to become members under charter of mutual company. § 354. Contribution by subordinate lodge to supreme lodge: Specific purpose: Power of disposal of funds. § 355. Effect of decision by official body created by constitution of order. § 356. Delegation of power by supreme lodge of mutual benefit so- ciety. § 357. Subordinate association cannot be deprived of charter with- out hearing. 5 35S. Member of benevolent association cannot be expelled without hearing. SUBDIV. 1. Mutual Companies: By-Laws. § 364. Definition of by-laws. § 365. Power to enact by-laws inherent. § 366. Charter: Provisions concerning by-laws. v § 367. Adoption of by-laws by custom or usage. § 368. Incorporated societies: Unreasonable by-laws. § 369. Unincorporated societies: Unreasonable by-laws. § 370. By-laws must not be unequal. § 371. Validity of by-laws. § 372. By-laws excluding resort to civil courts. § 373. By-laws must not be contrary'to laws of state or of United States. § 374. By-laws against public policy are void. § 375. By-laws must not contravene terms of charter. § 376. Enforcement of by-laws— Penalty. § 377. Power to alter or change by-laws. § 378. By-laws: Changes, how made. § 379. By-laws: Statutory or charter power to repeal, change, etc. § 380. Change of by-laws: Vested rights. § 3S1. Construction of by-laws. CHAPTER XVII. AGENTS OF INSURER: APPOINTMENT, ETC.— POWERS. § 3Sfl. Corporations act through agents. § 387. Charter provisions concerning agents. XX CONTENTS. § 3S8. Who are insurance agents. § 389. Classification of agents. § 390. Appointment of agents. § 391. Appointment of agents: Statutes. § 392. Appointment of agents: Territory: Contract with principal. § 393. Relative powers of agents of stock and mutual companies. § 394. Same subject: Powers after completion of contract. § 395. Who is general agent. § 396. Power of agents to delegate authority. § 397. Officers of insurance corporations and associations and their powers. § 398. Powers of officers of mutual benefit societies. § 399. Powers of president. § 400. Powers of vice-president. § 401. Powers of secretary. § 402. Powers of assistant secretary. § 403. Powers of treasurer. § 404. Powers of directors. § 405. Powers of superintendent. § 406. Powers of general managers. § 407. Agency of subordinate lodges. § 408. Agency arising from necessity or emergency. § 409. Agent delegated for special purpose. § 410. Agency— Person referred to by company. § 411. Powers of clerk. § 412. Powers of medical examiner. § 413. 'Whether one is agent or broker. § 414. Whether broker is agent of insured or Insurer. § 415. Partnership as agent: Joint agents. § 416. Powers of adjuster. CHAPTER XVIII. AGENTS OF INSURER CONTINUED -POWERS. § 424. Powers of agents— Generally. § 425. Authority which the agent is held out to possess. § 426. Agent's authority is coextensive with his employment. § 427. Authority which the agent represents himself to possess. § 428. Private restrictions upon agent's authority. § 429. Assured bound by knowledge of limitations on agent's au- thority. § 430. Obligation to inquire as to agent's authority. § 431. What is not notice of agent's limited authority. § 432. Stipulation that only certain agents may waive. § 433. Limitation of agent's authority in policy is valid. § 434. Authorities holding that restrictions in policy on agent's au- thority bind assured. CONTENTS. XXI § 435. Restrictions in policy as to manner of exercising authority by agent. § 436. That restrictions in policy on agent's powers only relate to acts after policy delivered. § 437. That restrictions in policy on agent's powers only relate to acts before loss. § 438. That restrictions in policy on agent's powers are only prima facie binding. § 439. Conclusion: Agent may waive conditions notwithstanding inhibition in policy. § 440. Opinions of courts on waiver and estoppel: Agents. § 441. Restrictions in policy: Oral waiver. § 442. Same subject: Oases— Contra. § 443. Where agent promises to make proper indorsement on policy but fails to do so. § 444. Restriction in application on agent's authority. § 445. Agency: Custom: Course of business: Similar acts. § 446. Agency: Custom, etc.: Signing for principal. § 447. Agency: Custom, etc.: Waiver of conditions. § 448. Agency: Custom, etc.: Alteration of contract. § 449. Agency: Custom, etc.: Submission to award. § 450. Agency: Custom, etc.: Proofs of loss. § 451. Agency: Custom, etc.: Surrender of policy. § 452. Agency: Custom, etc.: Transfer of insurance. § 453. Agency: Custom, etc.: Negotiation of drafts. § 454. Agency: Custom, etc.: Cancellation of policy. § 455. Ratification of agent's acts— Generally. § 456. Ratification of agent's acts operates retroactively. § 457. Ratification of agent's acts must be entire. § 458. Ratification of agent's acts must be one which principal could have authorized. § 459. Ratification of agent's acts: Signing for principal. § 460. Ratification of agent's acts: The premium. § 461. Ratification of agent's acts: Retaining benefits. § 462. Ratification of agent's acts: Neglect to disaffirm. § 463. Agent must have assumed to act for claimed principal. § 464. Agent's acts: Other insurance. § 465. Power to bind company by contracts other than those of in- surance. CHAPTER XIX. AGENT OF INSURER— POWERS PRIOR TO ISSUE OP POLICY. § 472. Powers of agent concerning the application— Misrepresenta- tions. § 473. Misrepresentations of agent— Continued. § 474. Misrepresentations by agent in application: Statements made warranties. XX11 CONTENTS. § 475. Where true answers are given but agent inserts different ones in application. § 476. Same subject: Cases. § 477. Where answers are unintentionally incorrect: Agent's knowl- edge. § 478. False answers by clerk of agent. § 479. Misrepresentations: Application signed by agent without ap- plicant's authority. § 480. Where agent agrees to note facts in application. § 481. Omission or negligence of agent in filling out application. § 4b2. View that not question of waiver or estoppel, but whether condition attached. § 4S3. Mistake of agent in filling out application. § 484. Misrepresentations by agent with full knowledge of facts. § 485. Misrepresentations by agent: Applicant signs in blank. § 486. Misrepresentations by agent: Application sent unsigned to company. § 487. Where agent fills out application without inquiry; or of his own knowledge. § 4S8. Where applicant has no knowledge of facts and agent fills out application. § 4S9. Misrepresentations by agent: Where applicant signs appli- cation without reading or knowing contents. § 490. Misrepresentations by agent: Where applicant is illiterate. § 491. Fraud of agent in preparing application. § 492. Agent's knowledge of falsity or incorrectness of applicant's statements. § 493. Where applicant is assured by agent that application is cor- rect. 9 494. Misrepresentations by agent: Insured may rescind. § 495. Broker's misrepresentations: Application. § 496. Oral application: Agent's knowledge. § 497. Information obtained from others by agent: Application. S 498. Where agent writes down such answers as he deems material: Application. § 499. Where agent dictates or advises the answers: Application. § 500. Where agent tells assured no answers are necessary: Appli- cation. § 501. Policy issued on agent's representations or recommendation. § 502. Where application gives notice of agent's Limited authority. § 503. Misrepresentations by agent: Copy of application or by-laws annexed. § 504. Misrepresenitiation: Agent's collusion with applicant. § 505. Misrepresentation by agents: Parol evidence admissible. § 506. Same subject: The opposing view. § 51)7. Same subject: When agent's authority Is limited. § 508. Agents of insured: When this provision in the policy Inoper- ative. § 509. Same subject: Mutual companies and benefit societies. contexts. xxiii § 510. Authority of subordinate officers of benefit association to waive requirements as to application. § 511. Agents of insured: Knowledge of insured. § 512. Statutes: Soliciting agent is company's agent. § 513. Cases holding that agent is agent of insured. § 514. Misrepresentations of insurer's agent to induce insurance. § 515. Notice to and knowledge of agent generally. § 516. Presumption as to agent's knowledge. § 517. Reformation of policy to conform with actual contract. CHAPTER XX. AGENT OF INSURER— POWERS— THE POLICY. § 525. Agent: Power to make oral contract. § 526. Power of agent to accept risks and make contracts. § 527. When contract of agent is personal. § 528. Power of agent to subscribe policy. § 529. Power of agent to execute retroactive policy. § 530. Countersigning policy by agent. § 531. Where subagent signs for agent. § 532. Signature of assured— Waiver by agent. § 533. Estoppel by acts of agent generally. § 534. Waiver and estoppel by agent: Conditions subsequent and precedent. § 535. What agents may waive conditions: Knowledge before and after contract made. § 536. Waiver of forfeitures by agent— Generally. § 587. Power of agent to bind company by construction of policy. § 538. Agent: Power to renew. § 539. Revival of policy by agent. § 540. Power of agent to orally waive. § 541. When agent fails to take advantage of forfeiture. § 542. Waiver by receiving premium — Agent. § 543. Waiver by delivery of policy— Agent. § 544. Knowledge not obtained in course of agent's employment. § 545. What agent might have learned by ordinary diligence. § 546. Agent's knoAvledge obtained in individual capacity. § 547. Knowledge of company, at whose instance another company issues policy. § 548. Agent's power to grant permits affecting risks. § 549. Agent's power to alter policy. § 550. Agent's powers in relation to the premium. § 551. Agent's authority to fix rates for premium. § 552. Agent's agreement to give notice when premium due. § 553. Authority of agent in regard to first and subsequent premiums. § 554. Agent's power in relation to premium — What agent may waive. § 555. Agent's power in relation to premium — When no waiver. § 556. Agent's power— Other insurance — Waiver. XXIV CONTENTS. § 557. Broker: Other insurance— Waiver. § 55S. Agent: Other insurance— When no waiver. § 559. Agent's powers: Change of risk— Waiver. § 560. Agent's powers: Alienation— Assignment: Waiver. § 501. Alienation: Assignment — When company not bound by agent's acts. § 562. Agent: Keeping prohibited articles— Waiver. § 563. Agent's authority: Encumbrances— Waiver. § 564. Agent's authority : Encumbrances— When no waiver. § 565. Agent's authority: Vacant— Unoccupied— Waiver. § 566. Same subject: When no waiver. § 567. Agent's authority: Cancellation. § 568. Agent's authority: Removal of property. CHAPTER XXI. AGENT OF INSURER— POWERS— THE LOSS. § 575. Agent's authority: Notice of loss. § 576. Agent's authority: What is not sufficient notice of loss. § 577. Misstatements by agent in proofs of loss— Estoppel. § 578. Where agent aids in preparing proofs of loss— Waiver. § 579. Agent: Waiver proofs of loss^Condition conflicting with set- tled rule of law. § 580. When formal proofs are waived: Agent. § 5S1. Delivery of proofs of loss to agent. § 582. Proofs of loss— Place of delivery: Waiver by agent. § 583. What agent may waive: Proofs of loss. § 584. Waiver by acts of adjuster: Proofs of loss. § 585. When no waiver by adjuster: Proofs of loss. § 586. Acts of agent adjusting loss: How far binding on company. § 587. What agent may not waive: Proofs of loss. § 588. Proofs of loss: What is not a waiver— Agent. § 589. Retention of proofs of loss by agents— Failure to object. § 500. Proofs of loss: Examination by agent— Waiver. § 591. Proofs of loss: Waiver— Agent's denial of company's liability on other grounds. § 592. Proofs of loss: Delay caused by agent. § 593. Custom of other agents: Proofs of loss: Waiver. § ."04. Fraud of agent inducing settlement— Waiver: Proofs of loss. § 595. Adjustment of loss: Agent. § 596. Particular account: Loss: Waiver by agent. § 597. Marine protest: Waiver: Agent. § 598. Agent's powers after loss— Generally. § 599. Fraud of agent: Settlement: Award: Assignment. § 600. Agent's authority: Arbitration: Appraisement. § 601. Agent's authority: Subrogation. § 602. Agent's authority: Time limit for suing: Waiver. § 603. Abandonment to insurer's agent. CONTENTS. XXV CHAPTER XXII. AGENT OF INSURED. § 60S. Agent of insured— Authority how conferred. § 609. Eight of general or special agent to insure. § 610. Agency arising from situation with reference to the property. § 611. Agency may be created by possession of the policy. § 612. Agency: Possession of written application. § 613. Agent with general power to insure: Mutual company. § 614. Authority of partner. § 615. Authority of part owner. § 616. Authority of joint owner. § 617. Authority of tenant in common. § 618. Authority of ship's husband. § 619. Agent effecting insurance for whom It may concern. § 620. Right of agent to insure in cases of emergency. § 621. Agency arising from custom or course of dealing. § 622. Del credere agents. § 623. Insurance by factors. § 624. Supercargo— Power to insure. § 625. Authority of commission merchants: Consignees. § 626. Bailee may effect insurance: Warehouseman. § 627. Authority of trustees. § 628. Treasurer of local lodge may be trustee. § 629. Authority of prize agents to insure. § 630. Agent: Insurance by carrier. § 631. Where husband acts as agent of wife. § 632. Insured's agent: Adjustment of loss. § 633. Authority of insured's agent as to proof of loss. § 634. Authority of agent to make abandonment: Master. $ 635. Broker not agent: Insured to receive notice of transfer policy. § 636. Agent or broker procuring insurance cannot cancel. § 637. Notice of cancellation to agent or broker procuring insur- ance. § 638. Cancellation: Condition that notice be given party procuring insurance. § 639. Cancellation: W T hen notice to insured's agent is sufficient. § 640. Cancellation: Agent of both parties. § 641. Agents of insured: Cancellation: Custom. | 642. Ratification by insured of agent's acts. § 643. Concealment by assured— General rule. § 644. Concealment by principal from agent to effect Insurance. § 645. Concealment by principal from general agent. § 646. Concealment by agent to effect insurance. § 647. Concealment by agent other than one to effect policy. § 648. Concealment where agency has ceased. § 649. Concealment by agent: False advices: Loss by another peril. § 650. Degree of diligence required to communicate information- Agent. XXVi CONTENTS. CHAPTER XXIII. AGENTS— DUTIES— LIABILITIES. § 655. Duties of agents— Generally. § 656. Duties of insurer's agent— Generally. § 657. Duties of agent of insured— Generally. § 658. Duties of agent to inform principal. § 659. Effect on insured of agent's neglect of duty to insurer. § 660. Agent cannot issue policy to himself. § 661. Agent cannot act for both parties. § 662. Same subject: Exception to rule. § 663. Agent should notify principal of refusal to accept order. § 664. Agent should notify principal of failure to effect insurance. § 665. Agent must follow instructions. § 666. Same subject: Instruction to cancel. § 667. Whene agent's orders vest him with discretion. § 668. When agent is excused for noncompliance with instructions. § 669. Duty to insure. § 670. Agent's duty: More advantageous terms. § 671. When agent departs from usage or usual form of policy. § 672. Duty as to premium. § 673. Duty as to subagent. § 674. Degree of skill required from agents. § 675. Duty to effect other insurance in case of insurer's insolvency. § 676. Duty of agent to settle loss. § 677. Duty and liability as to payment of loss— Agent. § 678. Liability of agent— Generally. § 679. Neglect to effect a valid policy. § 680. Liability of voluntary or gratuitous agent. § 681. Liability of agent for the premium. § 682. Liability for concealment— Agent. § 683. Liabilities of officers of the company. § 684. Liability of company for agent's frauds, etc. CHAPTER XXIV. AGENTS — RIGHTS AND REMEDIES — TERMINATION OP AGENCY. § 690. Agent's and broker's lien, when it attaches and what it covers. § 691. Agent's lien: Assignment of policy by assured § 092. Lien of sub-agent or broker. § 693. How agent's lien may be lost or waived. § f.94. Revival of agent's lien. § 695. Agent's right to commissions. § 696. Sub-agent's right to commissions. CONTENTS. XXVU § 697. When agent not entitled to commissions, § 098. Rights of agent as to the premium. § 699. Set-off: Agent. § 700. Same subject: English authorities. § 701. Same subject: English and American authorities. § 702. Agency: Attorney of foreign company. § 703. Service of papers or process: Agents of foreign company. § 7U4. Recovery back of loss paid by company's agent. § 705. Action against receiver by agent. § 706. Action against company by average adjusters. § 707. Indictment of agent for larceny. § 708. Action on agent's bond. § 709. Same subject: Laches of principal— Notification of sureties. § 710. Action on agent's bond: Prior defaults. § 711. Action on local agent's bond. § 712. Action on agent's bond: Defenses. § 713. Actions against agents of foreign companies acting without license: Statutes. § 714. When agent's right may not be abridged, though acting for unlicensed company. § 715. Indictment of agent for paying rebate — Statute. § 716. Reformation of policy for agent's mistakes. § 717. Agent's defenses. § 718. Proof of agent's authority. § 719. Termination of agency: War. § 720. Termination of agency as to assured. § 721. Termination of agency as to assurer: Revocation. CHAPTER XXV. BENEFICIARIES. SUBDIV, I. Beneficiaries, Generally: Who May Be: Interest, Designa- tion and Change of. II. Particular Designations and Effect of Same. SUBDIV. I. Beneficiaries, Generally: Who May Be: Interest, Designa- tion and Change of. § 728. Beneficiaries, generally: Designation of: Specified classes- Equities. § 729. Insurable interest: Beneficiary— Necessity of. § 730. Interest of beneficiary in regular life policy— Vested— Cannot be defeated without consent. § 731. Vested interest defeated by contract. § 732. Statements as to beneficiary in application. § 733. When member may designate beneficiary by will. § 734. Disposition by residuary clause— Widow's will: Statute. XX VI 11 CONTENTS. § 735. When member may not designate beneficiary by will— Effect of designation by will. § 736. Right of insured under regular life policy to dispose of same by will. § 737. Who may be beneficiary: Order of Knights of Pythias. § 738. Designation of beneficiary— How construed: Analogous to testamentary disposition. § 739. Where no beneficiary designated— Lapse to society. § 740. When insured in regular life policy, may change beneficiary. § 741. Right to change beneficiary under mutual benefit certificate: Whether interest of beneficiary vested. § 742. Beneficiary may acquire vested interest under contract with member. § 743. No vested right though beneficiary has possession of certifi- cate. § 744. Provision as to designation or change of beneficiary in char- ter by-laws etc. must be complied with if possible. § 745. When mode prescribed by charter differs from general rule of law. § 746. Change of beneficiary: Exceptions to rule that by-laws, etc. must be followed. § 747. Mere regulation or matter of practice not binding as to change of beneficiary. § 748. Effect of subsequent change of by-laws. § 749. Amendment as to payees does not necessitate changing bene- ficiary. § 750. Where provision as to mode of change of beneficiary cannot be complied with— Loss of certificate. § 751. Where member dies before change of beneficiary complete. § 752. Where designation of beneficiary is invalid. § 753. Effect of invalid or inoperative change of beneficiary. § 754. Society only can set up non-compliance with by-law. § 755. Statutes relative to designation of beneficiary. § 756. Statutes relative to change of beneficiary. SUBDIV. II. Particular Designations and Effect of Same. § 763. "Absent brother" as beneficiary. § 764. "Affianced wife" or betrothed as beneficiary. § 765. "As he may direct." § 706. "Children": Where no children survive. § 767. "Children": does not generally include grandchildren. § 768. "Children": does not include children of wife by former mar- riage. § 769. "Children": Where children are born subsequent to issuance of certificate or policy. 5 770. "Children": "when includes adopted child— Release of rights. § 771. "Children": "His children"— Includes child by former wife— Who included generally. § 772. "Children": "Their children." § 773. "Dependents." CONTENTS. XXIX § 774. "Devisees." § 775. "Devisees" or in case of their prior death to "legal heirs or devisees of certificate holder." § 776. "Estate"— "My estate." § 777. "Executor." § 778. "Executors and administrators." § 779. "Family" as beneficiary. § 780. "Families, widows, orphans, or other dependents." § 7S1. "Friends." § 782. "Guardian." § 783. "Heirs"— "Lawful heirs"— "Legal heirs"— "Heirs at law." § 784. "Heirs or assigns." § 7S5. Husband as "heir." § 7SG. "And legal representatives"— "Heirs or representatives." § 787. "Himself, executors," etc. § 7S8. Infant as beneficiary. § 7S9. "Natural heir." § 790. "Orphans." § 791. Partnership as beneficiary. § 792. "Relatives": "Related to." § 793. "Representatives": "Legal representatives.** § 794. "Resident brother" as beneficiary. § 795. Son as beneficiary. § 796. Survivor. § 797. "Trustee": "In trust." § 798. "Widow and children": Proceeds paid to administrator— Ex- tent of his liability. § 799. "Widow and children": Proceeds paid to administrator of in- sured a trust for widow and children. § S00. "Widow and children": Afterward in order named. § SOI. "Widow, orphans, or heirs." § 802. "Widow, orphans, and heirs or devisees." § 803. "Widow or relatives"— Funeral benefit. § S04. "Wife and children"— Widow and children"— How they take. § 805. Wife and children: Construction of contract by parties and beneficiaries. § 806. Wife and daughters— Survivor— Who entitled to fund. § S07. Wife, "if living," and "if not living" to children. § 808. Wife or any wife that may survive and minor children. § 809. "Wife" or "widow" as beneficiary. § 810. When wife entitled against husband to proceeds of surrender policy. § 811. Wife's rights: Delivery of policy as security. § 812. When wife has only equitable lien. § 813. Wife's rights where husband's misrepresentations Induce her to join assignment. § S14. Wife: Effect of payment to woman designated as wife of member when lawful wife living. S 815. Wife as beneficiary: No marriage ceremony performed. XXX CONTENTS. § 816. Wife or "widow" as beneficiary, where insured has married when lawful wife living. § 817. Wife or "widow" as beneficiary: Regular life policy: Effect of divorce. § 818. Wife or "widow" as beneficiary: Mutual benefit certificate: Effect of divorce. § 819. Articles of separation. CHAPTER XXVI. BENEFICIARIES— CONTINUED. § 825. Subsequent marriage of insured. § 826. Widow and surviving children— Second marriage. § 827. Where beneficiary under mutual benefit certificate dies before assured. § 828. Where beneficiary under life policy dies before assured. § 829. Where beneficiary dies before insured: Life policy— Conclu- sion. § 830. Death of wife: Subsequent marraige of member: Effect, where wife designated as beneficiary. § 831. Where death of beneficiary occurs after that of insured be- fore payment of fund. § 832. Death of beneficiary and insured: common disaster. § 833. Where beneficiary kills insured. § 834. Killing assured by insane beneficiary. § 835. Where killing is involuntary. § S36. Killing by sane assignee. § 837. Assignment by beneficiary. § 838. Ratification by beneficiary of assignment. § 839. Assignment to creditor. § 840. Assignment: Endowment policy: Wife as beneficiary. § 841. Assignment by beneficiary of life policy to one having no insurable interest. § 842. Lien of assignee on paid-up policy. § 843. Where wife joins in assignment of policy on husband's life. § 844. Same: Statute forbidding married women becoming surety. § 845. Assignment by wife of policy on husband's life. § 846. Provisions as to classes entitled to benefit fund, control in case of assignment: Benefit certificate. § 847. Effect of provision in certificate permitting assignment. § 848. Beneficiary charged with notice of contents of policy. § 849. Possession by beneficiary of mutual benefit certificate. § 8r>0. Beneficiary may be trustee of fund, though not so designated. § 851. Where policy provides payment to insured if he lives to a certain date — If not, to beneficiary designated. § S."2. Maturity of policy when beneficiary reaches certain age- Debt of association. CONTENTS. XXXI S 853. Policy cannot be surrendered without consent of beneficiary In life policy. i 854. Surrender of policy avoided for mental incapacity. § 855. Where minor children beneficiaries: Their consent to surren- der of policy by insured not binding upon them. 5 856. Policy to wife and children: Death of wife — Her executor no power to surrender policy. § 857. "Wife and children": Wife deceased at time of issuance of paid-up policy. § 858. Rights of creditors of insured: Regular life policy. | 859. Rights of creditors of members: Benefit societies. § 860. Rights of creditors of wife, when beneficiary. § S6l. Creditor as payee in policy on debtor's life. § 862. Society not bound by secret agreement by member with chil- dren as beneficiaries. § 863. When bequest by wife will not pass interest in policy on hus- band's life. § 864. Tontine policy: Where beneficiary not bound by action of company's officers. § 865. Suspension of member: Right of beneficiary to recover. § 866. Funeral benefit, who entitled. § S67. Beneficiary: Benefits payable in case of sickness or disability: Insanity of member. § 868. Railroad relief association: Provision for release of company For damages when beneficiary does not recover. § 869. Beneficiary not liable for premiums paid by stranger. § 870. Payment assessments by beneficiary gratuitous. § 871. Amount of policy and premiums may be advancement to ben- eficiary. § 872. Payment of benefit fund. § S73. Beneficiary entitled to fund— Fund cannot be garnished. § 874. Two or more beneficiaries — Joint tenancy. § S75. Beneficiary may sue on policy. § S76. Where money due beneficiary has been paid administrator of assured. § 877. Right of beneficiary premiums paid with misappropriated money or funds. § 878. Statutory provisions limiting beneficiary of benefit certificate to certain classes. § 879. Statutes: Beneficiaries: Wife and children. § SSO. Where amount exempted unreasonable— Unconstitutionality of law. § 881. Statute: Insurance of husband's life: Sole benefit of wife: Mutual benefit society: Vested interest in wife. § 882. Statute: Rights of children: Declaration of new trust. XX XU CONTENTS. TITLE V. ' INSURABLE INTEREST. CHAPTER XXVII. INSURABLE INTEREST. SUBDIV. I. Insurable Interest, Generally. II. Particular Insurable Interests. SUBDIV. I. Insurable Intercs', Generally. § SS7. Insurable interest defined. § SS8. Insurable interest generally. § 889. Necessity of an insurable interest. § 890. Insurable interest distinguished from the property or life insured. § 891. Insurable interest at common law. § 892. No insurable interest under unenforceable contract. § 893. The interest must be neither illegal nor immoral. § 894. Wager policies. § 895. Insurable interest does not necessarily imply property. § 896. Legal or equitable title: Qualified interest. § 897. Conditional or contingent interest: Expectancy: Inchoate rights. § 898. Liability to others: Railroad companies. § 899. Pecuniary interest: Consanguinity or affinity. § 900. Whether insurable interest ne'ed be stated. § 901. As to the time when the interest must exist. § 902. Same subject: Life insurance. § 903. Continuity of interest. § 904. Where interest is devested: Partial interest remaining. § 905. The interest need not be indefeasible. § 906. Obligation of insurer to ascertain insurable Interest in prop- erty. SUBDIV. II. Particular Insurable Interests. § 912. Different parties: Several interests. § 913. Interest of administrators and executors. § 914. Whether assignee of life policy must have an insurable Interest. § 915. Same subject: Payment of premiums as a factor. § 916. Same subject: Consent of insurers to assignment. § 917. Same subject: Mutual benefit societies. § 918. Same subject: Conclusion. § 919. Same subject: Summary of decisions. CONTEXTS. XXX 111 § 920. Insurable Interest policy payable "as bis interest may ap- pear." § 921. Interest of donor or contributor. § 922. Interest of bailor and bailee — Generally. § 923. Pledgor and pledgee: Pawnbroker. § 924. Innkeepers. § 925. Carriers. § 926. Warehousemen: "Wharfingers. § 927. Commission merchants: Consignees. § 928. Merchant furnishing dealer with stock. § 929. Agents. § 930. Consignor. § 931. Consignees and factors: Supercargo. § 932. Trustees. § 933. Cestui que trust. § 934. Assignee or trustee of insolvent. § 935. Stockholders. § 936. Sureties. § 937. Receiptor for goods attached: Surety on appeal. § 938. Indorser of note. § 939. Holder of note or bill of exchange: Drawee. § 940. Indorser or indorsee of bill of lading. § 941. Interest of insurer: Reinsurer. § 942. Interest in insolvency of insurer. § 943. Interest in royalties. § 944. Copartners: Joint owners. § 945. Partner: Life risk. § 946. Part owner. § 947. General creditors. § 948. Simple contract creditor In estate of deceased debtor. § 949. Creditors as assignees. § 950. Creditor attaching or levying execution. § 951. Attaching creditor must insure his interest § 952. Judgment creditor. § 953. Creditor in life of debtor. § 954. Same subject: Wager policy— Amount recoverable. § 955. Owner of goods concealed from creditors. § 956. One whose goods are levied on. § 957. Insolvent: Life risk. § 958. Insolvent debtor: Property. § 959. Officer serving attachment or making levy. § 960. Lessor. § 961. Lessee: Sublessee. § 962. Purchaser from lessee. § 963. Tenant at sufferance. § 964. Life tenant. § 965. Remainderman. § 966. Tenant for life and remainderman Joining In Insurance. § 967. Tenant per autre vie— Life risk. Joyce, Vol. I.— C XXXIV CONTEXTS. § 068. Tenant in common. § 969. Tenant by curtesy. § 970. Vendee on one under contract for purchase or for deed: Ten- ancy. CHAPTER XXVIII. INSURABLE INTEREST— CONTINUED. Particular Insurable Interests — Continued. § 977. Vendee or one under contract for purchase or for deed. § 978. One holding possession under contract of purchase from equitable owner. § 979. Same subject: Parol agreement. § 980. Same subject: Qualifications. § 9S1. Same subject: Cases. § 982. Vendor or one who has contracted to convey. § 983. Vendor. § 9S4. Vendee. § 9S5. Purchaser under execution sole. § 9S6. Purchaser in possession of land, title not to pass till build- ing completed. § 987. One in possession under claim of right. § 9S8. One in possession with power of sale. § 989. One in possession to care for and rent property. § 990. One in possession— Generally. § 991. Mere intruder or trespasser. § 992. Disseisor. § 993. Purchaser of legacy: Life risk. § 994. Owner: Absolute interest. § 995. Owner of land: Buildings constructing under contract. § 096. Contractors: Builders: Materialmen— Mechanics. § 997. Advances. § 998. Ship's general agent no insurable interest in advances. § 999. Voluntary advances on vessel. §1000. One expending money for his own benefit on another's prop- erty. §1001. Liens. §1002. Mechanic's lien. §1003. Mechanics and materialmen in ship. §1004. Ship-owner in ship and cargo. §1005. Ship-owner in special cargo: Lien. §1006. Charterer. §1007. Vendor and vendee in ship and freight. §1008. "What interest of ship-owner in freight includes. §1009. Requisites of an interest in freight. §1010. Ship-owner in freight. §1011. Charterer who is part owner. §1012. Charterer in expected freight. CONTENTS. XXXV §1013. Charterer and ship-owner: Separate risks. §1014. 'Charterer insuring against special peril. §1015. Advances by charterer on freight. §1016. When charterer has no insurable interest in freight advanced. §1017. Owner in bottomry or respondentia. §1018. Lender in bottomry or respondentia. §1019. Expected profits. §1020. Profits made and earned. §1021. Passage money. §1022. Mariner's wages. §1023. Supercargo. §1024. Fishing voyage: Outfits. §1025. Captors. §1026. Mortgagor and mortgagee— Generally. §1027. Mortgagor. §1028. Mortgagor of personal property. §1029. Extent of mortgagor's insurable interest. §1030. Mortgagor of ship. §1031. Mortgagee. §1032. Mortgagee under mortgage only valid In equity. §1033. Relation mortgagee's insurance sustains to the debt. §1034. Mortgagee of ship. §1035. Mortgagee of goods and freight. §1036. Extent of mortgagee's insurable interest. §1037. Several mortgagees. §1038. Mortgagor's interest after judgment or decree. §1039. Mortgagor after foreclosure sale. §1040. Effect of sale or conveyance on mortgagor's interest— De- vestment of interest. §1041. Cessation of mortgagor's interest. §1042. Effect on mortgagee's interest of sale and assignment. §1043. Disclosure of interest by mortgagee. §1044. Assignee of mortgagee. §1045. Mortgagor for mortgagee. §1046. Mortgagee after foreclosure sale. §1047. Interest in homestead. §1048. Husband in personal community property. §1049. Husband in property of wife. §1050. Same subject: Disclosure of interest. §1051. Husband in life of wife. §1052. Husband for benefit of wife or child. §1053. Wife in her own property. §1054. Wife in husband's life. §1055. Wife without marriage ceremony in husband's life. §1056. Dower interest. §1057. In life of betrothed. §1058. In servant's life: Actor's life. §1059. In master's life. §1060. Earnings of another: Life. §1061. Promise to support one not a relative— Life. XXXVI CONTENTS. §1062. Promise to support relative: Life. §1063. Parent and child: Life. §1064. Unborn child. §1065. Son in father's property. §1066. Son-in-law: Stepson: Life. §1067. Grandparent: Grandchild: Life. §1068. Brother and sister: Brother-in-law: Step-sister. §1069. Uncle and nephew; Aunt and nephew. §1070. Cousin. §1071. Friend's insurable interest. §1072. Religious society in member's lif^ §1073. Benefit societies: Insurable interest. TITLE VI. PREMIUMS AND ASSESSMENTS. CHAPTER XXXI. THE PREMIUM. SUBDIV. I. Premiums, Generally. II. Premiums — Payment, Forfeiture, and Tender: Liens. III. Premiums: Manner and Mode of Payment: By and to Whom Payable: Mortgagor and Mortgagee: Miscellaneous Matters. SUBDIV. I. Premiums, Generally. §1083. Premium defined. §1084. Premium or rate per cent must be expressed in policy. §1085. Premium and conditions as consideration. §1086. Premium is of the essence of the contract. §1087. Premium is not due unless risk attaches. §1088. The rate of premium. §10S9. Premium as test of amount or character of risk. §1090. Agreement as to rate must govern. §1091. Discrimination as to rates of premium— Rebates of premium. §1092. Same subject: Such statutes constitutional. §1093. Premium to cover additional risks: Augmentation or dimi- nution of premium. SUBDIV. II. Premiums: Payment, Forfeiture, and Tender: Liens. §1097. Payment of premium generally. §1098. No forfeiture for non-payment of annual premium unless so agreed— Whether premium a debt. CONTENTS. xxxvu §1099. Whether payment condition precedent. §1100. Conditions as to payment of premium valid. §1101. Whether contract entire when premium entire. §1102. Whether life contract entire or from year to year. §1103. Failure to pay premium on day stipulated forfeits. §1104. Equity will not relieve from forfeiture so incurred. §1105. Subsequently enacted non-forfeiture statute: Payment of pre* mium into court. §1106. No notice or formal declaration of forfeiture necessary. §1107. Premium payable on demand. §1108. Forfeiture for non-payment of installments of premium when due. §1109. Company may extend time for payment of premium. §1110. Extension of time of payment: Computation of time. §1111. Acceptance of entire annual premium in advance. §1112. Prepayment of premiums. §1113. Offset — premium and rents due from agent. §1114. Part payment premium will not prevent a forfeiture. §1115. Non-payment premium may only suspend risk. §1116. Death or loss after suspension: Payment premium. §1117. Payment overdue premium after loss, death, or sickness. §1118. Death or loss within time extended for payment or days of grace. §1119. Review of cases generally relied on as holding such payment of no effect. §1120. Cases supporting opposite view. §1121. Same subject: Conclusion. §1122. Tender of premium: Tender to agent. §1123. Frequency of tender. §1124. Tender after delivery up of policy fraudulently Induced by agent. §1125. Actual production of money unnecessary after peremptory refusal to accept. §1126. Ratification of payment may relate back to time of tender. §1127. Tender after payment overdue premiums unconditionally re- quested. §1128. Tender as prerequisite to action— Judgment. §1129. Payment due Monday when premium matures Sunday. §1130. Holidays: Thanksgiving days. §1131. Lien for premium. §1132. Maritime lien for premium. SUBDIV. III. Premiums: Manner and Mode of Payment: By and to Whom Payable: Mortgagor and Mortgagee: Miscellaneous Matters. §1137. In what the premium may be paid. §1138. Cash premiums: Mutual company. §1139. Payment in depreciated funds: Confederate monpy. §1140. Payment in foreign money equivalent to United States money may be shown. XXXV111 CONTENTS. §1141. Payment premium: Credit may be given. §1142. Payment by order on third party. §1143. Effect of order on third party: Demand: Notice of non- payment: Forfeiture. §1144. Payment by cbeck. §1145. Payment with misappropriated funds. §1146. By whom premium payable. §1147. Premium paid by debtor in fraud of creditors— Husband and wife. §1148. Payment by and liability of third party— Beneficiary: Lien on policy. §1149. Same subject: Rules stated in Leslie v. French. §1150. Payment by and liability for premium of agent or broker. §1151. Premium paid out of partnership funds during solvency. §1152. Payment premium by mortgagee. §1153. Payment premium by mortgagor— Right to proceeds. §1154. When mortgagor may be charged premiums paid by mort- gagee. S1155. When premiums not chargeable to mortgagor. §1156. Payment of premium as connected with subrogation— Mort- gagor: Mortgagee. §1157. Payment of premium by assignee of mortgage. §1158. Forfeiture for non-payment of premiums by mortgagor: De- fense by mortgagee. §1159. Amount of premium for which mortgagor is chargeable may be limited. §1160. Policy taken as collateral— Right of mortgagee to charge premiums: His right to deposit premium. §1161. Right of mortgagee to recover premiums paid after decree. §1162. Purchaser of mortgaged premises— Previously advanced premiums. §1163. Payment— Premium: Sending by mail. §1164. Check mailed on last day of payment. §1165. Payment— Premium: Delivery to express company. §1166. Payment— Premium: By dividends or profit" §1167. To whom premiums may be paid. §1168. Place of payment. §1169. Liability for premium after forfeiture. §1170. Revival of policy. §1171. Recovery of premiums by unauthorized company. CHAPTER XXX. THE PREMIUM— PAID-UP AND NON-FORFE1TABLE POLI- CIES. §1178. Paid-up and nonforfeitable policies— Generally. §1179. Nonforfeiture statutes. CONTENTS. XXXIX §1180. Death as affecting right to paid-up policy. §1181. When only paid-up policy can be claimed, and when the full amount of insurance. §11S2. Right to claim paid-up policy. §1183. Right of infant to paid-up policy. §1184. When right to claim paid-up policy must be exercised. §1185. Right to claim paid-up policy must be exercised within speci- fied time. §1186. Exceptions to last rule and cases contra. §1187. Whether payment of note required to entitle to paid-up policy. §1188. When paid-up policy forfeited— Cases. §11S9. When paid-up policy not forfeited— Cases. §1190. Whether it is a new contract or continuation of old one. §1191. Amount of premium under statute— "Deducting indebtedness." §1192. Amount of paid-up policy. §1193. Endowment policy— Nonforfeiture statutes. §1194. Refusal to issue paid-up policy. §1195. Refusal to issue paid-up policy— Measure of damages. CHAPTER XXXI. NOTES FOR PREMIUMS, AND PREMIUM, ETC., NOTES. §1202. Payment by note. §1203. Premium note and policy one contract. §1204. Conditions as to forfeiture for non-payment of note at ma- turity—Generally. §1205. Validity of such provisions. §1206. Payment by negotiable paper: Demand and notice, etc.: Forfeiture. §1207. Payment by negotiable paper— Cases holding no demand or notice necessary— Forfeiture. §1208. Same subject: The rule. §1209. When stipulation is that policy void or risk suspended, etc., for non-payment note. §1210. Note for entire premium— Suspension risk. §1211. When condition for forfeiture is in note only. §1212. When there is no condition as to forfeiture for non-payment notes. §1213. Subsequent parol agreeme at— Non-payment of note— Forfeit- ure. §1214. Power of mutual company to take notes. §1215. Validity of notes for premium and premium notes. §1216. Premium note given unauthorized company. §1217. Premium, etc., notes generally. §1218. Negotiability of notes for the premium and premium, etc., note. Xl CONTENTS. §1219. When note is payable. §1220. Validity of provisions as to premium, etc., notes. §1221. Lien on premium notes and funds. §1222. Liability on premium, etc., notes— Generally. §1223. When liability absolute on note— When not. §1224. Liability for losses prior to membership. §1225. When liability continues until policy surrendered and all assessments paid. §122(5. Liability after termination of contract or surrender of policy. §1227. Liability after suspension on note for entire premium. §1228. Extent of liability after part payment of note. §"229. Liability after loss. §1230. Liability incurred by default in payment of assessment. §1231. Liability in case of insolvency of company. §1232. Insolvency of maker of note. §1233. Interest on premium note: Forfeiture. §1234. Tender: Premium notes. §1235. Payment of premium notes or interest thereon by dividends or profits. §1236. Effect of non-payment of note upon beneficiary. §1237. Deduction of note from loss. §1238. Counter-claim on note of owner of vessel insured for benefit of mortgagee. §1239. Amount of recovery on premium notes. CHAPTER XXXII. ASSESSMENTS. § 1245. Assessment defined— Consideration. § 1246. Assessments— Generally. § 1247. Distinction between premiums and assessments. § 1248. Membership fees and dues generally. ; 1249. Validity of provisions as to assessments. § 1250. Assessment premium, etc., notes— Generally. § 1251. Who liable to assessments: Members. § 12o2. Who liable to assessments: Mortgagee: Assignee. § 1263. Liability of member— Generally. § 1254. Non-payment of assessment due after date of accident in- sured agaiust. § 1255. Liability to assessments: Agreement or provisions contrary to statutes. § 1256. Liability: Prior and subsequent losses: Liability after loss, forfeiture or suspension. § 1257. Member joining between loss and rendition of judgment against company. § 1258. When dues payable: Dues in arrears: Forfeiture. § 1259. Assessment falling due Sunday. CONTENTS. Xli § 1260. Assessments: Suspension of member. § 1261. Where nonpayment dues and assessments forfeits or sus- pends. § 1262. Assessments paid in advance in excess of mortuary assess- ments. § 1263. No forfeiture— Assessments in advance of death losses. § 1264. Forfeiture or suspension, whether affirmative act of society necessary. § 1265. When member is in good standing— When not. § 1266. Non-payment of assessments — When no forfeiture. § 1267. Assessments by unauthorized company. § 1268. Liability to assessments: Cancellation: Surrender- Witn- drawal. § 1269. Right of members to withdraw and avoid liability for assess- ments. § 1270. Whether contract to pay assessments unilateral. § 1271. Eight to deny liability for losses on policies to non-members. § 1272. Dues and assessments: Effect of insolvency upon liability. § 1273. Assessments: Receiver. § 1274. What receiver may include in assessment premium note. § 1275. Assessments by trustee unauthorized company. § 1276. Restoration to membership: Reinstatement: Revival. § 1277. Reinstatement by way of waiver and not as new contract: Creditors' rights. § 1278. To whom dues and assessments payable. § 1279. Mode of remittance. § 1280. Tender of assessments: Frequency of tender. § 1281. Assessments and dues— Death before time specified for pay- ment expires: Loss after suspension. § 1282. Death of member during suspension of lodge. § 12S3. Death while dues in arrears. § 1284. Payment assessment after loss. § 12S5. Right to have assessment made. § 1286. No authority to receive less than amount of assessment due. § 12S7. Assessments and dues: Safety fund: Reserve fund. § 12S8. Refusal to pay assessments: Right to have fund distributed. § 1289. Application or appropriation of fund by society or lodge. § 1290. Necessity for assessment must exist. § 1291. Prescribed mode must be followed in levying assessment. § 1292. Who empowered to levy assessments. § 1293. Notice of intention to assess not necessary for director's reg- ular meeting. § 1294. Power of directors to assess cannot be delegated. § 1295. When power to assess may be delegated — Exceptions to rule. § 1296. Assessment by illegally elected board. § 1297. Intentional omission of members. § 1298. Assessments where risks are classified. § 1299. Assessment invalid of certificate changed to life policy with regular premiums. § 1300. When assessment may be made. xlii CONTENTS. § 1301. Assessment to pay unearned premium. § 1302. Slight errors do not invalidate, material errors or omis- sions do. § 1303. Second assessment of note. § 1304. Assessment new policy substituted for old one through fraud. § 1305. Levying assessment: The amount: Inequality. § 1306. Examination and allowance of claims. § 1307. What may be included. § 1308. What need not and may not be included. § 1309. Anticipated losses. § 1310. Regularity of assessment must be affirmatively shown— Alle- gation and proof: Evidence. § 1311. Defenses to actions: Assessments: Premium notes. § 1312. Statute of limitations: Assessments. CHAPTER XXXIII. NOTICE — PREMIUMS, ASSESSMENTS, AND DUES. § 1'320. When notice must be given— Generally. § 1321. When notice need not be given— Generally. § 1322. Failure to give written notice, tender unnecessary. § 1323. Statutory notice. § 1324. Stipulation contrary to statute requiring notice. § 1325. 'Constitutionality of statute requiring notice. § 1326. To what class of policies New York statute applies. § 1327. Stipulation in guaranty fund note as to notice. § 1328. Sufficiency of notice. § 1329. Sufficiency of statutory notice. § 1330. Authorities holding notice sufficient. § 1331. To whom notice should be given. § 1332. Cases holding that usage to send notice necessitates giving notice. § 1333. Authorities holding the contrary doctrine. § 1334. Same subject: Conclusion. § 1335. Personal notice— Whether notice must be actually received. § 1336. Service by mail. § 1337. Notice wrongly addressed. § 1338. Notice by publication. § 1339 Computation of time. contents. xliii CHAPTER XXXIV PREMIUMS, ETC —EXCUSES, WAIVER AND ESTOPPEL. § 1345. Whether war excuses nonpayment premium. § 1346. What excuses nonpayment premiums aud assessments— Gen- erally. § 1347. Excuses: Omitting customary statement: Amount unknown. S 1348. Excuses: Change of agency without notice. § 1349. Excuses: Insolvency: Company ceasing to do business. § 1350. Act of God— Sickness, death, accident, insanity— No excuse: Exceptions. § 1351. Death of agent— Failure to find agent: Agent's neglect or misrepresentations no excuse. § 1352. What is not an excuse: Absence of assured: Lapse of policy by accident: Other instances. § 1353. Waiver of punctual payment of premiums, assessments and dues: Estoppel generally. § 1354. Waiver and estoppel: Prior parol agreements as to payment premiums, etc. § 1355. Waiver and estoppel: Subsequent parol agreements as to payment premiums, etc. § 1356. Payment of premiums: Waiver and estoppel, custom, acts, etc. § 1357. Waiver— Holding overdue premium notes and demanding payment. § 1358. Custom not to treat nonpayment premium notes as for- feiture. § 1359. Enforcing payment of note after forfeiture. § 1360. Assured must have known of custom. § 1361. Payment of assessments: Waiver and estoppel, custom, acts. etc. § 1362. Waiver of prepayment. § 1363. Where receipt of premiums and assessments is an act of favor. § 1364. Waiver and estoppel: Acceptance and retention of overdue premiums and assessments: Cases. § 1365. Right or obligation to accept and retain overdue premiums or assessments— No waiver. § 1366. Unconditional offer to accept overdue premium— Tender. § 1367. Conditional acceptance of overdue premiums, etc. § 1368. When custom to receive overdue payments may be availed of by assured: General custom: Proof. § 1369. Waiver of forfeiture generally, by receipt of overdue pre- miums, assessments and dues. § 1370. Waiver by collecting assessments on notes, or by collecting or suing on notes. § 1371. Whether levy and receipt of subsequent assessments and dues waives forfeiture. xliv CONTENTS. § 1372. Sam* 1 subject: Authorities holding a waiver. § 1373. Same subject: Authorities contra. § 1374. Waiver: Custom: Acceptance of premium or assessment after loss or death. § 1375. Waiver: Payment of premium note after loss or death: Pay- ment of premium note — Generally. § 1376. Waiver by failure to declare a forfeiture. § 1377. Failure to insist promptly on payment of premium note. § 1378. Waiver: Collecting a loss: Adjustment. § 1379. Waiver by recognition of the policy as in force. § 13S0. Waiver by giving credit for the premium. § 13S1. Defense that waiver induced by false representations. § 1382. Waiver by agents: Subordinate lodges. § 1383. Waiver by assured of exemption from assessment. § 1384. Waiver by assured of defective notice and service of same. CHAPTER XXXV. RETURN OF PREMIUMS AND ASSESSMENTS. § 1390. Principles governing right to return of premium where risk has not attached. § 1391. Stipulation for return of premium— Generally. § 1392. Stipulation: Statutes governing right to return of premium. § 1393. Return of proportionate premium: Surrender, rescission, can- cellation, etc. § 1394. Stipulation may entitle to proportionate return of premium, although there be a partial or total loss. § 1395. Where underwriter discharged before performance of con- dition on which return of proportionate premium based. § 1~396. Where condition satisfied but underwriter discharged from loss: Premium returnable although loss by excepted risk. § 1397. No return if risk has attached. § 1398. Premium returnable if policy ab initio void: Generally. § 1399. Insurance contract with infant: Return of premium. § 14U0. Premium returnable where contract voidable or void for mis- representations or fraud of assurer. § 1401. Premium returnable when paid by mistake of facts: Policy based upon mistake of law. § 1402. Whether premium returnable where foreign company has not complied with state laws. § 1403. Return of premium: Breach of warranty. § 1404. Premium returnable for misrepresentations or concealment of assured without fraud. § 1405. Premium not returnable: Policy illegal— Parties in pari d< ticto. § 1406. Premium not returnable: Policy void for fraud of assured or his agent. CONTENTS. Xlv § 1407. Premium not returnable: Material alteration policy. § 1408. Return of premium: Breach of contract by assurer. § 1409. Return where note is giTen. § 1410. Return for want of interest. § 1411. Proportionate return: Over-valuation: Short interest. § 1412. Whether premium returnable for over-insurance by several insurers: Pro rata contribution. § 1413. Same subject: Opinions of text writers. § 1414. Same subject: The case of Fisk v. Masterman. § 1415. Same subject: Code provisions. § 1416. Same subject: The rule as to double insurances. § 1417. Same subject: Summary and conclusion. § 1418. 'Stipulations for return of premium: Prior and subsequent insurances: The American clause. § 1419. When no return in case of several policies. § 1420. Premium hot returnable when risk entire. § 1421. Premium returnable when risk divisible. § 1422. Return of premiums: Effect of usage: Review of authorities. § 1423. Same subject: Conclusion. § 1424. Stipulation for return of premium: "Sold or laid up." § 1425. Return of premium: Retention of a certain per centum by insurer. § 1426. Return of premium: Insurances by voluntary agent. § 1427. Recovery back of premium from agent. § 1428. Who may recover back premium. § 1429. Return of premium: Assignment: Right of assignee. § 1430. Return of premium: Miscellaneous authorities. TITLE VII. ATTACHMENT AND DURATION OF RISK. CHAPTER XXXVI. ATTACHMENT AND DURATION OF RISK. § 1436. Attachment and duration of risk— Generally. § 1437. Receipt and acceptance of application and fee. § 1438. Countersigning policy— Death before. § 1439. Attachment and duration of risk: Parol contract. § 1440. Necessity of fixing duration of the risk. § 1441. Attachment and duration of risk: Date of contract. § 1442. Attachment and duration of risk: The date: Reinsurance. § 1443. Attachment and duration of risk: Insurance retroactive. § 1444. Attachment of risk: Time policy may be retroactive. Xlvi CONTENTS. § 1445. Risk may attach although mistake in description of property. § 1446. Attachment and duration of risk: Computation of time. § 1447. Attachment of risk: Goods shipped "between" two dates. § 1448. Attachment and termination of risk: Necessity of an insur- able interest. § 1449. Termination by change of risk: Breach of conditions. § 1450. Policy may terminate by its own limitation or by actual loss or death. § 1451. Where attachment of risk not postponed by condition con- cerning repairs to vessel. § 1452. Attachment of risk: De facto and de jure existence of corpo- ration: Compliance with statutory requirements as to or- ganization, etc. § 1453. Duration of risk: Expiration of charter during life of policy. § 1454. Attachment and termination of risk: Insolvency: Dissolu- tion. § 1455. Dissolution: Right to reserve fund. § 1456. Termination of contract by expulsion of member of mutual benefit society. § 1457. Termination by withdrawal: Member mutual benefit society § 1458. When reinstatement by waiver not by new contract. § 1459. Renewal of policy: Amounts must be fixed. § 1460. Presumption that renewal policy like original. § 1461. Misrepresentations and warranties in application for re newal. § 1462. Immaterial oral representation not inducing risk: renewa valid. § 1463. When renewal is on same terms and conditions as old con- tract. § 1464. Renewal: Cases. § 1465. New policy may be only a renewal. § 1466. Renewal or revival may be conditional. § 1467. Agreement or waiver necessary to renewal or revival after forfeiture. § 1468. Agreement to renew not within statute of frauds. § 1469. Renewal need not be under seal. § 1470. Agent's agreement to renew: Delivery renewal receipt. § 1471. Right to reinstatement may pass to beneficiary. § 1472. Reinstatement of member. § 1473. Suspension of risk. § 1474. Duration of risk: Effect of war. CONTENTS. xlvii CHAPTER XXXVII. ATTACHMENT AND DURATION OF RISK— THE SHIP. SUBDIV. I. Attachment and Duration of Risk— The Ship. SUBDIV. II. Continuance and Termination of Risk — The Ship. SUBDIV. I. Attachment and Duration of Risk— The Ship. § 1483. Attachment and duration of risk on ship— Generally. § 1484. Detention by embargo, after voyage commenced. § 1485. Attachment of risk: Vessel building: "Waterborne," "safely launched." etc. § 1486. Attachment of risk "at and from" home port. § 1487. Prior parol agreement as to time of commencement of risk cannot change policy. § 1488. Attachment and duration of risk where voyage insured is changed or abandoned. § 14S9. Attachment and duration of risk: Time policy. § 1490. Attachment and duration of risk: Mixed policy. § 1491. Intent to insure vessel on time irrespective of place where she may be. § 1492. Time specified for continuance of risk after arrival— Voyage insured. § 1493. Attachment and duration of risk under time policies, the voyasre being described. § 1494. Attachment of risk "at and from:" Delay in port should not be unreasonable. § 1495. Attachment of risk sailing on voyage: Departure. § 1496. Attachment of risk "at and from" a foreign port. § 1497. What is sufficient repair and seaworthiness to enable ship to lie in safety "at" outport. § 1498. "Whether risk attaches upon first arrival "at," or after vessel has been moored twenty-four hours, etc. § 1500. Same subject: Cases and opinions of the courts. § 1501. Same subject: Attachment and duration of risk "at and from" island, etc. § 1502. Usage may suspend attachment of risk "at and from" be- yond time of ship's first arrival. § 1503. Stipulation that risk commence "at and from" on termina- tion of cruise, aud preparing for voyage. § 1504. Opinions of courts as to the attachment of risks in the pre- ceding cases. § 1505. Meaning of the word "port"— Generally: "Port risk." § 1506. Duration of risk: Time policies "at sea": "On a passage." § 1507. Attachment of risk "at and from" vessel lying long in for- eign port, or stated to be there in safety, "where she now is." § 1508. Homeward policy "at and from": General designation of ports: Case of island or district. xlviii CONTENTS. § 1509. Home-ward policy "at and from": Specific designation of port or place. § 1510. Attachment of risk "at and from" foreign port: Ownership acquired while lying in port. § 1511. "At and from" any one of several ports: Voyage from one port to another before risk attaches. § 1512. Attachment of risk. "from" a port. § 1513. Attachment and duration of risk: Entirety of risk. § 1514. The words "thence" or 'from" used in reference to inter- mediate ports. § 1515. "At and from" to a port named and a market. § 1516. Commencement of voyage insured to specified port with lib- erty to call at. etc. SUBDIV. II. Continuance and Termination of Rislc—The Ship. § 1523. Continuance of risk: Liberty to "touch and stay," etc: Inter- mediate voyage: Usage of trade. § 1524. Termination of risk on ship to island, with liberty of several ports, or to port or ports of discharge. § 1525. Insurance to several successive ports of discharge: Election of ports. § 1526. Continuance of risk where completion of voyage insured is compelled to be temporarily delayed. § 1527. Risk continues, although vessel be compelled to stop without harbor by municipal or like regulations: Quarantine. § 1528. Ship insured to designated port without provision as to dura- tion of risk after arrival. § 1529. Insurance "at and from" a port: Several ports within one classification. § 1530. Termination of risk: Time policy. § 1531. Risk terminates by abandonment or change of voyage in- sured. § 1532. Risk terminates in case of island or district at first port of discharge. § 1533. Continuance of risk while loading at specified port. § 1534. Continuance of risk on fishing voyage: Part of cargo arriv- ing by another ship. § 1535. Continuance of risk on furniture, etc. of ship. § 1536. Putting into port other than that of original destination and discharging small part of cargo. § 1537. Moored twenty-four hours in good safety. § 1538. What constitutes being moored twenty-four hours in good safety. § 1539. Limitation of the rule. § 1540. When vessel has arrived. § 1541. Vessel may have arrived, and yet never have been moored in safety. § 1542. Mere temporary mooring not sufficient. § 1543. Degree and kind of physical safety required. § 1544. Degree and kind of safety required: Seizure, etc CONTENTS. XI1X S 1545. Ship moored at outer harbor or outside place of usual dis- charge and unable to enter. § 1546. Mere liability to damage does not of itself prevent the ship being in safety. § 1547. Port of discharge: Last port of discharge. § 1548. Until she shall arrive in safety in any port or harbor of a particular place. § 1549. Risk may be terminated by substituting another port of de- livery. § 1550. To port or ports of discharge— Usage of trade to keep cargo on board for a time after arrival. § 1551. Ship insured to one of two ports— In alternative. § 1552. Termination of risk by undertaking distinct voyage before commencing voyage insured. i 1553. Loss incurred before expiration of risk— Expense incurred thereafter to repair injury. § 1554. Mutual insurance association: Termination of risk: Nonpay- ment ot contribution. 5 1555. Expiration by limitation of "binding" memorandum. CHAPTER XXXVIII. ATTACHMENT AND DURATION— GOODS AND FREIGHT. SUBDIV. I. Attachment and Duration of Risk on Goods. II. Attachment and Duration of Risk on Freight. SUBDIV. I. Attachment and Duration of Risk on Goods. § 1562. Attachment and duration of risk on goods— Generally. § 1563. Insurance on goods may be retrospective. § 1564. Risk will not attach until assured acquires an interest in the goods: Exception. S 1565. Goods on shore in warehouses: On the wharf awaiting ship- ment for trading voyages: Temporarily landed in govern- ment warehouses: Landed for transportation to port: Quar- antine. § 1566. "Safely landed," defined and construed. § 1567. "Safely landed," risk of craft while waiting for transship- ment. § lofiS. Goods "to be shipped": Time policy. § 1569. Goods in transit, in boats jor lighters, etc: Usage: Attachment and termination of risk. § 1570. Attachment of risk: Substituted goods: Goods laden at inter- mediate port: Trading voyages. § 1571. Where goods subsequently loaded at intermediate port are not substituted goods. S 1572. Outward goods and proceeds home: Attachment risk. Joyce, Vol. I.— D 1 CONTENTS. § 1573. "At and from": Undisposed of outward cargo may be pro- tected by the words "wheresoever loaded." § 1574. "At and from": Outward cargo to be considered homeward interest, etc.: Loading "at." § 1575. "Laden or to be laden" between designated ports. § 1576. Shipments to be subsequently declared: Risk attaches in order of shipment: Usage to correct declaration. § 1577. The insurance applies to the first voyage or the one com- menced. § 1578. "At and from" a specified port: Commencement of the risk from loading, etc.: What is a port of loading. § 1579. Cases relied on in support of the last rule. § 1580. Construction of policy may warrant loading elsewhere than at designated place. § 1581. Risk on goods "at and from." § 15S2. "At and from" on goods: Several ports, within one legal classification. § 1583. Goods on board ship or ships: Certain ports named: At- taches at port where loaded, etc. ■ § 1584. Unloading and reloading goods to make vessel seaworthy or for other purposes. § 15S5. Attachment and duration of risk on goods: Abandonment and change of voyage insured. § 1586. Homeward policy "at and from": Case of island or district: From the loading aboard ship "at" port or ports. S 1587. Duration of risk: Liberty to make port or ports: Insurance to several ports— Island or district. § 15S8. Attachment of risk from a port from loading: Duration of risk— Usage. 3 1589. To specified port: Anchoring outside of harbor. § 1590. Till safely landed: Final or last port of discharge. § 1591. Goods partly landed: Whether the risk is entire. 5 1592. Within what time goods must be landed. § 1593. Termination of risk: Voyage stopped or delayed by Ice: In- land navigation. § 1594. Risk terminates where goods are transshipped without neces- sity or agreement. § 1595. Risk does not terminate where goods transshipped from necessity. § 1596. Risk does not terminate when transshipment is by agree- ment. § 1597. Termination of risk: Outfits of whaling voyage. § 1598. Till arrival of goods to a market at final port of discharge. § 1599. Termination of risk by consignee or owner taking posses- sion: Consignees: Lighters. SVBDIV. 11. Attachment and Duration of Ri*k on Freight. § 100G. Attachment and duration of risk on freight— Generally. § 1007. The case of Tonge v. Watts. CONTENTS. 11 § 1G08. Risk on freight will only attach from loading of the vessel where so stipulated. § 1609. Risk on freight will attach only on goods laden where no contract for the goods exists. § 1610. Risk on freight attaches under valued policy where part only of goods are laden. § 1611. Risk on freight under valued policy may attach only propor- tionately to goods and freight actually at risk. § 1612. Risk attaches on freight if cargo purchased or contracted for, and both ship and cargo are ready. § 1613. Risk on freight will not attach where loss is incurred on voyage other than that insured. § 1614. Risk on freight "at and from": Homeward voyage. § 1615. Valued policy on freight outward and homeward covers each voyage. § 1616. Freight where voyage Insured consists of distinct or succes- sive passages: Valued policy. § 1617. Risk terminates where freight is earned: Freight partly earned. S 1618. Risk on freight terminated by assured accepting goods at in- termediate port. § 1619. Risk on freight against total loss only not terminated by de- livery of some goods at intermediate port. § 1620. Termination of risk on freight at port or ports of discharge. ■ § 1621. General rule as to attachment of risk on freight: Chartered freight. § 1622. Extension of rule last stated. 5 1623. Attachment of risk where vessel is being fitted at place of loading to receive contracted for cargo. § 1624. Risk on chartered freight attaches by inception of voyage even in ballast to port of loading. § 1625. Contract stipulation may supersede the above rule. § 1626. Where there is a sound charter party at and from outport. § 1627. Outward and homeward freight where contract for freight is entire. CHAPTER XXXIX. RESCISSION AND CANCELLATION. § 1634. Rescission and cancellation— Generally. § 1635. Statutory provisions relating to rescission or cancellation. § 1636. Rescission or cancellation before contract delivered or finally completed. § 1637. Rescission or cancellation by consent. § 1638. Agreement to cancel marine risk need not be in writing. § 1639. Option reserved by company to cancel. § 1640. Cancellation for nonpayment of premium or other breach of condition. Hi CONTENTS. § 1641. Cancellation where policy assigned. § 1642. Effect as to cancellation of repeal of charter. § 1643. Cancellation by authority of directors of mutual company. § 1644. Rescission and cancellation: Insolvency: Appointment of re- ceiver: Termination of business by transfer of assets, etc. § 1645. Cancellation by receiver: Statutory provision: Certificates of indebtedness. § 1646. What acts do not effect a cancellation. § 1647. Rescission by assured and surrender of policy. § 1648. Cancellation by request of assured under terms of policy. § 1649. Right to reject policy not of class ordered. § 1650. Rescission and surrender: Mutual company— Withdrawal of member. § 1651. Right of assured to surrender life policy dependent upon beneficiary's consent. § 1652. Proposition to cancel must be accepted or declined as a whole if indivisible. § 1653. Want of insurable interest as a ground of rescission or can- cellation. § 1654. Rescission or avoidance of compromise or release. § 1655. Right of agent to rescind or cancel: Notice of cancellation to agent or broker. § 1656. Cancellation by mistake of agent. § 1657. Partner's consent to cancellation or substitution binds firm. § 1658. Release by part of the insured parties. § 1659. Wrongful cancellation or termination of contract by assurer. § 1660. Strict compliance with stipulation as to rescission or can- cellation required unless waived: When stipulation not binding. § 1661. Rights relating to rescission or cancellation must be exer- cised within a reasonable time. § 1662. Company cannot cancel when loss is imminent, § 1663. Cancellation and rescission after loss or forfeiture. § 1664. 'Cancellation in equity after policy has become void or In- operative. § 1665. May the policy be terminated eo instant! on notice: Reason- able time. § 1666. Cancellation of parol contract: Notice. § 1667. Cancellation: Notice to the insurer. § 1668. Cancellation: Notice to the assured: To agent: To mortgagee: To one of several. § 1669. Cancellation: Notice by mail must be received. § 1670. Cancellation: Company must give notice:. SufBciency and service of same. § 1G71. Cancellation: Company must return or tender unearned pre- mium. § 1672. Cancellation: What is not a sufficient payment or tender of the unearned premium. 8 1G73. Cancellation: When actual payment or tender of unearned premium unnecessary. CONTENTS. Hii § 1674. When equity will rescind or cancel— Generally. § 1675. When equity will rescind or cancel— Cases. § 1676. When equity will not rescind or cancel— Cases. § 1677. Equity may rescind cancellation made by mistake. § 1678. When equity will refuse to cancel after loss or death. § 1679. When equity will cancel after loss or death. § 16S0. Same subject— Conclusion. § 1681. Proof: Evidence as to cancellation or rescission. | 1682. Whether question of rescission or cancellation is one of law or fact. TITLE VIII. SUBJECT OF INSURANCE. CHAPTER XL. DESCRIPTION OF PARTIES AND SUBJECT MATTER, § 16S9. Description of parties. § 1690. Description of the property— General rules. § 1691. Extent of interest need not be specifically described. § 1692. Same subject: Carriers: Shipment: Consignee: Undivided in- terest: Assignee. § 1693. Same subject: Joint owners: Partners. § 1694. Same subject: Trustee: Tenant by courtesy: Administrator; Executor: Agent: Charterer. § 1695. Same subject: Mortgagor and mortgagee: Reinsurer. § 1696. Goods shipped by carriers: Owner's interest covered. § 1697. Specific description, how far exclusive: The terms "includ- ing" and "consisting of." § 169S. When specific designation of interest or property is required. CHAPTER XLI. DESCRIPTION OF PROPERTY. 1705. Accounts: Evidences and securities of property. 1706. Advances: Advancements by charterer and master: Ad- vances on freight. 1707. "All or either": "Both or either." 1708. Alteration and repairs of property. 1709. Bank notes and bills of exchange. 1710. Bottomry and respondentia. i'lV CONTENTS. § 1711. Captor's Interest: Prize of war. § 1712. Cargo. § 1713. Contingent or special interest in property of others. § 1714. Contraband of war: Belligerent and neutral property. § 1715. Curiosities: Scientific cabinets and collection. § 1716. Equitable interest may be covered by the term property. § 1717. Freight must be insured eo nomine. § 1718. Freight right reserved by owner and vendor: Whether such interest covered by insurance on freight. § 1719. Freight: Whether charterer may insure it eo nomine: Diffi- cult to formulate a rule. § 1720. Same subject: The cases. § 1721. Same subject: Opinions of text-writers. § 1722. Same subject: Conclusion. § 1723. Freight: Designation of shipowner's interest. § 1724. Freight: Other interests. § 1725. Goods, wares and merchandise: Cargo. § 1726. Goods laden on deck. § 1727. Goods, wares and merchandises: "In trust or on commis- sion": On consignment. § 1728. Clause "In trust or on commission" may be limited and con- trolled by other words in the policy. § 1729. Goods, etc., "sold but not delivered": "Sold but not removed." § 1730. Goods, etc., "in trust or on commission": On storage: Where policy requires specific declaration or separate insurance. § 1731. Where policy stipulates specific insurance of goods "In trust" and specifies what interest these words cover. § 1732. Goods or merchandises: Shifting and successive cargoes. § 1733. Goods or merchandise: Shifting and successive goods: After- acquired property: Fire risks. § 1734. What goods are covered may be determined by custom be- tween the parties. § 1735. What goods are covered may be determined by known usage of a particular place. § 1736. Goods or merchandises to be described by indorsement: Ap- proval of risks: Goods to be thereafter declared and valued: Marine risks. § 1737. Gunpowder: Marine. § 1738. House or building: Dwelling-house. § 1739. Houses and buildings: Connected structures and additions. § 1740. Household furniture: Hotel furniture. § 1741. Livestock: Marine risks. § 1742. Locality important in fire risks. 8 1743. Locality: Property "contained in." § 1744. Locality: Property "contained In" connected or adjoining buildings: New buildings substituted for old. § 1745. Locality: "Contained in": Goods in different parts of build- ing. § 1746. Locality: "Contained in": Removal of goods from a specified location: Permanent removal. CONTENTS. lv 8 1747. Locality: Temporary removal of property from a specified location. § 1748. Locality: Property on premises. § 1749. Locality: Premises owned and occupied: Property on wharf. § 1750. Locality: Occupation and ownership or use of premises ac- quired subsequently to issuing policy. § 1751. Manufactories: Factories: Mills. § 1752. Materials not included in "building": Unfinished vessel. § 1753. Medals and models: Specific description: Standard policy. § 1754. Money, specie, bullion, coin, treasure, jewels. § 1755. Painting: Patterns: Specific description: Standard policy. § 1756. Passage money. § 1757. Personal effects: Money, jewelry, etc.: Master's effects. § 1758. Personal property: Wearing apparel: Master's clothes: Bag- gage. § 1759. Plate: Specific description: Standard policy. § 1760. Profits and commissions. § 1761. "Property." § 1762. Provisions and provender: Marine risks. § 1763. Scientific cabinets and collections— Sculpture: Speciflc de- scription: Standard policy. § 1764. Ship. § IT 65. Ships: Stores and outfit: What ship Includes. § 1766. Ship's boat or launch. § 1767. Ships: Character or kind of vessel: Rating. § 1768. Ship's name important: Master's name. § 1769. Change of ship or master, or name of ship. § 1770. Ship's enrollment as affecting validity of policy. § 1771. Ship as privateer or letter of marque. § 1772. Ship or ships. § 1773. Ship or ships: Right to apply policy in case of different ship- ments and loss. § 1774. Stock of goods, etc., in manufacturing: Stock in trade of mechanic: Fire risk. § 1775. Stock in trade: Goods or merchandise for sale: Fire risks. § 1776. Stock in trade: Stock in building: Owner and goods of others. § 1777. Stock in trade, etc., may cover property specifically excluded, or the keeping of which is prohibited. S 1778. Whaling and fishing voyages: Outfits: Stores, catchings, etc. CHAPTER XLIL CONCEALMENT— MARINE RISKS. § 1786. Concealment in marine insurances— Generally. § 1787. Concealment arising from negligence, accident, mistake, etc., avoids. § 178S. Concealment: Voluntary ignorance will not excuse. Ivi CONTENTS. f 17S9. A specific and full disclosure is required, not an evasive one or one in general terms. § 1790. Concealment is referred to the time of making the contract. § 1791. What constitutes a "material fact": Must it be a fact mate- rial to the risk. § 1792. Same subject: Opinion of the text-writers. § 1793. Same subject: Conclusion. I 1794. Whatever affects the state and condition of the ship at the time is material. § 1795. Facts and information affecting the condition or safety of the ship on her voyage. % 1796. Suspicions, rumors, reports, apprehensions, opinions, gen- eral intelligence. § 1797. Same subject: Cases. § 1798. Facts implied from or underwriter put on inquiry by Infor- mation given: Waiver. § 1799. Information, belief, or expectation of third person. § 1800. Failure to communicate a fact which would show known In- formation material. § 1801. Where intelligence or report proves untrue. § 1802. Intelligence, reports, or rumors of loss. § 1S03. Whether time of sailing must be disclosed: Opinions of text- writers. § 1804. Same subject: Cases. § 1805. Same subject: The general rule. § 1806. Underwriter presumed to know causes which occasion nat- ural perils. § 1807. Restrictions on commerce— Commercial and foreign regula- tions. § 1808. Underwriter presumed to know causes which occasion politi- cal peril. § 1S09. Underwriters presumed knowledge: Degree of publicity which will hind underwriter with knowledge of material fact. § 1810. Same subject: The English rule. § 1811. Same subject: The case of Bates v. Hewitt. § 1812. Same subject: Opinions of Mr. Arnould and Mr. Maclach- lan. § 1813. Usage need not be disclosed. § 1814. Exception to last rule. § 1815. Ownership of vessel need not be stated when not materia, and insurance is on cargo. § 1816. Nature and condition of cargo. § 1817. Cases where entire contracts not vitiated but only that part relating to risk concealed. § 1818. Whether it need be disclosed that goods are contraband: Belligerent risks: Neutral: National character. S 1819. Presumption concerning underwriter's knowledge of ports and places. § 1820. Repairs consequent upon outward voyage. CONTENTS. lvii $ 1821. Disclosure of Interest in ship or goods. f 1822. Must an equitable title be disclosed. S 1823. Facts not within assured's knowledge: Degree of diligence required of assured. § 1824. Need not disclose matters of express or implied warranty. § 1825. Whether information which falsities a warranty must be dis- closed. § 1826. Mode of construction of vessel. § 1827. Destination of vessel: Port or ports. § 1828. By-gone calamities: Previous condition of ship: Latest in- telligence. § 1829. That goods are to be stowed on deck need not be disclosed. § 1830. Particular language of bill of lading. § 1831. Excepted risks. § 1832. Ship's papers: False clearance, etc. § 1833. Whether the fact that letters of marque are on board must be disclosed. § 1834. Ship's true port of loading. § 1835. Other matters not necessary to be disclosed. § 1836. Other matters necessary to be disclosed. 5 lb3T. Where inquiries are made. CHAPTER XLIII. CONCEALMENT IN OTHER THAN MARINE RISKS. § 1844. Concealment in other than marine risks— Generally § 1845. English decisions. § 1846. Assured's knowledge. § 1847. Assured's knowledge: Concealment arising from negligence, accident, or mistake. § 1848. Assured's knowledge: His belief as to materiality of facts. § 1849. Same subject: Conclusion. § 1850. Insurer's knowledge. § 1851. Insurer's knowledge: Constructive knowledge from examina- tion by surveyor. § 1S52. Insurer's knowledge: Use of insurance maps in fire risks. § 1853. Insurer's knowledge: Public records of title. § 1854. Insurer's knowledge: Political perils. § 1855. A specific and full disclosure is required, not an evasive one. § 1856. Concealment must be referred to the time of the contract, and not to subsequent events. § 1857. Disclosure of assured's interest. § 1S58. Same subject: Exceptions to rule. § 1859. Must an equitable title be disclosed. § 1860. Unusual or extraordinary circumstances of peril to whieb property is exposed. § 1861. Same subject: Distinction to be observed. lviii CONTENTS. § 1862. Apprehensions that property is exposed to danger: Sus- pious, rumors, opinions, and speculations. § 1863. Where insured's belief, apprehension, or fear of danger is the moving cause in effecting insurance. § 1864. Where moral character of the assured may become material: Reinsurance. § 1865. Belief that property has been destroyed. § 1866. Facts implied from or assured put on inquiry by information given: Waiver. § 1867. Whatever affects the state or condition of the property at time: Materiality. S 1868. What constitutes a material fact: Must it be material to the risk? § 1869. Inquiries. § 1870. Inquiries: Questions in application unanswered or Incom- pletely answered: Waiver. § 1871. Same subject continued. § 1872. Same subject: Distinctions to be observed. § 1873. When subsequent reception of premium no waiver of con- cealment. § 1874. Concealment of same facts from other insurers. § 1875. Other matters: Code provisions, etc: General statement. CHAPTER XLIV. REPRESENTATIONS AND MISREPRESENTATIONS. S 1882. Representations and misrepresentations— Generally. § 1883. Representations, defined. § 1S84. Misrepresentations, defined. § 1885. Representations may be oral or written. § 1S86. Representation precedes contract. § 1887. Representation is collateral to, but no part of the contract. § 1888. Same subject: The theory that representations are a part of the contract. 8 1889. What weight should be given this theory that representa- tions are a part of the contract. 8 1890. Statements that are part of contract may sometimes be rep- resentations. § 1891. When statements in application are representations: Refer- ence to application— Generally. § 1892. Test of materiality of representation. § 1893. Representation only relates to material facts except it be otherwise stipulated. § 1894. False representations in regard to material matters avoid contract. § 1895. Misrepresentations or false representations must be of material facts. § 1896. Same subject: When statement is intentionally false: Effect of the fraud as to materiality of fact to risk. CONTENTS. lix § 1897. Where positive representation false and material, fraud need not he proven. § 1898. Representation may be of facts actually material to the risk: Question for jury. § 1899. Representation may be of facts in no way material to risk. § 1900. Representation may be of facts intentionally false. § 1901. Positive statment of fact which assured does not know to be true. § 1902. Representations through mistake, ignorance, or negligence. § 1903. Cases qualifying the last rule. § 1904. Representations of expectation, intention, belief, or opinion without fraud. 9 1905. False representations, owing to fault, etc., of insurer's agent. § 1906. Statements founded on information from agent. § 1907. Positive statements founded on information derived from others. § 1908. Statements not positive based on information from others. § 1909. Positive statements defining time of commencement of risk. § 1910. Facts actually material but not relied on by insurer. ? 1911. Matters of description, or facts relating to property. § 1912. Facts rendered material by stipulation. § 1913. Statement limited as to its effect by assured. § 1914. Facts stated in answer to inquiries. § 1915. When the stipulated materiality of statements Is qualified. § 1916. Statements under statutory provisions. § 1917. Promissory representations: Statement of proposition. § 1919. Same subject: Cases and opinions. § 1920. Same subject: Conclusion. § 1921. To what time the representation refers. § 1922. Representation falsified in the future does not operate retro- actively. § 1923. Representation true when made, but untrue when policy de- livered. § 1924. Representation must be substantially true. § 1925. Loss need not be connected with misrepresentations to avoid contract. § 1926. Misrepresentations to other insurers. § 1927. Representations must not be evasive. § 192S. Statements volunteered and irrelevant: Irresponsive an- swers. § 1929. Ambiguous or doubtful representations. § 1930. Answers to ambiguous or doubtful questions. § 1931. Representations false as to part of property: Entire or sev- erable contract. § 1932. Representations of third parties: Parties referred to. § 1933. Representations may be changed, modified, altered, or with- drawn. § 1934. Construction of representation. § 1935. Rules as to representations apply to modification of con- tract. IX CONTENTS. CHAPTER XLV. WARRANTIES. § 1942. Warranties— General statement. § 1943. Division of warranties. § 1944. Express warranty defined. § 1945. Implied warranty defined. § 1946. Affirmative warranty defined. § 1947. Promissory warranty defined. § 1948. Warranty of intention: The case of Bilbrough ▼. Metropoli- an Insurance Co. § 1949. Form of warranty: Construction. § 1950. In cases of doubt construction against warranty: Intention of parties. § 1951. Warranty in effect— Condition precedent. § 1952. Same subject: Loss occurring prior to breach of promissory warranty. § 1954. Same subject: Additional authorities. § 1955. Same subject: Conclusion. § 1956. Express warranty must appear on face of policy or be made a part of contract. § 1957. Warranties: Statements in application. § 1958. Application and other papers: What constitutes a sufficient reference: Marginal writings on policy. § 1959. Reference to application, plan, survey, etc., continued. § 1960. Same subject: Cautionary suggestion. § 1961. Whether stipulation on face of policy as to preservation of property after loss is warranty. § 1962. Warranty not necessarily material: Its materiality not sub- ject of inquiry. § 1963. Materiality of fact to the risk may In certain cases be sub- ject of inquiry. § 1964. Warranty: Mistake: Want of knowledge of untruth: Fraud: Good or bad faith, etc. $ 1965. Warranty may be qualified by other words in contract. § 1966. When matters of description or facts relating to property are wai'ranties. § 1967. Where time to which affrmative warranty relates is specified. § 1968. Where time to which af^tnative warranty in life risk re- lates is indefinite. § 1969. Partial answers. § 1970. Breach: Warranty must be strictly true and exactly and lit- erally fulfilled. § 1971. Is there a tendency to relax the above rule? § 1972. Exceptions to above rule: What excuses compliance with warranty. CONTEXTS. 1X1 § 1973. What excuses compliance: Waiver. § 1974. Neglect to read or have application read no excuse. § 1975. Breach of warranty avoids though not cause of loss. § 1976. Policy avoided by breach of warranty is not revived by subsequent compliance. § 1977. Burden of proof: Express warranties. CHAPTER XLVI. PARTICULAR REPRESENTATIONS AND WARRANTIES. § 1987. General statement. § 1988. Account of stock: Not continuing warranty. § 19S9. Merchandise accounts: Inventory. § 1990. Accounts settled monthly: Guarantee against embezzlement § 1991. Age and character of building. § 1992. Age of insured: Age of parents: Life risk. § 1993. Anchorage ground: Marine risk. § 1994. Armament of ship: Warranty. § 1995. Ashes. § 1996. Bodily or mental infirmities: Life ana accident policy. § 1997. Books of account: Keeping books in safe. § 1998. Cargo of ship: Warranty. § 1999. Convoy— Warranty to sail or depart with. § 2000. "Depart," warranty to, in marine risk. § 2001. Examination of property after work: Representation. § 2002. Fires: Heating: Stoves: Continuing warranty. § 2003. Health: Disease: Life risk. § 2004. Health: "Good health": "Sound health": "Sound body": "Perfect health," etc. § 2005. Same subject: Renewal of policy. § 2006. Same subject: Refusal of assured to accept renewal receipt conditioned as to good health. § 2007. Health of assured need not be disclosed at time of renewal receipt except on inquiry. § 2008. Health: "Spitting of blood": "Consumption." § 2009. Health: Previous sickness or disease. § 2010. Health: Assured's knowledge: Latent disease. § 2011. Health: Parents: Relations. § 2012. Health: Rupture: Hernia: Wearing truss. § 2013. "In port," as related to commencement of risk: Marine pol- icy: Warranty. § 2014. Incendiarism: Fire risk. § 2015. Incumbrances: Disclosure of title not necessary unless asked or otherwise required: Fire risk. § 2016. Incumbrances— Generally. § 2017. Incumbrances on property by verbal agreement. § 2018. Incumbrances made after the policy. l x ii CONTENTS. § 2019. Incumbrances: Judgment: Execution. § 2020. Incumbrances: Lien: Mechanic's lien: Judgment lien. § 2021. Incumbrances: Lien for taxes: Delinquent taxes. § 2022. Incumbrances: Mortgage. § 2023. Incumbrances: Mortgage— Knowledge of insurer or bis agent. § 2024. Incumbrances: Mortgage obtained by fraud. § 2025. Incumbrances pending litigation. § 2026. Interest and title: No disclosure necessary where no inquiry. § 2027. Interest and title— Generally. § 2028. Interest and title: Title which will enable assured to trans- fer by abandonment: Marine risk. § 2029. Interest and title: Assignee's policy. § 2030. Intel est and title: As interest may appear— "For account of." § 2031. Interest and title: Bill of sale. § 2032. Interest and title: Collateral. § 2033. Interest and title: Contract of purchase. § 2034. Interest and title— Conditional sale. § 2035. Interest and title: Deed as related to title. § 2036. Interest and title: Devisee: Charge created by will § 2037. Interest and title: Dower right. § 2038. Interest and title: Easement in property. § 2039. Interest and title: Equitable interest. § 2040. Interest and title: Fraudulent as against creditors. § 2041. Interest and title: Homestead. § 2042. Interest and title: Joint owner's undivided interest. § 2043. Interest and title: Judgment creditor: Execution sale: Fore- closure sale: Sheriff's sale. § 2044. Interest and title: Leasehold interest: Building an leased ground. § 2045. Interest and title: Lien. § 2046. Interest and title: Minor child's interest. § 2047. Interest and title: Mortgage, mortgagor, and mortgagee. § 204S. Interest and title: Ownership: Property. § 2049. Interest and title: Partnership interest: Exclusive owner- ship. § 2050. Interest and title: Pending litigation. § 2051. Interest and title: Possession. § 2052. Interest and title: Trust deed: Parol trust. f 2053. Interest and title: In trust or on commission, etc § 2054. Interest and title: Stored property. § 2055. Interest and title: Tenant by the curtesy: Joint occupancy. § 2056. Interest and title: Tenant for life: Tenant in tall. § 2057. Interest and title: United interests of assured. § 2058. Interest and title: Vendee under contact for purchase: Bond for deed. § 20"9. Interest and title: Wife's property. § 2060. Intention to navigate: Marine risk. S 2001. Insanity: Life risks. § 20fi2. § 2063. 5 2064. § 2065. § 20136. § 2007. § 20GS. § 2069. § 2070. a 2071. § 2072. § 2073. § 2074. § 2075. § 2076. 5 2077. CONTENTS. lxiii Insurance beyond specified amount contrary to stipulation. Iron safe: Fire risk: Keeping books, etc., in. Iron safe: Keeping books, etc., in: Waiver. Iron shutters: Fire risk. Lading: Dunnage: Registered tonnage: Marine risk. Lights: Fire risk. Location. Master's certificate: Warranty: Marine risk. Medical attendant: Medical treatment: Life risk. Medical examiner: Statements to. Medical examiner: Subject of inquiry. Moored safely in certain harbor: Warranty: Marine risk. Occupation: Life risk: Representation and warranty: Con- tinuing warranty. Other insurance: Refusal of other insurers. Opium habit: Life risk. Personal, accidental, or serious injury: Wounds: Hurts: Life and accident risks. § 2078. Pumps: Water— Tanks filled, etc.: Fire risk— Continuing Warranty. Residence: Birthplace: Life risk. Relative situation and distance: Other buildings: Variance in description: No warranty that location of other build- ings shall remain unchanged. Relationship: Life risk. Sailing: Warranty to sail: Marine risk. Sailing: Representation as to time of. Sailing: Representation as to time of may be merely of ex- pectation or belief. § 20S5. Sailing: Warranty to sail may not be engrafted on a policy by parol evidence. ? 20S6. Sailing: What constitutes. § 2087. Sailing: What does not constitute. § 20SS. Sheathing vessel. § 20S9. Ship's safety: Warranty: Marine risk. § 2090. Smoking on premises: Continuing warranty: Fire risk. § 2091. Spirits on board ship: Carrying prohibited articles: Raison- able construction: Marine risk. § 2092. Stay of vessel at certain place limited by warranty: Marine risk. § 2093. Stock kept up to specified amount. § 2094. Stowage cargo: Warranty: Marine risk. § 2095. Suicide: Effect of warranty against. § 2096. Temperate habits: Drunkenness: Use of intoxicating liquors. § 2097. Tobacco: "Moderate use." § 2098. Trade and employment of ship: Mnrine risk. § 2099. "Uninsured": Policy on another subject matter: "Honor" policy. 5 2100. Unmarried: Married: Widower: Wife. ^ 2101. Use and occupation: Whether continuing warranty: Fire risk § 2079. § 2080. § 2081. 5 2082, § 20S3. § 2084. IxiV CONTENTS. § 2102. Use and occupation: Constantly worked: Unlawful act not implied. § 2103. Use and occupation: Dwelling-house, boarding-house, hotel, etc. § 2104. Use and occupation: Hazardous trade or business. § 2105. Use and occupation: House of ill-fame. § 2100. Use and occupation: Manufactory. S 2107. Use and occupation: Manufactory: Incidental uses. § 2108. Use and occupation: Running factory nights. § 2109. Use and occupation: Stores: Storehouse: Storage. § 2110. Use and occupation: Stores, when continuing warranty. § 2111. Use and occupation: Tenants: Continuing warranty. § 2x12. Watchman on premises: Watch-clock: Sleeping in store: Continuing warranty. CHAPTER XLVII. NEUTRALITY AND NATIONAL CHARACTER. § 2122. Warranty of neutrality— Generally. § 2123. Object and meaning of this warranty. § 2124. Neutral property defined; Who is a neutral: Domicile. § 2125. Warranty true when made not forfeited by subsequent hos- tilities. § 2126. Warranty of neutrality as affected by barratry. § 2127. Documents, papers, etc., required. § 2128. Character of documents and insignia of national character required. § 2129. Description in policy or representation as to national char- acter. § 2130. Goods shipped from a neutral to a belligerent. § 2131. Goods shipped from a belligerent to a neutral: Transfer after capture. § 2132. Agreement to claim property as neutral In case of capture. § 2133. Neutral vessels employed in belligerent service. § 2134. May neutrals avail themselves in time of war of trade pro- hibited during peace? § 2135. Vendee of vessel. § 213G. Neutrality violated by breach of blockade. § 2137. Notice to neutral of blockade required. § 2138. Where existence of blockade is notorious or It has long con- tinued. § 2139. What constitutes a blockade. § 2140. Continuance of blockade. § 2141. Effect of sailing for blockaded port: Intention to enter: Breach of blockade: What is and is not. S 2142. Simulated or false papers: Concealment, suppression, or spo- liation of papers. CONTENTS. 1XV § 2143. Carrying contraband goods: Contraband of war: Breach of neutrality. ^ 2144. Breach of neutrality from resistance to lawful right of search. CHAPTER XLVIII. SEAWORTHINESS. § 2151. Warranty of seaworthiness implied: Voyage policy— General rule. § 2152. Whether warranty of seaworthiness implied in time poli- cies: The English rule. § 2153. Whether warranty of seaworthiness in time policies in this country. 3 2154. Same subject: Conclusion. § 2155. Implied warranty of seaworthiness in time policies: Code provisions: Stipulation. § 2156. Innocence of assured: Unknown defects. § 2157. Effect of exception of losses occasioned by unseaworthiness: Knowledge. § 2158. Effect of previous survey: Certificate of seaworthiness. § 2159. Different degrees of seaworthiness. § 2160. What constitutes seaworthiness. § 21 01. What constitutes seaworthiness: Unseaworthiness: 'Cases. § 2162. Effect of noncompliance with statute. § 2103. Effect of usage upon seaworthiness of foreign vessel in for- eign port. 8 2164. Manning vessel. § 2165. Whether inferior officers must be competent to fill master's position. $ 2166. Whether vessel must when she sails have a full complement of men engaged for whole voyage. § 2167. Negligence or misconduct of master or crew: Continuing warranty. § 2168. Employment of pilot. § 2169. Warranty may be superseded by stipulation: Waiver and estoppel. § 2170. Seaworthiness: Estoppel against insurer: Certificate of board of underwriters. § 2171. Successive voyages or stages of the voyage. § 2172. To what time the warranty of seaworthiness refers. § 2173. Continuing warranty as to seaworthiness: The English rule. § 2174. Continuing warranty as to seaworthiness: The rule in this country. § 2175. Continuing warranty as to seaworthiness: Time policies. § 2176. Continuing warranty as to seaworthiness: Repairs. Joyce, Vol. I.— E lxvi CONTENTS. § 2177. Whether cases as to necessity for repairs can be reconciled with other doctrines and cases apparently in conflict there- with. § 2178. Assurer's approval of ship at port of departure: Repairs. § 2179. Subsequent noncompliance as to seaworthiness no retro- spective effect. § 21S0. Vessel seaworthy for port. § 2181. Whether original unseaworthiness may be cured before loss. § 2182. Policy at and from: Vessel sailing unseaworthy: May defect be remedied before loss. § 2183. Vessel becoming unseaworthy after commencement of risk and defect cured before loss. TITLE IX. CONDITIONS VOIDING THE POLICY. CHAPTER XLIX. CONDITIONS VOIDING THE POLICY. § 2190. Conditions in policy— Generally. § 2191. Alterations and repairs— Generally. § 2192. Permission to make alterations or repairs. § 2193. Whether loss occasioned by the alteration cannot be In- quired into: Materiality of alteration. ? 2194. Materiality of alteration. § 2195. Alteration by act of proprietors. § 2196. Alteration conditioned to be at risk of insured. § 2197. Repairs upon the insured premises: Builder's risk. § 2198. Specially prohibited articles in connection with policy on stock of goods, etc. ? 2199. "Stock in trade": "Goods usually kept." § 2200. Storing of prohibited articles. § 2201. Keeping of prohibited articles; Hazardous and extra-haz- ardous. § 2202. Specially prohibited articles: Benzine— Burning fluid— Cam- phene— Fireworks— Gasoline. § 2203. Specially prohibited articles: Gunpowder— Hay— Kerosene- Lights— Naphtha. § 2204. Specially prohibited articles: Petroleum— Saltpeter— Spirit- uous liquors— Turpentine. CONTENTS. lxvii § 2205. Erection of buildings adjacent to Insured premises. § 2206. Erection of adjacent buildings to which insured was not a party. § 2207. Increase or change of risk. § 2208. Notice of increase of risk: Waiver. § 2209. Prohibited use of premises. § 2210. Meaning of "premises," as used in the condition. § 2211. Prohibited uses: Hazardous and extra-hazardous. § 2212. When policy is only suspended during a temporary prohib- ited use. § 2213. Uses not a violation of condition as to prohibited use. § 2214. Change in "situation" or circumstances affecting the risk. § 2215. Condition as to smoking upon the premises. § 2216. Ceasing to operate factory: Operating factory at night. § 2217. Use of stoves on premises: Fires. § 2218. Use of premises for unlawful purpose. § 2219. Prohibited uses which will avoid the policy. § 2220. Waiver of forfeiture on account of prohibited use. § 2221. Notice in case of change of use. § 2222. Effect of acts of tenant of insured property. § 2223. Change of occupancy: Tenancy. § 2224. Effect of nonoccupation of insured premises where policy prohibits increase of risk. § 2225. Vacant or unoccupied: Meaning of this term. § 2226. Provision as to notice in case premises become vacant or unoccupied. § 2227. "Unoccupied" premises. § 2228. "Vacant" premises. § 2229. Conditioned to be void if premises become "vacant and un- occupied." § 2230. Conditioned to be void if premises become "vacant or unoc- cupied." § 2231. Waiver of condition as to premises being vacated. § 2232. Restrictions in life policy as to residence, travel, etc.: Waiver. § 2233. Same subject: Construction of phrase, "settled limits of the United States." § 2234. Restrictions as to travel: Construction of permit to go be- yond prescribed limits. § 2235. Where insured is prevented by sickness from returning within time limited by permit. § 2236. Clause prohibiting change of occupation— Construction of. § 2237. Prohibition as to entering military or naval service. § 2238. Change in possession, title, or interest. § 2239. Effect of temporary increase of risk: Temporary violation of condition. lxviii CONTENTS. CHAPTER L. ALIENATION. § 2246. Alienation— Generally. § 2247. Conditions as to alienation— Construction of. § 2248. Consent to assignment: What constitutes a waiver: Notice to company. § 2249. Void sale of insured property. § 2250. Voidable and set-aside sale no alienation. § 2251. Sale of part of subject of insurance where policy contains no condition as to alienation. § 2252. Sale of part of property insured where policy stipulates against alienation or transfer of subject of insurance. § 2253. Alienation of part where contract severable. § 2254. Alienation of part— Whether contract entire or severable. § 2255. Conclusion: Alienation of part of subject of insurance. § 2256. Changes by incumbrances on the property. § 2257. Meaning of clause, '•incumbrance in any way": Liens cre- ated by operation of law. § 2256. Lease of insured property. § 2259. Conveyance by deed of property as collateral. § 2260. Sale of insured property with mortgage back: Change of in- terest or title. § 2261. Sale and mortgage back where policy prohibits alienation of interest. § 2262. Deed and reconveyance in trust to secure payment of pur- chase money. § 2263. Trustee, purchaser at his own sale under power of sale in mortgage: No alienation. § 2264. Mortgage not alienation: Sale or transfer title. § 2265. When mortgage not an incumbrance. § 2266. Mortgage under different conditions in policies. § 2267. Mortgage an "alteration." § 2268. Chattel mortgage under alienation clause. § 2269. Chattel mortgage by partner: Change of interest. § 2270. Commencement foreclosure proceedings. § 2271. "Entry of a foreclosure of mortgage"— Construction. § 2272. Decree of foreclosure — Sale thereunder. § 2273. Notice may operate as consent to mortgage. § 2274. Judgment— Generally: Mechanic's lien: Judgment lien. § 2275. Sale of equity of redemption where policy assigned to mort- gagee. § 5270. Writ of attachment: "Process." § 2277. "Levied on": "Taken into possession or custody": Construc- tion. § 2278. Levy of execution: Sale on execution. CONTENTS. lxix § 2279. Waiver of forfeiture: Sheriff's sale. § 2280. Dissolution partnership: Receiver. § 2281. Accident insurance on lives of partners: Dissolution. § 2282. Sales between cotenants. § 2283. Partition of insured property. § 2284. Executory contract of sale: Conditional sale. § 2285. Acts of vendor where person holds under contract of pur- chase. § 2286. Where sale has not been confirmed as required. § 2287. Where insurance on changing stock of goods. § 2288. Bankruptcy or insolvency. § 2289. Death of insured: Descent of title to heirs. § 2290. What amounts to an alienation: Sale: Transfer: Change of title: Instances. § 2291. What does not amount to an alienation: Sale: Transfer: Change of title: Instances. § 2292. Change in possession. § 2293. Sale by partner: Alienation, assignment, and change of title or possession clauses. § 2294. Summary of decisions. § 2295. Conclusion. CHAPTER LL ASSIGNMENT AND TRANSFER OF POLICY. § 2304. Assignment of policies: Fire insurance. § 2305. Assignment of fire policies: "Loss, if any, payable to. § 2306. Assignment of fire policies— Generally. § 2307. Sale of property does not transfer policy to purchaser. | 2308. Assignment: Legal effect of assent to in fire policy. § 2309. Manner of procuring assent to assignment of policy. § 2310. Notice of assignment: Fire: Marine. § 2311. What constitutes equitable assignment of fire policy. § 2312. Indorsements upon policy. § 2313. Fraud in making assignment: In procuring assent thereto. § 2314. Assignment to mortgagee. § 2315. Assignment of fire policy as collateral. § 2316. Assignment to partner. § 2317. By-laws of mutual company as affecting assignment of policy. § 2318. Rights of creditor of assignor attaching subsequently to assignment of fire policy. § 2319. Effect of acts of assignor upon rights of assignee generally, mortgagee. § 2320. Effect of acts of assignor upon rights of assignee who is § 2321. Effect of acts of mortgagor after loss upon rights of as- signee. lxx CONTENTS. § 2322. Legal effect of assignment after loss. § 2323. Assignment of a void policy. § 2324. Limitation clauses— Assignment. § 2325. Clauses as to assignment: Waiver of breach thereof: For- feiture. § 2326. Assignment of life policies— Generally. § 2327. No assignment by insured where interest in policy has vested in beneficiary. § 2328. No assignment if policy forbids. § 2329. Notice of assignment: Life policy. § 2330. What is sufficient notice: Life. § 2331. Assignment of life policy: Consent. § 2332. Delivery of assignment of life policy. § 2333. Possession of policy: Life. § 2334. Assignment of mutual benefit certificates. § 2335. Fraud in procuring or making assignment of life policy. § 2336. Absolute assignment: Life policy to creditor: Agreement to retain only amount due. § 2337. Assignment of life policy as collateral. § 2338. Assignment of policy payable to executors, administrators, or assigns. § 2339. Assignment of policy to trustee. § 2340. Assignment of policy pro tanto. § 2341. Effect of bankruptcy upon policy on life of bankrupt, § 2342. Rights of company where policy assigned. § 2343. Assignment by husband to wife of life policy. § 2344. Assignment of life policy to wife by insolvent. 5 2345. Right of husband to assign policy issued for benefit of wife or children. § 2346. Right of guardian to assign policy issued for benefit of ward. § 2347. Right of wife to assign policy on life of husband. § 2348. Assignment by wife of policy on husband's life—Cases gen- erally. § 2349. Assignment by husband and wife jointly of policy on hus- band's life: Joint assignment by husband, wife, and chil- dren. § 2350. Assignment and transfer of marine policies— Generally. § 2351. Assignment of marine policies where assignor has parted with entire interest in property insured. § 2352. Assignment of marine policy subsequent to absolute sale and transfer of subject of insurance. § 2353. Assignment of marine policy: Delivery to assignee. § 2354. Notice of assignment of marine policy. § 2355. Prohibition in marine policy as to assignment. § 2356. Rights of insurers to set off against assignee. § 2357. What constitutes assignment— Cases genernlly. § 2358. What will not amount to an assignment— Cases generally. CONTENTS. lxxi CHAPTER LII. CHANGE OF VOYAGE— DEVIATION— LIBERTY CLAUSES. § 2365. Description of the voyage. § 2366. Distinction between voyage of the ship and voyage insured. § 2367. Where course of voyage insured is not fixed by mercantile usage. § 2368. Determination as to which of two routes is the usual one: Case of several routes. § 2369. Deviation defined. § 2370. Effect of deviation: Basis of underwriter's discharge. § 2371. Insurer liable for prior loss. § 2372. Temporary deviation and return to course: Prior loss. § 2373. Same subject: Certain classes of cases distinguishable. § 2374. Time policy: Navigation limited. § 2375. Intention to deviate: Change of voyage. § 2376. Abandonment of voyage: Peril not insured against. § 2377. Effect of intention fixed at or after sailing to change des- tination. § 2378. Voyage shortened. § 2379. Voyage at and from port or ports. § 2380. Preliminary voyage- Completing loading at different ports. § 2381. Alternative ports of destination. § 2382. The word "thence" from port or ports of discharge in two specified localities will cover either locality. § 23S3. Election of ports: Specified or geographical order of visiting ports of discharge. § 23S4. Ports of discharge: Revisiting or returning to a port. § 2385. Returning to terminus a quo for clearance. § 23S6. "Near open port" refers to geographical order. § 2387. To an island and a market. § 2388. To a port in an island or district, thence to a port of advice or discharge. § 23S9 Vessel captured or carried out of her course— False papers. § 2390. Deviation to supply or repair defect in fitting for original voyage. § 2391. Reshipment of goods on the voyage not of itself a deviation under liberty to reship. § 2392. Transshipment. § 2393. Liberty of ports and places: Purposes of voyage. § 2394. Distinction between purposes of voyage and acts done to insure success of adventure. § 2395. When trading, etc., at port may be allowed although not in furtherance of adventure. § 2396. Liberty of ports: Course of voyage: Change of voyage. § 2397. Liberty of ports: Trading, discharging, or taking in cargo. § 2398. Liberty of ports and to tow and assist vessels. lxxii CONTENTS. § 2399. Liberty to touch and stay, or of port or ports, may be lim- ited by other words in policy. § 2400. Prohibited ports. § 2401. Liberty of ports: Where employment of the ship 3b limited by the policy. § 24U2. Not touching at privileged port. § 2403. River navigation: Departure from river channel. § 2404. River navigation: Vessel may make usual stops for landing and loading goods, etc. § 2405. Master and mariners: Negligence or mismanagement: Prox- imate and remote cause. § 2406. Departure from course through ignorance of master. § 2407. Master's judgment and discretion. § 2408. Instructions to master— Generally. § 2409. Departure from route to avoid seizure in pursuance of In- structions. § 2410. Liberty of ports for orders: Revisiting port. § 2411. Revisiting port for information or orders. § 2412. Delay or departure from route to obtain political informa- tion. § 2413. Delay to await orders as to port of discharge under permis- sion in policy. § 2414. Instructions to deviate— Whether must be disclosed. § 2415. Whether act be deviation, change of voyage, or barratry. § 2416. Vessel forced to deviate by barratrous act. § 2417. What justifies deviation generally: Code provisions. § 2418. Effect of usage and exigencies of trade. § 2419. Necessity for repairs. § 2420. Stress of weather: Port of necessity. § 2421. Stress of weather: Vessel need not return to point whence driven. § 2422. Compulsory delay or deviation by superior authority. § 2423. Turned away: Blockade. § 2424. Compulsory delay or deviation by acts of crew. § 2425. Departure from route or delay to save life or property. § 2426. Delay at port or place or in prosecuting voyage. § 2427. Delay for towing vessels. § 2428. Vessel turned away and delay in port which she has entered. § 2429. Departure from route or delay to avoid danger, cruisers, or capture. § 2430. Vessel delayed by ice. § 2131. Deviation to comply with warranty. § 2432. Departure from course or delay to seek protection of con- voy. § 2433. Right to convoy prize under liberty clauses to cruise, cap- ture, etc. § 2434. Deviation to recapture vessel. § 2435. Letter of marque: Cruising and making prize. contents. lxxiii § 2436. Instructions as to cruising. $ 2437. Understood purpose for which letters of marque taken im- portant. S 243S. Liberty clauses to cruise, capture: Construction. § 2439. Carrying letter of marque no deviation of itself. § 2440. Liberty clauses to cruise, capture, etc., for designated time. § 2441. Whether the peril which will justify deviation must be one insured against. § 2442. Loss need not be connected with deviation, § 2443. "Whether any exception exists to last rule. § 2444. Waiver of deviation. § 2445. Deviation: Acts of third person. CHAPTER LIII. OTHER OR DOUBLE AND OVER INSURANCE. § 2455. What is other or double insurance. § 2456. Overinsurance. § 2457. Conditions as to other insurance. § 2458. Construction of conditions as to other Insurance. § 2459. Where other insurance is only temporary. § 2160. Subsequent marine policy suspended where property fully covered by other insurance at time of issuance. § 2461. Warranted "uninsured": "Honor policy": Marine. § 2462. Representations concerning other insurance. § 2463. Policy outstanding at time of application for insurance surrendered before issuance of subsequent policy. § 2464. Subsequent policy must cover same or part of same prop- erty. § 2465. Insurance on ship and advances. § 2466. Insurance against different perils. § 2467. Where insurances are upon different interests or do not cover same subject. § 2468. Policy to different joint owners of property: Tenant in com. mon. § 2469. Insurance by owner of land and person holding under con- tract for deed. § 2470. Different interests: Mortgagor and mortgagee. § 2471. Insurance by stranger will not constitute other insurance. § 2472. Subsequent insurance covering property first insured and other property. § 2473. Where part of insured property is covered by subsequent policy. § 2474. Where insured goods are removed and joined with other goods also insured. lxxiv CONTENTS. S 2475. Where other insurance is void or voidable: Prior and sub- sequent policies conditioned against other insurance. § 2476. Interim receipts. § 2477. Subsequent voidable policy treated as valid after loss. § 2478. Prohibition against other insurance, whether "valid or In- valid." § 2479. Renewals of fire policies. § 2480. Where policies simultaneous: Concurrent insurance: Fire risks. § 24S1. Where marine policies of same date are issued: Priority in date may be shown. § 2482. Provisions in charter or by-laws as to other insurance. S 2483. Notice of other insurance: What sufficient. § 24S4. Permission to obtain other insurance. § 2485. Consent to other insurance: Indorsement on policy. $ 2486. Return of premium in case of refusal to indorse consent to other insurance. § 2487. Waiver of provisions as to other insurance: Notice: Con- sent: Indorsement on policy. § 2488. Insurer chargeable with knowledge of prior policies issued by it. § 24S9. Recovery in case of prior policies: Marine insurance: Con- tribution: Where no pro rata clause. § 2490. To enforce contribution policies must cover same interest in same property. § 2491. Rule as to recovery and contribution in fire insurance: Sev- eral policies constituting other insurance. § 2492. Rule where fire policy contains pro rata clause. § 2493. Specific insurance and subsequent general policy. § 2494. Agreement between insurers to share expenses of suit pro rata. § 2495. Effect under pro rata clause of payment by any company of more than its share. § 2496. American clause, "shall only be liable for deficiency." § 2497. Where policies of different dates attach and property sub- sequently diminished. § 2498. Presumption as to basis of settlement where settlement made with one of two insurers. § 2499. Double insurance for whom it may concern. CONTENTS. 1XXV TITLE X. VOID AND ILLEGAL INSURANCES AND EXCEPTED KISKS AND LOSSES. CHAPTER LIV. VOID AND ILLEGAL INSURANCES. § 2506. General principles as to void and illegal contracts. § 2507. Distinctions to be observed. § 2508. Sanitary inspection of buildings not within insurance law. § 2509. Life insurance a valid contract. § 2510. Stipulation valid suspending policy while matured premium note remains unpaid. § 2511. Waiver of condition rendering policy void from inception. § 2512. Insurance contract based on fraud invalid. § 2513. Marriage insurance. § 2514. Constitutionality of statute regulating printing conditions in policies. § 2515. Statute requiring insurer to pay losses In full, constitutional. § 2516. Illegality of contracts insuring mercantile credits. S 2517. When insurance of growing grain ultra vires. § 2518. When endowment insurance by beneficiary association ultra vires. § 2519. Stipulations limiting place of bringing suit. § 2520. Statute may affect right of recovery by enlarging rights of assured under its stipulations. § 2521. Where assured has no such interest as statute requires. § 2522. Navigation and convoy acts of England. § 2523. Effect upon valid contract of statute laying embargo. § 2524. Effect of subsequently enacted statute upon void or illegal insurances. § 2525. Whether policy void: Stamp, when required by statute. § 2526. Engaging in trade in expectation of repeal of existing law interdicting it. § 2527. Effect of subsequently enacted prohibitory law. § 252S. Same subject: Case. § 2530. Effect of arbitration clauses. § 2531. Insurances contrary to the policy of the law. § 2532. Condition upholding suicide, whether void. § 2533. Insurance by common carrier against losses from negli- gence, etc., not against public policy. § 2534. Policy executed on Sunday. lxxvi CONTENTS. § 2535. Newspaper company cannot carry on accident insurance business. § 2536. Where traffic insured unlawful, or unlawful business car- ried on upon insured property: Fire risk. § 2537. Illegal use of property when susceptible of legitimate use: Public policy. § 2538. Illegal occupation of insured: Life risk. § 2539. Goods the importation or exportation of which is prohib- ited. § 2540. Trade prohibited by foreign law: Effect of treaties. § 2541. Exportation otherwise legal may become illegal by subse- quent execution of agreement in evasion of revenue laws. § 2542. Effect of prohibitory statute imposing penalty: Collateral acts. § 2543. Trade which would otherwise be invalid because interdicted may be valid through necessity. § 2544. Contract of indemnity against embargo valid. § 2545. Effect of violation of embargo. § 2546. Cargo procured with proceeds of former illegal cargo: Prior separate voyage illegal. § 2547. Trade with enemy— Prior valid character of cargo. § 2548. Where prior part of same voyage is illegal. § 2549. Illegality after risk attaches "at and from." § 2550. Where subsequent part of same voyage is illegal. § 2551. Effect of partial illegality upon contract. § 2552. Last rule qualified where illegality removed as to part of cargo by permission of government. § 2553. Partial illegality-Ship-owners under same policy. § 2554. Partial illegality: Insurance by common agent covering goods of hostile and neutral owner. § 2555. Effect of illegal employment of ship upon neutral goods transported therein. § 2556. Goods of several owners under same policy effected by com- mon agent. § 2557. Transportation by same vessel of lawful and unlawful goods. § 2558. Effect of intention to do illegal act. § 2559. Trade with enemy, absence of intent to violate law no ex- cuse. § 2560. When possibility of executing illegal intention removed. § 2561. Insurance upon a cartel-ship while employed as such. § 2562. Insurance to ports, some hostile, some not. § 2563. Contract excepting interdicted port unlawful. § 2564. Subject of one or two allied powers may not trade with com- mon enemy § 2565. Trade with port occupied with enemy's forces: Power of government to determine what are hostile relations. § 25RR. Illegality to which insurer is in privity may affect his rights. § 2567. Goods shipped to neutral port. contents. lxxvii § 2568. Insurances on contraband of war. § 2569. W'hat articles contraband of war. § 2570. Definition of license and authority conferred thereby. § 2571. By what authority license granted. § 2572. Misdescription of land on which building located does not avoid policy. § 2573. Where failure to name destination does not avoid marine risk. § 2574. Policy to himself by agent of insurer and receiver void. CHAPTER LV. EXCEPTED RISKS AND LOSSES. § 2581. What constitutes invasion: Insurrection: Riot: Civil com- motion: Usurped power. § 2582. Excepted risks: Fire caused by invasion, isurrection, riot or mobs, civil commotion, or by military or usurped power. § 2583. Falling of building except as result of fire. § 2584. Explosion: Insurers not liable. § 2585. Insurers not exempt where building blown up to prevent spread of conflagration. § 2586. Explosion occurring upon other premises— Logs to insured property the result of explosion only. § 2587. Explosion occurring on other premises from which fire en- sues communicating to insured premises. § 2588. "Loss by explosion of any kind": Insurer's liability: Under such clause where fire ensues: New York rule. § 2589. Same subject: Rule in Ohio. § 2590. Same subject: Rule in Illinois. § 2591. Same subject: Rule in Pennsylvania. § 2592. Same subject: Conclusion. § 2593. No liability for explosion "unless fire ensues." § 2594. Construction of other provisions as to explosion. § 2595. Conclusion as to excepted liability in case of explosion. § 2596. Loss by theft excepted. § 2597. Exception of liability for "fire caused by hurricane." § 2598. Exception of liability for fire resulting from use of steam engine. 8 2599. Insolvency of debtors: Credit insurance: Exception of lia- bility: Discontinuance of business: Death of partner. lxxviii CONTENTS. CHAPTER LVI. EXCEPTED RISKS AND LOSSES— LIFE, ACCIDENT, CASUALTY AND TORNADO. § 2606. Death in known violation of law. § 2607. Death in known violation of law: Construction refers to voluntary criminal acts. § 2608. Same subject: Refers to both civil and criminal law. § 2609. Same subject: Conclusion. § 2610. Death or injury in violation of law. § 2611. Excepted liability where death occurs "by the hands of jus- tice." § 2612. Death: Use of intoxicants. § 2613. Intemperance: "If insured becomes so far intemperate as to impair his health." § 2614. Death: Intemperance: Waiver of provision. § 2615. Death: Intemperance: By-laws of society. § 2616. Death caused by submission to illegal operation. § 2617. Accident policy: Injuries where no visible mark. § 261S. Excepted liability where death or injury "may be caused by intentional injuries inflicted by insured or any other per- son." § 2619. Dueling or fighting. § 2620. Excepted liability: Taking of poison: Contact with poison- ous substances: Inhaling gas. § 2621. Poison or anything accidentally taken or inhaled. § 2622. Entering or leaving moving train. § 2623. Rules and regulations of common carriers and employer: Violation of a rule of corporation. § 2624. Voluntary exposure to obvious or unnecessary danger. § 2025. Walking or being on railway bridge or "roadbed." § 2626. Instances within the exception of voluntary exposure. § 2627. Instances not within the exception of voluntary exposure. § 2028. Death by disease excepted: Fits. § 2629. Disease caused by accident and death superinduced by other causes not death by excepted disease. § 2630. Death from disease as a "secondary cause" not death by ac- cident. § 2631. Death caused by "medical treatment for disease" excepted. § 2632. Occupations: Exception of liability for wrecking. § 2633. Accident to property: Loss by fire excepted. § 2634. Plate glass: Tornado insurance. § 2635. Effect of words "sane or insane" in suicide clause. § 2036. "Sane or insane": That suicide committed deliberately or hastily, immaterial. CONTENTS. lxxis § 2637. Suicide: "Felonious or otherwise, sane or insane." § 2638. Suicide: While intoxicated. § 2639. Suicide: Accidental or unintentional self-killing. 5 2640. Doubt as to "suicide" or accidental or unintentional self- killing. § 2641. Suicide under clause benefiting third parties acquiring inter- est prior thereto. § 2642. Suicide as defense in connection with statute. § 2643. Suicide: Option reserved to pay amount of insurance or re- fund premiums. § 2644. Stipulation as to part payment or incontestability after spe- cified time. § 2645. Suicide: By-law as part of contract. § 2646. Taking his own life by unlawful act: By-law. § 2647. Adoption of by-law against suicide after contract made. | 2648. Suicide: Policy to be void in case of death by violation of law. § 2649. Suicide: Intentional injuries by assured or another. § 2650. Suicide in absence of stipulation contra. § 2651. Suicide by insane person in absence of stipulation against suicide. | 2652. Suicide where policy obtained with that intent: Fraud: Credi- tor. § 2653. Suicide for benefit of assured's estate or third person. § 2654. Suicide: Temporary insanity. § 2655. Suicide: Temporary insanity: "Sane or insane, voluntary, or involuntary." § 2656. Suicide: Temporary insanity: "Felonious or otherwise, sane or insane." § 2657. Suicide: "Self-destruction": "In any form": "Disease": "Vol- untary act of assured." § 2658. Stipulation as to "suicide": "Death by his own hand," and the like. § 2059. "Suicide" and like clauses: Rule in United States supremo court. § 2660. English rule. § 2061. Rule in this country. CHAPTER LVII. EXCEPTED RISKS AND LOSSES— MARINE. 2670. Excepted risks and losses: Marine risks generally. 2671. Excepted risks and losses: Repugnant stipulations. ordinary care. etc.. gross negligence. 2672. Excepted liability for loss caused by negligence, want of 2673. Excepted liability for damage unless caused by negligence of ship. 1XXX CONTENTS. § 2674. Warranted free from mortality. § 2675. Exception of loss lrom specified cause followed by qualify- ing clause. § 2676. Exception of loss or damage from ice. § 2677. Exception of loss by barratry. § 2678. Excepted liability in bill of lading from damages arising from sweating, heat, steam, etc. § 2679, Explosion: Loss from bursting of boilers: Breaking or de- rangement of machinery: Steamboat clause. § 2680. Warranted free from insurrection. § 2681. Limited or prohibited trade: Prohibited waters. § 26S2. Warranty against illicit, prohibited, or contraband trade: Against seizure therefor. § 2RS3. Exception of perils of the sea. § 2684. Warranted free from capture, etc: Capture by authority of de facto government. § 26S5. A technical or actual capture or seizure not necessarily within the exceptions of these risks. § 2686. Capture and seizure may be synonymous. § 26S7. Exception of loss by detention. § 2688. Other cases as to exception of capture, seizure, and deten- tion. § 2689. Exception none the less binding because written on margin of policy. § 2690. Illegal seizure or attempt to seize within exception. § 2691. Warranted free from loss or damages arising out of collis- ion of foreign powers or of our government with others. § 2692. Exception of loss from existing regulations does not include subsequently enacted decrees. § 2693. Warranted free from confiscation in ship's port or ports of discharge. § 2694. Exception of risk of blockaded port: Turned away, etc: Free of loss if not permitted entry, etc. § 2695. Exception of loss or damage to goods or property on deck unless, etc. § 2696. The memorandum clause— Generally. § 2(397. What articles are within the clause. § 2698. Warranted free from average unless general. 8 L'i 199. Ot the ship be stranded or burnt. § 2700. Warranted "free from average under — per cent clause un- less general," and like clauses. § 2701. Unless it amount to — per cent and happen by stranding. § 2702. Exception of "loss or average" under specified per cent: Ex- pense of repairs. § 2703. Percentage: Aggregation of losses in case of collision. § 2704. Value only of cargo at risk and not of whole cargo forms basis of percentage. § 2705. Each package subject to its own average and similar clauses: Separately valued. CONTENTS. IXXXI § 2706. Average recoverable on each package separately or on the whole. § 2707. Effect of separate valuation of each package, etc: Where there is and is not an insurance on each separate pack- age, etc. § 2708. Where articles of different kinds are each separately valued. § 2709. Where percentage is fixed for each particular class or im- pliedly fixed upon each enumerated article. § 2710. Where insurance is upon cargo in bulk: General designation of "all other goods": Goods of distinct kinds under one general designation. § 2711. The question of addition of successive losses to reach the limitation: Cases. § 2712. Same subject: Conclusion. § 2713. Where liability is limited to invoice value. § 271-1. Particular and general average losses cannot be aggregated nor are general average charges included in partial loss. § 2715. Addition of loss by jettison and salvage expenses. § 2716. Percentage clause qualified by agreement as to salvage ex- penses. § 2717. Whether certain other charges and expenses may be added. § 2718. Exception of loss under specified percentage: Other insurers. S 2710. Exception as to leakage, breakage, dampness, etc. § 2720. Whether under exception of loss under specified percentage the premium should be deducted. § 2721. Exception of liability under specified percentage: Deviation. § 2722. Exception of claim arising from canceling of charter. TITLE XI. RISKS AND LOSSES. CHAPTER LVIII. RISKS AND LOSSES. § 2730. What risks and losses may be insured against: Liability generally. § 2731. Abortion: Public policy. § 2732. Accident disabling ship: Chartered freight. § 2733. Advances: Bottomry draft: Entire contract: Freight enrno. ;;.", 1 Ti. C CONTENTS. § 3379. Where company declines to receive proofs as not being In time or not by proper person. § 33S0. Refusal to furnish blanks: Life policy. § 3381. Examination under oath as waiver of notice or proofs. § 33S2. Waiver of provision as to particular account of loss. § 33S3. Waiver of magistrate's certificate. § 3384. Where insurer estopped from setting up that insured has sworn falsely in his proofs: Adjustment of loss. § 33S5. Adjustment is a waiver. § 33S6. Promise to pay: Waiver. § 33S7. Offer by company to pay in settlement of loss part of amount claimed. § 33SS. Payment of part of loss. § 33S9. Submission to arbitration: Waiver. § 3390. Appearance and pleading by insurer: Waiver. § 3391. Statutory provisions: Notice and proofs. § 3392. Letters showing waiver of proofs of loss. § 3393. Waiver of right to insist that proofs were not furnished by proper person. § 3394. Company estopped after payment of money into court to claim proofs insufficient. TITLE XIII. AVERAGE, ADJUSTMENT, AND DAMAGES. CHAPTER LXX. GENERAL AVERAGE— ADJUSTMENT AND DAMAGES. Art. I. General Average and Jettison— Generally. A.rt. II. General Average, Jettison and Adjustment. SUBDIV. I. York-Antwerp Rules. II. Other Matters Relating to General Average Art. III. Adjustment and Measure of Damages. Article I. General Average and Jettison: Generally. § 3400. Contribution— Laws of Rhodrans and Romans— Oleron— Generally. § 3401. Etymology of the word "avornge." § 34u2. Divergent usages among maritime countries. § 3403. Jettison generally. CONTENTS. CI g 8404. Jettison defined. § 3405. Essentials of general average. § 3406. Claim to coutnbutiuu equitable one. § 3407. General average defined. § 340S. Distinction: General and particular average. § 3409. General average— Fire policies. § 3410. Previous consultation not prerequisite to sacrifice. Article II. General Average, Jettison and Adjustment. SVBDIV. I. York-Antwerp Rules. § 3417. 'Cautionary remarks. § 3418. Jettison of deck cargo. § 3419. Exceptions to last rule. § 3420. Damage occasioned by jettison— Water getting dowD batches, etc. § 3421. Damage by fire or consequent thereupon. § 3422. Cutting away wrecks or remains of spars, etc. § 3423. Voluntary stranding or running ship on shore. § 3424. Damage or loss: Sails and spars— Ship's engines— Press of sail— Refloating ship. S 3425. Expense of lightening to refloat ship and of reshipping. § 3426. Sacrifices made for fuel. § 3427. Port of refuge expenses. § 3428. Port of refuge expenses— English rule. § 3429. Cost of repairs— Deductions allowed— Temporary repairs- New for old. S 3430. When loss of freight shall be made good as general average. § 3431. Loss of goods: Amount to be made good as general average. § 3432. Basis and amount of contributory values and deductions. § 3433. Adjustment as affected by general average clause in con- tract—Affreightment. SVBDIV. II. Other Matters Relating to General Average. § 3440. To what extent sacrifice must be successful— Subsequent ac- cident. § 3441. Other sacrifices and expenses in general average. § 3442. What is not included in general average. § 3443. Who contributes. § 3444. What contributes. Article III. Adjustment and Measure op Damages. § 3451. Settlement includes adjustment— Fifty per cent of goods of sound value delivered. § 3452. Adjustment of partial loss: Measure of damages. § 3453. General average— Adjustment— Values. § 3454. Measure of damages. § 3455. Damages— Deductions— Exchange— Duties. § 3456. Same subject— Continued. Cll CONTENTS. § 3457. Compound policies— Prorating loss. § 3458. Damages— Interest on amount of loss. § 3459. Same subject— Continued. § 3460. Measure of damages— Proportionate amounts— Limited lia- bilities. § 3401. Same subject— Continued. § 3402. Same subject— Continued. § 3403. Damages— Mutual insurance companies, benefit societies, etc. § 3404. Law of place or termination of adventure governs adjust- ment—General average. § 3465. Adjustment settled in foreign port. TITLE XIV. RIGHTS, REMEDIES, PLEADING, PRAC- TICE, AND EVIDENCE. CHAPTER LXXI. RIGHTS AND REMEDIES. § 3408. Rights of action by insured: Commencement of suit— Gener- ally. j 3409. Action when contract completed but policy not delivered— Trover for policy executed. § 3470. Form of action. § 3471. No action against insurers for refusal to insure. § 3472. Several policies upon same property— Double insurance— Pro rata clause. § 3473. Failure or refusal to levy assessment: Action for breach of contract. § 3474. Failure or refusal to levy assessment: Mandamus: Conclu- sion. § 3475. Election of insurers to rebuild: Garnishment. § 3476. Attachment and garnishment. § 3477. Recovery: Insurer in one state, company cannot be garnlsh- eed in another. § 3478. Action against foreign company— Quo warranto— Mandamus. § 3479. Action by foreign company to recover money paid agents. ? 3480. Action where insured euters in contract induced by fraud. § 3481. Action by Insured after settlement. § 3482. Carriers— Rights of— Remedy against. § 3483. Transfer of a member to another class: Wrongful refusal of benefit society. CONTENTS. Clll § 3484. Wrongful refusal to transfer policy. § 3485. Rights and remedies of assured: General matters. § 34S6. Recovery back by insurer of money— payment made or pro- cured by fraud: Mistake of facts. § 34S7. Action for assessments— Premium notes— Deposit notes. § 348S. Recovery by creditors as beneficiary or assignee of life policy. § 3489. When sue and labor clause provides additional remedy for salvage claims. § 3490. Action by insurers— Generally. § 3491. Right to make post-mortem — Exhumation — Accident Policy. CHAPTER LXXII. JURISDICTION. § 3495. Jurisdiction— Generally. § 3496. Jurisdiction— Judgment in federal court: After property is in custody of state court. § 3497. Statute as to foreign companies: Service of process and ex- clusive jurisdiction of state court. § 3498. Statute as to foreign companies: Right of removal to federal court. § 3499. Administrators appointed in different states: Separate ac- tions. § 3500. Jurisdiction: Marine Insurance — Admiralty. § 3501. Provision in company's charter as to where suits are to be brought. § 3502. Jurisdiction of tribunal of mutual benefit societies. § 3503. Jurisdiction: Where action may be brought— Generally. § 3504. Wben court may order exhumation— Accident policy. CHAPTER LXXIII. EQUITY JURISDICTION AND REMEDIES. § 3508. Jurisdiction of equity. § 3509. Reformation of policy. § 3510. Mistake in name or description of property. § 3511. Correction of mistake — Reformation of policy— Generally. § 3512. Correction of mistake of agent of insured in procuring policy. § 3513. Mistake in stating interest of insured. § 3514. Reformation of renewal policy to conform to former one. § 3515. When equity will not reform a policy. § 3516. Specific performance of contract of insurance — Mutual bene- fit societies. CIV CONTENTS. § 3517. Action to compel delivery of policy where contract has been completed. § 3518. Accounting— Tontine policy. § 3519. Decree apportioning loss. § 3520. Where member has been expelled. § 3521. Change of beneficiary— Bill of interpleader. § 3522. Rejection of claim by tribunal of society. § 3523. Equitable lien by mortgagee on insurance money. § 3524. Recovery by mortgagor where insurance paid to mortgagee: Application of money on mortgage debt. § 3525. Right to proceeds: Vendor and vendee— Trustee. § 3526. Right to proceeds: Creditors. § 3527. Injunction cases— Generally. § 3528. Particular cases where equity will grant remedy to Insured. § 3529. Particular cases where equity will grant a remedy to insurer. § 3530. Cases where equity will not act. CHAPTER LXXIV. SUBROGATION. § 3537. Subrogation: Right to of insurer— Generally. § 3538. Payment of total loss on entire destruction of subject In- sured equipollent with abandonment in giving right of sub- rogation: Negligence— Third parties. § 3539. Insurance on advances: Rights of insurer. § 3540. Effect of release by insured to third parties upon insurer's right of subrogation— Where release is prior to execution of insured's contract. § 3541. Same subject: Where release is subsequent to execution of insurance contract and before payment of loss. f 3542. Effect of reservation of right to indemnity in release to wrongdoers. § 3543. Where policy provides as to effect of release by insured to third parties. § 3544. Release to third party who has knowledge of payment of loss by insurer. § 3545. Agreement between Insured and carriers for benefit of in- surance to latter may be valid. § 3546. Same subject: No violation of provision in policy against sale or transfer of interest. § 3547. Abandonment: Right to be subrogated subjects insurer to agreement and equities under carrier's contract. § 3548. Provisions in bills of lading: Carrier to have benefit of in- surance: Effect where insurer pays loss. § 3549. Rights of insurers against carriers: Where no provision for subrogation. CONTENTS. CV i 3550. Policy providing for subrogation: Contract -with carrier lim- iting value of consignment. 5 3551. Where provision in bill of lading giving carriers benefit of insurance conflict wth policy provisions. § 3352. Stipulation for benefit of insurance where loss caused by carrier's negligence. § 3553. Stipulation in bill of lading that carriers shall have benefit of insurance does not compel owner to insure. § 3554. Where no stipulation for subrogation of carrier. § 3555. Where owner has insurance but refuses carrier the benefit thereof. § 3556. Subrogation of insurer to rights of mortgagee: Policy to mortgagor: "Loss payable to" mortgagee. § 3557. Same subject: Policy void as to mortgagor valid as to mort- gagee—Stipulation for subrogation. § 3558. Same subject: Where deficiency due on debt after foreclo- sure sale exceeds amount of insurance. § 3559. Insurance by mortgagee where mortgagor pays or under pro- Vision of mortgage may be chargeable with premiums. § 3560. Same subject: Conclusion. § 3561. Policy to trustees: Agreement to subrogate insurer. § 3562. Policy to sureties: Subrogation of debtor on payment of debt. S 3563. Right of insurer to subrogation where no provision therefor In policy issued to mortgagee and nothing inconsistent therewith: Contract between mortgagor and mortgagee. § 3564. Same subject: Massachusetts decisions— Contrary view. § 3565. Effect upon insurer's right to subrogation where mortgage debt exceeds amount of loss. § 3566. Where mortgagor entitled to subrogation against insurer. § 3567. Policy to mortgagor— Mortgagee has no right of subrogation. 3 3568. Foreclosure: Subsequent loss— Sale under foreclosure and deficiency. § 3569. Rights of insurer, vendor, and vendee— Where sale is incom- plete—Executory contract of sale. § 3570. Vendor and vendee— Goods at seller's risk. § 3571. Repairs: Insurer's right. % 3572. Right of insurers to subrogation to contract rights of In- sured with third parties. § 3573. Insurance by lessor— Rights to proceeds. § 3574. Loss by negligence— Wrongdoer— Carrier— Rights of subroga- tion—Fire and marine insurance. § 3575. Same subject: Marine insurance: Collision. § 3576. Collision between, vessels owned by same person— Insurers rights. § 3577. Company guaranteeing houesty of employee — Right to subro- gation. § 3578. Foreign company: Failure to comply with statutory require- ments — Right to subrogation against wrongdoer. § 3579. Death caused by negligence or willful act of another— Rights of insurers. Cvi CONTENTS. § 3580. Subrogation of Insurers' agent to their rights: Premium. § 3581. Contract by bailee to insure goods: Rights of company insur- ing owner. § 3582. Vessel impressed into naval service: Subrogation of insurer against government. § 3583. Insurance of pretended interest: Recovery: Real owner no rights. CHAPTER LXXV. BANKRUPTCY— INSOLVENCY— DISSOLUTION. § 3590. Bankruptcy and insolvency. § 3591. Effect of insolvency. § 3592. General powers of receiver: Assignee. § 3593. Powers of receiver: Collection of assets: Receiver in state of domicile of company. § 3594. Trustee in insolvency may recover where company has re- leased stockholder in violation of creditor's rights. § 3595. Rights of policy holders after dissolution— Generally. § 3596. Priority of claims: When death of insured or loss occurs be- fore insolvency of company — After insolvency. § 3597. Payment and priority of claims: Check given before insol- vency: Dividend declared before— Generally. § 3598. Dissolution of benefit society. § 3599. Insolvency of maker of premium note of debtor holding life policy. § 3600. General matters in bankruptcy and insolvency. § 3601. Distribution of assets. CHAPTER LXXVI. PARTIES— RIGHTS AND REMEDIES— PRACTICE AND EVI- DENCE. § 3607. Who may be parties to the action— Generally. § 3608. Contract under seal— Who may sue. § 3609. For whom it may concern— Who may sue. § 3610. Parties: In name of assured. § 3011. When mortgagor may sue. § 3612. When mortgagee may sue. § 3613. Same subject: Mutual companies. § 3614. Same subject: Mortgagee clause. § 3615. Assignor and assignee— Who may sue. § 3616. Same subject: Life policies. § 3617. Parties: Assignee— Mutual compnnies. § 3618. Sale of property: Assignee may sue. CONTENTS. CVU § 3619. Parties: Assignor and assignee -Collateral security. § 3020. Parties: Assignment after loss. § 3621. Parties: Trustees. § 3622. Parties— Consignor and consignee. § 3623. Parties carrier. § 3624. Beneficiaries— Who may sue. § 3025. Same subject: Wife. § 3026. Same subject: Children. § 3627. Same subject: Children: Guardian. § 3628. Same subject: Partners. § 3629. Same subjeet: Insurance as members of a club. § 3030. Parties: Personal representatives— Administrator— Executor. § 3631. Same subject: Mutual companies. § 3632. Parties: Agents. § 3633. Parties: Principal: Disclosed— Undisclosed. § 3634. Parties: Policy to husband on wife's property. § 3635. Pa-ties: Partners. § 3636. Parties: Part owner— Owner. § 3637. Renewals— Who may sue. § 3638. Parties: Sale under sheriff's certificate. § 3639. Joinder of parties— Who should be joined. § 3640. Same subject: Nominal partners. § 3641. Joinder: Owner, agent, or otherwise— For whom It might concern. § 3642. Joinder: Mortgagor and mortgagee. § 3643. Joinder: Heirs— Children— Husband. § 3644. Libelant: Insurers may be made colibelant or joined with in- sured, or made party defendant in certain cases. § 3645. Joinder: Policy as collateral— Stockholders. § 3646. Joinder of parties: Statute. § 3647. Misjoinder of parties— Who need not be joined. § 3648. Open policy— Who may sue. ? 3049. Double insurance: Parties defendant. § 3050. Parties: Charterers. 8 3651. Parties: Bonds with state treasurer. 5 3052. Suit by treasurer of mutual insurance company. § 3653. Parties: Insolvency— Stockholders— Attorney general. § 3654. Parties— Manager of mutual insurance company. § 3655. Parties: Receivers. § 3656. Corporate franchise: Usurpation— Parties. § 3057. Parties defendant: Mutual insurance company. § 3658. Parties: Insurance company against wrongdoer. cviii CONTENTS. CHAPTER LXXVII. PLEADINGS. § 3665. Declaration: Complaint or petition. § 3666. Sufficiency of declaration, complaint, or petition. § 3667. Declaration, etc: Benefit societies— Mutual companies. § 3G6S. Declaration, etc: Under statutes or codes. § 3669. Declaration, etc: Foreign companies. § 3670. Embodying the policy in the declaration. § 3671. Declaration, etc.: Application. § 3672. Averment of interest. § 3673. Averment of interest: Life policies. § 3674. Averment: Performance of conditions precedent § 3675. Conditions precedent: Statute. § 3676. Declaration, etc: Conditions— Notice and proof of loss. § 3677. Declaration, etc.: Conditions: Suing after proof of loss furnished. § 3678. The loss— Damage— Value of property. § 3679. Loss by barratry not recoverable under averment only of loss by capture. § 3680. Averment of ownership. § 3681. Declaration: Complaint or petition insufficient. § 3682. Insufficient declaration, etc.: Mutual benefit societies. § 3683. Declaration, etc: Tleading waiver. § 3384. Declaration, etc: Need not aver matter of defense— Condi- tions subsequent. § 3685. What declaration, etc., need not aver— Generally. § 36S6. Admissions by the pleadings— What they do not admit. § 3687. Amendments. § 3688. Multifariousness. § 36S9. The answer. § 3690. Answer: Insufficient— No defense. § 3691. Matters specially pleaded— Geueral issue. § 3692. Plea in bar: Abatement. § 3G93. Demurrer. § 3694. Bill of particulars— Of discovery. § 3695. Bill of interpleader. § 3696. Replication— Traverse. § 3697. Variance. CHAPTER LXXVIII. PRACTICE. § 3705. Practice. § .'',706. Service of process. § 3707. Consolidation of actions. § 3708. § 3709. § 3710. § 3711. § 3712. § 3713. § 3714. § 3715. § 3716. § 3717. § 3718. § 3719. § 3720. § 3721. § 3722. i 3723. CONTENTS. C1X Interrogatories. Order of reference of case. Admission of newly discovered evidence after evidence has closed. Instructions to jury. Instructions: Cases where not erroneous. Instructions: Cases where erroneous. Arguments of counsel. Special findings. Defects in declaration cured by verdict. Judgment of trial court final as to matters of fact. Verdict contrary to evidence — Excessive Damages— New trial. Appeals: Discretion of court as to motions. Appeals: Questions not raised at trial of case. Appeals. New trials. Incidental matters of practice. CHAPTER LXXIX. DEFENSES. § 3731. Waiver— Estoppel. § 3732. Fraud. § 3733. Fraud between third party and assured no defense In action against company. § 3734. Sufficient defenses to action on premium notes. § 3735. Defenses which are not good to actions on premium notes or assessments. § 3736. Setoff. § 3737. Setoff in actions on premium notes. § 3738. Defense to action by mortgagee— Tender. § 3739. Folicy to cover consignor's interest. § 3740. Noncompliance with by-laws as a defense— Conditions sub- sequent. § 3741. Election to repair. § 3742. Amount of loss received from another than insurer— No de- fense in action against company. § 3743. Matters of defense after adjustment of loss. § 3744. Defenses— General matters. CHAPTER LXXX. EVIDENCE. § 3755. Best evidence. § 3756. Proof in support of pleadings— Evidence admissible. § 3757. Admission by pleadings— Payment of money into court. § 3758. The policy. CX CONTENTS. § 3759. Application in evidence. § 3700. Oral contracts: Contract to insure. § 3761. Insurable interest— Generally. § 3762. Insurable interest in ship: The ship's register. § 37G3. Insurable interest: Goods— Bill of lading— Freight— Gener- ally. § 3764. Insurable interest: Burden of proof. § 3765. Evidence of sufficient proofs of loss: Receipt of by company. § 3766. Proofs of loss— As evidence. § 3767. Marine insurance: Proofs of loss— Master's protest. § 3708. Evidence of loss: Proximate and remote cause within the policy. § 3769. Evidence of value of property: Amount of loss— Fire insur- ance. § 3770. Evidence to show what goods are covered in case of shift- ing and successive goods. § 3771. Evidence of loss: Amount of— Value of property— Marine in- surance. § 3772. Evidence of death: Proofs of— Disease. § 3773. Presumption as to suicide. § 3774. Suicide: Evidence of. § 3775. Insanity: Presumption against— Evidence of. § 3776. Proof of matters in defense: Life insurance — Burden of proof — Character. 8 3777. Proof of matters in defense: Fire insurance: Burden of proof — Increase of risk— Breach of condition. § 3778. Evidence of other insurance. § 3779. Proof of matters in defense: Marine insurance. § 3780. Misrepresentations— Materiality of. § 3781. Evidence: Clause in policy as to false swearing or attempt at fraud. § 3782. Clause in policy as to evidence to show fraud— Willful burn- ing. § 37S3. Evidence of fraud— Generally. § 3784. Burden of proof— Compliauce with conditions and warranties —Fire insurance. § 3785. Marine insurance — Compliance with warranties— Burden of proof. § 378G. Presumptions as to seaworthiness and unseaworthiness— Burden of proof. § 3787. Same subject— -rases. Si 3788. Decrees and surveys: Rotten clause — Evidence of seaworthi- ness. § 37S9. Other matters of evidence and practice — Seaworthiness. § 3790. Burden of proof: Life insurance. § 3791. Burden of proof: Death result of external, violent, and acci- dental means. § 3792. Evidence as to whether insured was temperate 1 — Application. § 3793. Evidence of prior dishonest acts of employee. CONTENTS. CXI CHAPTER LXXXI. EVIDENCE— CONTINUED. § 3801. Evidence: Beneficiaries. § 3802. Ambiguities: Evidence. § 3803. Evidence to identify subject of insurance. § 3S04. Parol evidence— Waiver and estoppel— Custom or usage, § 3805. Evidence to correct mistake. § 3S06. Parol evidence to ascertain intention. § 3807. Parol evidence to explain phrases and words. § 3808. Parol evidence to explain contract. § 3809. Parol evidence— When inadmissible. § 3810. Expert and opinion evidence. § 3S11. Expert and opinion evidence: Increase of risk. § 3812. Expert and opinion evidence: Life insurance. § 3813. Experts: Physicians and surgeons: Life insurance. § 3814. Opinions of non-experts. § 3815. Evidence: Expert and opinion— As to premium— Material facts. § 3816. Evidence: Expert and opinion evidence— Marine Insurance. § 3817. Evidence: Expert and opinion— Generally— When admissible. § 3818. Evidence: Expert and opinion— Generally— What is not ad- missible. § 3S19. Declarations of insured. § 3820. Declarations of member of mutual benefit society— To phy- sician. $ 3821. Pes gestae: Declarations. § 3S22. Declarations of agents. § 3S23. Evidence— Agents— Conversations. § 3824. By-laws: Rules of company— Prospectus— Books. § 3825. Letters: Ship's papers— Correspondence. ■§ 3S26. Evidence: Assessments— Forfeiture. § 3827. Payment of premium: Receipts. § 3828. Payment of premium: Recital in policy— Generally. § 3S29. Foreign judgment. § 3S30. Judgments— Authentication of. § 3S31. Assignment of policy. § 3832. Corporation estopped from denying its authority to act. § 3833. Presumptions. § 3834. Evidence of consent of partner to insurance procured by oue with money stolen from the firm. § 3835. Other cases of admissibility of evidence. § 383G. Other cases of inadmissibility of evidence. § 3837. Evidence— General matters. •§ 3S38. Competency of witnesses. TITLE I. PRELIMINARY CHAPTER. joyce. Vol. I.— 1. (1) LAW OF INSURANCE. TITLE I. PRELIMINARY CHAPTER. THE SOURCES AND ORIGIN OF INSURANCES. § I. Sources of insurance. § II. Origin of insurance generally. § III. Origin of marine insurance. § IV. Adoption of marine insurance In modern times. § V. Origin of the mutual insurance system. $ VI. Origin of fire insurance. § V 11 . Origin of life insurance. k VITI. Origin of accident insurance. § IX. Origin of guarantee, fidelity guarantee! real estate title, etc.. insurances. § X. Origin of other insurances. § I. Sources of Insurance. — The principal sources of insurance law are to be found in the marine law and the customs of merchants, to he collected from ancient and modern codes or ordinances of commercial law, elementary treatises on the subject in our own and foreign languages, 1 and the judicial decisions in the courts of this and other coun- tries which follow the general marine law and the law of nations. 2 The origin of insurance, however, necessarily in- cludes a reference to many of its sources, and we shall here- after mention them in the consideration of that question. Whatever may have been the origin of insurance, this much is true, that it is to marine law and marine insurance that we 1 For history of insurance treatises, see 3 Kent's Commentaries, 13th ed., *342, 342, 487, *487; 1 Duer on Insurance, ed. 1845, lect. ii, p. 45, et seq. ; 1 Marshall on Insurance, 5th ed., 15, et seq. * 1 Duer on Insurance, ed. 1845, 19, et seq. ; 1 Marshall's Insurance, 5th ed., 13. (S) § 1 PRELIMINARY CHAPTER. 4 must look for a long period of time, especially in England, for the most certain developments of the system of insurance and the enunciation and regulation of the principles governing the contract. Justice Park, writing in 1796, says that where insurance is mentioned by professional men, marine insurance is meant. 3 Hopkins declares that the indemnity afforded by insurance was for a long period confined to the dangers of ma- rine insurance, 4 while Walford asserts that it is admitted by all writers that maritime casualties were the first to which the principles of assurance, as distinguished from the mutual pro- tection idea, were applied. 5 Other authors, writing on the subject, refer it to such sources, that it is through the medium of marine insurance that we must look for the fundamental principles governing the contract. Thus Emerigon declares 6 that "the ancient laws of the sea are the sources which are open to them, and the same whence they should draw who wish to recur to first principles"; and, he adds, that research into the antiquity of maritime jurisprudence is necessary, since many of the ancient doctrines, though now obsolete, are still the founda- tion of those now in force, and that it is difficult to comprehend many rules of the modern law without recourse to the ancient. 7 As to legislative action, or particular ordinances, Marshall says, 8 these have seldom gone further than to define and sanc- tion those principles which were already received in all com- mercial countries; that some have added regulations dictated by national policy or particular interest, but these are disre- garded elsewhere. Although the ordinances of other countries are not in force in England, or this country, they are of autho- rity as expressing the usage of other countries upon a contract which is presumed to be governed by general rules that are un- derstood to constitute a branch of public law. 9 Referring again to Emerigon, 10 he says that while the contract of insurance, and ■ Part; on Insurance, 4th ed., "Introduction," ii. • Hopkins' Marine Insurance, ed. 1867, 47. 8 Walford's Insurance Guide, 2d ed., 4. • Emerigon on Insurance, Meredith's ed. 1850, xxxi. T Id., xli. 8 Marshall's Insurance, 5th ed., 13. • Id. 10 Emerigon on Insurance, Meredith's ed. 1850. 1 5 PRELIMINARY CHAPTER. § I the mode of interpreting the obligations it involves, belong to the usage of mercantile places rather than to the civil law, or what was known to Blackstone and other English writers as municipal law, yet, "though it did not become, till very late, the special object of legislation, it is not the less regulated by the general principles of justice and equity that abide in the written reason of the law." He also declares that the contracts of maritime loan and insurance often depend on the same prin- ciples. This author, 11 and Marshall 12 both give an account of the various systems and progress of marine law promulgated by the different maritime states of Europe, state at about what period laws for the regulation of the contract of insurance first began to make a part of these systems, and show that the law of insurance is a branch of the law of merchants and the marine law. 13 The French writers also assert that marine in- surance, in its essential principles and leading maxims, is a part of the law of nations; 14 to these may be added the au- thoritative statement of Blackstone, that in "all marine causes relating to freight, average, demurrage, insurance, bottomry .... the law-merchant, which is a branch of the law of nations, is constantly adhered to," and that "there is no other rule of decision but this great universal law" (the law of na- tions), "collected from history and usage, and such writers of all nations as are generally approved and allowed of." 13 Flanders also declares 16 that the maritime jurisprudence of England is founded on the law-merchant, which is a branch of the law of nations. That the foregoing should be so is reason- able, since navigation is a state matter, 17 and necessarily all 11 Id. xxxi, et seq., 19, et seq. 12 Marshall on Insurance, 5th ed., 3, et seq. 1S See, also, Mr. Justice Bradley in Insurance Co. v. Dunham, 11 Wall. (U. S.) 1, 31, 34. M Emerigon on Insurance, Meredith's ed. 1850, 19, et seq. j 1 Duer on Insurance, ed. 1845, 2. 15 Blackstone's Commentaries, book iv, c. 5, 4 Hammond's ed. 1890, 89; Id., Chase's 2d ed., 880. 16 Flanders' Maritime Law, ed. 1852, 26. 17 Emerigon on Insurance, Meredith's ed. 18-0, 4, 5. See, also, opinion of Marshall, C. J., in Gibbons v. Ogden, 9 Wheat. (U. S.) 1, 189. et seq. g I PRELIMINARY CHAPTER. 6 maritime states would be interested in fostering and promul- gating laws which would tend to encourage adventures at sea and commerce between nations. Justice Park, 18 referring, from the context, to 1756, asserts "that as there have been but few positive regulations upon insurances, the principles on which they were founded could never have been widely dif- fused nor very generally known" ; that no question had arisen upon them in the superior courts; that, as late as the 30th and 31st Elizabeth, it became a question where an action upon a policy should be tried, and speaks of a certain case 19 as the most ancient one he had ever found on insurance. He further de- clares that, down to 1756, there were not more than sixty de- cisions upon insurance, and "even those cases which are re- ported are such loose notes .... that little information can be gathered upon the subject," and Marshall 20 is an authority for the statement that insurance was little litigated in the courts of Westminster till toward the close of Elizabeth's reign, speaks of the decisions of the superior courts as of non- binding effect, and adds, that before the statute 43 Elizabeth, chapter 12, of date 1601, almost all disputes were settled by arbitration. 21 Such being the state of the law of insurance in England in 1756, Lord Mansfield, who in that year came to the bench, where he continued till 1788, had recourse to marine law foreign treatises and authorities, as well as to the customs and usages of merchants, for those leading principles upon which the English authorities then furnished little or no in- formation. In writing of this learned jurist, Parsons says 22 that he set a wise example in this respect, and since then the jurisprudence of England and America has done little else than adopt the usage of merchants, and given it the force of author- ity. 23 As illustrations of the above we find that Brough v. 18 See Park on Insurance, 4th ed., xliii, xliv, xlviii, xlix. 19 Decided, 1588; 4 Inst. 142, cited in Dowdale's case, Coke's Rep., pts. 6, 46, 48. 20 Marshall on Insurance, 5th ed., 16, 17, 19. 21 See Maylnes' Lex Mercatoria, 106. " Parsons' Marine Insurance, ed. 1868, 5. " See Marshall on Insurance, 5th ed., 20; Flanders' Maritime Law, ed. 1852, 25. 7 PRELIMINARY CHAPTER. § I Whitmore 24 refers to Lombard Street as giving a construction to policies of insurance, which the uniform practice of mer- chants and underwriters had made intelligible. So the Rho- dian Laws, the Consoiato del Mare, the laws of Oleron and Wisby, Roccus, and the Ordonnance of Louis XIV. (1681), are cited in Luke v. Lyde, 25 by Lord Mansfield. This case is cited in Bork v. Norton, 26 as are also the laws of Oleron ; Luke v. Lyde is also cited in The Saratoga, 27 as are likewise Roccus, Straccha, Cleirac, Pothier, Emerigon, Valin, and the laws of Oleron, which laws are an authority in the decisions of Walton v. Ship Neptune, 28 and Sims v. Jackson, 29 and in Davy v. Hal- lett. 30 Kent, C. J., relies upon Emerigon, Valin, and Pothier. So in Franklin Ins. Co. v. Lord, 31 Story, J., says the doctrines of Valin, Pothier, and Emerigon are entitled to great weight and cites from Emerigon. Of the reports of Mason and Galli- son, in which appear two of the above cases, Chancellor Kent 32 declares that they may fairly be placed upon a level with the best productions of English admiralty, for deep and accurate learning, as well as for the highest ability and wisdom in de- cision. So, in the Star of Hope the court, in discussing the question of general average, cites Emerigon. 33 Again, the Ordonnance of Louis XIV. (1681), and the commentary there- on by Valin, is referred to by the court in Morgan v. The In- surance Company of North America, 34 decided in 1806. It says: "These ordinances and the commentaries on them have been received with great respect in the courts both of England and the United States, not as containing any authority in them- selves, but as evidence of the general marine law. Where they are contradicted by judicial decisions in our own country they 24 4 Durn. & E. 206-9 (1791). 25 2 Burr. 882, 889. 26 2 McLean (CO, 422, 426. 27 2 Gall. (C C.) 164, 179. 28 1 Pet. Adm. (U. S.) 142. 29 1 Pet. Adm. (U. S.) 157. 80 3 Caines (N. Y.), 21. » 4 Mason (CO, 248, 255. M 3 Kent's Commentaries, 13th ed., *20. 83 The Star of Hope, 9 Wall. (U. 8.) 203, 230, per Clifford, J. M 4 Dall. (U. S.) 455, 458, per Tilghman, C. J. § *■ PRELIMINARY CHAPTER. 8 are not to be respected, but on points which have not been 1 decided they are worthy of great consideration. I am strongly inclined to adopt the rule laid down by Valin, because I think it reasonable." This case is cited on the point decided, on the above authorities, in King v. The Delaware Insurance Com- pany. 35 In Odlin v. The Insurance Company of Pennsylva- nia, 36 the court says the opinions of French jurists on the ques- tion there under consideration had no inconsiderable weight with it, and although founded upon positive ordinances, yet they were evidence of the general law of merchants upon the subject, no judicial decision and no custom appearing to the contrary. "The sea laws and state ordinances of many of the maritime countries of Europe have, with some exceptions, gradually become incorporated with the commercial law of England by a land of tacit adoption, and are in these cases con- sidered as evidence of the customs of merchants. These regu- lations are used in the British and American courts, and have frequently furnished rules of decision where the positive law of the country or former decisions upon the point had not pre- scribed a different one." And the court refers to Roccus, Le Guidon, Valin, Emerigon, Pothier, and the Ordonnance of Louis XIV. So in Hone v. The Mutual Safety Insurance Company 37 the court considers the Ordonnance de la Marine of Louis XIY., Valin, Emerigon, Boulay Paty, and Alauzet, upon the question of reassurance. An examination of the in- surance cases of England further shows that for the most part, certainly until comparatively recent times, they have concerned marine insurance ; 38 and the earlier statutes of England, which legislate concerning insurance as such, relate to marine in- surance. It is, therefore, these ancient usages and customs of merchants, digested and compiled into sea laws, ordinances, and treatises, which have furnished the leading principles for the adjudication of insurance cases, and which are the sources from which Lord Mansfield, Story, and other learned jurists, have drawn in the determination of marine cases of insurance, » 5 2 Wash. (C. C.) 300, 307. M 2 Wash. (C. C.) 312, 315. » 7 1 Sand. (N. Y.) 137, 145. 18 For cases down to 1795, see Beawea' Lex Mercatoria, 302, et seq. 9 PRELIMINARY CHAPTER. § II and so marine law and marine insurance for a long period of time furnished the most certain developments of the principles governing the contract of insurance. § II. Origin of Insurance Generally. — The origin of in- surance is wrapped in such obscurity that an exhaustive exam- ination of the works of the most learned authors on this subject fails to discover the exact time when insurance was first known or practiced. Some of the most eminent writers contend that it was known to the ancients; others, that it had its inception in the necessities of maritime commerce, and the risks and haz- ards consequent thereon; although none of these fix definitely the date of its invention and first practice. It is, however, ar- gued by other prominent writers that the present mutual insur- ance system had its origin in those artificial alliances or clubs, which are said to have existed from time immemorial for mu- tual benefit and assistance in different exigencies, in China, among the Teutons, the early Christians, and the ancient Greeks and Romans. That from these alliances or clubs sprang what were known as "guilds," between which and the Friendly Societies of England, mutual benefit societies, and the mutual insurance system, the connection can be traced. There are certainly many points of resemblance between some of the alliances or clubs and the mutual insurance system, as will be noticed hereafter; and, if mutual insurance is a lineal descendant therefrom, then the date of the earliest existence and practice of insurance can be somewhat more definitely fixed than it can upon the theory that it owes its inception to maritime commerce. In view, then, of the preceding remarks, we will consider specifically the origin of the different kinds of insurance, placing marine insurance first, because the most replete references, legal and historical, are to that branch of the contract of true insurance, and also because that concrete idea known as marine insurance first took tangible shape, grew, and was more extensively known and practiced among nations than any other kind of insurance until, perhaps, recent times. We shall next consider the origin of the mutual insurance system, and follow with the origin of the several kinds of insurance in that order which their priority of existence, coupled with their § HI PRELIMINARY CHAPTER. 10 relative development and growth, as governed by the weight of authority, shall warrant. § III. Origin of Marine Insurance. — Whether insurance was used among the Romans is a disputed question, and one upon which there is no certain evidence. The principal argu- ments adduced in its favor are: 1. Passages from Livy 39 and Suetonius, 40 implying that the government of Rome, during the republic on two occasions, and the reign of the Emperor. Claudius on one occasion, had assumed the risk of losses that might arise during the course of certain voyages, by storms or enemies; 2. That Cicero, in a letter written to the Proquaestor Caninius Sallust, at Laodicea, asks him to procure himself sure- ties for treasure he should be sending home; 41 3. That the laws relating to usury in the Justinian code and pandects, 42 and elsewhere, specified the rate of interest granted to nautical insurance; 4. That the extensive use of bottomry and respon- dentia affords a strong presumption that insurance in its sim- pler forms was known and practiced among the ancients; 5. That the nauticum faenus, the trajectitia, or nautica pecunia, which were terms used to indicate a form of obligation con- nected with carriage by sea or marine adventure, wherein en- tered the element of risk, resembled insurance; 6. That the Romans possessed ships and commerce, and wherever foreign commerce was introduced some protection or security of the nature of insurance would be necessitated, especially in times of war, to encourage merchants to undergo the risks and haz- ards of adventures at sea; 7. That insurance, as a wager, was not unknown to the Romans; 8. That the above evidences, scattered through the Roman law and Roman history, if not sufficient in themselves, taken separately, are the several con- stituents which aggregated discover the existence among the Romans of the system of insurance. Opposed to these facts and the proposition they are advanced to prove are arguments to show: 1. That the passages from Livy and Suetonius have 89 T. Livius, lib. 23, n. 49; lib. 25, n. 3. 40 Lib. 25, n. 21. 41 Oicero, lib. 2, epis. 17. " Published respectively A. D. 529, 533. 11 PRELIMINARY CHAPTER. § III no application to insurance; that the inference therefrom is that contractors were only to transport the stores purchased of them to their destination at the risk of the government, or, in other words, that the government became purchasers of the commodities or merchandise before embarked, and consequently the actual owner during the voyage; 2. That no inference is to be deduced from Cicero's letter in favor of the proposition, but that the reference therein has a much stronger affinity to bills of exchange than to insurance; 3. That the laws relating to usury in the code and pandects referred only to maritime interest, the consideration given in a bond of bottomry or hy- pothecation, and not to premium of insurance; 4. That im- pignoratio embraced what is known as bottomry, hypotheca- tion, and respondentia; that the foundation of these was merely a loan or pledge, either personal or on property; 5. That faenus nauticum, trajectitia, or nautica pecunia were only pay- ments for money advanced, or were terms used to indicate the loan, and as the creditor ran a risk during the voyage, and as the risks might apply to the ship or part of it, or to the cargo pledged for the payment of the debt, the rate of interest nau- ticum faenus usurae maritimae might be higher than ordi- nary; 6. That there is no evidence that any premium was paid in these transactions ; 7. That ancient maritime commerce was limited and exposed to a paucity of risk, and that the naviga- tion of the Romans was for war, and not for peace or commerce; 8. That insurance is not a wager, and the knowledge of wagers among the Romans would not imply a knowledge of insurance; 9. That there is no positive information, historical or other- wise, that insurance was in use among the Phoenicians, Car- thaginians, or Greek republics, and that the Roman laws, the laws of Oleron, of Wisby, and of the Hanse Towns are silent as to insurance. It is also argued that Coke, in 1588, 43 notices the practice as a novelty. With some or all of the above af- firmative facts as the principal basis, it is deduced that, in- surance existed among the Romans by Emerigon, 44 B^dar- 43 Rep., pt. 6, pp. 46, 48. ** Emerigon on Insurance, Meredith's ed. 1850, xxxii. Emerigon, the French jurist, had a well-earned reputation for skill and learn- ing in the maritime law, and his researches aa to the origin and § III PRELIMINARY CHAPTER. 12 ride, 45 Duer, 46 and others. Gibbon, 47 connects the usury laws with nautical insurance. Waif ord, 48 relying upon Hendriks, 49 does not go as far as Gibbon, but states that the contract of nautical interest or loan on bottomry or respondentia was used from very remote ages by the Greeks, Romans, and other na- tions as their ordinary insurance contract, and that it formed the traditionary groundwork of the insurance system, and this author quotes from Leybourn's Parnarithrnologia that insur- ance was established by a law under Claudius Caesar; and Maylnes 50 declares Claudius "did bring in this most laudable custom of assurances." Among those who assert that insur- ance was unknown to the Romans, Hopkins 51 admits that the transactions relating to interest or usury and maritime loans, above mentioned, bore a resemblance to insurance in the in- troduction of risk as an element in the pretium or rate of in- terest. He also says: "Unquestionably within the compass of the Roman law and the details of Roman history may be found scattered the several constituents which, when built together, form the system of marine insurance." So, Marshall 52 also ad- mits that the observation of Ulpian in the pandects gives color for insurance having been known among the Romans ; that bot- tomry was a species of insurance, and was well understood by law of insurance were laborious and exhaustive. In the early part of 1783 his work on "Marine Insurances" was published. "It is a work tbat has long been held in esteem in all commercial countries in Europe and America," says Meredith in the introduction to his edition of date 1850 of the work (p. xxix), and he adds (Id., n. 1) : "Estrangin (Disc, prelim., p. 32) affirms that in France it is regarded as a sure oracle in the matter of insurance ; that it is cited in the tribunals as an authority having the force of law. With the Italians it is held in the highest credit," and he also refers to other authorities which show the great value of the work. Valin, the commentator of the Ordonnance de la Marine, speaks of Emerigon's learning, and Justice Park (Park on In- surance, 4th ed., xv), refers to him as a distinguished writer, and he is cited as an authority in the courts both in England and this country. 45 Comm. de Code de Commerce, sec. 1004. 46 Duer on Insurance, ed. 1845, 7, et seq. 47 Decline and Fall, Milman's ed. 1860, vol. 4, 368. 48 Walford's Insurance Guide, 2d ed., 3. 49 Assur. Mag., vol. ii. 60 Lex Mercatoria, ed. 1622, 146. 11 Hopkins' Marine Insurance, ed. 1867, 6, 9, 10. 6a Marshall's Insurance, 5th ed., 5, et seq. 13 PRELIMINARY CHAPTER. § HI them; and we would add that it is generally conceded that bot- tomry and respondentia were well understood by the ancients. The American Cyclopedia says it is possible that insurance was common among merchants centuries before it was recognized by law; 53 while Richards 54 declares that the practice of under- writing by individuals lays claim to great antiquity, although he adds that its origin is a matter of doubt. In answer to the negative argument of silence of the Roman laws and Roman jurists on this subject, Duer, 55 by an exhaustive course of rea- soning, and Meredith 56 in an excellent short note, show that this argument is not conclusive, and that notwithstanding there is, says the former, a fair presumption, and the latter, an ex- treme probability, that insurance was known to the Romans. That insurance is of great antiquity is evidenced by the works of Bacon 57 and also by the preamble to the earliest English statute on insurance, of date 1601, 58 in both of which it is spoken of as a usage which had existed "time out of mind." In support of some or all the propositions for the negative above mentioned and of the claim that insurance was unknown to the Romans, are Marshall, 59 Park, 60 Hopkins, 61 Parsons, 62 and the American Cyclopedia. 63 Richards 64 says it is more probable it started in the 12th or 13th century. Hunter 65 speaks of mari- time loans pecunia, trajectitia, and says Justinian fixes in them the maximum of interest. Ortolan 66 defines "trajectitia" or "nau- tica pecunia" as a loan or pledge during a voyage, and asserts that on account of the risk a higher rate of interestwas allowed. M 9 American Cyclopedia, 314. 64 Richards on Insurance, ed. 1892, sec. 5, p. 5. 65 Duer on Insurance, ed. 1845, 7, et seq. 56 Emerigon on Insurance, Meredith's ed. 1850, xxxiii, n. a. 67 Bacon's Abridgment, 4th ed., 598, 599. 68 43 Eliz., c. 12. 69 Marshall's Insurance, 5th ed., 2, et seq. 60 Park on Insurance, 4th ed., iii, et seq. 61 Hopkins' Marine Insurance, ed. 1867, 2-16. 81 Parsons' Marine Insurance, ed. 1868, 1, et seq. See 1 Parsons' Maritime Law, c. 1. 63 9 American Cyclopedia, 314. 64 Richards on Insurance, ed. 1892, dec. 5, p. 5. te Hunter's Roman Law, 472, note. M Ortolan's Roman Laws, Mears' ed. 1876, 258. § IV PRELIMINARY CHAPTER. 14 The same author also says the Justinian code fixed the rate of interest for maritime loans, 67 and Justice 68 speaks of money lent to sea or upon the sea as faenus nauticum, pecunia trajecti- tia, usura maritima, and translates faenus nauticum, naval in- terest, and gives as a reason that "there seems to be such a difference between the faenus nauticum of the Rhodians and our bottomry that the latter would not be a proper term for the other." From an examination of the authorities and of the arguments on both sides we are inclined to the belief that there are many traces of the existence among the Romans of the contract of insurance, and we are more especially led to this conclusion by reason of the learning and laborious researches of Emerigon and the great value of his work on insurance, as also by the arguments adduced in favor of the proposition by Meredith, Duer, and others, as well as by the admissions of those of the opposite view. But we are unable to determine to what degree of perfection the system may have attained, or to conjecture that it existed in any, other than a most simple form, because of the absence of positive proof thereon. § IV. Adoption of Marine Insurance in Modern Times. As to marine insurance in modern times; although there is no certain evidence as to the exact time and place of its adoption, nor as to the exact period of its introduction into the several countries of Europe, nevertheless it is generally agreed that the best evidences of its first recognition, or, as some writers say, of its invention, point to Italy and the latter part of the 12th or the beginning of the 13th centuries as the place and time. 69 So Emerigon 70 speaking of the Ordonnance de la Marine, says, "It was principally for the contract of insurance that the framers of the Ordonnance had recourse to the laws of the middle ages," etc. It is supposed by some that insurance was invented by the Jews, who found a refuge in. Italy after their " Id. 300, n. 1658. 68 Justice's Treatise on the Sea, ed. 1705, iii, 259, and see Id. 255. 69 Marshall's Insurance, 5th ed., 7, et seq ; 1 Duer on Insurance, ed. 1845, 28; 9 American Cyclopedia, 314; 1 Parsons' Marine Insurance, ed. 1868, 2. 70 Emerigon on Insurance, Meredith's ed. 1850, xxxi. 15 PRELIMINARY CHAPTER. § IV expulsion from France by Philip Augustus, A. D, 1182, 71 and that the merchants in northern Italy saw its success and ex- tended its use. 72 Justice Park, 73 however, says that if the Lom- bards were not the inventors, thev were the first who brought the contract to perfection and introduced it to the world. But Emerigon 74 declares that it may be that the contract only from that time acquired a name and particular form, but that the policy or instrument is another matter from the contract. Hopkins 7a considers that the idea may not be rejected, but that it is conjectural only, and adds that it is possible the "Florentines received the germ of the system from the Jews, although insurance was in general use in Italy, A. D. 1194, four years earlier than even the date of the Florentine republic, and Marshall 76 rejects the narrative as improbable. He fur- ther declares that the word "assecuratio" is a barbarism adopted in Italy about the 12th or 13th century. It also appears that the word "policy" or "polizza" is of Italian derivation, and signifies a note or memorandum in writing, or note or bill of security, creating an evidence of a legal obligation, 77 although Lord Mansfield declares that policy is derived from a French word which means a promise. 78 The Ordonnances of Wisby 79 are said to mention the contract of marine insurance. 80 As to 71 Anderson fixes the date of banishment of the Jews as A. D. 1143; 1 History of Commerce, 82. 72 1 Duer on Insurance, ed. 1845, 33; Walford's Insurance Guide, 2d ed., 5, 6; Jacobs' Law Dictionary, title "Insurance." 73 Park on Insurance, 4th ed., xxvii. 74 Emerigon on Insurance, Meredith's ed. 1850, 2. 70 Hopkins' Marine Insurance, ed. 1867, 17, et seq. 76 Marshall's Insurance, 5th ed., 2, 3. See, also, Emerigon on In- surance, Meredith's ed. 1850, 10, 11. 77 1 Duer on Insurance, ed. 1845, 29; Angell on Fire and Life Insur- ance, 2d ed., 3, sec. 4; Marshall's Insurance, 5th ed., 228. 78 Cited in Good v. Elliot, 3 Durn. & E. 703. 79 "The Ordonnances made by tne merchants and masters of the magnificent town of Wisby, a city of Sweden, in the Island of Gott- land, formerly the most renowned fair and market in Europe, but at this day almost in ruins": Emerigon on Insurance, Meredith's ed. 1850, xxxviii. 80 9 American Cyclopedia. 314; Emerigon on Insurance, Meredith's ed. 1850, xxxviii, UiO, n'. b; Flanders' Maritime Law, ed. 1852, 21* Park on Insurance, 4th ed., xxxiii. § IV PRELIMINARY CHAPTER. 16 the date of these Ordonnances there is much doubt, one writer placing it as early as 1250. 81 Others declare that it is more ancient than the Consolato del Mare, which was recognized at Kome in 1075, 82 while some refer its date to a period near 1288, and others to a time anterior to or about 1320. 83 Mar- shall, 84 however, criticises Cleirac's version of the laws of Wisby, which version mentions insurance, and says Maylnes' translation does not mention it. He further asserts that the earliest ordinance on the subject of insurance is that of Barce- lona, which he considers must have been published about the year 1435, differing herein from Emerigon, 85 who fixes its date as 1484. It is also said that a "Chamber of Assurance" was established in the city of Bruges as early as 1310. 86 Hop- kins 87 cites Bedarride, commentator on the French Code de Commerce, as asserting that the insurance system "takes no place in legislature till the 14th century." While Duer ^ de- clares that no certain inference arises that the existence of insurance is owing to express legislation. An early document, of date 1411, refers to insurance as an established practice, 81 9 American Cyclopedia, 314. 82 But see Reynolds' Maritime Law, ed. 1852, 12, which asserts that the Spaniards claim paternity of the Consolato del Mare, and that it was promulgated in the Catalan tongue ahout the middle of the 13th century. Meredith, however, in his introduction to Emerigon's Insur- ance, ed. 1850, xiv, says that the oldest copy of this Ordonnance exists in the Catalan tongue, which is taken to be a translation from a long lost and unknown original, and that the age of the Ordonnance ranges from a period anterior to 1075 to 1150, or 1220; but Emerigon, who translated a large portion of it, says it was recognized as law in Rome in 1075. See also next note. 88 Emerigon on Insurance, Meredith's ed. 1850, xxxv, xxxviii, 157, n. a, 160, n. b, and authorities cited; 9 American Cyclopedia, 314; Flanders' Maritime Law, ed. 1852, 11, 12, 21, 28; 3 Kent's Commen- taries, 13th ed., 13 ; Park on Insurance, 4th ed., xxxii, et seq ; 1 Smith's Mercantile Law, Macdonell & Humphrey's ed. 1890, lxviii. 8i Marshall's Insurance, 5th ed., 12, et seq. 84 Emerigon on Insurance, Meredith's ed. 1850, xxxix; see Park on Insurance, 4th ed., xxxiv; Griswold's Fire Underwriters, ed. 1872, 10; 2 American Cyclopedia, 303, 304; Walford's Insurance Guide, 2d ed., 3; 1 Smith's Mercantile Law, Macdonell & Humphrey's ed. 1890. lxviii. 88 Richards on Insurance, ed. 1892, 6, sec. 5; Griswold's Fire Un- derwriters, ed. 1872, 10. 87 Hopkins' Marine Insurance, ed. 1867, 19. 88 1 Duer on Insurance, ed. 1845, 33. 17 PRELIMINARY CHAPTER. § IV recites that a dangerous custom of the inhabitants and citizens of Venice to insure foreign vessels had been introduced, and prohibits such insurances. 89 Although Hopkins 90 asserts that the attempt is fruitless to ascertain the exact time when insur- ance was first introduced and practiced in England; although Anderson 91 and Maylnes 92 both declare that insurance was in use in England earlier than upon the Continent, and although Marshall 93 supposes that insurance must have been in use in that country long before the middle of the 15th century, yet we can safely say that the most certain indications of its first use in England point to its introduction there by the Lombards or Italians from Lombardy, who settled in London somewhere about the 13th century. 94 And in this connection it is noted that policies issued at Antwerp in 1620 refer to insurances made in Lombard Street, London. 95 In view of the above facts it can be reasonably concluded that marine insurance came into gen- eral use as a system or contract as early as the 12th or 13th centuries, although there is much which points to an anterior date for its existence and use. Passing over the growth of in- surance in other foreign countries, except to notice that the Ordonnance of Louis XIV., established in 1681, contains lengthy regulations concerning insurances, as does also the Guidon de la Mer, of date somewhere between 1556 and 1584, 96 we find in England that in 1512 a Venetian merchant 89 Hopkins' Marine Insurance, ed. 1867, 20. 90 Id. 28. 91 2 History of Commerce, 109, 203. 92 Maylnes' Lex Mercatoria, 105. 93 Marshall's Insurance, 5th ed., 7. 94 Angell on Fire and Life Insurance, 2d ed., 4, sec. 4; Maylnes' Lex Mercatoria, ed. 1622, 146; 1 Duer on Insurance, ed. 1845, 33 ; Gris- wold's Fire Underwriters, ed. 1872,13; Park on Insurance, 4th ed., xlii. See Marshall's Insurance, 5th ed., 6, 7; 1 Smith's Mercantile Law, Macdonell & Humphrey's ed. 1890, lxviii. 95 Walford's Insurance Guide, 2d ed., 5; Griswold's Fire Under- writers, ed. 1872, 13; see, also, Justice's Treatise on the Sea, ed. 1705, appendix and forms; Angell on Fire and Life Insurance, 2d ed., sec. 4; 1 Duer on Insurance, ed. 1845, 33. 96 Of date 1578, says Griswold: Griswold's Fire Underwriters, ed. 1872, 9. Written not long hefore the 15th century, says Marshall : Mar- shall on Insurance, 5th ed., 15. While Meredith fixes the date some- where between 1556 and 1584: Emerigon on Insurance, Meredith's ed. Joyce, Vol. I.— 2 IV PRELIMINARY CHAPTER. 18 effected insurance there on property from Candia, capital of the island of Crete; that in 1548 and 1558 insurance is mentioned in England; 97 that in 1560 or 1561 Guicciardini, an Italian historian, speaks of the commerce between England and the Netherlands, and the insuring their merchandise from losses at sea. 98 The earliest English statute on insurance is the 43 Elizabeth, chapter 12, of date 1601, by virtue of which com- missioners consisting of the judge of admiralty, the recorder of London, two doctors of the civil law, two common lawyers, and eight merchants, or any five of them, were appointed to hear and determine causes arising upon policies of assurance in the city of London. The powers of these commissioners were, however, so limited and the statute so defective, that the act 13 and 14 Car. II., chapter 23, was passed in 1662, enlarging their powers and otherwise attempting to remedy the defects of the prior enactment. But a judgment of the commissioners was held no bar to an action at law; 99 "prohibitions to restrain them were issued and the court fell into disuse." 10 ° The statute 6 George I., chapter 18, of date 1719, under pretense of remedying certain alleged evils arising by reason of "many particular persons," insurers, becoming bankrupt and otherwise failing to meet their losses, granted to two companies the mon- opoly of marine insurance and lending money on bottomry. The statute did not extend to private persons, and also con- tained some other exceptions. However, the statute 5 George 1850, 157, n. a. For a translation of the sea laws of the Rhodians, the Romans, of Oleron, of the Hanse Towns, and the sea laws of the French of 1681, see Justice's Treatise on the Sea, also Maylnes. 97 Walford's Insurance Guide, ed. 1867, 5; Richards on Insurance, ed. 1892, sec. 5. 98 1 Parsons' Marine Insurance, el. 18ri8, 10; 2 Anderson's History of Commerce, 108, 109; Hopkins' Marine Insurance, ed. 1867, 29. See Marshall's Insurance, 5th ed., 7. 99 Carne v. Moye, 2 Sid. 121 (1658) j 3 Blackstone's Commentaries, c. vi, 75, Hammond's ed. 1890, p. 102. 100 1 Smith's Mercantile Law, Macdonell & Humphrey's ed., 1890, Ixix; 4 Bacon's Abridgment, 4th ed., 251; Bendyr v. Oyle, Sty. 166, 172 (16-19), case of life assurance. Prohibition granted to court of assur- ance on ground that it had jurisdiction only of such contracts as related to merchandise: Dal bye v. Proud foot, 1 Show. 396 (1692). Rule to show cause why prohibition should not be granted was issued: Park on Insurance, 4th ed., xliv, xlv, xlviii. 19 PRELIMINARY CHAPTER. § IV IV., chapter 114, of date 1824, repealed so much of the prior act as restrained other corporations from underwriting, but did not otherwise abridge the rights or privileges of the two com- panies which had been enlarged by other enactments, especially that of the 11 George I., chapter 30, of date 1724, by virtue of which the right to plead the general issue was granted. 101 This privilege would, however, seem to be impliedly abrogated, or at least so far abrogated as to be of little or no practical value by the changes resulting in the present system of plead- ing in England. 102 The other statutes affecting these com- panies were those of 7 George I., chapter 27, passed in 1720, and that of 8 George I., chapter 15, enacted the next year under the first of which a large proportion of the sum which each company had agreed to pay was remitted each company, and under the latter they were excepted from liability to cer- tain costs and damages. In 1746, the statute 19 George II., chapter 37, provided that any insurance made on ships or on "any goods, merchandises, or effects laden, or to be laden, on board any such ship or ships, interest or no interest, or without further proof of interest than the policy, or by way of gaining or wagering, or without benefit of salvage to the assurer," should be void, with certain exceptions. This act further pro- hibited reassurance, unless the insurer be insolvent, become a bankrupt, or die. In 1864 the 27 and 28 Victoria, chapter 56, amended the last act by pro Adding that reassurance of sea risks might lawfully be made. 103 Passing from these statu- 101 See Carr v. Eoyal Exch. Assur. Co., 31 L. J. Q. B. 93; 1 Best & S. 956. 102 See 5 and 6 Vict., c. 97, sec. 3. and Judicature Acts. m The insurance statutes in force in 1889 in England were: 1745-46 (E. S.), 19 Geo. II., c. 37 (marine) ; 1774 (E. S.), 14 Geo. III., c. 48 (life) ; 1774 (E. S.), 14 Geo. III., c. 78, sec. 83 (fire) ; 1787-88 (E. S.), 28 Geo. Ill, c. 56 (marine); 1854-55, 18 & 19 Vict., c. 119, sec. 55 (emigration); amended, 26 & 27 Vict., c. 51; 35 & 36 Vict., c. 73; 36 & 37 Vict., c. 85; 38 & 39 Vict., c. 66; 39 & 40 Vict., c. 80; 1862, 25 & 26 Vict., c. 63, sec. 55 (merchant shipping) ; 1866 (I.), 29 & 30 Vict., c. 42 (life) ; 1867, 30 & 31 Vict., c. 23 (inland revenue) ; 1867, 30 & 31 Vict., c. 144 (assignment of life) ; 1868, 31 & 32 Vict., c. 86 (marine) ; 1870, 33 & 34 Vict., c. 97 (stamps); 1876, 39 & 40 Vict., c. 6 (marine); 1880 (S.), 43 & 44 Vict., c. 26 (life, married women); 1881, 44 & 45 Vict., c. 12, sec. 44 (inland revenue) ; 1881 (E. I.), 44 & 45 Vict., c. 41, sec. 14 (fire) ; 1882 (E. I.), 45 & 46 Vict., c. 75, sec. 11 (married women's prop- § IV PRELIMINARY CHAPTER. 20 tory regulations in England to the adjudicated cases, we find in that country no reported decision prior to 15 8 8, 104 and the number of cases down to the middle of the 18th century are comparatively few. 105 A consideration of the origin of ma- rine insurance would not be complete without a mention of Lloyds, which may be referred in the beginning to the date 1710, 106 since in that year Lloyd opened a coffeehouse in Abchurch Lane, London, which became the resort for under- writers and merchants, marine insurance having been carried on for a long time prior thereto by individual merchants, 107 in Lombard Street. The name "Lloyds," therefore, was identified with the underwriters and insurance, and so became known throughout the insurance world. The name had become so at- tached to the house as a resort of underwriters that it clung to them when they removed in 1774 to the Royal Exchange, where, with the exception of a period from 1838 to 1814, they permanently located an office for carrying on their business. This society was incorporated by an act passed in 1871. 108 Their affairs are managed by a committee appointed from their members, which appoints agents who are located in all the principal ports of the world. It is the duty of these agents to keep the society constantly informed of all matters of import- ance relating to the departure and arrival of ships, losses, cas- ualties, and the like, and from these accounts forwarded by the agents and posted up in the private room at Lloyds, and known erty) ; 1884, 47 & 48 Vict., c. 62, sees. 8, 11 (marine, life) ; 1887, 50 & 51 Vict., c. 15, sees. 5, 6 (marine) ; 1889, 52 &53 Vict., c. 42, sec. 20 (acci- dent). See, also, Act 1892, 55 Vict., c. 39: From Chronological Table and Index, Statutes, 11th ed., title "Insurance." 101 4 Inst. 142; cited in Dowdale's case, Coke's Rep., pt. 6, 46. 48. 105 See Park on Insurance, 4th ed., xliii. 106 Richards (Richards on Insurance, ed. 1892, sec. 10), says Lloyds was started in latter part of 17th century. 107 As to insurance being carried on by individuals, see Richards on Insurance, ed. 1892, sec. 5, pp. 5, 7; Griswold's Fire Underwriters, ed. 1872, 11, 35; 13 Encyclopedia Britannica, 180; Hopkins' Marine Insurance, ed. 1867, 32; Reynolds' Life Insurance, ed. 1853, 3. But the statute of 1719, 6 George I., chapter 18, would warrant the infer- ence that corporations had carried on insurance as a business long be- fore its date, although Walford (Insurance Guide, 2d ed., 10) speaks of the two companies as the first marine corporations. 108 34 Vict., c. 21; see, also, schedule of act for rules of society. 21 PRELIMINARY CHAPTER. § V as "Lloyd's Written Lists," are methodically compiled what are known as "Lloyd's Books," one of which is placed in the public room at Lloyds. The "Written Lists" are printed and filed, and are known as "Lloyd's Printed Lists." 109 We have traced, so far as the main facts enable us, the origin of marine insurances, as well as its adoption in modern times down to the date of the earliest reported English case, also to that of the earliest English statute, mentioning, in addition, some later statutes relating to the subject, together with a brief mention of some other facts bearing upon its growth in that country. From these dates the sources of the law are easier of access to those who wish to recur to principles, and will be referred to hereafter, as far as necessary in treating of the law governing the contract. § V. Origin of the Mutual Insurance System. — The mutual insurance system is claimed to be of very ancient origin. This claim is based upon the assumption that there is an an- alogy between it and the Friendly Societies of England; that between the latter and guilds there is a great similarity, and, to go one step farther, the origin of guilds is attempted to be traced to those artificial alliances or clubs which existed in ancient times, in China, among the Teutons, the German tribes of Scandinavia, the ancient Greeks and Romans, and the early Christians, for mutual protection and assistance in various exi- gencies, and for other purposes. The effort, however, to dis- cover the origin of guilds, as well as of the word "guild" itself, has been productive so far only of disagreement. 110 It is not 109 1 Parsons' Marine Insurance, ed. 18G8, 12; Hopkins' Marine In- surance, ed. 1867, 33; Richards on Insurance, ed. 1892, sec. 6; Gris- wold's Fire Underwriters, ed. 1872, 14, et seq., 10; 1 Arnould on Marine Insurance, Perkins' ed., 1850, 83, 84, *82, *83, sec. 50; Id., Maclachlan's ed. 1887, 148-51 ; 14 Encyclopedia Britannica, 9th ed., 741, title "Lloyds" ; Century Dictionary, 3490, "Lloyds." 110 Lambert's Two Thousand Years of Guild Life; and see biblio- graphic note appended thereto; 11 Encyclopedia Britannica, 259, "Guilds"; 9 Id. 780, "Friendly Societies"; Brentano on Guilds and Trades Unions; Old Guilds and New Friendly Trades Societies, 6 Fort- nightly Review, N. S., Oct., 1869, p. 391; Workmen's Benefit Societies, Quarterly Review, Oct. 1864, p. 318; Bacon's Benefit Societies and Life Insurance, ed. 1888, sec. 10; Walford's Insurance Guide, 2d ed., 3. § V PRELIMINARY CHAPTER. 22 necessary, though, to inquire here as to the origin of guilds or of the word "guild." It is sufficient that the essence of the guild was mutual protection or benefit, social, political, or pe- cuniary. We may also note that guilds are said to be men- tioned in the laws of Ina and Alfred. 111 While Brentano 112 speaks of the guilds shown by the Judicia Civitatis Lundoniae, the statutes of the London guilds reduced to writing in King Athelstan's time, 113 and says one might call these guilds "assur- ance companies against theft," owing to their regulations against violence, especially of theft; and guilds have also been defined as "the mutual assurance societies of the poorer classes." 114 The Fortnightly Review n ° states that the "Fra- ternitie," or "Bretherede," of "St. James at Garlekhith, Lon- don," begun in 1375, provided for relief in sickness, for old age, for burial, arbitration clauses, and relief under false im- prisonment. The same author 116 asserts that "the whole vast group of Friendly Societies scarcely looks back beyond the first act which authorized the formation of such bodies toward the close of the last century, 1793, 117 and if the existence of a Friendly Society here and there can be established in the ear- lier years of the century, it is reckoned a matter worthy to be recorded." Notwithstanding this assertion, there is authority for stating that the system of Friendly Societies in England may be traced to within a few years of the suppression of relig- ious guilds in the 16th century, since the last recorded guild was in 1628, and Friendly Societies existed in 1634, and al- though there is no directly connecting link between the two, »! Ina, Ini, or Ine, 688 A. D. to 726 A. D. ; Alfred, 871 A. D. to 001 A. D. See Lambert's Two Thousand Years of Guild Life, 43; Walford's Insurance Guide, 2d ed, 3. n - Brentano on Guilds, etc., 11. 113 92.") A. D. to 941 A. D. 114 Bacon's Benefit Societies and Life Insurance, ed. 1888, sec. 10. 115 Vol. 6, N. S., or Vol. 12, 0. S., Ludlow's article on Old Guilds, etc., Oct. 1869, p. 394. 116 Id. 391. See article by same writer on Guilds and Friendly Socie- ties, 21 Contemp. Rev. 553, 737. 117 The act was 33 Geo. III., c. 54; repealed 1855, 18 & 19 Vict., c. 63, 8ec. 1; latter act repealed 1875, 38 & 39 Vict., c. 60, sec. 5, hut see sec. 7; this act amended 1876, 39 & 40 Vict., c. 32; last act repealed ls^T, 50 & ol Vict., c. 56, sec. 17. 23 PRELIMINARY CHAPTER. § V yet it may reasonably be believed that the latter are an out- growth of the former. 118 The purpose of Friendly Societies under the English Insurance Corporation Act of 1892 was mainly by voluntary subscriptions, with or without donations, for relief in sickness or other infirmity, in old age, widowhood, or orphanhood, for payments on birth or death, for payments in distress, to seekers for employment, and in case of damage or shipwreck at sea, for endowments and for insurance of tools against fire, and these societies include under the act every such corporation not required by law to be licensed for the transaction of insurance, and if the contract it offers to under- take is a contract of insurance, the society is an insurance cor- poration. 119 Numerous acts have been passed in England containing provisions in relation to these societies. 120 In so far, then, as the object of guilds and Friendly Societies is mu- tual benefit and assistance, pecuniary and otherwise, there are many points of resemblance in them to the mutual insurance system, even if there were no other connecting link. Taking this analogy as a basis, then, upon the question of priority be- 118 9 Encyclopedia Britannica, 7S0, "Friendly Societies"; see, also, 6 Ludlow on Old Guilds and New Friendly Trade Societies, Fortnightly Review, N. S., Oct. 1869, p. 391; Workmen's Benefit Societies, Quar- terly Review, Oct. 1864, p. 318; 16 Am. & Eng. Ency. of Law, 19; Bacon on Benefit Societies and Life Insurance, ed. 1888, 16, 17. 119 Act 1892, 55 Vict., c. 39; Hunters' Insurance Corporation Act, 1892, 12, 13. "° The following acts relating to Friendly Societies were in force in 1889: (1833) 3 & 4 Will. IV., c. 14, sec. 25; (1854) 17 & 18 Vict., c. 56; (I860) 23 & 24 Vict., c. 137; (1863) 26 & 27 Vict., c. 87, sees. 60, 68; (1870) 33 & 34 Vict., c. 61, sec. 2; (1875) 38 & 39 Vict., c. 60; (1877) 40 & 41 Vict., c. 13, sees. 16, 17 ; (1882) 45 & 46 Vict. , c. 72, sec. 21 ; (1883) 46 & 47 Vict., c. 47; (1884) 47 & 48 Vict., c. 43, sec. 4; (1887) 50 & 51 Vict., c. 56; (1888) 51 & 52 Vict., c. 15, sec. 6; (1889) 52 & 53 Vict., c. 22. Acts were also passed in 1819, 1829, 1834, 1846, 1850, 1855 and 1876. These acts, from 1819 to 1830, inclusive, as well as the act of 1793 (al- ready noted), were repealed by act of 1855 (18th & 19th Vict., c. 63, sec. 1). but as to acts of 1829 and 1834, see 17 & 18 Vict., c. 56, and 6 & 7 Will. IV., c. 32 (1836), and as to acts of 1846 and 1850, see 17 & 18 Vict., c. 56. The act of 1855 was repealed by act of 1875 (38 & 39 Vict., c. 60), which was amended in 1876 by 39 & 40 Vict., c. 32, which in 1887 was repealed by 50 & 51 Vict., c. 56, sec. 17; Chronological Table and Index of Statutes, 11th ed., title "Friendly Societies." See, also, Bun- yon on Insurance, ed. 1854, 176, 177. § V PRELIMINARY CHAPTER. 24 tween this system of insurance and marine insurance, there is more direct and certain evidence in favor of the mutual system. Thus, Hopkins, 121 who gives credit therefor to a paper read 122 before the Institute of Actuaries, in 1864, notices to some ex- tent a Latin inscription on a marble slab found at Lanuvium, an ancient town in Latium, a short distance from Home, dated during the reign of Hadrian, A. D. 117-138. This inscription shows that the club was ostensibly for the worship of Diana and Antinous, but in reality it was to provide a sum at death of a member for burial. There was also an entrance fee provided. It was constituted under a decree of the Roman senate and people, granting it the privilege of assembling and acting col- lectively. It met not more than once a month; whoever omitted payment for a certain number of months had no claim on the society for his funeral rites, although he should have made a will. ]STo claim was allowed by the club to any patron, patroness, master, mistress, or creditor except he were named in a will, and no funeral rites could be had by one who had in- flicted death upon himself. The resemblance between this club's system and that of the modern benefit society is notice- able. Hopkins remarks that it is "probably the nearest ap- proximation on record to the insurance system during the Ro- man period, and as containing the feature of a present payment for a larger deferred sum," but he adds that it differs from in- surance in some important respects. There also existed in the third century, at Alexandria, a Christian brotherhood for nursing the sick. 123 Other instances might be mentioned, but the above are sufficient to show that this system may claim more positive evidence of an anterior date when compared with marine insurance in this respect than can the latter. We have already noted the granting by statute, in England in 1719, monopolies to two companies for insuring sea risks and loaning money on bottomry. It appears that while these mo- nopolies existed, clubs or associations of shipowners were estab- lished in many of the seaports of England for the insurance of 121 Hopkins' Marine Insurance, ed. 1867, 7-11. 122 By M. N. Adlcr. 123 Uruntano on Guilds and Trades Unions, 9. 25 PRELIMINARY CHAPTER. § V ships of their members, being in fact mutual insurance clubs. 124 These clubs, however, while they may still retain their mutual feature, are obligated to be registered in order to carry on the business of insurance. 125 There are many reported cases in which such clubs or associations were interested, and in which various questions, including that of their legality, the sub- scription to the policy, its validity, the liability of members, etc., are considered. 126 The premiums on insurance in these clubs, so far as their liability could be called premiums, were merely nominal, the absence of regular premiums being one feature of their organization, the liability of each member being based upon the expenses and their contributions to losses. 127 TIopkins, 127a speaking of mutual insurance clubs or societies, says their nature is that of benefit societies. He distinguishes the protection they afford from insur- ance properly so-called, and adds, "their resemblance to true assurance consists in the protection mutual clubs give against similar losses and contingencies subject to local rules and usages, and in their attaching their 'rules' frequently to the common form of the policy with some nec- essary modifications." In this connection we notice a state- ment of Guicciardini, before referred to, of date 1560 or 1561, 124 Marshall on Insurance, 5th ed., 35. 125 See the Companies' Act, 1862; 25 & 26 Vict., c. 89; 30 & 31 Vict., . c. 26, sec. 9; 7 & 8 Vict., c. 110. 126 Seed v. Cole, 3 Burr. 1512 (1754); Harrison v. Millar, 7 Term Rep. 340 (1796); Lees v. Smith, 7 Term Rep. 338 (1797); Dowell v Moon, 4 Camp. 166 (1815) ; Strong v. Harvey. 3 Bing. 34 (1825) ; Mead v Davidson. 3 Ad. & E. 303 (1835) ; Turpin v. Bilton, 5 Man. & G. 455 (1843) ; London Monetary Advance and Life Assn. v. Smith, 3 Hurl. & N. 543 (1858) ; Bromley v. Williams. 32 L. J. Ch. 716 (1863) ; Turnbull v. Woolfe, 9Jur., N. S.,57 (1863) ; In re London Mar. Ins. Assn. (Smith's case), L. R. 4 Ch. 611 (18(i9) ; In re London Mar. Ins. Assn. (Andrews' case), L. R. 8 Eq. 176 (1869) ; Re Arthur Average Assn., L. R. 10 Ch. 542 (1875): Marine Mutual Ins. Assn. v. Young, 43 L. T., N. S., 441 (1880) ; Re Padstow Total Loss Assn., L. R. 20 Ch. D. 137 (1882) ; Lion Assn. v. Tucker, L. R. 12 Q. B. D. 176; 53 L. J. Q. B. 185 (1883); Ocean Iron Steamship Ins. Assn. v. Leslie, 6 Asp. Mar. Rep., N. S., 226 (1887) ; Jones v. The Bangor Mut. Shipping Ins. Soc, Lim., 6 Asp. Mar. Rep., N. S., 456 (1889). 127 See Marshall on Insurance,- 5th ed., 35; Hopkins' Marine Insur- ance, ed. 1867, 405. 127a Hopkins' Marine Insurance, ed. 1867, 391, 392. § V PRELIMINARY CHAPTER. 26 that a vast commerce existed between England and the Nether- lands, and that the merchants had "f alien into a way of insur- ing their merchandise from losses at sea by joint contribution." This passage is cited by Anderson and also by Hopkins, who speaks of it as being a meager account of insurance. 128 . Justice Bradley 128a says the earliest form of the contract of insurance was that of mutual insurance. Griswold 129 says mutual insur- ance was earliest in use, 130 and Richards 131 asserts that back in Anglo-Saxon times there is evidence of attempts among friendly guilds to guarantee protection against fire and other calamities by mutual contribution, 132 and that in 1710 the ear- liest mutual and stock company was organized in London. 133 Other companies had, however, formed prior thereto on the mutual plan; thus, in 1686, the "Friendly Society for Insuring Houses from Fire" was formed; in 1696 the "Amicable Con- tribution for the Assurance of Houses and Goods from Fire" was organized, and the policy of this company is said to con- tain the germ of perpetual insurance, and to throw some light upon the decisions of the courts upon successive losses, 134 and in 1706 the "Amicable Society for a Perpetual Assurance Office," a life company, was founded. The scheme was mu- tual, and provided for a fixed rate of contribution, which was the same for all members, the ages of whom were limited from twelve to fifty, afterward changed to forty-five, and a certain sum was distributed each year among representatives of de- ceased members. The plan was, however, changed in 1734, so as to fix more definitely the sum to be paid at death, but it was not until 1807 that the company began rating members accord- ing to age and other circumstances. 135 Coming to the United 128 2 Anderson's History of Commerce, 109; Hopkins' Marine Insur- ance, ed. 1867, 20. "* Insurance Co. v. Dunham, 11 Wall. (U. S.I 32. 129 Griswold's Fire Underwriters, ed. 1872, 74, 84. 130 See, also, Wal ford's Insurance Guide. 2d ed., 198. 131 Richards on Insurance, ed. 1892, sec. 8. 132 See, also, Walford's Insurance Guide, 2d ed., 3, 13. 133 See, also, 13 Encyclopedia Britannica, 180, 182; Griswold's Fire Underwriters, ed. 1872, 24; Walford's Insurance Guide, 2d ed., 25. 134 Griswold's Fire Underwriters, ed. 1872, 20, 23. 135 Richards on Insurance, ed. 1892, sec. 9; Hopkins' Marine Insur- ance, ed. 18G7, 392, 393; 13 Encyclopedia Britannica, 180-82; 9 American 27 PRELIMINARY CHAPTER. § V States, the earliest insurance company was the "Philadelphia Contributionship for the Insurance of Houses from Loss by Fire," organized on the mutual plan in 1752. 136 But the earli- est benefit assurance case in the United States appears to be of date 1871, 137 and the next decision seems to be of date 1875. 138 While, therefore, the idea of mutual protection or mutuality as a principle of insurance is of very ancient origin, yet it has not approximated to true insurance until within a comparatively short time, 139 and it furnishes no adjudications in this country until recent years. It appears, then, that the principle of mu- tuality or reciprocity had been applied to protection against various emergencies certainly before marine insurance came into general use, if not before it had been used at all, and that even in England it became the basis of incorporation of several life and fire companies before marine insurance had assumed any proportions as an organized system, and thus, also, before marine insurance decisions commenced, under that eminent jurist, Lord Mansfield, from 1756, to make that marked prog- ress which they then did in establishing leading principles of insurance. It is proper to mention here the origin of cattle in- surance societies, which in their constitution and management resemble Friendly Societies. They were introduced during the panic caused by the cattle plague, and were established and regulated under the Friendly Societies Act of 1875 140 for in- surance of neat cattle, sheep, lambs, swine, and horses, in case of death by disease or otherwise. 141 Whatever defects may have existed in the infancy of the assessment system or mutual system of insurance, great strides have been made toward plac- Cyclopedia, 424, et seq. ; Bliss on Life Insurance, ed. 1872, sees. 1, 2; Keynolds' Life Insurance, ed. 1853, 4, 5; Walford's Insurance Guide, 2d ed., 25. 136 Griswold's Fire Underwriters, ed. 1872, 36, et seq. For the history of mutual companies and their plans of organization in NewYork, and the statutes relating thereto down to and including that of 1849, see opinion of Denio, C. J., in White v. Haight, 16 N. Y. 310. 137 Wet more v. Mutual etc. Co., 23 La. Ann. 770. 138 Maryland Mut. Ben. Soc. v. Clendinen, 44 Md. 429; s. c, 22 Am. Eep. 521. 139 See Tabor's Three Systems of Life Insurance, 11, 120, et seq. 140 38 & 39 Vict., c. 60, sec. 8, sub. 2. 111 Rapalje & Lawrence's Law Dictionary, 179. § VI PRELIMINARY CHAPTER. 28 ing the same on a scientific basis, so that now some of the larg- est and most successful companies are mutual companies. 142 § VI. Origin of Fire Insurance. — Although life assur- ance may claim an earlier date for its origin, yet the idea of security in case of fire seems to have followed more closely upon marine insurance than the adoption of life insurance. It is said that efforts were made among the early Saxon guilds to guarantee protection against fire, and we have seen that Friendly Societies offer this indemnity in some measure. It is also said that insurance was applied to fire risks as early as 1609, and in 1670 there is a record of a com- pany formed at Edinburgh for "Friendly Assurance against Fire." P>ut it was not, however, till after 1666, when the great fire in London occurred, that the idea of fire insurance assumed in England any organized shape as a system. In 1680 a proprietary company, the "Fire Office," formed in Lon- don. In 1681 the corporation of London opened books for securing and entering subscriptions, for fire insurance, but the scheme was dropped. Then came in 1686 the "Friendly Society for Insuring Houses from Fire." But the first regular office which is said to have transacted any business was the "Amicable Contribution," organized in 1696, and in 1710 the first mutual and stock company, "The Sun Fire Office," was formed. Passing down to the two companies, the Koyal Ex- change and London Assurance, chartered in 1720, we find that they added fire risks to their scheme of insurances. In the United States fire insurance took an early start, since an agency for a fire office is said to have existed in Boston in 1721, though the earliest fire company organized here was the Philadelphia Contributionship of date 1752. 143 It is noteworthy that the first fire companies also undertook to extinguish fires. 144 The *« See Tabors' Three Systems of Life Insurance, 24; Richards on In- surance, ed. 1892, sees. 7, 9, p. 14. 14S Reynold's Life Insurance, ed. 1853, 2; Griswold's Fire Under- writers, ed. 1872, 19-48; 13 Encyclopedia Britannica, 161, et seq; Rich- ards on Insurance, ed. 1892. sec. 8; Walford's Insurance Guide, 2d ed., 3,13, 14; Hopkins' Marine Insurance, ed. 1867, 47, 48; Jacobs' Law Dictionary, title "Insurance, v." Ui 13 Encyclopedia Britannica, 166; Walford's Insurance Guide, 2d ed., 25. 29 PRELIMINARY CHAPTER. § VII above facts show that fire insurance, as a systemized plan, can- not date its growth from a date anterior to 1666 in England, nor does it appear to have become an organized system in this country prior to 1752. It is also said that there was no organ- ized system of insurances against losses of houses by fire in Eng- land, outside of London and Westminster, until the organiza- tion of the Sun Fire Office above mentioned, and that there were no insurances against losses of goods by fire prior to that time, and that the insurances issued by this office were contracts only between it and the persons insuring, the loss being con- fined to the contracting parties only. 144a § VII. Origin of Life Insurance. — It is asserted by some writers that life insurance had its beginning in the 16th century. Life insurance is said to claim a very ancient origin. Meredith 145 asserts that the Ordinance of "Wisbay mentions insurance upon life. As we have already stated, there is much disagreement as to the date of this Ordinance, it being placed anterior to 1075, and as late as 1320. It is said that about the time of the division of the Koman Empire, 146 a table was in existence by which annuities could be valued, 147 and this is noteworthy in this connection since annuities are based upon the principles of life contingency upon calculations made by means of the mortality tables, 148 al- though an annuity transaction is the very reverse of a life trans- action, it being to the interest of a life company that the in- sured should live, but contra in the case of an annuitant. 149 The Guidon de la Mer, of date somewhere between 1556 and 1584, mentions life assurance as a long-established and familiar custom in certain countries. Scaccia, in De Commerciis, in an 14te Lynch v. Dalzell, 3 Bro. Par. Cas. 497. u5 Eraerigon on Insurance, Meredith's ed. 1850, 160, n. b. 116 This date is variously fixed at A. D. 305, 364, 395. See Montes- quieu's Grandeur and Decline of the Romans, Baker's Notes, ed. 1882, 358, et seq., 368, et seq. ; Gibbon's Decline and Fall, vol. 2, 529, vol. 3, 127, 165; Smith's Gibbon, 98, c. 8; 14 American Cyclopedia, title "Rome," 408; 8 Chambers' Encyclopedia, title "Rome," 793. " 7 Wal ford's Insurance Guide, 2d ed., 15. 148 13 Encyclopedia Britannica, 161. 119 Walford's Insurance Guide, 2d ed., 25. § VII PRELIMINARY CHAPTER. 30 edition of 1620, which is not the earliest, refers extensively to the contract, and gives a form of policy then in use. France and several other countries prohibited insurances on lives. Al- though it was forbidden in France from an early period, and such assurances were void upon the proposition that "man can- not be estimated at a price," and that "the life of man is not an object of commerce, and it is odious that his death should form matter of mercantile speculation" ; and although such contracts were considered mere wagers by Emerigon, yet at Na- ples, Florence, and other places life assurances were permit- ted; and even in France "all navigators, passengers, and others" were permitted to insure the freedom of their persons; that is, the liberty of persons and not the persons were permitted to be insured by fixing in the policy a definite sum to be paid as a ransom, or to stipulate generally that the insurers should pro- cure the freedom of the person. It is also conjectured that insurance was employed during the Middle Ages in assuring the personal liberty of pilgrims to the Holy Land. However, insurance on life has been permitted in France since 1820. 150 It is unnecessary to pursue our investigations farther as to for- eign countries other than England, and there we find that Maylnes, 151 in the edition 1622, mentions assurance upon life However, the first life company had its birth in 1698 by the Mercers, as a widow's fund, an annuity scheme, and that this was quickly followed in 1699, when a "Society of Assurances for Widows and Orphans" was formed. 152 It is to the year 1706, though, that we must look for the first definite scheme 150 Emerigon on Insurance, Meredith's ed. 1850, 157, et seq., and notes a and b; Bliss on Life Insurance, ed. 1872, sees. 1, 2. Life assur- ances were forbidden in France by the Ordonnance of Louis XIV., of date 1081; in the Netherlands by the Ordonnance of Philip II. of 1570; by the civil statutes of Genoa, of 1588; by the Amsterdam Ordonnance of 1598, and by the Rotterdam Ordonnances of 1604 and 1635, Reynolds' Life Insurance, ed. 1853, 10; Walford's Insurance Guide, 2d ed., 22; Bunyon's Life Assurance, ed. 1854, 7. The last author says life assur- ance was not reintroduced in France till the latter part of the 18th cen- tury. 151 Maylnes' Lex Mercatoria, 149. 151 Bliss on Life Insurance, ed. 1872, sees. 1, 2; 13 Encyclopedia Bri- tannica, ISO, 182; Reynolds' Life Insurance, ed. 1853, 3, et seq; Walford's Insurance Guide, 2d ed., 24; 9 American Cyclopedia, 424, et seq. 31 PRELIMINARY CHAPTER. § VII of life assurance, which was that of the amicable company al- ready noted, which society changed its system in 1734, and again in 1807, which last lease of corporate life was based more upon the scientific principles of true insurance than it had be- fore possessed. It is probably upon the basis of the establish- ment of this company that Hopkins declares that life insurance did not takes its rise before the 18th century. The progressive step taken by the Amicable in 1807 was the rating of new mem- bers "according to age and other circumstances." This plan, however, had been anticipated by the Royal Exchange and London Assurance Companies, chartered in 1720; while the Equitable, started in 1762, is said to have "possessed from the outset all the essential features of a life assurance office." 153 In 1774, it having "been found by experience that the making insurances on lives or other events wherein the assured shall have no interest hath introduced a mischievous kind of gaming, for remedy whereof," etc., says the preamble, an act was passed in England, 104 prohibiting insurance on lives or any other event or events, wherein the person to be benefited should have no interest, "or by way of gaming or wagering." The act fur- ther provided that the name of the beneficiary should be in- serted in the policy. 155 In the United States the earliest corpo- ration was formed in Pennsylvania in 1769 for the benefit of families of Episcopal clergymen. 106 Reynolds, however, 157 says that life insurance was introduced here by a company formed in 1814, followed by another company in 1815, both of which added life to marine and fire risks, 158 and that it was 153 Bliss on Life Insurance, ed. 1872, sees. 1, 2; 13 Encyclopedia Bri- tannica, 169, 180, 182; Hopkins' Marine Insurance, ed. 1867, 32, 33, 47, 48; Richards on Insurance, ed. 1892, sec. 9; Reynolds' Life Insurance, ed. 1853, 2, 4, et seq ; 9 American Cyclopedia, 424; Walford's Insurance Guide, 2d ed., 24, 23; Jacobs' Law Dictionary, title "Insurance, v"; 33 Geo. HI., c. 14 (1793). 154 14 Geo. III., c. 48. 155 Life insurance statutes will be noted hereafter under their appro- priate heads. 156 9 American Cyclopedia, 424, et seq.; Richardson Insurance, ed. 1892, sec. 9. 157 Reynolds' Life Insurance, ed. 1853, 7, 8. 158 Viz.: The Dutchess County Insurance Company, chartered in 1814, and the Union Insurance Company in 1815 § IX PRELIMINARY CHAPTER. 32 not till 1818 that a corporation was formed in the United States having for its sole object the insurance of lives. 159 At the be- ginning of the present century but few cases of value on life insurance had been reported in the English books, 160 while the earliest life case in the United States was decided in Massa- chusetts. 161 Life assurance, therefore, did not assume any great importance either in a legal aspect or as a business until with- in a few years. In fact, it is asserted that its growth did not become marked in the United States till as late as 1843 or per- haps 1S58. 162 § VIII. Origin of Accident Insurance. — We have already noted under preceding sections cattle insurance, and that form of casualty insurance known as insuring the liberty of persons, but insurance which relates to the loss of life or limb, or other personal injury by accident, is of modern origin. Ac- cident insurance, in its original form, seems to have compre- hended railway accidents, only for which purpose a company was established in London in 1849, known as the Railway Pas- sengers' Assurance Company, but in 1856 it extended its plans to embrace accidents of all kinds, and the first American com- pany was said by a writer in 1873 to have been then only ten years old. 163 § IX. Origin of Guaranty — Fidelity Guaranty — Title Guaranty, etc. — Insurances. — These and kindred in- surances have become an important and useful branch of the 159 Viz.: The Massachusetts Hospital Life Company. 160 Jacobs' Law Dictionary, title "Insurance," which is apparently compiled from Justice Parks' work on Insurance, edition of 1802, notea only twelve cases, while Comyn's Digest, 4th edition, published in 1800, notes only four cases. In 1649 the case of Bendye v. Oyle, sty. 166, 172, was a life case, although no principle of life insurance was involved, it being only a question of prohibition to the court of commissioners. For insurance cases to 1795, see Beawes' Lex Mercatoria, 302, et seq. 161 Lord v. Dall, 12 Mass. 115. 162 9 American Cyclopedia, 424, et seq. 163 Bunyon's Life Assurance, 2ded., 100; 13 Encyclopedia Britannica, 161; 1 Am. & Eng. Ency. of Law, 87; Richards on Insurance, ed. 1892, sec. 9; Walford's Insurance Guide, 2d ed., 10, 11; 18t>4, 27 & 28 Vict., c. 125; 7 American Law Review, 585; Porter's Law of Insurance, 18S4,c. 24,431. 33 PRELIMINARY CHAPTER. § X system of insurance. The decisions, however, are compara- tively few. 164 § X. Origin of Other Insurances. — In England the earliest schemes of insurances covered almost every conceiv- able subject or contingency, 165 but the progress of modern in- surances and the safeguards thrown around them for the pro- tection of the public have done much to place insurance on a legitimate basis, and the necessities of business have given rise to the outgrowth of many branches of the system designed to cover special emergencies. In Michigan an act was passed in 1887 providing for the organization and regulation of log and timber insurance companies. Such insurances are intended to indemnify against the risk of lake and river navigation in the transporting and towing of such property. 166 The insurance laws of lSTew York provide generally for the organization of companies for insuring (1) the lives and health of persons, and for granting and disposing of annuities; (2) against in- jury, disablement, or death resulting from traveling or general accidents; (3) against accidents from employers; (4) guaranteeing fidelity of persons holding public or private places of trust; guaranteeing performance of contracts, bonds, or undertakings; (5) against loss by burglary or theft, or both; (6) against breakage of glass; (7) upon steam- boilers, pipes, etc., against explosion and accident and loss or damage to life or property resulting therefrom; (8) against any casualty which may lawfully be the subject of insurance. Such statutes also specially provide for the incorporation of life, health, and casualty insurance companies; fire and marine insurance corporations; life and casualty companies upon the co-operative or assessment plan, fraternal benefit societies, or- ders, or associations, corporations for insurance of domestic an- imals, and town and county co-operative insurance compa- nies. 167 164 9 Am. & Eng. Ency. of Law, 65; 13 Encyclopedia Britannica, 161; Eichards on Insurance, ed. 1892, sec. 10. 168 See Watford's Insurance Guide, 2d ed., 1-3, 24, et seq. 1M Act Mich., April 16, 1887; Acts, 1887, No. 73, p. 80. 167 Hamilton's Stat. Rev. Ins. Laws, N. Y. 1892; amended 1893 and 1894, being chapter 690, constituting chapter 38 of the general lawst Joyce, Vol. 1—3 TITLE II. GENERAL TERMS AND DEFINITIONS. (»5) TITLE II. GENERAL TERMS AND DEFINITIONS. CHAPTER I. TERMS AND DEFINITIONS. f 1. "Insured" and "assured" synonymous. § 2. Definition of insurance. § 3. Contract to indemnify assured for bank's default is contract of insurance. § 4. Sanitary inspection of buildings, etc., is not insurance. § 5. Definition of marine insurance. § 6. Definition of fire insurance. § 7. Definition of life insurance. § 8. Definition of accident insurance. § 9. Definition of casualty insurance. § 10. Definition of endowment insurance. § 11. Definition of tontine insurance. § 12. Definition of guarantee insurance. { 13. Definition of real estate and title insurance. § 1. " Insured " and "Assured " Synonymous. — Some writers have attempted to distinguish between the terms "in- sured" and "assured." 1 But an examination of the early Eng- lish cases and statutes does not discover any distinction between them as applied to the subject of insurances. 2 Lord Bacon 3 1 Babbage on Assurance of Lives; 13 Encyclopedia Britannica, 169. * See preamble, 43 Eliz., c. 12 (1601), which reads: Whereas, hereto- fore, "a'ssurers, " etc., "have sought to draw the parties assured to seek their moneys of every several assurer." See, also, Stat. 6 Geo. I., c. 18 (1719) ; Stat. 19 Geo. II., c. 37 (1746) ; Stat. 14 Geo. III., c. 48 (1774.) "Assurances" related formerly to the conveyance of property in Eng- land, as is evidenced by Sheppard's work entitled "The Touchstone of Common Assurances .... or conveyances of the Kingdom." So, in 1627, Charles I. introduced a project "for .... making and register- ing .... assurances." • Bacon's Abridgment, ed. 1778, 598, 599. (37) § 1 TERMS AND DEFINITIONS. 38 says this "kind of contract or dealing is commonly called 'pol- icy of assurance,' or 'insurance.' " 4 Mr. Hopkins asserts that their meaning is identical, and bases his statement on the der- ivation of the words. Other writers use the terms indiscrimi- nately. Mr. Justice Field, in the Connecticut Mutual Life In- surance Company v. Luchs, 5 declares that "there are undoubt- edly instances where this distinction between the terms 'assured' and 'insured' is observed, though we do not find any judicial consideration of it." In this case a policy was issued on L.'s application, by which the company agreed to insure the life of D., and to pay the money to the "assured" after due notice and proof of D.'s death, and it was decided that the term "assured" must be held as applicable to L., as being the party for whose benefit the insurance was intended, the court say- ing: "The application of either term to the party for whose benefit the insurance is effected or to the party whose life is insured has generally depended upon its collocation and context in the policy." 6 This case was expressly fol- 4 Hopkins' Marine Insurance, ed. 1867, 46. 6 108 U. S. 498, 504. 6 See, also, Cyrenius v. Mutual L. Ins. Co., 73 Hun (N. Y.), 365; 26 N. Y. Supp. 248; 55 N. Y. 897. In this case the court said : "It is to be observed that in the policy the amount is payable 'to the said assured, his executors, administrators, or assigns.' The question is, Does the term 'assured' refer to George A. Cyrenius, who is recited to have paid the consideration, or to Alvin Cyrenius, whose life was the subject of the insurance? In determining this question the application may properly be referred to. That was executed by both Alvin and George A., and on its face stated that it was the basis and a part of the contract. It is referred to in the policy as furnishing in part the consideration. The policy is stated to be issued upon the faith of the statements and decla- rations made in the application. Both are part of one transaction, and are to be read together in determining its character and effect. Read- ing the policy and application together, it appears that George A. Cyre- nius was the applicant for the insurance, and was the person for whose benefit it was to be effected. The policy recites that the money consid- eration is received from him, and in the complaint it is alleged that he paid it. Such being the case, according to the doctrine laid down in Smith v. ^EtnaLife Insurance Company, 5Lans. (N. Y. ) 545, the assured would be deemed to be George A. Cyrenius. A similar view is taken in Connecticut Mutual Life Insurance Company v. Luchs, 108 U. S. 498." See New York L. Ins. Co. v. Ireland (Tex. 1891), 21 Ins. L. J. 161; 17 S. W. Rep. 617. In Irving v. Manning, 4 H. L. Cas. 303, 307, in the 39 TERMS AND DEFINITIONS. § 1 lowed in Brockway v. Connecticut Mutual Life Insurance Company, 7 which latter case was based upon substantially the same material facts and precisely the same policy, the court holding that the same construction should be given the term "assured" as was given in Connecticut Mutual Life Insurance Company v. Luchs. 8 So in other cases this term has been held to mean the person for whose benefit the insurance was made, rather than the one upon whose life it depends. 9 On the other hand, in Campbell v. New England Mutual Life Insurance Company, 10 the policy was issued upon the life of A. to him, as "the assured," and the promise was to pay the sum insured to the assured, his executors, etc., for the benefit of his brother's wife; and the court declared that the plaintiff did not, by virtue of the clause declaring the policy to be for her benefit, become the assured; that she was merely the person designated by agreement of the parties to receive the proceeds of the policy on the death of the assured. There was, however, no discussion as to the meaning of these terms. 11 In a Massachusetts case 12 the words "insured" or "assured" in a mutual fire insurance policy were held to apply to the person who owned the prop- erty, applied for the insurance, paid the premium, and signed the deposit note, and not another to whom the money was pay- able in case of loss, although he might have a lease of the prem- ises. Again, where the loss was payable to the "assured" under an agreement to reinsure, it was decided that by "assured" was meant the company reinsured, and not the assured under the original policy. 13 The construction, however, does not appear opinion of the judges the words "assured" and "policy of assurance" are used. 7 29 Fed. Eep. 766. 8 108 U. S. 498, 504. • Hogle v. Guardian L. Ins. Co., 4 Abb. Pr., N. S. (N. Y.), 346, 348; iEtna L. Tns. Co. v. France, 94 U. S. 562. In this case the policy provided that the sum insured should be paid "to the said assured, her execu- tors," etc., and the policy was effected by a brother for a sister's ben- efit: Reynolds on Life Insurance, sec. 22. 10 98 Mass. 381, 389. 11 See, also, Hurlburt v. Pacific Ins. Co., 2 Sum. (C. C.) 471, 479. M Sanford v. Mechanics' Mut. F. Ins. Co., 12 Cush. (Mass.) 541. 1S Carrington v. Commercial Ins. Co., 1 Bosw. (N. Y.) 152. § 2 TERMS AND DEFINITIONS. 40 in any of these cases to have turned upon any distinction be- tween the terms themselves, but rather upon the relation which they sustained to the other words of the policy, and were con- strued as they were for the purpose of effectuating the intent of the parties to the contract, and determined that the loss was payable to the party whose interest was intended to be covered where the description might apply to more than one. We cannot discover that any distinction of practical value has ever been made by the text-writers or the courts in the use of these words, except in those cases where their meaning or application has depended upon the construction of some particular policy, and we shall therefore use the terms throughout this work as synonymous. 14 If parties agree to "reinsure" loss if any, "pay- able to the assured upon the same terms and conditions, and at same time as contained in the original policies," the word "assured" means the reinsured company, and not the assured in the original policies. 15 § 2. Definition of Insurance. — Insurance, strictly defined, is a contract whereby one for a consideration agrees to indemnify another for liability, damage, or loss by certain per- ils to which the subject may be exposed, but the contracts of life insurance and of accident insurance covering death are not strictly contracts of indemnity. 16 Emerigon 17 defines insur- ance as "a contract by which one promises indemnity for things transported by sea, deducting a price agreed upon between the assured, who makes or causes to be made the transport, and the insurer, who takes upon himself the risk and burdens himself with the event," and he adds: "This definition is taken from the Guidon la Mer, and is the doctrine of all our authors." He also says that it "is a contract by which one takes upon himself the peril which the property of others encounters upon the " See Bouvier's Law Dictionary; Bacon's Benefit Societies and Life Insurance, ed. 1888, sec. 19, p. 22; Id., ed. 1894, sec. 19, p. 27; 13 Am. & Eng. Ency. of Law, 630. 15 Carrington v. Commercial etc. Ins. Co., 1 Bosw. (N. Y.) 152. 18 See next chapter as to this distinction. 17 Emerigon on Insurance, Meredith's ed. 1850, c. i, p. 2. 41 TKKMS AND DEFINITIONS. § 2 sea." 18 This definition, of course, relates to marine insurance, as do the early definitions. 19 Insurance is now defined under 18 Id., 4. 19 Many other definitions of insurance have been given. Mr. May's (May on Insurance, 3d ed., sec. 1) definition of insurance is: "Aeon tract whereby one for a consideration undertakes to compensate another if he shall suffer loss," and he says it is substantially the definition given long ago by Koccus. This last definition is also given by Mr. Field : (Field on Damages, 2d ed., sec. 561.) Laurence, J., in Lucena v. Craw- ford, 5 Bos. & P. 269, 301, defines the contract as follows: "Insurance is a contract by which the one party, in consideration of a price paid to him adequate to the risk, becomes security to the other that he shall not 6uffer loss, damage, or prejudice by the happening of the perils specified to certain things which may be exposed to them." This definition is approved in Cummings v. Insurance Co., 55 N. H. 457, per Foster, C. J., although the court gives preference to the definition of Blackstone (2 Blackstone's Commentaries, 458; 2 Hamond's ed. 696; Chase's Black- stone, 567), which is this: "A policy of insurance is a contract between A and B, that upon A's paying a premium equivalent to the hazard run, B will indemnify or insure him against a particular event." The statute 43 Elizabeth, chapter 12, declares that a policy of assurance is when a merchant gives a consideration in money to others to assure his goods, ship, or other things by him adventured, upon such terms as may be agreed between the merchant and assurers. Mr. Phillips (Phillips on Insurance, 3d ed., sec. 1) says: "Insurance is a contract whereby, for a stipulated consideration, one party undertakes to indemnify the other against damage or loss on a certain subject by certain perils." While Mr. Marshall (Marshall on Insurance, ed. 1810, 1) defines the contract as one "whereby one party, in consideration of a stipulated sum, under- takes to indemnify the other against certain perils or risks to which he is exposed, or against the happening of some event." In Bensinhouse V. Seeley, 72 Mich. 603, 617, lhe court declares that insurance is "an agreement by which one party, for a consideration, promises to make a certain payment of money upon the destruction or injury of something in which the other party has an interest." In Cross v. National Fire Insurance Company, 132 N. Y. 133, it is said : "A contract of insurance is intended as an indemnity against an uncertain event, which, if it occurs, will cause loss to the assured." The definition given by Gray, J., in Com- monwealth v. Weatherbee, 105 Mass. 149, 160, has been cited with ap- proval in several cases (cited in State v. Farmers' Ben. Assn., 18 Neb. 276, 281; State ex rel. v. Yigilant Ins. Co., 30 Kan. 585, 587, per Brewer, J.; Supreme Corrmandery K. G. R. v. Ainsworth, 71 Ala. 436, 443, per Brickell, C. J.; State ex rel. v. Merchants' Exch. Mut. Ben. Soc, 72 Mo. 146, 159, per Napton, J.), and is as follows: "A con- tract of insurance is an agreement by which one party, for a.considera- tion (which is usually paid in money either in one sum or at different times during the continuance of the risk), promises to make a certain payment of money upon the destruction or injury of something in which g 3 TERMS AND DEFINITIONS. 42 the statutes in several states. 20 It is said in Funke v. Minnesota Farmers' Mutual Fire Insurance Association 21 that "the word 'insurance' in common speech and with propriety is used quite as of tqji in the sense of contract of insurance or act of insuring, as in that expressing the abstract idea of indemnity or security against loss." This construction was in a case where the condi- tion was against making any insurance in any other company. § 3. Contract to Indemnify " Assured " for Banks' Default is Contract of Insurance.— If a party designated as the assured be guaranteed under an instrument purporting to be a policy of "insurance" against the loss of a sum of money deposited in a bank, it is a contract of insurance. 22 In this case there was a contract under which "the Mortgage Insur- ance Corporation, Limited," guaranteed to a depositor in a cer- tain bank the payment of the amount deposited, should the the other party has an interest. In fire insurance and marine insur- ance the thing insured is property; in life or accident insurance it is the life or health of a person." Insurance is a contract of indemnity, in which the parties may stipulate for the manner and time in which that indemnity shall be made, and the law will enforce such contract: Commonwealth Ins. Co. v. Sennett, 37 Pa. St. 205; 78 Am. Dec. 418. See, also, Paterson v. Powell, 9 Bing. 320, per Tindal, J., and Mr. Ser- geant Coleridge's argument; Commonwealth v. Beneficial Assn., 137 Pa. St. 419 ; American L. of H. v. Larmour, 81 Tex. 71 ; Eapalje & Law- rence's Law Dictionary, 667; Smith's Common Law, 299; Bacon's Ab- ridgment, 4th ed., 598, 599. 20 Insurance is a contract whereby one undertakes to indemnify an- other against loss, damage, or liability arising from an unknown or con- tingent event: Deering's Annot. Civ. Code, Cal., sec. 2527; Dakota Codes (Levisee), p. 1027, sec. 1474; Georgia Code, 1882, sec. 2794; Supplement 1888, Pub. Stat. Mass., p. 511. Bee. 3, c. 214; Sanders' Annot. Civ. Code, Mon., sec. 3370; Kev. Code N. Dak., 1895, sec. 4441; Stat. Okla., 1890, sec. 3043, p. 608, c. 44. The insurance laws of New York provide for the incorporation of marine insurance companies "for the purpose of making insurance upon vessels, freights, goods, wares, merchandise, specie, bullion, jewels, profits, commissions, bank-notes, bills of exchange, and other evidences of debt, bottomry and respond- entia interests, and every insurance appertaining to or connected with marine risks and risks of transportation and navigation": Hamilton's Statutory Rev. of Insurance Laws, 1892; amended 1893-94, c. iv, sec. 150, p. 73. ' » 29 Minn. 347, 354, per Dickinson, J. » Dane v. Mortgage Ins. Corp., Ld. (Eng. C. A. 1894), 1 Q. B. Div. 64. 43 TERMS AND DEFINITIONS. § 5 bank fail to pay. The contract used these words: "This pol- icy of insurance," and the court in construing the same said: "It seems to me that the intention was this contract should be one of insurance, and that those who entered into it with the plaintiff should be in the position of underwriters. Here the policy recites that the plaintiff is the holder of a deposit receipt for one thousand pounds of the Commercial Bank of Australia, and is desirous of being 'insured' as thereinafter appearing, and the defendants thereby in effect promise to pay the assured the principal sum if the debtors have made default in so doing. "What the defendants have done, as it appears to me, is to insure payment of the deposit receipt according to the contract made between the depositor and the bank, i. e., that the bank will pay the amount at the date fixed by that contract for payment. The policy is not a guaranty that the bank will be able to pay. It is a positive, direct contract that if the bank does not pay a certain sum on a fixed day, the insurance company will pay that amount." 23 § 4. Sanitary Inspection of Buildings, etc., is not Insurance. — The inspection and certification as to the sanitary condition of buildings and premises is not insurance, within the Xew York statute. 24 § 5. Definition of 3Iarine Insurance. — Marine insurance is a contract whereby one for a consideration agrees to indemni- fy anotherfor loss or damage on a certain interest, subject to ma- rine risks by certain perils of the sea or specified casualties dur- ing a voyage or a fixed period. This branch of insurance includes risks of river navigation and of railway and other land carriage connected with sea transit. 25 Another definition is this : "Ma- 23 See Young v. Trustee Assets & Invest. Ins. Co., Ld. (Scot. C. S. 1894). 31 Scot. L R. 199. u People ex rel. v. Rosendale, Atty. Gen.(N. Y. 1894), 36 N. E. Rep. 806; reversing 25 N. Y. Supp. 769. The court said: "This is not insur- ance in any legal sense, but an entirely distinct kind of business not within the purview of the statute now under consideration. We there- fore hold that the declaration and charter of the proposed company were not in accordance with the requirements of law, and are not enti. tied to be filed in the office of the superintendent of insurance." 25 See Hopkins on Insurance, ed. 1867, 53. /> § 6 TERMS AND DEFINITIONS. 44 rine insurance is a contract of indemnity against all losses ac- cruing to the subject matter of the policy from certain perils during the adventure." 26 Marine insurance is also denned un- der several statutes. 27 § 6. Definition of Fire Insurance. — Fire insurance is a contract whereby one for a consideration agrees to indemnify another for loss or damage on property by fire. 28 « Lloyd v. Fleming, L. R. 7 Q. B. D. 299, 302, per Blackburn, J. Mr. Arnould (Arnould on Marine Insurance, 2d ed., 2) defines this con- tract as that "whereby one party, for a stipulated sum, undertakes to indemnify the other against loss arising from certain perils or sea risks to which his ship, merchandise, or other interest may be exposed dur- ing a certain voyage or a certain period of time." Mr. Phillips (Phillips on Insurance, 1) says: "Marine insurance is a contract whereby, for a consideration stipulated to be paid by one interested in a ship, freight, or cargo subject to marine risks, another undertakes to indemnify him against some or all those risks during a certain period or voyage." An- other definition, given by Mr. Marshall (Marshall on Insurance, ed. 1810, 2), is as follows: "Marine insurance is that which is applied to maritime commerce, and is made for the protection of persons having an interest in ships or goods on board from the loss or damage which may happen to them from the perils of the sea during a certain voyage or a fixed period of time." While Chancellor Kent (3 Kent's Commen- taries, 13th ed., 25) defines marine insurance as "a contract whereby one party, for a stipulated premium, undertakes to indemnify the other against certain perils or sea risks to which his ship, freight, and cargo, or some of them, may be exposed during a certain voyage or for a fixed period of time." This is the same definition given by Mr. Field in his work on Damages, second edition, section 562. Mr. Duer's definition (1 Duer on Insurance, ed. 1845, 1) is very brief, being this: "Marine insurance is a contract of indemnity against the perils of the sea. " For other definitions, see Lloyd v. Fleming, L. E. 7 Q. B. 299, 302; 2 Par- sons on Contracts, 7th ed., 350; Rapalje & Lawrence's Law Dictionary, 668; 13 Encyclopedia Britannica, 184; Bacon's Abridgment, 4th ed. 598, 599. 27 Sea insurance is defined in England under Stamp Acts: 30 Vict., c. 23, sec. 4; 47 & 48 Vict., c. 62, sec. 8. Marine insurance is an insur- ance against risks connected with navigation, to which a ship, cargo, freightage, profits, or other insurable interest in movable property may be exposed during a certain voyage or a fixed period of time: Deering's Annot. Civ. Code, Cal., sec. 2655; Lester, Rowell & Hill's Ga. Code (1882), sec. 2824; Levisee's Dak. Code, sec. 1563; Annot. Code, Mon., 1895, sec. 3540; Rev. Code, N. Dak., 1895, etc. 4537. 28 The insurance laws of New York provide for the incorporation of fire insurance companies, "for the purpose of making insurances on dwelling-houses, stores, and all kinds of buildings and household furni- 45 TERMS AND DEFINITIONS. § 8 § 7. Definition of Life Insurance. — Life insurance is a contract dependent upon human life, whereby one for a con- sideration agrees to pay another a certain sum of money upon the happening of a given contingency, or upon the termination of a specified period. 29 § 8. Definition of Accident Insurance. — Accident in- surance is a contract whereby one for a consideration agrees either (1) to indemnify another against personal injury result- ing from accident, or (2) to pay another a certain sum of money in case of death caused by accident. It is said that accident insurance is intended to in- demnify for injury resulting from accident or to com- pensate by payment of a fixed sum where death results to the insured in consequence of accident, and that the contract ture and other property against loss or damage by fire, lightning, wind, storm, or tornadoes, and upon vessels, boats, cargoes, goods, merchan- dise, freights, and other property against loss or damage by all or any of the risks of lake, river, canal, and inland navigation and trans- portation : Hamilton's Statutory Revision of Insurance Laws of New York, 1892; amended 1893-94, art. iii, sec. 110, p. 52; and 6ee, also, Lester, Rowell & Hill's Ga. Code, 1882, sec. 2794. It has also been defined as a contract by which the insurer undertakes in considera- tion of the premium to indemnify the insured against all losses which he may sustain in his house, goods, or merchandise by fire within the time limited in the policy: 11 Petersdorff's Abridgment, 9, note "Insurance." A recent definition is as follows: "Fire insurance is a contract to indemnify, in whole or part, one having an insurable inter- est in property from loss or damage caused by fire to the property in- sured": Sharp's Lectures on Fire Insurance, 1. Another author says: "Insurance against fire is a contract to indemnify the insured for loss or damage to his property occasioned by that element during a specified period" : Flanders on Fire Insurance, 1, 17. And the court, in Johannes v. Phoenix Insurance Company, 66 Wis. 50, 56, 57 Am. Rep. 248, says: "By such contract the insurer agrees to compensate the iusured for loss by fire of certain property for a given time." For other definitions, see Wood on Fire Insurance, 2d ed., p. 4; 2 Parsons on Contracts, 7th ed., 418; 7 Am. & Eng. Ency. of Law, 1002: Wilson v. Hill, 3 Met. (Mass.) 66, 68; 2 Marshall on Insurance, ed. 1810, *784. 39 State ex rel. Clapp v. Federal Invest. Co., 48 Minn. 110; 21 Ins. L. J. 226; 50 N. W. Rep. 1028; 24 N. J. L. 576, 585; and see sec. 24, herein; Lester, Rowell & Hill's Ga. Code, 1882, sec. 2818; Supple- ment 1888, Pub. Stat. Mass., pp. 291, 292, c. 183, sec. 1. In an Eng- lish case it is said life insurance "is simply a contract that on the consideration of a certain annual payment the company will pay at a K 8 TERMS AND DEFINITIONS. 46 closely resembles that of life insurance. 30 It is also declared by the court, in Healey v. Mutual Accident Association, 31 that 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 post- poned payment. Whatever event may happen meanwhile is a matter of indifference to the company. They do not found their calculations on that, but simply upon the probabilities of human life, and they get paid the full value of that calculation": Law v. London Indis. L. Pol. Co., 1 Kay & J. 229, per Wood, V. C. So in Fryer v. Moreland, L. R. 3 Ch. 675, 683, Jessel, M. R., in construing the Succession Duty Act (16 & 17 Vict., c. 51), and the meaning of "policy of insurance on the life," etc., says those words mean "a contract, no doubt, for money. It is a purchase of a reversionary sum in consideration of a present payment of money, or, as is generally the case, on the payment of an annuity during the life of the person insuring" ; and also says it is not a dispo- sition of property at all, as "a mere covenant to pay money is not a dis- position of property in the ordinary sense. The insurance company does not die, and therefore a covenant to pay money on the death of some otner person is a mere contract to pay money. " In Bunyon on Life Insurance, ed. 1868, 1, cited in State ex rel. v. Mechanics' Exchange Mut. Ben. Soc, 72 Mo. 146, 159, the contract is "defined to be that in which one party agrees to pay a given sum upon the happening of a par ticular event contingent upon the duration of human life, in considera- tion of the immediate payment of a smaller sum or certain equivalent periodical payments by another." Mr. Marshall (2 Marshall on Insur- ance, ed. 1810, 766, says: "The insurance of a life is a contract whereby the insurer, in consideration of a certain premium, either in a gross sum or periodical payments, undertakes to pay the person for whose benefit the insurance is made a stipulated sum or an annuity equivalent upon the death of the person whose life is insured, whenever this shall hap- pen, if the insurance be for the whole life, or, in case this shall happen within a certain period, if the insurance be for a limited time." For other definitions, see Briggs v. McCullough, 36 Cal. 550; Petersdorff's Abridgment, title "Insurance," 16; St. John v. American etc. Ins. Co., 13 N. Y. 31, 38; 64 Am. Dec. 529; Mutual L. Ins. Co. v. Allen, 138 Mass. 27; 52 Am. Rep. 246, 247; Dalby v. India etc. Assur. Co., 15 Com. B. 364, per Parke, B. ; Bliss on Life Insurance, ed. 1872, sec. 3; see Cooke on Life Insurance, ed. 1891, sec. 1. "A contract by which the insurer, in consideration of a certain premium, either in a gross Bum or by annual payments, undertakes to pay the person for whose benefit the insurance is made a certain sum of money or annuity on the death of the person whose life is insured": 1 Smith's Mercantile Law, Macdonell & Humphrey's ed. 1890, 491. In this connection it may be stated that under the act 55 George III., chapter 184, an insurance on the lives of cattle is held an insurance on lives: Attorney General v. Cleobury, 18 L. J. Ex. 395; 4 Ex. 65. 30 7 American Law Review, 585, 587. 41 133 111. 556, 560; 23 Am. St. Rep. 637. 47 TERMS AND DEFINITIONS. § 10 "a policy of accidental insurance is issued and accepted for the purpose of furnishing indemnity against accidents and death caused by accidental means." 32 Under the Massachusetts act of 1887 ^ accident insurance policies include "horse or vehicle policies," "general liability policies," "outside liability pol- icies," and "elevator policies," all being intended to cover acci- dental injuries to persons arising from different causes, as spec- ified within the policy classification, and the issuance of said policies is not carrying on more than "one class or kind of § 9. Definition of Casualty Insurance. — Casualty insurance has been defined as an insurance against loss through accidents or casualties resulting in bodily injury or death. 35 In a case decided in Massachusetts a distinction is made by the court between "accident" and "casualty" insurance, it being said that the "distinguishing feature of what is known in our legislation as 'accident insurance' is that it indemnifies against the effects of accidents resulting in bodily injury or death. Its field is not to insure against loss or damage to property, al- though occasioned by accident. So far as that class of insur- ance has been developed it has been with reference to boilers, plate-glass, and perhaps to domestic animals and injuries to property by street-cars, and is known as 'casualty insurance.' " 36 § 10. Definition of Endowment Insurance. — Endowment insurance is, in general, a .contract to pay assured a specified sum of money at the termination of a certain designated period, if he is then living, but to a person named if assured dies be- 32 See Employers' L. A. Corp., Lino., v. Merrill, 155 Mass. 404; 29 N. E. Rep. 529; Black's Law Dictionary, 632; Rapalje & Lawrence's Insurance Law Dictionary, 668; Bunyon on Insurance, p. 100. 33 C. 214, sec. 29, cl. 5. u Employers' L. A. Corp., Lim., v. Merrill, 155 Mass. 404; 29 N. E. Rep. 529. 35 State ex rel. Clapp v. Federal Invest. Co., 48 Minn. 110; 5Q N. W. Rep. 1028; 21 Ins. L. J. 226. 36 Employers' L. A. Corp., Lim., v. Merrill, 155 Mass. 404; 29 N. E. Rep. 529. "Casualty insurance" defined, Supplement 1888, Pub. tetat. Mass., c. 183, pp. 291, 292. £ 11 TERMS AND DEFINITIONS. 48 fore the specified time. 37 There are, however, several forms of endowment policies, or rather, plans of endowment insurance. 38 § 11. Definition of Tontine Insurance. — Tontine in- surance, strictly so called, derives its name from Tonti, an Italian, to whom its invention is accredited. It is based upon survivorship among a number who share an annuity, or rather participate in an apportionment of the profits upon the lapse of certain intervals, and the sum representing the share of one deceased is enjoyed by those who survive to this extent, that the profits to be apportioned among the survivors must, theo- retically at least, increase as the deaths increase, until final divis- ion made among the survivors, or the last survivor may take the whole according as the terms of the agreement may provide. In this, as in other kinds of insurances, several plans have been devised which differ in a greater or less degree from "tontine" insurance strictly so called. 39 An insurance company which by » 7 State ex rel. Clapp v. Federal Invest. Co., 48 Minn. 110; 50 N. W. Rep. 1028; 21 Ins. L. J. 226. 38 As to reserve dividend plan of W. P. Stewart, see Fuller v. Metro- politan L. Ins.Co., 37 Fed. Rep. 163. 39 See Pierce v. Equitable L. Assur. Soc, 145 Mass. 56; 12 N. E. Rep. 858; 1 Am. St. Rep. 433; per Devens, J.; Uhlman v. New York L. Ins. Co., 109 N. Y. 421, 660; 17 N. E. Rep. 363; 4 Am. St. Rep. 482; 2 Abb. Law Diet. 572. "Besides the provision for payment by the in- sured on the happening of the event on which the liability of the in- surer becomes consummated, provision is sometimes made for appropria- tion for the benefit of the insured of dividends or profits from the busi- ness conducted by the insurer. This is commonly done in what is known as a 'tontine policy,' wherein provision is made for the distribu- tion of such profits at the expiration of a specified period": Cooke on Life Insurance, ed. 1891, 200, 201, sec. 110. "A species of life annuity propounded by Lorenzo Tonti, about 1650, as a mode by which govern- ments might obtain loans. The general idea is that property is loaned, owned, or invested for the benefit of a certain number of persons who at first receive its income, the share of a deceased member increasing the sum divisible among the survivors; the last survivor taking the whole income or principal, as the case may be": Anderson's Dictionary of Law, 1039, title "Tontine." "A life annuity or a loan raised on life annuities with benefit of survivorship": 2 Rapalje & Lawrence's Law Dictionary, 1280, title "Tontine": Wharton's Law Lexicon, 826, title "Tontine. " "A species of association or partnership formed among per- sons who are in receipt of perpetual or life annuities, with the agree- ment that the shares or annuities of those who die shall accrue to the 6urvivors": Black's Law Dictionary, 1178, title "Tontine." 49 TERMS AND DEFINITIONS. § 11 a policy agrees that tlie surplus or profits derived from policies on the tontine savings fund assurance plan, that shall cease to be in force before the completion of their tontine dividend pe- riods, shall be apportioned equitably among such policies as shall complete their tontine dividend periods, does not hold such surplus or profits as a trust. The amount to be appor- tioned is not a dividend in the limited sense in which that word is used in its application of dividends to stockholders. The as- sured is not a member of the corporation, but its creditor who has contracted with it. At the end of the fixed period, having complied with the contract on his own behalf, and made the payments required, he is entitled to have apportioned to him his share of a certain fund to be computed. This share, or its equivalent in value, is the assured's own property. 40 In Bo- gardus v. Xew York Life Insurance Company 41 the policy was on the tontine or "ten-year dividend system"; annual pre- miums were to be paid each year for ten years policy, to be voided in case of default, dividends to be allowed assured only in case he survived the ten-year dividend period, the policy being then in force. Aside from the provision for payment of amount at death, it was stipulated, in case of surviving the period specified and the policy remained in force, that there should be a payment in cash or annuity bonds of a proportion- ate share of dividends, accretions, etc., from a fund to be cre- ated by a certain class of policy holders, consisting of those effecting insurance on the same plan in the same year, and that the surplus and profits from certain funds of that class should be equitably apportioned among survivors of that class holding policies, and it was held that the policy did not require a separate investment of the funds of that class to* which the policy belonged, and that the consent of assured to placing of dividends in a reserve fund did not extend its obligations in this respect. The court said: "]^o express obligations are assumed by the defendant, either in the policy or by the application, with reference to the management or investment of the funds in question, and the tontine plan is referred to as a known and 40 Pierce v. Equitable L. Assur. Co., 145 Mass. 56, 61, 62, per Dev- ens, J. ; 1 Am. St. Eep. 433. « 101 N. Y. 328, per Ruger, C. J. Joyce, Vol. 1—4 § 12 TERMS AND DEFINITIONS. 50 understood system of insurance pursued by all life com- panies of similar character to determine in a certain contin- gency the extent of the company's liability to a special class of its policy holders. It contemplates the union of the interests of a large number of persons, and the administration of a fund for their mutual benefit, and from its very nature is incapable of being molded and managed to meet the special require- ments of particular individuals. Upon the accession of every person to this class, he becomes interested in the contributions of every other member, and neither of them can afterward withdraw his contribution without injury to the rights of all others interested in the fund We therefore think that the use of these moneys in connection with its other funds, and their investment and management according to the mode which in the judgment of the defendant was best adapted to promote the interests of all of its policy holders, was entirely legitimate, and in accordance with the true meaning of the contract. The tontine plan undoubtedly contemplated such action on the part of the insurers as would enable them at the expiration of the ten-year dividend period to determine the ag- gregate of such dividends, accretions, and interest, and to di- vide the same among the survivors of the class to which they belonged according to their respective rights therein; but it seems to us that it does not involve the necessity of keeping separate from its other funds either the premiums paid by such class or their profits or accumulations, or the duty of separately handling, investing, or accumulating such funds." 42 § 12. Definition of Guaranty Insurance. — Guar- anty insurance is a contract whereby one for a consideration agrees to indemnify another against loss arising from the want of integrity, fidelity, or insolvency of employees and persons holding positions of trust, against insolvency of debtors, losses in trade, losses from nonpayment of notes and other evidences of indebtedness, or against other breaches of contract. It in- cludes other forms of insurance which are specifically classified, " As to uncertainty of amount to be received, see Avery v. Equitable L. Assur. Soc, 117 N. Y. 459, per Gray, J. ; Uhlnian v. New York L. Ins. Co., 109 N. Y. 430, 431, per Peckham, J. ; 4 Am. St. Kep. 482. 51 TERMS AND DEFINITIONS. § 13 such as "fidelity guaranty," "credit guaranty," etc. 43 Policies on life insurance and ship policies are contracts for securing against losses to be incurred under circumstances entirely dif- ferent from the loss contemplated under guaranty polices. 44 § 13. Real Estate and Title Insurance. — Title guaranty insurance is a contract whereby one agrees for a con- sideration to guarantee or protect another's title to real estate. Mr. Richards 45 says: "Their policies obligate the insurers to do three things for the protection of the insured: 1. To defend suits against the title at the expense of the insurers; 2. To pay judgments rendered; 3. If the insured contracts to sell or loan, and the title is refused, to test its validity in court at the expense of the insurer, and, if defeated, to pay damages and also protect the property where the insured has contracted to sell it." The insurance laws of New York provide for organiz- ation of title and credit guaranty companies "for either one or the other of the following purposes: 1. To examine titles to real property and chattels real, to procure and furnish informa- tion in relation thereto, make and guarantee the correctness of searches for all instruments, liens, or changes affecting the same; and to guarantee and insure bonds and mortgages, and the owners of real property and chattels real, and others inter- ested therein, against loss by reason of defective titles thereto and other encumbrances thereon; .... 2. To guarantee and indemnify merchants, traders, and those engaged in busi- ness, and giving credit for loss and damage by reason of giving and extending credit to their customers and those dealing with them." 46 As to the nature of this contract it is said in Minne- 43 See Bunyon on Insurance, 107; 9 Am. & Eng. Ency. of Law, 65; 13 Encyclopedia Britannica, 161. The statutes, Georgia Laws, 1887, No. 360, page 108, regulate and define fidelity insurances. See second note under next section. ** Towle v. National Guard Ins. Co., 7 Jur., N. S., 618, 623. 45 Eichards on Insurance, ed. 1892, sec. 10, p. 14. 46 Hamilton's Statutory Revision of Insurance Laws of New York, 1892, amended 1893-94, art. v. sec. 170, p. 81. See Sandel & Hill's Ark. Dig., Stat. 1894, sees. 4145-64, guaranty and surety companies; Del. Code, 1852, as amended, 1893, p. 585 (c. 694, vol. 18), fidelity insurance and corporate suretyship. § 13 TERMS AND DEFINITIONS. 52 sota, Title Insurance and Trust Company v. Drexel 47 that "the insurer is not a surety. The defendant company for an ade- quate consideration agreed to 'indemnify, keep harmless, and insure, Drexel, the mortgagee, 'from all loss or damage not ex- ceeding fifty-five thousand dollars,' the amount of the mort- gage debt, which he or his assigns might sustain by reason of defects in the title to the mortgaged premises, or by reason of liens or encumbrances thereon existing at the date of the pol- icy. The contract is plain and explicit on this point. In a word, it is a guaranty that the mortgagee should not suffer any loss or damage by reason of defects in the title to the property, or liens or encumbrances thereon existing at the date of the policy, under this guaranty, if the mortgaged property with a clear title and free from encumbrances was worth the amount of the mortgage . debt, the mortgagee could confidently rely upon the sufficiency of his security." « 70 Fed. Rep. 194, 198 (C. C. App., 8th Ct., 1895), per Caldwell, J. Laws applicable to sureties do not apply to guaranty and surety com- panies to indemnify against losses by bad debts: Tebbets v. Mercantile etc. Co., 38 U. S. App. 431; 73 Fed. Rep. 95; 19 U. S. (O. C. App.) 281. TITLE III. THE CONTKACT AND POLICY. (53) TITLE III. CONTRACT AND POLICY. CHAPTER II. NATURE OF THE CONTRACT. | 16. Risk is an essential element. § 17. Division and distribution of loss are essential. § 18. Insurance is an aleatory contract. S 19. Insurance is a voluntary contract. { 20. Insurance is an executory contract. § 21. The contract is synallagmatic. § 22. Insurance is a conditional contract. § 2b. Insurance is a personal contract. § 24. Insurance other than that of life and accident Is a contract of indemnity. § 25. Indemnity stipulation as to value in policy. § 26. Life insurance is not a contract of indemnity. § 27. Accident insurance is not a contract of indemnity In all cases. § 28. Reinsurance is a contract of indemnity. § 29. Other incidents of the doctrine of indemnity. § 16. Risk is an Essential Element. — There must be a risk, since that is an essential element. It is of the very essence of insurance and forms the principal foundation of the contract. In other words, the insurer takes upon himself the peril which the property or interest of others is liable to en- counter. The very life of the contract involves the presump- tion that the thing is or will be exposed to some danger. But the risk should be of a real loss which neither the insurer nor insured has the power to avert or hasten. 1 If the term "risk" 1 See Emerigon on Insurance t Meredith's ed. 1850, c. i, pp. 4, 5; Hopkins' Marine Insurance, ed. 1867, 53,55; 13 Encyclopedia Britannica, 161; Nve v. Grand Lodge, 9 Ind. App. 140, 141, per Lotz, J. (55) § 17 CONTRACT AND POLICY. 56 is used in a contract of insurance or reinsurance, the court must in case of doubt determine what the parties intended, having in view the whole contract, and the sense in which the word is used and the precise contract relations sustained by the parties to each other is important. The word, as ordinarily used, de- scribes the liability assumed as specified on the face of the pol- icy. 2 This risk or cause of loss against which it is intended to indemnify the assured 3 may, as a general rule, be any uncertain event which may in anywise be of disadvantage to the party insured, 4 provided always that said party has an insurable in- terest which is exposed thereto, or which may suffer damage or loss therefrom, and provided further that the risk is a legal one not in contravention of the provisions or obvious policy of the law, nor an infringement upon the rights of persons not parties to the contract, and that it does not arise from the fraud of the insured. 5 These points will, however, be fully considered un- der insurable interest, void and illegal insurances, wager poli- cies, description of subject matter and property, risk and loss, etc. § 17. Distribution of Loss an Essential Element. — Another most important principle underlying the contract of insurance is that which minimizes the loss to the individual by a division and distribution of liability among a large number of persons who are subjected to like risks, and it follows as a necessary corollary, that the peril ought to happen only to a comparatively small number. This principle of division and distribution of loss is fully recognized by the text-writers and courts as fundamental. Thus, Maylnes writes: "This most laudable custom of assurances whereby the danger and adven- 1 Continental Ins. Co. v. .Etna Ins. Co., 138 N. Y. 16, 20; 33 N. E. Rep. 724, per O'Brien, J., reversing, as to the construction of the word "risk" under the facts of the case: 17 N. Y. Supp. 106. See, also, Pitcher v. Hennessey, 48 N. Y. 415, where "risks of navigation" were held broader than "perils of navigation." 3 1 Phillips on Insurance, 3d ed., sec. 905. But see definition of the word "peril" in Marshall on Insurance, ed. 1810, 2, note a, which is: "In insurance the word 'peril' generally signifies the happening of the event or misfortune of which danger was apprehended." 4 Lucena v. Crawford, 5 Bos. & P. 301, per Lawrence, J. 6 See 1 Phillips on Insurance, 3d ed., 905, et seq. 57 CONTRACT AND POLICY. § 18 ture of goods is divided, repaired, and borne by many persons consenting and agreed upon between them what part everie man will be contented to assure, make goode, and pay if any loss or casualtie should happen to the goods adventured, or to be adventured, at the seas as also by land, to the end that mer- chants might enlarge and augment their tram" eke and com- merce, and not adventure all in Bottome to their loss and over- throw, but that the same might be repaired and answered for by many." 6 Substantially the same language was used in 1601, in the preamble to the Statute 43 Elizabeth, chapter 12, and also by Lord Bacon in his Abridgment. 7 So Willes, Lord Chief Justice, in Pole v. Fitzgerald, 8 says: "Insurances was at first invented for the benefit of trade, that if a mer- chant miscarried in one voyage he might not be ruined forever, but by giving premiums to other persons to insure either his ship or his goods, the loss, if it happened, might be divided amongst them, and so the merchant might be enabled to try his fortune in another voyage." Again, the court, in !N~ew York Life Insurance Company v. Statham, 9 declares that "the busi- ness of insurance is founded on the law of average, that of life insurance eminently so By spreading their risks over a large number of cases the companies calculate on this average with reasonable certainty and safety." And the court also says: "The insured parties are associates in a great scheme. This associated relation exists whether the company 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 average which underlies the whole business. An essential fea- ture of this scheme is the mathematical calculations referred to on which the premiums and amounts assured are based." 10 § 18. Insurance is an Aleatory Contract. — The deri- vation of this word embodies the idea of chance or uncertainty, and the contract is aleatory in the sense that it is dependent upon some contingent event : That the obligation of the insurer 6 Maylnes' Lex Mereatoria, ed. 1622, 146. 1 Vol. 3, 4th ed., 598, 599. 8 Willes. 641, 645. » 93 U. S. 24, 31, 32. w Id. 31. §§ 19, 20 CONTRACT AND POLICY. 58 is subordinated to certain perils. As we have already stated, 11 risk is an essential element of insurance, and neither the assurer nor insured can know whether the event will or will not hap- pen, nor can either control the event to avert or hasten it. Therefore, since insurance depends upon some contingent event against the occurrence of which the contract is intended to provide, although it may never occur, it is an aleatory con- tract. It must be understood, however, that true insurance is always concerned with real value ; it is not merely speculative, as in case of wager policies, but is intended to protect actual interests from possible losses. It is based upon certain facts and data required to be made known as far as ascertainable. It does not proceed upon concealed facts, since the chance or probability of the uncertain event happening or of the peril must be estimated beforehand with an approximate degree of certainty. 12 § 19. Insurance is a Voluntary Contract. — Insur- ance is a voluntary contract, and insurers have the right to impose conditions therein. If the assured objects to them, he is not bound to close the contract, but if he voluntarily enters therein, he will be bound thereby. 13 This of course relates to valid conditions, and those not prohibited by positive law nor against public policy. § 20. Insurance is an Executory Contract. — The con- tract of insurance is an executory contract in the sense that it i 3 pyprvpted "hv the payment of the sum insured on a loss. 14 It is said in a New York case that "the contract (life) was not as to all its stipulations and as to both parties executory. It was executed by the plaintiff by the payment of the annual pre- miums from 1849 to and including 1861, while it was wholly 11 Sec. 16. " See Emerigon on Insurance, Meredith's ed. 1850, c. i, sec. 3, pp. 11,13; 1 May on Insurance, 3d ed., sec. 5; Hopkins' Marine Insur- ance, ed. 1867, 53, 58, 59, 299. » Keim v. Home Mut. F. Ins. Co., 42 Mo. 38, 43; 97 Am. Dec. 291. 11 Mutual L. Ins. Co. v. Waaer, 27 Barb. (N. Y.) 354, 367. See New York L. Ins. Co. v. Statham, 93 U. S. 24. 59 CONTRACT AND POLICY. §§ 21, 22 executory on the part of defendant, its undertaking being to pay the amount specified upon the death of the insured." 15 § 21. The Contract is Synallagmatic. — Inasmuch the contract of insurance is a mutual agreement imposing cer- tain reciprocal obligations upon the insurer and insured, it may be said to be synallagmatic whether the subject matter be of a marine character or a building or the life or health of a person, or any other insurable interest. "Pothier says that 'the contract of insurance is synallagmatic, for it produces reciprocal obliga- tions. The insurer enters into an obligation to the assured to guarantee and indemnify him against the perils of the sea, and the assured binds himself in turn to the insurer to pay him the premium agreed upon.' " 16 .§ 22. Insurance is a Conditional Contract. — Insurance is a conditional contract in the sense that the contract may never attach even though the terms be agreed upon, as where the payment of the premium is a condition precedent or where some act is required to be performed by the assured in relation to the risk before the contract is completed. It is also condi- tional in the sense that the insurer is not obligated to pay unless the loss arises from the specified perils or where no risk attaches and no premium is due. 17 If the contract stipulates that in certain contingencies it shall be void and insures "against all di rect loss or damage by fire except as hereinafter provided," it is a conditional contract. It is also conditional when it insures against loss to property "while located and contained as described here- in and not elsewhere." 18 The court said in this case: "(a) The contract is declared upon as absolute and unconditional ; it is al- leged that by it the defendant did insure the plaintiff against all direct loss or damage by fire upon or to the property, etc. The contract in proof insures 'against all direct loss or damage by fire 15 Cohen v. Mutual L. Ins. Co., 50 N. Y. 619, per Allen, J. 16 Emerigon on Insurance, Meredith's ed. 1850, c. i, sec. 2, pp. 5. 6. 17 Emerigon on Insurance, Meredith's ed. 1850, c. i, sec. 3, p. 11; 1 May on Insurance, 3u ed., sec. 4; McKee v. Metropolitan L. Ins. Co.» 25 Hun. (N. Y.) 583, 584; Tyrie v. Fletcher, Cowp. 666, 668, per Lord Mansfield; Stevenson v. Snow, 3 Burr. 12.37. 16 Cool edge v. Continental Ins. Co., 67 Vt. 14; 30 Atl. Rep. 798. § 23 CONTRACT AND POLICY. 60 except as hereinafter provided/ and there are subsequent stip- ulations which provide that in certain contingencies the nolicy shall be void, such as loss caused by riot, etc. By the very terms of the contract it is conditional; it insures the plaintiff only in case the loss does not occur from the excepted causes. A contract to insure without limitation is not a contract to in- sure only in certain cases, (b) In another respect, the contract in proof is a conditional or qualified one. The declaration is upon a contract to insure the tinshop building and its contents. The company would be liable if the property burned, situated as described, when the policy was issued, and it might be liable in case of loss if the building was located elsewhere and the personal property contained in some other building. 19 The contract in proof insured the property 'while located and con- tained as described herein and not elsewhere.' This latter clause qualifies the contract, making it conditional." 20 . § 23. Insurance is a Personal Contract. — It is well settled that insurance is a personal contract, whatever the subject matter of the insurance may be. 21 It is a contract by which the insurer undertakes to indemnify or pay money to the insured in the manner and subject to the conditions agreed upon. This liability of the insurer to pay money is not altered by the fact that such money may be expended in rebuilding under certain circumstances, as in a fire policy, nor that it may be paid out in defending suits against the title, or in test- ing its validity or in paying judgments rendered, as in case of title insurance. It is nevertheless a contract either to indem- 19 Citing Pelly v. Governer, 1 Burr. 341; Lyons v. Providence etc. Ins. Co., 14 R. I. 109. 20 Id.,27, 28, perTaft, J. 21 Carpenter v. Washington F. Ins. Co., 16 Pet. (U. S.) 495, 504, per Story, J.; Columbia Ins. Co. v. Laurence, 10 Pet. (U. S.) 507, 512; Disbrow v. Jones Harr. (Mich.) 48; Adams v. Rockingham Ins. Co., 29 Me. 292, 294, per Tenney, J.; .Etna F. Ins. Co. v. Tyler, 16 Wend. (N. Y.) 385, 397; 30 Am. Dec. 90; Lett v. Guardian F. Ins. Co. 125 N. Y. 82, 86. per Gray, J. ; Raynor v. Preston, L. R. 18 Ch. D. 1, 10, per Brett, L. J. ; McDonald v. Black, 20 Ohio, 185, 192; 55 Am. Dec. 448; Wyman v. Prosser, 36 Barb. (N. Y.) 368; Wyman v. Wyman, 26 N. Y. 253. 61 CONTRACT AND POLICY. § 23 nif j the assured or to pay him a certain sum of money in case a certain casualty happens. 22 This obligation does not run with the property whether it be real estate or personalty, neither does it pass with the title unless assigned with the con- sent of the insurer, 23 or unless by extraordinary and express stipulation of the parties it is made to run with the subject mat- ter, 24 or unless it be so framed as to be inseparably attached to the property and follow the successive owners during the con- tinuance of the risk, such successive owners being in turn the parties really assured, as where the insurance is onaccount of the "owners," or for whom it may concern, or where the loss hap- pens to be payable to "bearer," although this latter form rarely exists. 25 So where one insured real property, the insurance payable to himself, his executors, administrators, and assigns, the interest in the policy was held to pass to his executors in preference to his heirs. 20 The distinction which underlies this construction is that the thing is not insured but the right ap- pertains to the person since the contract is not in its nature an incident to the property. The term formerly used was aversio periculi, it being the intention of all insurances to avert any damages or loss the insured might sustain. 27 In the case of Lynch v. Dalzell, 28 Chancellor King says: "These policies are " See Kayner v. Preston, L. R. 18 Ch. D. 1, 9, per Brett, L. J. « .Etna F. Ins. Co. v. Tyler, 16 Wend. (N. Y.) 385, 397; 30 Am. Dec. 90; Wilson v. Hill, 3 Met. (Mass.) 66, 69; Lett v. Guardian F. Ins. Co., 125 N. Y. 82, 86; Disbrow v. Jones, Harr. (Mich.) 48; Cum- wring v. Insurance Co., 55 N. H. 457, 459; Adams v. Rockingham Ins. Co., 29 Me. 292, 294; Raynor v. Preston, L. R. 18 Ch. D. 1, 9; Mc- Donald v. Black, 20 Ohio St. 185, 192; 55 Am. Dec. 448. 24 Cumming9 v. Insurance Co., 55 N. H. 457, 459. 28 See Rogers v. Traders' Ins. Co., 6 Paige (N. Y.), 583, 588; 2 r> uer on Insurance, ed. 1846, pp. 49, 50, sec. 31. 26 Wyman v. Prosser (N. Y.), 36 Barb. 368. r Sadlers' Co. v. Babcock, 2 Atk. 554, 556; Cummings v. Cheshire etc. Ins. Co., 55 N. H. 457, 459; Columbian F. Ins. Co. v. Laurence, 10 Pet. (U.S.) 507, 512 ; Wilson v. Hill, 3 Met. (Mass.) 66, 69; Patterson v. Powell, 9 Bing. 322, per Coleridge, J., who says: " Every policy of insurance must insure some thing or person from some risk to which that thing or person is liable." 18 4 Bro. Cas. Pari. 432. This quotation is as reported in Parke on Insurance, ed. 1800, 453, and ascribed by him to Chancellor King, while in the above report it is apparently ascribed to counsel. § 23 CONTRACT AND POLICY. 62 not insurances on the specific things mentioned to be insured nor do such insurances attach on the realty or in any manner go with the same as incident thereto by any conveyance or as- signment, but they are only special agreements with the per- sons insuring against such loss or damage as they may sustain. The party insured must have a property at the time of the loss or he can sustain no loss and consequently can be entitled to no satisfaction." 29 So in a Massachusetts case 30 the court de- clared that "it has been repeatedly decided here that under the forms of our policies none but the parties to the contract or their legal representatives in case of their death can avail them- selves of the contract although others may in fact have an equitable or even legal interest in the property insured. The only exception to this rule which has been admitted exists where a policy has been bona fide and for a valuable considera- tion assigned with notice to the underwriter and an assent on his part, either express or implied." And again it is said that the contract of insurance "appertains to the person or party to the contract, and not to the thing which is subjected to the risk against which its owner is protected. It is not a contract running with the land in the case of real estate nor running with the personalty, so to speak, in the case of a chattel interest of the insured." 31 There is, however, another class of cases where the question arises whether certain covenants to insure made between certain parties relative to land run with the land. Thus, a covenant to effect insurance and apply the proceeds in case of loss by fire to the reparation of the insured property, is held such a covenant as may run with the land. 32 29 Cited in Carpenter v. Providence etc. Ins. Co., 16 Pet. (U. S.) 495, 503. 30 Carroll v. Boston M. Ins. Co., 8 Mass. 515, 517. 31 Cummings v. Cheshire etc. Ins. Co., 55 N. H. 457. 458. 82 Thomas v. Vonkapffs, 6 Gill & J. (Md.) 372. Where interest need not be personal, see sec. ^90, herein ; Masoury v. Southworth, 9 Ohio St. 340. A builder who has entered into possession without a sale under a decree upon his contract of building made with the lessee, and insures the premises to the extent of his interest in the lease, the policy does not inure to the benefit of the lessor or his assigns, nor does it make the builder liable on the covenant of insurance in the lease: Merchants' Ins. Co. v. Mazange, 22 Ala. 168. A covenant to keep premises insured 63 CONTRACT AND POLICY. § 24 § 24. Insurance Other than that of Life and Acci- dent is a Contract of Indemnity. — It is elementary that the contract of insurance, other than that of life and of accident, where the injury results in death, is one of indem- nity. 33 By indemnity is meant that the party insured is en- titled to be compensated for such loss as is occasioned by the perils insured against, in precise accordance with the princi- ples and terms of the contract of insurance. The right to re- cover being commensurate with the loss sustained, 34 or with the amount specified, as in cases of life insurance and valued policies. It is not intended by insurance that the party in- sured shall be put in exactly the same situation as he might have been had there been no loss, although he may be restored as nearly as may be to the condition he was at the outset. 35 for a certain sum during the term, in companies approved by the lessor or lease to be forfeited, does not tend to renew prior policy covering lessor's own interest, but lessee may insure respective interests of lessor and self: Sherwood v. Harral, 39 Conn. 333. See, further, as to covenants to insure: Eberts v. Fisher, 54 Mich. 294; Ehone v. Gale, 12 Minn. 54; Whitaker v. Hawley, 25 Kan. 674; 37 Am. Rep. 277. Ex- amine Hidden v. Slater Mut. F. Ins. Co., 2 Cliff. (C. C.) 266. 83 McDonald v. Black, 20 Ohio St. 185; 55 Am. Dec. 448; Glendale W. Co. v. Protection Ins. Co., 21 Conn. 19, 30, 31 ; 54 Am. Dec. 309; Eager v. Atlas Ins. Co., 14 Pick. (Mass.) 141; 25 Am. Dec. 363; Morrison v. Tenn. Ins. Co., 18 Mo. 262; 59 Am. Dec. 299; Bosley v. Chesapeake Ins. Co., 3 Gill & J. (M'i.) 468, per Dorsey, J.; Insurance Co. v. Insurance Co., 38 Ohio St. 15; Insurance Co. v. Butler, 38 Ohio St. 133; Johannes v. Phoenix Ins. Co., 66 Wis. 50, 53; 57 Am. Rep. 248; Darrell v. Tib- bitts, L. R. 5 Q. B. D. 560, 562, 563; Castellain v. Preston, L. R. 11 Q. B. D. 380, 386; Cummings v. Insurance Co., 55 N. H. 457, 458; Cross v. National F. Ins. Co., 132 N. Y. 133, 135; Bevin v. Connecticut Mut. L. Ins. Co., 23 Conn. 244, 251; Commonwealth Ins. Co. v. Sen- nett, 37 Pa. St. 205, 208; 78 Am. Dec. 418; Lloyd v. Fleming, L. R. 7 Q. B. 299, 302; Rawls v. American L. Ins. Co., 36 Barb. (N. Y. ) 357, 362; 84 Am. Dec. 280; Wilson v. Hill, 3 Met. (Mass.) 66,68; Insurance Co. v. Bailey, 13 Wall. (U. S.) 618, per Clifford, J. ; Eureka Ins. Co. v. Robinson, 56 Pa. St. 256, 269; 94 Am. Dec. 65; Powels v. Innes, 11 Mees. & W. 10, 13. See Aitchison v. Lohre, 4 L. R. App. C. 755, 761 ; 49 L. J. Q. B. D. 123; 41 L. T., N. S., 323. 34 Franklin F. Ins. Co. v. Hamill, 6 Gill & J. (Md.) 87, 95; Glendale Woolen Co. v. Protection Ins. Co., 21 Conn. 19; 54 Am. Dec. 309; Car- penter v. Providence etc. Ins. Co., 16 Pet. (U. S.) 503; Kemp v. Vigne j 1 Term. Rep. 309; Commonwealth Ins. Co. v. Sennett, 37 Pa. St. 205; 78 Am. Dec. 418. 85 Commonwealth Ins. Co. v. Sennett, 37 Pa. St. 205, 208; 78 Am. § 25 CONTRACT AND POLICY. 64 § 25. Indemnity — Stipulation as to value in Policy. — It has been said that insurance is not a perfect con- tract of indemnity in that the parties may agree be- forehand in estimating the value of the subject assured as the measure of damages. 36 The fact, however, that the sum to be paid is agreed upon beforehand makes in itself the con- tract no less one of indemnity, because the value is so fixed in order that the insured may have an indemnity and no more, since if there be a gross and fraudulent overvaluation it may be inquired into, and it is ordinarily to the insured's advantage to see that there is not an undervaluation, and that the amount be fixed sufficiently large to constitute an indemnity. 37 If, however, a valued policy is bona fide meant as an indemnity, the courts will not inquire very minutely whether the valuation be very near the true interest of the assured. This is the rule stated by Marshall, and accords with that given by the courts. 38 So it is held in New York that an overvaluation does not per se render a valued marine policy void. In the absence of fraud, accident, or mistake the valuation agreed upon is conclusive Dec. 418; Hopkins' Marine Insurance, ed. 1867, 59; 2 Phillips on In- surance, 3d ed., 36, sec. 1220. See Woods' Mayne on Damages, 1st Am. ed., sec. 439; 2 Sedgwick on Damages, 8th ed., sec. 722, et seq. ; Times F. Assur. Co. v. Hanke, 1 Fost, & F. 406. 36 "A policy of assurance is not a perfect contract of indemnity. It must be taken with this qualification, that the parties may agree before- hand in estimating the value of the subject assured by way of liqui- dated damages, as indeed they may in any other contract to indem- nify": Irving v. Manning, 1 H. L. Cas. 303, 307, opinion of the judges. This case is cited in Aitchison v. Lohre, L. R. 4 App. Cas. 755, 761, per Blackburn, J., and one of the qualicfiations stated is that of the allow- ance of one-third new for old in marine risks: See Hamilton v. Mandes, 2 Burr. 1198, 1210, per Lord Mansfield. 37 See Voison v. Commercial Mut. Ins. Co., 62 Hun, (N. Y.) 10, 11, per Daniels, J., 41 N. Y. 889; Lewis v. Rucker, 2 Burr. 1171; Clark v. Ocean Ins. Co., 16 Pick. (Mass.) 289; Shane v. Felton, 2 East. 109; Wol- cott v. Eagle Ins. Co. 4 Pick. (Mass.) 429; Marine Ins. Co. v. Hodgson, 6 Cranch (U. S.), 220; 7 Cranch (U. S.), 332; Natchez & New Orleans etc. Co. V. Louisville Underwriters, 44 La. Ann. 714, 11 S. Rep. 54, where actual value exceeded value specified, and assured was held bound by value stated: 1 Marshall on Insurance, ed. 1810, 288, 291. 38 Marshall on Marine Insurance, ed. 1810, 291; Miner v. Tagert, 3 Binn. (Pa.) 204. See, also, Hodgson v. Marine Ins. Co., 5 Cranch (U. S.), 100, 110; 6 Cranch (U. S.), 206; 7 Cranch (U. S.), 332. 65 CONTRACT AND POLICY. § 26 and binding, however largely in excess of the true value. Overvaluation is simply presumptive evidence of fraudulent in- tent strong in proportion to the excess, which presumption may be repelled by proof. 39 Again, in case of partial loss in valued policies an inquiry may be made as to the amount of loss as a basis upon which to indemnify the assured. 40 Therefore, the fact that the amount is fixed in a valued policy where the pe- cuniary value of the subject of insurance is capable of being estimated makes the contract none the less one of strict indem- nity, the only difference being that the money value or indem- nity is, as far as may be possible, determined before instead of after the loss. So Mr. Phillips says: 41 "The valuation in a val- ued policy is a mere substitute as between the parties for the computation or estimate of the value of the subject in an open policy." 42 Nor does the valuation preclude an inquiry as to the amount of interest at stake, for it may be shown that only part of the property was at risk, 43 the valuation being as- sumed to be based upon the principles of indemnity in all val- ued policies. § 26. Life Insurance not a Contract of Indemnity. — Although the question of indemnity as related to life insur- ances has been prolific of much discussion by both text-writers and the courts, yet the weight of authority is that life insur- ance is not a contract of indemnity. In Godsall v. Boldero, 44 89 Sturm v. Atlantic Mut. Ins. Co., 63 N. Y. 77 ; Watson v. Insurance Co. of North America, 3 Wash. (C. C.) 1,2; Borden v. Hingham Mut. F. Ins. Co., 18 Pick. (Mass.) 523 ; 29 Am. Dec. 614, and note, 616, 621. Under following heads: '"Overvaluation of insured property.' ' fraudulent overvaluation avoids policy,' 'rule applies both to valued and to open pol- icies,' 'where overvaluation not fraudulent,' 'overvaluation contrary to warranty or condition in policy,' 'examinations of property by agent' ": Helbig v. Svea Ins. Co., 54 Cal. 156; 35 Am. Rep. 72, and note 74, 76. 40 Watson v. Insurance Co. of North America, 3 Wash. (C. C.) 1, 2j Clark v. United Ins. Co., 7 Mass. 365; 5 Am. Dec. 50. See 1 Arnould on Marine Insurance, Perkins' ed. 309, *304, et seq. a 2 Phillips on Insurance, 3d ed., sec. 1188. 42 See, also, 1 Arnould on Marine Insurance, Perkins' ed. 1850, 315, *309, et seq; Maclachlan's ed. 1887, 299, et seq. ; Forbes v. Aspinall, 13 East, 327. 4S Forbes v. Aspinall, 13 East, 327. 44 9 East, 72. Joyce, Vol. I.— 5 § 26 CONTRACT AND POLICY. 66 •which was for a long time a leading case, a creditor insured his debtor's life. After the debtor's death and before action brought, his executors paid the debt, and the court held that such payment took away the ground of action. 45 The court relied upon the case of Hamilton v. Mendes, 46 which was a case of marine insurance. The ruling was followed in other cases, although there were conflicting decisions until the law became settled upon the authority of Dalby v. India and Lon- don Life Insurance Company, 47 which expressly overruled Godsall v. Boldero. The question was well considered both by the court and in the arguments of counsel, and it was there determined that life insurance in no way resembled a contract of indemnity. 48 While a life is not a subject of valuation 45 Lord Ellinborough, C. J , declared "that if, before the action was brought, the damage which was at first supposed likely to result to the creditor from the death of Mr. Pitt (the insured) were whoily obviated by the payment of his debt to them, the foundation of any action on their (the plaintiffs') part, on the ground of such insurance, fails": Godsall v. Boldero, 9 East, 72, 81. *• 2 Burr. 1210. " 15 Com. B. 365. * 8 It was there declared that "the contract commonly called life assur- ance, when properly considered, is a mere contract to pay a certain 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 cal- culated in the first instance according to the probable duration of the life ; and when once fixed it is constant and in variable. 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 in- surance in no way resembles a contract of indemnity." The reasoning in this case seems to be based upon the construction of the statute 14 George III., chapter 48, clause 3, which provides "that in all cases where the insured 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." This was held to mean that "if there is an interest at the time of the policy, it is not a wagering policy, and that the true value of that interest may be recovered in exact conform- ity with the words of the contract itself"; that "the only effect of the statute is to make the assured value his interest at its true amount when he makes the contract," and that the contract "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 the common law, and if it is made by a person having an interest in the duration of the life, it is not prohibited by the statute, 14 George III., chapter 48": Id., per opinion Parke, B. 67 CONTRACT AND POLICY. § 20 itself, 49 nor the loss adjustable on any principle of indemnity, still the amount of insurable interest in a life can sometimes be estimated as in case of the insurance by a creditor of the life of his debtor, so much so that it has been held that in case of a gross disproportion between the amount of the insurance and the debt secured thereby it may be declared a wager pol- icy. 50 So, perhaps, in other cases where the insurable interest is a pecuniary one it may be valued in the sense that the inter- est might be assumed to be equal in amount to the sum in- sured, 01 and therefore a life policy might be said to resemble a valued marine policy, and in so far as the insurable interest in the former is capable of being approximately estimated upon a pecuniary basis that that establishes a measure of in- demnity, and therefore constitutes life insurance a contract of indemnity, and that the fact that the amount is fixed in a life policy makes it differ in no wise from a valued marine policy. This conclusion, however, cannot follow when it is considered that the nature of the two contracts differs in many respects. Thus, in life risks the premium depends upon data based upon the duration of human life, and the event must happen. In other risks the data for fixing rates of premium depends upon an uncertain event which may or may not happen. 52 Again, in the one case the contract is based on a pecuniary interest, while in a life risk the interest need not necessarily be strictly and exclusively a pecuniary one, as in case of consanguinity or affinity. 03 Another distinction is that in marine, fire, and 49 Life insurances are, says Mr. Bunyon, independent of the value of the subject matter: Bunyon on Life Insurance, ed. 1867, 7. And the court in Connecticut Mut. L. Ins. Co. v. Schaefer. 94 U. S. 457, 460, declares that "In life insurance the loss can seldom be measured by pecuniary values": per Bradley, J. 50 Cooper v. Schaeffer (Pa.), llAtl. Rep. 548: 20 Week. Not. Cas. 123; 9 Cent. Rep. 601 ; 17 Ins. L. J. 152. But see Grant v. Kline, 115 Pa. St. 618, 9 Atl. Rep. 150, 7 Cent. Rep. 626, where the insurance was for three thousand dollars, and the debt less than eight hundred, and the disproportion was not considered too great. 61 See 2 Phillips on Insurance, 3d ed., 35, sees. 1216, 1217. 83 Loss certain to occur in life and not in fire and marine insurances: Nye v. Grand Lodge A. O. U. W., 9 Ind. App. 140, per Lotz, J. 63 "An insurance upon life has in fact but a remote resemblance to a marine or fire insurance. In the latter the particular obiect is to in- 8 26 CONTRACT AND POLICY. GS other insurances of like nature the interest must exist at the time of the loss, or there can be no recovery, 04 while in life insurance the interest need only exist at the time the insurance is effected, 55 unless such be the necessary effects of the provi- sions of the insurance itself. 56 Again, in life policies there is no distinction between total and partial losses, but upon the loss occurring the insurer is bound to pay, according to the terms of demnify against a pecuniary loss ; and the event upon which the money is made payable is the happening of the loss, the contract being in terms to pay whatever is lost, not exceeding a specified sum. But a life insurance is a contract to pay a specific sum on the happening of a par- ticular event which may or may not occasion a pecuniary loss. Where that event is the death of the insured himself, there is nothing like an indemnity against loss to him, for he can never receive the money": Trenton Mut. L. Ins. Co. v. Johnson, 24 N. J. L. 576, 585, per Elmer, J. See Halford v. Kymer, 10 Barn. & C. 724; Insurance Co. v. Bailey, 13 Wall. (U. S.) 616, 618, 619, per Clifford, J.; Appeal of Carson's Exr., 113 Pa. St. 438, 443,444, per Clark, J.; Warwick v. Davis, 14 Otto (U. S.), 775, 779, per Field, J.; Loomis v. Insurance Co., 6 Gray (Mass.), 39. Held, in Mutual L. Ins. Co. v. Allen, 138 Mass. 27, 52 Am. Rep. 246, 247, that pecuniary interest in life not necessary. See, also, necessity of pecuniary interest: Carpenter v. United States L. Ins. Co., 161 Pa. St. 9, 15, 16, per Dean, J.; Nye v. Grand Lodge, 9 Ind. App. 142. It was, however, held in England under the statute 14 George III., chapter 48, that there must be a pecuniary interest in the life or event insured: Halford v. Kymer, 10 Barn. & C. 724; 1 Phillips on Insurance, 3d ed., 201, sec. 356. "But the better opinion is that the decided cases which proceed upon the ground that the insured must necessarily have some pecuniary interest in the life of the cestui qui vie are founded in an erroneous view of the nature of the contract": Insurance Co. v. Bailey, 13 Wall. (U. S.) 616,618, 619. A wife, how- ever, might in England insure the life of her husband without other proof of interest than the relation between them: Reed v. Royal Ex- change Assur. Co., Peake Add. Cas., Peake, N. C, 3d ed., pt. ii. See Bunyon on Life Insurance, ed. 1868, 6. 54 Sadlers' Co. v. Babcock, 2 Atk. 554; Insurance Co. v. State Ins. Co., 16 Or. 283. 65 Appeal of Carson's Exr., 113 Pa. St. 438, 447; Rawls v. American Mut. L. Ins. Co., 27 N. Y. 282; 36 Barb. (N. Y.) 357; 84 Am. Dec. 280; Mowry v. Home L. Ins. Co., 9 R. I. 346; McKee v. Phoenix Ins. Co., 28 Mo. 383; 75 Am. Dec. 129; Dal by v. India etc. Life Assur. Co., 15 Cum. B. 365; Connecticut Mut. L. Ins. Co. v. Schaefer, 94 U. S. 457. 56 Connecticut Mut. L. Ins. Co. v. Schaefer, 94 U. S. 457; Scott v. Dickson, 108 Pa. St. 6; 56 Am. Rep. 192; Sides v. Knickerbocker L. Ina. Co., 16 Fed. Rep. 650. 69 CONTRACT AND POLICY. § 26 his agreement, the full sum insured. 57 Again, in a life policy the element of damage is not dependent upon the payment or nonpayment of the debt, nor the payment of the amount of pe- cuniary interest by third parties. The insurable interest is in- quired into beforehand by the insurers to prevent speculative insurances which are against public policy, and it is sufficient in all life policies that the contract is not involved as a wager pol- icy, although, of course, it may be voided for fraud, but as we have said, the question as to interest is limited in case of loss to that of whether the policy is within that class denominated wagers. The question of fraud should be eliminated in deter- mining whether life insurance is or not a contract of indem- nity, for fraud vitiates all contracts. But in the case of a val- ued marine policy the inquiry is not thus restricted, as where the owner's interest in a valued policy is diminished to the ex- tent of a loan on bottomry to pay for repairs. 08 So in a val- ued marine policy the insurer may show that either by mis- take or design the whole of the property insured was not shipped, and thus entitle himself to a proportionate deduction from the valuation of the policy. 59 To carry the argument still further, if life insurance is a contract of indemnity in any case whatsoever, then since by indemnity is meant a full in- demnity, and no more, it must be conceded that the question may be opened to the extent of determining whether the party intended to be benefited has been indemnified or not, as in the case of Godsall v. Boldero, 60 and that ruling must then be held 67 Kennedy v. New York L. Ins. Co., 10 La. Ann. 809, 811, citing An- nesley, 207; Loomis v. Eagle L. & H. Ins. Co., 6 Gray (Mass.), 396, 399, per Shaw, C. J., quoting from Park on Insurance, 7th ed., 645; St. John v. American Mut. L. Ins. Co., 2 Duer (N. Y.), 419. 434. In the last case the court, notwithstanding it admits that there is no distinction between total and partial iosees in life insurance, nevertheless asserts that life insurance is a contract of indemnity. This case, however, is not the law of New York, since the rule there seems to be that life insurance is not a contract of indemnity: Ferguson v. Mutual Life Ins. Co., 32 Hun (N.Y. 1,306, 310,311, et seq. ; affirmed, 102 N. Y. 647; Rawls v. Ameri- can Mut. L. Ins. Co., 36 Barb. (N. Y.) 357, 362; 84 Am. Dec. 280; affirmed, 27 N. Y. 232, 239. 68 Read v. Mutual Safety Ins. Co., 3 Sand. (N. Y.) 54. 69 Atlantic Ins. Co. v. Lunar, 1 Sand. (N. Y.) 91. 60 9 East, 72. § 26 CONTRACT AND POLTCY. 70 to govern. This conclusion is irresistible, as was fully realized by the six judges who in the exchequer chamber expressly over- ruled that case in Dalby v. India etc. Company, 61 and held un- equivocally that life insurance was not a contract of indemnity, and how an agreement to pay a fixed sum, and one in which the premium is based upon the duration of human life and an event which is bound to occur and which differs in so many es- sentials, can be held to be a contract of indemnity is hardly conceivable without also conceding that Godsall v. Boldero 62 determines the law, and if so, the rule stare decisis should ob- tain, notwithstanding the injustice of that decision was so great that Mr. Bunyon, 63 evidently speaking for the profession, at- tacked it on that ground, among others, and predicted that it would be overruled. 64 As was thereafter done in Dalby v. India etc. Company, 65 wherein the judges also declared that 61 15 Com. B. 365. See Ferguson v. Massachusetts Mut. L. Ins. Co., 32 Hun (N. Y.), 312, per Hardin, J., affirming Dalby v. India etc. case, affirmed 102 N. Y. 647. 62 9 East, 72. 63 Bunyon on Life Assurance, sec. 7. 64 This author, who wrote (1853) before the decision in Dalby v. India etc. Assur. Co., 15 Com. B. 365 (1854), gives much consideration to this question, and determines that life insurance is not a contract of indem- nity. He strongly disapproves the ruling in Godsall v. Boldero, 9 East, 72, and says that there are the greatest difficulties in considering the contract as that of an indemnity apart from the statute 14 George III., chapter 48, and that the principle upon which the decision is based ia the assumed common-law doctrine rather than the words of the act, and he adds: "So great is the injustice involved in it that in practice it ia universally rejected The officers themselves .... have not found it to be for their benefit to act upon the rigid rule of law, but generally pay without inquiry." He further says: "So strong appears the feeling at the present time in the profession against this derision, that it is by no means improbable that it may # be shortly reviewed in a higher court than that in which it was decided." This author also as- serts: "A whole life policy is not like a fire or marine assurance made for a short period, and renewable with the consent of both parties, but is a contract to receive a sum of money upon an event which, although deferred, will certainly happen, and, although renewed from year to year bv the payment of an annual premium, the premium is so calcu- lated that the right of renewal rests with the assured, and is a portion of the consideration for which all past premiums have been paid": Bunyon on Life Assurance, 79 Law Library, *22, *24. 66 15 Com. B. 305. 71 CONTRACT AND POLICY. § 26 the injustice of the decision was so great that but a few offices had availed themselves of it. We have shown in a prior sec- tion 66 that although the amount may be agreed upon before- hand, as in case of valued marine policy, nevertheless that does not alter the fact that an indemnity is intended in such policies, and although a life policy may be a valued one, the similarity extends no further. We conclude, therefore, as we first as- serted, that the weight of authority is that life insurance is not a contract of indemnity. 67 66 Sec. 25. 67 The following authorities hold that it is not a contract of indem- nity : Dalby v. India etc. Co., 15 Com. B. 365; Nye v. Grand Lodge, 9 Ind. App. 139, per Lotz, J. ; Law v. London Indis. L. Pol. Co., 1 Kay & J. 228. 229; Whiting use of Sun Mut. Ins. Co. v. Independent Mut. Ins. Co.,15Md. 297,327; Trenton Mut. etc. Ins. Co. v. Johnson, 24 N.J. L. 585; Rawls v. American Mut. L. Ins. Co., 36 Barb. (N. Y.) 357; 27 N. Y. 282, 289; 84 Am. Dec. 284; Ferguson v. Mutual L. Ins. Co., 32 Hun (N. Y.), 311, 312; affirmed 102 N. Y. 647; Bunyon on Life Insurance (79 Law Library ), *7-24; Mowry v. HomeL. Ins. Co., 9 R. 1.346, 354; Scott v. Dickson, 108 Pa. St. 6; 56 Am. Rep. 192; Mutual L. Ins. Co. v. Allen, 138 Mass. 27; 52 Am. Rep. 246. 247; Emerick v. Coakley, 35 Md. 188, 193. See, also, Sweet's Diet. Eng. Law, ed. 1882, "Insurance." The following authorities hold that it is not strictly a contract of indemnity, or, in other words, it is in f he nature of an indemnity, as in case where a creditor insures his debtor's life: Bacon's Benefit Societies and Life Insurance, sec. 163; Miller v. Eagle L. & H. Ins. Co., 2 E. D. Smith, 294, 295. "Policies of life insurance are governed in some respects by different rules of construction from those applied by the courts in case of policies against marine risks or policies against loss by fire. Marine and fire policies are contracts of indemnity by which the claim of the insured is commensurate with the damages he sustained by the loss of or injury to the property insured Life insurances have some- times been construed in the same way, but the better opinion is that the decided cases which proceed upon the ground that the insured must necessarily have some pecuniary interest in the life of the cestui qui vie are founded in an erroneous view of the nature of the contract, that the contract of life insurance is not necessarily merely one of indemnity for a pecuniary loss, as in marine and fire policies, that it is sufficient to show that the policy is not invalid as a wager policy if it appear that the relation, whether of consanguinity or of affinity, was such between the person whose life was insured and the beneficiary named in the policy as warrants the conclusion that the beneficiary had an interest, whether pecuniary or arising from dependence or natural affection, in the life of the person insured. Insurers, in such a policy, contract to pay a certain sum in the event therein specified, in consideration oi the payment of the stipulated premium or premiums, and it is enough to entitle the assured to recover if it appear that the stipulated event has § 27 CONTRACT AND POLICY. 72 § 27. Accident Insurance is not a Contract of In- demnity in all Cases. — Accident insurance is not a contract of indemnity in all cases. It only indemnifies against the effect of happened, and that the party effecting the policy had an insurable in- terest such as is described in the life of the person insured at the incep- tion of the contract, as the contract is not merely for an indemnity, as in marine and fire policies": Insurance Co. v. Bailey, 13 Wall. (U. S. ) 616, 618, et seq., per Clifford, C. J. The following authorities hold that it is a contract of indemnity: Godsall v. Boldero, 9 East, 72, which was overruled as noted in the text ; St. Juhn v. American Mut. L. Ins. Co., 2 Duer (N. Y.), 419, 434, not the law of New York as noted in the text; Bevin v. Connecticut Mut. L. Ins. Co., 23 Conn., 244, 251 ; Kennedy v. New York L. Ins. Co., 10 La. Ann. 809, 810, where Merrick, C. J., says: "The contract of insurance is one of indemnity, but in life insurance the amount of the indemnity, we think, like a valued policy, is agreed upon beforehand": See note2Smith's Lead. Cas. (44 Law Lib. 203, 207), 165, 170. "A distinction has sometimes been taken between marine and other insurances and life insurance, on the ground that while the former have for their object to indemnify for loss, the latter is an absolute engage- ment to pay a fixed sum on the happening of a certain event, without reference to any damage in fact suffered by the insured in consequence. But this distinction is superficial, and rests rather upon the mode of determining the amount of indemnity than upon any difference in prin- ciple. There is the same difference, having reference to the question of indemnity, between valued and open policies, in both fire and marine insurance, that there is between an open policy in either and a policy of life insurance. In open policies the question of the amount of in- demnity is left to be determined when the contingency upon which it becomes due shall have happened, while in valued policies and policies on lives the value of the interest which the insured seeks to protect is agreed upon by the parties, and inserted in the policy, and so the amount of indemnity which shall beome due on the happening of the given contingency is predetermined. The purpose in all cases is alike indemnity for the loss of a valuable interest": May on Insurance, 3d ed., sec. 7. See, also, Id. sec. 117. Mr. Marshall speaks of life insurance as an expedient by which a pecuniary indemnity may be secured to the beneficiaries: (Book 3, c. 1, p. 766, ed. 1810) ; and he notes (Id., p. 777) the case of Godsall v. Boldero, which at that time had not been over- ruled, and says: "They hold that this insurance, like every other to which the law gives effect, is in its nature. a contract of indemnity as distinguished from a wager. Mr. Phillips (1 Phillips on Insurance, sec. 3), says that the contract is now considered "as extending not only to indemnity against sea risks, fire, or land, and death, but," etc. This author, however, wrote before Godsall v. Boldero, 9 East, 72, was over- ruled. The code definition of insurance in California is thought by Mr. Deering co imply that life insurance is a contract of indemnity in that state (Deering's Annot. Civ. Code Cal., sec. 2527, and note), although he does not discuss the question. 73 CONTRACT AND POLICY. §§ 28, 29 accidents resulting in bodily injuries. In case of death occa- sioned thereby it can in no sense be said to indemnify, because in such case there is a close analogy between accident and life insurance. 68 So it is said that accident insurance indemnifies in a certain sense against the pain and loss connected with the immediate accident, except in case of death. 69 § 28. Reinsurance is a Contract of Indemnity. — Re- insurance is a contract of indemnity and binds the reinsurer to pay the reinsured the whole loss sustained in respect of the subject insured to the extent for which he is reinsurer. 70 § 29. Other Incidents of the Doctrine of Indemnity. Since the doctrine of indemnity contemplates that the insured shall be indemnified, but shall never be more than fully indem- nified, for a loss, there have necessarily arisen many incidents or corollaries thereto, such as the doctrines of constructive to- tal loss, of abandonment, of subrogation, contribution, and ap- portionment of loss, etc., which will be noticed hereafter under their appropriate heads. 71 68 Pee Rradburn v. Great Western Ry. Co., 23 Week. Rep. 48. 69 Theobald v. Railway Pass. Assur. Co. 26 Eng. L. & Eq. 432, 437, 440. But in Healey v. Mutual Ace. Assn., 133 111. 556, 560, 31 Cent. L. J. 419, where it is said that the purpose of accident insurance is to furnish indemnity against accidents and death caused by accidental means. This, however, appears to be a mere general statement of the court, made incidentally in connection with the question of construc- tion. " See Hone v. Mutual S. Ins. Co.,1 Sand. (N. Y.) 137; Eaglelns. Co. v. Lafayette Ins. Co., 9 Ind. 443; Mutual S. Ins. Co. v. Hone, 2 N. Y. 235, 240. Examine Bartlett v. Fireman's Ins. Co., 77 Iowa, 155, 158; 41 N. W. Rep. 601, where it was said an agreement, to reinsure is an un- dertaking entered into with the insurer "to indemnify the owner of the insured property in case a loss occurs." See sec. 97, herein. 71 Brett, J., in Castellnin v. Preston, L. R. 11 Q. B. D. 380; Cincinnati Ins. Co. v. Duffield, 6 Ohio St. 200, 67 Am. Dec. 339, where it is held that the legal effect of an abandonment in the sense in which it is used in policies of marine insurance and in the law regulating that subject, is to operate as a transfer to the underwriter by the party insured, but only to the extent of the indemnity contemplated by the policy: See chapters herein on Abandonment and Total Losa. CHAPTER III. PAROL CONTRACTS. § 31. Contract need not be in writing: Parol contract and rule In England. § 32. Same: The common-law rule. § 33. Same: Statutory regulations— English Stamp Acts. S 34. Parol contracts— Mutual benefit societies. § 35. Parol contracts— Statutory or charter provisions. § 36. Parol contracts— (Statutory or charter provisions— continued. § 37. Parol contract for insurance subject to usual provisions of policy. § 38. Parol agreement for insurance may be specifically enforced, or court may award damages. § 39. Parol contract— Statute of frauds. § 40. How far parol contract merged in written agreement, § 41. Parol contract— Renewal. § 31. Contract Need not be in Writing — Parol Con- tract — Rule in England. — The contract of insurance need not be a specialty nor even in writing, for it is well settled law that a parol contract of insurance is valid in the absence of a statu- tory requirement to the contrary, and this rule covers not only agreements to insure, 1 but the completed contract. 2 Such con- 1 See Fish v. Cottenett, 44 N. Y. 538; 4 Am. Rep. 715; Ruggles v. American Cent. Ins. Co., 114 N. Y. 415; 11 Am. St. Rep. 674; British Ins. Co. v. Lambert, 26 Or. 199; 37 Pac. Rep. 909; Croft v. Hanover F. Ins. Co. (W. Va. 1895), 21 S. E. Rep. 854. Contracts and policies do not require seal: Mill's Annot. Stat. Col. (1891), c. 67, sec. 2227. 2 Sanborn v. Fire Ins. Co., 16 Gray (Mass.), 448; 77 Am. Dec. 419; Newark Mach. Co. v. Renton Ins. Co. (Ohio, 1894), 35 N. E. Rep. 1060; Stickley v. Mobile Ins. Co., 37 S. C. 56; 16 S. E. Rep. 280; Humphrey v. Hartford F. Ins. Co., 15 Blatchf. (C. C), 35, 37; Vrete v. Germania Ins. Co., 26 Iowa, 9; 96 Am. Dec. 83; Ellis v. Albany City Ins. Co., 50 N. Y. 402; 10 Am. Rep. 495; Stoehle v. Hahn, 55 111. App. 497; North- western Ins. Co. v. .Etna Ins. Co., 23 Wis. 160; 99 Am. Dec. 145; Roger Williams Ins. Co. v. Carrington, 43 Mich. 252; 9 Ins. L. J. 577; Gold v. Sun Ins. Co., 73 Cal. 216; 14 Pac. Rep. 786; Commercial Union Assur. Co. v. State, 113 Ind. 331; Relief F. Ins. Co. v. Shaw, 94 U. S. (74) 75 PAROL CONTRACTS. § 31 tract must, however, be clearly established, or the court will re- fuse relief either at law or in equity, 3 and evidence of usage to make written applications is immaterial. 4 In the following 574; Hartford F. Ins. Co. v. Farriah, 73 111. 166; Emery v. Boston M. Ins. Co., 138 Mass. 398; Stehlich v. Mechanics' Ins. Co., 87 Wis. 322; 58 N. W. Rep. 359; Harron v. City of London F. Ins. Co., 88 Cal. 16; 25 Pac. Rep. 982; Dodd v. Gloucester Ins. Co., 120 Mass. 468; Hart- ford F. Ins. Co. v. Wilcox, 57 111. 180; Matthews v. Union M. A. Assn., 78 Wis. 588; 11 Law Rep. 83; Smith v. Odlin, 4 Yeates (Pa.), 468; First Baptist Church v. Brooklyn Ins. Co., 19 N. Y. 305; Union Ins. Co. v. Commercial Ins. Co., 2 Curt. (C. C.) 524; 19 How. (U. S.) 318; Patterson v. Benjamin Franklin Ins. Co., 81 Pa. St. 454; Mobile M. Ins. Co. v. McMillan, 31 Ala. 711; Machine Co. v. Insurance Co., 50 Ohio St. 549; Walker v. Metropolitan Ins. Co., 56 Me. 371. See Home Ins. Co. v. Adler, 71 Ala. 516; Strolin v. Hartford Ins. Co., 33 Wis. 648. Policy need not be issued, and if no date is mentioned takes effect immediately: Potter v. Phcenix Ins. Co., 63 Fed. Rep. 382. As tc marine insurances, see 1 Duer on Insurance, ed. 1845, 60, sec. 5. See Morgan v. Mather, 2 Ves. Jr. 15 and n. Contra, Bell v. Western M. & F. Ins. Co., 5Rob. (N. Y.) 423; 39 Am. Dec. 542; Cockerell v. Cincinnati Ins. Co., 16 Ohio, 148. In this case the court says : "It is universal com- mercial usage that the policy shall he in writing, and there is no exception to it in positive decision or municipal regulation. Such a thing as a ver- bal policy is unknown to the law of insurance, and the books upon the subject and decisions unite in declaring that a policy must be in writing." It here appeared that the act incorporating the company required their contract to be in writing, but the court also said that "without the act we should hold that a policy of insurance upon the principle of general usage must be in» writing, as supported and declared by universal au- thority." But see Dayton Ins. Co. v. Kelly, 24 Ohio St. 345; 15 Am. Rep. 612. It should be remembered that a policy is the contract re- duced to writing. s N. E. Ins. Co. v. Robinson, 25 Ind. 536; Patterson v. Benjamin Franklin Ins. Co., 81 Pa. St. 454; McCann v. vEtna Ins. Co., 3 Neb. 198; Dwinning v. Phcenix Ins. Co., 68 HI. 414; Suydam v. Columbus Ins. Co., 18 Onio St. 459; Strolin v. Hartford Ins. Co., 37 Wis. 625. * Emery v. Boston M. Ins. Co., 138 Mass. 398. In this case the court, per Allen, J., said: "But it is also well settled, and it is now too late to question the doctrine, that an oral contract of insurance may be valid: Sanborn v. Fireman's Ins. Co., 16 Gray (Mass.), 448. As was said in that case: 'It is not easy to see the force of the reasoning -which would infer that because parties usually make their contract in one way it would be void when they choose to make it in another, equally good at common law and not prohibited by any statute.' See, also, Relief Ins. Co. v. Shaw, 94 U.S. 574. A usage that an oral contract if made is considered invalid would be plainly repugnant to law and void. In the present case the evidence of usage was offered, not in aid of the construction of § 31 PAROL CONTRACTS. 76 case the plaintiff made an application for fire insurance to de- fendant's local agent, who orally agreed to place a certain amount at a certain rate upon the risk at once, and to bind it, and immediately made a memorandum to that effect in the "binding book." The risk was specially hazardous, and in view thereof a special agent was to inspect and approve the risk. The agent had written authority to receive proposals for insurance, and was accustomed to fill and deliver policies signed in blank by the company's officers and left with him for that purpose. The same class of risks had been frequently taken by the agent, and he had issued policies thereon without consulting the company. Upon action brought it was decided that the agent had made an oral agreement for insurance within the apparent scope of his authority. 5 So an oral agree- ment may be binding on the company when by agreement with the assured the agent is to fix the amount of indemnity as he sees proper and does fix it, as shewn by memorandum made by him. 6 In England, however, the act 35 George III., chapter 63, section 2, expressly provides for an engrossed printed or written contract in case of every agreement for any marine in- a contract, but to support the position that no contract whatever had been made. If a contract had in point of fact been made as alleged, it was of no consequence whether it was according to general usage or not It is no legitimate confirmation of the defendant's position under such circumstances to show that other insurance compnnies usually require applications for marine insurance to be in writing as a condition of making the contract An oral contract was lawful, and the evidence was properly confined to the question whether this par- ticular oral contract had been made, as testified .by the plaintiff, with- out going into the general inquiry whether other parties were accus- tomed to make such contracts.' " 5 Putnam v. Home Ins. Co., 123 Mass. 324; 25 Am. Rep. 93. But 6ee Daniels v. Citizens' Ins. Co., 5 Fed. Rep. 425, 430; Taylor v. Ger- mania Ins. Co., 2 Dill. (C. G.) 282; Franklin F. Ins. Co. v. Taylor, 52 Miss. 44; Home Ins. Co. v. Adler, 71 Ala. 516; Ruggles v. American Cent. Ins. Co., 114 N. Y. 415; 11 Am. St. Rep. 674, and note, 678, and note; 21 Am. St. Rep. 883. Cases of parol agreements to insure held valid are: Mobile etc. Ins. Co. v. McMullan, 31 Ala. 711; Van Loan v. Farmers' Mut. F. Ins. Assn., 90 N. Y. 280; Commercial Mat. M. Ins. Co., 19 How. (U. S.) 318; 2 Curt. (C. C.) 524; Fish v. Liverpool etc. Ins. Co., 44 N. Y. 538; Angell v. Hartford F. Ins. Co., 59 N. Y. 171; 17 Am. Rep. 322. 6 Croft v. Hanover F. Ins. Co. (W. Va., 1895), 21 S. E. Rep. 854. 77 PAROL CONTRACTS. § 32 surance, and that the same shall specify the premium or con- sideration, the character of the risk, the sums insured, and the names of the insurers. 7 And by act 1867, 30 Victoria, chap- ter 23, section 7, every contract or agreement for sea insurance 8 must be expressed in a policy, otherwise it is null and void, and in addition, under section 9 of said act, no policy shall be pleaded or given in evidence, or admitted in any court to be good and available in law or in equity, unless duly stamped. 9 Under the same act policies effected abroad and chargeable with duty by virtue of the 28 and 29 Victoria, chapter 96, section 15, may be stamped within the time specified in that act. Again, under an English decision, it is held that although there is no positive law in New South Wales necessitating that ma- rine contracts of insurance be in writing, yet an agent author- ized to make contracts in the ordinary way must make them in writing, 10 and although the slip be initialed, and would other- wise be a contract of marine insurance, it is not an enforce- able policy in England under the provisions of the act above noted. 11 § 32. Same — The Common Law Rule. — Formerly, con- tracts of insurance were not required to be in writing, and this was the common law in England. 12 The earliest English stat- ute, 43 Elizabeth, chapter 12, enacted in 1601, mentions poli- cies of insurance, as does also the statute 6 George I., chapter 18, which was the act securing to the two great companies of 7 See, also, 25 Geo. III., c. 44; 28 Geo. III., c. 56, which imply a written contract; Abbott on Shipping, Story's ed., 2, n. 1. 8 Other than that referred to in Merchant Shipping Amd. Act, 1862, 25 & 26 Vict., c. 63, sec. 55. 9 But see In re Teigenmuth Mut. Ship, Assn. (Martin's Claim), L. R. 14 Eq. 148. 10 Davies v. National F. & M. Ins. Co. of N. Z., App. Cas. L. R. (H. L. P. C, Eng. 1891) 485. 11 Fisher v. Liverpool M. Ins. Co., L. R. 8 Q. B. 469; L. R. 9 Q. B. 418. As to shipmen's clubs or associations, see 30 & 31 Vict., c. 26, sec. 9; 25 & 26 Vict., c. 89, sees. 3, 6, 180, 193, 194, 196, 206. 12 The Northwestern Iron Co. v. ^Etna Ins. Co., 23 Wis. 160; San- born v. Fireman's Ins. Co., 16 Gray (Mass.), 448; 77 Am. Dec. 419; First Baptist Church v. Brooklyn F. Ins. Co., 19 N. Y. 305; 1 Smith's Mer- cantile Law (M. & H. 1890), 494. § 32 PAROL CONTRACTS. 78 assurance in 1719 the monopoly of making these contracts, sub- ject to certain exceptions. In this latter act the preamble de- clares that this contract "or course of dealing is commonly called a policy of assurance." But there is nothing in these statutory regulations which can be construed as making the acts requiring a written policy in England declaratory of the common law, and in fact the earlier statutes in that country sought only to remedy or restrain certain abuses in insurance rather than to declare old principles. It was no doubt a well- established usage to have policies of assurance in England from the day of the Lombards, and Maylnes 13 asserts that it was customary to register verbatim policies of assurance in the of- fice of assurances in order to preserve evidence of the contract in case the policy should become lost. But these and other like facts go no farther than to establish a usage to have policies as an evidence of the contract. An examination of Lord Mans- field's decisions and of the cases subsequent thereto fails to discover that a policy or writing was necessary to the validity of a contract of insurance at the common law, and it is admit- ted that formerly the contract was not required to be in writ- ing. 14 Emerigon declares that "Valin and Pothier agree in saying that in insurance the writing is only required for proof of the contract; that the writing is extrinsic to the substance of the agreements. They are reduced to writing for the purpose of more easily preserving their proof But this common-law rule ceases its oper- ation in all cases where writing is expressly required by law. .... The Guidon 15 informs us that formerly insurances were made without writing; they were termed 'in confidence/ because the person stipulating for insurance did not make his bargain in writing, but trusted to the good faith and honesty of his insurer. But this practice, because of the abuses and dis- putes it engendered, was subsequently prohibited in all com- " Lex Mercatoria, 115. 11 See 1 Wood on Fire Insurance, 2d ed., sec. 1; 1 Phillips on Insur- ance, 3d ed., sees. 8, 9. 16 Chapter 1, art. 2, p. 223. 79 PAROL CONTRACTS. § 33 mercial places." 16 And the court in Sandford v. Trust Fire Insurance Company 17 declared in 1845 that it had not been able to find anything in the common law of England rendering it necessary that contracts of insurance should be in writing. So it was held in a case in the United States Supreme Court, s that under the common law a promise for a valuable considera- tion to make a policy of insurance is no more required to be in writing than a promise to execute and deliver a bond or a bill of exchange or a negotiable note. In the case of Cockerell v. Cincinnati Mutual Insurance Company 19 the court, relying upon usage and upon the fact that the charter of the company required a writing, holds that such a thing as a verbal policy was unknown to the law of insurance, and that a policy must be in writing "as supported and declared by universal adjudi- cation." But the policy is the writing. This case was sub- stantially overruled by a later Ohio case; that is, in so far as re- lates to the contract being in writing. 20 The opinions of Mr. Duer and Mr. Millar 21 are to the same purport as the Ohio case. The court of appeals in New York ^ has held that a contract of insurance is not required to be in writing by the general prin- ciples of law. Referring again to the statutory regulations in England, Mr. May 23 doubts whether the stamp laws require a writing and whether a parol agreement to insure would be void. The statements m this section as to the common-law rule relate also to cases of contracts by other than corporations. The rule as to them will be considered hereafter. 24 § 33. Same — Statutory Regulations — English Stamp Acts. — Where a statute requires the stipulations to be in 16 Emerigon on Insurance. Meredith's ed. 1850, c. ii, 6ec. 1, pp. 25, 26. See 1 Wood on Fire Insurance, 2d ed., p. 2, sec. 1. 17 11 Paige (Mass.), 547. 18 Commercial Mut. M. Ins. Co. v. Union Mut. ins. Co., 19 How. (U.S.) 31S, 321, 32','. 19 16 Ohio, 148. See, also, Bell v. Western etc. Ins. Co., 5 Rob. (La.) 423; 39 Am. Dec. 542. 20 Dayton Insurance Co. v. Kelly, 24 Ohio St. 345; 15 Am. Rep. 612. ** 1 Duer on Insurance, ed. 1345, t>0; Millar on Insurance, 30. « First Baptist Church v. Brooklyn F. Ins. Co., 19 N. Y. 305. aa 1 May on Insurance, 3d ed., sec. 25. u See sees. 36, 37, herein. § 33 PAROL CONTRACTS. 80 writing, it is indispensable that they should be. 25 Thus it was held in Georgia, 26 where the code requires a writ- ing, that an insurance company was not estopped from insisting that the contract was not in writing in a case where the insured, while removing his insured stock of goods to another house, requested the insurance agent to trans- fer his policy if necessary, and the agent consented to the re- moval and promised to make the necessary entry on the books, and that equity would not relieve the party acting on a parol contract unless his act was in pursuance of the contract, on the faith of it, and induced by it. 27 It was said by the court in a Kansas case that subsequent to the passage of the revenue laws requiring a stamp it might be necessary that a contract of in- surance should be in writing. 28 But in Fish v. Cottenet 29 it is held that a stamp does not affect the validity of a parol con- tract for insurance. In that case the court says: "Contracts of this character when put in writing certainly require a stamp. If the defendant had performed its agreement and issued a policy the government would have received the aid to its rev- enue which is so much required. It is not the making of the agreement that defrauds the revenue, but its breach by the de- fendant. Agreements, when in writing, must be stamped. A stamp upon an oral agreement is an impossibility." And Mr. May 30 asserts that the stamp laws do not go to the validity of the contract. He also says that the doctrine of the Kansas case above referred to "seems not to be well founded," and "that the state courts do not recognize the constitutional" right of the gen- eral government to determine the rules of evidence by which the former shall be governed, and hold pretty uniformly" that the laws of Congress in regard to using or admitting in evi- dence only stamped instruments applies only to United States courts, 31 and that author doubts the power of Congress to de- » Clark v. Brand, 62 Ga. 23 (under Ga. Code, sec. 2794). 26 Simonton v. Liverpool etc. Ins. Co., 51 Ga. 76. 17 See Southern L. Ins. Co. v. Kempton, 56 Ga. 339. 28 West Massachusetts Ins. Co. v. Duffey, 2 Kan. 347. » 44 N. Y. 538, 543. 80 1 .May on Insurance, 3d ed., sec. 25. ,l Citing Carpenter v. Snelling, 97 Mass. 452; Hitchcoct y. Sawyer, 81 PAROL CONTRACTS. § 33 clare unstamped instruments wholly void, and cites cases from Illinois and Kentucky holding that it has not such power. 32 And he adds: "But it is doubtful if this will become the settled view of the law upon mature consideration. 33 It is also very generally held that under United States Statutes 1864, chapter 173, section 163, and 1865, chapter 78, only those unstamped instruments can be said to be void where the stamp has been omitted with intent to defraud the revenue, and such is the law under the statute of 1866, chapter 184, section 9." 34 Mr. Cooley says: "It has been repeatedly decided that the act of Congress which provided that certain papers not stamped should not be received in evidence must be limited in its opera- tion to the federal courts. 35 Several of these cases have gone still further and declared that Congress cannot preclude parties 39 Vt. 412* Dudley v. Wells, 45 Me. 145; McGovern v. Hoesback. 53 Pa. St. 176, 177; Griffin v. Ranney, 35 Conn. 239; Craig v. Dimock, 47 111. 308; Bunker v. Green, 48 111. 243; United States Express Co. v. Haines, 48 111. 248; Twitchell v. Commonwealth, 7 Wall. (U. S.) 321; Green v. Holway, 101 Mass. 243; 3 Am. Rep. 339. Contra, Chartiers & Rob. Turnp. Co. v. McNamara, 72 Pa. St. 228; 13 Am. Rep. 673; cases, in 7 Alb. L. J. 49; Edeck v. Ranier, 2 Johns. (N. Y.) 423; Plessinger v. Depuy, 25 Md. 419. "Where unstamped instruments were excluded the question of constitutional competency was not raised." 88 Citing Latham v. Smith, 45 111. 29; Hunter v. Cobb, 1 Bush, 239. 83 Citing License Tax cases, 5 Wall. 462; Pervear v. Commonwealth, 5 Wall. 475. 84 Citing numerous cases. Examine Hunter v. Cobb, 1 Bush (Ky.), 239; Sayles v. Davis, 22 Wis. 225; Green v. Lowry, 38 Ga. 548; Jacquin v. Warren, 40 111. 459; Israel v. Redding, 40 111. 362; Blunt v. Bates. 40 Ala. 470; McLean v. Skelton, 18 La. Ann. 514; Blake v. Hall, 19 La. Ann. 49; Carpenter v. Snelling, 97 Mass. 452; Maynard v. Johnson, 2 New 16. If one fails to affix the stamp, the presumption arises that such act is willful: Howe v. Carpenter, 53 Barb. (N. Y.) 382. Contra, New Haven etc. Co. v. Quintard, 6 Abb. Pr., N. S. (N. Y.),128; Welt- ner v. Riggs, 3 W. Va. 445: Act June 30, 1864, which only declared those instruments invalid where there was an intent to evade the provisions of the act: Hallock v. Jaudin, 34 Cal. 167, declares internal revenue stamps no part of a note. Instrument not stamped when made may be stamped subsequently, so as to be admissible in evidence, as where stamped in presence of the court: Patersen v. Eames, 54 Me. 203; Cooke v. England, 27 Md. 14; Dorris v. Grace, 24 Ark. 326. See further as to stamps, Hitchcock v. Sawver, 39 Vt. 412; Corbin v. Tracy, 34 Conn. 325. 85 Citing numerous cases. Joyce, Vol. 1—6 § 33 PAROL CONTRACTS. 82 from entering into contracts permitted by the state laws, and that to declare them void was not the proper penalty for the en- forcement of tax laws." 36 And in a case which arose in Mas- sachusetts the court said : "We entertain grave doubts whether it is within the constitutional authority of Congress to enact rules regulating the competency of evidence on the trial of cases in the courts of the several states which shall be obligatory upon them. We are not aware that the existence of such a power has been judicially sanctioned. There are numerous weighty reasons against its existence." 37 In England, however, the statute 35, George III., chapter 63, which repealed all former stamp duties on marine insurances, and which did not extend to fire or life insurances, provided that every contract for marine insurance should be "printed or written," and that an insurance contract or agreement therefore should be void unless stamped, and prescribed a penalty for noncompliance. 38 As we have stated under a prior section, 39 the English Act of 1867, 30 Victoria, chapter 23, page 9, requires that every pol- icy of sea insurance be duly stamped to be admissible in evi- dence, and also provides that policies made abroad may be stamped. Other sections of this act make provisions in relation to the stamping of policies, covering time and voyage policies, mixed policies, and insurances by carriers, and making certain exceptions in case of mutual insurances, and providing penal- ties for noncompliance. 40 Under a decision rendered in 1891 the words "ship or vessel," in the Customs and Inland Revenue Act of 1870 (which imposes a stamp duty upon policies of sea insurance made on any ship or vessel), will be construed "ships or vessels." Under the Interpretation of Statutes Act of 1889, 86 Cooley's Constitutional Limitations, 6th ed., 592, n. 2, citing sev- eral cases. 37 Green v. Hoi way, 101 Mass. 243; 3 Am. Rep. 339. 38 See Kensington v. Inglis, 8 East, 273; Morgan v. Mather, 2 Ves. Jr. 18; Rogers v. McCarthy, 3 Esp. 106; 3 Phillips on Evidence, 5th ed., 232. 39 Sec. 31, herein. 40 See, also, 33 & 34 Vict., c. 97, sec. 117; 44 & 45 Vict., c. 12, sec. 44; 47 & 43 Vict., c. 62, sec. 8. See, also, list of acts in force in Eng- land in 1889 noted, sec. IV., preliminary chapter herein. 39 & 40 Vict., c. 6, sec. 2, providea for stamping atfer execution. 83 PAROL CONTRACTS. § 34 providing that in statutes enacted after 1850 words in the singular shall include the plural, so that where one hundred and nineteen vessels were insured under a time policy, it was held that the stamp duty must be calculated upon the aggre- gate amount insured, even though a specific sum was appro- priated fo each vessel. 41 In many of the states a standard form of fire policy is provided for by statute. 42 § 34. Parol Contracts — Mutual Benefit Societies. — Some doubt has been expressed as to whether the rule that a contract of insurance need not be in writing except when re- quired by statute applies to mutual benefit societies. 43 The cases for the most part are those of marine and fire insurances, with some authorities in accident and life insurance on other than the mutual plan. 44 But we see no reason why the rule should not obtain in cases of an agreement for insurance on the mutual plan as in other contracts, and it has been held in Xew York that a mutual fire insurance company could bind itself by parol to issue a valid policy of insurance. The court said, referring to the plaintiff, that "it must be assumed that she knew the character of defendant and the purpose for which it 41 Great Britain Steamship Prem. Assn. v. White (Scot. Ch. Sesa. 1891), 29 Scot. L. R. 104. *■ Acts Mass. 1887, c. 214, sec. 60; Howell's Annot. Stat. Mich. 1882, sees. 4344-53; Minn. Stat. 1891, vol. 1, sees. 2973-77; Gen. Laws 1889, c. 217; N. H. Laws 1885, c. 93, S3C. 3; N. J. Laws 1892, c. 231; N. Y., 3 Rev. Stats. (B'k's Bros. 8th ed.), p. 1663; Laws 1886, c 488; N. Dak. Laws 1890, p. 253, c 74; Wis. Laws 1891, vol. 1, c 195. As to unconsti- tutionality of act of standard fire policy, see O'Neil v. American F. Ins. Co., 166 Pa. St. 72; reversing 3 D. R. 778 (act April 1891, Pub. L. 22, sec. 1). 43 Bacon's Benefit Societies and Life Insurance, ed. 1888, sec. 172; 1 Id., new ed. 1894, sec. 172, u Marine: Northwestern Ins. Co. v. ^Etna Ina. Co., 23 Wis. 160; 99 Am. Dec. 145. Fire: Strohn v. Hartford F. Ins. Co., 33 Wis. 649: 37 Wis. 625: 19 Am. Rep. 777; First Baptist Church v. Brooklyn Ins. Co., 19 N. Y. 305. Life: Sheldon v. Conn. Mut. L. Ins. Co., 25 Conn. 219; 65 Am. Dec. 565. Accident: Rhodes v. Ry. Pass. Ins. Co., 5 Lans. 71. Same to ship goods on deck instead of hold: N. W. Ins. Co. v. JCtna Ins. Co., 26 Wis. 78. As to mutual companies: Commercial Mut. M. Ins. Co. v. Union Mut. Ins. Co., 19 How. (U. S.) 318; Belleville Mut. Co. v. Van Winkle, 12 N. J. L. 333; Schaffer v. Mut. Fire Ins. Co., 89 Pa. St. 296. § 34 PAROL CONTRACTS. 84 was organized, and her application for insurance was an appli- cation to become a member of the defendant upon the terms and conditions prescribed in its charter, and its constitution and by-laws. She must have expected a policy in the usual form issued by the defendant, and must be deemed to have agreed to accept such a policy. She must also be deemed to have agreed in advance to pay the consideration in the mode prescribed by the defendant's charter, constitution, and by- laws. The agreement for this insurance was binding, there- fore, not only on defendant, but also upon the plaintiff. De- fendant could have issued and tendered its policy to the plain- tiff." 45 So an oral promise by the president of an insurance company to make a policy of insurance is a contract binding on the company, and a court of equity will compel its specific per- formance. 46 It is true that mutual benefit societies differ in some respects from other mutual insurance corporations, and the powers of such organizations are restricted either by statute or by charter, 47 and these restrictions relate not only to mem- bership, but to the designation of beneficiaries. The laws, how- ever, of these societies have been construed liberally in many cases, 48 although some courts are inclined to limit such corpora- tions strictly to their statutory or charter powers ; 49 but the omission to sign or countersign a policy has been held not to 45 Van Loan v. Farmers' Mut. F. Ina. Assn., 90 N. Y. 2S0. 46 Commercial Mut. M. Ins. Co. v. Union Mut. Ins. Co., 19 How. (U. S.) 318; see, also, Union etc. Ins. Co. v. Commercial etc. Ins. Co., 2 Curt. (C.C.) 524; New England etc. Ins. Co. v. Robinson, 25 Ind. 536; First Baptist Church v. Brooklyn Ins. Co., 18 Barb. (N. Y.) 69; Kelly v. Commonwealth Ins. Co., 10 Bosw. (N. Y.) 82. 47 Elsey v. Odd Fellows' etc. Assn., 142 Mass. 224; Kentucky Masonic etc. Ins. Co. v. Miller, 13 Bush (Ky.), 489. 48 Supreme Lodge K. of P. v. Schmidt, 98 Ind. 374, 381; Blooming- ton Mut. L. Ben. Assn. v. Blue, 120 111. 121 ; 11 N. E. 331 ; 8 West. Rep. 642; 60 Am. Rep. 558; Maneely v. Knights of B. (Pa.), 7 Cent. Rep. 633; 9 Atl. Rep. 41; Covenant Mut. B. Assn. v. Sears, 114 111. 108. 49 Kentucky Mas. Mut. Ins. Co. v. Miller, 13 Bush (Ky.), 489; Knights of H. v. Nairn, 60 Mich. 44; 26 N. W. Rep. 826; Daniels v. Pratt, 143 Mass. 216; 10 N. E. Rep. 166; 3 N. Eng. 480; State v. Moore, 38 Ohio St. 7; National Mut. Aid Assn. v. Gouser, 43 Ohio St. 1 ; 1 West Rep. 4; 1 N. E. Rep. 11; Elsey v. Odd Fellows' etc., 142 Mass. 224; 2 N. Eng. 667; 7 N. E. Rep. 844; Van Bibber v. Van Bibber, 82 Ky. 347; Worley v. Northwest Mas. Aid Assn., 10 Fed. Rep. 227. 85 PAROL CONTRACTS. § 34 render a policy invalid, notwithstanding such requirement of the corporation. 50 So it is held that a regulation or by-law of a fire insurance company cannot make void a policy issued by the directors in contravention thereof if the policy is not void- able upon other grounds, 51 and, as a general rule, the doctrine of waiver is applicable equally to mutual benefit societies as to other insurance companies where the charter or constitution of a society does not render it inapplicable, 02 for in gener'al by- laws may be waived which are intended as a protection to the company.' 53 Again, where a mutual benefit society issues a policy which is in its terms in conflict with the by-laws of the society, the presumption is that the society has waived its by- laws in favor of assured, 54 and a by-law restricting membership in a certain class to persons under a certain age may be waived. 55 And where an agent has acted within the apparent scope of his authority, the principal is estopped to allege spe- cific instructions not known to the party, 56 or to deny the 60 Myers v. Keystone etc. Ins. Co., 27 Pa. St. 268; 67 Am. Dec. 462; Union'lns. Co. v. Smart, 60 N. H. 458. 61 Campbell v. Merchants' etc. Ins. Co., 37 N. H. 35; 72 Am. Dec. 324; Merchants' etc. Ins. Co. v. Curran, 45 Mo. 142; 100 Am. Dec. 361. 62 Millard v. Supreme Council etc., 81 Cal. 340; 22 Pac. Rep. 864. In this case the society had continued to levy and receive assessments from the member after the date when it claimed the member ceased to be in good standing. 53 Union etc. Ins. Co. v. Keyser, 32 N. H. 313; 64 Am. Dec. 375. Here, by the charter and by-laws, the directors were required to divide the risks into four classes, and to determine the rates of insurance and the issuing of all policies; with full knowledge of all facts the directors insured property which should have been insured as belonging to an- other class. 54 Davidson v. Old People's M. B. Soc, 39 Minn. 303; 39 N. W. Rep. 803. 55 Morrison v. Wisconsin O. F. M. L. Ins. Co., 59 Wis. 162. 66 Emery v. Boston M. Ins. Co., 138 Mass. 398, 412. In this case under the by-laws the president was required to sign all policies. In case, however, of his absence, inability, or death, policies were to be signed by two directors. The secretary of the company contrai ted orally with the plaintiff to insure him. The company claimed a want of authority, but it was held that the evidence showed a sufficient bind- ing authority: New England etc. Ins. Co. v. Schettler, 38 111. 166; In- surance Co. v. Wilkinson, 13 Wall. (U. S.) 222. Here the court said: "The powers of the agent are prima facie coextensi\e with the business § 34 PAROL CONTRACTS. 86 agent's power or its own power to contract where the contract has been executed by the other party, 57 and an unrestricted authority to an agent of a fire insurance company to negotiate a contract of insurance by issuing a policy includes authority to make a valid preliminary contract for such issue; and a parol agreement to that effect upon his part and the receipt of the premium therefor binds the company. 58 In view, therefore, of these principles why cannot a corporation of this character bind itself by a completed agreement of insurance not in writ- ing? Certainly in those cases where the society is One which does not issue certificates 59 it could not be urged that the con- tract must be in writing. And assume the case where an agent, within the apparent scope of his authority, makes an oral agreement of insurance in a corporation which does issue cer- tificates, and such party is received into the corporation, and the right to certain benefits matures before any certificate is issued, can the corporation impeach its own want of power to make such contract where not contrary to public policy? To hold that it could would hardly seem to be founded in the rea- son and justice of the law. 60 Public policy is the basis of the intrusted to his care, and will not be narrowed by limitations not com- municated to the person with whom he deals." 67 Bloomington etc. Assn. v. Blue, 120 111. 127; 58. Am. Rep. 852: 60 Am. Rep. 558; Fuller v. Boston etc. Ins. Co., 4 Met. (Mass J 206; Lamont v. Grand Lodge etc., 31 Fed. Rep. 177. 68 Ellis v. Albany Ins. Co., 50 N. Y. 402. The agent was authorized to receive proposals for insurance, and to make and countersign policies and to renew the same. 69 Grand Lodge v. Eisner, 26 Mo. App. 108. 60 See Bloomington Mut. B. Assn. v. Blue, 120 111. 127; 58 Am. Rep. 852; 60 Am. Rep. 558; Chicago Building Soc. v. Crowell, 65 II. 454. In this case Crowell borrowed money of the society, and the latter procured insurance upon the property, and shortly before the expiration of the policy Crowell told the secretary that he wished to insure his own prop- erty; but the secretary replied that the society preferred to procure the insurance and would do so, but before the insurance was effected the property was destroyed. It was held that though the procuring of in- surance was not an express right conferred by charter, yet as the society had exercised these powers they would be estopped from claiming it as ultra vires: Germantown Ins. Co. v. Dhein, 43 Wis. 420; Gordon v. Sea F. Assur. Co., 1 Hurl. & N. 599; Connecticut Mut. L. Ins. Co. v. Cleveland etc. Co., 41 Barb. (N.Y.) 9; In re County L. Aesur. Co., L. R. 5 Ch. 288; Bennett v. Maryland F. Ins. Co., 14 Blatchf. (C. C.) 422; In- 87 PAROL CONTRACTS. § 34 prohibition by law of acts which are unauthorized by the char- ter of a company, 61 but there are numerous cases which up- hold contracts, even when made in violation of a provision contained in the charter, and which involve an unauthorized exercise of corporate powers. Especially is this true where it appears that the provision so contravened was not intended by the legislature to operate as an imperative prohibition of the contract violating such charter provision; or where the charter provision was intended for the benefit of the corporation rather than the protection of the public; or where the provision is merely directory; 62 or where the contract is made in violation of the charter, and third persons acting in good faith and with- out notice would be injured thereby. 63 Such cases also involve questions as to the nature and extent of the powers of agents, and also whether the party dealing with the agent had notice of facts which if known to him would make the contract not only ultra vires, but void. The point under consideration also comprehends the question of estoppel, as where the party has relied upon the apparent authority of an agent, or the com- pany has received the benefits arising from unauthorized acts. "While there are certain leading principles which aid in a solu- tion of the question of what is and is not a valid contract within the charter or articles of association, yet each case must rest in a large measure upon its particular facts. Many of the de- cisions are arbitrary and seemingly rendered without regard to surance Co. v. McCain, 96 U. S. 84; In re Port of London Assur. Co., 5 De Gex, M. & G. 465,481 ; Southern L. Ins. Co. v. Lanier, 5 Fla. 110; 58 Am. Dec. 448; Bulkley v. Derby Fish. Co., 2 Conn. 252, 254; 7 Am. Dec. 271 ; New England etc. Ins. Co. v. Schettler, 38 111. 166; Matt v. Roman Catholic Mut. Prot. Soc, 70 Iowa, 455; 30 N. W. Rep. 799; Emery v. Boston M. Ins. Co., 138 Mass. 410; Lamont v. Hotelmen's B. Assn., 30 Fed. Rep. 817. 61 Morawetz on Private Corporations, ed. 1882, sec. 100. 62 National Bank v. Matthews, 98 U. S. 627; Ayres v. South Austra- lian Banking Co., L. R. 3 P. C. 548; Bates v. Bank etc., 2 Ala. 462; Gold Min. Co. v. National Bank, 96 U. S. 640; Palmer v. Cypress Hill Cemetery, 122 N. Y. 429; Buckley v. Derby F. Co., 2 Conn. 252; 7 Am. Dec. 271; Leslie v. Lorillard, 110 N. Y. 519; Zabriskie v. Cincinnati etc. R. R. Co., 23 How. (U. S.) 381. See notes 22 Am. St. Rep. 768; article "Ultra Vires Contracts of Corporations," 32 Am. Law. Reg. 43. 63 Morawetz on Private Corporations, ed. 1882, sec. 50; Id., rule vi, sec. 62, et seq. See next section herein. § 34 PAROL CONTRACTS. 88 principle or authority. 64 It will be seen, therefore, that the decided cases offer herein no certain and unvarying rule for the determination of the proposition before us. It is held that when an accepted applicant for membership pays his member- ship fee and promises in his written application to pay the further sum of one dollar and ten cents whenever any other member dies, or to forfeit his own claim to a benefit, and the by-laws provide that the association within thirty days after satisfactory proof of his death, will pay to his "widow" as many dollars not exceeding one thousand as there are surviving members at the time of the death, a contract of life insurance is completed. 65 So where the intestate has complied with all other provisions of the society, the fact that he had not taken out a certificate nor designated to whom his benefit should be payable does not preclude a recovery against the society, but in the absence of such certificate the family of the deceased will be entitled to the benefit, 66 and where the supreme lodge of the Knights of Honor sends a benefit certificate, prop- erly signed and sealed, to a subordinate lodge for a person who has applied for membership, been balloted for, elected, and had a degree conferred upon him, and has paid his fees and passed a medical examination which has been approved, the contract relations between him and the supreme lodge are com- plete, although the subordinate lodge has not delivered to him the certificate ; 67 and in Zell v. Herman Farmers' Insurance Company 68 it was held that under its by-laws the company could bind itself by a contract of insurance without issuing a written policy. 68a «* See notes 51 Am. Dec. 341-45; 13 Am. Dec. 108, 109; Morawetz on Corporations, ed. 1882, sees. 28-148, 165, 209; Angell & Amea on Cor- porations, 9th ed., sees. 256-65. See next section herein. 66 Bolton v. Bolton, 73 Me. 299. «• Bishop v. Grand Lodge etc., 112 N. Y. 627; 20 N. E. Rep. 562. « Lorcher v. Supreme Lodge K. of H., 72 Mich. 316; 40 N. W. Rep. 545. 68 75 Wis. 521 ; 44 N. W. Rep. 828. 68 * For a full consideration of the principles discussed in this section, see 4 Thompson on Corporations, ed. 1894, sec. 5015, et seq. , 5825, et seq. ; vol. 5 Id., sees. 5849. 6042. 89 PAROL CONTRACTS. § 35 § 35. Parol Contract — Corporations — Statutory or Charter Provisions. — Some distinction was formerly made between corporations and individuals or partnerships as to the validity of parol contracts, since under the common law corpo- rations could only contract under their corporate seal. But this doctrine does not now obtain. 69 There are cases, however, which go so far as to hold that where the act of incorporation or charter of the insurer requires the contract to be in writing, such corporate provision should govern, and necessitates a writ- ing. Such decisions would seem to rest upon the principle that a corporation can only act in the manner and mode pre- scribed by the law creating it. Thus, in 1804, Mr. Chief Jus- tice Marshall, although not holding that a parol contract of insurance was invalid, determines that where the act incorpo- rating an insurance company provides that its policies shall be rn writing, a contract to cancel is as solemn an act as the con- tract for insurance, and must likewise be in writing and not rest in parol. 70 So in Spitzer v. St. Mark's Insurance Com- pany 71 it is held that since under the company's act of incorpo- ration it was empowered only to make policies in writing, a contract to renew a policy was the same as to make one, and it could only be done by a written instrument, and where the company's charter provided that policies issued by the com- pany should be under seal, it was decided that an unsealed pol- icy could not be given in evidence. 72 Again, it was declared in Illinois that the rights of the parties were governed by the 69 Thayer v. Middlesex Ins. Co.. 10 Pick. (Mass.) 326, 329; N. E. etc. Ins. Co. v. Schettler, 38 111. 171; Hamilton v. Lycoming Mut. Ins. Co., 4 Pa. St. 339; Perkins v. Washington Ins. Co., 4 Cow. (N. Y.) 645; Bank of Columbia v. Patterson, 7 Cranch (U. S.), 299; Fleckner v. United States Bank, 8 Wheat. (U. S.) 357, 358, per Story, J.; Angell & Ames on Corporations, 9th ed., sec. 228, et seq. ; 1 May on Insur- ance, Parsons' ed., sec. 16; Morawetz on Private Corporations, ed. 1882, sec. 167, et seq. See, as to parol contracts by corporations, 4 Thompson on Corporations, ed. 1894, sees. 5015, et seq., 5174-5177, 5825, et seq. 70 Head v. Providence Ins. Co., 2 Cranch (U. S.), 150. 71 6Duer (N. Y.), 6 (1856). 72 Lindauer v. Delaware Mut. S. Ins. Co., 13 Ark. 461. S^e Insurance Co. v. McGilliway, 9 L. C. 488; National Banking etc. v. Knaup, 55 Mo. 154; Cockerill v. Cincinnati Ins. Co., 16 Ohio, 148. But see the last section herein. § 35 PAROL CONTRACTS. 90 law of that state where the application was made to a local agent in the state, and the policy issued in New York did not become operative until countersigned by the local agent there. 73 So in Massachusetts it is held that under the statute insurance companies can make valid policies only when at- tested by the signatures of the president and secretary ; but the court held that this had no application to oral agreements to make insurance. 74 There is a distinction, however, between mere agreements to issue a policy and completed parol contract of insurance. There are numerous cases which hold that pre- liminary parol contracts to issue a policy are valid, even though a loss occur before the issuance, and even though the charter or act of incorporation provide that the contract be executed only in a certain manner. 75 But where the question is whether a parol executed contract of insurance can be enforced in view of such charter provisions as the above, many serious considera- tions are involved, such as the right of a corporation to incur a liability which is not necessarily an enlargement of its powers. So again, it cannot be assumed that every person is familiar with the charters of all corporations, 76 and where a person with- out such knowledge has acted in the highest good faith in pur- suance of a parol contract and induced by it, it is undoubtedly true that the corporation could not plead ultra vires to avoid the obligation. 77 So where a contract has been fully per- 73 Pomeroy v Manhattan L. Ins. Co., 40 111. 393. 74 Commercial Ins. Co. v. Union Ins. Co., 19 How. (C. 0.3 318. 75 See Constant v. Insurance Co., 3 Wall. Jr. (U. S. 3,313; Collett v. Morrison, 9 Hare, 162; Perry v. Mercantile Ins. Co., 8 U. C. 3G3. 76 Lloyd v. West Branch Bank, 15 Pa. St. 172. 77 See Parish v. Wheeler, 22 N. Y. 494; Newark Mach. Co. v. Kenton Ins. Co., 50 Ohio St. 549; 35 N. E. Rep. 1060; Louisville etc. Ry. Co. v. Flannigan (Ind.3, 14 N. E. Rep. 370; National Bank v. Whitney 103 U. S. 99; Credit Co. v. Howe Mach. Co., 54 Conn. 387; Lloyd v. West Branch Bank, 15 Pa. St. 172; Union Nat. Bank v. Matthews, 98 U. S. 621; Mallory v. Hanauer Oil Works, 86 Tenn. 598; 8 S. W. Rep. 396; Norton v. Bank, 61 N. H. 593; Palmer v. Hartford F. Ins. Co., 54 Conn. 488; Samuel v. Fidelity etc. Co., 1 N. Y. S. 850; 2 Morawetz on Corporations, 2d ed., c. viii, sees. 577-725; 5 Thompson on Corpora- tions, ed. 1894: Sec. 6021, "The other party estopped when he has re- ceived the benefit"; Sec. 6022, "Or where the corporation has acted to its disadvantage"; Sec. 6023, "Rule where the contract is fully ex- 91 PAROL CONTRACTS. § 35 formed by the party contracting with a corporation, and the corporation has received the benefits from such contract, it cannot afterward invoke the doctrine of ultra vires to defeat an action brought against it on such contract. And where an in- gurance company issues a policy to one upon his own life, pay- able at his death to a third person, and the insured pays the premiums which are accepted by the company, it is held that it cannot, after the death of the assured, resist payment of the policy to the beneficiary, upon the ground that he is neither a relative, heir, nor devisee of the insured, and that its charter authorizes it to pay to such persons only. 78 So if a company by its charter is prohibited from insuring more than two-thirds of the value of any property, yet voluntarily and without fraud or misrepresentation insures more, the policy is not thereby made void. 79 Again, when the act of incorporation provides that all powers relating to contracts of insurance are vested in directors, and they are to divide the property insured into four classes and to direct the making and issuing of all policies of insurance, if after making a by-law establishing a rule for the division of risks, and with a knowledge of the facts, they in- sure property in one class properly falling in another, thereby violating the by-law, still the policy issued will be valid and the company bound. 80 But it has also been held that an in- surance company is not estopped from setting up the fact that a contract of insurance made through its agent is ultra vires, though its agent had led the other contracting party to believe that the company had power to make it, and though no pre- tense was set up by the company or its agent that the contract was ultra vires until a loss thereunder was known by all parties ecnted on both sides"! Sec. 6024, "Rule where the contract has been fully executed on either side"; Sec. 6025, "Rule where the contract has been executed by the party contracting with the corporation"; Sec. 6026, "Rule where the contract has been executed by the corporation"; Sec. 6028, "Doctrine that violation of charter or want of power cannot be set up collaterally"; Sec. 6029, "Cases where this doctrine has been applied"; Sec. 6030, "Who may not set up such violations or want of power"; Sec. 6031, "Illustrations of the foregoing." 78 Bloomington Mut. L. B. Assn. v. Blue, 120 111. 121; 11 N. E. Rep. 331: 60 Am. Rep. 558. See last section herein. 79 Williams v. N. E. Mut. F. Ins. Co., 31 Me. 219. 80 Union etc. Ins. Co. v. Keyser, 32 N. H. 313; 64 Am. Dec. 375. § 36 PAROL CONTRACTS. 92 to have occurred. 81 Therefore, charter provisions relating to executing a policy ought not, in the absence of words of re- striction or a plain denial of such power, to be construed to limit the powers of the corporation or to prevent them from mak- ing parol contracts within the ordinary scope of their chartered powers. 82 § 36. Parol Contract of Corporations — Statutory or Charter Provisions, Continued.— It is even declared in a Mas- sachusetts case 83 that the phraseology of statutes chartering in- surance companies respecting the execution of policies should be regarded as consisting simply of enabling words not restrain- ing the power which they confer to make contracts of which the policies are the evidence, and it was directly determined that the company had power to make an oral contract, although the charter gave authority to make contracts of insurance "in their name and by the signature of their president for the time being, or by the signature of such other person and in such form and with such ceremonies of authentication as they may by their rules and by-laws direct." So it is declared in a New York case 84 that "whatever doubts may formerly have existed as to the validity of parol contracts of insurance made by insur- ance companies authorized by their charters to make insurance by issuing policies, it is now settled that they are valid. It is equally well settled that parol contracts of such companies to effect an insurance by issuing policies are valid," and it was also held in an Indiana case 85 that the company, unless ex- 81 Webster v. Buffalo Ins. Co., 7 Fed. Eep. 399. See Post v. ^Etna Ins. Co., 43 Barb. (N. Y. ) 351 ; Hartford Ins. Co. v. Wilcox, 57 111. 180; Insur- ance Co. v. Colt, 20 Wall. (U. S.) 560; Walker v. Metropolitan Ins. Co., 56 Me. 371; Butman v. Home Ins. Co., 123 Mass. 324, 328; 25 Am. Rep. 93. 82 Sanborn v. Firemen's Ins. Co., 16 Gray (Mass.), 448; 77 Am. Dec. 419; New England Ins. Co. v. Robinson, 25 Ind. 536; Baile v. St. Joseph F. Ins. Co., 73 Mo. 371. 83 Sanlx.rn v. Firemen's Ins. Co., 82 Mass. 448; 77 Am. Dec. 419; see, also, Insurance Co. v. Colt, 20 Wall. (U. S.) 560. 84 Ellis v. Albany City F. Ins. Co., 50 N.Y. 402; 10 Am. Rep. 495. See, also, Walker v. Metropolitan Ins. Co., 56 Me. 371; First Baptist Church v. Brooklyn F. Ins. Co., 19 N. Y. 305; Commercial Mut. M. Ins. Co. v. Union Mut. Ins. Co., 19 How. (U. S.) 319. 85 N. E. F. & M. Ins. Co. v. Kubinson, 25 Ind. 536. 93 PAROL CONTRACTS. § 36 pressly restrained by charter, might make a valid insurance by parol. And the facts that an insurance company is bound by its charter to print on the face of its policies all conditions, and that certain officers shall sign all the policies or contracts made, etc., do not prohibit the company from making oral contracts of insurance, 86 although under a similar state of facts a case was decided contra in the Missouri state court. 87 It is held in Constant v. Insurance Company 88 that although by its act of incorporation an insurance company can make a valid insurance only by a policy attested by the president, secretary, and the seal of the corporation, yet before such instruments are attested in due form the presi- dent or secretary, or whoever else may act as a general agent of the company, may make agreements and even parol promises as to the terms on which a policy shall be issued, so that a court of equity will compel the company to execute the contract specifically, 89 and it is generally held in like cases that a parol agreement for insurance is valid. 00 But a mere collateral promise or representation which does not involve the execution of a policy of insurance is not within the scope of the general authority of an officer or agent of such a corporation, and cannot be enforced. 91 The following cases further illus- trate the rule as to agreements for insurance: Thus, an agree- ment for insurance was made with an insurance company through its agent, and on the next day the policy, dated as of the preceding day, was executed, delivered, and received in per- fect accordance with that agreement, and it was held that the company was liable for a loss occurring after the agreement was entered into and before the policy was executed, although the 86 Henning v. United States Ins. Co., 2 Dill. (G. C.) 26. 87 Henning v. United States Ins. Co., 47 Mo. 425; 4 Am. Eep. 332. 88 3 Wall. Jr. (CO, 313. 89 See, also, Security etc. Ins. Co. v. Kentucky M. Ins. Co., 7 Bush (Ky.), 81; 3 Am. Rep. 301. 90 Cooke v. ./Etna Ins. Co., 7 Daly (N. Y.), 555; Insurance Co. v. Colt, 20 Wall. (U. S.) 560; Post v. ^Etna Ins. Co., 43 Barb. (N. Y.) 351; Ide v. Phoenix Ins. Co., 2 Biss. (C. C.) 333; Fish v. Liverpool etc. Ins. Co., 44 N. Y. 538; Angell v. Hartford F. Ins. Co., 59 N. Y. 171 ; 17 Am. Eep. 322; Jones v. Provincial Ins. Co., 16 U. C. Q. B. 477. 91 Constant v. Insurance Co., 3 Wall. Jr. (C. C.) 313. § 37 PAROL CONTRACTS. 94 charter of the company provided that all policies of insurance should be subscribed by the president and signed and sealed by the secretary. 92 Again, where the charter confers upon an insurance company power "generally to do and perform all things relative to the object of the association," and provided in a subsequent section that "all policies or contracts of insur- ance" shall be subscribed by the president or some other officer designated by the board of directors for that purpose, the latter provision does not disable the company from binding itself by contracts for policies and immediate insurance executed in other modes and by other agents, but merely prescribes the manner in which the final contract or policy shall be exe- cuted. 93 So a provision in a company's charter requiring that "all policies and contracts of insurance .... shall be sub- scribed by the president" relates only to executed insurances, and does not abridge the common-law right to make an oral executory contract for insurance. 94 § 37. Parol Contract for Insurance Subject to Usual Provisions of Policy. — A parol contract for insurance is in effect the contract of the company as expressed in the poli- cies commonly issued by them, unless otherwise agreed upon, 95 and is to be regarded as made upon the terms and subject to the conditions in the ordinary forms of policies used by the company at the time. 96 So where plaintiff applied to defend- ant's agent for a policy of marine insurance on certain goods and paid the premium, but the agent said it was not his custom to give a policy, and that it was unnecessary, and gave him a receipt specifying the risk insured, but containing no condi- 92 Davenport v. Peoria etc. Ins. Co., 17 Iowa, 276. » s Dayton Ins. Co. v. Kelly, 24 Ohio St. 345; 15 Am. Rep. 612. M Security F. Ins. Co. v. Kentucky M. Ins. Co., 7 Bush (Ky.), 81; 3 Am. Rep. 301. 95 Hubbard v. Hartford F. Ins. Co., 33 Iowa, 325; 11 Am. Rep. 125; Newark Mach. Co. v. Kenton Ins. Co., 50 Ohio St. 549; 35 N. E. Rep. 1060; Smith v. State Ins. Co., 64 Iowa, 716. 96 Eureka Ins. Co. v. Robinson etc. Co., 56 Pa. St. 256; 94 Am. Dec. 65; De Grove v. Metropolitan Ins. Co., 61 N. Y. 594; 19 Am. Rep. 305; Salisbury v. Hekla F. Ins. Co., 32 Minn. 458; State F. Ins. Co. v. Por- ter, 3GrantCas. (Pa.) 123. 95 PAROL CONTRACTS. § 38 tions, it was held that the contract was governed by the limitations and conditions contained in the policies ordinarily used by the company. 97 If the insurer, however, enters into an oral contract of insurance, and at the same time agrees to issue a policy which it subsequently refuses to do, it cannot claim that the insured's right of recovery is defeated by the viola- tion of any provisions which the policy, if issued, would have contained. 98 But if a policy is issued in pursuance of a verbal agreement, and assured receives it, but it is void because of noncompliance with a statutory form, the presumption is that the terms of the oral contract conform with those of the written policy. 99 § 38. Parol Agreement for Insurance may be Specifi- cally Enforced, or Court may Award Damages. — An oral contract to issue a policy of insurance is binding and may be specifically enforced, or the court may award damages the same as in an action on an executed policy. 100 In a New Hampshire case 101 an agreement was made with the agent of 97 De Grove v. Metropolitan Ins. Co., 61 N. Y. 594; 19 Am. Eep. 305, and note, 309. See, also, Barre v. Council Bluffs Ins. Co., 76 Iowa, 609; Belief F. Ins. Co. v. Shaw, 94 U.S. 574; Salisbury v. Hekla F. Ins. Co., 32 Minn. 458; Smith v. State Ins. Co., 64 Iowa, 716; Lipman v- Niagara F. Ins. Co., 121 N. Y. 454; McCann v. ^tna Ins. Co., 3 Nev. 198 T Fames v. Home Ins. Co., 94 U. S. 621. 98 Hard wick v. State Ins. Co., 23 Or. 290; 31 Pac. Rep. 656; 22 Ins. L. J. 262. 99 Green v. Liverpool etc. Ins. Co. (Iowa), 60 N. W. Rep. 189. See Howard Ins. Co. v. Owens, 94 Ky. 197. 100 Security F. Ins. Co. v. Kentucky M. Ins. Co., 7 Bush (Ky.), 81; 3 Am. Rep. 301. See Amer. Horse Ins. Co. v. Patterson, 28 Ind. 17; Gerrish v. German Ins. Co., 55 N. H. 355; Gold v. Sun Ins. Co., 73 Cal. 216; Jones v. Provincial Ins. Co., 16 U. C. Q. B. 477; Kentucky Mut. Ins. Co. v. Jenks, 5 Ind. 96; Humphrey v. Hartford F. Ins. Co., 15 Blatchf. (C. C.) 35, 504; Phoenix Ins. Co. v. Ryland, 69 Md. 437 1 Law Rep. Annot. 548; Peoria etc. Ins. Co. v. Walser, 22 Ind. 73 Northwestern Iron Co. v. ^Etna Ins. Co., 23 Wis. 160; 99 Am. Dec. 145 Rhodes v. Ry. Pass. Ins. Co., 5 Lans. (N. Y.) 71; Wooddy v. Old Dominion Ins. Co., 31 Gratt. 362; 31 Am. Rep. 732; Home Ins. Co. v. Adler, 77 Ala. 242; Dunning v. Phoenix Ins. Co., 68 111. 414; Kelly v. Connecticut Ins. Co., 10 Bosw. (N. Y.) 82; Ellis v. Albany City F. Ins. Co., 50 N. Y. 402; 10 Am. Rep. 495; Taylor v. Merchants* Ins. Co., 9 How. (U. S.) 390. 101 Gerrish v. German Ins. Co., 55 N. H. 355. § 38 PAROL CONTRACTS. 96 the company for insurance against fire for one year, commenc- ing the risk at noon, September 30, 1873. The premium was paid to the agent and he agreed to procure and deliver the policy. Before this was done, and on October 1, 1873, a loss occurred. The requisite proofs of loss were made and a policy demanded and payment of the amount insured, which demands were refused. Upon a bill in equity therefor it was decided that the court had jurisdiction to compel a delivery of the pol- icy and specific performance, and that it would, to avoid circuity of action, decree payment of the loss. So specific performance of an executory parol contract to insure a marine risk may be compelled in equity after the loss has occurred, when it ap- pears that the voyage was undertaken on the understanding that the risk had been accepted, and that the writing to effect the insurance would be duly made, and that the premium would be paid when required according to usage; 102 and an oral promise by the president of an insurance company to make a policy of insurance is a contract binding on the com- pany, and a court of equity will compel its specific perform- ance. 103 Again, if the agents of the A, B, C, D, and E insur- ance companies agree with a party to insure her premises in the A, B, C, and D companies, she has against these four, after destruction thereof by fire, a claim for the loss, even though the policies have not been delivered to her, but none against the E, although the E had also written out a policy for her. Equity will only consider that to be done which was agreed to be done. 104 So equity may compel the issuance and delivery of an insurance policy after the loss, and enforce the payment of it, as if made in advance, where there has been a valid agree- ment for one before the loss, even where the contract was by 102 Phoenix Ins. Co. v. Eyland, 69 Ind. 437; 1 Law Hep. Annot. 548. 103 Commercial Mut. Mar. Ins. Co. v. Union Mut. Ins. Co., 19 How. (U. S.) 318; see Union etc. Ins. Co. v. Commercial etc. Ins. Co., 2 Curt. (C. C.) 524; New England etc. Ins. Co. v. Robinson, 25 Ind. 536; First Baptist Church v. Brooklyn Ins. Co., 18 Barb. (N. Y.) 69; Kelly v. Commonwealth Ins. Co., 10 Bosw. (N. Y.) 82. 101 Fitrton v. Fire Ins. Assn., 20 Fed. Eep. 766. 97 PAROL CONTRACTS. §§ 39\ 40 parol and the charter of the company requires all policies to be in writing. 105 § 39. Parol Contract — Statute of Frauds. — Tn the United States supreme court it is held that the statute of frauds does not require that a promise to make a policy of in- surance should be in writing, 106 nor does the statute make a writing necessary in Alabama, 107 nor in Kentucky. 108 So an oral contract of insurance for one year including its date is a contract to be performed within a year, and is not within the statute of frauds, 109 and an agreement to insure for even three or more years, where the contingency may happen within a year, is not within the statute. 110 So a verbal agreement of renewal which is not by its terms to endure for a longer period than one year, though it may continue for an indefinite period, is not within the statute. 111 But the contract may be divisible and partly within the statute, and void as to that part and valid as to the other part, as in case of a parol agreement to an- swer for loss by fire, and for the default and miscarriage of an- other. 112 § 40. How far Parol Contract Merged in Written Agreement. — A parol contract to issue a policy is not. merged in a written policy which does not cover all the branches and elements of the parol contract, and which 105 Franklin F. Ing. Co. v. Taylor, 52 Miss. 441. See Ellis v. Albany Ins. Co., 50 N. Y. 495, and note. 106 Commercial Mut. M. Ins. Co. v. Union Mut. Ins. Co., 19 How. (IT. S.) 318; 2 Curt. (C. C.) 524. 107 Gold L. Ins. Co. v. Mayes, 61 Ala. 163. 108 Howard Ins. Co. v. Owens, 94 Ky. 197; 21 S. W. Eep. 1037; Phoe- nix Ins. Co. v. Spiers, 87 Ky. 286. See, also, Wiebeler v. Milwaukee etc. Ins. Co., 30 Minn. 464. 109 Sanborn v. Fireman's Ins. Co., 16 Gray (Mass.), 448; 77 Am. Dec. 419; Howard Ins. Co. v. Owen, 94 Ky. 197; 14 Ky. L. Rep. 881. See, also, Walker v. Metropolitan Ins. Co., 56 Me. 371. 110 Morse v. Minnesota Ry. Co., 30 Minn. 464. See Van Loan v. Farm- ers' Mut. F. Ins. Assn., 24 Hun (N. Y.), 132. 111 First Baptist Church v. Brooklyn F. Ins. Co., 19 N. Y. 305; s. c. 18 Barb. (N. Y.) 69. 112 Mobile Marine etc. Ins. Co. v. McMillan, 31 Ala. 74. Joyce, Vol. I.— 7 § 41 PAROL CONTRACTS. 98 the company does not admit as binding upon it. 113 So the issuing in consequence of a parol agreement of a policy containing material errors resulting from a mistake of the agent of the insurers in communicating the facts to them, and the agent's error in requiring the insured to pay a premium which is less than the rate agreed upon and less than the agent was authorized to insure at, does not impair the liability of the insurers upon the original agreement, 114 and where the in- surers on receiving a premium agreed to deliver a policy cover- ing specific property, and afterward sent a policy varying from the terms of the contract and a loss occurred, it was decided that a recovery might be had in accordance with the terms of the insurance contracted for, it appearing that the policy was received by a clerk and its provisions not known to the insured till after the fire. 115 So where the terms of an order to insure have been materially departed from in the policy by fraud or mistake, the order will be considered as containing the contract between the parties. But the order can be resorted to only in so far as it varies from the policy ; in all other respects the pol- icy should be considered as the contract. 116 And if an insur- ance company receives the premium paid to its agent who made the contract and forwarded the policy, it is bound by the contract made by him, although by mistake it is not correctly stated in the policy. 117 It may be stated that, as a general rule, the written contract will be presumed to embody therein all previous verbal agreements of the parties and will in the ab- sence of fraud or mistake be conclusive upon them. 118 § 41. Parol Contract — Renewal. — A company through its authorized agent, may contract by parol for the renewal of a policy, although it be stipulated on the face of the existing "* Nebraska etc. Ins. Co. v. Seivers, 27 Neb. 541; 43 N. W. Rep. 351. 114 Bernton v. Orient etc. Ins. Co., 8 Bosw. (N. Y.) 448. 116 Franklin Ins. Co. v. Hewitt, 3 B. Mon. (Ky.) 231. 116 Delaware Ins. Co. v. Hogan, 2 Wash. (C. C.) 4. 117 Abraham v. North German Ins. Co. (C. C. Iowa), 40 Fed. Rep. 717. 118 McLaughlin v. Equitable L. Assur. Co., 38 Neb. 725; 57 N. W. Rep. 557. 99 PAROL CONTRACTS. § 41 policy that it shall not be renewed in that manner. 119 And an agreement to continue an insurance is valid, and a recovery may be had before the issuance of the policy or the payment of the premium. 120 But the contract must be complete as in cases of original insurance, 121 and mere loose general conversation relating to the renewal of a policy, had between the assured and an agent authorized to renew policies, cannot be deemed equivalent to a renewal. 122 In Benjamin v. Saratoga Mutual Fire Insurance Company 123 a policy of insurance was issued to plaintiff as agent of the owners. Plaintiff had an interest in the property as mortgagee, of which he informed the insurers. Afterward he obtained title by foreclosure. He notified the insurers of this and of the fact that he had agreed to convey to a third person. They consented that the policy should remain valid till the vendee's title was perfected and it was held that this agreement was equivalent to issuing a new policy to the plaintiff. But where an insurance agent is questioned as to whether the company would bind or renew the policv, the agent's silence does not operate to impose a contractual rela- tion upon the company. In such case it is incumbent upon the party to repeat his question and take further action if he wishes to obtain assent of the company. 124 119 Cohen v. Continental F. Ina. Co., 67 Tex. 325; 3 S. W. Rep. 296; 60 Am. Eep. 24. See Giddings v. Phoenix Ina. Co., 90 Mo. 272, 277; Royal Ina. Co. v. Beatty, 119 Pa. St. 6. Examine aa to apecialtiea, Firemen'a Ina. Co. v. Floaa, 67 Md. 403. 120 Springer v. Anglo-Nevada Aaaur. Corp., 33 N. Y. 543; 11 N. Y. Supp. 533. See Waince v. Milford Mut. F. Ina. Co., 153 Maaa. 335. 121 Johnson v. Com. F. Ins. Co., 84 Ky. 470; King v. Hekla Ina. Co., 58 Wia. 508; Dinning v. Phoenix Ina. Co., 68 111. 414, 418. 122 O'Reilly v. London Assur. Corp., 101 N. Y. 575. See, also, Croghan v. New Y. Underwriters' Agency, 53 Ga. 109, 111. 128 17 N. Y. 415. "* Royal Ins. Co. v. Beatty, 119 Pa. St. 6; 11 Cent. Rep. 442; 12 Atl. Rep. 607; 5 Pa. (L. ed.) 366. CHAPTER IV. REQUISITES OF VALID CONTRACT— COMPLETION OF CON- TRACT. SUBDIV. I. Requisites of Valid Contract. II. Completion of Contract: Proposal and Acceptance. III. Completion of Contract: Prepayment of Premium. IV. Completion of Contract: Delivery of Policy: Knowledge of Loss. SUBDIV. I. Requisites of Valid Contract. S 43. Requisites of a valid contract of insurance. § 44. Requisites of a valid parol contract of insurance. § 45. Minds of the parties must meet on all essentials of contract. § 46. Essentials need not be expressly agreed upon— Prior course of dealing, custom, etc. § 47. The usual rate of premium will be presumed to have been intended. § 48. Both the rate of premium and the duration of the risk may be understood. § 49. The rate of premium and amount may.be understood., § 50. Whether a contract exists may be governed by custom or usage of the parties or of the insurance business at a place. SUBDIV. II. Completion of Contract: Proposal and Acceptance. § 53. Completion of contract: Mutual benefit societies. § 54. Completion of contract: Proposal or application. § 55. Completion of contract: Acceptance, generally. § 56. Qualified acceptance— Condition precedent. § 57. Acceptance— Delay in acting on application. § 58. When applicant is not bound to accept policy: Effect of reten- tion of policy by applicant. § 59. Agent's agreement— Liability not to attach till approval. § 60. Approval may be implied from the circumstances. § 61. Oral agreement of agent may be controlled by application. § 62. Completion of contract: Negotiations through mail. § 63. No contract where acceptance mailed differs in terms from proposal. § 64. Agent's receipt pending approval or issuance of policy. (100) 101 REQUISITES OP VALTD CONTRACT. § 65. Same subject: Effect of memorandum— Binding slip, In- dorsement, etc. { 66. Completion of contract, marine and fire: Binding slip. SUBDIV. III. Completion of Contract: Prepayment of Premium. § 70. Prepayment of premium: Condition precedent. § 71. Actual prepayment of premium not in all cases essential to validity of contract. § 72. Prepayment of premium: Oral agreement. § T6. Prepayment of premium to agent or broker. § 74. Effect of part payment. § 75. Payment by third person. § 76. Prepayment of premium may be -waived. § 77. Waiver of prepayment by agent. § 78. Renewal— Waiver of prepayment of premium. § 79. Prepayment of premium— Effect of delivery of policy. § 80. Prepayment— Credit may be given. § 81. Prepayment— Mutual credits— Application on agent's debt. § 82. Where there are mutual credits. § 83. Crediting premium on agent's indebtedness to appbeant. § 84. Prepayment— Course of dealings allowing credit. § 85. Prepayment of premium— Evidence of waiver. § 86. Effect of receipt in policy for premium. SUBDIV. IV. Completion of Contract: Delivery of Policy: Knowledge of Loss. § 90. Delivery of policy not necessary to complete contract. § 91. Actual or manual delivery of policy not necessary to com- plete contract. § 92. Agreement to deliver policy— Demand unnecessary. § 93. There may be a constructive delivery. § 94. Delivery— Possession of policy by the assured. § 95. Neglect of assurer to deliver policy. § 96. Conditional delivery. § 97. Parol evidence admissible to show conditional delivery. § 98. When actual delivery of the policy necessary. § 99. Delivery: Misrepresentation or fraud. § 100. Delivery: Notice to assured of execution of policy. § 101. Delivery to agent of insured or to third person. § 102. Delivery by or to agent— Policy held by agent. § 103. Delivery: Agreement completed before loss. § 104. Delivery. Agreement incomplete at time of loss. § 105. Loss before date of contract— Retroactive policy. § 106. Where both parties know of loss when contract made or executed. § 107. Knowledge of loss by assured before and after risk attaches. § 108. Assured not obligated to notify company of loss before de- livery of policy where risk has attached. § 43 REQUISITES OF VALID CONTRACT. 102 SUBDIV. 1. Requisites of Valid Contract. § 43. Requisites of a Valid Contract of Insurance. — To constitute a valid contract of insurance it is necessary that there should be (1) parties thereto, (2) a premium, (3) a subject matter, (4) an insurable interest, (5) certain risks or perils, (6) duration of the risk, (7) the amount insured. 1 And there can be no complete contract of insurance, unless all these essen- tials exist, either expressly or by implication. But "neither the times and amounts of payments by the assured, nor the modes of estimating or securing the payment of the sum to be paid by the insurers, affect the question whether the agreement be- tween them is a contract of insurance. All that is requisite to constitute such a contract is the payment of the consideration by the one and the promise of the other to pay the amount of the insurance upon the happening of injury to the subject by a contingency contemplated in the contract." 2 It is also neces- sary that the parties be those capable of contracting, 3 and that the risk be a legal one, not repugnant to public policy nor pos- itive prohibition, nor occasioned by the insurer's own fraud or misconduct, nor an infringement of the rights of persons not parties to the contract. 4 1 The essentials of a contract of insurance are a subject matter, the risk insured against, the amount, duration of the risk, and the premium : Tyler v. New Amsterdam etc. Ins. Co., 4 Rob. (N. Y.) 151; First Bap- tist Church v. Brooklyn Ins. Co., 28 N. Y. 153. Essentials are, the premises, the risk, the amount, the time the risk should continue, and the premium: Strohn v. Hartford F. Ins. Co., 37 Wis. 625; 19 Am. Rep. 277. The substantial elements of a contract of insurance are the pay- ment of a consideration by one party and the promise of the other to pay an agreed amount upon the happening of the specified contingency, it being understood that the former party had an insurable interest in the subject matter: Bolton v. Bolton, 73 Mo. 299, 303. To render the contract complete, there should be a matter to form its subject, and this matter should be exposed to the hazards of the sea: Emerigon on Insurance, Meredith's ed., c. i, sees. 1, 2, pp. 5, 11. Newspaper con- tract : If one is induced to buy or to subscribe for a copy of a newspaper by reason of a promise to pay a certain sum of money to his heirs, in case of death by accident within a specified and limited time, such person to be identified by having the paper in his possession, it is a contract of insurance: Commonwealth v. Philadelphia Inquirer, 15 Pa. Co. Rep. 4P>3. 2 Gray, J., in Commonwealth v. Weatherbee, 105 Mass. 149, 160; State v. Farmers' etc. Assn., 18 Neb. 276. 3 See sec. 34 herein. * Bell v. Western etc. Ins. Co., 5 Rob. (La .) 423: 39 Am. Dec. 542; 1 Phillips on Insurance, 3d ed., 492, sec. 906. bee sec. 34 herein. 103 RKQUISITES OF VALID CONTRACT. g 45 § 44. Requisites of a Valid Parol Contract. — A parol contract for insurance must contain all the essentials of a valid agreement so that nothing remains to be done but to fill up and deliver the policy on the one hand, and to pay the pre- mium on the other; 5 and the contract must be fairly entered into for a good consideration between parties competent to con- tract, 6 and must otherwise conform to the rules given in the last section in regard to legality of the contract. § 45. Minds of the Parties must Meet on all Essentials of Contract. — There must be a meeting of minds upon all the essentials of a valid contract of insurance. If any of the material details remain to be determined, the contract is not complete. 7 In brief nothing should be left open for future determination. The assent must be mutual, since this meeting of minds is vital to the life of the contract. This obligation is correlative, and depends upon the acts of the parties them- selves, and if one party is not bound it necessarily follows that there is no obligation on the other party. 8 In case the corre- spondence between the parties shows that their minds never met with respect to the terms, there is no contract, nor is the company bound in such case by mailing to the applicant a policy which he is not bound to accept. 9 But the terms being specified, the minds of the parties meet when the insurer signifies his acceptance of the application 5 People's Ins. Co. v. Paddon,8 Bradw. (111.) 447. See, also, Sandford v. Trust F. Ins. Co., 11 Paige (N. Y.), 547; Home Ins. Co. v. Adler, 71 Ala. 516; Kentucky M. Ins. Co. v. Jenks, 5 Ind. 96; Franklin Ins. Co. v.Taylor, 52 Miss. 441; Hartford Ins. Co. v. Wilcox, 57 111. 180; Tyler v. New Amsterdam etc. Ins. Co.,4 Eob. (N. Y.) 151; Real Estate M. F. Ins. Co. v. Roessle, 1 Gray (Mass.), 336. 6 Hartford F. Ins. Co. v. Farrish, 73 111. 166. 7 Kimball v. Lion Ins. Co., 17 Fed. Rep. 625, 626; GoJdard v. In- surance Co., 108 Mass. 56; 11 Am. Rep. 307; Covenant M. B. Assn. v. Conway, 10 Brad. (111.) 348; Mutual L. Ins. Co. v. Young, 23 Wall. (U. S.) 85; Home Ins. Co. v. Adler, 71 Ala. 516; Trustees etc. V.Brook- lyn F. Ins. Co., 28 N. Y. 153; Serane v. Portland, 9 Mich. 493. 8 Insurance Co. v. Young, 23 Wall. (U. S.) 85; Strohn v. Hartford Ins. Co., 37 Wis. 625; 19 Am. Rep. 777; Hallock v. Insurance Co., 27 N. J. L. 645; Eliasen v. Henshaw, 4 Wheat. (U. S.) 228. 9 Hamblet v. City Ins. Co., 36 Fed. 118. See Sheldon v. Hekla F. Ins. Co., 65 Wis. 436. § 45 KEQUISITES OP VALID CONTRACT. 104 to the applicant. 10 Though where an undated note with a blank application was given to an agent of an insurance com- pany, with an agreement by the latter that such acts constituted an agreement of insurance, and that when the owner gave the company a description of the property the policy should issue, and the note and application be filled out, this does not consti- tute a contract of insurance. 11 In another case the defendant's agent agreed to insure one C. by an "open policy" upon tobacco belonging to C. and others, stored in C.'s warehouse at a certain rate per annum, the amount insured being variable from time to time as the amount of tobacco in the store should vary. The time for which the insurance should continue was not fixed, and no premium was received by the agent, on the ground that he could not determine what amount of premium would be- come due under the policy. After this agreement plaintiff's tobacco stored in the warehouse was destroyed by fire, and it was held that in the absence of any definite agreement as to the duration of the risk there was no complete contract of in- surance. 12 Again, where the agent upon application gave a receipt for the premium, which contained only a brief state- ment of the risk insured, specifying the rate of the premium, amount of insurance, the property, the time insured, but did not specify the peril or risk insured against, it was held not a contract, but merely evidence that the insured was entitled to a contract in the usual form, and that the usual policy must be looked to to ascertain the limitations and conditions of the con- tract and the company's liability. 13 So where there was an agreement to accept the risk as soon as the rate of premium should be fixed, which was not done, and a loss occurred, it was held that no insurance was effected, although the company entered the insurance in its order-book, and the number and date of the proposed policy in its ledger, and the secretary told the applicant to consider himself insured. 14 And the agree- ment will be complete, although a bond to pay assessments be 10 Schwartz v. Germania Ins. Co., 18 Minn. 448, 455. » Mattoon M. Co. v. Oshkosh Ins. Co., 69 Wis. 564 ; 35 N. W. Rep. 12. » Strohn v. Hartford F. Ins. Co., 37 Wis. 625; 19 Am. Rep. 777. 15 De Grove v. Metropolitan Ins. Co., 61 N. Y. 594;'19 Am. Rep. 3~>5. u Christy v. North Brit. Ins. Co., 3 Ct. Sess. (1st aeries, 1825) p. 360. 105 REQUISITES OF VALID CONTRACT. § 45 not executed, it being customary to do that upon delivery of the policy. 10 So a definite statement of the period of insurance is indispensable where the code requires a writing; 16 and an oral agreement by an insurance agent to take five thousand dollars upon mill property is not a completed contract of insurance if there was to be an apportionment between real and personal estate, and none had been made when the property was de- stroyed by fire. 17 Again, where it appeared that a. "risk was taken for two thousand five hundred dollars at two per cent," and that the applicant's insurance broker threw a policy down on the secretary's desk and said, according to one witness, "There is a policy, if you take it," or according to another wit- ness, "You are to make out a like policy," but tendered no premium till the premises to be insured were burned, it was held that the contract was too vague and indefinite to be bind- ing; 18 and in a case where the application was for insurance on one house and the policy covered another which the agent thought was the one meant, there was no insurance, as the minds of the parties never met. 19 In another case the broker, without the owner's knowledge or authority, stated in the ap- plication that the risk was a machine shop, when in fact it was an organ factory, which was a more hazardous risk, and the owner accepted the policy expressed to be on a machine shop, and paid the premium. It was held in an action after loss that "the policy was void, as the minds of the parties never met on the subject matter of the contract. 20 So again where two ves- sels with the same name were lying in port, and the insurance was on goods laden or to be laden on board a vessel of a certain name, and there was a doubt as to which vessel was intended, it was held, in the absence of proof that the goods were laden on board the vessel contemplated by the parties, that the policy did 16 Van Sloan v. Farmers' M. F. Ins. Co., 24 Hun (N. Y.), 132. 16 Clark v. Brand, 62 Ga. 23, 25; Ga. Code, sec. 2794. 17 Kimball v. Lion Ins. Co., 17 Fed. Rep. 625. 18 Tyler v. New Amsterdam etc. Ins. Co., 4 Rob. (N. Y.) 151, 156. 19 Mead v. Westchester F. Ins. Co., 3 Hun (JN\ Y.), 608. 20 Goddard v. Monitor Mut. F. Ins. Co., 108 Mass. 56; 11 Am. Rep. 307. §§ 46, 47 REQUISITES OF VALID CONTRACT. 106 not attach. 21 The rule is otherwise, however, if both parties intend the same subject, but make a mistake in the name. 22 But an insurer who has left the value of the property blank, to be determined after loss, is estopped to insist that an oral state- ment as to its value was material to the validity of the con- tract. 23 § 46. Essentials Need not be Expressly Agreed upon — Prior Course of Dealing — Custom, etc. — All the essentials need not, however, be expressly negotiated upon, since they may be understood, as where the terms of the usual policy are presumed to have been intended; 24 or where the usual rate of premium is presumed to have been meant; 25 or in case the du- ration of the risk is understood to be the same as in a former policy ; 26 or where by custom or usage a certain course of deal- ing has been established. 27 § 47. The Usual Rate of Premium will be Presumed to have been Intended, and the minds of the parties will be assumed to have met and fixed the rate where a prior course of dealing would reasonably warrant such intend- ment. In Audubon v. Excelsior Insurance Company, 28 an ap- plication was made for insurance against fire of certain engrav- ings similar in all respects to others on which the assurer had recently issued a policy to the same applicant. The parties agreed verbally upon all the terms of such insurance, except the rate of premium. The previous insurance was mentioned in the conversation, and the assurer promised to make out a policy and send it to the assured at a near date, and it was held « Sea Ins. Co. v. Fowler, 21 Wend. (N. Y.) 600. See Hughes v. Mer- cantile M. Ins. Co., 55 N. Y. 265; 14 Am. Rep. 254. » Hughes v. Mercantile M. Ins. Co., 55 JST . Y. 265; 14 Am. Rep. 254; Sanders v. Cooper, 115 N. Y. 279. 23 Bardwell v. Conway etc. F. Ins. Co., 122 Mass. 90. 24 De Grove v .Metropolitan Ins. Co., 61 N. Y. 602; 19 Am. Rep. 305; Boice v. Thames etc. Ins. Co., 38 Hun (N. Y.), 246; Ruggles v. Amer- ican C. Ins. Co., 114 N. Y. 415. 25 Audubon v. Excelsior Ins. Co., 27 N. Y. 216; Perkins v. Washing- ton Ins. Co., 4 Cow. (N.Y.) 645; Winne v. Niagara F. Ins. Co., 91 N. Y. 185; Home Ins. Co. v. Adler, 71 Ala. 516. 26 Winne v. Niagara F. Ins. Co., 91 N. Y. 185. 27 Hartstrome v. Union Mut. Ins. Co., 36 N. Y. 172. 18 27 N. Y. 216. 107 REQUISITES OF VALID CONTRACT. §§ 48, 49 that there was a contract to insure at the former rate of pre- mium, and that recovery might be had for loss thereon though the policy was not made out when the loss happened. But if anything remains so that it appears that the rate of premium is not fixed, or that the usual rates do not apply, then the con- tract is incomplete, 29 and where there is a verbal agreement for a continuous insurance, and the rate of premium is changed, this terminates such agreement, and it requires a new bargain to effect a continuing contract. 30 So where an agent had authority to receive applications and forward the same with the premium for approval, and the policy issued was to be of effect as of the time of the agreement, and the usual rate was paid, but a loss occurred before the agent forwarded the risk and premium, the contract was held binding, although it was claimed by the company that it had not assented to the rate of premium. x § 48. Both the Rate of Premium and the Duration of the Risk may be Understood, and a valid contract exist, as where an agent had insured certain property for several years, and upon expiration of the insurance an application was made to him for another policy thereon, which was written by him, and thereupon he directed it to be reported to the defend- ant, and entered upon the register of completed contracts. The rate of premium and duration of the risk were not specified when the agreement was made, but the agent had been accus- tomed to give credit for premiums and to keep the policies until called for. Before delivery the property was burned, and it was held that the same term and rate of premium as the expired policy must have been intended, notwithstanding the amount of insurance was reduced in the last policy. 32 § 49. The Rate of Premium and Amount may he Un- derstood. — An agreement to insure a cargo to be laden, pro- vided the vessel sail within a given time, which agreement, 29 Orient Mut. Ins. Co, v. Wright, 23 How. (U. S.) 401. 80 First Baptist Church v. Brooklyn F. Ins. Co., 28 N. Y. 153. 31 Perkins v. Washington Ins. Co., 4 Cow. (N. Y.) 645. Si Winne v. Niagara F. Ins. Co., 91 N. Y. 185. See, also, Walker v. Metropolitan Ins. Co., 56 Me. 371. § 50 REQUISITES OF VALID CONTRACT. 108 though contingent as to the amount to be covered and the rate of premium, provides means for ascertaining them with cer- tainty as soon as the lading is completed and the day of sailing fixed, is valid, and the insurers are bound to give a policy on the vessel's sailing within the given time, and the insured is bound to pay the premium accordingly. 33 § 50. Whether Contract Exists may he Governed hy Cnstoin or Usage of the Parties or of the Insurance Busi- ness at a Place. — It is well settled that insurers are bound to know the customs of a place where they transact business, and are assumed to have made their contracts in reference to such customs. So in a ISTew York case, a custom had existed for many years, and had become an established usage and course of business. By this custom the insurance business was conducted at a certain place in the following manner: Persons engaged in receiving consignments of cotton at that place obtained from the insurer a certificate of insurance expressed to cover ship- ments of cotton from various points on the river to the holder of such certificate to said place. The holder kept a book in which he entered as received all shipments of the description specified in the certificate, with the values and requisite par- ticulars, and after the end of each month he exhibited such pass-book to the insurer, and had the premium fixed. The fact of shipment was rarely known to the consignee or insurer before the termination of the risk. The defendants, a ISTew York company, delivered to their agents an open policy of ma- rine insurance for two hundred and fifty thousand dollars; a certificate of renewal of this policy, and an additional policy was thereafter issued for two hundred and fifty thousand dol- lars, and delivered to said agents at the same time a large num- ber of certificates, one of which was issued to the plaintiff and pasted into his pass-book. The agents at the time made an entry in their pass-book, "To cover all cotton shipped by or for ac't of the following parties, valuation per bale annexed to each name." Then followed the names and value per bale. Thereafter the agents wrote on the original certificate to the plaintiff a renewal of the policy, and signed the same, and at 83 Bunten v. Orient etc. Ins. Co., 8 Bosw. 448. 109 COMPLETION OF CONTRACT. § 53 the same time gave a renewal of the certificate for the same term. By instructions to the agents the certificates were cov- ered by the policies, and considered as representing the pol- icies, subject to the same terms and payable in like man- ner. Thereafter and before the termination of the renewal period a boat having cotton on board, consigned to the plaintiff on account of the persons named in the certificate, was destroyed with the cargo by fire. An action was brought de- manding the issue of a formal policy and the amount due, and it was held that the defendants were liable, the certificate being declared to be in effect an open, continuous policy. 34 In an- other case, in the same state, a contract binding upon the com- pany was permitted to be established by evidence that a custom existed between the plaintiffs and several insurance companies, including the defendant, by which applications were made for "not to exceed" a certain sum where the value of property upon which insurance was desired was not known at the time of the application, and that the company, not knowing the actual value of the property, had made insurances in like manner with certain of the other companies upon the property in various sums; 35 and a custom to consider that an open policy covered all cotton consigned to a party unless the bill of lading showed the contrary, binds the insurer in the absence of such reser- vation in the bill of lading. 36 SUBDIV. II. Completion of Contract: Proposal and Acceptance. § 53. Completion of Contract — Mutual Benefit Socie- ties. — [n mutual benefit societies the by-laws and charter of the company are of great weight in determining what constitutes the completion of the contract, as where the by-laws provide that the beneficiary shall be named in the certificate, involving thereby the question whether the company has power to com- plete a contract otherwise than in the precise manner provided, and whether or not a compliance with the by-laws is not a con- •* Hartshorne v. Union Mut. Ins. Co., 36 N. Y. 172. 15 Fabbri v. Mercantile Ins. Co., 6 Lans. (N. Y.) 446; Id., 64 Barb. (N. Y.) 85. 86 Brainstem v. Crescent Mut. Ins. Co., 24 La. Ann. 589. § 53 COMPLETION OF CONTRACT. 110 dition precedent. In New York it has been held that it is. 27 Where by the charter of the company the deposit of a premium note for a sum to be determined by the directors is made a con- dition precedent to receiving the policy, this condition must be complied with. 38 Where under the laws of a society no cer- tificate was to be issued until full membership should be con- ferred, and a person made and signed an application for mem- bership, attended one meeting, and was notified to attend the next, when full membership would be conferred, and at the time of the next meeting he was too ill to attend and died shortly after, it was held that the contract was not completed. 39 It has also been held that a person enrolled as a member of a mutual benefit association, without having signed the applica- tion required, cannot claim any insurance, even though he did not know that his application had never been received. 40 Al- though in another case it was determined that a valid contract of insurance existed between the owner of a schooner and an insurance company at the time of her loss, although on the ap- plication book of the company certain blanks left for the value of the vessel and the amount insured were not filled as provided in the by-laws. 41 In another case the by-law of the company required the execution of a premium note by the assignee be- fore delivery to him of the approved policy, and the purchaser of insured property took an assignment of the policy and sent it to the secretary of the company for approval. This was given by indorsement on the policy, and entry on the com- pany's books. The policy, however, was retained until the re- quired premium note should be executed, which was agreed to be done. This was neglected, a loss occurred, and defend- ant was assessed as a policy holder. He refused to pay. A bill was filed against him by the company. The court dis- missed the bill on the ground that the property was not in- 87 Bishop v. Empire Order, etc., 43 Hun (N. Y.), 472. 38 Belleville Mut. Ins. Co. v. Van Winkle, 12 N. J. Eq. 333; sec. 34, ante. 39 Taylor v. Grand Lodge etc. (N. Y. Sup. Ct. 1894), 29 N. Y. Supp. 773. *° Supreme Lodge v. Grace, 60 Tex. 569. But see Somers v. Kansas Prot. Union, 42 Kan. 619; 22 Pac. Rep. 702. 11 Dodd v. Gloucester Mut. F. Ins. Co., 120 Mass. 468. Ill COMPLETION OF CONTRACT. § 53 sured. 42 In a Michigan case, however, the constitution and regulations of the lodge provided that the contract should be complete on examination of the applicant and approval of the application by the supreme lodge, and upon the signing the certificate and forwarding it to the subordinate lodge, which was done, but the subordinate lodge retained it on the ground of fraud in the application, and the court determined that the beneficiary might recover without producing the certificate, no fraud in the application being shown. 43 In a case which arose in Nebraska, an action being brought against a railroad relief association, it appeared that the by-laws of the associa- tion provided that those who desired to become members should make application in a certain manner, and also submit to a phy- sical examination. TV., on July 21st, stated his desire to be- come a member to a soliciting agent of the department, who gave written notice of TV.'s application to the officers of the as- sociation, specifying July 21st as the day for the application to take effect. On July 22d, however, TV. was taken sick. The prescribed manner of making the application was not com- plied with, nor was any physical examination made, and no request was made of TV. for compliance with either require- ment. His name was placed on the roll of members and an assessment deducted from his wages. On August 7th, the association, through its officers, was notified of TV.'s disability, and subsequently tendered back his assessment in the form of a "time check," which he refused a few hours before his death. It was held that the company was estopped from denying the completion of the contract. 44 TVe have, however, already 43 given some attention to this question of the power of such cor- porations to make a parol contract of insurance, and have seen that while in some states the courts have been inclined to limit such corporations strictly to their statutory or charter powers, yet in other states a more liberal construction has been given. 46 « Crmberry Mut. F. Ins. Co. v. Hawk (N. Y.1888), 14 Atl. Rep. 745. » Lorcher v. Supreme L. K. of H., 72 Mich. 316; 40 N. W. Eep. 545. " Burlington Vol. Eel. Dep. v. White, 41 Neb. 547; 59 N. W. Rep. 747, 751. 45 Sec. 34, ante. 48 See, also, Bacon's Benefit Societies and Life Insurance, sec. 147. § 54 COMPLETION OF CONTRACT. 112 But, as we have stated, the by-laws, however, are made to gov- ern the officers and members of the company, rather than per- sons who are about to become members; 47 and such persons are not members, but rather strangers, to the company in prior negotiations with it relative to granting insurance, for mem- bership does not date before consummation of the contract. 48 The following general rules, however, govern in such compan- ies in relation to the consummation of the contract. The con- tract is complete upon proposal and acceptance of the terms, 49 provided that the terms are so definitely agreed upon as to all the essentials that all that remains is to comply therewith; 50 and the company may waive provisions in its by-laws where they are for its benefit, 51 and acts done by an agent within the scope of his authority, although in disregard of the express provisions of the by-laws, may be binding on the company. 52 § 54. Completion of Contract — Proposal or Applica- tion. — The proposal for insurance may be made by written application or orally, and it is generally upon reliance of the facts stated therein that the insurer accepts the risk. A writ- ten application is now generally dispensed with by fire insur- ance companies. The application is not the contract, but a mere proposal for insurance. 53 No obligation rests upon the 47 The court in Somers v. Kansas Prot. Union, 42 Kan. 619. 622- 22 Pac. Eep. 702; Titsworth v. Titsworth, 40 Kan. 571; 20 Pac. Eep. 213. 18 Eilenberg v. Protective M. F. Ins. Co., 89 Pa. St. 464; Columbia Ine. Co. v. Cooper, 50 Pa. St. 331: Franklin F. Ins. Co. v. Martin, 40 N. J. L. 579; 29 Am. Eep. 271; Cumberland Valley Mut. Prot. Co. v. Schell, 29 Pa. St. 31 ; Stratton v. Allen, 16 N. J. Eq. 229. * 9 Oliver v. American L. of H. (Cal. 1882), 17 Am. L. Eev. 301. 60 Connecticut Mut. L. Ins. Co. v. Eudolph, 45 Tex. 454; Todd v. Piedmont etc. Ins. Co., 34 La. Ann. 63. 51 ^plann v. Chew, 60 Tex. 532; Cumberland Val. Mut. Prot. Co. v. Schell, 29 Pa. St. 31 ; Manning v. A. O. U. W., 86 Ky. 136 ; 5 S. W. Eep. 385. 62 Union Mut. L. Ins. Co. v. Wilkinson, 13 Wall. (U. S.) 222; Somera v. Kansas Prot. Union, 42 Kan. 619; 22 Pac. Eep. 702; Emery v. Boston M. Ins. Co., 138 Mass. 398. 54 Covenant M. B. Assn. v. Conway, 10 Brad. (111.) 348; McCulIy v. Phoenix Mut. L. Ins. Co., 18 W. Va. 782; Heiman v. Phoenix Mut. L. Ins. Co., 17 Minn. 157; Schwartz v. Germania Ins. Co., 18 Minn. 448. 113 COMPLETION OF CONTRACT. § 54 company to accept, 54 and it may reject the proposal even though there may have been a payment of part or even all of the premium. 55 So, where there is the payment by an appli- cant of the admission fee and an acceptance by him of a re- ceipt stating that the policy is not to go into effect until the application has been approved and accepted, and there is a statement in the application that the annual dues must be paid and the policy actually delivered to the applicant, and the ap- plication is not accepted nor are the dues paid, there is no valid contract created. The payment of the admission fee under such circumstances creates no contract of insurance of itself. 56 There may be an acceptance for a limited period of time with the right reserved to reject: as in a case where a fire insur- ance company, having received an application for a policy, con- tracted to accept the risk for the term of thirty days from date, "unless the applicant is sooner notified of its rejection. If he receives no notice that the risk is rejected, the insurance will cease at the end of the thirty days, unless a regular policy has been issued." After expiration of the thirty days a loss oc- curred, no policy having been issued nor notice of rejection given; it was held that the company was not liable. 57 So the acceptance may be conditional. 58 If the application is not made in writing and there are no statements contained in any written application as to the risk or subject matter, then oral proof of such facts is admissible. 59 Though oral statements are not ad- missible, as a rule, to alter the application, if in writing, 60 for such application is itself the best evidence of its contents, 61 and 64 Insurance Co. v. Young, 23 Wall. (TJ. S.) 85; Harp v. Grangers' Mut. etc. Ins. Co., 49 Md. 309. 55 Otterbein v. Iowa State Ins. Co., 57 Iowa, 274; Armstrong v. State Ins. Co., 61 Iowa, 212. 66 Weinfeld v. Mutual Res. F. L. Assn., 53 Fed. Rep. 208. 67 Barr v. North American Ins. Co., 61 Ind. 4S8. 68 Hamilton v. Lycoming Ins. Co., 5 Pa. St. 339. 69 The court in Hoose v. Prescott Ins. Co., 84 Mich. 309; 32 Cent. L. J. 226. 60 Ash worth v. Builders' Mut. F. Ins. Co., 112 Mass. 422; 17 Am. Rep. 117; Jenkins v. Quincy Mut. F. Ins. Co., 7 Gray (Mass.), 370; Tibbetts v. Hamilton Mut. Ins. Co., 3 Allen (Mass.), 569. 61 Lewis v. Hudmon, 56 Ala. 186. Joyce, Vol. 1—8 § 55 COMPLETION OF CONTRACT. 114 where the custom of the company has been to issue a new pol- icy covering a former risk without a new written application therefor, the secretary of the company has authority to issue a new policy without a new written application, notwithstanding a by-law provides that all applications shall be examined and approved before a policy is issued. 62 § 55. Completion of Contract — Acceptance Generally. A proposition only becomes a binding contract when the party to whom it is made signifies his acceptance to the proposal, 63 so that in the absence of some provision to the contrary there must be an actual acceptance of the proposal for insurance, some act to bind the company, or some act must be done which is equiv- alent thereto, and from which the company cannot recede without liability. 64 If the act done by the insurer be such that a liability would exist against him were he to withdraw, or, in other words, if he has so acted that he cannot recede without liability, there is an acceptance, and the contract is complete; 65 and an acceptance of the policy by the insured will conclude the contract with the insurer. 66 In an action on a policy of insurance which had been filled up and signed, but not deliv- ered, and on which no premiums had been paid, it is for the jury to determine what constitutes a reasonable time within which the insured should pay the premium and accept the pol- icy. 67 It is also a question for the jury whether an application 62 Zell v. Herman F. Mut. Ins. Co., 75 Wis. 521; 44 N. W. Rep. 828. 63 Bentley v. Columbia Ins. Co., 17 N. Y. 421, 423; Hartford F. Ins. Co. v. Davenport, 37 Mich. 609. 61 Markey v. Mutual B. Ins. Co., 103 Mass. 92; New England Ins. Co. v. Robinson, 25 Ind. 536; Hallock v. Insurance Co., 26 N. J. L. 278; Haskin v. Agricultural F. Ins. Co., 78 Va. 707; Shattuck v. Mutual L. Ins. Co., 4 Cliff. (C. C. ) 598 ; Connecticut Mut. L. Ins. Co. v. Rudolph, 45 Tex. 454 ; Keim v. Home Mut. F. Ins. Co., 42 Mo. 38 ; 97 Am. Dec. 291 ; Heiman v. Phoenix Mut. L. Ins. Co., 17 Minn. 153; 10 Am. Rep. 154; Alabama Gold L. Ins. Co. v. Mayes, 61 Ala. 163; Schwartz v. Germania Ins. Co., 18 Minn. 448; Haden v. Farmers' etc. Ins. Co., 80 Va. 683. 65 Mead v. Davidson, 3 Ad. &E.303; Dunlop v. Higgins, 1 H. L. Cas. 38; Vasser v. Camp, 14 Barb. (N. Y.) 341; Kentucky Mut. Ins. Co. v. Jenks, 5 Ind. 96. 68 Wallingford v. Home etc. Ins. Co., 30 Mo. 46; Hartford F. Ins. Co. v. Davenport, 37 Mich. 609. 67 Baxter v. Massasoit Ins. Co., 13 Allen (Mass.), 320. 115 COMPLETION OF CONTRACT. § 56 to an insurance company by a party desiring to be insured lias been declined or not, 68 and if the policy ever attached, the in- surer has a claim for premium; if otherwise, he has not. 69 So where upon the same day that an application for insurance was filed the company made out and signed the policy, it thereby ratified the application, and its consent was complete. 70 And when an open policy is issued "on property on board vessel," etc., "with such other risks as may be agreed on, as per indorse- ment hereon, accepted by the company," and the risk is agreed upon, the premium paid, and the indorsement made by the agent, the insurance is effected; but a different rule obtains where the risk is "to be accepted." 71i § 56. Qualified Acceptance — Conditions Precedent. — An acceptance may be qualified or made dependent upon the performance of some condition precedent, in which case no- tice of compliance therewith will bind the insurer. This is illustrated by a case where a person having an interest in an academy building applied to the agent of a mutual office for insurance, paid what cash was required, and gave the necessary premium note. The insurance company agreed to issue a pol- icy on the application on certain alterations being made in the building, and on authority from the trustees of the academy to effect the insurance. These conditions were complied with, and the agent was notified to examine the building, which he did not do. It was held that the risk commenced from the time of the notice that the conditions were performed. 72 In case the policy does not conform to that contemplated by the application, there must be an acceptance of such policy, or there is no binding contract, 73 and if the time or place of ac- ceptance is specified, the acceptance must conform thereto. 74 68 Mutual etc. Ins. Co. v. Wise, 34 Md. 532. 69 Cleveland v. Fittyplace, 3 Mass. 392, 395; Merchants' Ins. Co. v. Clapp, 11 Pick. (Mass.) 56, 61; Hendricks v. Commercial Ins. Co., 8 Johns. 1; Homer v. Dorr, 10 Mass. 26; Taylor v.. Lowell, 3 Mass. 331; 3 Am. Dec. 141; Elbers v. United Ins. Co., 16 Johns. (N. Y.) 128. 70 Keime v. Home Mut. F. Ins. Co., 42 Mo. 38; 97 Am. Dec. 291. " Wars v. Maine Mut. M. Ins. Co., 61 Me. 537. " Hamilton v. Lycoming Ins. Co., 5 Pa. St. 339. " Insurance Co. v. Young, 23 Wall. (U. S.) 85. M Eliason v. Henshaw, 4 Wheat. (U. S.) 225. § 57 COMPLETION OF CONTRACT. 116 § C7. Acceptance — Delay in Acting 1 on Application. — There is, as we have seen, no obligation resting upon the in- surer to accept a proposal or application for insurance, 75 and therefore delay in acting thereon will not in itself warrant a presumption of acceptance. 76 Thus, in an Alabama case, a re- ceipt was given by an agent reciting that the applicant was to be considered insured from date, "if said application shall be approved and accepted by said company." After several weeks the application was rejected, and it was held that no ac- ceptance could be implied from such delay, even though the note for the premium was not surrendered, it not appearing that the agent claimed the power to contract. 77 So the com- pany will not be bound by a mere delay of five months with- out reply to the proposal; 78 nor will unreasonable delay bind the company, 70 anol where the application provided "the policy to bear date and take effect at noon of the day this application is approved," this was held to mean approval by the home or principal office, and that a delay of eighteen days before re- jecting the application would not warrant a presumption of acceptance. 80 But where the agent, who knew of the rejection of the application, failed for eighteen days thereafter to notify the insured, and a fire occurred, the company is liable. 81 In another case an application for fire insurance was made to a mutual company August 7th, the application being subject to the approval of the directors, and was delivered to one of the directors August 9th. On the 19th of August the directors had a meeting for the transaction of special business, and no action was at that time taken on the application. August 30th the house was burned. September 25th, at the first regular meeting of the executive committee, the application was re- 75 Sec. 53, herein. 76 Herman 1 v. Phoenix Mut. L. Ins. Co., 17 Minn. 153; Hallock v. Commercial Ins. Co., 26 N.J. L. 268; 27 Id. 645; 72 Am. Dec. 379; Haskiu v. Agricultural F. Ins. Co., 78 Va. 707. " Alabama Gold L. Ins. Co. v. Mayes, 61 Ala. 163. 78 Insurance Co. v. Johnson, 23 Pa. St. 72. 79 Misselhorn v. Mutual Res. F. L. Assn., 30 Fed. Eep. 545, per Brewer, J. 80 Winnesheik Ins. Co. v. Holzgrafe, 53 111. 516; 5 Am. Rep. 64. 81 Moore v. New York etc. F. Ins. Co., 29 N. Y. 763. 117 COMPLETION OP CONTRACT. § 58 jected, and the committee's action was approved by the direct- ors. It was held that there was no such negligence on the part of the company as would entitle the plaintiff to recover. 82 In case of a proposal by mail an offer to insure should be ac- cepted within a reasonable time, or the party might as- sume that it was rejected. 83 But if the company agrees to notify the applicant of rejection of his proposal, and receives the application and premium note, but fails to send such noti- fication for seven months, and the property is burned in the meantime, this is such a delay as to render the company lia- ble, 84 and if through negligence of the agent the application is not received or acted upon, until a loss occurs, the company is liable. 85 § 58. When Applicant is not Bound to Accept Policy — Effect of Retention of Policy by Applicant. — Where the policy does not conform in terms to the proposal, there is no obligation resting upon the applicant to accept it. Thus, in a New York case an agent, who had authority to solicit and make contracts for insurances, agreed to insure the plaintiff by a pol- icy containing special provisions for refunding the money paid for premiums and received the plaintiff's note in part payment. The company tendered a policy without the provision, which policy the plaintiff refused. It was decided that the transac- tion did not constitute a binding contract. 86 If an application for insurance does not set forth all the provisions which the policy is to contain, and the agent represents that the policy will contain certain lawful stipulations, the policy must contain them, or the insured will not be bound to accept it. 87 In such case, however, it is incumbent upon the applicant, immediately on receipt of the policy, to notify the company of his refusal to accept the policy. In Meyers v. Keystone etc. Insurance Company, 88 it was determined that there was no sufficient ac- 62 Harp v. Grangers' Mut. F. Ins. Co., 49 Md. 307. 83 Thayer v. Middlesex Mut. F. Ins. Co., 10 Pick. (Mass.) 326. 64 Somerset F. Ins. Co. v. May, 2 Week. Not. Cas. (Pa.) 43. 85 Fish v. Cottenet, 44 N. Y. 538. 86 Tifft v. Phcenix Mut. etc. Ins. Co. 6 Lans. (N. Y.), 198. 87 American Ins. Co. v. Weiberger, 74 Mo. 167. 88 27 Pa. St. 268; 67 Am. Dec. 462. § 58 COMPLETION OF CONTRACT. 118 ceptance of the policy to make it binding. There the agent of the company agreed on certain terms for a policy which were not ratified by the company, but a new policy was sent with a request to return it if the terms were not satisfactory, and both policies were kept without complying with the terms of the letter. But in Adams v. Eidam, S9 it was held that a finding that an applicant receives and retains without objection policies made out and sent to him is equivalent to a finding that he had accepted them. In a Massachusetts case 90 an insurance com- pany issued a policy in the name of B., and sent it to B.'s agent, by whom it was returned with a request to make it payable to K., B.'s mortgagee. The first policy was canceled and a new policy was made out to K., but without B.'s knowledge of such return and substitution. The court determined that al- though the new policy was kept seven months by K., this did not constitute an acceptance thereof on the part of B., not- withstanding B. admitted that Iv.'s possession was not fraudu- lent. In a ISTew York case 91 it appeared that the agent of a company gave to A. a life insurance policy and received his note and a check therefor. A written agreement was entered into, providing that the policy should be returned unless the agent should obtain the surrender value or paid-up policies for certain policies delivered by A. to the agent. The agent failed to accomplish this result. The court held that no valid con- tract was created until the condition was complied with, and that it was immaterial whether the agent of the company had power to make such conditional delivery or not, since if he had not, the result would still be that no contract was made. But the insured is not justified in refusing to receive a policy not- withstanding the agent falsely states that the policies of a rival company did not contain a certain clause where the insured subsequently makes an application therefor, after having been furnished with a blank policy which he retained about ten days 89 43 N. W. Eep. (Minn.) 690. 90 Bennett v. City Ins. Co., 115 Mass. 241. 91 Harnickell v. New York L. Ins. Co., Ill N. Y. 119 ; 40 Hun (IS. Y. ), 558; 19 N. Y. 98; 19 N. E. Rep. 632. 119 COMPLETION OF CONTRACT. § 59 and having been requested by the agent to compare it with that used by the other company. 92 § 59. Agent's Agreement— Liability not to Attach till Approved. — If the application provides that no liability shall attach until approval by the principal, such approval is neces- sary to complete the contract, and if a loss occurs before such approval, the insurance company is not liable, though the pre- mium has been delivered to the local agent. 93 If an agent has authority merely to receive applications and forward the same for approval and to deliver policies and receive premiums, and the applicant knows the extent of the agent's authority, but that the policy was to be issued by the general agent on his ap- proval of the risk, and the risk is rejected after the property is burned, but without knowledge of the fact, there is no valid contract of insurance. 94 In another case an insurance solicitor received a written application for insurance, with the under- standing that no liability should attach until approval by the company. The solicitor also accepted the premium and gave a receipt therefor providing that it should be returned in case of nonapproval of the risk. The solicitor mailed the applica- tion and premium to the company, but the company never re- ceived or heard of them, no policy was issued, and the premium was not returned to the applicant. It was decided that the company was not liable. 90 In a !New York case a general agent appointed a subagent, with authority to make contracts for insurance which should be binding upon the company from the date of application until, upon reference to the general agent, they should be rejected. The plaintiff claimed to have been appointed a subagent, and sent a letter proposing insur- ance. The letter was delivered to the general agent. There was conflicting evidence as to whether the latter read plain- tiff's letter until after he had knowledge of the fire; but after 92 American etc. Ins. Co. v. Wilder, 39 Minn. 350; 1 L. R. App. 671. 93 Pickett v. German F. Co., 39 Kan. 697; 18 Pac. Rep. 903; Jacobs v. New York L. Ins. Co., 71 Miss. 658: 29 Atl. Rep. 606. 94 Fleming v. Hartford F. Ins. Co., 42 Wis. 616. 95 Atkinson v. Hawkeye Ins. Co., 71 Iowa, 340; 32 N. W. Rep. 371. This was a fire risk; the agent was a soliciting agent only. §§ 60, 61 COMPLETION OF CONTRACT. 120 he knew of the fire he executed and delivered a policy to the plaintiff, and it was held that the policy was invalid, and that the agent had no authority to issue a policy to himself. 96 § 60. Approval may be Implied from the Circum- stances. — Receipt of a premium from a local agent, by the general agent, followed by an instruction from the latter to the former to cancel the policy, will be such a recognition of the existence of the policy as to constitute the requisite "approval" of the general agent for its validity; 97 and if after the exe- cution and delivery of a policy by an agent of the insurers duly authorized to make insurance upon vessels and who had in fact previously insured the same vessel for the same applicant, a memorandum is signed by the insured that the insurance is to tf.ke effect "when approved by the general agent at Buffalo," and a loss occurs, the insurers are liable although the insurance was disapproved by the general agent, who directed the agent to return the premium note and cancel the policy; no notice of the disapproval having been given to the insured till after the loss. 98 Again, when the insurance was to inure from the time of the payment of the premium to the agent, provided the com- pany approved the risk, and the agent having had negotiations with a party accepted a premium for insurance for a certain sum to commence then, and gave a receipt therefor as agent. Before the premium was received by the company or the pol- icy made out the premises were burned. Had the premium been immediately remitted by the agent to the home office, it would have been received there before the loss. In the lower court it was held that there could be no binding contract until the receipt of the premium and approval of the risk at the home office. The court of errors, however, decided that a recovery could be had. 99 § 61. Oral Agreement of Agent may be Controlled by Application. — If the application particularly specifies when 96 B»ritley v. Columbia Ins. Co., 17 N. Y. 421. 97 .Etna Ins. Co. v. Maguire, 51 111. 342. 98 Insurance Co. v. Webster, 6 Wall. (U. S.) 129. 99 Perkins v. Washington Ins. Co., 4 Cow. (N. Y.) 645; 6 Johns. Ch. (N. Y.)485. 121 COMPLETION OF CONTRACT. § 62 the contract will take effect, this, it is held, will control a con- temporaneous oral agreement differing in terms therefrom, and made with the agent of the insurer, in a case where the plain- tiff, at the solicitation of an agent signed an application for a policy, wherein it was provided that the policy should take ef- fect from the day the application was approved and gave his note for the premium. The agent gave a receipt for the note, at the same time promising plaintiff that the policy would take ef- fect from the date of the application. The application was sent to the principal office and was rejected; but, before the agent had informed plaintiff of the failure of the negotiations the property proposed to be insured was destroyed by fire. It was held that there was no valid contract of insurance. 100 § 62. Completion of Contract — Negotiations Through Mail. — Negotiations are frequently carried on by mail, and some question has arisen as to what constitutes an acceptance in such cases. If the application and premium be mailed, and they are never received nor heard of by the company, no con- tract exists even though a receipt is given by the company. 101 In the well-known case of McCulloch v. The Eagle Insurance Company 102 a letter was written inquiring on what terms the company would take a risk for a stated amount on a certain brig and cargo between specified termini. The company re- plied stating the terms, and on the same day the answer was received the party wrote requesting a policy on the terms speci- fied. The day before this letter of acceptance was mailed the .company had written refusing the risk, which, however, was not received at the time of mailing the letter of acceptance. All the letters were duly received in regular course of mail by both parties. Upon a loss and action brought for recovery thereof the court held that there was no completed contract. In a later case, however, in the same state 103 it was declared by the court in argument that a "notice actually put into the mail, especially if forwarded and beyond the control or revocation 100 Winneeheik Ins. Co. v. Holzgrafe, 53 III. 516; 5 Am. Rep. 64. 101 Atkinson v. Hawkeye Ins. Co., 71 Iowa, 340; 32 N. W. Rep. 371. 102 1 Pick. (Mass.) 277. 103 Thayer v. Middlesex Mut. F. Ins. Co., 10 Pick. (Mass.) 326, 331. § 62 COMPLETION OF CONTRACT. 122 of the party sending it, may be a good notice." 104 In view of the McCulloch v. Eagle Iusurance Company case, we will state that a locus poenitentiae exists so long as either party may withdraw. But the rule clearly is, that the mailing a letter of acceptance in like cases completes the contract, as the locus poenitentiae is ended when the acceptance has passed beyond the control of the party, notwithstanding before that the com- pany may have mailed another letter rejecting the risk, unless such notice has reached the insured before his acceptance had been mailed. 105 And if the acceptance is made by the deposit of a policy in the mail, the contract is consummated, for the company thereby does an overt act which signifies that the pol- icy should have present vitality. 106 So in a case in the United States circuit court a life insurance, upon due application, was issued under a contract with the local agent, whereby it was substantially agreed that the agent should pay the first 104 See, also, 1 Duer on Insurance, ed. 1845, 121. Mr. Phillips (1 Phillips on Insurance, 3d ed., p. 18, sec. 17) says: "The doctrine de- cidedly predominating in the cases, accordingly, is that a written offer by insurers of terms on which they will insure where the subject risks and terms are adequately specified, becomes binding on dispatch of an acceptance, provided the acceptance reaches them before being coun- termanded, and in reasonable time, or within the time prescribed." 105 1 Wood's Fire Insurance, 2d ed., 40, sec. 15, et seq., and notes J Hamilton v. Lycoming Ins. Co., 5 Pa. St. 339 ; Haliock v. Insurance Co., 26 N. J. L. 268; 27 N. J. L. 645; Eliason v. Hurshaw, 4 Wheat. (U. S.) 228; Adams v. Lindell, 1 Barn. & Aid. 681; Taylor v. Merchants' Ins. Co., 9 How. (U.S.) 390: Lungstrass v. German Ins. Co., 48 Mo. 201, 204; 8Am. Rep. 100; Mactier, Admr. v. Frith, 6 Wend. (N. Y.) 103; 21 Am. Dec. 262. As to the general rule in other contracts that the acceptance takes effect from the mailing of the letter of acceptance and a retraction from the receipt of the letter, see Abbott v. Shepherd, 48 N. H. 14; Stockham v. Stockham, 32 Md. 196; Ferrier v. Storer, 63 Iowa, 484; Wheat v. Cross, 31 Md. 99: 1 Am. Rep. 28: Washburn v. Fletcher, 42 Wis. 152; Potts v. Whitehead, 20 B. J. 55; Bryan v. Booze, 55 Ga. 438; Hutcheson v. Blakeman, 3 Met. (Ky.) 80; Greer v. Chartiers R. R. Co., 93 Pa. St. 391; 42 Am. Rep. 548; Duncan v. Topham, 8 Com. B. 225; 2 Kent's Commentaries, 13th ed., 477. 106 Oliver v. American L. of H. (Cal. 1882), 17 Am. L. Rev. 301; Commercial Ins. Co. v. Haliock, 27 N. J. L. 645; £6 N. J. L. 268: 71 Am. Dec. 379; Mactier v. Frith, 6 Wend. (N. Y.U03; 21 Am. Dec. 262; 2 Kent's Commentaries, 13th ed., 477: Taylor v. Merchants' F. Ins. Co., 9 How. (U.S.) 390 ; Vassar v. Camp, 11 N. Y. 441. See Fames v. Home Ins. Co.,94U. S. 621. 123 COMPLETION OF CONTRACT. § 63 quarter's premium and take the applicant's note for the same, and the policy was mailed from the home office July 28, 1885, and received by the local agent August 5, 1885, but was never actually delivered into the possession of the applicant, who was taken ill August 6th, and died September 9, 1885, and it was held that as between the applicant and the company the policy became effective and binding when placed in the mail July 28, 1885, and if not then, certainly when it reached the hands of the agent, August 5, 1885. 107 So, also, where an accident pol- icy was sent by mail but did not reach its destination until after the death of assured, it was held that the contract was complete when the policy was deposited in the mail and credit given for the premium. 108 And where a policy insuring against loss by boiler explosion was deposited in the mail, together with the report of the company's boiler inspector and suggestions as to changes in the setting of the boiler, it was held that the con- tract was complete and that compliance with the suggestions was not a condition precedent to the completion of the con- tract. 109 § 63. No Contract where Acceptance Mailed Differs in Terms from Proposal. — If the policy sent by mail is not an acceptance of the terms proposed, but is in different terms, there is no contract, as the minds of the parties never met, al- though the insurers answer that they accept the terms propos- ed. 110 So if the correspondence shows that the minds of the parties never met upon the terms, mailing a policy which the applicant is not bound to accept does not bind the company. 111 * In a Connecticut case, one C. signed an application for life in- surance, and submitted to a medical examination under an agree- ment that the policy-5 when issued, should be forwarded by mail 107 Young v. Equitable L. Ins. Co., 30 Ferl. Rep. 902. 108 Dailey v. Masonic Mut. Ace. Assn. 102 Mich. 289: 57 N. W. Rep. 184. Reversed upon other points on rehearing, 102 Mich. 299. 109 Hartford etc. Ins. Co. v. Lasher Stocking Co., 66 Vt. 439; 29 Atl. Rep. 629. 110 Ocean Ins. Co. v. Carrington, 3 Conn. 357; Duncan v. Topham, 8 Com. B. 225. 111 Hamhlet v. City Ins. Co., 36 Fed. Rep. 118; Piedmont etc. Ins. Co. v. Ewing, 92 U. S. 377. § 64 COMPLETION OF CONTRACT. 124 to C.'s address in New York, who, if it was found to "be as agreed, was to send the premium, or if not, to return the pol- icy; the policy to take effect when the premium was paid. Afterward, the agent mailed it to C. at New York, the en- velope being marked "return in ten days if not called for." It was returned uncalled for. The agent then sent the policy to another place where he supposed C. might be, but C. had died two days before it was sent. It was held to be an inchoate and not a complete contract of insurance, and that no liability at- tached under it. 112 But where an agent sent a policy by mail to an applicant, with a statement that the premium charged was higher than usual, and requesting a return of the policy by mail should he decline it, or if retained, to send the premium, it was held that retaining the policy was an acceptance, or, at all events, the question was one for the jury. 113 § 64. Agent's Receipt Pending- Approval or Issuance of Policy. — To what extent a company is bound by a receipt given by an agent pending an approval by the company or until the policy is issued depends greatly upon the agent's authority and the particular circumstances of each case, and for these reasons the decisions are not perfectly in accord. The following general rules will, however, be found to be in conformity with the law as laid down by the adjudicated cases: 1. If the act of acceptance of the risk by the agent and the giving by him of a receipt is within the scope of the agent's authority, and nothing remains but to issue a policy, then the receipt will bind the company; 114 2. Where an agreement is made between the applicant and the agent whether by signing an application containing such condition, or otherwise, that no liability shall attach until the principal approves th6 risk and a receipt is given by the agent, such acceptance is merely condi- tional, and is subordinated to the act of the company in ap- proving or rejecting; 115 3. Where the acceptance by the agent is within the scope of his authority, a receipt containing 112 Rogers v. Charter Oak L. Ins. Co., 41 Conn. 97. 113 Sheldon v. Atlantic etc. Ins. Co., 26 N. Y. 4fi0; 84 Am. Dec. 213. 114 Fish v. Cottenet, 44 N. Y. 53S; sec. 57, herein, and casea. m See sec. 57, herein, and cases. 125 COMPLETION OF CONTRACT. § 64 a contract for insurance for a specified time which is not abso- lute but conditional, upon acceptance or rejection by the prin- cipal, covers the specified period, unless the risk is declined within that time, 116 and it has been held in these cases that the company may not arbitrarily reject after a loss. 117 In connec- tion with the above rules the following decisions are important: "Where an agent gave a binding receipt pending the company's approval and told the applicant that the risk had been accepted, and the evidence of the agent showed that it had in fact been accepted, the contract was held good after loss, and the com- pany estopped to deny acceptance, 118 and it is also held where the agent gave a receipt for certain money intended as part payment of premium and duty, under an agreement of in- surance for one month, or unless rejected by the company be- fore the expiration of the month, and the property was burned before a policy was issued, that giving the receipt completed the contract, unless rejected by the principal, 119 and the com- pany will be bound where a local insurance agent authorized to deliver "binding receipts," signed by the general agent, agrees in good faith and for value to assume the payment to the company of the first cash installment, and delivers to the insured a "binding receipt" properly signed. 120 But it is held that it is competent for the agent to explain what was under- stood between the parties by the words, "this receipt being binding," etc., where the receipt was signed by the agent and read as follows: "Received of S. three hundred and seventy-five dollars in payment of insurance in the C. S. Insurance Com- pany, this receipt being binding, on sakl company until policy is received." 121 In another case A. applied to an agent for in- surance on certain property, and the terms were agreed upon and 116 Goodfellow v. Times & Beacon Assur. Co., 17 U. C. Q. B. 411. 1,7 Fish v. Cottenet, 44 N. Y. 538; Palm v. Medina Ins. Co., £0 Ohio, 529. 118 Penley v. Beacon Ins. Co., 7 Grant U. C. 130. 119 Mackie v. European Ins. Co., 21 L. T., N. S., 102. See Barr v. North American Ins. Co., 61 Ind. 488. 120 Mississippi Val. L. Ins. Co. v. Neyland, 9 Bush (Ky.), 430. But see Todd v. Piedmont etc. Ins. Co., 34 La. Ann. 63. UI Scurry v. Cotton States L. Ins. Co., 51 Ga. 624. § 65 COMPLETION OF CONTRACT. 126 the premium paid, but the agent having no blanks for policies agreed to send a policy to A., and gave him a receipt specifying the property to be insured and providing that a policy should be sent as soon as the blanks were received, and it was held that the effect of the receipt was to bind the company the same as if a policy with the ordinary conditions had been issued. The pol- icy, however, was declared void for breach of certain conditions relating to "other insurance" contained therein. 122 But where a receipt was given by the general agent of an insurance com- pany, who agreed if the application should be approved by the company to furnish a policy within thirty days, "or, if the ap- plication is declined, to return the above amount to him, or his order, on demand and return of this receipt," and the ap- plication was approved by the company and a policy was sent to the agent within thirty days; but before delivery the appli- cant died and the agent returned the policy to the company, the court decided that the receipt did not operate as a pres- ent insurance for thirty days or until a policy should be fur- nished. 123 In another case the applicant signed an application providing that only the home office had authority "to deter- mine whether or not a policy shall issue on application." The agent gave a receipt, specifying the amount received and ex- pressed to be in payment of insurance in the company. It was also set forth that the receipt should be binding upon the com- pany, until the policy was received. An action being brought, the court decided that the receipt was not binding after the application was rejected, and also that the company was not bound to issue a policy. ISTo decision was given, however, as to whether the receipt was binding on the company until action had by it on the aplication, as the question was not considered as raised by the facts in the case. 124 § 65. Same Subject — Effect of Memorandum — Bind- ing Slip — Indorsement, etc. — The memorandum of insurance 122 Hubbard v. Hartford F. Ins. Co., 33 Iowa, 325; 11 Am. Rep. 125. 123 Marks v. Hope Mut. L. Ins. Co., 117 Mass. 528. m Cotton States L. Ins. Co. v. Scurry, 50 Ga. 48. Examine Insur- ance Co. v. Johnson, 23 Pa. St. 72. 127 COMPLETION OF CONTRACT. § 65 and the receipt for the premium, both signed by the agent of the underwriter, form a contract of insurance between the par- ties, 120 and where no policy is made out or delivered, an action can be maintained on the memorandum, since the contract will be presumed to be that evidenced by the iu,..01 Critchett v. American Ins. Co., 53 Iowa, 404. «•» Southern L. Ins. Co. v. Booker, 9 Heisk. (Tenn.) 203, 606: 24 Am. Rep. 344; Farnum v. Phoenix Ins. Co., 83 Cal. 246; 23 Pac. Rep. 869; Eagan v. ^Etna F. etc. Ins. Co., 10 W. Va. 583 ; Latoix v. Germania Ins. Co., 27 La. Ann. 113; Boehen v. Williamsburg Ins. Co., 35 N. Y. 131; 143 COMPLETION OP CONTRACT. § 80 circumstances, cancel the policy for nonpayment without first putting the insured in default by some act, such as a new de- mand. 204 But the mere nonpayment of the premium on de- mand, does not of itself destroy the policy where the company fails to give notice of its election to rescind the contract. 205 It is held that the delivery of a policy does not operate as a waiver of prepayment where the policy provides that it shall not b$ binding until the premium is paid, and that waiver must be in writing. In such case the agent cannot waive such condition precedent, 206 and although a condition as to prepayment of premium may be waived by the general agent, by delivering the policy without exacting payment, there is no such waiver when the agent merely leaves the policy for examination and requires the party, if he concludes to accept it, to prepay the premium, in accordance with the condition. 207 § 80. Prepayment — Credit may be Given. — An insur- ance may be binding without actual prepayment of the pre- mium by an agreement by the company to give credit therefor; 208 and it is held that if the charter of an insurance company be wholly silent as to the power of the corporation to give credit for premiums and to take notes in payment, such a power nec- essarily results from its power to make insurances and to en- able it to advantageously conduct its business. 209 An agent authorized to insure may give credit, 210 and where an agent 90 Am. Dec. 787; Wytheville Ins. etc. Co. v. Teiger (Va. 1893), 18 S. E. Eep. 195; Washoe Tool Mfg. Co. v. Hibernia F.Ins. Co., 7 Hun (N. Y.), 74; s. c. 66 N. Y. 613; Equitable Ins. Co. v. MeCrea, 8 Lea (Tenn.), 541; Miller v. Life Ins. Co., 12 Wall. (U. S.) 285. 204 Latoix v. Germania Ins. Co., 27 La. Ann. 113. 205 Washoe Tool Mfg. Co. v. Hibernia F.Ins. Co., 7 Hun (N. Y.), 74. 206 Pottsville Mut. F. Ins. Co. v. Minnequa Springs Imp. Co., 100 Pa. St. 137. 207 Wood v. Poughkeepsie Ins. Co., 32 N. Y. 619. 208 Insurance Co. v. Colt, 20 Wall. (U. S.) 560; Mississippi Val. Ins. Co. v. Dunklee, 16 Kan. 158. 209 Mclntyre v. Preston, 5 Gilm. (111.) 48. 210 Insurance Co. v. Colt, 20 Wall. (U.S.) 560. Agent with authority to take and approve risks and to insure : Ball etc. Co. v. Aurora F. etc. Ins. Co., 20 Fed. Rep. 232. Agent had "full power to receive proposals for insurance, to receive moneys, and to countersign, issue, and renew pol- icies of insurance of the company, subject to such rules and regulations § 80 COMPLETION OF CONTRACT. 144 with no authority to give credit delivers a policy before the premium is paid, but accounts therefor to the company, it is bound. 211 So the agent may agree to hold himself accountable to the company for the cash payment, and that a note should be given by the applicant for the balance of the premium at some future time, and that the insurance should take effect when the proposals were accepted. 212 So an agent may give credit where the policy provides that the insurance shall not be binding until the actual payment of the premium. 213 And credit may be given for a portion of the premium, 214 and the payment may be made partly in cash and partly in notes, as where a life insurance policy was issued to plaintiff's decedent expressed to be made in consideration of a premium already paid, and of a like sum to be annually paid during the contin- uance of the policy, and providing that the policy should not take effect until the premium was paid, and that the policy should be forfeited "in case any premium due upon this policy shall not be paid at the day when payable." The first pre- mium was paid partly in cash and partly in promissory notes, but the notes were not paid and the insured died. It was held that the policy had taken effect and that the nonpayment of notes did not bar plaintiff's recovery, because the "forfeiture" clause referred to premiums after the first. 215 So the agent may accept the promissory notes of the applicant. 216 So where the agents of an insurance company, acting for themselves, advance the money for the premium to the company, and take the note of the insured for the amount as their own and negotiate it, the company cannot dispute its liability on the ground that the aa are or may be adopted by the company, and such instructions as may from time to time be given by the manager of the company at Cincin- nati." 211 Agricultural Ins. Co. v. Montague, 38 Mich. 548 ; 31 Am. Rep. 326. 212 Sheldon v. Life Ins. Co., 25 Conn. 207; 65 Am. Dec. 565. 2,3 Dayton Ins. Co. v. Kelly, 24 Ohio St. 345 ; 15 Am. Rep. 612 ; O'Brien v. Union Mut. Ins. Co., 22 Fed. Rep. 586 (general agent). *" First Baptist Church v. Brooklyn Ins. Co., 28 N. Y. 153. - 15 McAllister v. New England Mut. Ins. Co., 101 Mass. 558; 3 Am. Rep. 404. 210 Mississippi Valley L. Ins.Co. v. Neyland,9 Bush (Ky.), 430. Gen- eral agent with power to solicit applications and receive first premiums: Kelly v. St. Louis etc. Life Ins. Co., 3 Mo. App. 554. 145 COMPLETION OF CONTRACT. §§ 81, 82 premium has not been actually paid. 217 So the agent may agree to be himself responsible for the premium. 218 In a Lou- isiana case the agent was requested to send the bill for the pre- mium to the treasurer of the insured society for payment and he replied, "That's all right," and called several times, but did not find the party, and the contract was held to be complete; 219 and an agreement to pay the premium is sufficient although the property is destroyed before the delivery of the policy. 220 § 81. Prepayment — Mutual Credits — Application on Agent's Debt. — Where there are mutual credits between the parties, and an authorized agent of the company is in- debted to the applicant, the parties may agree that the amount of the premium may be charged or credited, as the case may be, subject to settlement of accounts, and this will constitute a valid prepayment of the premium and be binding upon the company. § 82. Where there are Mutual Credits. — Where the insurer and insured had mutual credits' and struck a balance monthly, this is in effect a payment, 222 and where an applica- tion had been sent by plaintiff's agent to defendant's agent, who agreed to take two-thirds the risk, and the amount, dura- tion, and premium were agreed upon, and the two agents had running accounts with each other and settled monthly, the court held that there was evidence for the jury of a contract of insurance, which began immediately; 223 and where the parties had mutual accounts and their course of dealing was to give credit for premiums due to each, and to give receipts as for cash and to balance accounts from time to time, and the plaintiff was 217 Home Ins. Co. v. Curtis, 32 Mich. 402. 818 Mississippi Valley L. Ins. Co. v. Neyland, 9 Bush (Ky.), 430. 119 La Societe v. Morris, 24 La. Ann. 347. 220 p\4t v. Kire Ins. Assn., 20 Fed. Rep. 766. M1 Marsh v. Northwestern Nat. Ins. Co., 3 Biss. (C. C.) 351. See cases in following sections charging premium to agent personally by company, and agent credits insured as payment: Wythevilleetc. Ins. Co. v. Teiger (Va. 1893), 18 S. E. Rep. 195. 222 Marsh v. Northwestern Nat. Ins. Co., 3 Biss. (C. C.) 351. 223 Sanborn v. Firemen's Ins. Co., 16 Gray (Mass.), 448; 77 Am. Dec. 419. Joyce, Vol. I.— 10 §§ 83, 84 COMPLETION OF CONTRACT. 146 given a receipt for his premium, such premium is paid when the receipts are given." 4 § 83, Crediting 1 Premium on Agent's Indebtedness to Applicant. — When an insurance agent, who has authority to issue policies of insurance, issues and delivers a policy upon a building therein described, and agrees vith the assured to de- duct the premium out of money then in his possession belong- ing to the assured, and apply it on the payment of the pre- mium, such an agreement is a receipt of the premium, and the company issuing the policy will be bound thereby; 220 and where money is advanced by a subagent to the general agent to be debited against premiums collected by the former, and he applies for insurance, the advancement to the general agent will be considered a payment of the premium. 226 In AVooddy v. Old Dominion Insurance Company 227 an agent authorized to fill up and deliver policies entered into an agreement for in- surance with an applicant who tendered the premium to the agent; but the latter, who resided in the house insured, and who owed the former for rent, said he would apply the pre- mium toward the rent, and this was held a valid payment of the premium. § 84. Prepayment — Course of Dealings — Allowing Credit. — Stipulations making a prepayment of the premium a condition precedent to the attachment of the risk are in some cases governed by the usual course of dealing between the partis to the contract, or between the principal and agent or insurance broker. So an agent authorized to take risks and insure may be also authorized by general usage to give credit. 228 In a Pennsylvania case 229 the company issued and 22 * Prince of Wales L. Assur. Co. v. Harding, EL B. & E. 183; 4 Jur., N. S., 851; 27 L. J. Q. B. 297. 225 . Phoenix Ins. Co. v. Muir, 28 Neb. 124; 44 N. W. Rep. 97. 226 Thompson v. American Tont. L. Ins. Co., 46 N. Y. 647. 227 31 Gratt. (Va.) 362; 31 Am. Rep. 732. 228 Insurance Co. v. Colt, 20 Wall. (U. S.) 5G0. See, also, Boice Y. Thames etc.. Ins. Co., 38 Hun (N. Y.), 246. « 9 Long v. North British etc. Ins. Co., 137 Pa. St. 335; 21 Am. St. Rep. 879; 20 Atl. Rep. 1014. 147 COMPLETION OF CONTRACT. § 84 forwarded a policy to its agents after notification given the plaintiff that a policy whicli was about to terminate would be renewed unless he gave notice to the contrary. It was a custom between the agent and the insured to give the latter a credit for thirty days, and the premium in this instance was charged to him by such agents, and a credit of thirty days given. Before the expiration of that period, but after a fire, the insured gave his check for the premium, which was re- tained for two weeks without objection. In an action on the policy it was held to be a question for the jury whether a con- tract existed. In Lungstrass v. German Insurance Com- pany,- - -* the agent was accustomed to forward his remittances to the company at the end of each month. He applied for in- surance on his goods, and upon receipt of the policy he made an entry of the amount chargeable against him for the pre- mium in a book in which his accounts with the company were regularly kept, and it was decided that he was not obliged to forward the premium before the accustomed time, and that the company was liable. So in another case it was determined that the company might waive a condition providing that the pre- mium should be actually paid before the policy should attach, and if the course of business between the company and one of its agents tended to show that the company was accustomed to substitute the personal liability of the agent for premiums re- ceived in the place of the security whicli the suspension clause in the policy afforded, a nonsuit should not be ordered, but the case should be submitted to the jury, 231 and the contract may be complete without prepayment where it is the custom of the company to give the broker credit until the end of the month. 232 In Lebanon Mutual Insurance Company v. Hoover 233 it appeared that by the usual and established course of business between an agent and the company the former was charged for the premiums received by him on all policies and 230 48 Mo. 201 ; 8 Am. Rep. 100. 231 Elkina v. Susquehanna Mut. F. Ins. Co., 113 Pa. St. 386; 6 Atl. Eep. 222. 232 R U galea v. American Cent. Ins. Co., 114 N. Y. 418; 11 Am. St. Rep. 674. 233 113 Pa. St. 591 ; 8 Atl. Rep. 163. § 84 COMPLETION OF CONTRACT. 148 renewal certificates obtained through him, whether the insured paid the agent or not, and that he was expected to render reg- ular monthly statements and settle with the company, and the assured was not expected to pay the agent in advance, but only on demand about a month after effecting insurance. It was held that a failure to pay the premium would not prevent a re- covery on the policy for a loss. And where insurance brokers, on delivery to them of a policy, are with their knowledge charged in a general account with the premium due on the policy, and they make no objection, the company is liable for the insurance money, notwithstanding the policy provides in terms that the insurance company shall not be liable until the premium shall be actually paid, and that no such provision shall be construed as waived except by some distinct act, such as a clear express agreement indorsed on the policy. 234 But it is held in New Hampshire that the custom of the company to charge the advance premium to the agent on issuing a policy is not a payment unless so understood between the agent and the insured. 235 So it may be shown that by usage in case of a parol agreement to insure, the premium is not due till delivery of the policy. 236 But it is held, however, in a New York case that evidence that the agent of an insurance company frequently waived the condition of prepayment is not admissible to raise an inference of waiver in the absence of other proof tending to establish it. 23 ' This decision does not, perhaps, conflict with the general rule that, notwithstanding there may be a condi- tion that the policy shall not attach till the premium is acitu- S3 * Bang v. Farmville Ins. etc. Co., 1 Hughes (C. C), 290. 235 Brown v. Massachusetts Mut. L. Ins. Co., 59 N. H. 293; s. c. 47 Am. Kep. 205. In England, the negotiations are generally carried on through a hroker, and the premium is due from assured to the broker and from him to the company : 1 Phillips on Insurance, 3d ed., 274, sec. 507, citing Fouke v. Pensack, 2 Lev. 153, and other cases: Grove v. Dubois, 1 Term Rep. 112; Edgar v. Fowler, 3 East, 222: De Gaminde v. Pigou, 4 Taunt. 246; Parker v. Smith, 16 East, 382, and several other cases. See, also, 1 Marshall on Insurance, ed. 1S10, *292, et seq., where it is said that the rule that the underwriters give credit to the broker depends upon usage. 236 Baxter v. Massasoit Ins. Co., 13 Allen (Mass.), 320. JS7 Wood v. Poughkeepaie etc. Ins. Co., 32 N. Y. 619. 149 COMPLETION OF CONTRACT. § 85 ally paid, nevertheless the insurer cannot successfully set up nonpayment, where the authorized agent of the company, by his accustomed and usual course of dealing with the assured, induces him to rely upon the belief that the condition of pre- payment is waived. 238 In Dinning v. Phoenix Insurance etc. Company 239 an alleged general custom among agents and brokers to give credit for premiums was set up, but the court found that there was nothing in the course of dealings between the parties to sustain such a claim or warrant any implied waiver of prepayment, and this is on a line with the decision in the ]STew York case above noted. 240 And in connection with these cases we do not believe that a mere custom to give credit to others will be sufficient to hold the company in the absence of other proof, such as a custom to give the applicant credit. 241 § 85. Prepayment of Premium Evidence of Waiver. — Delivery of the policy without prepayment of the premium is prima facie evidence of waiver, 242 and such waiver may be 238 See Tenant v. Travelers' Ins. Co., 31 Fed. Rep. 322; Home L. Ins. Co. v. Pierce, 75LU.426; Franklev. Pennsylvania F. Ins. Co. (Col. 1883), 9 Fed. Rep. 706; 12 Ins. L. J. 614; Helme v. Philadelphia L. Ins. Co., 61 Pa. St. 107; 100 Am. Dec. 621; Yonge v. Equitable L. Ins. Co., 30 Feu. Rep. 902. 239 68 111. 414; 3 Ins. L. J. 677. 240 Wood v. Poughkeepsie.etc. Ins. Co., 32 N. Y. 619. 241 See 1 Wood on Fire Insurance, 2d ed.,68, who says: "But so far as evidence of the practice of the agent to give credit to others is concerned, it is hardly believed that evidence thereof can establish a waiver, and that it is inadmissible to establish a waiver unless connected with other proof to establish it": Citing Teutonia Ins. Co. v. Anderson, 77 111. 382; Madison Ins. Co. v. Fellowes, 1 Disn. (Ohio) 217; New York Cent. Ins. Co. v. National Prot. Ins. Co., 20 Barb. (N. Y. ) 468; Heminway v. Bradford, 14 Mass. 121; Troy F. Ins. Co. v. Carpenter, 4 Wis. 20; Baker v. Union Mut. L. Ins. Co., 43 N. Y. 283; Illinois Cent. Ins. Co. v. Wolf, 37 111. 354; 87 Am. Dec. 251; Teutonia Ins. Co. v. Mueller, 77 111. 22; Provident Ins. Co. v. Fernell, 49 111. 180; Marsh v. North West Ins. Co., 3Biss. (C. C.) 351; Michael v. Mutual Ins. Co., 10 La. Ann. 737; Barnum v. Childs, 1 Sand. (N. Y.) 58; Goit v. National Prot. Ins. Co., 25 Barb. (N. Y.) 189; Sheldon v. Atlantic F. Ins. Co., 26 N. Y. 460; 84 Am. Dec. 231. 242 Wood v. Poughkeepsie Ins. Co., 32 N. Y. 619; see sec. 75, herein; Church v. Lafayette F. Ins. Co., 66 N. Y. 222; Washoe Tool Mfg. Co. v. Hibernia F. Ins. Co., 66 N. Y. 613. § 86 COMPLETION OF CONTRACT. 150 shown by parol. 243 So parol evidence is admissible to show that the agent verbally agreed that a policy of insurance should take effect immediately upon the approval of the application, and that the premium note might be made and the cash premium paid at some future time, at the convenience of the parties; provided that such agreement was made known to and ac- quiesced in by the defendants, 244 although evidence is admis- sible to prove whether the delivery was conditional or absolute, yet when a husband, acting as agent for his wife, procures a policy of insurance on his own life in the name and for the benefit of the wife, his subsequent declarations that the policy was delivered conditionally are not admissible as against the wife. 245 § 86. Effect of Receipt in Policy for Premium. — In this country the effect of an acknowledgment of the receipt of the premium in a policy of insurance which has been delivered to the assured has been the subject of much discussion. It is held in an Indiana case that if an agent delivers a policy which acknowledges that the premium has been paid, this concludes *» Pino v. Merchants' Ins. Co., 19 La. Ann. 214; 92 Am. Dec. 529. 2 " Sheldon v. Connecticut Mut. L. Ins. Co., 25 Conn. 207; 65 Am. Dec. 565. 245 Southern L. Ins. Co. v. Booker. 9 Heisk. (Tenn.) 606; 24 Am. Rep. 344. Emerigon (Emerigon on Insurance, Meredith's ed., 1850, c. iii, sec. 6, p. 69), savs: "If the policy imports that the premium has been re- ceived, there is novation, though the payment has not been effective, and the sum was passed into account current. It becomes, then, an ordinary and purely chirographic debt": "Novation" defined in note f, id., p. 68. He then notes an old custom whereby the clause, "received the premium," was withdrawn from the p ilicy; the brokers held them- selves as debtors to the insurer and creditors of the assured for the amount of the premium. This species of transfer worked a novation. The premium ceased to be due as premium. It was due as money ad- vanced or to be advanced by the broker. In England, in case of marine policies negotiated through a broker, the cases evidence a custom for the underwriter to credit the broker with the premium, and the premium becomes due from the latter to the former. The broker generally cred- its the assured with the premium ; therefore, the acknowledgment of its receipt in the policy in England stands on a different basis than in the United States, where the liability, as a rule, is from the assured to the underwriter. In England, the assured is estopped by the receipt: See chapter ou Agency. 151 COMPLETION OF CONTRACT. § 86 the company, in the absence of fraud or mistake, from subse- quently assailing the policy on account of failure to pay the premium. 240 In a New York case the fact that the assured had possession of the policy which provided for payment of a specified sum in advance as a part of the consideration, was held no evidence of payment of the first premium. 247 In California, it is held that if an insurance policy contains a for- mal receipt of the premium, its unconditional delivery is con- clusive evidence of payment so as to estop the company from denying the validity of the policy, notwithstanding the dec- laration in it that it shall not be binding until the premium is actually paid ; that the same result follows where the policy is delivered as a valid and completed contract upon a considera- tion expressed therein, the receipt of which is impliedly acknowledged. 248 In an Illinois case 249 the court declares that an insurance company will be estopped on the grounds of pub- lic policy to dispute its receipt for the purpose of avoiding the policy. The same ruling obtains in Tennessee, 250 but it is held in the same case that the company may show nonpayment in an action to collect the premium, or in deducting it from the amount sought to be recovered. So in Maryland 251 it is de- clared that an insurance company will not be permitted to allege a want of consideration for its promise by disputing its acknowledgment of the receipt of the premium when sued on the policy after a loss has happened. In a New Jersey case 252 the policy was executed by the president and secretary of the company, and contained a formal acknowledgment of the payment of the premium, and it was decided that this pre- vented the company from averring or showing nonpayment for 246 Home etc. Co. v. Gilman, 112 Ind. 7. 2 « Quinby v. New York L. Ins. Co., 71 Hun (N. Y.), 104; 24 N. Y. Supp. 593; 54 N. Y. 82. 248 Farnum v. Phcenix Ins. Co., 83 Cal. 246; 17 Am. St. Rep. 233. 249 TeutoniaL. Ins. Co. v. Anderson, 77 111. 384; Same v. Miller, 77 III. 22. 250 Southern L. Ins. Co. v. Booker, 9 Heisk. (Tenn.) 606; 24 Am. Rep. 344. 251 Consolidated Real Estate etc. Co. v. Cashou, 41 Md. 59. 252 Basch v. Humboldt etc. Ins. Co., 35 N. J. 429; 5 Bennett's Fire Insurance Cases, 421. § 86 COMPLETION OF CONTRACT. 152 the purpose of proving that the contract had no legal exist- ence, and that it conclusively admitted payment of the pre- mium so far as was necessary to give validity to the contract, and it was said by Beasley, J., that the usual legal rule that a re- ceipt was only prima facie evidence of payment, and might be explained, did not apply "where the question involved is not only as to the fact of payment, but as to the existence of rights springing out of the contract," and that "with a view of defeat- ing such rights the party giving the receipt cannot contradict it," and he adds "an acknowledgment of an act done contained in a written contract, and which act is requisite to put it in force, is as conclusive against the party making it as any other part of the contract, and cannot be contradicted or varied by parol." Mr. Wood 253 cites this case somewhat at length as an authority; a recent writer, however, 254 dissents therefrom. Mr. May 253 states that such recital in the policy is only prima facie evidence of payment. Mr. Marshall 256 asserts that the payment or nonpayment of the premium can have no effect on the validity of the contract, as an action will lie to recover the premium "notwithstanding the formal acknowledgment of it in the policy, which is not inserted there as conclusive evidence of the actual payment of the premium, but to preclude the necessity of proving it in case of loss," and Mr. Phillips 257 states that the acknowledgment is, according to general prac- tice, "substantially true," but is nevertheless only prima facie evidence of payment which may be rebutted. The cases are numerous, however, which hold that where a policy duly ex- ecuted and delivered acknowledges the payment of the pre- mium, such receipt, in the absence of fraud, duress, or mistake estops the company from denying the same, and is conclusive evidence of payment; 258 while other courts qualify this rule by ass i Wood on Fire Insurance, 2d ed., 69. J " Ostrander on Fire Insurance, sec. 95, p. 220. 255 1 May on Insurance, 3d ed., sec. 359, citing Massachusetts, New York, Indiana, United States, New Hampshire, Texas, and Louisiana cases. See, also, Troy Fire Ins. Co. v. Carpenter, 4 Wis. 32, and cases cited. 256 1 Marshall on Insurance, 335. »' 1 Phillips on Insurance, 3d ed., sees. 275-78, 512-15. •*• Teutonia L. Ins. Co. v. Anderson, 77 111. 384; Provident L. Ins. 153 COMPLETION OF CONTRACT. § 86 holding that it is evidence of payment to the extent, at least, that such payment is necessary to give validity to the con- tract. 209 It is also held in ISorth Carolina that parol evidence is admissible to explain a receipt given by the agent of a fire insurance company for the premium on the policy, 260 and a suit lies at the instance of a policy holder to recover a portion of the unearned premium notwithstanding that a promissory note which has been given for the premium has not been paid. 2 ' 31 Other cases hold, however, that the delivery of the receipt for payment of premium is not conclusive, and that where the pol- icy provides for payment in the lifetime of assured of an ad- vance premium it must be done. 262 In Ormond v. Mutual Life Association 263 the insured agreed to pay the dues to the agent upon delivery of the policy. Attached to the policy was a receipt for the dues, providing that when payment was made to an agent such agent must countersign it at the date of pay- ment. The policy was sent to the insured without the receipt being countersigned by the agent. It was decided that this amounted to a declaration that the required payment had not been made, and must be made before the policy could become binding. If the insurer delivers to a broker for the assured a policy containing an acknowledgment of the receipt of the premium, they cannot insist, as a condition precedent, on their Co. v. Farrell, 49 111. 180; Illinois Cent. Ins. Co. v. Wolf, 37 111. 354; 87 Am. Dec. 251; Savage v. Phoenix Ins. Co., 12 Mont. 258; 33 Am. St. Rep. 591; 31 Pac. Rep. 66; :1 Ins. L. J. 967; Consolidated F. Ins. Co. v. Cashaw,41 Md. 59; Madison Ins. Co. v. Fellows, 1 Disn. (Ohio) 217; 2 Disn. (Ohio) 128; Dalzell v. Mair, 1 Camp. 532; dimming v. Forrester, 1 Maule & S. 499; Home Ins. Co. v. Gilman, 112 Ind. 7; 13 N. E. Rep. 118; 17 Ins. L. J. 12; Michael v. Mutual Ins. Co., 10 La. Ann. 737; Goit v. National etc. Protection Ins. Co., 25 Barb. (N. Y.) 189; De Gaminde v. Pigon, 4 Taunt. 246; Anderson v. Thornton, 8 Welsh. H. & G. 424; Kline v. National B. Assn., Ill Ind. 4^2; 11 N. E. Rep. 620; 60 Am. Rep. 703; 9 West. Rep. 284; Deering's Annot. Civ. Code, Cal., sec. 2598. ™ In re Insurance Co., 22 Fed. Rep. 109. 260 Fehebee v. North Carolina etc. Ins. Co., 63 N. C. 11. 361 Hemingway v. Bradford, 14 Mass. 121. 262 Brown v. Insurance Co., 59 N. H. 298; Ormond v. Mutual L. Ins. Assn., 96 N. C. 158; 1 S. E. Rep. 796; Davis v. Massachusetts L. Ins. Co., 13 Blatchf. (C. C.) 462. See, also, 1 May on Insurance (Parsons) sec. 359, and cases cited. See Troy F. Ins. Co. v. Carpenter, 4 Wis. £0. a « 96 N. C. 158; 1 S. E. Rep. 79b. § 86 COMPLETION OF CONTRACT. 154 actual receipt of the premium note which was delivered by the assured to the broker at the time of receiving the policy, and afterward delivered to the underwriters, 264 and the burden is upon the insurance company to prove nonpayment of the premium note, in order to avoid a policy of insurance made and accepted on condition that it should cease and determine upon failure by the assured to pay a premium note when due given by him to the insurers. 260 It is certainly true that the insurer can waive prepayment of the premium, and if the policy be de- livered without exacting such prepayment its validity is estab- lished, provided always that the contract of assurance is other- wise binding. It is also true that if the contract be completed and is valid and the note has attached, that the insurer has an action for the premium earned, and the insured either a suit for specific performance, or an action for indemnity 266 may be compelled in equity. Certain rights have attached and the insured may, with the knowledge and acquiescence of the insurer, have rested to his prejudice upon those rights. The contract has been completed and the policy has become valid and binding. 267 At exactly what point, then, does the flaw exist which will enable the insurer to aver or prove that the premium has not been paid for the purpose of escaping liability on a contract which the assured, resting his belief upon the precedent established by the adjudicated cases, has the right to 264 Mayo v. Pew, 101 Mass. 555. 265 Hodsdon v. Guardian L. Ins. Co., 97 Mass. 144; 93 Am. Dec. 73. 266 Gerrish v. German Ins. Co., 55 N. H. 355; Dinning v. Phoenix Ins. Co., 68 111. 414; N. E. Ins. Co. v. Robinson, 25 Ind. 536; Phoenix Ins. Co. v. Ryland, 69 Ind. 437; 16 Atl. Rep. 109; 1 Law. Rep. Annot. 548. It is held in Carpenter v. Mutual Safety Ins. Co., 4 Sand. Ch. (N. Y.) 408, that an agreement to insure, evidenced by the receipt for the premium, may be specifically enforced, and if a loss has happened, payment may be compelled in equity. As to life policies, where the pre- mium is paid in advance, the contract is held not to bind the insured to pay, the forfeiture of the policy being the result of nonpayment when due, although it is held, a contract obligation on the part of a member of a co-operative assessment company may exist and be en- forced at law to pay bimonthly a specified sum : .Smith v. Bown (N. Y. Sup. Ct. 1894), 58 N. Y. 605. 267 Even though the premium be never paid, decides the court in Miller v. Life Ins. Co., 12 Wall. (U. S.) 285; Pa mum v. Phcenix ins. Co., 83 Cal. 246; 17 Am. St. Rep. 233. 155 COMPLETION OP CONTRACT. consider completed and binding? In view, therefore, of the weight of authority, such receipt is conclusive evidence of pay- ment, so far as the validity of the policy rests thereon, and the assured is estopped to deny such acknowledgement for the pun- pose of escaping liability on the contract, unless fraud, duress, or mistake be shown. But where payment of the premium is sought to be enforced, the receipt should be only prima facie evidence of payment. 268 SUBDIV. IV. Completion of Contract: Delivery of Policy; Knowledge of Loss. § 00. Delivery of Policy not Necessary to Complete Contract. — A promise to insure is generally performed by issu- ing a policy or procuring one to be issued, 269 and if the insurer delivers the policy and receives the premium, he is estopped from denying the fact that a contract of insurance was made. 270 But a contract to issue an insurance policy, the agreement be- ing otherwise complete, is equivalent to the actual issuance of the policy so far as the binding force of the contract is con- cerned; 271 since if a sufficient contract has been made neither a policy nor a certificate is necessary to make the company liable. 272 So in mutual benefit societies, if the insured has complied with all the other requirements of the society, the fact that he has not taken out a certificate or that one has not been delivered to him does not prevent a recovery, 273 and such recovery may be had without producing such certificate, 2 ' 4 and where an. application was made to an agent and the agent 168 Norton v. Phoenix L. Ins. Co., 36 Conn. 503; 4 Am. Rep. 98. See Life Ins. Co. v. Davidge, 51 Tex. 244; Pitt v. Berkshire L. Ins. Co., 100 Mass. 500; Southern L. Ins. Co. v. Booker, 9 Heisk. (Tenn.) 006; 24 Am. Rep. 344; Ryan v. Ban. I, 26 N. H. 12. 269 Scranton Steel Co. v. Wards etc. Line, 40 Fed. Rep. 866. 270 Re State of Pennsylvania Ins. Co., 22 FeL Rep. 109. 271 Springer v. Anglo-Nevada Ins. Corp., 33 N.Y. 543; UN. Y. Supp. 533. 272 Blake v. Hamburg-Bremen F. Ins. Co., 67 Tex. 160; 60 Am. Rep. 15. See Newark Mach. Co. v. Kenton Ins. Co. (Ohio, 1894), 35 N. E. Rep. 1060; 31 Week. L. Bull. 51. 273 Bishop v. Grand Lodge etc., 112 N. Y. 627; 20 N. E. Rep. 562; Lischer v. Supreme L. K. of H., 72 Mich. 316; 40 N. W. Rep. 545. 3U Lorscher v. Supreme L. K. of H., 72 Mich. 316; 40 N. W. Rep. 545. §§91,92,93 COMPLETION OF CONTRACT. 156 agreed to issue and send the applicant a policy on a certain day, and the policy was in fact issued on and bore date of that day, but was not delivered nor the premium paid for several days thereafter, it was held that the policy became operative and binding from the day it was issued though not delivered. 275 § 91. Actual or Manual Delivery of Policy not Neces- sary to Complete Contract. — If the contract of insurance is otherwise complete, and the parties intend that it shall be ef- fectual without the policy being actually delivered, an actual or manual delivery is unnecessary; 276 and although it is in- tended to issue the policy, yet if the terms have been agreed upon and acts have been done which would entitle the appli- cant to a policy, or if by custom or by rules of the company, or by agreement or otherwise, the policy is not required to be im- mediately delivered, the contract may be complete for the reception of the policy is not a prerequisite to a contract of insurance. 277 So the assured need not formally accept nor take away a policy to complete the delivery, 2 ' 8 and where a policy of life insurance was delivered to the broker to whom the application was made but the applicant died without having received the policy, it was held that the contract was complete. 279 § 92. Agreement to Deliver Policy. -Demand is Un- necessary where an insurance policy is agreed to be delivered within a certain time. 280 § 93. There may be a Constructive Delivery. — That there may be a constructive delivery of the policy is un- 575 Hubbard v. Hartford F. Ins. Co., 33 Iowa, 325; 11 Am. Rep. 125. 176 Loring v. Proctor, 26 Me. 18; Insurance Co. v. Colt, 20 Wall. (U. 8.) 560. *'•' Blanchard v. Waite, 28 Me. 51; 48 Am. Dec. 474; Yonge v. Equi- table L. Assur. Soc.,30 Fed. Rep. 902; 1 Corp. L.J. 531; Alabama Gold L. Ins. Co. v. Herron, 56 Miss. 643; Warren v. Ocean Ins. Co., 16 Me. 439, 451 ; 33 Am. Dec. 674; Sheldon v. Conn. Mut. L. Ins. Co., -5 Conn. 207; 05 Am. Dec. 565. 278 Xenos v. Wickham, 2 L. R. Eng. & Irish App. 296; 16 L. T., N. S., 800; 16 Week. Rep. 38; 36 L. J. Com. P. 313. 279 .Mutual L. Ins. Co. v. Thompson, 94 Ky. 253; 22 Ins. L. J. 481. a80 West Mass. Ins. Co. v. Duffey, 2 Kan. 347. 157 COMPLETION OF CONTRACT. §§ 94, 95 doubted. 281 In the following cases, however, the circum- stances were held not sufficient to justify finding such con- structive delivery. Thus, in Herman v. Phoenix Mutual Life Insurance Company 282 the company executed and for- warded a policy to its agent to be delivered to the appli- cant H. on receipt of the premium. The agent took the policy to H.'s place of business, but he was temporarily absent from the state and the policy was exhibited to the son, who was informed by the agent that the first pre- mium was payable in cash and a note. The son did not pay cash, but gave his father's note as required, and the agent ac- cepted the same and took it away with the policy, stating that he would keep the policy good till the father's return. The father died while so absent, and the court decided that there was no actual or constructive delivery of the policy. 283 So where there was no payment of the premium due upon a life policy, and payment of only one-half of the premium due had been waived, it was held that a letter by the agent to the appli- cant stating that "your policy" has arrived did not amount to a constructive delivery. 284 § 94. Delivery — Possession of Policy by Assured. — Possession of the policy by the assured is only prima facie evi- dence of its delivery, as where it appears that it was delivered subject to examination by the assured. 285 So mere possession by the assignee of the assured of a life policy which recites on its face that it is to take effect only when countersigned by the agent, and which is not so countersigned, is no evidence that the policy was ever delivered to the assured. 286 § 95. Neglect of Assurer to Deliver Policy. — Nonde- livery by reason of negligence of the company or its agents 281 McLachlan v. JStna Ins. Co., 4 Allen (N. B.), 173; Home Ins. Co. v. Curtis. 32 Mich. 402; 5 Ins. L. J. 120. 282 17 Minn. 153; 10 Am. Rep. 154. 283 g e ^ a i PO Marker v. Mutual B. etc. Ins. Co., 103 Mass. 78; IIS Mass. 178; 126 Mass. 158. ' M Union Cent. L. Ins. Co. v. Pauley, 8 Moon (Ind. App.),"85; 35 N. E. Rep. 190. 285 Davis v. Massachusetts Mut. L. Ins. Co., 13 Blatchf. (C. C.) 4; Rogers v. Charter Oak L. Ins. Co.. 41 Conn. 97; Benton v. Martin, 52 N. Y. 570. 290 Harneckell v. New York L. Ins. Co., 40 Hun (N. Y.), 558. 291 Faunce v. State etc. Ins. Co., 101 Mass. 279. 292 Kohen v. Mutual Res. F. L. Assn., 28 Fed. Rep. 705; Misselhorn v. Same, 30 Fed. Rep. 545. 159 COMPLETION OF CONTRACT. §§ 99, 100, 101 cant's wife, and although there was a day's delay in passing on said application, when otherwise it might have reached the ;q: plicant before his death. 293 So where a policy upon the life of A payable to B was conditioned not to be binding until de- livered to A in good health, it was held that a delivery to B after the death of A was not binding upon the insurer. 294 The rule above stated is, however, subject to certain qualifications, as will be noted elsewhere, as in cases of waiver or delivery to an agent, etc. § 99. Delivery — Misrepresentation or Fraud. — If the delivery be obtained by misrepresentation or fraud, it can have no effect as a binding contract, as in case the assured has knowl- edge of the loss at the time the application is made and conceals the fact. 295 § 100. Delivery — Xotice to Assured of Execution of Policy. — An actual delivery of the policy is not essential to the completion of the contract where an application has been made, accepted, and the terms agreed upon, and the policy ex- ecuted and notice thereof given to the assured. 296 In Myers v. Liverpool etc. Insurance Company 297 application was made to an agent for a fire policy; thereafter the applicant was notified by the agent that the policy was ready, and he was requested to call for it, which he did several times, but did not find the agent in. The policy was finally canceled by the agent and soon after the premises were destroyed by fire, and it was held that no action could be maintained on the contract. § 101 . Delivery to Agent of Insured or to Third Person . The delivery need not be made personally to the insured but 293 Kohen v. Mutual Res. F. L. Assn., 28 Fed. Rep. 705. 294 McClair v. Mutual Res. F. L. Assn., 55 N. J. L. 187; 26 Atl. Rep. 78. 295 piedmont Ins. Co. v. Ewing, 92 U. S. 377; Fitzherbert v. Mather, 1 Term Rep. 12; Wales v. New York Bowery F. Ins. Co., 37 Minn. 106; ;:; N. W. Rep. 322; Whitley v. Piedmont etc. Ins. Co., 71 N. C. 480; Edwards v. Footner, 1 Camp. 530. 296 Bragdon v. Appleton M. F. Ina. Co., 42 Me. 259; Sheldon v. Life Ins. Co., 25 Conn. 207; 65 Am. Dec. 565. 297 121 Mass. 338. § 102 COMPLETION OF CONTRACT. 160 may be to a third person for him, or to the order and control of a third person, or to the agent of the insured, so the delivery is effectual to bind the contract where the company's agent under an agreement with the assured holds the policy subject to the order and control of a third person, whose mortgage interest is covered by it, though such third person does not call for or receive it; 298 but where the delivery is to a third party, until it can be learned whether the com- pany will accept the risk, and it is understood that if the company refuses to insure, the applicant will try to obtain insurance in another company, and a loss occurs before the agent learns whether the risk has been accepted or not, no con- tract is consummated, although the applicant has paid the premium. 299 But the delivery is sufficient to complete the con- tract where it is delivered to the company's agent under a stip- ulation in a proposal for insurance that such agent shall act for both parties. 300 If the policy, however, is handed to a messen- ger of the assured, his acts and declarations are inadmissible to bind the assured in the absence of proof of his authority. 301 § 102. Delivery by and to Agent — Policy Held by Agent. A delivery of a policy by an authorized agent is effectual to bind the principals although it be delivered by him to another agent from whom the application was received, and to whom the premium is charged, it being delivered by the latter to the assured. 302 But the rule is otherwise where the policy is in- tended as a substitute for an existing policy in another com- pany, but is not delivered, and the insured has no knowledge thereof until after the loss. So the company will be bound by a delivery by its agent where the premium has been paid not- withstanding the actual knowledge of the assured that the company intended to revoke the agent's authority, where the delivery takes place before such revocation and the agent has 398 Home Ins. Co. v. Curtis, 32 Mich. 402. m Brown v. American Cent. Ins. Co., 70 Iowa, 390; 30 N. W. Rep. 647. 300 Alabama Gold L. Ins. Co. v. Herron, 56 Miss. 643. 801 Williams v. Niagara F. Ins. Co., 50 Iowa, 561. i0i Stebbins v. Lancashire Ins. Co., 60 N. H. ti5. 161 COMPLETION OF CONTRACT. § 103 no knowledge of the company's purpose. 303 So where the au- thorized agent delivers the policy to another to deliver to the assured, this is a delivery by the company. 804 Again, the de- livery may bind the company where the policy is retained by its agent, although only a part of the premium has been paid by the assured, 305 and where it is expressly agreed that the policy shall be held by the agent in his safe for the assured, this is a sufficient delivery, and the assured's right is perfected. 306 So where an agent of the defendant company was also agent of another company, and he had charge of B.'s insurance, select- ing the companies and receiving his policies, and a policy hav- ing been canceled he insured the property in the defendant company, notifying both parties thereof, charging the premium to the assured in their private account, and the policy was placed by him in his safe, it was held that this completed the contract and bound defendant, 307 and, as a rule, an uncondi- tional delivery of the policy to the agent for delivery to the insured binds the company, and the agent may not refuse to deliver upon tender of the premium, although the insured may be seriously sick. 308 §103. Delivery — Agreement Completed Before !Loss. — "Where the contract is completed and the risk commenced, but the loss or a dangerous sickness occurs thereafter and before delivery of the policy or certificate, the company is liable, even though the premium has not been paid, provided there be no fraud or concealment by the insured. 309 So where an applica- 805 Lightbody v. North America Ins. Co., 23 Wend. (N. Y.) 18. 804 Kelley v. Commonwealth Ins. Co., 10 Bosw. (N. Y.) 82, 95. 805 Wheeler v. Watertown F. Ins. Co., 131 Mass. 1. 806 Insurance Co. v. Colt, 20 Wall. (U. S.) 560. 307 Dibble v. Northern Assur. Co. of London, 70 Mich. 1; 14 Am. St. Rep. 470; 37 N. W. Rep. 704; 14 West. Rep. 213; 3 Mich. 345. 308 Schwartz v. Germania L. Ins. Co., 21 Minn. 215; Yonge v. Equi- table L. Assur. Soc, 30 Fed. Rep. 902. 309 Commercial Ins. Co. v. Hallock. 27 N. J. L. 645; 72 Am. Dec. 379; Southern L. Ins. Co. v. Kempton, 56 Ga. 339; Kohne, v. Insurance Co. of North America, 1 Wash. (C. C.) 93; Ellis v. Albany etc. Ins. Co., 50 N. Y. 402; 10 Am. Rep. 495; City of D.ivenport v. Peoria etc. Co., 17 Iowa, 276; Gauser v. Firemen's Fund Ins. Co., 38 Minn. 74; 35 N. W. Rep. 584; Walker v. Metropolitan Ins. Co., 56 Me. 371. In this case Joyce, Vol. I.— 11. § 103 COMPLETION OF CONTRACT. . 162 tion was made for life insurance and the sum of fifty dollars was paid to be applied on the first year's premium, and the policy was forwarded to the agent for delivery, and the insured died and the agent refused to deliver it, although the balance of the premium was offered, the policy was held to have attached. 310 So where the premium is to be paid on delivery of the policy, and a loss by fire occurs before delivery, the com- pany is liable. 311 In Fried v. Royal Insurance Company 312 the plaintiff made a proposal for insurance on the life of her husband, and advanced the usual premium for one year, and received therefor a receipt, providing substantially that the policy was to be forwarded to the head office at Liverpool, and if accepted a policy was to be issued; if rejected, the premium was to be returned ; if the husband died before decision should be received the sum insured was to be paid. The proposal was accepted and the policy returned to be executed by the agent and delivered. The agent executed but refused to deliver it, on account of an alleged unfavorable change in the husband's health. The husband died soon after and the defendant re- fused payment, claiming that the contract was never consum- mated, and that the acceptance must be qualified by the com- pany's standing instructions to the agent not to deliver a policy if a change had taken place in the health of the assured. The court, however, decided that the acceptance was absolute and unqualified, and could not be limited by private instructions to the agent of which the plaintiff had no notice, and if the con- tract was in violation of the instructions or inconsistent there- with, the defendant ratified the same; that it was competent for the defendant to contract in entire disregard of instructions to its agent; that they were chargeable with knowledge that the contract was inconsistent with the agent's alleged instruc- tions, and with that knowledge had assented to it, and that a recovery could be had by the plaintiff. And where the agreement is completed before loss, the assured has the right the policy was not issued nor the premium paid : Whitman v. American Cent. Ins. Co., 14 Lea (Tenn.), 327 (case of substituted policy). 3,0 Cooper v. Pacific Mut. Ins. Co., 7 "Xev. Ifi6; 8 Am. Eep. 705. 811 An-ell v. Hartford F. Ins. Co., 59 N. Y. 171; 17 Am. Dec. 322. 8 » 50 N. Y. 243. 163 COMPLETION OF CONTRACT. § 104 to receive a policy although he knows that the company in- tended to revoke the agent's authority, but had not actually done so when the agent tendered the policy. 313 § 104. Delivery — Agreement Incomplete at Time of Loss. — If the contract is not completed, and a loss occurs or the insured dies, the company may refuse to deliver the policy or receive the premium, or otherwise consummate the contract, as where the policy was withheld until payment of the pre- mium, which had not been made when the assured died. 314 In a Pennsylvania case the application was made to a mu- tual company and the agreement was that the premium should be paid on delivery of the policy. The policy was drawn with- out the applicant's signature, but he was enrolled on the com- pany's books as a member. A fire occurred and delivery of the policy was refused, although the premium was tendered, and it was held that the applicant's liability to contribute to losses was not fixed, that the contract was not completed, and therefore no action could be maintained for a policy. 316 So where an agent represented several companies and an application was made to him for insurance, and part of the premium paid, and after a loss the balance was paid and a policy demanded, it was held that no action could be maintained to compel delivery of a policy in the absence of evidence that a contract of insurance had been completed with some particular company. 316 So the company may refuse to deliver a life policy although it is made out and mailed to the agent to be countersigned and delivered, it being provided that it shall take effect only when counter- signed by the agent, and the party dies before the policy reaches the agent; 317 and where a life policy was not to be in force until "signed by the officers of the association and deliv- ered to the applicant," and was not made out until after the death of the applicant and in ignorance of it, and was then de- livered at the proper place, it was declared void. 318 So where a 813 Liehtbody v. North America Ins. Co., 23 Wend. (N. Y.) 18. 814 Collins v. Insurance Co., 7 Phila. (Pa.) 201. 815 Schaffer v. Lehigh etc. Ins. Co., 89 Pa. St. 296. 816 New Orleans Ins. Assn. v. Boniel, 20 Fla. 815. 817 Noyes v. Phoenix Mut. L. Ins. Co., 1 Mo. App. 584. 318 Misselhorn v. Mutual Res. F. Assn., 30 Fed. Rep. 545. § 105 COMPLETION OF CONTRACT. 164 policy provides that under no circumstances shall it be enforced until the premium is paid, if the assured dies before such pay- ment and before delivery of the policy, the policy is inopera- tive, notwithstanding the company's agent has told the assured that he could pay when the policy was delivered. 319 ISfor is the company liable in a case where an applicant for life insurance dies before the application is forwarded to the company, al- though the applicant has given his note for the amount of the first premium. 320 And where in an action upon a fire policy it appeared that the agent of the insurer, after writing the policy, forwarded it to one S., with instructions to tender it to the plaintiff in renewal of an expired policy, but before it was so tendered, the property was destroyed and S. received instruc- tions by wire not to deliver the policy, and he told the plaintiff of the receipt of the policy by him and his instructions not to deliver it, and upon the following day the plaintiff wired S. to hold the policy, which had, however, been returned to the agent of whom a demand therefor was made and the premium tendered, it was hold that the contract was not complete; 321 and where a policy was assigned and left with the company to be approved, and such approval was delayed until assured should give a premium note, and a loss occurred before the note was given, it was held that the company could not collect his assessment for the loss, as no contract of insurance existed. 322 § 105. Loss Before Date of Contract — Policy Retro- active. — An insurance policy may be retroactive, and so provide for indemnity for a loss which happened anterior to the date of the policy. In marine insurance a policy can be lawfully effect- ed upon property "lost or not lost" ; but this phrase so used has reference to cases where the property has started upon its voy- age and the parties to the insurance have no knowledge wheth- er it has been lost or not. In such cases the insurance is against an unknown event, and the underwriter takes the risk 519 Ormond v. Fidelity L. Assn., 96 N. C. 158. 320 Covenant Mutual B. Assn. v. Conway, 10 III. App. 348. 821 New York Lumber etc. Co. v. People's F. Ins. Co., 96 Mich. 20; 55 N. W. Rep. 434. 8M Cranberry etc. Co. v. Hawk (N. J. Ch. 1888), 14 Atl. Rep. 745. 165 COMPLETION OF CONTRACT. § 105 of the arrival of the property at its destination, and thus there is something to insure. 323 So a policy may contain the words "lost or not lost/' and cover a cargo on board a ship then on a whaling voyage, beginning the adventure on said cargo as aforesaid, 324 and the property may be covered, although it was lost eight hours before the policy was effected. 320 So an insurance will be valid where there is no fraud in the case, al- though made after a loss and before notice thereof, and not- withstanding the vessel was cast away and lost about ninety miles from the port of destination, where some of the part- ners who procured the insurance resided. 326 And a policy will be upheld although the owners went to the company's office late in the evening and obtained insurance on a vessel which was past due and lost, and news of such loss had reached the city, although it was not proven to have reached the owners; 327 and a policy may be retroactive where, in the absence of fraud, concealment, or misrepresentation, it is signed after a loss has occurred for a risk taken to commence before its date, though there be no clause equivalent to "lost or not lost" ; 328 for the policy need not contain the words "lost or not lost" to cover losses prior to its date. It is sufficient that it appear that the insurance was intended to cover prior losses. 329 And a retrospective fire insurance contract made when the thing in- sured is distant and its status unknown to either party will bind the insurer for a loss occurring before the date of the agreement, if such appear either from the policy or from cir- 823 People v. Dimick, 107 N. Y. 13, 29, per Earle, J. SM Paddock v. Franklin Ins. Co., 11 Pick. (MasO 227. 325 Blackhurst v. Cockell, 3 Term Rep. 360. See, also, Clement v. Phoenix Ins. Co., 6 Blatchf. (C. C.) 481; Schroeder v. Stock and Mutual Ins. Co., 46 Mo. 174; Mer. Ins. Co. V. Paige, 60 111. 448; Sutherland v. Pratt, 11 Mees. & W. 2.16. 326 Andrews v. Marine Ins. Co., 9 Johns. (N. Y.) 32. 327 Horter v. Merchants' Mut. Ins. Co., 28 La. Ann. 730. 328 Hallock v. Commercial Ins. Co., 26 N. J. L. 268; Commercial Ins. Co. v. Hallnck, 27 N. J. L. 645; 72 Am. Dec. 379; Insurance Co. v. Folsom, 18 Wall. (U. S.) 237. 329 Insurance Co. v. Folsom, 18 Wall. (U. S.) 237, affirming 8 Blatchf. (C. C ) 170; 9 Blatchf. 201; 3 Kent's Commentaries, 259, note c; Ham- mond v. Allen. 2 Sum. (C. C.) 396; Hooper v. Robinson, 98 U. S. 537; 1 Phillips on Insurance, 3d ed., 501, sec. 925. See, also, sec. 104 herein. §§ 106, 107 COMPLETION OF CONTRACT. 166 cumstances to have been the intention of parties; 33 ° and ex- trinsic evidence is admissible to prove that a policy, dated on the same day on which an embargo was laid, was made without knowledge of the embargo. 331 And where the contract is made when both parties are ignorant of the loss, the policy may be valid and binding, although it is not delivered, 332 and so al- though the policy is post-dated. 333 § 106. Where Both Parties Know of Loss When Con- tract is Made or Executed. — Although in marine risks the policy may be upon property "lost or not lost," yet if the prop- erty has been totally lost and this is known by the parties, there is nothing to insure, no event to be indemnified against, no unknown event upon which to base the contract, and hence there can be in such case no lawful or valid insurance. 334 But if at the time the policy is executed a loss has occurred, and it is known to both parties, the contract will be binding if the risk has actually attached prior thereto. 335 And it is held that a binding contract may be made where the insurers know of the loss at the time the contract is entered into, and it appears that they intend to make themselves liable. 336 For if the amount of the loss is uncertain, there is no reason why the in- surance should not attach. 337 Such intention where the loss is unknown is generally expressed by the words "lost or not lost." *» § 107, Knowledg-e of Loss by Assured Before and After Bisk Attaches. — Where a loss occurring before the risk 830 Security etc. Ins. Co. v. Kentucky etc. Ina. Co., 7 Bush (Ky.), 81 ; 3 Am. Rep. 301. 331 Lorent v. South Carolina Ins. Co., 1 Nott & McC. (S. C.) 50^, 506. 332 Kohne v. Insurance Co. of North America, 1 "Wash. (C. C.) 93. 333 Mead v. Davidson, 3 Ad. & E. 303; Giffard v. Queen's Ins. Co., 1 Hann. (N. B.) 432; Merchants' Ins. Co. v. Paige, 60 111. 448; Horter v. Merchants' Mut. Ins. Co., 28 La. Ann. 730. 334 So held in People v. Dimick, 107 N. Y. 13, 29, per Earle, J. 335 Mead v.Davidson, 3 Ad. & E. 303; Davenport v. Peoria etc. Ins. Co., 17 Iowa, 276; Walker v. Met. etc. Ins. Co., 56 Me. 371; 1 Phillips on Insurance, 3d ed., 502, sec. 926. 336 Arkansas Ins. Co. v. Bostick, 27 Ark. 539. But see People v. Dimick, 107 N. Y. 14. 837 2 Phillips on Insurance. 3d ed., 502, sec. 926. 838 Mead v. Davidson, 3 Ad. & El. 303; Arkansas Ins. Co. v. Bostick, 27 Ark. 539. See sees. 104 and 105, herein. 167 COMPLETION OF CONTRACT. § 107 attaches is known only to the applicant and he obtains a policy without disclosing the fact of loss, the policy is void, 339 even though the contract be given a date prior to the loss. 340 If a person who has directed a marine insurance to be procured at a distant place receives intelligence of a loss before his order is executed, he should countermand the order, or transmit the intelligence by the earliest and most expeditious usual route of mercantile communication. But it is not obligatory on him to resort to an unusual and extraordinary mode of transmission. So where the Atlantic cable had been only about three months in operation, and the rates were high, it was held sufficient to send notice by the first mail from Liverpool to New York, where the insurer resided. 341 In an Illinois case a marine pol- icy was obtained on goods lost or not lost, shipped on a vessel lost two days prior to the date of the policy; this loss was, known to the insured at the time, but he failed to inform the agent, and it was decided that the particular agent effecting the insurance should have been informed ; that knowledge by the company of the loss did not necessarily arise from the fact that the daily papers received at the company's office on the day the policy was issued contained a notice of the loss; and that no- tice to one agent of the company did not import necessarily a notice to the other. 342 In Blake v. Hamburgh-Bremen Fire Insurance Company 343 the agent agreed with the insured that he might obtain additional insurance, such insurance to take effect for an amount named in a letter from the time it was mailed. It was determined that the insurance could not be held to have attached from the mere posting of an unstamped letter, and that giving notice after the fire began, the insured knowing of such fact, was insufficient to bind the company. 889 Fitzherbert v. Mather, 1 Term Eep. 12; Laidlaw v. Liverpool etc. Ins. Co., 13 Grant (Ont.), 337; Mackie v. European Ins. Co., 21 L. T., N. S., 102. See Mittaker v. Farmers' Union Ins. Co., 29 Barb. (N. Y.) 312; People v. Dimick, 107 N. Y. 13. 840 Wales v. New York Bowery F. Ins. Co., 37 Minn. 106; 33 N. W. Rep. 322. 811 Snow v. Mercantile Mut. Ins. Co., 61 N. Y. 160. 842 Merchants' Ins. Co. v. Paige, 60 111. 448. ■" 2 S. W. Rep. (Tex.) 368; 67 Tex. 160; 60 Am. Rep. 15. § 108 COMPLETION OF CONTRACT. 168 § 108. Assured is not Obligated to Notify Company of Loss before Delivery of Policy when Risk has Attached. There is no legal nor moral obligation resting on the assured to voluntarily notify the company of a loss occurring after the lisk has attached, although the policy has not been delivered nor the premium paid. 344 So where an application was ac- cepted and the policy made out and executed, but was per- mitted to remain in the hands of the company, and the plain- tiff, directly after the occurrence of a loss paid the premium and received the policy without disclosing the fact that the property had been burned in the meantime, it was determined that the company was liable and that upon receipt of the pre- mium and delivery of the policy the contract related back to the date of the policy, 345 and in such case the policy will also relate back to the time when it was made out and signed, not- withstanding a provision in the by-laws that the policy should take effect on the day of approval and be binding thereafter "providing the premium has been paid, and not otherwise." 348 8 " Keim v. Home Mut. F. Ins. Co., 42 Mo. 38; 97 Am. Dec. 291; American Home Ins. Co. v. Patterson, 28 Ind. 17. 3 « Baldwin v. Chouteau Ins. Co., 56 Mo. 151; 17 Am. Rep. 671. See, also, Commercial Mut. M. Ins. Co. v. Union Mut. M. Ins. Co., 19 How. (U. S.) 318. **• Keim v. Home Mut. F. Ins. Co., 42 Mo. 38; 97 Am. Dec. 291. CHAPTER V. REINSURANCE. § 112. Reinsurance defined. § 113. Nature of contract. § 114. Reinsurance: Validity of contract. § 115. Reinsurance: Validity of company's acts— Its powers. § 116. Reinsurance: Not within statute of frauds. § 117. Relations between parties and between insured and reinsurer. § 118. Insurable interest of reinsurer. § 119. Reinsurance: The risk. § 120. Duration of risk may be controlled by original insurance. § 121. Custom of underwriters may affect risk. § 122. Limitation of risk may be specified date — Change of risk. § 123. Limitation of risk to particular locality. § 124. Condition as to assignment. § 125. Condition as to other insurance. § 12G. Conditions: Time limit for suing — Award. § 127. Amount of reinsurance. § 128. Representations and warranties in reinsurance. § 129. Abandonment unnecessary in reinsurance. § 130. Proofs of loss in reinsurance. § 131. Extent of reinsurer's liability. § 132. Agreements affecting reinsurer's liability. § 133. Reinsurer's liability: Pro rata clause. § 134. Reinsurer's liability: Compromise: Insolvency of Insurer. § 135. "When suit may be brought against reinsurer: Rights of origi- nal insured. § 136. Reinsurance: Recovery: Evidence. § 137. Reinsurer bound by judgment: Notice to defend. § 138. Defenses available to reinsurer. § 112. Reinsurance Defined. — Reinsurance is a contract whereby one for a consideration agrees to indemnify another against loss or liability assumed by the latter as insurer of a third party. Other definitions have been given as follows : A contract "by which one insurer causes the sum which he has insured to be reassured to him by a distinct contract with an- other insurer, with the object of indemnifying himself against (169) § 112 REINSURANCE. 170 his own responsibility." 1 "Reinsurance is an indemnity against a risk incurred by the assured in consequence of a prior insurance upon the same property or some part of it." 2 "A contract whereby one party, called the 'reinsurer,' in con- sideration of a premium paid to him, agrees to indemnify the other against the risk assumed by the latter by a policy in favor of a third party." 3 "Reinsurance is where an insurer procures the whole or part of the sum which he has insured (i. e., contracted to pay in case of loss, death, etc.) to be in- sured again to him by another person. This is commonly done in case of marine insurance Formerly, by 19 George II., chapter 37, section 4, reinsurance was prohibited except in certain cases, but this provision was repealed by 30 and 31 Victoria, chapter 23." 4 Sometimes, however, reinsurance exists where an insurer about to become insolvent, or for other reasons, transfers his risks to another com- pany, or consolidates with some other company, and the transferee or consolidated company assumes all the risks. 5 Whether a contract is or is not one of reinsurance has been before the courts in several cases. It was held in New York that there was no contract of reinsurance, but simply an original insurance, where certain policies upon a mortgage interest were directed to be canceled, and the agent 1 Phoenix Ins. Co. v. Erie Transp. Co., 117 U. S. 312, 323, per Gray, J. See Deerinti's Annot. Civ. Code, Cal., sees. 2646-49; Devisee's Dak. Code, sees. 1559-62; Annot. Code Mont. (18 5), sec. 3530; Rev. Code N. Dak. 1895, sec. 4533. 2 Mutual Safety Ins. Co. v. Hone, 2 N. Y. 235, 240, per Gardiner, J. * 1 Phillips on Insurance, 3d ed., 209, sec. 374. 4 Sweet's Dictionary of English Law (18S2), 689. For other defini- tions, see Commercial Ins. Co. v. Detroit F. & M. Ins. Co., 38 Ohio St. 15, 16; 11 Am. & Eng. Ency. of Law, 34:5; liapalje & Lawrence's Law Dictionary, 1089, title "Reinsurance"; 1 May on Insurance, 3d ed., sec. 11; Deering's Annot. Civ. Code, Cal., sec. 2646; Comp. Laws, Dak. 1887, sec. 4183. 6 Johannes v. Phoenix Ins. Co., 66 Wis. 50; 57 Am. Rep. 249; Glen v. Hope Mut. etc. Ins. Co., 56 N. Y. 379. "The insurance of the sol- vency of an insurer is permitted and practiced in some foreign countries (Le Guidon, c. 2, art. 20; Ord. Louis XLV., h. t. art. 20; Valin, h. t. 65), but it seems never to have been in use amongst us": 1 Marshall on Insurance, ed. 1810, *145; Emerigon on Insurance, Meredith's ed. 1850, c. viii, sec. 114, p. 205. 171 REINSURANCE. § 1 1 3 applied to defendant to reinsure the risks, which it agreed to do, but under a subsequent agreement the policies were issued di- rectly to the insured. 6 The word "reinsurance" is sometimes used in the sense of a renewal insurance. Thus, where part- nership property was insured by the defendants, and thereafter one of the partners having purchased the others' interest ap- plied to defendant's agent for reinsurance, which was agreed to be effected ; but the agent gave the latter a paper which he supposed was a policy and so did not examine it, but it was in fact only a renewal of the old policy, and the court held it a new contract, subject to the same terms and conditions as the first. 7 § 113. Reinsurance — Nature of Contract. — Although the decisions show a difference in many respects between the contract of insurance and reinsurance, yet the contract involves no legal principles essentially different from those applicable to contracts generally. 8 ISTor does the contract necessarily differ in form from original insurance. 9 It is held that an agreement to reinsure is not a contract of guaranty. 10 As we have seen elsewhere, reinsurance is a contract of indemnity to the rein- sured. 11 This rule, however, is qualified in Illinois to the ex- tent that the amount paid by the reinsured to the insured is • Excelsior F. Ins. Co. v. Royal Ins. Co., 55 N. Y. 343; 14 Am. Rep. 271. 1 Pierce v. Nashua Ins. Co., 50 N. H. 2H7; 9 Am. Rep. 235. 8 Smith v. St. Louis Mut. L. Ins. Co., 2 Tenn. 727, 742. • New York Bowery F. Ins. Co. v. New York F. Ins. Co., 17 Wend. (N. Y.) 359; Philadelphia Ins. Co. v. Washington Ins. Co., 23 Pa. St. 250, 253. 10 Bartlett v. Firemen's Ins. Co., 77 Iowa, 158: 41 N. W. Rep. 601. 11 Sec. 28, herein. Faneuil Hall Ins. Co. v. Liverpool etc. Ins. Co., 153 Mass. 67, 68, per Morton, J. ; Manufacturers' Ins. Co. v. Western Assur. Co., 145 Mass. 423, per Knowlton, J.; Barnes v. Hekla F. Ins. Co., 56 Minn. 38; 57 N. W. Rep. 314; Fame Insurance Company's Ap- peal, 83 Pa. St. 398: Bartlett v. Firemen's Ins. Co., 77 Iowa, 158; 41 N. W. Rep. 601; Insurance Co. v. Insurance Co., 38 Ohio St. 15, 16; Eagle Ins. Co. v. Lafayette Ins. Co., 9 Ind. 443, 446; Philadelphia Trust etc. Ins. Co. v. Fame Ins. Co., Phila. 9 (Pa.) 292 (a contract of indemnity against liability and not merely against damage); Deering's Annot. Civ. Code, Cal., sec. 2648; Dak. Com p. Laws 1887, sec. 4185; Levisee's Dak. Codes, sees. 1559-H2; Annot. Civ. Code Mon., 1895, sec. 3530; Revr. Code, N. Dak., 1895, sec. 4535. § 114 REINSURANCE. 172 the measure of indemnity from the reinsurer. 12 "We shall con- sider the force of this qualification hereafter. 13 § 114. Reinsurance — Validity of Contract. — Reinsur- ance was a valid contract at common law, 14 but in 1746 an act was passed 15 in England providing that it should not be law- ful to make reassurance unless the insurer should be insolvent, become a bankrupt, or die. 16 This statute remained in force till the act of 1864 17 was passed, providing that reassurance of sea risks might lawfully be made. Reinsurances have al- ways been valid and lawful in this country, and in an early Massachusetts case the court decides that the statute 19 George II., chapter 37, did not extend to the then British colonies here, and was not the law of that commonwealth. 18 It was held however, in a Maryland case 19 that the English prohibitory statute 20 was in force in that state, and related exclusively to marine reinsurance. Reinsurance is, however, not only a valid contract, but is now commonly practiced, and it is held that a parol agreement by the underwriter to transfer a risk to an- other is not within the prohibition of the statute 19 George II., chapter 37. 21 " Illinois Mut. Ins. Co. v. Andes Ins. Co., 67 III. 362; 16 Am. Rep. 620. See, also, Insurance Co. v. Insurance Co., 38 Ohio St. 11, 15, 16. 13 See sec. 118, herein. " Phoenix Ins. Co. v. Erie Transp. Co., 117 U. S. 312, 323; New York Bowery F. Ins. Co. v. New York F. Ins. Co., 17 Wend. (N.Y.) 359, 362; Merry v. Prince, 2 Mass. 176, 185. 16 19 Geo. II., c. 37. 18 This act covered reassurances in England made in England either by British subjects or foreigners, whether on British or foreign ships: Andree v. Fletcher, 2 Term Rep. 161; 1 Marshall on Insurance, ed. 1810, *144. See Edgar v. Fowler, 3 East, 118. " 27 & 28 Vict., c. 56. See, also, 30 & 31 Vict., c. 23. 18 Merry v. Prince, 2 Mass. 176, 185; Hastie v. De Peyster, 3 Caines (N. Y.), 190 b, 193; New York Bowery F. Ins. Co. v. New York F. Ins. Co., 17 Wend. (N. Y.) 359, 3(>2. This case holds that there is no dif- ference between cases of fire and marine risks: Insurance Co. v. Insur- ance Co., 38 Ohio St. 11, 16, 17; 43 Am. Rep. 413: Merchants' etc. Mut. Ins. Co. v. Washington Mut. Ins. Co., 1 Handy tunio), 408, 425; Phoe- nix Ins. Co. v. Erie Transp. Co., 117 TJ. S. 323. 19 Consolidated Real Estate etc. Co. v. Cashaw, 41 Md. 59. » 19 Geo. II., c. 37. 21 Delver v. Barnes, 1 Taunt. 48. 17o REINSURANCE. § 115 § 115. Reinsurance — Validity of Coin pany's Acts — Its Powers. — An insurance company empowered " to make con- tracts of insurance," or "all kinds of insurance against losses by lire," may make a contract of reinsurance; 22 and where the act of incorporation of the F. company made it subject to the gen- eral laws of the state authorizing companies to "reinsure them- selves," and the F. Company agreed to reinsure the E. Company on all its term risks in certain enumerated states, and to indemnify it upon all losses in one class not ex- ceeding five thousand dollars, and in others known as "extra-hazardous," exceeding a certain sum, and to contrib- ute in various proportionate amounts on another class of risks, and the losses were payable under a pro rata clause, and losses were sustained in the Chicago fire in 1871, it was held that the contract was not ultra vires, and would be enforced by a court of equity. 23 An insurance company having a control- ling interest in another company may delay a statement de- manded of the superintendent of insurance from the latter company, and may reinsure its risks and absorb its assets pro rata, and the assets of both companies being available to the superintendent and the reinsured company, which is solvent, the act of the reinsurer is neither a fraud against the state nor against public policy. 24 But the reinsurance of the policies and the transfer of the whole reserve of a solvent life insurance company to an insolvent company without security by mana- gers who have bought the stock of the former under an agree- ment that its contract obligations shall be rigorously fulfilled to the same extent and in the same manner as if no change had taken place, is a breach of such contract obligations and of such agreement ; 25 and where the intendment of a law was that in- surance should be made in the name of and for the benefit of the company, and not individual policy holders, such law can- not be construed so as to allow reinsurance in favor of a policy holder, and thus bring it into conflict with a statute forbidding 22 New York Bowery F. Ins. Co. v. New York F. Ins. Co., 17 Wend. (N. Y.) 359, 363. 23 Fame Insurance Company's Appeal, 83 Pa. St. 396. 2i Alexander v. Williams, 14 Mo. App. 13. 25 Mason v. Cronk, 125 N. Y. 49b; 35 N. Y. 859; reversing 27 N. Y. 122. § 116 EEINSUEANCE. 174 a corporation giving preferences. 26 In Iowa it is held that a contract by a mutual benefit society, by which it agrees to as- sume the liabilities and death losses of another association, is ultra vires and void. 2 ' An agreement by which one life in- surance company transfers to another all its assets in considera- tion that the latter company will reinsure the risks and assume the debts and liabilities of the former company, is ultra vires and void, although the vendor company is authorized to rein- sure its risks/ -28 and a policy holder in the reinsured company who has paid premiums to the transferee company without such latter company issuing a new policy to him is entitled to recover from the reinsurer the premiums so paid, with interest thereon. 29 So the right of a mutual life insurance company to reinsure does not carry with it the power to sell or transfer all its property against the will of the minority of its policy hold- ers, and a contract to so sell or transfer is ultra vires and void as against the dissenting policy holders. 30 Again, where a majority of the policy holders of a reinsured company assented to the transfer of the assets to the reinsuring company, it was held that the court might decree that all the securities depos- ited as a trust fund be given to those policy holders who had neither expressed assent nor dissent. 31 But a failure to comply with a state law requiring a certain amount of capital as a condition precedent to doing busi- ness, will not prevent an insurance company from indem- nifying itself by reinsurance against risks already assumed. 32 $ 116. Reinsurance not Within Statute of Frauds. Reinsurance is not a contract within the statute of frauds, and is not a promise to pay the debt of another, and need not be in 116 Caeserly v. Manners, 48 How. Pr. (N. Y.) 219. 27 Twissv. Guaranty L. Assn., 87 Iowa, 733; 55 N.W. Rep. 8j 22 Ins. L. J. 539. 29 Smith v. St. Louis Mut. L. Ins. Co., 2 Tenn. Ch. 727. *> Smith v. St. Louis Mut. L. Ins. Co., 2 Tenn. Ch. 727. 30 Price v. St. Louis etc. L. Ins. Co., 3 Mo. App. 262; see Barden v. St. Louis etc. L. Ins. Co., 3 Mo. App. 248. " Kelfe v. Columbia L. Ins. Co., 10 Mo. App. 150. M Davenport F. Ins. Co. v. Moore, 50 Iowa, 619. 175 REINSURANCE. § 117 writing. 33 Notwithstanding the above rule, it is held in Egan v. Fireman's Insurance Company 34 that if one insurance com- pany assumes the policies of another, that such agreement can- not be enforced unless in writing, as it is a promise to pay the debt of another. § 117. Relations between Parties and between In- sured and Reinsurer. — The reinsured sustains as to the rein- surer the same relation which the original insured bears to the reinsured, but the contract of reinsurance does not inure to the benefit of the assured, and he has no claim, legal or equitable, against the reinsurer, 3o nor any interest in the contract. 36 There is no privity of contract between them, and the reinsured remains solely liable on the original insurance, and he alone has a claim against the reinsurer. 37 Nor can the insured claim a right to share in the assets in case of reinsurance where he has not paid for ten years, on the ground that the reinsurance excused such payment; 38 and in case of insolvency of the re- insured and a recovery in full against the reinsurer, the insured has no claim against the reinsured over the per cent received from him. 39 Notwithstanding this rule, we are inclined to agree with Mr. Parsons that the statement that assured has no claim on such funds is "too sweeping, but that his claim is one in common with other creditors." 40 The rule that there is no 33 Bartlett v. Fireman's Fund Ins. Co., 77 Iowa, 155; 41 N. W. Rep. 601. See Connecticut Mut. M. Ins. Co. v. Union Mut. Ins. Co., 19 How. (TJ. S.) 318. »* 27 La. Ann. 368. 36 Herckenrath v. American Mut. Ins. Co., 3 Barb. Cb. (N. Y.) 63: 1 Barb. Ch. (N. Y.) 363. 36 Delaware Ins. Co. v. Quaker City Ins. Co., 3 Grant's Cas. 71; Fan- euil Hall Ins. Co. v. Liverpool etc. Ins. Co., 153 Mass. 67, 08, per Mor ton, J. ; Deering's Annot. Civ. Code, Cal., sec. 2649; Comp. Laws, Dak. 1887, sec. 4186; Annot. Civ. Code, Mon., 1895, sec. 3533; Rev, Code, N. Dak., 1895, sec. 4536. 37 Strong v. Phoenix Ins. Co. 62 Mo. 289, 296, 297; 21 Am. Rep. 417; Barnes v. Hekla F. Ins. Co., 56 Minn. 38; 57 JS. W. Rep. 314; Hastie v. De Peyster, 3 Caines (N. Y.), 190 b. 38 Re Empire Mut. L. Ins. Co., 64 How. Pr. (N. Y.) 51. 39 Consolidated Real Estate & F. Ins. Co. v. Cashaw, 41 Md. 59, 74. 40 He says (1 May on Insurance (Parsons), sec. 11 A): "The assured has no distinctive claim on those funds, no claim different from that oi §118 REINSURANCE. 176 privity of contract between the insured and the reinsurer is sub- ject, however, to such exceptions as may arise from the agree- ment of the parties, as where the contract provides that the as- sured may sue the reassurer ; 41 or in case of transfer of its business and consolidation of the insurer with another com- pany, the reinsurer becomes directly liable, or where the reinsurer assumes all risks and liabilities of the insurer here, the insured may sue the reinsurer. 42 § 118. Insurable Interest of Reinsurer. — The fact that the insurer has assumed a risk gives him an insurable inter- est. 43 The relation which the reinsured sustains to the prop- erty at risk, as the original insurer thereof, gives an insurable interest. 44 Insurers, however, have no insurable interest in the property insured by them, regarded in the light of own- ers. 45 It is not necessary to specify in the policy that the in- terest is a reinsurance, although the nature of the contract would make it advisable so to do for practical reasons. 46 any other creditor of the insolvent company, but in common with the other creditors he did have a claim The claim against the re- ceiver was part of the assets in the hands of the receiver to be admin- istered for the benefit of creditors." This statement of Mr. Parsons refers to words of the court in the case of Consolidated Real Estate etc. Co. last above cited, and quoted by him as follows: "'The original in- sured has no claim in respect of the money so paid.' " » Glen v. Hope Mut. L. Ins. Co., 56 N. Y. 379. 42 Fischer v. Hope Mut. L. Ins. Co., 69 N. Y. 161 ; Glen v. Hope Mut. etc. Ins. Co., 56 N. Y. 37; Johannes v. Phoenix Ins. Co., 66 Wis. 50; 57 Am. Rep. 248; Barnes v. Hekla F. Ins. Co., 56 Minn. 38; 57 N. W. Rep. 314. 43 New York Bowery Ins. Co. v. New York F. Ins. Co., 17 Wend. (N. Y.) 359; Philadelphia Ins. Co. v. Washington Ins. Co., 23 Pa. St. 250; Yonkers etc. Ins. Co. v. Hoffman, 6 Rob. (N. Y.) 316; 1 Phillips on Insurance, 3d ed., 209, sec. 375. 44 Manufacturers' Ins. Co. v. Western Assur. Co., 145 Mass. 423, per Knowlton, J. 46 Alliance M. Ins. Co. v. Louisiana State Ins. Co., 8 La. 1; 2S Am. Dec. 117. 46 This question is considered in 1 Phillips on Insurance, 3d ed., 270, sees. 408, 499, and he concludes: "That an assured may effect reinsur- ance directly on the insured subject against the risks or any part of the risks insured against in the original policy, without any disclosure in the policy, or otherwise, that it is a reinsurance"; but he adds: "A practical objection may arise unless a reinsurance is expressed to be 177 REINSURANCE. § 119 § 119. Reinsurance — The Risk. — The insurer may rein- sure all or part of the risk or liability he has assumed, 47 whether the perils be of the sea or fire, 48 but the same subject matter or peril is implied as in the original, but it need not be the same specific risk, 49 for the contract of reinsurance covers only the insurable interest or liability of the original insurer, and extends no further than the risk taken by it; it cannot stipu- late for indemnity against a risk which it has not assumed. 50 So where the original insurance covers a certain voyage, there can be no indemnity for a different voyage under the contract of reinsurance, although the policy for reinsurance is made "subject to such risks, valuations, and conditions, including the risk of premium note, as are or may be taken" by the in- surer. 51 And where a reinsurance policy was by its terms equally applicable to two charters, both of which were known to the reinsuring company, such policy will be presumed to refer to the charter on which the insured company had issued its policy, and which the evidence shows was the one in- tended. 52 Although the contract of reinsurance applies to the subject matter of insurance specified in the original policy and to risks of the same kind, the risk need not be identical, and this is the law, in the absence of special stipulations except such as have no application to reinsurance, and the words "sub- ject to coinsurance clause," in the application of the reinsured company, may constitute a material part of the description of the risk upon which reinsurance is sought, and so affect the liability of the reinsurer. 03 such in the policy .... on account of the usual stipulations .... relative to notice of prior and subsequent insurance, .... which ren- ders it expedient for both parties that it should be so expressed": citing Hone v. Mutual S. Ins. Co., 1 Sand. (N. Y.) 137; Mutual S. Ins. Co. v. Hone, 2 N. Y. 235. " 1 Phillips on Insurance, 3d ed., sec. 376. 48 New York Bowery Ins. Co. v. New York F. Ins. Co., 17 Wend. (N. Y.) 359. 49 Philadelphia Ins. Co. v. Washington Ins. Co., 23 Pa. St. 250. *° Commonwealth Ins. Co. v. Globe Mut. Ins. Co., 35 Pa. St. 475. 51 Commonwealth Ins. Co. v. Globe Mut. Ins. Co., 35 Pa. St. 475. 62 Ocean Ins. Co. v. Sun Mut. Ins. Co., 15 Blatchf. (C. C.) 249. 53 Eoyal Ins. Co. etc. v. Home Ins. Co., 15 C. C. A. 609; 68 Fed. Rep. 698. McCormick, C. J., says: "The appellee— the Home Ins. Co. — ap- Joyce, Vol. 1—12 § 120 REINSURANCE. 178 § 120. Duration — Term ol Risk may be Controlled by Original Insurance. — This is illustrated by a Pennsylvania plied to the appellants for reinsurance, and received the respective pol- icies, which are tne subjects of the litigation. The applications to the Royal were made on printed forms, with certain blanks filled in in writ- ing. The application to the Imperial does not appear to have been in writing, but was substantially the same in effect as those made to the Royal, the features of which material to note here were and are*that the applicant warranted to retain twenty-five thousand dollars, and de- scribed the property applicant had insured as ' cotton subject to coin- surance clause." The Royal has now abandoned any contention on the retention clause. The Imperial still insists on its construction of that clause, but the proof abundantly supports the action of the circuit court on the issues made on the warranty by the Home to retain twenty-five thousand dollars or more on the risk. During the life of these policies of coinsurance a large amount of the cotton was destroyed by fire. At the time of the fire the appellee had written, and in force on the cotton, subject to (he fire, policies with the coinsurance clause to the amount of ninety-seven thousand seven hundred dollars and policies without the coinsurance clause to the amount of twenty-five thousand dollars. The loss on the cotton covered by the first-named class of these policies was thirty-eight thousand seven hundred and seven dollars and fifty- eight cents, and the loss on the other exceeded the amount of the pol- icies. There is substantially no issue as to what were the actual facts as to the contracts and the loss, and there can be no dispute that if the contention of the appellee as to the construction of the contract of coin- surance is correct, the decree of the circuit court should be affirmed. Having found that its construction of the retention clause is correct, it only remains to consider the other clauses of the policies on which issue is joined. The judgment and decree of the circuit court construe these clauses in favor of the appellee, and a majority of the judges of this court concur in that decision. The questions here involved are so well stated, and the authorities, so far as any authority exists, bearing on the question are so well applied in the brief of counsel for appellee, that, in justice to ourselves and to him, we must adopt and use his reasoning almost literally, and substantially to the full extent that he has advanced it, there being left little or nothing to add to or qualify what he had said, viz: It is urged that the defendants are not liable for the losses paid by the plaintiff to F. and B. because the policies issued to thcni did not contain the coinsurance clause. It is urged that the two Blips pasted on the policies of reinsurance are descriptive of the risk assumed by the reinsurer. The defendants are driven to take this ground because the reinsurer has insured the liability of the original insurer, whatever that be, unless in the contract of reinsurance there can be found some clause whereby the reinsurer stipulated that it assumed no risk, unless the original contract contained the coinsurance clause. It is observed that the policies of reinsurance bear the following dates: That of the Imperial is dated Nov. 23, 1891, and those of the Royal Nov. 12, '91 and Dec. 20, '91; the F. and B. policies are dated Oct. 12, '91, 179 REINSURANCE. § 120 case, where the duration of the reinsurance was stated as for one year, but the policy did not mention when that period was Nov. 19, '91, Feb. 9, '92, Feb. 11, '92, and Feb. 26, '92. Only one of the policies is dated before those 1 of the Royal, and only two are dated be- fore that of the Imperial. Three of them are dated after ali the policies of reinsurance were issued. The description of the risk in the reinsur- ance policies is that the Home are insured on ten thousand dollars of their liability as insurers under their various policies issued to various parties for various amounts, and covering as follows: Ten thousand dollars on cotton in bales, their own or held by them in trust or on com- mission, while contained in the yard No. 1, Shippers' Press, New Or- leans. A put of this description is clearly inapplicable to the reinsur- ance, for the words, 'their own or held in trust or on commission,' have no meaning as between the insurer and the reinsurer. The cotton itself was not the subject of reinsurance as between the insurer and reinsurer, but as between them the subject of the insurance was the liability of the insurer, as an insurer, on the cotton, owned or held by the original insured. This policy was issued for a year, and to cover any liability that the insurer, during the year, might assume as insurer of cotton in the designated press. It was not restricted to a liability then existing, but extended to future liability wdiich might be incurred by the Home on cotton in the Shippers' Press-yard 1. What was the stipulation as to the risk assumed by the reinsurer? He agreed to cover any risk which the insurer might be willing to take, for that is the meaning of the words, 'This policy to be subject to the same risks, conditions, etc., as are or may be assumed by the reinsured, and the loss, if any, payable pro rata at the same time and in the same manner as by said company, etc' Any printed stipulation having reference to the property itself or the cash value thereof cannot be applied to the contract of reinsurance between the reinsurer and the reinsured, because the property is not the subject matter of their contract. It is true that the contract of re- insurance must apply to the subject matter ot insurance specified in the original policy; that is to say, to cotton in press-yard 1, and to risks of the same kind as those specified in the original policy. In other words, if the original policy is a contract of insurance against loss by fire, the reinsurance must be against loss by fire, and not against loss by storms on land or at sea. But the specific risk in the policy of reinsurance need not be identical with that in the original policy; that is to say, an orig- inal insurance may be effected for six months, with use of all ports of the world, except those of Texas. The reinsurance may be for a single voyage within bounds not prohibited and for a less amount: Philadel- phia Ins. Co. v. Washington Ins. Co., 23 Pa. St. 2o0. Such is the law in the absence of stipulations contained in the lower printed slip an- nexed to the policies sued on. That slip provides that this policy is to be subject to the same ris'.is, conditions, etc., that are or may he as- sumed by the original insuier. Hence reinsurance, under these policies, is reinsurance against any of the fire risks assumed by the original in- surer in any of its policies on cotton in Press-yard 1, and on the same conditions as those contained in any of the original policies issued by § 120 REINSURANCE. 180 to commence or terminate. The original insurance was for one year from February 24th, with privilege of the original insurer to the original insured on cotton thus located. This clause gives to the original insurer the privilege of taking such risks on cotton in the designated place as it may choose. The reinsurer says: 'I will reinsure whatever contract you make, and, to protect me from any imprudence on your part, you must retain at least twenty- five thousand dollars on the same risk.' This view is taken by the supreme court of Massachusetts in Manufacturers' Fire etc. Ins. Co. v. Western Assur. Co., 145 Mass. 424, 14 N. E. Rep. 632. The court said: 'It is often doubtful how far provisions which relate to the conduct of an insured person, as general owner of that which is the subject of the contract, shall be given effect in a policy to indemnify against a risk which the insured has taken on the property ol another. The nature of the risk against which it insured, if there was no special stipulation regarding it, would suggest troublesome questions with reference to the applicability of these provisions of this peculiar kind of insurance, some of which it might be necessary to decide.' But in connection with the statement of the risk, the following sentence was inserted, which re- lieves the court of this difficulty: 'This policy to be subject to the same risks, conditions,' etc., 'as are or may be assumed or accepted by the in- sured company,' etc. The language of the clause is almost identical with the language used in the lower slip or rider attached to the policies sued .on in these cases. The court said: ' By this language the defendant bound itself by what had been done and by what might be assumed by the plaintiff, properly pertaining to the risk which it was reinsuring. This agreement rendered nugatory'many printed portions of the policy in which it was inserted. This was special and peculiar, pertaining directly to the subject matter of the contract, and it controlled those parts of the policy which were inconsistent with it. It assumed knowl- edge on the part of the defendant of all the terms and conditions of the plaintiff's policy, and it implied that the plaintiff, as original insurer, might properly assume risks, conditions, etc., without materially chang- ing the nature of the liability created by the original policy.' This was a case of reinsurance of a risk on a factory which had been assumed by the reinsured company, and the number of the policy designating the risk was inserted in the contract of reinsurance. The court of appeals of New York, in the case of Jackson v. Insurance Co., 99 N. Y. 129, 1 N. E. Rep. 539, confirms the doctrine of the Massachusetts court. Jus- tice Dan forth says : 'The reinsurers had no property right in the subject insured by them, but, by underwriting the policy, rendered themselves liable to loss by tire, and they thereby acquired an insurable interest to the extent of that liability. But it was in relation only to the peril against which they had insured. It is that to which their request for reinsurance applied. By it, in effect, they say as insurers: 'We have undertaken a risk as follows: It amounts to four thou- sand five hundred dollars, and we ask indemnity against a portion of it.' It is not pretended that they did not state the risk literally as they had taken it, and it was, in fact, described in their policy 181 KEINSURANCE. § 120 renewing, and the reinsurance was taken out May 31st of the ensuing year, and it was decided that the reinsurance in terms similar to those used in the policy of reinsurance. The case may indeed be taken in iike manner as if they had exhibited to the defendants the original policy, and the defendants had indorsed upon it an assumption of the risk of one thousand five hundred dollars. In both these cases the reinsurance applied to a specific original policy of insurance, designated by number in the contract of reinsurance. In these cases the original contract of insurance had been made before the reinsurance contract. In this case most of the original insurance was subsequent to the contract of reinsurance, and none of the policies of insurance originally issued prior to the contract of reinsurance are des- ignated by numbers or otherwise. The original policies are not only not described in the contract of reinsurance, but the contract covers a period of one year, and it contemplated subsequent insurance. It also contemplated that existing policies might expire and new policies be made. Other insurance was permitted by the reinsurer. How was it possible to describe these future contracts of insurance intended to be covered by the reinsurance? They could not be described except as to the species of property and their locality, and therefore the reinsurer said to the reinsured : 'We will protect you against any loss on the cot- ton in Shippers' Press-yard 1 which you may assume as insurer, and we agree to accept the terms and conditions you may make with your customers, but you must retain, as insurer, a liability of at least twenty- five thousand dollars on the risk which we take, though we permit you to take other reinsurance, and, in case of loss, we fix the proportions in which we are to make payment. For that purpose we put in the follow- ing stipulation: This policy to be subject to the same risks as are or may be assumed by the reinsured company, and any loss payable pro rata at the same time and in the same manner as by said company,' etc. The court of appeals of New York says, in Blackstone v. Insurance Co., 56 N. Y. 107, that by virtue of this clause the defendant is not bound to pay the full amount reinsured by its policy, but only such proportion of the amount of the loss as is in the ratio of the amount of reinsurance to the amount originally insured. Thus, the defendant's reinsurance be- ing for half the amount of the original insurance, the defendant is to pay half the loss. The agreement to pay pro rata with the original in- surer whatever liability may be assumed is entirely inconsistent with the clause providing for a different basis of liability, and it has no appli- cation to reinsurance, which does not cover property, but covers only the insurable interest of the reinsured growing out of his liability as insurer. In the Massachusetts case (145 Mass. 424; 14 N. E. Rep. 632) it was held that the clause requiring the written consent of the com- pany to a change in the title or possession of the property insured had no application to the reinsurer, and no notice of such change need be given to him. It sufficed if such change was assented to by the original insurer. In Uzielli v. Insurance Co., 15 Q. B. 13, it was field that the reinsurer was not entitled to notice o; abandonment, though the prim- itive insured may have abandoned to hia insurer. The court quotes § 120 REINSURANCE. 182 should be construed as running one year from the date Febru- ary 24th, that being the date of commencement of the original Phillips on Insurance and Hastie v. De Peyster, 3 Caines, 196. In that case Chief Justice Kent says: 'The reinsurer has no connection or con- cern with the first insurance, and is at all times bound to indemnify hia own assured when the other can show that he has been damnified in consequence of the first insurance.' Mr. Justice Livingston says there was no privity at all between the primitive insured and the reinsurer. In the Uzielli case it was held that the suing and laboring clause in an original insurance policy and in the policy of reinsurance has no appli- cation to reinsurers. That clause provides that in case of loss or mis- fortune it shall be lawful for the assured, his agents, etc., to sue, labor, and travel in and about the safeguard, defense, and recovery of goods, etc., and the ship, without prejudice to this insurance, to the charges whereof the insurers agree to contribute. In that case the reinsurance was for one thousand pounds, but the loss as between the insurer and the assured was one hundred and twelve per cent, because the loss was eighty-eight per cent, and the expenses incurred, when added to the loss ; made the original insurer responsible for one hundred and twelve per cent; that is to say, eighty-eight per cent of the loss, plus the ex- penses. The court said : 'The plaintiffs seek to recover eighty-eight per cent which the French company have paid for a total loss, and they seek to recover more under the suing and laboring clause in the policy. Now, in the policy sued on, the ship, as between the plaintiffs and the defend- ants, is insured at one thousand pounds. The policy itself is declared to be a reinsurance, and also it contains the suing and laboring clause. If it were not for the clause whereby the defendants were rendered sub- ject to the same terms and conditions as were contained in the original policy, and were to pay as might be paid thereon, the plaintiffs, in my opinion, would be entitled to recover only eighty-eight per cent, etc. The plaintiffs rely, however, upon the special clause, whereby the de- fendants have undertaken to pay as the French company shall have paid, and under this clause they are entitled to recover any sum not exceeding one thousand pounds.' This special clause referred to is in the main similar to that contained in the lower slip of the policies sued on. The defendants in this English case were reinsurers of the French company, which itself was a reinsurer of English underwriters. In this case it will be observed that though the suing and laboring clause waa a part of the policy of reinsurance, the court held it had no application to the reinsurers. Why? For no other reason than that the reinsurer doea not insure the owner of the ship, but the insurable interest of the insurer. Hence that interest is the loss that the insurer might suffer under the policy issued by him, and the master of the rolls said the su- ing and laboring in that case for the safeguard of the ship was not by the assured under the policy of reinsurance, but by the assured under the original policy, for the ship was not insured under the reinsurance pol- icy. So totally distinct is the original insurance from the reinsurance, that the premium of reinsurance may be less or greater than that of the 183 REINSURANCE. § 120 risk, and that the reinsurer was liable, the death of the insured having occurred between February 24th and May 31st. 54 So original insurance, as well as the extent of the risk. The most instruct- ive case on the subject is the most recent — Faneuil Hall Ins. Co. v. Liverpool etc. Ins. Co., 153 Mass. 70; 26 N. E. Rep. 244. The reinsur- ance policy in that case contained a clause similar to that in the lower slip attached to the policies sued on, to wit: 'This policy is subject to the same risks, conditions, mode of settlement, and, in case of loss, pay- able at the same time and in the same manner as the policies reinsured.' The court said that many of the provisions in the printed blank would be inapplicable, and quotes one provision at the very commencement of the blank, viz: 'This company shall not be liable beyond the actual value of the insured property at the time of any loss or damage.' This, said the court, does not measure the defendant's liability under the contract of indemnity. Under that it may be liable, not only lor the original loss, but for the costs and expenses incurred by the German company in defending itself against Chauncey's suit. Again, in speak- ing of the provision quote 1 ahove, the court says: 'We think this pro- vision means, not that the various terms in the reinsured policy as to risk, etc., and time and mode of payment in case of loss are incorporated with, and form part of, the contract for indemnity — so that, for in- stance, claims by the plaintiff on the defendant here be settled by arbi- tration, or the plaintiff shall submit its books to the inspection of the defendant, or shall bring suit within one year — but that the reinsured or original policies furnish in these and other particulars the basis upon which the contract of indemnity stands, and that in all dealings with the original insured the provisions of the policy issued to him are to be observed.' The object of the coinsurance clause is to make the owner of the property carry a part of the risk, unless he insures to the full value of his property. The purpose is to compel the owner to take out policies to the full value of the property, and pay premiums on such lull value, whereas the retention clause in policies of reinsurance is in- tended to discourage and prevent full reinsurance, and is, in fact, a coinsurance clause as between the reinsured and his reinsurer, for the retention clause is a contract between the insurer and his reinsurer that the original insurer will not effect reinsurance to the extent of his en- tire liability, but will carry himself a part of that liability, and the part to be carried was fixed in this case as not less than twenty-five thousand dollars. Hence the retention clause, the coinsurance clause, as between the reinsured and the reinsurer, is intended to accomplish an object totally different from the object intended to be secured by the coinsurance clause in the primitive policy issued to the insured. It is, therefore, plain that the clause in the upper slip or rider attached to the policies of reinsurance has no application to reinsurance. That clause provides 'that this company shall be liable for only such propor- tion of the whole loss as the sum hereby insured bears to the cash value of the property hereby insured.' > 344, 345; National etc. Ins. Co. v. Knaup, 55 Mo. 154; Mc- Cullough v. Talladiger Ins. Co., 46 Ala. 376; Bank of United States v. Dan bridge, 12 Wheat. (U. S.) 67, et seq. See for general rule, 1 Mora- wetz on Private Corporations, 2d ed., sees. 338-41. See for exhaustive consideration of the entire subject of execution of corporate contracts, Beals, etc., 4 Thompson on Corporations, title 9, c. cv, sees. 5015-39 ; Id., art. 2. "Manner of executing sealed instruments by corporations": Bees. 5069, et si q. 181 Mitchell .v. Union L. Ins. Co., 45 Me. 104; 71 Am. Dec. 529. See Freeman's Supp. Stat. Me. 1885-95, p. 271 (5) ; Laws 1889, c. 163, p. 153. ' 185 Clegg v. Le Messurier, 15 Gratt. (Va.) 108. 186 Herron v. Peoria M. & F. Ins. Co. 28 111. 235. 187 Kev. Stat. Ariz., 1887, sec. 253; 1 Mills' Annot. Stat. Col., 1891, sec. 2227; Kev. Stat. Idaho, 1887, sec. 2742; Gen. Stat. Kan., 1889, vol, l,sec. 3347; Rev. Stat. Maine, 1883, p. 445, c. 49, sec. 12; Rev. Stat. Mont., 1887, p. 772, sec. 575. See 3 Sanders' Annot. Mon. Codes (1895), § 181 THE POLICY. 246 § 181. Requisites of a Valid Policy. — In case the form of the policy is not prescribed by statute and the contract is reduced to writing, it should contain either by itself or by reference to other papers the exact agreement between the par- ties set forth therein in clear, precise, and unambiguous terms. The policy should likewise embody all the requirements of a valid insurance contract; 188 for policies of insurance have ever been considered instruments of a solemn nature, though not under seal, and should embody in their terms expressly or by reference the whole contract between the parties. 189 It is upon this contract that the suit must be brought, where there is no fraud, duress, or mistake. All prior negotiations, proposals, and conversations are considered waived or merged in this writ- ten contract. 190 And no rule is better settled than that parol evidence is inadmissible to vary or control the plain and unam- biguous terms of a written contract of insurance. 191 sees. 3220-25; Id., Civ. Code, sees. 2189-91; Neb. Comp. Stat., 1891, p. 529, c. 43, sec. 12; Comp. Laws N. Mex., 1884, sec. 1465; Rev. Code N. Dak., 1895, sees. 3891, 3892; 1 Smith & Ben. Eev. Stat. Ohio, 1890, sec. 3645; Bright. Pur. Dig. Pa., 12th ed., 17C0-1894, vol. 1, p. 1046, sec. 63; Hill's Annot. Code, Wash., 1891, sec. 2739; Eev. Stat. "Wye, 1887, p. 223, sec. 614. 188 See sees. 43, 176, 177, herein. 189 See Higginson v. Dall, 13 Mass. 96, per Parker, C. J. ; Merchants' Mut. Tns. Co. v. Lyman, 15 Wall. (U. S.) 664. 190 Higginson v. Dall, 13 Mass. 96, per Parker, C. J. ; Merchants' Mut. Ins. Co. v. Lyman, 15 Wall. (U. S. ) 664. 191 Keim v. Home Mut. Ins. Co. , 42 Mo. 38 ; 97 Am. Dec. 291 ; Cheriot v. Barker, 2 Johns. (N. Y.) 346; 3 Am. Dec. 437; Waxahachie Bank v. Lancashire Ins. Co., 62 Tex. 461; Weston v. Emes, 1 Taunt. 115; Van- dervoort v. Smith, 2 Caines (N. Y. ), 155; 1 Marshall on Insurance, ed. 1810, 345a; Stacey v. Franklin F. Ins. Co., 2 Watts & S. (Pa.) 506; Walton v. Agricultural Ins. Co., 116 N. Y. 317; 26 N. Y. S. 780; 22 N. E. Rep. 443. See sec. 160, herein. CHAPTER VII. CONSTRUCTION— WHAT IS PART OF THE POLICY. § 185. What is part of the policy: General rule: Parol evidence. § 186. When application is part of the policy. § 187. When application is not part of the policy. § 18S. When charter and by-laws are and are not part of contract. § 189. Effect of subsequent amendment of by-laws or eDactment of new by-laws. § 190. Application and by-laws, when part of contract: Statutory provisions. § 191. When other papers are and are not part of policy. § 192. Whether prospectus or pamphlet part of policy. § 193. Same subject: The cases. § 194. Whether common and statutory law part of contract. § 195. Indorsements: Marginal references— When part of policy— When not. § 196. Conditions annexed to policy— When and where not part of same. § 197. Whether premium note part of policy. § 198. Usage— How far part of policy. § 185. What is Part of the Policy — General Rule — Parol Evidence. — Whatever is intended to be made a part of the policy should be either inserted therein or be incorporated by proper words of reference, and whether the correspondence or application, or other papers or indorsements on the policy, are a part thereof, are questions that have frequently been be- fore the courts. If parol evidence were admissible to vary a written contract of insurance, then all prior negotiations, corre- spondence, proposals, and other acts would become as much a part of the contract as though actually embodied in the policy, and it could never be known exactly what the terms of the con- tract were, except, perhaps, after extended litigation, and the safeguard which a policy ought to afford would be valueless if its terms could thus be added to or limited. It is, therefore, a general rule that all prior negotiations are considered as (247) § 185 CONSTRUCTION. 248 waived or merged in the written contract, and that in the ab- sence of fraud, duress, or mistake, parol evidence is inadmis- sible to contradict or vary its terms. The entire engagement of the parties, with all the conditions upon which its fulfillment can be claimed, must be conclusively presumed to have been stated in the policy, as the terms of the policy when explicit must control. 1 So it cannot be shown that only a particular interest, as that of a warehouseman, was intended where the contract is unambiguous; 2 nor can the intention of the parties be explained by parol evidence, although part of the policy is written and part printed, where there is no contradiction be- tween the two parts and there is no ambiguity. 3 !STor is parol evidence admissible to show that the insured did not agree to the conditions; 4 for whatever proposals or negotiations are made or conversations had are to be considered as waived or merged in the written contract. 5 In case the vessel insured be warranted as neutral, it cannot be shown by parol evidence that such warranty was not intended, 6 nor can the intention be shown by parol evidence in contradiction of the terms of the •policy, 7 nor is the memorandum admissible to change the in- tent evidenced by the policy. 8 But the order for insurance 1 Candee v.Citizens' Ins.Co.,4 Fed. Rep. 143; Union Mut. L. Ins. Co., v. Mowry, 96 U. S. 544; Ripley v. iEtna Ins. Co., 30 N. Y. 136; 86 Am. Dec. 362; Finney v. Bedford Commercial Ins. Co., 8 Met. (Mass.) 348; 41 Am. Dec. 515; Bed v. Western etc. Ins. Co., 5 Rob. (La.) 423; 39 Am. Dec. 542; Franklin F. Ins. Co. v. Martin, 40 N. J. L. 568; 11 Vroom (N. J.), 50$; 29 Am. Rep. 271; Winnesheik Ins. Co. v. Holzgrafe, 53 111. 516; 5 Am. Rep. 64; Hartford F. Ins. Co. v. Davenport, 37 Mich. 609; Sanborn v. Fireman's Ins. Co., 16 Gray (Mass.), 448; 77 Am. Dec. 419; Mutual B. L. Ins. Co. v. Reise, 8 Ga. 536; Creston v. Ernes, 1 Taunt. 115. 2 Lancaster Mills v. Merchants' etc. Co., 89 Tenn. 1; 24 Am. St. Rep. 586; 14 S. W. Rep. 317. 3 Mumford v. Hallett, 1 Johns. 433. 4 Liverpool etc. Co. v. Morris, 79 Ga. 666; 5 S. E. Rep. 125. 6 See opinion of Chief Justice Parker in Higginson v. Dall, 13 Mass. 96, 98, cited in Dewees v. Manhattan Ins. Co.. 35 N. J. L. 366, 372: Merchants' Mut. Ins. Co. v. Lyman, 15 Wall. (U. S.) 664. 6 Lewis v. Thatcher, 15 Mass. 431. 1 Hou&h v. People's F. Ins. Co., 36 Md. 398. 8 Ewer v. Washington Ins. Co., 16 Pick. (Mass.) 502; 28 Am. Dec. 25$ : Hogan v. Delaware Ins. Co., 1 Wash. C. C. 419; Higginson v. Dall, 13 Mass. 96. 249 CONSTRUCTION. § 185 may be adopted as a part of the policy, and is to be resorted to when construing it; 9 nor can a condition as to the time and place of payment of the premiums be varied by such evidence ; 10 nor is it permitted to show that prior to issuing the policy an agreement was made and not inserted therein that upon the happening of a certain event the policy should become void; 11 nor that before the contract was executed the parties agreed to insure "outfits" under the term "advances"; 12 nor can a con- temporaneous agreement to waive a provision affecting the risk in the policy be shown by parol; 13 nor can it be shown after a loss that the application was for a policy materially different from the one issued; 14 nor in an action on a fire policy which clearly states the property insured is parol evidence admissible to show a mistake, and that it was the intention to insure other property. 15 So parol evidence cannot be received to control a warranty in a policy of insurance, and accordingly evidence to prove that the insurer was informed that a watchman was not kept in the building insured from twelve o'clock Saturday night till twelve o'clock Sunday night, there being a warranty for a watchman every night, should be rejected; 16 nor can a written contract of insurance be altered or varied by parol evi- dence of what occurred between the insured and the agent of the insurer at the time of effecting the insurance. Such evi- dence will not be received to raise up an estoppel iri pais which shall conclude the .insurer from setting up the defense that the policy was forfeited by a breach of the conditions of insurance. 17 Although the better rule is that parol evidence is admissible of the agent's misrepresentations or mistakes in filling out the application where he has knowledge or has been correctly in- 9 Maryland v. Bossiere, 9 Gill. & J. (Md.) 121. io Mobile L. Ins. Co. v. Pruett, 74 Ala. 4S7. n Candee v. Citizens' Ins. Co., 4 Fed. Rep. 143. 12 Burnham v. Boston M. Ins. Co., 139 Mass. 399. 13 Lamott v. Hudson River Ins. Co., 17 N. Y. 199. 14 Pindar v. Resolute Ins. Co., 47 N. Y. 114. is Holmes v. Charlestown etc. Co., 10 Met. (Mass.) 211; 43 Am. Dec 428. 16 Ripley v. Mtna Ins. Co.. 30 N. Y. 136: 86 Am. Dec. 362. 17 Franklin F. Ins. Co. v. Martin, 40 N.J.L. 568; 11 Yroom (N. J. I,.), 56S; 29 Am. Rep. 271. § 185 CONSTRUCTION. 250 formed as to the facts; 18 but a policy cannot be changed or altered by parol evidence where the party is named and his interest specified, except fraud or mistake be alleged. The intent as shown by the instrument itself must be sought, since the same principles of construction obtain in this regard as in other written contracts. 19 But in case of fraud or mistake, as where the terms of an order to insure have been materially de- parted from in the policy by fraud or mistake, the order will be considered as containing the contract between the parties, al- though it can only be resorted to in so far as it varies from the policy. In all other respects the policy should' be considered as the contract. 20 Where a party made an application in writ- ing, signed by him, for insurance upon certain property, gave his note payable to the insurance company to the agent of the company for the premium, and took from the agent a receipt showing the giving of the note, and stating that, in case the policy should not be issued, the note was to be returned, it was decided that these papers must be regarded as the contract of the parties, and could not be varied or explained by parol evi- dence. 21 In another case it appeared that the agent of the company omitted to insert in a policy on general merchandise permission to the assured to keep kerosene oil and powder in the same building with such stock, which permission was in accordance -with the actual contract. It was held that parol evidence was admissible to show knowledge by the agent that such goods were to be kept. 22 If the terms' of the policy are not clear and unambiguous, parol evidence not inconsistent therewith may be resorted to to explain the same; as in case of a clause, "loss, if any, payable to G. and B. of K," 23 and parol evidence of the contents of an order verbally communi- cated by the broker to the insurer is admissible, as this is not evidence of the contents of a writing. 24 So where an insurance 18 See chapter on Agents, herein. in 1MI v. Western etc. Ins. Co., 5 Rob. (La. 1 ) 423; 39 Am. Dec. 542. 20 Delaware Ins. Co. v. Hogan, 2 Wash. (C. C.) 4. 21 Winnesheik Ins. Co. v. Holzgrafe, 53 111. 51G; 5 Am. Rep. 64. 22 Mobile F. Dept. Ins. Co. v. Miller. 58 Ga. 420. 23 Oraham v. Fireman's Ins. Co.. 2 Disn. (Ohio) 255. 24 Livingston y. Delaiield, 1 Johns. (N. Y.) 522. 251 CONSTRUCTION. § 186 was on goods in the D. & Co.'s car factory it may be shown by parol what building was meant. 25 § 186. When Application is Part of the Policy. — The question whether the application is part of the contract or not is of great importance in construing policies and determining the force and effect of the statements in such application. There is a great want of unanimity in the cases, but it may be stated as a general rule that a clear purpose, unequivocally expressed, manifest from the papers, to make an application a part of the contract will have that effect, and make them one entire contract. But where the reference to the application is expressed to be for another purpose, or where it is not clearly expressed that it is intended to make the application a part of the contract, the courts are not inclined to make it so by con- struction. This rule accords with the rules of construction re- garding the intent of the parties, and that warranties and for- feitures are not favored, as well as with such rules in other respects. 26 So if the policy expressly refers to the application as a part thereof, all the stipulations and conditions in the ap- plication are thereby engrafted into it, and made as much a part of the policy as if written in terms therein, and are to be construed together with it. 27 And it is said that the application is in itself collateral merely to the contract of insurance, and to make it a part of the policy there must be an obvious in- tent so to do; 28 and also that the language making the appli- 25 Blake v. Exchange etc. Ins. Co., 12 Gray (Mass.), 265. 26 See Campbell v. New England Mut. L. Ins. Co., 98 Mass. 880. 391. per the court: Daniels v. Hudson River Ins. Co., 12 Cush. (Mass.) 423; 59 Am. Dec. 192. 2T Holmes v. Charlestown Mut. F. Ins. Co.. 10 Met. (Mass.) 211; 43 Am. Dec. 428; Burritt v. Saratoga etc. Ins. Co., 5 Hill (N. Y.), 188; 40 Am. Dec. 345; Jennings v. Chinango Mut. Ins. Co., 2 Denio (N. Y.). 75; Eban v. Mutual Ins. Co. of Albany, 5 Denio (N. Y.), 32G; Shoemaker v. Glen Falls Ins. Co., 60 Barb. (N. Y.) 84; Clark v. Maufacturers' Ins. Co., 8 How. (U. S.) 235; Chrisman v. State Ins. Co., 16 Or. 283: 18 Pac. Rep. 466; Worsley v. Wood, 6 Durn. & E. 710. See Key Louisville Mut. Ins. Co. v. Southard, 8 B. Mon. 634. 28 Campbell v. New England Mut. L. Ins. Co.. 98 Mass. 389. 891. per the court; Holmes v. Charlestown etc. Ins. Co., 10 Met. (Mass.) 211; 43 Am. Dec. 42S. § 186 CONSTRUCTION. 252 cation a part of the policy must unequivocally appear on the face of the policy. 29 So the words "reference being had to the application .... for a more particular description, and as forming a part of this policy," are held a sufficient reference. 30 And where there was a provision in a policy that "in considera- tion of the statement of facts warranted to be true in the ap- plication for this policy, and of the payment" of certain speci- fied sums, the company assumed the risk, it was held that the application was thus made a part of the contract. 31 It is also held that where a policy is made and issued upon a survev and description of certain property, the survey being referred to by number as filed in the office of the company, such survey is a basis of the contract and part of the policy. 32 So where the reference is to the application filed in the office of the com- pany, 33 and where an application and survey is made to accom- pany a policy or is referred to therein as a part thereof, they should be construed together with the policy as one entire con- tract. 34 So the proposals and conditions attached to the policy form a part of it, and are of the same force as if embodied in the policy; 35 but it is also held that the application need not be ex- pressly referred to in the policy as a part thereof. 36 So a declaration in an application constitutes a portion of the policy where the latter provides that it shall be void if the declara- tion "upon the faith of which this agreement was made" is untrue; 37 and it is held that the application is a part of the policy where the latter recites that "the basis of this contract is the application of the insured"; 38 and where the "applica- 29 Hartford etc. Ins. Co. v.Harmer, 2 Ohio St. 452; 59 Am. Dec. 684; Stebbins v. Globe Ins. Co.. 2 Hall (N. Y.), 632. so Kennedy v. St. Lawrence Co. Mut. Ins. Co., 10 Barb. (N. Y.) 285. 31 Standard etc. Assn. v. Martin, 133 Ind. 376; 33 N. E. Rep. 105. 32 Stewart v. Phoenix Ins. Co.. 5 Hun (N. Y.), 261. 33 Draper v. Charter Oak etc. Ins. Co., 2 Allen (Mass.), 569. 34 Clinton v. Hope Ins. Co., 51 Barb. (N. Y.) 647. 35 Duncan v. Sun F. Ins. Co., 6 Wend. (N. Y.) 488; 22 Am. Dec. 539; Dewees v .Manhattan Ins. Co.. 34 N. J. L. 244. 39 Murdock v. Chenango Mut. Ins. Co., 2 N. Y. 210. 37 Day v. Mutual B. L. Ins. Co., 1 McAr. (D. C.) 41; 29 Am. Rep. 5f!5. 38 Babbitt v. Liverpool etc. Ins. Co., 66 N. C. 70; 8 Am. Rep. 494. 253 CONSTRUCTION. § 187 tion is made and accepted subject to all other clauses and con- ditions in the policies of the company," it is part of the pol- icy; 39 and this is so where the policy is issued and accepted in consideration of the agreements made in the application. 40 It is held that the application for membership in a mutual benefit society constitutes a part of the contract even without regard to the fact whether there is any constitutional requirement of such character. 41 § 187. Where Application is not Part of Policy. — When the reference to the application is expressed to be for another purpose, or when no purpose or intention is indicated to make it a part of the policy, it will not be so treated. 42 So it is held that a mere general reference to the application or survey does not make it a part of the contract. 43 It is also held that the application is not a part of the contract so as to require setting forth in pleading, though the policy provides that if it is issued upon or refers to "an application, survey, plan, or description," it should be made a part of the contract, and this although the policy was issued on such application signed by the insured; 44 and a reference to and making an ap- 39 Weinberger v. Merchants' M. Ins. Co., 41 La. Ann. 31; 5 S. Rep. 728. 40 Mandego v. Centennial Mut. L. Assn., 64 Iowa, 134. What is part of policy, see Philbrook v. New England Mut. F. Ins. Co., 37 Me. 137; Studwell v. Mutual B. L. Assn. of America, 19 N. Y. St. Supp. 709; Cuthbertson v. North Carolina H. Ins. Co., 96 N. C. 480; 2 S. E. Rep. 25S; Foot v. Life Ins. Co., 61 N. Y. 575; Supreme Council etc. v. Curd, 111 111. 284; Jeffries v. Life Ins. Co., 22 Wall. (U. S.) 47. See, also, Mace v. Provident L. Assn., 101 N. C. 122. Where policy re- fers to application as part, and it is defective or even not made in writing, see Blake v. Exchange etc. Ins. Co., 12 Gray (Mass.), 265. See further on this point chapter on Representations and Warranties, post, herein. 4i Grand Lodge etc. v. Jesse, 50 111. App. 101. 42 Campbell v. New Ens-land Mut. L. Ins. Co.. 98 Mass. 3S9. 392, per the court; Jefferson Ins. Co. v. Cotheal, 7 Wend. (N. Y.) 72; 22 Am. Dec. 567. 43 Wheelton v. Hardisty, 8 El. & B. 285, 295: Burritt v. Saratoga etc. Ins. Co., 5 Hill (N. Y.). 188: 40 Am. Dec. 345; Weed v. Schenec- tady Ins. Co., 7 Lans. (N. Y.) 452. 44 Throop v. North American etc. Ins. Co., 19 Mich. 423, one judge dissenting upon the authority of numerous cases. § 188 CONSTRUCTION. 254 plication a part of the contract does not bind the applicant where the application is not signed, authorized, or ratified bj him. 45 It is also held that the agreements and statements in the application do not become a part of the policy, although it is provided in the application that they should "be the basis and form part of the contract or policy," and although the pol- icy provided that the contract was "in consideration of the rep- resentations." 46 Nor does an indication in the policy of the place where the application is on file make it a part of the policy, 47 and a condition in the application does not make it a part of the policy where the policy does not refer to it, 48 and it is held that a slip or application is inadmissible to show the in- tention of the parties, since the policy is the only legal evi- dence of the contract. 49 AVhere a fire policy had expired and the application therefor was used in obtaining insurance in an- other company, the policy in which contained the words "as per application ISTo. 1234," which was the number of the orig- inal application, it was determined not to be a sufficient refer- ence to make it a part of the policy. 50 And in another case the court excluded the application as evidence in an action on a time policy of marine insurance, on the ground that the ap- plication was merged in the policy. 51 And where the policy refers only to the application as the consideration in part for the insurance, the legal construction of the policy cannot be controlled by a statement in the application of the understand- ing of the assured and what the insurance will "extend to." 52 § 18S. When Charter and By-laws are and are not Part of Contract. — When a party complies with the require- ments of a mutual benefit or like society or corporation, and be- 45 Lycoming F. Ins. Co. v. Jackson, S3 111. 302; 25 Am. Rep. 386. 4'i American etc. Ins. Co. v. Day, 39 N. .T. I,. 89; 23 Am. Rep. 198. 47 CommonTvonlth Ins. Co. v. Monninger, 18 Ind. 352. 48 Brogan v. Manufacturers' etc. Ins. Co., 29 U. C. C. P. 414. 49 Dow v. Whelton, 8 Wend. (N. Y.) 160. so Vi]as v. New York Cent. Ins. Co., 7J X. Y. 590; 28 Am. Rep. 186. 51 Folsom v. Mercantile Ins. Co., 9 Blatchf. (C. C.) 201. 52 Accident Ins. Co. v. Crandal, 120 U. S. 527; 7 S. Ct. Rep. 6S5, See Hunter v. Scott, 10S X. C. 213; 12 S. E. Rep. 1027. See further on this point chapter on Representations and Warranties herein. 255 CONSTRUCT I OX. § 188 comes a member, its charter and by-laws are presumed to have been known by him from the date of his membership, and they enter into and form a part of his contract even though, in the absence of a statutory requirement to the contrary, they are not set forth in his policy nor expressly made a part of it by reference. 53 And all the provisions of the by-laws not incon- sistent with the terms of the policy, 5 * and which are within the scope of the purposes and nature of the organization, will be held binding. 55 So the constitution and by-laws are binding on a charter member and form part of the contract where his atten- tion has been directed to them, 56 and where the policy declares that the insurance is made with reference to its conditions and the terms of its constitution and by-laws, the fact that each of the conditions annexed to the policy refers to a by-law cannot warrant the assumption on the part of the insured that the by-laws contain no other conditions, 57 but a by-law prohibiting insurance for oyer two-thirds the estimated value of the prop- erty is not a part of the contract, but is merely directory; 58 and 53 Pfister v. Gerwig, 122 Ind. 567; 23 N. E. Rep. 1041; Susquehanna Mut. F. Ins. Co. v. Leavy, 136 Pa. St. 499; 20 Atl. Rep. 502, 505; Fry v. Charter Oak Ins. Co.. 31 Fed. Rep. 197; Hyatt v. Wait, 87 Barb. (N. Y.) 29; Davidson v. Old People's Mut. B. Soc, 39 Minn. 303, 304; 1 Law Rep. Ann. 482; Wiggin v. Knights of Pythias, 31 Fed. Rep. 122; Nnte v. Hamilton Mut. Ins. Co., 6 Gray (Mass.), 174; Boyle v. North Carolina etc. Ins. Co., 7 Jones (N. C), 373; Maginnis' Estate v. New Orleans etc. Assn., 43 La. Ann. 1136; 10 S. Rep. 180; Wendt v. Iowa L. of H., 72 Iowa, 682; 34 N. W. Rep. 470; Simeral v. Dubuque etc. Ins. Co.. IS Iowa, 319; Burbank v. Rockingham Ins. Co., 24 N. H. 550, 558; 57 Am. Dec. 300; Gray v. Supreme Lodge etc., 118 Ind. 293; 20 N. B. Rep. 833; Treadway v. Hamilton Mut. Ins:. Co. 29 Conn. 68; Great Britain S. S. Assn. v. Wyllie, L. R. 22 Q. B. D. 710; Protection L. Ins. Co. v. Foote, 79 111. 361. "Undoubtedly, when the plaintiff complied with what was required of him as a member, the by-laws constituted a contract": Stohr v. San Francisco etc. Soc, 82 Cal. 557, 559; 22 Pac. Rep. 1125. 54 Davidson v. Old People's Mut. B. Soc, 39 Minn. 303; 1 Law Rep. Ann. 4S2, and see cases in last note. 55 Mutual Assur. Soc v. Korn, 7 Cranch (U. S.), 396. 5G Sabin v. Senate of Nat. Union, 90 Mich. 177; 51 N. W. Rep. 202; Sargent v. Supreme Lodge K. of H., 158 Mass. 537; 33 N. E. Rep. 650; 22 Ins. L. J. 545. 57 Miller v. Hittsborough Mut. F. Assur. Assn., 42 N. J. Eq. 459, 462; 7 Atl. Rep. 895. 58 Cumberland Valley Mut. Prot. Co. v. Schell, 29 Pa. St. 31. § 189 CONSTRUCTION. 256 the charter of a foreign insurance company must be brought to the notice of a party to bind him as to conditions therein. 59 Where the charter and by-laws are a part of the contract be- tween the member and the society, the latter is also bound thereby, and where the by-laws provide for mortuary benefits, the fact that the certificate does not provide for such benefits will not relieve the society from its liability. 60 § 189. Effect of Subsequent Amendment of By-laws or Enactment of New By-laws — The question has arisen not infrequently in our courts as to whether the amendment of the by-laws or subsequent enactment of new laws or modifi- cations of existing ones affects the contract so as to enter into the terms of it and become a part of it, or not. We believe, however, that such amendments or new laws cannot operate retroactively or infringe upon or divest the insured of rights which are already determined or ascertained by his contract. But the assured may, however, under the terms of his contract or by agreement or ratification, be bound by such subsequent amendments, modifications, or new laws. 61 It is held, however, that it is incident to the very nature and purpose of beneficial and like insurance associations that they should have power to modify and change their by-laws so as to graduate claims upon them under their contracts in such manner as experience and necessity may require. They may regulate the manner in which they shall most reasonably carry out the purposes for which they are associated, although they cannot pervert the objects of their organization. It is also held that a society may limit the amount of recovery for sick benefits by a subse- quently enacted by-law, in view of the above principles, and that such a by-law does not impair vested rights. The court, however, in this particular case modified the statements by the fact that when the certificate was taken out there was exist- 59 City Fire Ids. Co. v. Carrugi, 41 Ga. 660. 60 Railway Pass. etc. Assn. v. Robinson, 147 111. 138; 35 N. E. Rep. 168; 23 Ins. L. J. 79. oi See Supreme Com. etc. v. Ainsworrh. 71 Ala. -410; in Am. Rep. 332; Poultney v. Bachman, 62 How. Pr. (N. Y.) 466; Bacon on Benefit Societies and Life Insurance, ed. 18S8, sees. 185-88. 257 construction. § 190 ing a special provision for altering or changing the by-laws. 62 But it is decided that the fact that amendments were made to the articles of incorporation did not estop the insured from denving that they were part of the contract where they were not made known to him at the time of taking out the policy. 63 It is also held that a new article of incorporation adopted subsequently to the issue of a certificate does not make it a part of the con- tract so as to destroy a right which the insured previously had under his policy; 64 but it is otherwise where the insured agrees to be governed by changes which may afterward be made, and receives a copy of the new by-law, and does not object thereto and continues his membership, 65 or where the general law of the state and the by-laws gives power to repeal, alter, or amend by-laws, both the statute and by-laws become part of the con- tract, and the amendment of the by-laws is not a breach of contract. 66 So where a certificate in a mutual benefit society is to be paid "in an amount to be computed according to the laws" of the society, and such laws provide that the provisions therein relative to the payment of such certificates may be changed at any time, a member who has procured such a cer- tificate will be bound by any change which is made therein between the time of procuring the certificate and the time of its payment. 67 § 190. Application and By-laws "When part of Con- tract — Statutory Provisions, — In many of the states there are statutory provisions requiring the annexation of the appli- cation to the policy, or that copies of the application and by- laws shall be contained in or attached to the policies. 68 It is 62 Future v. Soc. of St. Joseph, 46 Vt. 369. G3 Day v. Mill Owners' F. Ins. Co., 75 Iowa, 694; 38 N. W. Rep. 113. 64 Hobbs v. Iowa Mut. B. Assn., 82 Iowa, 107; 47 N. W. Rep. 983; 11 Law Rep. Ann. 299; 20 Ins. L. J. 434. See, also, Stewart v. Mu- tual F. Ins. Assn., 64 Miss. 499. 65 Bogards v. Farmers' Mut. Ins. Co., 79 Mich. 440; 44 N. W. Rep. 856. 66 stohr v. San Francisco M. F. Soc, 82 Cal. 557; 22 Pac. Rep. 1125; Sargent v. Supreme Lodge etc.. 158 Mass. 557; 33 N. E. Rep. 650; 22 Ins. L. J. 545. 67 Cowie v. Grand Lodge etc., 99 Cal. 392; 34 Pac. Rep. 103. 68 Application shall be annexed: California, Deering's Civ. Code, Joyce, Vol. I.— 17 § 190 CONSTRUCTION. 258 held in Pennsylvania that the intent of the statute, making ap- plications for insurance and by-laws of companies inadmissible in evidence unless a copy thereof is attached to the policy, was to produce a uniform rule of procedure and to apply to all in- surance companies incorporated by the laws of the state, as well as to all other corporations insuring within the state. 69 A statement written at the end of a policy entitled "copy of appli- cation," not containing any signature, is not a part of the pol- icy, nor are any of its recitals binding on the insured. 70 So an act requiring that the application be annexed to or copied into the policy has been held constitutional Such act does not im- pair the obligation of contracts, 71 and under such act an affidavit of defense is defective if it fails to allege that the application was so annexed; 72 nor is such act superseded by an act regulating mutual benefit societies, 73 and a demurrer will lie to a plea of misrepresentations when such act has not been complied with. 74 A statement unsigned, although annexed and entitled "copy of application," is not admissible in evidence, 75 and the application is not admissible where not attached. 76 Nor are the by-laws a sec. 2605; Iowa, McClain's Stat. 1SS8, sec. 1733; Kansas, Gen. Stat 18S9, vol. 1, sec. 3437; Massachusetts Act, 1890, c. 421, sec. 21; Ohio, Giauque's Rev. Stat. 1890, 6th ed., sec. 3623; Oklahoma, Stat. 1890, sec. 3155; Pennsylvania, 1 Bright. Purd. Dig., 12th ed., p. 1046, sec. 62; Wisconsin, 1 Sanb. & Berr. Ann. Stat. 18S9, sec. 1945 a. Appli- cation and by-laws to be contained in or attached to life or fire pol- icy: Connecticut, Gen. Stat. 1888, sec. 2826; Maine, Rev. Stat. 1883, c. 49, sec. 24; Massachusetts, Acts 18S7. c. 214, sec. 59. 09 Kittaning Ins. Co. v. Hebb, 138 Pa. St. 174; 21 Pitts. L. J., N. S., 153; 27 Week. Not. Cas. 97; 48 Phila. Leg. Ins. 35; 20 Ins. L. J. 92; 20 Atl. Rep. 837. io Under act Pa. May 11, 1881; Susquehanna Mut. F. Ins. Co. v. Hallock (Pa.), 14 Atl. Rep. 167; Dunbar v. Phoenix Ins. Co., 72 Wis. 492; 40 N. W. Rep. 386. 71 Now Era etc. Co. v. Musser, 120 Pa. St. 384; 14 Atl. Rep. 155; 12 Cent. Rep. 477. 72 Metropolitan etc. Co. v. Jenkins (Pa. 1886), 10 Atl. Rep. 474. Not reported in state reports. 73 McConnell v. Iowa Mut. A. Assn., 79 Iowa, 757, 760; 43 N. W. Rep. 188. 74 Cook v. Federal L. Assn.. 74 Iowa. 746; 35 N. W. Rep. 500. 75 Susquehanna Mut. Ins. Co. v. Hallock (Pa.), 14 Atl. Rep. 167; 12 Cent. Rep. 478. 76 Pickett v. Pacific Mutual L. Ins. Co., 144 Pa. St. 79; 22 Atl. Rep. 259 construction. § 191 part of the contract, though attached to the policy, when un- signed by the company's officers as provided by statute. 77 It is held in England that a deed-poll containing an insurance against fire may refer to conditions in the printed proposals without stamp, seal, or signature. 78 The omission to indorse or attach the application does not, however, 79 invalidate the policy, but only goes to the pleading and proof of the repre- sentations, 80 and the application, if not attached, is properly excluded in evidence, though the policy provides that it is to be a part thereof. 81 But it is held in a recent Pennsylvania case that the by-law T s may be put in evidence by the insurer, not- withstanding they are not attached to the policy as required by statute, since the statute does not apply to orders doing busi- ness through lodges. 82 § 191. When Other Papers are and are not Part of Policy. — Other papers may become a part of the policy by being annexed thereto or subjoined, or by being re- ferred to therein in plain terms as a part thereof, 83 but the intent to incorporate such other papers should be plainly manifest and not dependent upon implication. 84 So a mort- gage slip making the loss payable to the mortgagee may be at- 871; 13 Law Rep. Ann. 661; Mahon v. Pacific Mut L. Ins. Co., 144 Pa. St. 409; 22 Atl. Rep. 876. tl Capitol Ins. Co. v. Pleasanton, 48 Kan. 397; 29 Pac. Rep. 57S; Capitol Ins. Co. v. Bank of Blue Mound, 48 Kan. 393; 29 Pac. Rep. 576. 78 Rutledge v. Burrell, 1 H. Black. 255. 79 Under Iowa Act, Miller's Code, 1888, p. 398. 80 McConnell v. Iowa Mut. A. Assn., 79 Iowa, 757; 43 N. W. Rep. 1SS. 81 Imperial F. Ins. Co. v. Dunham, 117 Pa. St. 460; 2 Am. St. Rep. 6S0; 12 Atl. Rep. 668, under act May 11, 1881. S2 Donlevy v. Supreme Lodge etc., 11 Pa. Co. Ct. 477; 49 Leg. In. tell. 145. 83 See Carson v. Jersey City Ins. Co., 43 N. J. L. 303; 14 Vroom, 300; 39 Am. Rep. 584; Sheldon v. Hartford P. Ins. Co., 22 Conn. 235; 58 Am. Dec. 420. 84 Weed v. Schenectady Ins. Co., 7 Lans. (N. Y.) 452; Burritt v. Saratoga Co. Mut. F. Ins. Co., 5 Hill (N. Y.), 188; 40 Am. Dec. 345, per Bronson, J.; Moore v. State Ins. Co., 72 Iowa, 414; 34 N. W. Rep. 183; Merchants' Ins. Co. v. Dwyer, 1 Tex. Unrep. Cas. 445. § 191 CONSTRUCTION. 260 tached to the policy and become a part of the contract. 85 And a rider attached to a marine policy subsequent to its issuance giving permission to navigate in other waters than allowed by the terms of the policy becomes a part of the contract, 86 and a paper written in lead pencil and signed by the insured may be a part of the policy when it is referred to therein by number. 87 A separate paper may by distinct and clear reference be ex- pressly made a part of the contract, but a simple reference is not sufficient, 88 and the whole of a survey may be incorporated by proper reference. 89 So a receipt for the husband's notes given in payment of a premium for a policy insuring his wife'a interest in his life, is a part of the contract. 90 So an ad interim receipt may be a part. 91 Again, a separate paper may by ex- press stipulation be made part of a policy, but where from the manner of referring to it it would seem that the insurers were satisfied to look to it only for the purpose of estimating the risk, it is not a part of the policy. 92 In Bize v. Fletcher, 93 it ap- peared that at the time the insurers underwrote the policy a slip of paper was wafered to it describing the state of the ship as to repairs and strength, and it also mentioned several particu- lars as to her intended voyage, and Lord Mansfield held that this was not a part of the policy so as to make the statements other than representations. It was said of this in a ISTew York case 94 that it would be impossible to sustain the decision if the slip so wafered had expressly declared itself to be conditions. In this last case the policy was printed on one-half the sheet and the "conditions of insurance" on the other, and it was held 85 Westchester F. Ins. Co. v. Coverdale, 48 Kan. 446; 29 Pac. Rep. 682; 21 Ins. L. J. 530. 86 Mark v. Home Ins. Co., 52 Fed. Rep. 170. 87 City Ins. Co. v. Bircher, 91 Pa. St. 488. 88 Hartford etc. Ins. Co. v. Harrner, 2 Ohio St. 452; 59 Am. Dec. 684. See Anderson v. Fitzgerald, 4 H. L. Cas. 474. 89 Sheldon v. Hartford F. Ins. Co., 22 Conn. 235; 58 Am. Dec. 420. 00 Baker v. Union L. Ins. Co., 6 Abb. Pr., N. S. (N. Y.), 144; 37 How. Pr. (N. Y.) 12fi. 91 Goodwin v. Insurance Co., 16 L. C. Jnr. 298. 92 Snyder v. Farmers' Ins. and Loan Co., 13 Wend. (N. Y.) 92. 93 1 Doug. 284, 291; 13, n. 4. 94 Roberts v. Chenango Co. Mut. Ins. Co., 3 Hill (N. Y.), 501, 503. 261 ' CONSTRUCTION. § 192 that the conditions were part of the policy, and that there was no need of an express reference thereto in the policy; that the juxtaposition of the papers was prima facie evidence of the parties' intention, which might be rebutted, however, by parol evidence, as by showing that the two were thus connected by mistake. 90 x\gain, it is held that a paper detached from the policy containing instructions relative to the force with which the ship was to sail, and which was shown to the underwriter at the time of subscribing, did not thereby become a part thereof, 96 and a diagram on the back of an application which is not itself properly made a part, there being no evidence that the insured ever saw or knew of the diagram, it having been made by the agent, 97 and a letter written after the application was rejected in regard to insurable interest, and held not to be a part of the policy thereafter issued, nor of the application, 98 nor are proofs of loss a part. 99 § 192. Whether Prospectus or Pamphlet Part of Pol- icy.— Whether a prospectus or pamphlet is a part of the pol- icy is a question in which there is a conflict between the cases wherein this issue has been distinctly before the courts. It would seem that in many English decisions, where there has been an equitable replication, 100 the courts have been inclined to hold that the prospectus or pamphlet is a part of the con- tract, especially if it appears that the representations therein were an inducement to the assured to enter into the contract. 101 The rule in this country is not settled. If the prospectus or 95 Same point in Murdock v. Cnenansro Co. Mut. Ins. Co., 2 N. Y. 210. 220. See, also, Duncan v. Sun F. Ins. Co., 6 Wend. (N. Y.) 488; 22 Am. Dee. 539. 96 Pawson v. Watson, Cowp. 785. 97 Vilas v. New York C. Ins. Co., 72 N. Y. 590; 28 Am. Rep. 186. 98 Mace v. Providence L. Ins. Assn., 101 N. C. 122; 7 S. E. Rep. 647. See Menk v. Home Ins. Co., 76 Cal. 51; 9 Am. St. Rep. 158; Alemannia F. Ins. Co. v. Peck. 133 111. 220; 23 Am. St. Rep. 610. 99 McMaster v. Insurance Co., 55 N. Y. 222; 14 Am. Rep. 239. i"0 Under the Common Law Procedure Act, 1854, 17 & 18 Vict., c. 125, sees. 83-86. ioi See Wood v. Dwarris, 11 Exch. (Hurl. & G.) 493; Salvin v. James, 6 East, 571. § 192 CONSTRUCTION. 262 pamphlet is expressly, by reference or otherwise, made a part of the policy, then such should be the effect, but in case it is not so made a part of the policy, then the question is not so easily determined. If the question were to be decided upon equitable principles, then such prospectus or pamphlet, where the representations therein were made a special inducement to the assured to enter into the contract, and were relied upon by him, might be considered a part of the policy on the ground of estoppel, or perhaps, if on no other, of mistake, in that the pol- icy did not contain all the terms of the agreement. But we believe that inasmuch as it is within the power of the parties to the contract to expressly make such prospectus or pamphlet a part of the policy by reference or otherwise, that the neglect so to do ought not to give the right after delivery and acceptance thereof to vary or enlarge or disannul the provisions of a writ- ten contract which the parties have solemnly consummated, and which they are bound to know merges all prior negotia- tions. This rule is subject, however, to such exceptions as may exist in cases of clear estoppel or mistake, and we believe that the best considered cases and authorities make this question to depend upon the same general principles that underlie refer- ences to other papers, and which require some evidence in the policy itself of a purpose or intent to make such a prospectus or pamphlet a part of the contract, or clear evidence of an estoppel or mistake. Otherwise, serious questions might arise in con- struing a written contract of insurance. The presumption that a policy contains the real terms of the contract is a presump- tion against the existence of such prospectus or pamphlet when it is not incorporated in the policy by reference or otherwise. 102 And subject to the above exceptions to permit such presump- tion to be overcome by proof that it was intended to make such papers a part of the policy, would be to open the doors to the admission of parol evidence, establishing a different contract entirely from that evidenced by the policy which has been de- liberately executed, delivered, and accepted. 102 See opinion of Earl, J., in Wheelton v. Hardisty, 8 El. & B. 232. 263 CONSTRUCTION. § 193 § 193. Same Subject — The Cases. — In a New York case 103 it is held that a prospectus issued by a life insurance company and delivered to the insured by the company's agent, importing that the company was careful to prevent forfeitures 2 and which is not referred to in, nor in any manner annexed to, the policy, is not part of the contract, and is inadmissible to control the express terms of the policy, providing that it should determine upon failure to pay the premium. This case, how- ever, came subsequently before the same court 104 on a motion for reargument, based upon the ground that the attention of the court on the prior hearing was not called to several decisions in England, where a contrary ruling had been adopted upon this point. The cases referred to were Wood v. Dwarris, 105 Wheel- ton v. Hardisty, 106 and Collett v. Morrison, 107 and the court says these cases "do certainly hold that the prospectus might equitably be regarded as forming a part of and controlling the terms of the policy. It is not improbable that an examination of these cases would have led this court to a different con- clusion," but the case was not reopened, however. In the case of Wood v. Dwarris 108 the prospectus issued by the company represented that all policies effected by it should be indisput- able, except in cases of fraud, and it appeared that the pros- pectus was issued prior to the issuance of the policy, and the statements therein were relied upon by the insured as a basis of the contract. That when he went to the office of the com- pany it professed to grant him assurance on those terms. These facts were held to preclude the company from defending on grounds which would leave out of consideration the pros- pectus, 109 and it was said 110 that it would no doubt have been competent for the company to have granted a policy upon 103 Ruse v. Mutual etc. Ins. Co., 23 N. Y. 516, 519; overruling s. c. 26 Barb. 556. J 04 24 N. Y. 653. 105 11 Ex. 493. 106 92 Eng. C. L. 231. 107 9 Hare, 173. 108 11 Ex. (Hurl. & G.) 493. 109 See opinion of Baron Alderson in this case, no By Martin, B. § 193 CONSTRUCTION. 264 terms which, would have excluded the prospectus. In the case of "VVheelton v. Hardisty 111 the facts were similar, although it did not appear that the prospectus was ever in fact seen by the plaintiff, or that its statements were an inducement to him to enter into the contract, and it was held, reversing the judgment of the Queen's Bench, that the plaintiff was not entitled to a verdict, and that if a certain statement contained in a proposal as to health was intended to be the basis of the contract, it should have been inserted therein. It was further held that the prospectus was not a part of the contract, nor made so by a mere reference thereto. 112 The case of Collett v. Morri- son 113 merely decided that if on a proposal and agreement for a life insurance a policy be drawn up at the insurance office in a form which differs from the terms of the agreement and varies the rights of the parties assured, equity will interfere and deal with the case on the footing of the agreement and not that of the policy. It is held, however, in a comparatively recent iSTew York case 114 that the terms of the policy cannot be affected by a statement in the company's pamphlets that it would allow "thirty days' grace .... on all payments" sub- sequent to the first. So in Tennessee 115 a prospectus of the company is not a part of the contract, and is not made so by a statement on the back of the policy that it may be had gratis on application. So in Georgia 116 a pamphlet promulgated as con- taining the terms and conditions upon which insurance would be granted, and which was not referred to in the policy, was held not a part of the policy and inadmissible in evidence to vary its terms, but that if referred to it might have been part of ni 8 El. & B. 285; 92 Eng. C. L. 231. 112 This case was decided in 1858, the Collett case in 1851, and the Wood case in 1856. 113 9 Hare, 162. n a Fowler v. Metropolitan L. Ins. Co., 116 N. Y. 389; 26 N. Y. 770; 5 Law Rep. Ann. 805; 22 N. E. Rep. 576; distinguishing Ruse v. Mutual etc. Ins. Co., 23 N. Y. 516; 24 N. Y. 653 ; and How- ell v. Knickerbocker L. Ins. Co., 44 N. Y. 276; reversing Fowler v. Metropolitan L. Ins. Co., 41 Hun. (N. Y.) 357. H5 Knickerbocker Ins. Co. v. Heidel, 8 Lea, 488. Jic Mutual etc. Ins. Co. v. Ruse, 8 Ga, 534. 205 CONSTRUCTION. § 194 the policy. 117 But in a Kentucky case 118 a prospectus issued by the company and shown to the assured at the time he tew >k out the policy provided that he should be entitled to a paid-up policy after the payment of a certain number of annual pre- miums, and also represented that the policy was nonforfeitable. The policy itself provided for forfeiture for nonpayment of the premiums at the time when due, and that the right to a paid-up policy should be forfeited unless the original contract was sur- rendered within thirty days after default in payment of the pre- miums, and the terms of the prospectus were held to govern the rights of the insured under the contract. § 194. Whether Common or Statutory Law Part of Contract. — A contract of insurance is presumed to have been made in reference to common and statutory laws, so far as ap- plicable, which are in force at the time of contracting. Such laws enter into and form a part of every such contract as much as if incorporated therein. 119 Emerigon says: 120 "In cases of doubt the parties are presumed to have intended to form their agreements according to the rules established by the law, which is nothing else than the universal will of the community." 121 U7 See 1 Parsons' Marine Insurance, ed. 186S, p. 124; Bliss on Life Insurance, see. 400; 1 Duer on Insurance, lect. 1, see. 22, ed. 1845, p. 76, for general rule as to other papers. But see Rohrschneider v. Knickerbocker etc. Ins. Co. (N. Y.), 8 Ins. L. J. 392; 76 N. Y. 216; 32 Am. Rep. 290: Continental L. Ins. Co. v. Hamilton, 41 Ohio St. 274; Walsh v. .Etna L. Ins. Co., SO Iowa. 133; 6 Am. Rep. 664; Clemmett v. New York L. Ins. Co., 76 Va. 355. H8 Southern Mutual L. Ins. Co. v. Montague, 84 Ky. 653; 4 Am. St. Rep. 218; 2 S. W. Rep. 443. ii9 Wauschaff v. Masonic Mut. B. Sec, 41 Mo. App. 211, where sec- tion 59S1 of the Revised Statutes o fMissouri, 1879, is construed and held to become a part of the contract: Fry v. Charter Oak L. Ins. Co., 35 Fed. Rep. 197; Weingartner v. Charter Oak L. Ins. Co., 32 Fed. Rep. 314. 120 Emerigon on Insurance, Meredith's ed. 1850, 49, 555, c. 2, sec. 7. 121 "Verba conventiouum secundum jus commune debent intelligi. Nam jus commune informat conventiones easque interpretatur. Et si conventio est ambigua redigiturad intellectum jur communi. Num qui contrahit proosumitur habere mentem quae congruit legis disposi- tioni": Id. The contract is "regulated by the general principles of jus- tice and equity that abide in the written reason of the law": Id. "The obligation of a contract consists in its binding force on the party who § 194 CONSTRUCTION. 266 Where trie construction of a statute or of the constitution be- comes settled by judicial construction, such construction, so far as contract rights acquired under the statute are concerned, be- comes a part of the statute itself, and necessarily, therefore, a part of the obligation of the contract. 122 So the construction given by courts in judicial decisions and the ordinances of com- mercial countries, so far as these latter may be applied or have been adopted by our own courts, are presumed to have entered into the consideration of the parties when making the contract and to have become a part thereof. 123 It is said in a Virginia case by the court that a statute relating to foreign insurance companies, and providing that they must have a citizen as a resident therein, and must act through him, must be read as a constituent part of the contract. 124 And this question arose in connection with that at issue in the case as to whether the non- payment of premium when prevented by war avoided the con- tract. So every contract of marine insurance is also presumed to have been made in view of commercial treaties in force be- tween this and other maritime countries, which treaties are part of the private law of the countries parties thereto, 120 for no risk can be the subject of a valid marine insurance if the course of trade or voyage contravene either the laws of the land or the laws of nations. 126 So the parties are presumed to have knowledge of a city ordinance or local laws affecting the property and risk; 127 but a certificate issued prior to the enact- makes it. This depends on the laws in existence where it is ma: Tns. Co., 138 Mass. 151; De Halm v. Hartly, 1 Term Rep. 343: McLaughlin v. Atlantic Ins. Co., 57 Me. 17ii; Cochran v. Retberg, 3 Esp. 121. 153 Patch v. Phoenix etc. Ins. Co.. 44 Vt. 487. See Emerson v. Mur- ray, 4 N. H. 171; 17 Am. Dec. 407. For case where memorandum not a part, see McQuilty v. Continental L. Ins. Co., 15 R. I. 573. 154 cowles v. Continental L. Ins. Co., 63 N. H. 300. 155 Pierce v. Charter Oak L. Ins. Co., 138 Mass. 151. 271 CONSTRUCTION. § 196 description of goods in the margin, 156 and the marginal words "against actual total loss" may limit the liability. 10 ' It is held, however, that the fact that the indorsement is written on the policy does not necessarily make it a part thereof. 158 So where a fire policy was indorsed with a proviso that when an alteration in the property was intended to be made that certain steps should be taken to determine whether the risk would be thereby increased, it was held that such indorsement did not form a part of the policy unless referred to therein as such. 159 § 196. Conditions Annexed to Policy, etc., When and When not Part of Same. — Conditions, although on another paper, may be made a part of the policy by reference when an- nexed thereto, 160 and where the conditions are annexed to and delivered with a policy, they are prima facie a part thereof, al- though not referred to in the policy. 161 So conditions printed on the back and referred to in the body of the policy as follows: "In conformity with the annexed conditions," are part of the contract, even though they are unsigned. 162 And where the pol- 156 Guerlain v. Col. Ins. Co.. 7 Johns. 527. 157 Burt v. Brewers' etc. Ins. Co., 78 N. Y. 400; 9 Hun (N. Y.), 3S3. That indorsements and marginal references are part of the policy, see. also. Alabama etc. Ins. Co. v. Thomas, 74 Ala. 578; Wright v. Mutual B. Assn., 118 N. Y. 237; 16 Am. St. Rep. 749; 43 Hun (N. Y.j, 61; Ferrer v. Home Mut. Ins. Co., 47 Cal. 416, holds that an indorse- ment on the back of the policy of the name and place of business of the company by which it is issued forms no part of the policy. In this case the copies contained in the complaint did not contain this indorsement, and when the policies were offered in evidence defend- ant objected on the ground of not being annexed to or contained in the complaint; Warwick v. Scott, 4 Camp. 62; Heygrun v. yEtna Ins. Co., 11 Iowa, 21. The clause "camphene cannot be used in building" is part: Mead v. North W. Ins. Co., 7 N. Y. 530. 158 Caraher v. Royal Ins. Co. etc., 63 Hun (N. Y.), 82; 17 N. Y. Supp. 858; 44 N. Y. 141; Stone v. United States Cas. Co., 34 N. J. L. 371. 150 Planters' Ins. Co. v. Rowland, 66 Md. 236, 240; 7 Atl. Rep. 257; Mullaney v. National etc. Ins. Co., 118 Mass. 393. See further as to when indorsement and marginal reference not a part, Kingsley v. New England etc. Ins. Co., 8 Cush. (Mass.) 303. 160 Jennings v. Chenango Mut. Ins. Co., 2 Denio (N. Y.), 75. 161 Murdock v. Chenango Mut. Ins. Co., 2 N. Y. (2 Comst.) 210; Hyatt v. Wait, 37 Barb. (N. Y.) 29. 162 Kensington Nat. Bank v. Yerkes, 86 Pa. St. 227. § 197 CONSTRUCTION. 272 icy provides that it is issued "on the special conditions stated on the back of this policy, which are hereby accepted by the assured as part of this contract," the insured is bound by the condi- tions so referred to. 163 So, also, where a policy of insurance is made "as per form attached,'' it is held that the provisions of the attached form must prevail over the inconsistent provisions stated in the body of the policy. 104 But the insured cannot generally be held bound by conditions which are printed on the back in small type where they have not been called to his attention, for usually the policy is transmitted to the insured after the agent and the insured have contracted, after the pre- mium has been paid, and under circumstances which put it out of the power of the insured to object to such provisions inserted in it as were not in his mind or in the oral understanding which was had when he paid the premium. 160 Where, however, the insured accepts a policy with conditions printed on the other half of the sheet with the policy or any sheet physically at- tached, the intent that the two shall be taken together is pre- sumed, although they are not referred to, but it may be shown that they were annexed by mistake. 166 § 197. "Whether Premium Note Part of Policy. — The premium note, together with the application and policy, are generally parts of the same transaction, and are to be construed together in detennining the rights of the parties. 167 It is also held that a promissory note given for a premium is a part of the contract, and therefore inadmissible to change the terms of the policy in relation to forfeiture. 168 So a condition in a note of forfeiture for nonpayment of premium is held to be nugatory where the policy contains no such provision and no condition 163 Porter v. United States L. Ins. Co., 160 Mass. 183; 35 N. E. Rep. 678. 164 St. Paul etc. Ins. Co. v. Kidd, 55 Fed. Rep. 23S; 22 Ins. L. J. 457. 165 Bassoll v. American F. Ins. Co.. 2 Hughes (C. C), 531, 536. 166 Roberts v. Chenango Mut. Ins. Co., 3 Hill (N. Y.), 501; Crigler v. ►Standard F. Ins. Co., 49 Mo. App. 11. See Murdock v. Chenango Mut. Ins. Co., 2 N. Y. (2 Comst.) 210. 167 American Ins. Co. v. Story, 41 Mich. 3S5; Schultz v. Hawkoye Ins. Co., 42 Iowa, 239. 168 New England etc. Ins. Co. v. Hasbrook, 32 Ind. 447. 273 CONSTRUCTION. § 198 that it should not take effect until the premium is paid, but is executed on the theory that the note is accepted as payment of the premium, and that the policy is to take effect upon the ac- ceptance of the note and the delivery of the policy. 169 Where the note is not accepted as absolute payment it is inadmissible to contradict the terms of the policy. 170 It is also held that the premium note is so far a collateral instrument that the courts will not permit it to be construed so as to defeat the manifest intent of the parties expressed in the policy, as in a case where the terms of the note in relation to forfeiture are inconsistent therewith. 171 Other cases hold that the premium note and the policy issued by a mutual company are independent contracts. 172 § 198. Usage — How Far a Part of Policy. — It has been constantly adjudicated that all usages which are so well estab- lished and so well known as that parties engaged in the trade to which the usage relates are presumed to have contracted in reference thereto, become as much a part of the policy as if written therein in terms. 173 But such inference is repelled where the express terms of the policy or the policy itself by im- plication shows on its face an intent to contract without refer- ence to usage, 174 for the parties may undoubtedly make what- ever contract they please in this respect. 175 An express con- tract is always admissible to supersede or vary or control usage or custom, for the latter may always be waived at the will of W9 Dwelling House Ins. Co. v. Hardie, 37 Kan. 674; 16 Pac. Rep. 92. no Continental Ins. Co. v. DQrman, 125 Ind. 189; 25 N. E. Rep. 213. 171 Fithian v. Northwestern L. Ins. Co., 4 Mo. App. 386. 172 New England Mut. F. Ins. Co. v. Butler, 34 Me. 451; American Ins. Co. v. Gallahan, 75 Ind. 168; Sbaw v. Republic L. Ins. Co., 67 Barb. (N. Y.) 586. 173 Martin v. Delaware Ins. Co., 2 Wash. (C. C.) 254; Renner v. Bank of Columbia, 9 Wheat. (U. S.) 581; Brough v. Whitmore, 4 Term Rep. 206. per Butler, J.; Trott v. Wood, 1 Gall. (C. C.) 443; Stevens v. Reeves, 9 Pick. (Mass.) 198; Colorado Ins. Co. v. Oatlett, 12 Wheat. (U. S.) 383; Taunton C. Co. v. Merchants' Ins. Co., 22 Pick. (Mass.) Ill; Rogers v. Mechanics' Ins. Co., 1 Story (C. C), 603, 607, 608; Gracie v. Marine Ins. Co., 8 Cranch (U. S.), 75. 174 Mobile etc. Ins. Co. v. McMillan, 27 Ala. 77, and see cases cited In last note. 175 Parsons on Marine Insurance, ed. 1868, p. 88. Joyce, Vol. L— 18 §398 CONSTRUCTION. 274 the parties. 176 Insurers, says the Connecticut supreme court, "are presumed to act and contract in reference to known and general usage, and to submit to it, and such general usage may be well enough said to become a part of all their contracts." 177 So Lord Mansfield declares that "every man who contracts under a usage does it as if the point of usage were inserted in the contract in terms." 178 The established usage as to the course of a voyage constitutes a part of the policy as much so as if expressed therein in terms. 179 So "what is usually done by such a ship with such a cargo in such a voyage is understood to be referred to by every policy, and to make a part of it as much as if it were expressed." 18 ° In this case the usage was to store rigging in a particular manner universal with all European ships for many years; so a general usage among shipowners and underwriters in relation to the settlement of average loss, if known to the parties, becomes part of the contract, and binds 176 The Schooner Keeside, 2 Sum. (C. C.) 567, 570, per Story, J. 177 Crosby v. Fitch, 12 Conn. 422; 31 Am. Dec. 745. its Mason v. Skurry, U. P. Case, per Lord Mansfield, cited in 1 Marshall on Insurance, ed. 1810, 226. "Such usages form part of the law-merchant, and to incorporate them with the policy is merely to admit the addition of known terms not inconsistent with the tenor of the instrument and well understood by the contracting parties": 1 Ar- nould on Insurance, Perkins' ed, 71; s. p. 72; Id., p. 66, sec. 42; Id. 65, side p. 66. "Whatever is usually done is presumed to be foreseen and to be in the contemplation of the parties in making the contract, and is. therefore, understood to be referred to by every policy, and to make a part of it as much as if it were express": 1 Marshall on In- surance, ed. 1810, 186, citing Pelly v. Royal Ex. Assur. Co., 1 Burr. 348. "While the usage is established, it becomes part of the contract, and has the same effect upon the construction of the policy as if it were adopted by express words": 1 Duer on Insurance, ed. 1845, p. 195, sees. 42, 43, et seq., p. 271. The introduction of a clause referring to usage is superfluous, "since the contract itself by legal construction, and without any express provision, fully provides for all that can be t-ffected by a general clause of this description": 1 Phillips on Insur- ance, sec. 36. 179 Eyre v. Marine Ins. Co., 5 Watts & S. (Pa.) 116; Bulkeley v. Pro- tection Ins. Co., 2 Paine (C. C), S2: Salvador v. Hopkins, 3 Burr. 1707, 1714, per Lord Mansfield; 1 Arnould on Marine Insurance, ed. 1868, 69, 360, side pp. 70, 354. iso Telly v. Royal Ex. Assur. Co., 1 Burr. 341, 350, per Lord Mans- field. 275 CONSTRUCTION. § 19S them. 181 In marine insurances "every policy, then, in the ab- sence of any express stipulation to the contrary, is generally read as though it contained on the face of it an exemption in terms against liability" for goods carried on deck contrary to the usage of trade in like cases, 182 and a usage of a mutual benefit association that a question whether a member was a Mason in good standing should be decided by Masonic tribu- nals, is held to be as conclusively a part of the contract of in- surance as though it provided so in terms. 183 Mr. Duer, in considering how far an illegal usage enters into and becomes a part of the contract of insurance, says "an illegal usage does not become a part of the contract merely by the consent of the insurers to assume its risk, but it does become a part of the con- tract where the effect of the policy is to sanction and encourage a practice which the law condemns, and in such cases the in- surance is doubtless void." 184 isi Sanderson v. Columbian Ins. Co., 2 Cranch (O. C), 218. 182 l Arnould on Marine Insurance, Perkins' ed., 1850, 68, 69 (citing Taunton Cop. Co. v. Merchants' Ins. Co., 22 Pick. (Mass.) 108; Wol- cott v. Eagle Ins. CO., 4 Pick (Mass.) 429, and other cases; Id., Maclachlan's ed. 1SS7, 281, 282. 183 Connelly v. Masonic Mut. B. Assn., 58 Conn. 552, 557; 18 Am. St. Rep. 296: 20 Atl. Rep. 671; 9 L. R. Annot. 428. 184 l Duer on Insurance, ed. 1845, 274. CHAPTER VIII. CONSTRUCTION OF POLICY. § 205. Construction generally. § 206. Whether same rules govern marine, fire, and life policies. § 207. Construction: Mutual companies: Benefit societies. § 208. Policies are construed like other written contracts. § 209. Construction: Intention of parties governs. § 210. Construction: Reference must be had to nature of risk and subject matter. § 211. Construction must be reasonable. § 212. Contract should be given effect if possible. § 213. Construction: Rejection of words and clauses. § 214. General and special clauses. § 215. Construction will be given to uphold the law. § 216. Words are to be construed in ordinary and popular sense. § 217. Construction: Technical, etc., words. § 218. Addition of words by construction. § 219. Counts cannot extend or enlarge by construction. § 220. Forfeitures and exceptions not favored by construction. § 221. Construction should be liberal in favor of assured and for benefit of trade. § 222. Same subject: The rule contra proferentem. § 223. The written controls printed part of policy. § 224. Same subject: Cases. § 225. Construction: Lex loci contractus. § 226. Same subject: Cases. § 227. Same subject: Exceptions to the rule. § 228. Same subject: Mutual benefit societies. § 229. When place where policy is countersigned is place of con- tract. § 230. When place of delivery is place of contract. § 231. When place of acceptance and mailing is place of contract. § 232. Assignment: Lex loci contractus. § 205. Construction Generally. — Inasmuch as all prior negotiations are assumed to be merged in the written con- tract, the policy itself, in the absence of fraud, duress, or mis- take must be looked to to ascertain the meaning and intent of (276) 277 CONSTRUCTION OF POLICY. § 206 the parties, 1 and where the contract is clear, precise, and unam- biguous in its terms, and the sense is manifest and leads to noth- ing absurd, there is no need of a resort to rules of construction, 2 and extrinsic evidence is then inadmissible to vary or control its terms. 3 If the policy be ambiguous, extrinsic evidence is ad- missible not to contradict or change the contract, but to develop and explain its true meaning. 4 Resort may then be had to the facts and circumstances attendant at the time the insurance was effected to aid the interpretation. 5 So conversations between the parties had at such time is held competent. 6 "Where par- ties have by certain acts of their own placed a construction upon doubtful terms of a contract, this construction will be adopted by the courts as against them. 7 § 206. Whether Same Rules Govern Marine, Fire, and Life Policies. — 1'he rules of marine insurance apply to 1 Higginson v. Dall, 13 Mass. 96. See sec. 181 herein. 2 Emerigon on Insurance, Meredith's ed. 1S50, c. ii, sec. 7, p. 49. 3 Dewees v. Manhattan Ins. Co., 35 N. J. L. (6 Vroom) 306; Mum- ford v. Hallett, 1 Johns. (N. Y.) 433; Baltimore Ins. Co. v. Loney, 20 Md. 36; Burnham v. Boston M. Ins. Co., 139 Mass. 399. See sec. 1S5 herein. 4 Finney v. Bedford C. Ins. Co., 8 Met. (Mass.) 348; 41 Am. Dec. 515; Sayles v. Northwestern Ins. Co., 2 Curt. (C. C.) 610; Tessonn v. Atlan- tic Mut. Ins. Co., 40 Mo. 33; 93 Am. Dec. 293. 5 Fuller v. Metropolitan L. Ins. Co., 37 Fed. Rep. 163; Reynolds v. Commerce Ins. Co., 47 N. Y. 597, per Church, C. J.; Manger v. Holy- oke Ins. Co., 1 Holmes (C. C), 2S7, per Shipley, J. 6 Gray v. Harper, 1 Story (C. C), 574: "Whether parol evidence of the declarations and conversations of the parties at the time their contract was made may he received in order to show in what sense general words were in fact used by them, or to determine particular words to a distinct and particular sense, is a question that I have purposely omitted to discuss in the text. The authorities are con- flicting, and I have found myself not only unable to reconcile them, but to state any distinction satisfactory to my own mind upon which the propriety of admitting the evidence can be founded": 1 Duer on Insurance, ed. 1815, 308. "An inquiry is often made into the history of a clause in a policy and the purpose for which it was introduced. But although this may afford some aid in arriving at its meaning, yet it cannot control the construction of its language": 1 Parsons on In- surance, ed. 186S, 129, citing Hugg v. Augusta Ins. etc. Co., 7 How. (U. S.) 595; Kettell v. Alliance Ins. Co.,S. J. C, Mass. Nov. T., 1857; Heehner v. Eagle Ins. Co., 10 Gray (Mass.), 131; 69 Am. Dec. 30S. 7 Insurance Co. v. Dutcher, 95 U. S. 269. § 206 CONSTRUCTION OF POLICY. 278 the interpretation of policies on vessels expressly employed in inland navigation when not inapplicable from the particular subject matter. In a New Hampshire case 8 it is declared that "great strictness has always been held in contracts of marine insurance I apprehend that from this strictness exist- ing in the law of marine insurance have been drawn the rigid rules laid down by many tribunals upon fire insurance policies, and that the authorities in cases of marine insurance have been followed in actions upon policies against fire without perhaps sufficiently adverting to the difference that exists in the knowl- edge of facts upon which the respective contracts are founded. Kent says that the strictness and nicety required in the con- tract of marine insurance do not so strongly apply to insurance against fire, for the risk is generally assumed upon actual exam- ination of the subject by skillful agents on the part of insur- ance offices. 9 The severity of these rules has caused courts in many instances to endeavor to avoid their effect." 10 It is said that insurance on lives is governed by the same legal rules which control other contracts, 11 and that it is to be construed by the terms in which it is couched. 12 But in a New York case it is held that in respect to life policies the rule in regard to the construction of the statements of the assured in the appli- cation is different from that which prevails in construing state- ments in applications for marine and fire policies. In applica- tions of the former class the statements of the insured concern- ing his health or vital organs are not understood or intended as warranties ; because the applicant may not know enough of the human system to be aware of the existence of some affection of a vital organ, and because the insurers are supposed to rely upon the opinions of their own medical advisers; 13 and in a 8 Campbell v. Merchants' etc. Ins. Co., 37 N. H. 43; 72 Am. Dec. 324, per Eastman, J. 9 3 Kent's Commentaries, 373. io Caldwell v. St. Louis Ins. Co., 1 La. Ann. 85. li St. John v. American Mut. L. Ins. Co., 13 N. Y. 31, 39; 64 Am. Dec. 529. 12 Law v. London etc. Co., 1 Jur., N. S., 178; Connecticut Mut. etc. Ins. Co. v. Pyle. 44 Ohio St. 19; 4 N. E. Rep. 4C>r>. 13 Horn v. Amicable etc. Ins. Co., 64 Barb. (N. Y.) 81. 279 CONSTRUCTION OF POLICY. § 207 United States supreme court case 14 it is declared that "poll of life insurance are governed in some respects by different rules of construction from those applied by the. courts in cases of policies against marine risks or policies against loss by fire," which are contracts of indemnity, while "life insurance is not necessarily one merely of indemnity for a pecuniary loss," and we apprehend that this is true whether life insurance be con- sidered a contract of indemnity or only a contract for the pay- ment of a fixed sum. So the court declares in an Alabama case that "a contract of life insurance is simpler in form in the relative rights and duties of the insurer and the assured, and differs in many respects from marine or from fire insurance, and yet the general principles applicable to marine or fire in- surance are applied, so far as consistent with the nature and obligations of the contract, to the contract of life insurance." lo And it is said by the court in Chartrand v. Brace 16 that "a policy of life insurance is in the nature of a testament, and al- though not a testament, in construing it the courts will, so far as possible, treat it as a will." 17 And the question involved might arise in the construction of wills. It is held in Jolly v. Baltimore etc. Society 18 that in the construction of policies of fire insurance the same strictness is not to be observed as in the construction of policies of marine insurance. § 207. Construction — Mutual Companies — Benefit Societies. — It is a general rule that contracts of insur- ance with a mutual company are construed in most respects like other policies, 19 although it is said that "the business of in- surance against fire has been greatly increased by the incorpo- ration and establishment of mutual companies, and the mode of 14 Insurance Co. v. Bailey. 13 Wall. (U. S.) 616, 619. 15 Supreme Commandery etc. v. Ainsworth, 71 Ala. 436, 446; 46 Am. Rep. 332. 16 16 Col. 19; 32 Cent. L. J. 410. 17 Citing Bolton v. Bolton, 73 Me. 299. 18 1 Har. & G. (Md.) 295; 18 Am. Dec. 2S8. i» Elkhart etc. Assn. v. Houghton, 103 Ind. 286; 53 Am. Rep. 514; New England etc. Co. v. Butler, 34 Me. 451; Willcuts v. Northwestern Mut. L. Ins. Co., 81 Ind. 300; Bacon's Benefit Societies and Life In- surance, sec. ISO. § 207 CONSTRUCTION OF POLICY. 280 transacting business, as well as the property insured, differs very essentially from that of marine insurance. The method of doing business in these companies also varies materially in some respects from that which prevails in stock companies, as they are usually termed. And were courts now for the first time to lay down, without regard to authority, the rules of law that should govern contracts made between mutual companies and their members, I apprehend that in many jurisdictions they would differ essentially from the rules which at present prevail." 20 But the interpretation can be no different in the policies or certificates in such companies than in other insurance contracts, where the words are used for a definite purpose, and relate to clearly defined transactions, as that a policy shall be void if the insured die in known violation of any law. 21 If the language of such contracts be plain, unambiguous, and well understood to have a fixed meaning, either generally or as technical terms of law, that meaning will be given the same as in case of other contracts of insurance, 22 and the courts will adjudicate the rights of members in reference to certificates in such companies upon the same principles as apply to insurance companies. 23 So the policy, the conditions annexed thereto, the charter, and by-laws of the company must be all construed together in cases of discrepancy, 24 and the by-laws, it is held, must receive the interpretation put upon the contracts of which they are a part; 25 and it is held that the charter and by-laws must be liberally construed to effectuate the purposes contem- plated, 26 although other courts have adhered to a different rule limiting the company or society strictly to the exercise of those 20 Campbell v. Merchants' etc. Ins. Co., 37 N. H. 44, per Eastman, J. 21 Cluff v. Mutual etc. Ins. Co., 99 Mass. 317. 22 Wiggin v. Knights of Pythias. 31 Fed. Rep. 122. 23 Goodman v. Jedidjah Lodge, 67 Md. 117. See Chartrand v. Brace, 16 Col. 39; 32 Cent. L. J. 410. 24 Hyatt v. Wait, 37 Barb. (N. Y.) 29. See cases In sees. 175, 176, 185-88, herein. 25 Wiggins v. Knights of Pythias. 31 Fed. Rep. 122. 26 Ballou v. Gile, 50 Wis. 614; Erdman v. Insurance Co., 44 Wis. 376; Maniely v. Knights etc.. 115 Pa. St. 305; 7 Cent Rep. 633; 9 Atl. Rep. 41, 43; Elsey v. Odd Fellows' Assn., 142 Mass. 224; Supreme Lodge etc. v. Schmidt, OS Ind. 374. 281 CONSTRUCTION OF POLICY. §208 powers conferred by their charter. 27 But it is held that a stipulation in the policy repugnant to a provision in the act of incorporation controls the latter, 28 and the same is held to be true where by-laws are inconsistent with the provisions of the policy, the company having power under its charter to issue such a policy. 29 But the practice and opinion of the officers of such companies as to the meaning of words used in the rules, regulations, and by-laws cannot change by construction the plain terms of the policy or affect the rights of the parties. 30 So the customs and usages adopted by the society are inadmis- sible to supersede the regularly adopted by-laws and thus change the contract. 31 § 208. Policies Construed Like Other Written Con- tracts. — Policies of insurance are subject to the rules of construction which are applicable to other contracts. 32 So Xelson, J., declares that "there is no more reason for claiming a strict literal compliance with its terms than in ordinary con- tracts." 33 The clause in a policy of insurance requiring the certificate of a magistrate as to the character of the assured and the amount of the loss is to be construed as liberally as ordinary contracts, 34 though a policy of insurance may be avoided by 27 National Mut. A. Assn. v. Gonser, 43 Ohio St. 1; Knights of Honor v. Nairn, 60 Mich. 44. And see Bacon's Benefit Societies and Life Insurance, sees. 170, 244. 245. 28 Howard v. Franklin etc. Ins. Co., 9 How. Pr. (N. Y.) 45. See Ba- con's Mutual Benefit Societies and Life Insurance, sec. 178. 29 Davidson v. Old People's Mut. B. Soc, 39 Minn. 303; 1 L. R. Annot. 4S2. But see Bacon's Mutual Benefit Societies and Life Insur- ance, sec. 178. 30 Wiggin v. Knights of Pythias, 31 Fed. Rep. 122; Manson v. Grand Lodge A. O. U. W., 30 Minn. 509. 31 District Grand Lodge v. Conn, 20 111. App. 335; Davidson v. Knights of Pythias, 22 Mo. App. 263. 32 Aurora F. Ins. Go. v. Eddy, 49 111. 106; Crane v. City Ins. Co., 3 Fed. Rep. 558; St. John v. American Mut. L. Ins. Co., 13 N. Y. 81, 39; 64 Am. Dec. 529; Wells, Fargo Co. v. Pacific Ins. Co., 44 Gal. 397; Higginson v. Dall, 13 Mass. 90, 9S; Weidert v. State Ins. Co., 19 Or. 261; 19 Ins. L. J. 710; 24 Pac. Rep. 242; Robertson v. French, 4 East, 135, per Lord Ellenborough; Pindar v. Resolute F. Ins. Co., 47 N. Y. 114 ,per Rapallo, J.; Goix v. Low, 1 Johns. Cas. (N. Y.) 341, per Kent, J. 33 Turley v. Insurance Co., 25 Wend. (N. Y.) 376. 34 Turley v. Insurance Co., 25 Wend. (N. Y.) 375. § 209 CONSTRUCTION OF POLICY. 282 representations and concealments, which would not be allowed to affect the force of any other contract, if they materially affect the risk, yet with regard to its other incidents, it is subject to the same rules of construction as other contracts. Thus, it is no defense to an action on a premium note that false represen- tations were made when such representations were plainly con- tradictory to the terms of the note itself. 35 § 209. Construction — Intention of Parties Governs. — The cases are numerous which hold that the first object of con- struction is to ascertain the intention or meaning of the parties, and to understand the contract accordingly. 36 It is said by Denman, C. J., 37 that the question is "not what was the inten- tion of the parties, but what is the meaning of the words they have used." 38 In this case the parties had failed, by apt and proper words, to express their intention, and the contract was construed in accordance with the meaning of the terms em- ployed. In connection with this case we suggest that, if the words used are clear and precise, it is not an unreasonable pre- sumption that the parties intended that meaning which the words used fairly express, even though the parties may have actually intended otherwise, and if the meaning of the words is obscure, it is but just that other aids should be re- sorted to to ascertain what meaning the parties intended to con- vey by the words they have used. 39 The general rule is, that 35 Farmers' Mutual F. Ins. Co. v. Marshall, 29 Vt. 23. 39 Emerigon on Insurance, Meredith's ed. 1S50. c. ii. see. 7. p. 40. "The instrument avails nothing beyond the intention of the parties": Id., c. i, sec. 5, p. 17: Wells. Fargo Co v. Pacific Ins. Co., 44 Cal. 397, 406; Blinn v. Dresden M. F. Ins. Co., S5 Me. 3S9: Marco v. Liver- pool etc. Ins. Co., 35 N. Y. 664; Manger v. Holyoke Ins. Co., 1 Holmes (C. 0.), 289; Maryland Ins. Co. v. Bossiere,9 Gill & J. (Md.) 121 : Ripley v. ^Etna Ins. Co., 30 N. Y. 136, 158; 86 Am. Dec. 362; Parkhurst v. Smith, Willes, 332. per Willis, C. J.; Patapseo Ins. Co. v. Biscoe, 7 Gill . & J. (Md.) 293; 28 Am. Dec. 219. 3T Rickman v. Carstars, 5 Barn. & Adol. 651, 663. 38 gee, also, Holmes v. Charlestown M. F. Ins. Co., 10 Met. (Mass.) 211; 43 Am. Dec. 428. 39 Emerigon says: "If the party who could and should have ex- plained himself clearly and precisely has not done so, it is so much the worse for him . . . . ; the just construction of an instrument should tend only to discover the meaning of its author or authors",: 283 CONSTRUCTION OF POLICY. § 209 the intent is to be obtained first from the language of the entire policy in connection with the risk or subject matter, 40 but if the language is ambiguous and obscure, and does not in itself dis- cover the intent, then resort may be had to usage or to the sur- rounding circumstances existing at the time the contract was made. 41 This intent should not be contrary to legal principles or rules of law, 42 and it should be looked to rather than to any grammatical accuracy in the use of language, 43 and is rather to be regarded than the strict literal sense of the words. 44 Where the language evidences that the assured intended to do or omit an act material to the risk, it will be so construed, and the assured must reserve the right to change his intention by ex- plicit language. 45 Mr. Parsons 46 inquires, Which intent gov- erns where there is reason to believe that one of the parties intended one thing and the other another thing? It would seem, however, that the intent ought to be a concurrent one, that is, not the intent alone of either the insurer or insured, but one upon which the minds of the parties met. 47 So it is said Emerigon on Insurance, Meredith's ed. 1850, c. ii, sec. 7, p. 49. This learned writer also declares that "the words of the contract are to be taken together with the intention of the parties. Verba contractus assecurationes et mentern contrahentiurn esse attendenda". Id., c. i, sec. 5, p. 17. 40 Moore v. Protection Ins. Co., 29 Me. 97; 48 Am. Dec. 514; Mc- Cluer v. Girard F. & M. Ins. Co., 43 Iowa, 349; Blinn v. Dresden M. F. Ins. Co., S5 Me. 3S9; 27 Atl. Rep. 263; Weidert v. State Ins. Co., 19 Or. 261; 19 Ins. L. J. 740; 24 Pac. Rep. 242; Goodrich v. Treat, 3 Col. 408; Savage v. Howard Ins. Co., 44 How. Pr. (N. Y.) 40, 51; 52 N. Y. 502, 504; 11 Am. Rep. 741; Foot v. .Etna L. Ins. Co., 61 N. Y. 571. 41 Savage v. Howard Ins. Co., 44 How. Pr. (N. Y.) 40, 51; 52 N. Y. 502, 504; 11 Am. Rep. 741; Marco v. Liverpool etc. Ins. Co., 35 N. Y.6t r 4; Philadelphia etc. Co. v. British American Assur. Co., 132 Pa. St. 236, 24; 25 Week. Not. Cas. 370. 42 Patapsco Ins. Co. v. Biscoe, 7 Gill & J. (Md.) 293; 28 Am. Dec. 219; Parkhurst v. Smith, Willes, 332, per Willes, C. J. 43 Palmer v. Warren Ins. Co., 1 Story (C. C), 360, 365, per Story, J.; Bradley v. Nashville Ins. Co., 3 La. Ana. 708; 48 Am. Dec. 465. 44 Cross v. Shutliffe, 2 Bay (S. C), 220; 1 Am. Dec. 645; Eyre v. Marine Ins. Co., 6 Whart. (Pa.) 249, 254. 45 Bilbrough v. Metropolis Ins. Co., 5 Duer (N. Y.), 587. 46 1 Parsons on Insurance, ed. 1S6S, 75. 47 See 1 Duer on Insurance, ed. 1845, 159, 160; Holmes v. Charles- town etc. Ins. Co., 10 Met. (Mass.) 211, 216; 43 Am. Dec. 42S, where the § 210 CONSTRUCTION OF POLICY. 284 that there is no principle of law "which allows the understand- ing of one of the parties to determine the meaning of the con- tract." 48 § 210. Construction — Reference Must be Had to Nature of Risk and Subject Matter. — The language of a pol- icy must be construed with reference to the subject matter and the nature of the property to which it is applied, and with a view to the objects and intentions of the parties as the same may be gathered from the whole instrument. 49 An accident policy must be construed with reference to the subject to which it is applied, 50 and in case of a policy upon livestock it has been said that "such policies must be presumed to have been made with reference to the purposes for which such property is ordinarily used, as well as the manner in which it is usually kept. 51 It may be added as within this rule that the terms and conditions of a policy should be construed, if possible, so as to give them a meaning reasonably applicable to the kind of in- surance upon the particular species of property insured," 52 and construction should be liberal, having in view in the case of marine policies, the nature of the voyage, and the intent of the parties. 53 So a provision in the policy against loss by lire avoiding the policy if the property becomes encumbered has been held not to include encumbrance by judgment, although within the terms used. 54 So the court declares in a New York case that "this policy, like any other contract between parties, court refused to apply insurance to certain chattels, although it ap- peared that the insured intended to cover them. 48 Montgomery v. Firemen's Ins. Co., 16 B. Mon. (Ky.) 427, 441, per Marshall. C. J. 49 Allegre v. Maryland Ins. Co., 2 Gill & J. (Md.) 136; 20 Am. Dec. 424; De Graff v. Oueen Ins. Co., 3S Minn. 501; 8 Am. St. Kep. 685; Ripley v. iEtna Ins. Co., 30 N. Y. 136; S6 Am. Dec. 3G2. bo Henley v. Mutual Ace. Assn., 133 111. 556: 23 Am. St. Rep. 637; 31 Cent. L. J. 419, per Craig, J.; Rockfoi'd Ins. Co. v. Nelson, 65 111. 420. 5ii Citing Halbrook v. Insurance Co.. 25 Minn. 229; Boright v. In- surance Co.. 34 Minn. 352; 25 N. W. Rep. 790. 52 De Graff v. Queen Ins. Co., 38 Minn. 501; S Am. St. Rep. GS5, per Mitchell, J. 53 Columbia Ins. Co. v. Catleft, 12 Wheat. (U. S.) 386, per Story. J. 54 Baley v. Homestead F. Ins. Co., 80 N. Y. 21; 36 Am. Rep. 570. 285 CONSTRUCTION OF POLICY. §§ 211,212 is to be construed not merely by tlie letter, but by the spirit. We must read it in connection with the whole subject matter to which it relates, and give to language its ordinary and natural meaning. If, then, the intention of the parties becomes mani- fest, such intention must prevail." 0o § 211. Construction must be Reasonable. — The con- struction of policies of insurance must not be that which would lead to an absurdity, but must be reasonable with reference to the risk and subject matter, 56 so as not to defeat the intention of parties, 57 and when a reasonable construction can be had without recourse to extrinsic evidence, such evidence is inad- missible. 58 § 212. Contract Should be Given Effect if Possible. — The whole policy with all its parts should be construed together as one entire contract, 59 and such meaning should be given thereto as to carry out and effectuate to the fullest extent the intention of the parties; no portion should receive such a con- struction as will defeat the obvious intent, 60 and the construc- tion should be liberal rather than critical or technical, 61 for technical constructions are not favored. 62 The contract should be given effect if possible, rather than made void, for only a 55 Paul v. Travelers' Ins. Co., 112 N. Y. 472, 477; 8 Am. St. Rep. 758, 761. 56 Eyre v. Marine Ins. Co., 5 Watts & S. (Pa.) 117; Turley v. North America F. Ins. Co., 25 Wend. (N. Y.) 377; Tesson v. Atlantic Mut. Ins. Co., 40 Mo. 33; 93 Am. Dec. 293; Springfield F. & M. Ins. Co. v. Mc- Liruaus, 27 Neb. 649; 45 N. W. Rep. 171. 57 West v. Citizens' Ins. Co., 27 Ohio St. 1; 22 Am. Rep. 294. 58 Baltimore Ins. Co. v. Lorey, 20 Md. 36. 59 See Chrisman v. State Ins. Co., 16 Or. 283; 18 Pac. Rep. 466. Cases under sees. 185-SS, herein. 60 Crane v. City Ins. Co., 3 Fed. Rep. 558. 61 Palmer v. Warren Ins. Co., 1 Story (C. C), 365, per Story, J.; Crane v. City Ins. Co., 3 Fed. Rep. 558; Alabama G. L. Ins. Co. v. Johnston, 80 Ala. 467; 60 Am. Rep. 112; McNamara v. Dakota F. & M. Ins. Co., 1 S. Dak. 342; 47 N. W. Rep. 288; Allegre v. Maryland Ins. Co., 2 Gill & J. (Md.) 136; 20 Am. Dec. 424; Pual v. Travelers' Ins. Co., 112 N. Y. 479; 8 Am. St. Rep. 758, 762; Riggin v. Patapsco Ins. Co., 7 Har. & J. (Md.) 279; 16 Am. Dec. 302. 62 Miller v. Mutual B. L. Ins. Co., 31 Iowa, 226; 7 Am. Rep. 122, per the Court; Insurance Co. v. Wilkinson, 13 WaU. (U. 'S.) 222. § 213 CONSTRUCTION OF POLICY. 286 stern legal necessity will warrant a construction that would nullify the policy. 63 Doubtful clauses should not be consid- ered separately, and discrepancies must, if possible, be recon- ciled. Resort may be had to other parts to ascertain the mean- ing and intent of the parties. 64 The premium may be resorted to to discover the amount intended to be insured, 60 for the in- tent is to be gathered from the surrounding clauses and from all parts of the instrument, and the words should be taken in that sense to which the apparent object and intention of the parties limit them. 66 § 213. Construction — Rejection of Words and Clauses. Every word and every sentence should be given effect, and no part be ineffectual or rejected as superfluous, in order that the whole contract may stand together, 67 and if the words are sus- ceptible of a rational and intelligible meaning which is consist- ent with the object and purposes evidenced by the entire policy, no part should be rejected as inoperative, 68 for a construction should be given that will carry into effect, if possible, all the provisions of the policy. 69 But where printed and written por- tions of the policy are contradictory, the printed will be re- ♦33 McNamara v. Dakota F. & M. Ins. Co., 1 S. Dak. 342; 47 N. W. Rep. 2SS; Franklin L. Ins. Co. v. Wallace, 93 Md. 7; Carson v. Jersey City Ins. Co., 43 N. J. L. (14 Vroom) 300; 39 Am. Rep. 5S4. 586; Stacey v. Franklin F. Ins. Co., 2 Watts & S. (Pa.) 506; Evans v. Phoe- nix Mut. R. Assur. (Pa. 1892), 49 Leg. Intell. 15; 9 Lancaster Law Rev. 59; Phoenix Ins. Co. v. Tomlinson, 125 Md. 84; 21 Am. St. Rep. 203. 211; Baley v. Homestead F. Ins. Co., 80 N. Y. 21; 36 Am. Rep. 570; Brink v. Merchants' Ins. Co., 49 Vt. 442; Bnrkhard v. Travelers' Ins. Co., 102 Pa. St. 262; 48 Am. Rep. 205. 64 l Duer on Insurance, ed. 1845, 165, sec 10. "Indeterminate forms of expression .... are to be understood in a sense subservient to the general purposes of the contract": Hoffman v. iEtna F. Ins. Co.. 32 N. Y. 413; 88 Am. Dec. 337. 05 Port v. Fhoonix Ins. Co., 10 Johns. (N. Y.) 79, 84. 66 Paul v. Travelers' Ins. Co., 112 N. Y. 479; 8 Am. St. Rep. 758, 762. per the Court, citing Yeaton v. Fry, 5 Cranch (U. S.), 335; White v. Hudson River Ins. Co., 15 How. Pr. (N. Y.) 288; Hoffman v. ^Etna etc. Ins. Co., 32 N. Y. 405; 88 Am. Dec. 337. 67 Chrtisman v. Stale Ins. Co., 16 Or. 284; 18 Pac. Rep. 466. 68 Stettiner v. Granite Ins. Co., 5 Duer (N. Y.), 594, 597. on Springfield F. & M. Ins. Co. v. McLimans, 28 Neb. 846; 45 N. W. Rep. 171. 287 CONSTRUCTION OF POLICY. §§ 214, 215 jected. 70 "Words in the policy will not be so construed as lead to unreasonable results. 71 Portions of the description which are false will be disregarded if enough remains to iden- tify the property. 72 § 214. General and Special Clauses. — The general clauses, says Emerigon, are to be interpreted, generally, as they are written. 73 But general words, says Lord Bacon,' 4 "not ex- press and precise, shall be restrained unto the fitness of the matter and the person," and general words may be aptly re- strained according to the subject matter or person to which they relate. 75 A special clause in a policy which creates an ex- ception to a general clause governs the latter, 70 and a special stipulation in a certificate will control a general stipulation therein. 77 The clauses are to be taken literally when clear in themselves, 78 but the literal application of words may be con- trolled by other parts of the policy. 79 § 215. Construction will be Given to Uphold the Law. "When a law is susceptible of two constructions, the one which will give effect to the law, rather than the one which would ren- der the law unconstitutional, must be adopted. 80 And it is held 70 Hernandez v. Sun Milt. Ins. Co., 6 Blatchf. (C. C.) 317. 7J Ogden v. Columbia Ins. Co., 10 Johns. (N. Y.) 273. 72 Patch v. New Zealand Ins. Co., 67 Cal. 122. 73 "The contracting parties are to impute to themselves the incon- venience of not having affixed any instructions. These rules are taught us by all our doctors": Emerigon on Insurance, Meredith's ed. 1S50, 48, 49. "The general clauses are to be construed as they are written, and because it depends on the parties either not to stipulate them or to modify them": Emerigon on Insurance, Meredith's ed. 1S50, c. xii, sec. 45. p. 513. 74 Bacon's Law Max. Reg. 10. 75 Sawyer v. Dodge Co. Mut. Ins. Co., 37 Wis. 503. 76 Mitchell F. Co. v. Imperial F. Ins. Co., 17 Mo. App. 627; Bowman v. Pacific Ins. Co., 27 Mo. 152. 77 Northwestern Mut. Ins. Co. v. Hazelett, 105 Ind. 212; 55 Am. Rep. 192; 4 N. E. Rep. 582. 7S "in contractu assecurationis inspici debit in tantum, quod cer- turn est inter contrahentes": Emerigon on Insurance, Meredith's ed. 1S50. c. ii. se<\ 7, p. 49; c. i, sec. 2, p. 16. 73 Grant v. Delacour, 1 Taunt. 466. so New Orleans v. Salamander Co., 25 La. Ann. 650. § 216 CONSTRUCTION OF POLICY. 288 that a statute controls where the terms of the policy conflict therewith. 81 § 216. Words are to be Construed in Ordinary and Popular Sense. — Words are to be construed in their ordin- ary, usual, and popular sense, unless they have been given a contrary, legal construction, or have acquired a distinct com- mercial meaning by usage, or are peculiar to some art, trade, or science, and have thereby acquired a technical meaning, or un- less it is apparent from the context that a distinct and particu- lar meaning was intended; 82 and this rule is in accordance with all the authorities. So Emerigon says: "The true meaning of an expression in its ordinary use is the idea that people are ac- customed to attach to it." 83 And Lord Ellenborough declares that the policy "is to be construed according to its sense and meaning as collected, in the first place, from the terms used in it, which terms are themselves to be understood in their plain, ordinary, and popular sense, unless they have generally, in re- spect to the subject matter, as by the known usage of trade or the like, acquired a peculiar sense distinct from the popular sense of the same words, or unless the context evidently points out that they must in the particular instance, and in order to effectuate the immediate intention of the parties to that con- tract, be understood in some other special and peculiar sense." 84 So Chancellor "Walworth. declares that "a policy of insurance, like any other contract, is to be construed by the popular understanding or the plain and ordinary sense of the terms employed, unless those terms have received a legal con- si Fidelity Mutual L. Assn. v. Fichlin, 74 Md. 172; 23 Atl. Rep. 197; Fletcher v. New York L. Ins. Co., 4 McCrary (C. C), 440: 13 Fed. Rep. 528; Taylor v. Merchants' etc. Ins. Co., 83 Iowa, 402; 49 N. W. Rep. 994; Marsden v. Hotel Owners' Ins. Co., 85 Iowa, 584; 52 N. W. Rep. 509; Wall v. Equitable L. Assur. Soc, 32 Fed. Rep. 273. But set- sec. 194, herein. 82 Whitmarsh v. Conway Ins. Co., 16 Gray (Mass.), 359; 77 Am. Dec. 414; Peoria Ins. Co. v. Whitehill, 25 111. 466; De Longuiemere v. New York F. Ins. Co., 10 Johns. (N. Y.) 120. 83" E>merigou on Insurance. Meredith's ed. 1850, c. 11, sec. 7. p. 50. And this presumption cannot be overcome but by a stronger presump- tion contra: Id. 84 Robertson v. French, 4 East, 135, per Lord Ellenborough. 289 CONSTRUCTION OF POLICY. §§ 217, 218 struction or have acquired a technical meaning in reference to the subject matter of the contract." 85 So answers to questions must be taken in the popular sense of the language used, 80 and the words "jewelry and clothing, being stock in trade," will be construed in their ordinary and popular sense, and as not in- cluding musical and surgical instruments, etc., in the absence of evidence that a particular meaning has attached to the words by usage. 87 § 217. Construction — Technical, etc., Words. — Where a word has acquired by usage in trade or commerce a meaning peculiar thereto, or is a word of technical 88 application, as where used in some art, trade, or science, or where it appears from the context that words are used in a particular sense to compass the intent of the parties, such meaning may be shown by proper evidence, and the exact technical and commercial meaning or particular meaning will govern; 89 and "technical terms or terms proper to the arts and sciences are ordinarily to be understood according to the definition given them by mas- ters in the art." 90 Illustrations under this rule will be found throughout this work under the several heads to which they properly belong. § 218. Addition of Words by Construction. — -In the case of Davis v. Boardman 91 the words "or either of them"were inserted by construction after the word "cargo" in the clause "should this vessel and cargo be insured in England in time to 85 Dow v. Whitten, 8 Wend. (N. Y.) 160, 167, per Chancellor Wal- worth. See criticism 1 Duer on Insurance, ed. 1845, 229, et seq. 86 Ripley r. iEtna Ins. Co., 30 N. Y. 136; S6 Am. Dec. 362. 8T Rafel v. Nashville M. & F. Ins. Co., 7 La. Ann. 244. 88 See sees. 246-255, herein. 89 Whitmarsh v. Conway Ins. Co., 16 Gray (Mass.). 359; 77 Am. Dec. 414; Fowler v. .Etna Ins. Co., 7 Wend. (N. Y.) 270; 1 Phillips on In- surance, 3d ed., sec. 143, et seq.; Bacon's Benefit Societies and Life Insurance, 1st ed., sees. 256, 264; Home v. Mutual S. Ins. Co., 1 Sand. (N. Y.) 137: 2 N. Y. (2 Comst.) 235, per Sandford, J.; Robertson v. Mooney, 1 R. & M. 75. 90 Emeriiron on Insurance, Meredith's ed. 1850, c. ii, see. 7, p. 50. » 12 Mass. 80. Joyce, Vol. I.— 19 §§ 219, 220 CONSTRUCTION OF POLICY. 290 attach," etc., the court saving that it was not unusual "to find 'and' used for 'or' and 'or' for 'and.' " 92 § 219. Courts cannot Extend or Enlarge by Construc- tion. — If the terms of the contract are express, the court cannot extend or enlarge the contract by implication so as to embrace an object distinct from that originally contemplated. 93 In insur- ance contracts the insurer undertakes to guarantee the insured against loss or damage upon the exact terms and conditions specified in the agreement, and upon no other, and therefore, courts cannot change the contract nor make a new one for the parties. It is their duty to enforce and carry out the one al- ready made. 94 So a benefit certificate payable to certain chil- dren cannot be enlarged by construction so as to include a post- humous child by a second marriage contracted after the in- sured became a member of the society, 95 nor will conditions limiting the insurer's liability be extended to include cases not reasonably and clearly within the words, 96 nor will a construc- tion be given which would enlarge or diminish the risk to an unreasonable extent, 97 nor can the court apply the insurance to chattels not insured, even though the policy holder intended to insure them. 98 § 220. Forfeitures and Exceptions not Favored by Construction. — Where the intent of conditions involving disabilities or forfeitures is doubtful, they should be construed 92 See United L. F. & M. Ins. Co. v. Foote, 22 Ohio St. 340. The words "by fire" were added by construction: Contra, ■Commercial In- surance Co. v. Robinson, G4 111. 265. 93 "It is never allowed to stretch the contract from one case to another, nor to make it embrace an object really distinct from that originally contemplated": Emerigon on Insurance. Meredith's ed. 1850, c. i, sec. 7, p. 16; Waxahachie Bank v. Lancashire Ins. Co., G2 Tex. 461. 94 Glendale Mfs. Co. v. Protection Ins. Co., 21 Conn. 19, 30, 31; 54 Am. Dec. 309, per Ellsworth, J, 95 Sprey v. Williams, 82 Iowa, Gl; 47 N. W. Rep. 890; 10 L. R. Annot. 863. 9f. Rann v. Home Ins. Co., 59 N. Y. 387. 97 Eyre v. Marino Ins. Co., 6 Whart. (Pa.) 247. 98 Holmes v. Charlestown M. F. Ins. Co.. 10 Met. (Mass.) 211; 43 Am. Dec. 428. 291 CONSTRUCTION OF POLICY. § 221 against the party for whose benefit they were imposed," for the right to insist upon forfeitures is stricti juris, and courts will not favor forfeitures by literal intendments and enlarged con- structions, 100 and words of limitation in the nature of an excep- tion will be construed against the party preferring them, 101 and a prohibition against the transfer of a policy will be con- strued strictly. 102 So conditions in a policy of insurance which create restrictions on the remedy of the insured thereon, as that he shall sue within a certain time, are to be strictly con- strued. 103 § 221. Construction Should be Liberal in Favor of Assured and for Benefit of Trade. — It has long been de- termined with an almost unwavering unanimity that insurance contracts, when susceptible of more than one interpretation, shall be construed in favor of the assured. This rule is impera- tive and undoubted, since to hold otherwise, without an abso- lute necessity therefor, would tend to subvert the very object and purposes of insurance, which is that of indemnity to the assured in case of loss, or the payment of money on the happen- ing of a contingency. 104 And this is true of certificates in mil- 99 McNamara v. Dakota etc. Ins. Co., 1 S. Dak. 342; 47 N. W. Rep. 288; Colton v. Fidelity etc. Co., 41 Fed. Rep. 506; Burnett v. Eufaula etc. Ins. Co., 46 Ala. 11; 7 Am. Rep. 581; Evans v. Phoenix Mut. Assn. (Pa. 1S92), 49 Leg. Intell. 15; Liverpool etc. Ins. Co. v. Verdier, 33 Mich. 13S; Livingston v. Stickles, 7 Hill (N. Y.), 253; Alabama etc. Ins. Co. v. Johnston, SO Ala. 467; 2 S. Rep. 128, per the Court; 60 Am. Rep. 112; Yeaton v. Fry, 5 Cranch (U. S.), 335. 100 Aurora etc. Ins. Co. v. Eddy, 55 111. 213. See Fitzpatrick v. Mutual etc. L. Ins. Co., 25 La. Ann. 443. 101 Schroeder v. Stock & Mut. Ins. Co., 46 Me. 174; Bullen v. Den- ning, 5 Barn. & C. 842; Palmer v. Warren Ins. Co., 1 Story (C. C.),360, per Story, J.; Donnel v. Columbian Ins. Co., 2 Sum. (C. C.) 380, 381; Earl of Cardigan v. Armitage, 2 Barn. & C. 197. 102 Griffey v. New York Cent. Ins. Co., 30 Hun (N. Y.), 299; 100 N. Y. 417; 53 Am. Rep. 202. W)3 state Ins. Co. v. Maackens, 38 N. J. L. 564. 104 "it is an accepted canon of interpretation that if there is any uncertainty as to whether given words were used in an enlarged or restricted sense, that construction should be adopted which is most beneficial to the covenantee": Paid v. Travelers' Ins. Co., 112 N. Y. 472, 479; 8 Am. St. Rep. 758. 762: Kratzenstein v. Western Assur. Co., 116 N. Y. 54; Foot v. .Etna F. Ins. Co., 61 N. Y. 571; Getman § 221 CONSTRUCTION OP POLICY. 292 tual benefit societies; 105 and since indemnity is the ultimate object of insurance, 100 the construction should also be in favor of indemnity and likewise for the benefit of trade, 107 for in case of doubtful construction insurance is held to be a contract uberrimae fidei. 108 So it is held that policies of insurance cre- ate reciprocal rights and obligations which require the utmost good faith in both parties, 109 and "the striatum jus or apex juris is not to be laid hold on." no The fact that contracts were drawn up generally in a loose and inartificial manner gave a v. Guardian F. Ins. Co., 46 111. App. 489. See, also, Germania F. Ins. Co. v. Deckhard, 3 Ind. App. 361; 28 N. E. Rep. 868; Doe v. Dixon, 9 East, 15; Franklin F. Ins. Co. v. Brock, 57 Pa. St. 74; Marvin v. Stone, 2 Cow. (N. Y.) 781, 806; Teuton la F. Ins. Co. v. Mund, 102 Pa. St. 89; Elliott v. Hamilton Ins. Co., 13 Gray (Mass.), 139; Northwestern M. L. Ins. Co. v. Hazelett, 105 Ind. 212; 55 Am. Rep. 192; De Graff v. Queen Ins. Co., 38 Minn. 501: Monator v. Ameri- can L. Ins. Co., Ill U. S. 335; Western etc. Lines v. Home Ins. Co., 145 Pa. St. 3-16; 27 Am. St. Rep. 703; 22 Atl. Rep. 665; 21 Ins. L. J. 24; 48 Leg. Intell. 440; Pettit v. State Ins. Co., 41 Minn. 299; 43 N. W. Rep. 378; Hoffman v. ^Btna F. Ins. Co., 32 N. Y. 405; 8S Am. Dec. 339; Wells, Fargo Co. v. Pacific Ins. Co., 44 C'al. 397; Healey v. Mutual Aec. Assn., 133 111. 556, 561; 23 Am. St. Rep. 637, 638, Grant v. Lex- ington F. L. & M. Ins. Co., 5 Ind. 23; 61 Am. Dec. 74; Alabama etc. Ins. Co. v. Johnson, 80 Ala. 467; 2 S. Rep. 128, per the Court; 60 Am. Rep. 112; Rocker v. Great Western Ins. Co., 4 Abb. App. Dec. 76: Hood v. Manhattan F. Ins. Co., 11 N. Y. (1 Kern.) 532, per Parker, 0.; McGlinchy v. 1'idelity etc. Co., 80 Me. 251. W5 Supreme Lodge v. Abjott, 82 Ind. 1, 6. ion Manger v. Holyoke F. Ins. Co., 1 Holmes (C. 0.), 287. 107 Dow v. Hope Ins. Co., 1 Hall (N. Y.), 166, 174; Bond v. Gonzales, 2 Salk. 445, per Lee, C. J.; Pelly v. Royal Exch. Assur. Co., 1 Burr. 341, 349; Grandin v. Rochester Ins. Co., 107 Pa. St. 26; McCluer v. Girard etc. Ins. Co., 43 Iowa, 349; 22 Am. Rep. 249; Teutonia Ins. Co. v. Mund, 102 Pa. St. 89; Phoenix Ins. Co. v. Barnd, 16 Neb. S9; Miller v. Insurance Co., 12 W. Va. 116; 29 Am. Rep. 452; Schroeder v. Trade Ins. Co.. 109 111. 157; Brink v. Merchants' etc. Ins. Co., 49 Vt. 442. 108 Goram v. Sweeting, 2 Saund. 200, note; Wolf v. Horncastle. 1 Bos. & P. 316, 322. "Iste contractus assecurationi est bonaD fidei . . . . et practicandus non est cum juris apicibus et rigoribus": Emer- igon on Insurance, Meredith's ed. 1850, c. i, sec. 5, p. 17, citing Cas- aregis, disc. 1. n. 2. 109 Natchez Ins. Co. v. Stanton, 2 Smedes & M. (Miss.) 340, 375; 41 Am. Dec. 592. no Pelly v. Royal Exch. Assur. Co., 1 Burr. 341. 349, per Lord Mansfield, adopting opinion of Lee, C. J. 293 CONSTRUCTION OF POLICY. § 222 reason for the rule that policies are to be construed liberally. 111 It was early stated, however, by Emerigon, in considering whether the contract was one stricti juris or bonae fklei, 112 that "so far as the nature of the contract will allow, the chance of the insurer and of the insured must be the same," and the courts frequently show a disposition to somewhat modify the rule of liberal construction, 113 and to do in these contracts, as in others, equal justice between the parties as far as the nature of the contract renders it possible. 114 There are numerous cases, however, where a rule which contemplates less than a liberal construction in favor of the insured and of indemnity would result in gross injustice to the insured. 115 § 222. Same Subject — The Rule Contra Proferentem. It is a settled rule of construction that in cases of doubt policies of assurance shall be construed strictly against the insurer in accordance with the rule "verba fortius accipiuntur contra pro- ferentem." So of two interpretations equally reasonable that construction most favorable to the assured must be adopted, for in "Policies of insurance are generally drawn up in loose and in- artificial language, and indeed in the language of common life, and -therefore are always construed liberally": Palmer v. Warren Ins. Co., 1 Story (C. C), 360, 365. 112 Emerigon on Insurance, Meredith's ed. 1S50, c. i, sec. 5, p. IS. 1M See sec. 221, herein. tw Insurance Co. v. Slaughter, 12 Wall. (U. S.) 404; Merchants' Ins. Co. v. Davenport, 17 Gratt. (Va.) 138. "We should, however, have great doubts whether this rule of liberal construction has been in- variably followed. It has certainly been modified and restrained in recent cases by a disposition. to treat these contracts like all other contracts, in such a way as shall do equal justice to all interested": 1 Parsons on Marine Insurance, ed. 1868, 67. 68, citing several cases criticising Mr. Duer's statement (1 Duer on Insurance, ed. 1845, 212) that a liberal construction had been invariably followed. us See sec. 248, herein; Anderson v. Fitzgerald, 4 H. L. Cas. 484, 507; 17 Jur. 995; 24 Eng. L. & E. 1, per Lord St. Leonards. "Many early adjudications may be found, and not a few recent ones also, in which contracts of insurance, and especially of life insurance, have been construed in such a manner as to operate with great harsh- ness and injustice to policy holders": Alabama etc. Ins. Co. v. John- son, SO Ala. 467; 60 Am. Rep. 112; 2 S. Rep. 128. And see remarks on this point in Bacon's Benefit Societies and Life Insurance, 1st ed., sec. 19a. § 222 CONSTRUCTION OP POLICY. 294 the language is that of the insurers, 116 and if the terms ot the policy are such that reasonable and intelligent men would hon- estly differ as to its meaning, it will be construed against the insurer; 117 and this is so of equivocal expressions which would narrow the range of the insurer's obligations, 118 and the rule applies to clauses restrictive of the company's liability in an accident policy, 110 and to exceptions, 120 and to conditions and provisions which would narrow the range and limit the force of the principal obligation or lessen the indemnity. 121 And where a clause in a policy of reinsurance provided: "This in- surance to be on the excess which the T. Insurance Company may have on all their policies on cotton, sugar, and molasses and cotton seed, issued at their office in New Orleans, or at their Shreveport agency, as follows, viz., on the excess of ten thousand dollars on boats from places on the Mississippi river, but said excess not to exceed five thousand dollars by any one uc Western etc. Co. v. Cropper, 32 Pa. St. 351; 75 Am. Dec. 561; Travelers' Pref. Ace. Ins. v. Kelsey, 4G 111. App. 371; Olson v. St. Paul F. & M. Ins. Co., 35 Minn. 432; 29 N. W. Rep. 125; Montgomery v. Fire- men's Ins. Co., 16 B. Mon. (Ky.) 427; Paul v. Travelers' Ins. Co., 112 N. Y. 479; 8 Am. St. Rep. 758, 762; Wilson v. Conway F. Ins. Co., 4 R. I. 141; Teutonia Ins. Co. v. Boylston Mut Ins. Co., 20 Fed. Rep. 14S; Allen v. Insurance Co., 85 N. Y. 473; Catlin v. Springfield Ins. Co., 1 Sum. CC. C.) 440; Alemannia F. Ins. Co. v. Pittsburg Exp. Soc, 11 Atl. Rep. 572; 4 Pa. (L. ed.) 718; 10 Cent. Rep. 292; Brink v. Mer- chants' Ins. Co., 49 Yt. 442; White v. Smith, 33 Pa. St. 186; 75 Am. Dec. 5S9; Chandler v. St. Paul etc. Ins. Co., 21 Minn. 85; IS Am. Rep. 3S5; American Cent. Ins. Co. v. Rothchild, S2 111. 166; Bryan v. Pea- body Ins. Co., 8 W. Ya. 605; Bartlett v. Insurance Co.. 46 Me. 500; Insurance Co. v. Slaughter. 12 Wall. (U. S.) 404; Hoffman v. .Etna Ins. Co.. 32 N. Y. 405; 88 Am. Dec. 337; Foot v. .Etna L. Ins. Co., 61 N. Y. 575; Philadelphia Tool Co. v. British American Assur. Co., 132 Pa. St. 236; 19 Am. St. Rep. 596; 25 Week. Not. Cas. 370; Wallace v. German Ins. Co., 41 Fed. Rep. 742; Darro-w v. Family F. Soc, 116 N. Y. 537; 27 X. Y. 474: 15 Am. St. Rep. 430; 6 L. R. Annot. 495; 22 N. E. Rep. 1093; Fowkes v. Insurance Co., 3 Best & S. 917. 11^7 Kratzenstein v. Western Assur. Co., 116 N. Y. 54; 26 N. Y. 453, 456; 5 L. R. Annot. 799; 22 N. E. Rep. 221. 118 Commercial Tns. Co. v. Robinson, 64 111. 265; 16 Am. Rrp. 557. H9 United States Mut. Ace. Assn. v. Newman, 84 Va. 52; 3 S. E. Rep. 805. 125 Grant v. Lexington etc. Ins. Co.. 5 Ind. 23; 61 Am. Dec. 74. 121 Hoffman v. .Etna F. Ins. Co., 32 N. Y. 405; 88 Am. Dec. 337; Au- rora F. Ins. Co. v. Eddy, 49 111. 106. 295 CONSTRUCTION OF POLICY. 8 222 boat," it was decided that the words "on boats" indicated that more than the freight was included. 1 - 2 So the clause in a policy requiring notice of loss and a particular account of the samewill be construed liberally against the insurer. 123 But it is said by Lord Bacon 124 that "this rule contra proferentem is the last to be resorted to, and is never to be relied upon, but where all other rules of exposition fail"; and it is held in a New York case 120 that the rule that an insurance contract is to be con- strued most strongly against the insurer is to be resorted to only where the language or some of the terms of the contract remain of doubtful import after the use of such other helps in construc- tion as are proper. Story, J., recognizes the rule in Palmer v. Warren Insurance Company, 126 where he holds that a clause in the nature of an exception, if supposed to be ambiguous, must be construed most strongly against the insurer. So Lord Lyndhurst, in Blackett v. Royal Exchange Assurance Com- pany 12 ' says: "The rule of construction as to exceptions is that they are to be taken most strongly against the party for whose benefit they are introduced. The words in which they are expressed are considered as his words ; and if he do not use words clearly to express his meaning, he is the person who ought to be the sufferer." Mr. Duer 128 distinguishes in the application of this rule between words introduced "for the benefit of the insurers" and the "words of the insurer," and says: "If the words of a clause are to be construed strictly against the party for whose benefit it is introduced, the main provisions of the policy must be construed strictly against the assured .... and his indemnity reduced to the narrowest possible limits." 129 In another case, Story, J., 130 speaks of this rule as "a mere technical rule of construction." But that 122 Teutonia Ins. Co. v. Boylston Mut. Ins. Co., 20 Fed. Rep. 148. 123 McLaughlin v. Washington Co. Mut. Ins. Co., 23 Wend. (N. Y.) 524; Barker v. Phoenix Ins. Co., 8 Johns. (N. Y.) 307; 5 Am. Dec. 339. 124 Bacon's Max. Reg. 3. 125 Foot v. ^tna L. Ins. Co., 61 N. Y. 571. 126 l story (C C), 360. 127 2 Cromp. & J. 244, 250. 128 1 Duer on Insurance, ed. 1845, 214. See, also. Id. 209-11. 129 Citing Yeaton v. Fry. 5 Cranch (U. S.), 335. 130 Donnell v. Columbia Ins. Co., 2 Sum. (C. C.) 381. § 222 CONSTRUCTION OF POLICY. 296 this expression should be regarded as obiter accords clearly with the opinion of Mr. Duer. 131 Mr. Parsons 132 thinks that the rule contra proferentem has been "pressed quite too far in favor of the insured/' since insurance contracts are the result of ne- gotiations- and an agreement, and that "it is difficult to see how the words can be regarded as any more the words of the insurer than of the assured." Considered from a strictly legal stand- point this is true, for the contract of insurance, when consum- mated, is supposed to be one upon the terms of which the minds of the parties have met or concurred, and the insured is on general principles presumed to know the contents of a policy which he has accepted, and should therefore be bound by its terms. 133 But an examination of the cases discovers that the rule of construction against the insured obtains, because-the ap- plications and policies are framed by insurers in their interest, and the insured is in a measure bound to accept them. The terms of these contracts are seldom, if ever, the result of nego- tiations in the same sense that other contracts are. Yery strong terms have been used at various times against the practice of many insurance companies to issue applications and policies which "are illegible and unintelligible to the generality of mankind," 134 and the abuses which, have arisen in consequence and the 'injustice resulting to the insured have been the oc- casion for legislative interposition in many states, and a rule of liberal interpretation in favor of indemnity and the assured and -against the insurer has been followed as far as possible. Thus it is said by the court in Brink v. Merchants' Insurance Company 13 ° that "it is a fundamental rule in the law of insurance that the policy shall be construed most strongly against the insurer and liberally in favor of the 131 1 Duer on Insurance, ed. 1S45, 214. 1S2 l Parsons on Insurance, ed. 1SG8, 69, et seq. 133 Herbst v. Lowe, 65 Wis. 321; 26 N. W. Rep. 751; Moore v. State Ins. Co., 72 Iowa, 414; 34 N. W. Rep. 183; Brown v. Insurance Co., 59 N. H. 298; Morrison v. Phelps, etc., 44 Wis. 410; Hawkins v. Rock- fort Ins. Co.. 70 Wis. 1; 35 N. W. Rep. 34, per Cassody. J. 134 De Daneey v. Rockingham Mut. F. Ins. Co., 52 N. H. 581, per Doe. C. J. 135 49 Vt. 457. 297 CONSTRUCTION OF POLICY. § 223 insured They use their own language, and surround and barricade their liability under it with such defenses as they choose to adopt There is obvious reason for the rule of liberal construction in favor of the man whose legal rights are to be extracted from such a labyrinth of mysticism." And in an Iowa case 136 the court declares: "It is quite time that the technical constructions which have pertained, with reference to contracts of this kind blocking the pathway to justice and lead- ing to decisions opposed to the general sense of mankind, should be abandoned." To the same effect, although ex- pressed in much stronger terms, are the words of Doe, C. J., in Rockingham v. Mutual Fire Insurance Company, 137 who refer? to the policies prepared by the companies and to the numerous conditions against forfeiture, and says: "These provisions were of such bulk and character that they would not be understood by men in general, even if subjected to a careful and laborious study." 138 So in the case of warranties, which we shall con- sider hereafter, 139 the courts will not favor them by construc- tion: 140 and in this connection it is said by the court in another case 141 that "the rapid growth of the business of life insurance in the past quarter of a century, with the tendency of insurers to exact increasingly rigid and technical constructions, and the evils resulting from an abuse of the whole system, justify, if they do not necessitate, a departure from the rigidity of our earlier jurisprudence on this subject of warranties." And in the same case the court also declares that "all the conditions of the contract and the obligations imposed" will be construed "liberally in favor of the assured and against the insurer." § 223. The Written Controls the Printed Part of Policy. — Insurance policies are reduced to a printed form, 136 Miller v. Mutual B. L. Ins. Co., 31 Icwa, 226; 7 Am. Rep. 122. 137 52 N. H. 581, 5S7. 13B And see, also, Hausal v. Minnesota etc Assn., 31 Minn. 17, 21; 47 Am. Rep. 776. 139 See c. 45, herein. ho Vivar v. Supreme Lodge, 52 N. J. L. 455; 20 Atl. Rep. 36. 141 Alabama etc. Ins. Co. v. Johnson, 80 Ala. 467, 472; 60 Am. Hep. 112; 2 S. Rep. 128. § 223 CONSTRUCTION OF POLICY. 298 conforming *o a prescribed formula, since many, if not most, of the clauses haA 7 e obtained a settled judicial construction, 142 and because they embrace general provisions applicable not only to one case, but to most cases of a certain class, and these printed forms contain blanks in which may be written such covenants and specific provisions as are agreed upon, which are consistent with the nature of the contract and the' principles which govern it. 143 These specific written agreements become, therefore, the immediate and chosen language of the parlies themselves, 144 and for this reason it is said that they are to be more strictly construed than the printed ones. 14 ° These writ- ten clauses should be construed together with the printed ones, and reconciled with them, if possible, in case of apparent con- tradiction, so as to give effect to every part of the contract; 146 and if there is no contradiction between the two, the printed clauses will be given the full effect of their terms. 147 But if the printed and written clauses are repugnant to each other, and cannot be reconciled, then inasmuch as the parties have 142 The greater pari of the printed language of policies of assur- ance, being invariable and uniform, has acquired from use and prac- tice a known and definite meaning: Robertson v. French, 4 East. 136, per Lord Ellenborough. 143 Harper v. New York City Ins. Co., 22 N. Y. 441. per Selden. J. "In most maritime places they have printed forms of policies of in- surance, in the blanks of which are written the special covenants on which the parties choose to agree": Ernerigon on Insurance, Mere- dith's ed. 32, c. ii, sec. 3; 1 Duer on Insurance, ed. 1845, 64, sees. 6, 7. "The printed words are a general formula, adapted equally to their case and that of all other contracting parties upon similar occasions and subjects": Robertson v. French, 4 East, 136, per Lord Ellenbor- ough. 144 "The written words are the immediate lauguasre and terms se- lected by the parties themselves for the expression of their meaning": Robertson v. French, 4 East, 136, per Lord Ellenborough. . 145 1 Arnould on Insurance. Perkins' ed., 81. sec. 47, rule vi. 146 Goicoechea v. Louisiana Ins. Co., 6 Mart. N. S. (La.) 51; 17 Am. Dec. 175; Stokes v. Cox, 1 Hurl. & N. 533; Goss v. Citizens' Ins. Co., 18 La. Ann. 97, 101; 2 Parsons on Contracts, 5th ed., 516; Howes v. Union Ins. Co., 16 La. Ann. 235. 147 "But where there is no contradiction between the two (written and printed clauses), the printed clauses must stand and have the full effect of their terms, because they have been adopted by the par- ties": Ernerigon on Insurance, Meredith's ed., 33, c. ii, sec. 3. See Mumford v. Hallett, 1 Johns. (N. Y.) 433. 299 CONSTRUCTION OF POLICY. § 224 stipulated in writing, this express adoption of a chosen form of words to convey their meaning will control, and upon the point that the written clauses will be given effect over the printed ones, the decisions are unanimous. 148 § 224. Same Subject — Cases. — A special indorsement exempting from liability for partial loss controls, 149 but where the language of the printed form provided that the policy should be controlled by indorsements of special risks, and the written part omitted the word "carriage" contained in the printed part, such omission was held not to limit the policy. 150 Where the terms of limitation and descrip- tion of the risk are written in, such clauses will control printed clauses which should have been stricken out, but which are left in, according to the usual custom. 101 And the phrase "against 'actual total loss only," written across the margin of a policy, will control the printed language there- in. 152 So a written memorandum as to the manner of settling- losses controls. 103 So where the risk assumed by the written 148 "it is permitted to derogate from the printed clauses, and one is judged to derogate from them from the fact alone that the written clauses are repugnant to them": Emerigon on Insurance, Meredith's ed., 33, c. ii. sec. 3; Minnock v. Eureka F. & M. Ins. Co., 90 Mich. 236; 51 N. W. Rep. 367; Harper v. Albany Mut. F. Ins. Co., 17 N. Y. 104: Russel v. Manufacturers' etc. Assn., 50 Minn. 400; 52 N. W. Rep. 906; Benedict v. Ocean F. Ins. Co.. 31 N. Y. 3S0; Robertson v. French, 4 East, 130; 3 Kent's Commentaries, 6th ed., 26; Goieoechea v. Louis- iana State Ins. Co., 18 Mart. (La.) 51, 55; 17 Am. Dec. 175, per Porter, J.; Frederick Co. Mut. Ins. Co. v. Deford. 3S Md. 404; Gunther v. London etc. Ins. Co., 34 Fed. Rep. 501; Bargett v. Orient Mut. Ins. Co., 3 Bosw. (N. Y.I 385: Shertzer v. Mutual F. Ins. Co., 46 Md. 506: Niagara Ins. Co. v. De Graff, 12 Mich. 124; Archer v. Merchants' etc. Ins. Co., 43 Mo. 434; Coster v. Phoenix Ins. 0o., 2 Wash. (C. C.) 51: Bill v. Hob- son, 16 East, 240; Nielson v. Commercial Ins. Co.. 3 Duer (N. Y T .), 455; Phoenix Ins. Co. v. Taylor, 5 Minn. 402; Reynolds v. Commerce Ins. Co., 47 N. Y. 507; Hernandez v. Sun etc. Ins. Co., 6 Blatchf. (C. C.) 317; Plinskly v. Germania Ins. Co., 32 Fed. Rep. 47. 149 Chadsey v. Guion, 07 N. Y. 333. iso Kratzenstein v. Western Assur. Co., 116 N. Y. 54; reversing 21 Jones & S. (53 N. Y. Sup. Ct.), 505. isi Dudgeon v. Pembrook, 2 L. R. App. C. 284. 152 Burt v. Brewers' etc. Ins. Co.. Hun (16 N. Y. Supr. Ct.), 383. 153 Hugg v. Augusta Ins. etc. Co., Taney (C. C), 159. § 225 CONSTRUCTION OF POLICY. 300 agreement is irreconcilable with the printed terms, the former governs. 154 And the written words "port risk in the port of _N T ew York" control the printed part, and limit and define the risk. luu And the insurance will not be limited to the interest of the insured, a carrier, where other and written parts discover a contrary intention. 1 " 6 Other cases illustrating this proposi- tion are noted elsewhere. 157 § 225. Construction — Lex Loci Contractus. — Although there are conflicting decisions, yet the general rule is that con- tracts of insurance are governed, in matters of construction af- fecting their validity and the rights of the parties, by the law and usages of the place where the contract is made, 158 unless it appears that the parties had the law of another place in con- templation. The place where the contract is made is that where the final act is performed, which is necessary to its com- pletion and to make it binding upon both parties, for if any- thing remains to be and is done in another state to give valid- ity to the policy, that state is the place of contract. 159 Other 154 Nieolet v. Insurance Co., 3 La. 366; 23 Am. Dec. 458. 155 Nelson v. Sun Mut. Ins. Co., 71 N. Y. 453. 156 "Fire Ins. Assn. v. Miners' Transp. Co., 66 Md. 339; 7 Atl. Rep. 905. isr See cases under sec. 223. See chapters 45, 49, 50, 53, 58, herein. 158 But see Griswold v. Union etc. Tns. Co., 3 Blatchf. CC. C.) 231. 159 Ford v. Buckeye State Ins. Co., 6 Bush (Ky.), 133; 99 Am. Dec. 663; Cox v. United States, 6 Pet. (U. S.) 172; Heebner v. Eagle Ins. Co., 10 Gray (Mass.), 131; Northampton etc. Co. v. Tuttle, 40 N. J. L. 476; Equitable L. Assur. Soc. v. Clements, 140 U. S. 226; Burchard v. Dunbar, 82 111. 450; 25 Am. Rep. 334. See Bliss on Life Insurance, ed. 1872, sees. 370-73; 1 Parsons on Insurance, ed. 1868, 132-35; 1 Duer on Insurance, ed. 1845, 262; Western v. Genesee Mut. Ins. Co., 12 N. Y. (2 Kern.) 258; Kennebec v. Augusta Ins. Co., 6 Gray (Mass.), 208; North- western Mut. L. Ins. Co. v. Elliott, 7 Saw. (C. C.) 17; 5 Fed. Rep. 225; Pomeroy v. Manhattan L. Ins. Co., 40 111. 398. "For that which is of the substance of the decision reference must be had, as a general rule, to the laws of the place where the contract was made. Ex con- suetudine ejus regionis in qua negotium gestum est": Emerigon on Insurance, Meredith's ed. 1850, 98: "A foreigner who contracts within the territory of any state is bound as a subject, for the time being, of that, state to submit himself to the laws of the country and reciprocally he is entitled to invoke the laws and privileges of this same country in the matter of any contracts he may have entered 301 CONSTRUCTION OF POLICY. § '22o cases hold, however, that generally the rights of parties are governed by the laws of the place where the contract is to be performed, and not where made, since it will be presumed that the contract was entered into with reference to the laws of the latter. 100 Unless there is something "in the cir- cumstances to show that the parties had specially in view the law of the place where the contract is made, this law will gov- ern, although the contract is to be performed elsewhere." It has also been held that the legal construction and effect of a policy of insurance made by a company incorporated in a sister state are governed by the law of that state, 162 and that the law of the place where a mutual benefit association is formed and does business determines the liability of mem- bers. 163 So it is held in a recent mutual benefit association case that the contract is governed by the statutes of the state of the domicile of the corporation. 164 And it is also held that the contracts of a corporation, though made without the state by which it was created, are controlled by the laws of the state in which created. 165 into there. It is the same with insurances made in France, for ac- count of a foreigner, for everything connected with the decision of the substantial right of the case depends on the laws of the place of the contract But for decision of the substance of the cause, recourse must be had to the laws of the place of contract": Id. 101. See note, 99 Am. Dec. 671; Bacon's Benefit Societies and Life Insur- ance, ed. 188S, sec. 175; Richards on Insurance, ed. 1892, p. 54, sec. 44; 1 May on Insurance, Parsons' ed., sees. 66, 66 a. "The law of the country where the contract arose must govern the contract": Male v. Roberts, 3 Esp. 163, per Lord Eldon. "The law of the place where the contract is made is to govern as to the nature, validity, and construc- tion »f such contract": Reimsdyk v. Kane, 1 Gall. (C. C.) 374, per Story, J. "A contract must be governed by the law of the country where it is made": May on Insurance, Parsons' ed., 66 a. 160 Hyde v. Goodnow, 3 N. Y. (3 Comst.) 266, per the Court. 161 Ruse v. Mutual B. L. Ins. Co., 26 Barb. (N. Y.) 556; 23 N. Y. 521; 24 N. Y. 653. See same case, S Ga. 534. 162 St. John v. American Mut. L. Ins. Co., 2 Duer (N. Y.), 419; 13 N. Y. 31; 64 Am. Dec. 529. 163 Cutler v. Thomas, 25 Vt. 73. See Knights of Honor v. Nairn, 60 Mich. 44; 26 N. W. Rep. 826. 164 in re Globe Mut. B. Assn., 63 Hun (N. Y.), 264; 43 N. Y. 756; 17 N. Y. Supp. 852. 16.'. Fidelity Mut. L. Assn. v. Ficklin, 74 Md. 172; 20 Ins. L. J. 534; 21 Atl. Rep. 680. § 226 CONSTRUCTION OF POLICY. 302 § 220. Same Subject — Cases. — A statute 166 providing that the omission to attach to or indorse upon an insurance pol- icy "a true copy" of the application of the assured shall pre- clude the insurance company from afterward relying thereon, applies to a foreign corporation insuring property situated in the state, though the contract of insurance is made without the state. 167 And a policy issued within the state by the agent of a foreign insurance company, not naming the place of payment of . is payable within the state. 168 The contract is governed also by the laws of the state where the agent having the power to make the contract acts. 169 So where an insurance company, organized under the laws of Vermont, was transacting business in the state of New York, and had a general agent in the city of New York, to whom a person acting as agent for a resident of New Jersey made application for insurance, and a policy was issued in pursuance of such application by the general agent in New York, it was held that the contract was executed in New York and subject to the laws of that state as to for- feiture for nonpayment of premiums. 170 But it is not neces- sary that a foreign insurance company issuing policies, duly signed by their president and secretary and accepted by the in- sured in the state of Massachusetts, where the premium note is given, should have a general agent within that state, in com- pliance with its general statutes, in order to have the policy in- terpreted according to the laws of that state. 171 So the Mas- sachusetts statute relating to the forfeiture of life policies ap- plies to foreign insurance companies doing business in Massa- chusetts, without regard to the question whether the contract of insurance is made there or in the state where the company is incorporated. 172 It is decided in a Michigan case that the 166 Wis. Rev. Stat., sec. 1945 a. 167 Stanhilber v. Mut. M. Ins. Co.. 70 Wis. 2Sr.: 45 N. W. Rep. 221. IBS Moshassuok etc. v. Blauding, 17 R. I. 95; 20 Ins. L. J. 475; 21 Atl. Rep. 538. 169 Albion L. Ins. Co. v. Mills (App. Cas.), 3 WUs. & S. 218, 233. 170 Hicks v. National L. Ins. Co. (U. S. C. C. A. 1894), 60 Fed. Rep. 690. 171. Thwins v. Great Western Tns. Co., Ill Mass. 93. 172 Holmes v. Charter Oak L. Ins. Co., 131 Mass. 64. 303 CONSTRUCTION OF policy. ,; ; 226 "circumstance that the liability to pay is made to depend" upon a risk upon real property here does not make the contract a Michigan contract, or in any legal sense make that "state the place of performance by the insurance company, and the further circumstance that the contractee was a Michigan cor- poration did not impress upon the contract the quality of local- ity so as to cause" the laws of Michigan, as to business done there by agents of foreign companies, to affect it in point of law. 1 ' 3 So where the policy was issued and dated in Maine, the laws of that state were held to govern its con- struction, though the policy was sent to another state. 1 ' 4 So where the secretary of an insurance company solic- ited and obtained the application of a resident of Nebraska, in which place the company was not authorized to transact busi- ness, and the application and the premium note were signed, the latter made payable at the home office, in Iowa, whence the policy issued, the contract was held, to be governed by Iowa laws. 175 So policies executed in Ontario are Ontario con- tracts. 176 In another case where the contract was held to Imxe been made in Glasgow, the agent there accepted the risk, and delivered the insured a memorandum stat- ing the sum and the property insured, and promised that the policy would be made out in London and delivered to the insured or to his order. 177 So the law of the place where the premium note" is made and given to the agent governs its construction; 17S and where the contract was to be performed in New Jersey, it was held that the statute of limitations oper- ating as a bar there would control in another state, 179 and it is held that where a state law requires an ag;ent to be appointed therein on whom process can be served, the contracts 173 Clay etc. Ins. Co. v. Huron S. Co.. 31 Mich. 346. 174 Bailey v. Hope Ins. Co., 56 Me. 474. 175 Marden v. Hotel-Owners' Ins. Co., 85 Iowa, 584; 52 N. W. Rep. 509. See, also, Eureka Ins. Co. v. PaTks, 1 Cin. S. C. R. 574; Hyde v. Goodnow. 3 N. Y. 266. 176 Clarke v. Union F. Ins. Co.. 6 Ont. Rep. 223. 177 Pattison v. Mills, 2 Bligh, N. S.. 519; 1 Dow & C. 342. 178 Thornton v. Western Res. F. Ins. Co., 31 Pa. St. 529. 179 Snratley v. Mutual B. L. t U s. Co., 11 Bush (Ky.), 443; 7 Chi. Leg. News, 51. §§ 227, 228 CONSTRUCTION OF POLICY. 304 made by the agent are to be governed by the law of the state where the agent acts. 180 An open policy of insurance containing all the conditions governing the shipment of such goods as are specially insured under the policy, and reserving to the insurer the right of accepting or rejecting each special subject of insurance, will, it is held, be considered as a contract made at the domicile of the company. 181 § 227. Same Subject — Exceptions to the Rule. — An ex- ception to the rule that the contract of insurance is governed by the law of the place where made exists in case the usage of trade in one state affects the construction of a policy made in another, 182 So the question of seaworthiness is determined by the usage or custom of port where the vessel belongs, rather than that of the place where the contract is made, 183 and if the usages of such port are adopted by the policy, they control its construction; 184 but rights of parties under a contract of affreightment are governed by the law of the place where the contract is made, and not by that of the place of the ship's flag. 185 § 228. Same Subject — Mutual Benefit Society. — In case of mutual benefit societies it is held that the right to desig- nate a beneficiary is governed by the law of the place of con- tract giving such power, 186 and in a recent case the application was made in Michigan, and the by-laws provided that it must be approved in Indiana, and that the membership fee should be paid before the contract became binding, and the certificate also provided that the contract should be considered made in lso Manhattan L. Tns. Co. v. "Warwick, 20 Gratt. (Va.) 614. isi State v. Williams, 46 La. Ann. 922; 15 S. Rep. 290; 23 Ins. L. J. 508. 182 See 1 Duer on Insurance, ed. 1845, 262, 263. 183 The Titania, 19 Fed. Rep. 101; Tidinarsh v. Washington F. & M. Ins. Co., 4 Mason (C. C), 442. 184 T T nion F.nnk v. Union Ins. Co., Dud. (S. C.) 171. isrs China Mut. Ins. Co. v. Force, 142 N. Y. 90; r>8 St. R. 400; 40 Am. St. Rep. 570, citing l>yke v. Erie R. R. Co., 45 N. Y. 113: Faulk- ner v. Hart, 82 N. Y. 413. 186 American L. of H. v. Perry, 140 Mass. 580; Knights of Honor r. Nairn, 60 Mich. 44. 305 CONSTRUCTION OF POLICY. §§ 229. 230 Indiana, and should be governed by its laws, and it was held that the laws of that state controlled. 187 § 229. When Place Where Policy is Countersigned is Place of Contract. — Where the policy is not to be valid till countersigned by the agent, it will be construed according to the law of the place where such act is performed and the policy delivered, 188 although the policy is dated in another state and signed by the president and secretary there. 189 A Canadian insurance company with a branch office at Baltimore insured a resident of Washington, D. C. The policy provided that it was not to be valid until countersigned by the authorized agent at Washington, D. C. The agent there countersigned and de- livered the policy, and it was signed by the agent at Baltimore, at which place it also purported to be dated and to be signed by two directors of the company and by the attorney, and to bear the company's seal. It was held that this was not a Maryland contract. 190 § 230. When Place of Delivery is Place of Contract, Although the contract is made and dated in one state, but is to be binding only on delivery, the laws of the state where the insured is a resident and where it is de- livered to him, govern the contract. 191 And, as a general rule, the delivery of the policy to the insured in the state in 1ST Yoorhees v. People's Mut. B. Soc, 91 Mich. 469; 51 N. W. Rep. 1109. 183 in re Breitung's Estate, 78 Wis. 33; 46 N. W. Rep. 891; Curnon v. Phoenix Ins. Oo., 37 S. C. 406; 34 Am. St. Rep. 766; 16 S. E. Rep. 132; Moore v. Charter Oak L. Ins. Co., 8 Ins. L. J. 78; Pomeroy v. Man- hattan L. Ins. Co., 40 111. 398; Northwestern Mut. L. Ins. Co. v. Ellioit, 9 Saw. (C. C.) 17; 5 Fed. Rep. 225. See Smith v. Mutual L. Ins. Co., 5 Fed. Rep. 582; Hardie v. St. Louis M. L. Ins. Co., 26 La. Ann. 242; St. Louis M. & L. Ins. Co. v. Kennedy. 6 Bush (Ky.), 455. 189 Daniels v. Hudson River F. Ins. Co., 12 Cush. (Mass.) 422; 59 Am. Dec. 192; Heebner v. Eagle Ins. Co., 10 Gray (Mass.), 131; 69 Am. Dec. 308. 190 Cromwell v. Royal Canadian Ins. Co., 49 Md. 366; 33 Am. Rep. 258. 191 Knights Templar etc. Co. v. Berry, 50 Fed. Rep. 511; Wall v. Equitable etc. Soc, 32 Fed. Rep. 273; Meagher v. iEtna Ins. Co., 20 U. C. Q. B. 607; Hyde v. Goodnow, 3 Comst. (N. Y.) 266. Joyce, Vol. I.— 20 § 231 CONSTRUCTION OF POLICY. 306 which he resides, and the payment by him of his first premium in that state, renders the contract subject to the laws of such state. 192 And this is the rule where it is sent to the agent in another state to be there delivered on receipt of the pre- mium. 193 Where by the express terms of the charter of an insurance company a contract of life insurance does not be- come binding until delivery to assured, and the application is made and the policy delivered to the resident agent of the com- pany in Missouri, it is incepted and completed in that state, and is to be construed by the laws thereof, even though issued by a corporation in Illinois. 194 But where the agent in Edin- burgh received a policy and delivered it there, and received the premium, the policy being executed in London, it was held that the laws of England governed. 190 So in another case the agent in Canada of an insurance company, incorporated in ISTew York, received and forwarded to the secretary of the company in JSTew York a proposal for insurance upon property in Can- ada, the proposal was accepted, and the deposit and premium note left with the secretary, who issued the policy and sent it to the agent in Canada, by whom it was delivered to the in- sured, and it was decided that it was a Xew York contract. 198 § 231. When Place of Acceptance and Mailing is Place of Contract. — The place of acceptance of the proposal for insurance may become the place of contract, by mail- ing from there such acceptance, and the law of that place will then govern the contract, 197 although it is held that where the W2 Equitable L. Assur. Soc. v. Winning, 7 C. C. App. (U. S.) 359; 58 Fed. Rep. 541; 23 Ins. L. J. 81; Reliance Mut. Ins. Co. v. 'Sawyer, 160 Mass. 41-1: 36 N. E. Rep. 59. 193 Ford v. Buckeye State Ins. Co., 6 Bush (Ky.), 133; 99 Am. Dec. 663: Thwing v. Great Western Ins. Co., Ill Mass. 93: In re Breitung's Estate. 78 Wis. 33; 46 N. W. Rep. 891. wi Knights Templar etc. Co. v. Berry, 1 C. C. A. (U. S.) 561; affirm- ing 4H Fori. Rop. 43H; Mutual B. L. Ins. Co. v. Robinson, 54 Fed. Rep. 580, 584; Hicks v. National L. Ins. Co.. 60 Fed. Rep. 690; 9 C. C. A. (U. S.) 215. 105 Parken v. Royal Exch. Assur. Co.. IS Scot. Jur. 147. 106 Western v. Genesee Mut. Ins. Co.. 12 N. Y. (2 Kern.1 258. 197 Northampton Mut. L. Ins. Co. t. Tuttle, 40 N. J. L. 476; Gld- dings v. Insurance Co., 102 U. S. 108; Ford v. Buckeye State Ins. Co., 307 CONSTRUCTION OF POLICY. § 232 application was accepted in Xew York and mailed to Missouri, the law of Missouri governed the contract. 198 But in another case it was held that a policy of insurance executed in Xew York by a Xew York corporation doing business in Missouri, upon an application signed in Missouri by a resident of Mis- souri, the application being made part of the contract, which declared that it should not take effect until the first premium should have been actually paid, etc., and which was delivered and the first premium paid in Missouri, was, in the absence of evidence of the company's acceptance of the application in Xew York, or of its transmission directly by mail to the in- sured, a Missouri contract, and governed by the laws of that state. 199 § 232. Assignment L,ex L.oci Contractus. — It is held that the validity of an assignment of a policy of insurance is governed by the place of contract; 20 ° but it is also decided that where a policy was issued under the laws of Xew York relating to insurances on lives for the benefit of married women, the contract being made in that state and assigned by the wife to secure her husband's debt, and the assignment was executed in Xew York and sent by mail to Maryland, to a creditor there, the validity of the assignment must be deter- mined by the laws of Xew York, the action being brought there. 201 " 6 Bush (Ky.), 133, 139; 99 Am. Dee. 663; Commercial Ins. Co. v. Hal- lock, 27 N. T. L (3 Dutch.) 645: 72 Am. Dec. 379; Hyde v. Goodnow, 3 N. T. 269: Bailey v. Hope Ins. Co., 56 Me. 474. 198 Wall v. Equitable L. Assur. Co., 32 Fed. Rep. 273. 199 Equitable L. Ins. Soc. v. Clements, 140 U. S. 226; 11 Sup. Rep. 822. 200 p r att v. Globe Mut L. Ins. Co. (Tenn. 1891), 17 S. W. Rep. 352. • 20i Barry v. Equitable L. Assur. Soc.. 59 N. Y. 587. CHAPTER IX. CONSTRUCTION— USAGE. § 237. Usage generally. § 238. Usage part of the common law. § 239. Presumption as to knowledge of usage. § 240. Usage must be general. § 241. Usage must be well established and notorious. § 242. Usage may be of recent origin. § 243. Usage must be reasonable. § 244. Usage must be uniform. § 245. Parties may by express contract include or waive usage. § 246. Usage admissible where contract ambiguous or obscure. § 247. Usage inadmissible to contradict or substantially vary the plain terms of policy. § 248. Same subject: Cases and authorities. § 249. Whether usage controls the plain legal import of words of policy. § 250. Same subject: Opinions and cases. § 251. Same subject: Conclusion. § 252. Usage cannot legalize an illegal act. § 253. Particular usage may control general usage. § 254. Usage controls implied limitations. § 255. Usage of another similar trade or place or of another com- pany. § 256. Evidence of usage: Liberal construction. § 257. What is sufficient evidence of usage. § 258. Evidence of usage, when admissible: Cases. § 259. Evidence of usage, when inadmissible: Oases. § 1237. Usage Generally. — Evidence of general usage was formerly admitted to determine' the construction of policies of insurance for the reason that they were so loosely drawn, and because the contract depended so greatly upon commercial usage, and there were so few adjudications or rules of positive law to aid in its interpretation. So Lord Mansfield had re- course in a large measure to the usage of merchants and com- mercial law in ascertaining those principles which underlie his (308) 309 CONSTRUCTION USAGE. § 238 decisions in cases of insurance, and which have now to so largo an extent become of controlling force in the construction of insurance contracts. 1 Buller, J., in Brough v. "Whitmore 2 says that insurance "is founded on usage, and must be gov- erned and construed by usage," and Mr. Duer 3 asserts that the true purpose of a usage is "to discover in order to effectuate the intentions of the parties," and usage is received to ascertain the sense of the parties with reference to such usage. 4 § 238. Usage Part of the Common L.aw. — In England, where so few positive laws have been enacted, and where the first act concerning insurances was not passed until 1601, 5 the practice of insuring was dependent upon the common law, of which the law of merchants was considered a branch, and also upon the general principles and usages of trade. 6 It is de- clared in an English case 7 that "the custom of merchants or law of merchants is the law of the kingdom, and is part of the common law." These customs acquire the force of law, be- cause as they must be 'ancient, uniform, and reasonable, they must have been generally received, known, and approved/ 8 1 See sec. 1, preliminary chapter. Remarks of Lord Kenyon in Brough v. Whitmore, 4 Term Rep. 208, that Lombard St. had given a construction to policies of insurance, and that the practice of merchants and underwriters had rendered them intelligible. 2 4 Term Rep. 210. 3 1 Duer on Insurance, ed. 1845, 253. 4 Renner v. Bank of Columbia, 9 Wheat. (U. S.) 581, per the Court. 6 43Eliz., c. 12. 6 See sec. 1, preliminary chapter; 1 Marshall on Insurance, ed. 1810, 21. 7 Edie'v. East India Co., 2 Burr. 1226. 8 McGregor v. Insurance Co., 1 Wash. (C. C.) 39, per Washington, J., See sec. 1, herein. "The whole business of insurance and all the in-' struments by which it is carried on, and all their language and provi- sions, rest on the usage of merchants; and nearly all the law of insur- ance is but the usage of merchants, adopted and sanctioned by courts": 1 Parsons o« Marine Insurance, ed. 1868, 82. "With respect to usage, it is a sort of natural law formed out of our habits, our interests, and the universal consent of all mankind. In {all maritime matters it is regarded as the surest interpreter of the law In questions of insurance established usages must in all cases be adhered to, and in doubtful cases they are the safest guide one can follow": 1 Marshall on Insurance, ed. 1810, 707 a. § 239 CONSTRUCTION — USAGE. 310 § 239. Presumption as to Knowledge of Usage. — Under- writers are bound to inform themselves and to know the gen- eral usages of the trade in which they insure, 9 for it is pre- sumed that the custom of merchants is known to them, 10 and the insurer and insured must be supposed to be fully apprised and conusant of a notorious usage, as to a course of a voyage, and to know the nature and peculiar circumstances of that branch of trade to which the policy relates, and that whether it is recently established or not. 11 The insurers are also pre- sumed to know the customs of the place where they do busi- ness, and are assumed in law to know them. 12 So they are presumed to be acquainted with the nature and peculiar circumstances of the branch of trade to which the risk relates. 13 So in a policy on a foreign vessel the under- writer must be taken to have knowledge of the common usages of trade in such country as to equipments of vessels of that class for the voyage on which she was destined. 14 Mr. Mar- shall lo asserts that British underwriters cannot be presumed to be conusant of the usages of the particular trade undertaken by ships of foreign nations in foreign trade, but that the usage must have been made known to them to be binding. 16 Mr. Duer, however, 17 criticises this assertion as impolitic and un- 9 Noble v. Kennoway, 2 Doug., pt. 2, 3d ed., 513, per Lord Mans- field ; Maryland & Phoenix Ins. Co. v.Bathhurst, 5 Gill & J. (Md.) 159; Cox v. Charleston etc. Ins. Co., 3 Eioh. (S. C.) 331; 45 Am. Dec. 771; Vallance v. Dewar, 1 Camp. 503; Wall v. Howard Ins. Co., 14 Barb. (N. Y.) 383; Norris v. Insurance Co., 3 Yeates (Pa.), 84; 2 Am. Dec. 360; Salvador v. Hopkins, 3 Burr. 1707, 1712, 1714; 1 Duer on Insur- ance, ed. 1845, 196. See, generally, Horan v. Strachan, 86 Ga. 40S; 22 Am. St. Bep. 471 ; First Nat. Bank v. Fiske, 123 Pa. St. 241 ; 19 Am. St. Bep. 635. 10 McGregor v. Insurance Co., 1 Wash. (C. C.) 39, per Washington, J. See, generally, Austrian v. Springer, 34 Mich. 343; 34 Am. St. Bep. 350. 11 Salvador v. Hopkins, 3 Burr. 1707, 1714; Wadsworth v. Pacilic Ins. Co., 4 Wend. (N. Y.) 33. 12 Hartshorne v. Union etc. Ins. Co., 36 N. Y. 172. 13 Grant v. Lexington etc. Ins. Co., 5 Ind. 23; 61 Am. Dec. 74. 14 Tidmarsh v. Washington etc. Ins. Co., 4 Mason (C. C), 442, por Story, J. 15 1 Marshall on Insurance, ed. 1810, 275. 16 Citing Larabie v. Wilson, Doug. 271 ; digested, Id. 192, et seq. ; also in 1 Duer on [nsurance, ed. 1845, 243, et seq. 17 1 Duer on Insurance, ed. 1845, 199. 311 CONSTRUCTION — USAGE. § 240 supported, but it is said by McLean, J., in Hazard's Administra- tor v. Xew England Marine Insurance Company, 18 that "the underwriters are presumed to know the usages of foreign porta to which insured vessels are destined, also the usages of trade and the political conditions, of foreign nations." AY here the usage is of such a character that the presumption exists that the insurer has knowledge thereof, the applicant is not bound to communicate such usage to him. 19 But usage in a particu- lar place or of a particular class of persons cannot be binding on other persons unless they are acquainted with that usage and adopt it.' 20 § 240. Usage must l>e General. — rn order that a usage should be admitted in evidence in the construction of the terms' of a policy, it must possess certain necessary properties or es- sentials, one of which is, that it should be general 21 — that is, general to the whole mercantile world, 22 or in regard to the 18 8 Pet, 582. 19 Cox v. Charleston etc. Ins. Co., 3 Rich. (S. C.) 331; 45 Am. Dec. 771; Planche v. Fletcher, 1 Doug. 251 ; Daniels v. Hudson River F. Ins. Co., 12 Cush. (Mass.) 416; 59 Am. Dec. 192; Kingston v. Knibbs, 1 Camp. 508, n., per Lord Ellenborough. 20 Bartlett v. Pentland, 10 Barn. & C. 760, 770, per Lord Tenterden ; Wells v. Bailey, 49 N. Y. 464; Rogers v. Mechanics' Ins. Co., 1 Story (C. C), 603; Adams v. Otterback, 15 How. (U. S.) 539; Eyre v. Marine Ins. Co., 5 Watts & S. (Pa.) 116; Herman v. West etc. Ins. Co., 7 La. (13 La., O. S., 516) 325; Scott v. Irving, 1 Barn. & Adol. 605; Howard v. Great Western Ins. Co., 109 Mass. 384; Taylor v. ^Etna L. Ins. Co., 13 Gray (79 Mass.), 434; Crosby v. Fitch. 12 Conn. 422; 31 Am. Dec. 745; Hartford Prot. Ins. Co. v. Harmer, 2 Ohio St. 452; 59 Am. Dec. 684; Gabay v. Lloyd, 3 Barn. & C. 793; Leach v. Perkins, 17 Me. 462; 35 Am. Dec. 268; Trott v. Wood, 1 Gall. (C. C.) 443; Stewart v. Aberdeen, 4 Mees. & W. 211; Lee v. Dorchester Mut. F. Ins. Co., 105 Mass. 298; Mason v. Franklin Ins. Co., 12 Gill & J. (Md.) 468. In general, if a custom is local, a person who resides in a foreign land, and has never been to the particular locality before, is not bound unless he has knowledge of the custom: Horan v. Strachan, 86 Ga. 408; 22 Am. St. Rep. 471. 21 Sturges v. Buckley, 32 Conn. 20; Leach v. Perkins, 17 Me. 462; 35 Am. Dec. 268; Crosby v. Fitch, 12 Conn. 410; 31 Am. Dec. 745, 750, per Church, J. ; Missouri etc. R. R. Co. v. Fagan, 72 Tex. 127; 13 Am. «t. Rep. 776; Gabay v. Lloyd, 3 Barn. & C. 793; Trott v. Wood, 1 Gall. (C. C.) 442, per Story, J., and see cases cited in last note. 22 1 Arnould on Marine Insurance, Perkins' ed. 1850, 71. See gener- ally, on this point, southwestern F. & C. P. Co. v. Stanard,44 Mo. 71; § 240 CONSTRUCTION — USAGE. 312 trade to which it has reference. Thus, a universal custom of a particular trade, which has been invariably or uniformly followed for many years, is admissible in evidence to deter- mine the actual con-tract. 23 A usage cannot be said to be gen- eral which has obtained only in a few instances, for such a usage cannot be regarded, 24 nor can a usage be general which is known only to a few, for such limited knowledge does not es- tablish a usage. 25 Mr. Duer 26 gives much consideration to the meaning of the word "general" in this connection, 27 and lim- its its application to those cases in which the knowledge of the parties and their intention to adopt the usage are inferred merely from the fact of its existence, but says that when their knowledge or intentions depend upon other direct or circum- stantial evidence, their contract may be governed by usage, local or partial, as in case of usage between the parties or a local usage of trade practiced by the insurers. 28 It is said by Story, J., in Rogers v. Mechanics' Insurance Company 29 that "the usage or custom of a particular port in a particular trade is not such a custom as the law contemplates to limit or control or qualify the language of contracts of insurance. It must be some known general usage or custom in the trade, appli- cable and applied to all the ports of the state where it exists, and from its character and extent so notorious that all such con- 100 Am. Dec. 255- Columbus etc. Ins. Co. v. Tucker, 48 Ohio St. 41 ; 29 Am. St. Rep. 534, per Spear, J. 23 See Leach v. Perkins, 17 Me. 462; 35 Am. Dec. 268; Eennerv. Bank of Columbia, 9 Wheat. (U. S.) 581; Coggeshall v. American Ins. Co., 3 Wend. (N. Y.) 283; Goodenow v. Tyler, 7 Mass. 336; 5 Am. Dec. 22. In general, knowledge of a usage need not be shown by direct evidence, but may be inferred from circumstances or implied from its notoriety: Barry v. Hannibal etc. Ry. Co., 98 Mo. 62; 14 Am. St. Rep. 610. 2 * Cutter v. Powell, 6 Term Rep. 324; Crosby v. Fitch, 12 Conn. 422; 31 Am. Dec. 745, 749. 25 Collings v. Hope, 3 Wash. (C. C.) 149, 150, per Washington, J. 18 1 Duer on Insurance, ed. 1845, 258, et seq. 27 "The word 'general,' " he says, "is used in various senses. It ia used in reference to places as well as persons. In the first sense it ia opposed to 'local,' in the second to 'partial.' In another sense it em- braces the whole of the subjects to which it relates, and is opposed to 'spe- cial' or 'particular,' " etc. : 1 Duer on Insurance, ed. 1845, 259, sec. 55.' 28 1 Duer on Insurance, ed. 1845, 263, sec. 55. " 1 Story (C. C), 607. 313 CONSTRUCTION — USAGE. §§ 241. 242 tracts of insurance in that trade must be presumed to be en- tered into by the parties in reference to it as a part of the pol- icy." But a local or particular custom may be general in the sense that an insurance company, by a long-continued and in- variable and known course of dealing, have established a bind- ing usage. 30 So a usage at Lloyds may be general ancl binding upon those in the habit of underwriting there. 31 § 241. Usage must be Well Established and Notorious. The usage should be well established; that is, so well settled that persons engaged in a trade must be considered as contract- ing in reference thereto, 32 and it must be so well known in general among those engaged in the business or trade to which it belongs as to be received as a matter of course. 33 If it be a particular usage, it must be "of universal notoriety in the trade in which, and of the place at which, the insurance is effect- ed." 34 § 242. Usage may be of Recent Origin. — Although it is said that usage must be ancient, 35 public, and continued, 36 30 See De Forest v. Fulton F. Ins. Co., 1 Hall (N. Y.), 84; Union Cent. L. Ins. Co. v. Pottker, 33 Ohio St. 459 ; 31 Am. Rep. 555 ; Helrae v. Phil- adelphia L. Ins. Co., 61 Pa. St. 107; 100 Am. Dec. 621; Baxter v. Mas- easoit Ins. Co., 13 Allen (Mass.), 320. 31 Gabay v. Lloyd, 3 Barn. & C. 793. 32 Trott v. Wood, 1 Gall. (CO 444, per Story, J.; Cobb v. Lime Rock etc. Ins. Co., 58 Me. 328, per Appleton, C. J. ; Columbus etc. Ins. Co. v. Tucker, 48 Ohio St. 41 ; 29 Am. St. Rep. 534, per Spear, J. ; Missouri etc. R. R. Co. v. Fagan, 72 Tex. 127; 18 Am. St. Rep. 776; Southwestern F. & C. P. Co. v. Stanard, 44 Mo. 71 ; 100 Am. Dec. 255. 33 Macy v. Whaling Ins. Co., 9 Met. (Mass.) 363, per Shaw, C. J.; Winson v. Dellawney, 4 Met. (Mass.) 221, 223, per Shaw, C. J. ; Rogers V. Mechanics' Ins. Co., 1 Story (C. C), 603, 607, 608, per Story, J. ; McGregor v. Insurance Co., 1 Wash. (C. C.) 39, per Washington, J.; Donnell v. Columbian Ins. Co., 2 Sum. (C. C.) 377, 378, per Story, J.; Steele v. McTyer's Admr., 31 Ala. 667; 70 Am. Dec. 516, and note 523; Palmer v. Blackburne, 1 Bing. 61, per Dallas, J., and Burrough, J.; Collings v. Hope, 3 Wash. (C. C.) 149, 150 : per Washington, J. ; Salva- dor v. Hopkins, 3 Burr. 1707; Power v. Whhmore, 4 Mees. & S. 150; 1 Duer on Insurance, ed. 1845, 265. 31 1 Arnould on Marine Insurance, Perkins' ed. 1850, 71. And sea cases in two preceding notes. 35 Collings v. Hope, 3 Wash. (C. C.) 149. See Commonwealth v. Mayloy, 57 Pa. St. 291. 36 See Crosby v. Fitch, 12 Conn. 422; 31 Am. Dec. 745; Sipperly v. Steward, 50 Barb. (N. Y.) 62. § 243 CONSTRUCTION — USAGE. 314 and although it is held that a usage of short continuance is not entitled to any weight, 37 vet it is well settled that a usage may be of recent origin. 38 So in Noble v. Kenneway 39 a usage existing for three years was held sufficient, and Lord Mans- field declares in that case that "every underwriter is presumed to be acquainted with the practice of the trade he insure-, whether recently established or not. If he does not know it, he ought to inform himself. It is no matter if the usage has been only for a year." So Mr. Arnould 40 says that where the trade is recent, it is only necessary that a usage be coextensive therewith, and be general and well known. In a Maine case the court 41 declares that a usage must be "certain, general, fre- quent, and so ancient as to be generally known and acted upon," while in a New York case 42 it is said that "the true test of a commercial usage is its having existed a sufficient length of time to have become generally known, or to warrant a pre- sumption that contracts are made in reference to it." 43 § 243. Usage must be Reasonable. — A usage must be valid, reasonable, and not one which would by construction result in an absurdity, for it must be assumed that an unreason- able usage or one leading to an absurdity was not contem- plated by the parties in effecting the contract. 44 It is held 37 Wall v. East River Ins. Co., 3 Duer (N. Y.), 264. 38 Macy v. Whaling Ins. Co., 9 Met. (Mass.) 363, 364, per Hubbard, J., citing 2 Starkie on Evidence, 453. See Townsend v. Whitby, 5 Harr. (Del.) 55. 39 Doug., 3d ed., pt. 2, 513. Cited also in Renner v. Bank of Colum- bia, 9 Wheat. (U. S.) 589. 40 1 Arnould on Insurance, Perkins' ed. 1850, 69, 70. 41 Leach v. Perkins, 17 Me. 462; 35 Am. Dec. 268, per Shipley, J. 42 Smith v. Wright, 1 Caines (N. Y.), 43. Usage in this case carried back by some witnesses as far as thirty years, and it was objected that period was too short. 43 See Renner v. Bank of Columbia, 9 Wheat. (U. S.) 581, per Thomp- son, J. " No particular period is requisite to the establishment of a usage": 1 Phillips on Insurance, 2d ed., sec. 138. "It is quite certain that where a usage is recent or local, it may have sufficient force to af- fect the construction of the policy if brought home to the knowledge and recognition of the parties": 1 Parsons on Insurance, ed. 1868, 93. 44 Seccomb v. Provincial Ins. Co., 10 Allen (Mass.), 314, per Bigelow, C. J. ; Macy v. Whaling Ins. Co., 9 Met. ( Mass. ) 363, per Shaw, J. ; Leach v. Perkins, 17 Me. 462; 35 Am. Dec. 268; Ougier v. Jenning, 1 Camp. 505, note, Lord Eldou 'a charge to jury; Collings v. Hope, 3 Wash. (CO 315 CONSTRUCTION — USAGE. i; 243 that a general and notorious custom of steamboat captains at large river ports to insure tlieir boats and execute premium notes therefor is reasonable and valid as against the owners. 43 But a custom of a particular port to strike off one-third the gross freight for charges and to pay two-thirds only to the as- sured in a freight policy is unreasonable, 46 and a usage which would continue a time policy in force at the election of the in- sured for an unlimited time is unreasonable. 47 So a usage for a master to sell without necessity is invalid. 48 So a usage per- mitting an intermediate voyage may be unreasonable, as in a case where the policy gave "liberty of other port or ports,'' but was indorsed, "liberty is given to deviate by going to port or ports in Europe, by paying an equitable premium therefor." 49 A local custom that insurance agents may, after the termina- tion of their agency, cancel any policies issued through them, is unreasonable and void. 00 It is said that a usage, to be en- forced by law, "must be reasonable in its provisions, for though usages apparentlv unreasonable may have been so lone: con- tinued as to have acquired the force of law, yet the unreason- ableness now apparent may have grown out of changes occur- ring after the usage was established." ol 149, 150, per Washington, J. ; Bryant v. Commonwealth Ins. Co., 6 Pick. (Mass.) 131. "Usage, to be valid, must be reasonable. It must not tend to increase extravagantly or indefinitely the risks that the underwriter meant to assure, or to deprive the assured of the whole or a large portion of the indemnity on which he certainly relied. It must not lead toconse- quences that, could not have been contemplated by the parties, thus repelling the presumption that they meant to adopt it as the basis of their contract": 1 Duer on Insurance, ed. 1845, 268, sec. 63, lect. ii, p. 2. See Jordan v. Meredith, 3 Yeates ' Pa.) , 318 ; 2 Am. Dec. 373, and note ; Missouri etc. R. R. Co. v. Pagan, 72 Tex. 127: 13 Am. St. Rep. 776; Eager v. Atlas Ins. Co., 14 Pick. (Mass.) 141; 25 Am. Dec. 363; Colum- bus etc. Ins. Co. v. Tucker, 48 Ohio St. 41; 29 Am. St. Rep. 534, per Spear, J. ; Farnsworth v. Hemmer, 1 Allen (Mass.), 494; 79 Am. Dec. 756, and note, 759; Kendall v. Russell, 5 Dana (Ky.), 501; 30 Am. Dec. 696, 698. 45 Adams v. Pittsburgh Ins. Co., 95 Pa. St. 348; 40 Am. Rep. 662. 46 McGregor v. Pennsylvania Ins. Co., 1 Wash. (C. C.) 89. 47 Eyre v. Marine Ins. Co., 5 Serg. & W. (Pa.) 116; 6 Whart. (Pa.) 247. 48 Bryant v. Commonwealth Ins. Co.. 6 Pick. (Mass.) 131. 49 Secomb v. Provincial Ins. Co., 10 Allen (Mass.), 305. 60 Merchants' Ins. Co. v. Prince, 50 Minn. 53; 52 N. W. Rep. 131. 51 Macy v. Whaling Ins. Co., 9 Met. (Mass.) 363, per Shaw, C. J. It § 244 CONSTRUCTION USAGE. 316 § 24-i. Usage must be Uniform. — The course of trade or custom which constitutes a usage must be uniform in its practice during its continuance, whether the usage be recent in its origin or long established; that is, its practice must be regu- lar, uninterrupted, and constant in its observance and settled, not indeterminate nor variable in its character; 52 for occasional instances, or its practice among a few only, will not establish a usage, 53 and as was said by Shaw, C. J., in Macy v. Whaling Insurance Company, 04 it must also be "convenient and adapted not only to increase facilities in trade, but to the promoting of just dealings in the intercourse between the parties." It is said that "the course of trade must be uniform and general to enable it to be considered as a legal defense," 5o but Lord Ellen- borough declares, in Vallance v. Dewar, 06 that "if a usage be general, though, not uniform, the underwriters are bound to take notice of it." Mr. Duer ° 7 explains the word "uniform," as used by Lord Ellenborough, to mean "universal," and says: "It is not necessary that the usage, when it is a usage of trade, or, in the technical application of words, to be uniform, should be universal : that is, should be followed at all times by all per- sons or vessels concerned or employed in the trade to which it relates, for this would be inconsistent with the meaning which in these cases is attributed to the word 'general.' " A usage which is uniform is not, however, necessarily a valid one, al- though of long continuance, as where it is a particular usage is declared that by "unreasonable" is meant not that the usage itself is not reasonable, but that the unreasonableness consists in supposing that the parties included a certain usage in their contract: 1 Parsons on In- surance, ed. 1868, 102, 103. But see Ougier v. Jennings, 1 Camp. 505, where Lord Eldon instructed the jury, " If you think the usage does exist, if you think it reasonable" that sending a ship on an intermedi- ate voyage might be reasonable. 52 See Trott v. Wood, 1 Gall. (C. C.) 442, per Story, J.; Missouri etc. R. R. Co. v. Fagan, 72 Tex. 127 ; 13 Am. St. Rep. 776 ; Collings v. Hope, 3 Wash. (C. C.) 149; Southwestern etc. Co. v. Stanard, 44 Mo. 71; 100 Am. Dec. 255; Steele v. McTyer's Admr.,31 Ala. 677; 70 Am. Dec. 516, and note, 523. M See sees. 239, 240, herein. M 9 Met. (Mass.) 363. 65 Trott v. Wood, 1 Gall. (C. C.) 443, per Story, J. 66 1 Camp. r>08. 67 1 Duer on Insurance, ed. 1845, 264, sec. 58, note b. 317 CONSTRUCTION USAGE. §§ 245, 246 and not known to the assured, and where the result of its ap- plication would be unreasonable. 08 § 245. Parties may by Express Contract Include or Waive Usage. — It is undoubtedly true that parties may by express reference in the policy to certain valid usages adopt such usages as the standard by which their rights un- der the contract may be determined, and the contract will be construed thereby. 59 It is likewise true, as we have before stated, 60 that the parties may always expressly contract so as to waive usage. 61 § 246. Usage Admissible Wbere Contract Ambiguous or Obscure. — Where the terms of the contract are ambiguous or obscure or indefinite, or where the words have by the usages of trade acquired a particular meaning, or are tech- nical or local, usage is admissible to explain them. 62 The "true and appropriate office of a usage or custom," says Story, J., 63 "is to interpret the otherwise indeterminate intentions of the parties, and to ascertain the nature and extent of their con- tracts," and "courts have long allowed mercantile instruments to be expounded according to the custom of merchants." 64 So the "contract of insurance is presumed to have been made with reference to the usages of the place to which the contract 68 McGregor v. Insurance Co., 1 Wash. (C. C.) 39, per Washington, J. 69 Union Bank v. Union Ins. Co., Dud. (S. C.) 171. 60 See sec. 196, herein. 61 The Schooner Reeside, 2 Sum. (C. C.) 570, per Story, J. 62 See Allegre v. Maryland Ins. Co., 6 Har. & J. (Md.) 408; 14 Am. Dec. 289; Coit v. Commercial Ins. Co., 7 Johns. (N. Y.) 385; 5 Am. Dec. 282; Winthrop v. Union Ins. Co., 2 Wash. (C. C.) 7; Hancox v. Fish- ing Ins. Co., 3 Sum. 132; Eyre v. Marine Ins. Co., 5 Watts & S. (Pa.) 116; Wigglesworth v. Dallison, 1 Doug. 207; Citizens' Ins. Co. v. Mc- Laughlin, 53 Pa. St. 485; Harris v. Nicholas, 5 Munf. (Va.) 483; Tesson v. Atlantic Mut. Ins. Co., 40 Mo. 33; 93 Am. Dec. 293; Rankin v. American Ins. Co., 1 Hall (N. Y.), 619; Mooney v. Howard Ins. Co., 138 Mass. 375; 52 Am. Rep. 277; United States v. Macdaniel, 7 Pet. CU. S.) 1, 13, 14; Murray v. Hatch, 6 Mass. 477; New York etc. Co. v. Washington Ins. Co., 10 Bosw. (N. Y.) 428; 1 Arnould on Marine In. surance, Perkins' ed. 1850, 64. 63 Schooner Reeside, 2 Sum. (C. C.) 569. •* Smith v. Wilson, 3 Barn. & Adol. 728, per Parke, J. 8 247 CONSTRUCTION USAGE. 318 has reference," 65 and usage may be proved by parol, although it has its origin in law or edict of the government. 60 Evi- dence of local custom is admissible to supply details in oral or written contracts in regard to which the contract itself is silent, or to explain provincialisms or technical terms which have acquired a known, fixed, and definite meaning different from the ordinary import of such terms, or where such terms, if not explained, are susceptible of more than one reasonable construction. 67 And, in general, evidence of usage is admissi- ble to apply the written contract to the subject matter of the action, to explain expressions used in a particular sense by par- ticular persons as to particular subjects, and to give effect to language in a contract as it was understood by those who made it. 68 § 247. Usage Inadmissible to Contradict or Substanti- ally Vary the Plain Terms of the Policy. — It reasonably follows from the rule that parties may make such valid con- tracts as they wish, that usage is inadmissible to contradict, nullify, or substantially vary the positive terms in which they have expressly stipulated, where the words are clear and are of a plain and decisive character. To admit such evidence for such purpose would establish the principle that courts can, by construction, incorporate into the policy that which was never contemplated by the parties, and would allow mere presump- tions and implications to overthrow the most formal and delib- erate declarations of the parties. 69 It was early stated by Emerigon, 70 who refers to Vattel, 71 "that the first general rule of construction is that it is not permitted to interpret what has no need of interpretation." 72 And "if the parties have ex- 65 Cobb v. New England Mut. Ins. Co., 6 Gray (72 Mass.), 192, 200. 66 Livingston v. Maryland Ins. Co., 7 Cranch (U. S.1, 506. Time policies are said by Mr. Duer (1 Duer on Insurance, ed. 1845, 203) to embrace all usages or none. 67 Barlow v. Lambert, 28 Ala. 704; 65 Am. Dec. 374, and note, 379. 68 Smith v. Clews, 114 N. Y. 190; 11 Am. St. Rep. 627. 69 Schooner Reeside, 2 Sum. (C. C. ) 369, per Story, J. See New York Ins. Co. v. Thomas, 3 Johns. Cas. (N. Y.) 1, per Kent, J. 70 Emerigon on Insurance, Meredith's ed., c. ii, sec. 7, p. 49. 71 Droit des Gens, liv. 3, c. 17. 78 "When an instrument is conceived in clear and precise terms, 319 CONSTRUCTION — USAGE. § 247 plained themselves on the point in a precise, special, and clear manner, all interpretation becomes superfluous, cum in verbis nulla est ambiguitas non debet admitti voluntatis in quaestio; and the stipulated agreement must be adhered to." 73 The words ''precise," "clear," and "special," used by Emerigon, add much to the force of the rule, make it easier of applica- tion, and operate more strictly to the exclusion of usage. 74 So Harlan, J., in Grace v. American Central Insurance Com- pany 75 declares that "an express written contract embodying in clear and positive terms the intention of the parties cannot be varied by evidence of usage or custom," and there are nu- merous authorities of like tenor. 76 when its sense is manifest and leads to nothing absurd, there is no ex- cuse for refusing the meaning it naturally presents. To seek elsewhere conjectures to restrain or enlarge it is to wish to evade it": Emerigon on Insurance, Meredith's ed., c. ii, sec. 7, p. 49. And he adds that when in doubt as to the interpretation, "it must be understood with reference to principles of law and to the practice of commerce." 73 Emerigon on Insurance, Meredith's ed. 1850, c. xiii, sec. 7, p. 555. "If the covenants are clear in themselves, and contain nothing pro- hibited by law, the judge is not allowed to stray out of them"; that it is only where the contract is ambiguous "that the magistrate is author- ized to form his decision by the light which legal equity, the common law, the nature of the contract, and the circumstances of the case may afford him": Emerigon on Insurance, Meredith's ed. 1850, c.i, sec. 5, p. 17. It will be observed that Emerigon uses the words "clear" and "precise." The words "plain and decisive character" are also used by Hubbard, J., in Macy v. Whaling Ins. Co., 9 Met. (50 Mass.) 363. So, also, in 1 A mould on Marine Insurance, Perkins' ed. 1850, 64 a, note, who says: "Where, however, the terms employed are clear and precise in themselves," etc., no evidence of usage is admissible. See, also, 1 Parsons on Insurance, ed. 1868, 84, note. 74 See remarks in 1 Parsons on Insurance, ed. 1868, 83, 84, note 1. • See, also, 1 Arnould on Insurance, Perkins' ed. 1850, 75, rule iii, sec. 44. 76 109 U. S. 283. 76 Hone v. Mutual S. Ins. Co., 1 Sand. (N. Y.) 137; 2 N. Y. (2 Comst.) 235; Hall v. Jansen, 4 El. & B.508, per Campbell, C. J. ; Lat- tomus v. Farmers' Mut. F. Ins. Co., 3 Houst. (Del.) 254; Winthrop v. Union Mut. Ins. Co., 2 Wash. (C. C.) 7; Smith v. Mobile Nav. Ins. Co., 30 Ala. 167; Crofts v. Marshall, 7 Car. & P. 597, 607, per Lord Denman; Illinois etc. Soc. v. Baldwin, 86 111. 479; Duncan v. Green, 43 Iowa, 679; McGregor v. Pennsylvania Ins. Co., 1 Wash. (C. C.) 42, St. Nicholas Ins. Co. v. Mercantile Mut. Ins. Co., 5 Bosw. (N. Y.) 238; Bargett v. Orient Ins. Co., 3 Bosw. (IS. Y.) 385; 1 Arnould on In- surance, Perkins' ed. 1850, 78, rule iv ; 1 Parsons on Insurance, ed. 1868, § 248 CONSTRUCTION — USAGE, 320 § 248. Same Subject — Cases and Authorities. — Evidence of usage for vessels to go to two ports in the same island is inadmissible where the contract is written and plain, and the , usage is inconsistent with and repugnant to the contract. 77 So usage is held inadmissible to qualify an express stipulation as to keeping a watch nights by showing that certain rights were ex- cepted by custom, 78 nor can the practice of an insurance com- pany to surrender the notes of its members and cancel their pol- icies on the happening and payment of losses be shown to con- tradict or vary the terms of the policy or note. 79 And usage will not permit a deviation contrary to the terms of a policy expressly giving liberty to touch at a particular port, 80 nor can evidence be received against the plain language of the policy of a custom that a marine policy on goods shipped from New Orleans to Mobile covers the overland transportation of the goods by railroad. 81 And where the policy provides in ex- press terms that the company shall pay the amount of loss with- out any deduction, a custom or usage of the compauv which would vary or limit such express agreement is inadmissible. 82 So a local custom among insurers to pay only a certain pro- portion of the loss is inadmissible to vary or control the plain terms of the contract or to reduce the amount of recovery. 83 It is also held that where the contract is susceptible of a reason- able construction on its face, custom or usage is inadmis- 85, et aeq. Mr. Duer (1 Duer on Insurance, ed. 1845, 269) says, that usage must be consistent with the terms of the policy, and is never ad- missible to contradict its terms or to nullify or expunge them. "Usage may be admissible to explain what is doubtful. It is never admissible to contradict what is plain": Blackett v. Royal Exch. Assur. Co., 2 Cromp. & J. 244. "Where the terms of a contract are plain, usage can have little effect upon the construction to be placed upon it": Boldero v. East India Co., 26 Beav. 316. 77 Hearne v. Marine Ins. Co., 20 Wall. (U. S.) 488. 78 Ripley v. .Etna F. Ins. Co., 30 N. Y. 136; 86 Am. Dec. 362, and note 371. 79 New Hampshire etc. Ins. Co. v. Rand, 4 Fost. (24 N. H.) 428. See Mutual Assur. Soc. v. Scottish U. & N. Ins. Co., 84 Va. 116; 17 Ins. L. J. 570. 80 Elliott v. Wilson, 4 Brown Pari. C. 470. 81 Smith v. Mobile Nav. etc. Co., 30 Ala. 167. 82 Swanscot M. Co. v. Partridge, 5 Fost. (25 N. H.) 369. 85 Mutual S. Ins. Co. v. Hone, 2 N. Y. (2 Comst.) 235. 321 CONSTRUCTION — USAGE. § 249 sible to vary its language, although the instrument be an open, or running policy and the contested clauses are scattered over the document. 84 Where the policy was drawn in accordance with the terms, and the proposal provided for insurance "on the charter of the barque 'Maria Henry/ Liverpool to port in Cuba, and thence to port of advice and discharge in Europe," evidence was held inadmissible to show a usage for vessels so chartered to go to two ports in Cuba. 85 § 249. Whether Usage Controls the Plain and Legal Import of Words of the Policy. — It is said that usage must be consistent with the rules of law, but exactly what is meant by "consistent" is much controverted. 86 If usage is admissible to control the plain and legal import of the words of the policy, the rule given in the last section would be too limited in its application. 87 It is held that usage can only be resorted to where the law is unsettled. Chancellor Walworth 88 declares that "if the terms employed have re- ceived a settled legal construction, that must govern, and no evidence of a particular custom or usage in opposition to such legal construction can be received." 89 So Sandford, J., de- clares: 90 "We find it clearly settled that a general usage, the effect of which is to control rules^of law, is inadmissible, so 84 Insurance Co. v. Wright, 1 Wall. (U. S.) 456. 85 Hearn v. New England Mut. M. Ins. Co., 4 Cliff. (C. C.) 200. 86 Usage must be consistent with the rules of law. This rule, how- ever, is to be explained and limited, since a usage inconsistent with an established rule of commercial law may be allowed to prevail, and a definite rule of law is frequently set aside, although plainly applicable, and every rule of law which the parties may by stipulation vary or pre- vent is subject to a valid usage: 1 Duer on Insurance, ed. 1845, 271, et seq. This means only that the usage must be consistent with the rules of law, in the same sense that the policy itself is a prohibited usage cannot be made valid, no matter how long practiced. 87 Winthrop v. Union Ins. Co., 2 Wash. (C. C.) 7. 88 Dow v. Whitten, 8 Wend. (K. Y.) 168. 89 In 1 Duer on Insurance, ed. 1845, 229, it is said that this rule is true only in a very limited sense. In 1 Parsons on Insurance, ed. 1868, 98, it is said: "We apprehend that in this remark a distinction is lost sight of between law properly so called and the mere result, of decisions, as to the meanings of words. Usages continually vary, and do certainly change from time to time." 90 Hone v. Mutual S. Ins. Co., 1 Sand. (N. Y.) 149. Joyce, Vol. 1—21 § 249 CONSTRUCTION — USAGE. 322 of one which contradicts a settled rule of commercial law." 91 Mr. Arnould 92 says, parol evidence "will never be admitted to set aside or control its (the policy's) plain and unambiguous terms." 93 But the same author, however, 94 also declares that usage is admissible to explain the meaning or words which are ambiguous in themselves, or made so by proof of extrinsic circumstances. Mr. Marshall says 9o that "usage is only to be consulted where the law is doubtful. Where the law is clear it must prevail." 96 He also asserts ° 7 that "the usage of trade often controls the general construction of the policy." In Homer v. Dorr, 98 it is declared that the "usage of no class of citizens can be sustained in opposition to principles of law." So it is said in Bargett v. Orient Insurance Company 99 that "no ■usage can exist or be proved by which the liabilities of parties to a written contract will be greater or less than the written law of the state has adjudged it to be." Mr. Parsons 100 says: "No usage can be relied upon which opposes either a rule or principle of law If terms have received by definite adjudication a fixed and definite meaning, no usage will be per- mitted to show that the parties had another meaning," but he also asserts, in an earlier part of his work, 101 that it must not be understood "that where words are unambiguous, and have as commonly used a plain and certain meaning, usage is never permitted to control or vary its meaning," and that it is cer- tain "that the natural and ordinary meaning of the words, as 91 See this case as to the general rule of construction, also as to usage and how far usage is admissible ; and same case, 2 N. Y. (2 Comst.) 235. 92 1 Arnould on Insurance, Perkins' ed. 1850, 78, sec. 45, rule iv. 93 This rule is criticised as too broad : 1 Parsons on Insurance, ed. 1868, 83, note. 94 1 Arnould on Insurance, Perkins' ed. 1850, 75, sec. 44, rule iii. 95 1 Marshall on Insurance, ed. 1810, 707 a. 96 Criticised in 1 Duer on Insurance, ed. 1845, 235. 97 2 Marshall on Insurance, ed. 1810, 727. 98 10 Mass. 26, 28. This decision is said to be erroneous, and ir- reconcilable with Long v. Allen, 4 Doug. 276, in 1 Duer on Insurance, ed. 1845, 246, 247. It is also said of Homer v. Dorr, "that this decision has never been acted upon," in note attached to the case. See, also, 1 Parsons on Insurance, ed. 1868, 96, note 3. 99 3Bosw. (N. Y.) 397. 100 1 Parsons on Insurance, ed. 1868, 97, 98. 101 1 Parsons on Insurance, ed. 1868, 83. 323 CONSTRUCTION — USAGE. § 249 that may be detennined by common use, may be controlled by evidence of usage." Mr. Wood 102 states the rule as follows: "If the words written in the policy have received a judicial con- struction, and also a peculiar commercial construction by usage variant with such judicial construction, the judicial construc- tion is to control, but if no judicial construction has been given to them, and by usage they have acquired any meaning variant from that in which they are ordinarily used, such meaning by usage may be shown, unless from the whole instrument it was evident they were used in their ordinary sense." Emerigon 103 says: "In most cases it is very probable that words have been used in their ordinary sense ; that always implies a very strong presumption which cannot be overcome but by a contrary pre- sumption still stronger"; and he adds 104 that inasmuch as insur- ance is a contract bonae fides, "the subtleties of law are to be made to yield to that of equity, which is the soul of commerce. .... The clauses of the contract are to be interpreted accord- ing to the style, the customs, and usages of the place where the insurance has been made, though the inclination of the com- mon law might appear different." It is also declared in Long v. Allen 105 that evidence of usage might be received to explain or control the policy. Mr. Phillips 106 says this "is true if 'to control' means to interpret the policy, and give a meaning to it different from that imputed by the language in its ordinary ac- ceptation, but that the use of the word in this connection is likely to convey an erroneous meaning," and that "evidence of usage cannot be admitted to control what is written in contrast with explaining it." The words of Buller, J., are, we appre- hend, made clearer if considered in connection with those used by him in Brough v. "Whitmore, 107 where he declares that he "would not, on account of any usa^e to the contrary among underwriters, overturn a solemn determination of this court." Although in Long v. Allen 108 Lord Mansfield said: "The law 102 1 Wood on Fire Insurance, 2d ed., 143. 103 Emerigon on Insurance, Meredith's ed. 1850, c. ii, sec. 7, p. 50. m Id., c. i, sec. 5, p. 17. 105 4 Doug. 276, per Buller, J., and note. 106 1 Phillips on Insurance, 3d ed., 86. 107 4Teim Rep. 210. 108 4 Doug. 276. § 249 CONSTRUCTION — USAGE. 324 is clear that where the risk has never commenced the premium shall be returned," but it was held, nevertheless, that a usage that in certain cases the premium should be returned, deduct- ing a per centum, would control. Mr. Duer 109 says the dis- tinction made by Buller, J., is perfectly accurate, since where the words are ambiguous, usage "explains" them, "but where they convey a definite meaning that the court would be bound to adopt, or their construction has been settled by law, the usage controls them, and in these cases it does set aside what .... was the plain intention of the parties, but in control- ling, the usage does not contradict the words — it merely varies by restraining or enlarging their application." He also lays down the proposition that while usage may modify or control the policy, yet it must be consistent with its terms, and is inad- missible to contradict its express words; no and finally he de- clares that "in the only cases in which the evidence has been admitted to supersede a rule of law the usage was solely derived from a use and practice between the assurers and the assured, and they contain no intimation that when the usage is of a dif- ferent character the evidence could be justly received." U1 109 1 Duer on Insurance, ed. 1845, 245. 110 1 Duer on Insurance, ed. 1845, 186, 269, 270. 111 1 Duer on Insurance, ed. 1845, 275, citing Edie v. East India Co.. 2 Burr. 12,16; Frith v. Barker, 2 Johns. (N. Y.)328; Halsey v. Brown, 3 Day (Conn.), 46: Rennerv. Bank of Columbia, 9 Wheat. (U. S.) 592; Lennox & Kennebeck Bmk v. Page, 9 Mass. 158; Stewart v. Aber- deen, 4 Mees. & W. 228. "It has been seriously doubted by eminent judges whether a usage not adopted nor referred to in the policy ought ever to be permitted to control its operation Yet the propriety of receiving the evidence, when subject to its just limitations, is readily conceded": Duer on Insurance, ed. 1845, 178, sec. 29, citing Lord Holt in Lelhiellier's case, 2 Salk. 443; Lord Eldon, in Anderson v. Pitcher, 2 Bos. & P. 168; Story, J., in Schooner Reeside, 2 Sum. (C. C.) 567, and in Palmer v. Warren Ins. Co., 1 Story (C. C), 360. "A usage in the in- terpretation of the policy is the substitute for a judicial decision, and that which supersedes a rule of law has itself the force of law in the cases to which it applies": 1 Duer on Insurance, ed. 1845, 261. "Upon an examination of the decisions, it will appear that in a large majority of the cases the effect of the usage as proved was to set aside a construc- tion, or supersede a rule that the court must otherwise of necessity have followed ; . . . . the usage, therefore, overrules and sets aside a plain and settled construction": Id. 256. "A usage sufficiently and clearly proved has a controlling effect to vary the plain import or set- 325 CONSTRUCTION — USAGE. § 250 § 250. Same Subject — Opinions and Cases. — It is held that general usage operating as a general rule of law may be pleaded against a contract plain and unambiguous in its terms. 112 So it is said: "Evidence is admissible to show that the contract, notwithstanding the common meaning of the lan- guage used, was in fact made in reference to the usage in the trade to which the contract relates." 113 Language substanti- ally to the same effect is used in another case, where it is said that usage may be "admitted to vary and control the language used in the policy, and to give a construction different from that which it otherwise would have received or did receive." 114 A general and established rule of law may be set aside even by a particular and local usage, as in case of a usage at Lloyds, proven to have been known to underwriters. This is so de- cided in Stewart v. Aberdeen. 115 So a rule of law may be con- trolled by a particular usage between the parties known to them and the basis of contracting. 116 So a usage at Lloyds as to ad- tled construction of the words of the policy, or to prevent the applica- tion of an established rule of law by which the rights of the parties under their contract would otherwise be determined": 1 Duer on In- surance, ed. 1845, 257, citing Preston v. Greenwood Ins. Co., 4 Doug. 28, per Lord Mansfield. "Usage is always considered in policies of in- surance, even when no difficulty arises on the words themselves." The test is. "whether the rule of law that the usage supersedes is one that, in its application to their own contract, the parties themselves were competent to change. If this position be correct, the propriety of the decision of the supreme court of New York, in Frith v. Barker, 2 Johns. (N. Y.) 328, seems very questionable": 1 Duer on Insurance, ed. 1845, 303. It was held in the decision referred to that usage is inadmissible to change a settled rule of commercial law. "Now, the rule in question is certainly one that the parties may change by an express stipulation": 1 Duer on Insurance, ed. 1845, 303. 112 Lattonous v. Farmers' Mut. F. Ins. Co., 3 Houst. (Del.) 254. In this case the text was the argument of counsel for plaintiff on demurrer, which demurrer wa< sustained, but no opinion given. 113 Macy v. Whaling Ins. Co., 9 Met. (50 Mass.) 363, per Hubbard, J. 111 Eyre v. Marine Ins. Co., 5 Watts & S. (Pa.) 116, 122, per Ser- geant, J. See s. c, 6 Whart. (Pa.) 249. Mr. Duer (1 Duer on Insur- ance, ed. 1845, 296) says this "language involves the not infrequent error of confounding a usage of trade and a usage in the interpretation of the policy." 115 4 Mees. & W. 211. 116 Renner v. Bank of Columbia, 9 Wheat. (U. S.) 582, per Thomp- son, J., an exhaustive opinion. § 250 CONSTRUCTION — USAGE. 326 justment has been admitted, although contrary to the principle of indemnity, which governs marine insurance. 117 So a cus- tom of adjusting partial losses may be shown, and must govern the general law regulating the assessment of damages under such policies. 118 "It is a principle that the general common law may be, and in many instances is, controlled by special custom, so the general commercial law may by the same reason be controlled by a special local usage so far as that usage extends." 119 So it is said in an Ohio case 12 ° that "if it be assumed that the custom is a general one, then it is part of the common law itself, and there would be presented an instance of two rules of law equally binding, and yet wholly inconsistent the one with the other," although the point de- cided in this last case was that a usage which is not according to law, though universal, cannot be set up to control the law. Mr. Lawson says: "It was no objection to a common-law cus- tom that it was contrary to the common law of the land In general, too, evidence of a usage of trade is not inadmissible, because it is contrary to the principles of law governing such cases, for it is obvious that if proof of a usage could be rejected because it established something different from the law, no custom would ever be proved, because if it were not different it would be a part of the law," 121 and he adds: 122 "This being so plain, it is somewhat startling to find a large number of cases in the reports in which the principle is broadly laid down that a usage or custom in opposition to an established rule of law 117 Palmer v. Blackburn, 1 Bing. 61. 118 Fulton Ins. Co. v. Milner, 23 Ala. 420. 119 Halsey v. Brown, 3 Day (Conn.), 346. See, also, cases considered at length by Mr. Duer in support of his proposition cited under sections 249 and 250 herein, and also cited under "Proofs and Illustrations," 291, et seq. See, also, Id. 294, where McGregor v. Insurance Co., 1 Wash. (C. C.) 391, and Trott v. Wood, 1 Gall. 443, are cited as supporting his proposition. See cases cited in 1 Parsons on Insurance, ed. 1868, 83, 84, and notes. 120 Columbus etc. Ins. Co. v. Tucker, 48 Ohio St. 41 ; 29 Am. St. Rep. 528, 534, per Spear, J. 1,1 Lawson on Usages and Customs, ed. 1881, 465, sec. 225. 182 Id., sec. 226. 327 CONSTRUCTION — USAGE. § 250 is void and of no effect," and, noting the cases, he asserts that the meaning of the various expressions used is this: "That a custom or usage which changes what would otherwise be the situation of the parties, or alters to any extent their rights ac- cording to the rules of law applicable to such cases, is invalid and ineffectual," and in a subsequent section he notes a large number of cases in insurances where usages in conflict with es- tablished rules of law have been controlled by evidence of dif- ferent customs. 123 As opposed to the above cases and opinions there are numerous decisions which sustain the general propo- sition that usage is inadmissible to control a rule of law, or the plain and legal import of the words used in a policy of insur- ance. 124 So where the term of a lease is fixed by statute, evi- dence of usage to control its operation has been held inadmis- 123 Id., sec. 233; and see Id., sec. 234. 124 Winthrop v. Union Ins. Co., 2 Wash. (C. C.) 7; Rankin v. Amer- ican Ins. Co.,* 1 Hall (N. Y.), 619, 682. Mr. Duer (1 Duer on Insur- ance, ed. 1845, 231) says of this cases "It was certainly no objection that the usage would have varied the construction of the policy," and that it would not have rendered a single word of it inoperative, but have only qualified its terms conditional upon usage: Lattonous v. Farmers' Mut. F. Ins. Co., 3 Houst. (Del.) 254; Warren v. Franklin Ins. Co., 104 Mass. 521 (held custom of particular port could not vary rule o law as to damages). Usage "cannot be allowed to control the settled and acknowledged law of the state": Higgins v. Moore, 34 N. Y. 425 (usage in this case not a general usage) ; Mobile etc. Ins. Co. v. McMil- lan, 27 Ala. 77; St. Nicholas Ins. Co. v. Mercantile Ins. Co., 5 Bosw. (X. Y. ) 238, 246. Evidence of local custom is inadmissible to contra- vene any express contract or provision of law: Barlow v. Lambert, 28 Ala. 704 ; 75 Am. Dec. 374. "We think it clearly settled by the decided weight of authority that a general usage, the effect of which is to con- trol a rule of law, is inadmissible": Boon & Co. v. Steamboat Belfast, 40 Ala. 184; 88 Am. Dec. 761 (in this case proof was held inadmissible of a custom by which all carriers navigating the river were relieved from liability for losses occasioned by armed bodies of men without fault or negligence of the carrier). See, also, Boardman v. Spooner, 13 Allen (Mass.), 353; 90 Am. Dec. 196; Dickinson v. Gay, 7 Allen (Mass.), 29; 83 Am. Dec. 656; Cranwell v. Ship Fosdick, 15 La. Ann. 436; 77 Am. Dec. 190; Cox v. Riley, 4 'Ind. 368; 58 Am. Dec. 633, and note 638; Southwestern F. & P. Co. v. Stanard, 44 Mo. 71; 100 Am. Dec. 255. Hopper v. Sage, 112 N. Y. 530; 8 Am. St. Rep. 771. A person cannot establish a usage or custom which in his own interest contravenes an established rule of commercial law: Jackson v. Bank, 92 Tenn. 154; 36 Am. St. Rep. 81. That local usage to overthrow an established rule of law is inadmissible, see Merchants' Ins. Co. v. Prince, 50 Minn. 56, § 251 CONSTRUCTION — USAGE. 328 sible. 125 So usage to give notice of increase of risk is inadmissible to control the legal effect of the policy; 126 nor can a local custom to deduct one-third new for old from the gross amount of the expenses and repairs, without first deducting the proceeds of the old materials, control a general principle of law requiring such deduction of the proceeds of the old materials. 127 Evidence is admissible of usage of words in peculiar senses in an application for insurance where, although such words severally and as first read seem plain, an ambiguity becomes apparent when they are applied to the subject matter, 128 and when words are used in policies having a limited meaning in the trade, both parties must be assumed to have understood it in the sense in which the trade usually understood it. 129 So if any of the terms used in a policy have by the known usage of trade, or by use and practice as between insurer and insured acquired an appropriate sense, they are to be construed accordingly. 130 § 251. Same Subject — Conclusion.— We believe that Mr. Duer's position is not irreconcilable with the law as gen- 57; 52 N. W. Rep. 131, per Gilfillan, 0. J. See Seccomb v. Provincial Ins. Co., 10 Allen (92 Mass.), 312-14, per Bigelow, C. J., where it is said that usage is inadmissible to vary or control the written words, and give them a different construction than that given them by settled ju- dicial determinations, but that it is admissible to show the sense in which particular words or phrases are used, and to show that as ap- plied to the subject matter the language of the instruments was under- stood by the parties to have a special and peculiar meaning, differing from that which might ordinarily be attributed to it, and that this is especially true of policies of assurance. And see Lawson's Usages and Customs, ed. 1881, 465. sees. 226, 234, and cases collected; and articles of Jno. D. Lawson, 6 S.Eev., N. S., 845; 7 Id. 1 ; Eaton v. Smith, 20 Pick. (37 Mass.) 156. 125 Jackson v. Billing, 22 La. Ann. 378. «« Stebhins v. Globe Ins. Co., 2 Hall (N. Y.), 632, 674. 127 Eager v. Atlas Ins. Co., 14 Pick. (31 Mass.) 141 ; 25 Am. Dec. 363. » 8 Daniels v. Hudson River F. Ins. Co., 12 Cush. (66 Mass.) 429; 59 Am. Dec. 192. 129 Wall v. Howard Ins. Co., 14 Barb. (N.Y.) 383; Astor v. Union Ins. Co., 7 Cow. (N. Y.) 202. 130 Coit v. Commercial Ins. Co., 7 Johns. (N. Y.) 385; 5 Am. Dec. 282. See, also, as to evidence of usage to control forfeiture for nonpay- ment of premium, chapter on Premiums. 329 CONSTRUCTION — USAGE. § 251 erally stated by the courts and text-writers, and is entitled to consideration. Certainly, if the parties could incorporate by express terms in their contract a usage which would have con- trolled the plain and ordinary meaning of words used in the policy, then may not a known usage, with reference to which the parties expressly contracted, have a like effect? We ap- prehend, however, that whatever distinction exists between the statement of Mr. Duer and those of Emerigon and the others above considered, is more apparent than real. Mr. Duer says that usage must be consistent with the rules of law. His illus- trations are those of a particular usage known to the parties, with express reference to which the contract was made, and which became thereby a part thereof. He asserts that usage does control words that convey a definite meaning, which the court would otherwise be bound to adopt, or where their con- struction has been settled by law, 131 and does set aside what, judging from the terms of the policy or the rules of law, was the plain intention of the parties, "but," he adds, "in con- trolling, the usage does not contradict the words — it merely varies by restraining or enlarging their application," and that usage "can never be admitted to nullify or expunge" the plain words of a contract. 132 The use of the word "control," in this sense, does not seem irreconcilable with the conclusions of em- inent and learned judges and text-writers. We deduce, there- fore, from the authorities that the presumption is that words have been used in their ordinary sense, and if words are of such a plain and decisive character that a reference to the sub- ject matter and context shows the evident intent of the parties to be in accordance with this presumption, then usage is inad- missible to vary or control the plain and legal import of words. This presumption, that words have been used in their ordinary sense, may be overcome by a contrary presumption still stronger: thus, if words apparently plain and unambiguous are shown to be ambiguous in fact, then evidence of usage to con- trol their meaning is admissible. A settled judicial construc- 1S1 1 Duer on Insurance, ed. 1845, 245. 1SS Id. 270. §§ 252, 253 CONSTRUCTION USAGE. 330 tion governs a commercial construction by usage, variant there- with, so far certainly, as the rights of parties are dependent upon settled rules of law, and the contract is made clearly with reference thereto. But custom or usage, may undoubtedly affect and control what before was law, especially in insurance cases where the custom is of such a character that the parties may reasonably be assumed to have been fully cognizant thereof, and to have contracted in reference thereto. Where plain words have acquired by usage a meaning different from that in which they are ordinarily used, evidence of such usage is admissible, unless it is clearly evident from the subject matter and context that the ordinary meaning was intended, and usage can never be admitted to nullify or expunge the plain words of the contract. 133 § 252, Usage cannot Legalize an Illegal Act. — It is held that a particular usage and custom by which owners of insured property were permitted to purchase the property at sales for the benefit of the insurers, cannot have the effect of legalizing a sale which by the general law is unlawful and void. 134 § 253. General Usage may be Controlled by Evidence of a Different Usage. — A general usage may be con- trolled by evidence of another and different usage. Thus, a custom for a ship to pursue a certain course which is the safest, most usual, and expeditious in the course of the voyage insured may be controlled by evidence that it is usual and customary for one boat on a voyage to stop and aid another boat in dis- tress. 135 So it is held that a commercial usage of long stand- ing, such as that of adding the premiums to the invoice value, in cases of insurance, may be modified and controlled by a local 133 As to usage in foreign trade, see Livingston v. Maryland Ins. Co., 7 Cranch (U. S.), 506. 134 Robertson v. Western etc. Ins. Co., 19 La., 0. S. (10 La. 143), 227; 36 Am. Dec. 673. See Bryant v. Connecticut Ins. Co., 6 Pick. (23 Mass.) 131,144. 135 Walsh v. Homer, 10 Mo. 6; Gould v. Oliver, 2 Scott N. R. 252; 5 Scott, 445; 4 Bing. N. C. 134. 331 CONSTRUCTION — USAGE. §§ 254, 255 usage clearly proven and shown to be known to the other party. 136 § 254. Usage Controls Implied Limitations. — "The usage, and ordinary incidents of a risk should override any im- plied limitations, either as to the place or conduct of the risk." 137 § 255. Usage of Another Similar Trade or Place or of Another Company. — Evidence of usage in another simi- lar trade was held by Lord Mansfield admissible, on the ques- tion whether a recently established usage existed. 138 Usage of a particular place, as of London, may be shown by proof of us- age there and elsewhere. 139 But where the vessel was insured at IsTew York, but belonged to New Bedford, where the owners resided, a local usage of the last-named place, by which taking sea elephants is not within the scope of "whaling voyage," is inadmissible, and a uniform usage of insurers to insert a per- mission for vessels insured on a whaling voyage to take sea elephants on payment of an additional premium is inadmis- sible to establish such local usage. 140 It is held that usage of the custom of other like establishments to keep a watch may be shown to explain the term "keeping a watch." 141 Where the contract is made with reference to local usages, usages of other places are not binding, for such usage cannot be con- sidered as entering into the consideration of the parties, 142 and a usage of marine underwriters of Boston to except bar- ratry of the master from the risks assumed, when the assured is her owner, will not import such an exception by implication 136 Merchants' Mut. Ins. Co. v. Wilson, 2 Md. 217. 137 1 Wood on Fire Insurance, 2d ed., 116. The author here changes the rule from that given in a former edition with reference to cases where the words "contained in" are used in policies describing the risk. 138 Noble v. Kennoway, 2 Doug., 3d ed., 510, per Lord Mansfield. 139 Millward v. Hibbert, 3 Q. B. 120; 2 Gale & D. 142. 110 Child v. Sun Mut. Ins. Co., 3 Sand. (N. Y.) 26. »« Brocker v. People's Mut. Ins. Co., 8 Cush. (62 Mass.) 79. 112 Mason v. Franklin F. Ins. Co., 12 Gill & J. (Md.) 468; Child v. Sun Mut. Ins. Co., 3 Sand. (N. Y.) 26. § 255 CONSTRUCTION USAGE. 332 in a policy underwritten at Gloucester. 143 So a policy of in- surance against fire upon a vessel building in the port of Bal- timore, and for a specified period, is not controlled in its oper- ation by proof of usage in other parts of the Union; 144 and a usage of towing boats by steamers on the Mississippi cannot affect a contract of insurance made at Natchez, unless shown to be so general and well known that it is fair to presume the parties contracted with reference to it. 145 A clause in a policy of marine insurance providing that all matters of adjustment and settlement of losses shall be subject to the rules and regula- tions of the ports of ISTew York, refers only to the manner of making the adjustment when a liability is admitted, and cannot decide the question of the existence of any liability by the usage of such ports when the insurance is made elsewhere. 146 So the constructive total loss of a whaling ship at a port where whaling outfits are bought and sold, and where the outfits are in safety, is not a constructive total loss of the outfits; and evi- dence of a usage to regard it as such at the port from which the ship sailed is inadmissible. 147 And usage of the company in matters of insurance is inadmissible to bind another com- pany. 148 Such evidence should be limited to the custom and usage of the company directly concerned. So the practice of other insurance agents in the same town is inadmissible to es- tablish a custom that proofs of loss are not required. 149 But it is held, however, that the phrase "fire by lightning" may be shown, by evidence of the practice of other companies, to mean that the company is not liable where there is no burning. 150 us Parkhurst v. Gloucester etc. Ins. Co., 100 Mass. 301; 97 Am. Dec. 100. 144 Mason v. Franklin F. Tns. Co., 12 Gill & J. (Md.) 468. 118 Natchez Ins. Co. v. Stanton, 2 Smedes & M. (Miss.) 340; 41 Am. Dec. 592. 146 Hazleton v. Manhattan F. Ins. Co., 11 Biss. (C. C.) 210. "' Taber v. China Mut. Ins. Co., 131 Mass. 239. 148 Reynolds v. Continental Ins. Co., 36 Mich. 131; American Ins. Co. v. Neiberger, 74 Mo. 167. 149 Phoenix Ins. Co. v. Munger (Kan.), 30 Pac. Rep. 120. 150 Babcock v. Montgomery Co. Mut. Ins. Co., 6 Barb. (N. Y.) 637; i Com st. (N. Y.) 326. 333 CONSTRUCTION — USAGE. §§ 256, 257 § 256. Evidence of Usage — Liberal Construction. — Much stress has been placed upon the statements made by the courts in many of the early insurance cases, looking toward a liberal construction of policies in reference to usage. Thus, it is said in Long v. Allen, 151 that "in mercantile cases from Lord Holt's time, and in policies of insurance in particular, a great latitude of construction as to usage has been admitted. By usage, places come within the policy that are not within the words." This idea, however, arose in a great measure from the clumsiness of the instrument, 152 and because insurance is based upon mercantile law and the customs of merchants, and that down to Lord Mansfield's time there had been few adjudications on questions in insurance law and the custom of merchants, usage was necessary to be resorted to for interpretation; 153 but Story, J., 154 says that usage, though in former times freely re- sorted to, 155 "is now subjected by our courts to more exact and well-defined restrictions .... and it should therefore .... be admitted with a cautious reluctance and scrupulous jealousy." 156 § 257. What is Sufficient Evidence of Usage. — The court determines the admissibility of evidence of usage, and it will, as we have seen, be cautious in this respect, and the evi- dence thereof ought to be clear and satisfactory to the jury. 157 The question is, did the usage claimed exist, and this must be 151 4 Dong. 276, per Buller, J. See, also, Coggeshall v. American Ins. Co., 3 Wend. 283. 182 Gordon v. Little, 8 Serg. & R. (Pa.) 562 j 11 Am. Dec. 632, per Gibson, J. 163 See Smith v. Wilson, 3 Barn. & Adol. 728, per Parke, J. 154 In Rogers v. Mechanics' Ins. Co., 1 Story (C. O, 607. 155 As a rule it was, but examine Anderson v. Pitcher, 2 Bos. & P. 168, per Lord Eldon; Lethiellier's case, 2 Salk. 443, per Lord Holt. 166 See, also, Palmer v. Warren Ins. Co. , 1 Story (C. C), 360 ; Schooner Reeside, 2 Sum. (C. C.) 567, per Story, J. 157 See Pelly v. Royal Exch. Assur. Co., 1 Burr. 341, 349; Leach v. Perkins, 17 Me. 465 ; 35 Am. Dec. 268 ; Lucas v. Growing, 7 Taunt. 164 ; Bentaloe v. Pratt, Wall. 58; Crofts v. Marshall, 7 Car. & P. 597; Win- eor v. Dillawney, 4 Met. 223; Gabay v. Lloyd, 3 Barn. & C. 793; Greenleaf on Evidence, 14th ed., sec. 292, et seq. § 258 CONSTRUCTION — USAGE. 334 established by instances known to the witnesses, coupled with evidence of its duration and that it is uniform, 108 and a few of occasional instances are insufficient to establish a usage. 109 So of a single witness or individual, 160 and witnesses are confined to the fact of usage, and will not be permitted to give their opinions. 161 § 258. Evidence of Usage, When Admissible — Cases. — The following cases illustrate when usage is admissible: Thus, an insurer is liable for a loss occurring within the general course of a trade, of which he is presumed to have knowledge, as in case goods are lost from the deck of a lighter in being transmitted from the ship at quarantine to the customary land- ing place. 162 And a well-known usage of boats in the Mississ- ippi trade to touch at intermediate ports will cover additions to the cargo received in the usual manner at such ports. 163 So if goods are lost while in transportation from the shore to a ship engaged in a trading voyage, the insurer is liable if such trans- 168 Illinois Masons' B. Soc. v. Baldwin, 86 111. 479; Syers v. Bridge, Doug. 530, per Lord Mansfield; Hennessy v. New York M. M. Ins. Co., 1 Old. (Nov. Sc.) 259; Salisbury v. Townson, 1 Burr. 341; Rogers v. Mechanics' Ins. Co., 1 Story (C. C), 603, per Story, J.; Durrell v. Bed- erly, 1 Holt N. P. 283, per Gibbs, J. ; Martin v. Delaware Ins. Co., 2 Wash. (CO 254. 159 Crosby v. Fitch, 12 Conn. 422; 31 Ana. Dec. 745; Trott v. Wood, 1 Gall. (C. C.) 443; Herman v. Western F. & M. Ins. Co., 13 La., O. S. (7 La., N. S., 325), 516; Banter v. Orient etc. Ins. Co., 4 Bosw. (N. Y.) 254; Clevenger v. Mutual L. Ins. Co., 2 Dak. 114; Bond v. Nutt, Cowp. 601; Cutter v. Powell, 6 Term Rep. 320; Taunton Copper Co. v. Mer- chants' Ins. Co., 22 Pick. (Mass.) 108. 160 Parrott v. Thatcher, 9 Pick. (26 Mass.) 426; Loring v. Gurney, 5 Pick. (22 Mass.) 15. 161 Winthrop v.. Union Ins. Co., 2 Wash. (C. C.) 7, per Washington, J. ; Crofts v. Marshall, 7 Car. & P. 597 ; Gordon v. Little, 8 Serg. & R. (Pa.) 549; 11 Am. Dec. 632, 636, per Tilghman, C. J.; Rogers v. Me- chanics' Ins. Co., 1 Story (U. S.), 603, per Story, J. ; Astor v. Union Ins. Co., 7 Cow. 202; Syers v. Bridge, Doug. 512, 569; Story, J., in Rogers v. Mechanics' Ins. Co., 1 Story (C. C), 607, declares that "this court has nothing to do with the private opinions of witnesses, however respectable, which respect the proper interpretation of con- tracts." ie - Wadsworth v. Pacific Ins. Co., 4 Wend. (N. Y.) 33. 163 Stillwell v. Home Ins. Co., 3 Dill. (C. C., 80. 335 CONSTRUCTION — USAGE. § 258 portation is according to usage. 164 The course of trade in a particular place governs the construction, as where the usual method of unloading and reshipping in a place was "that when there is no British ship there, then the goods are to be kept in store ships," and if it is usual to stay a certain time at a port or to go out of the way, the insurer is considered as understanding that usage. 160 So acts done by the assured to avoid confisca- tion under the laws of a foreign power are valid if warranted by the usage of trade. 166 Thus a concealment of papers is not a breach of warranty if, by the usage of trade, it is necessary that they should be on board although they increase the risk of capture. 16 ' It may be shown that it is the custom generally to charge a higher premium for unoccupied dwelling-houses; 168 also that it is a general custom to refuse risks on vacant houses. 169 So usage is admissible to explain a blank, as "A B on account of ." 1T0 So the nature of the subject matter may be such that usage is admissible to construe the con- tract, 171 and in estimating the damage in case of partial loss evi- dence is competent of the custom of merchants in relation to the sale. 1 ' 2 So where the insurance was "from" Amsterdam, a custom for vessels of certain tonnage to take in part of their cargo at Amsterdam and the rest at another port is admissi- ble. 173 So evidence of a custom for one boat to stop and aid another in distress is competent. 174 Usage of a particular trade to keep goods on board for a long time after the ship's arrival is 164 Coggeshall v. American Ins. Co., 3 Wend. (N. Y.) 283. 165 Pelly v. Royal Exch. Assur. Co., 1 Burr. 341, 348, 349. See, also, Matthie v. Potts, 3 Bos. & P. 23. 166 Livingston v. Maryland Ins. Co., 7 Cranch (U. S.), 506. 167 Livingston v. Maryland Ins. Co., 6 Cranch (U. S.), 274; 7 Cranch (U. S.), 506. 168 Luce v. Dorchester Mat. F. Ins. Co., 105 Mass. 298; 7 Am. Rep. 522. 169 Kirby v. Phoenix Ins.Co., 13 Lea (81 Tenn.'),340. 170 Turner v. Burrows, 5 Wend. (N. Y.) 541; 8 Id. 144. 171 Sayles v. Northwestern Ins. Co.. 2 Curt. (C. C.) 610, per Curtis, m Stanton v. Natchez Ins. Co., 6 Miss. (5 How.) 744. 175 Mey v. South Carolina Ins. Co., 3 Brev. (S. C.) 329. 174 Walsh v. Homer, 10 Mo. 6; 45 Am. Dec. 342. § 258 CONSTRUCTION — USAGE. 336 admissible. 175 So evidence is admissible of a particular custom whereby the party holding a certificate thereof kept an account of shipments made and covered by the certificate, reporting the same monthly to the agent. 176 So usage between a principal and his agent may determine their rights, as in case whether a lien on the policy exists in favor of the agent. 177 So the com- mencement 178 and termination of a risk may be determined by usage. 179 So a clearance for a port without intending to go there may be justified by a constant and notorious usage of the trade, as where it was the custom for ships going with British goods to France to clear for Ostend. 180 So evidence of a cus- tom is admissible that policies executed, but not delivered, are held for the benefit of the insured. 181 So usage of commission merchants in New York to effect, without orders from their consignors, insurance on goods consigned to them for sale is admissible. 182 And usage to put into a certain port for bait where the vessel was engaged in cod-fishing may be shown. 183 So a contract may be governed in certain cases by the uniform and settled custom of the company, with reference to condi- tions contained in like policies, 184 and a usage by an incorpo- rated benevolent society, showing a valid practical construction by it of a by-law relating to holding the annual meeting and election, is admissible in quo warranto to determine title to office in the society. 185 In all cases of local or partial usage the insurers will be bound where it was expressly communicated to them and the contract based thereon. 186 175 Noble v. Kennoway, Doug. 492. "• Hartshorne v. Union etc. Ins. Co., 36 N. Y. 172. 177 Green v. Farmers, 4 Burr. 2214. 178 Kingston v. Knibbs, 1 Camp. 507. 179 Gracie v. Maryland Ins. Co., 8 Cranch (U. S.), 75. lf0 Plancbe v. Fletcher, Doug. 251. 181 Baxter v. Massasoit Ins. Co., 13 Allen (Mass.), 320. 18J De Forest v. Fulton F. Ins. Co., 1 Hall (N. Y.), 84. 183 Burgess v. Equitable L. Ins. Co., 126 Mass. 70; 30 Am. Rep. 654. 181 Home Ins. Co. v. Favorite, 46 111. 263. 185 State v. Conklin, 34 Wis. 21. 186 Gabay v. Lloyd, 3 Bing. 793; 1 Duer on Insurance, ed. 1845, 264. See further as to when custom or usage is admissible, sees. 84, 120, herein, and chapters on Seaworthiness, Duration, Bisk, and Premium. 337 CONSTRUCTION — USAGE. § 253 § 259. Evidence of Usage, When Inadmissible — Cases. — The following cases illustrate when usage is inadmissible: Thus, a local custom as to the materiality of an undisclosed fact respecting the risk is inadmissible, unless it is communicated to the insured or is of such a character that a presumption of knowledge thereof attaches thereto; 187 nor is evidence admis- sible of a usage in Xew York to give the insurer notice when anything is done by the assured to increase the risk. 188 So the usage of a company to require particular proof of loss does not bind the insurer where not known to him, 189 and no law or usage requires the assured to have his house, if untenanted, guarded by a keeper. 190 So a usage in a particular mill or lo- cality to keep a watchman over Sunday is inadmissible where the policy is unambiguous. 191 In estimating a loss under an open policy of marine insurance evidence of the usage of a particular port is inadmissible to vary the rule that the damages are to be based on the market value of the goods at the inception of the risk and not on the invoice price. 192 Where by the terms of a policy a vessel was insured "to a port in Cuba, and at and thence to a port of advice, and discharge in Europe," and the vessel was lost in going from the port of discharge in Cuba to another port in the same island for reloading, it was held, in a suit on the policy for a loss, that evidence by the assured was inadmis- sible to show a usage that vessels going to Cuba might visit at two ports, one for discharge and another for loading. 193 Sc "the usage or custom of a particular port in a particular trade is not such a custom as the law contemplates to limit or control or qualify the construction of contracts of insurance" ; 194 and evidence is inadmissible of an alleged custom of insurance com- 187 Hartford etc. Ins. Co. v. Harmer, 2 Ohio St. 452 j 59 Am. Dec. 68-U 188 Stebbina v. Globe Ins. Co., 2 Hall (N. Y.), 632. 189 Taylor v. ^Etna L. Ins. Co., 13 Gray (Mass.). 434, per Metcalf, J. 190 Loye v. Merchants' Ins. Co., 6 La. Ann. 761. 191 Glendale Woolen Co. v. Protection Ins. Co., 21 Conn. 19; 54 Am. Dec. 19; Ripley v. .Etna Ins. Co., 30 N. Y. 136; S6 Am. Dec. 362. m Warren v. Franklin Ins. Co., 104 Mass. 518. ,93 Hearne v. Marine Tns. Co., 20 Wall. (U. S.) 48S. 191 Rogers v. Mechanics' Ins. Co., 1 Story (C. C), 003, per Story, J, See remarks hereon in 1 Phillips on Insurance, 3d ed.. sec. 140. Joyce. Vol. I. —22. § 259 CONSTRUCTION — USAGE. 338 panies, claimed to have been known to plaintiff's agent, that upon the happening of a future event the policy should be void, said condition not having been inserted in the policy. 190 JSTor is evidence admissible of a custom that when insurance is made on goods with a particular mark, those goods, so marked, must be on board, in order to charge the underwriter with the loss; 196 and there is no law or usage that requires the master of a vessel to accept a general average bond in place of the cargo, after the adjustment of loss has been completed. 197 Nor does the length of time a vessel may wait to take in her cargo with- out discharging the underwriters depend on the usage of the trade. 198 And it is not competent to prove a custom that notice to a broker by the agent of the company should operate to can- cel a policy. So held in an action against the agent by the principal seeking recovery for a loss paid by the company which occurred after it had directed the agent to cancel. 199 So held, also, where notice of cancellation was given to the local agent. 200 A particular usage of insurance companies with re- spect to risks on grain in elevators does not bind the insured in the absence of proof of knowledge on his part, 201 and where the insurance was upon a boat lying at a wharf in the Ohio river, evidence is not admissible of a custom to remove such boats to the ice harbor, some miles distant, for safety during the season of moving ice. 202 Where goods claimed to have been damaged by perils of the sea were landed on their arrival at New York, before a survey by the wardens of the port, a usage at that port is inadmissible to prove the liability of the master for dam- .ages sustained by goods delivered by him to the owner or con- 195 Canilee v. Citizens' 7ns. Co., 4 Fed. Rep. 143, citing Patriae v. Insurance Co., 15 Wall. (U. S.)573; Oelricbs v. Ford, 23 How. (U. S.) '9. 196 Ruan v. Gardner, 1 Wash. (C. C.) 145. 197 The Water Witch's Cargo, 29 Fed. Rep. 159. 198 Oliver v. Maryland Ins. Co., 7 Cranch (TJ. S.), 487. 199 Franklin Ins Co. v. Sears, 21 Fed. Rep. 290. 100 Hodge v. Security Ins. Co., 33 Hun. (N. Y.), 583. 101 Pettit v. State Ins. Co., 41 Minn. 299; 43 N. W. Rep. 378. ■*» Franklin Ins. Co. v. Humphrey, b5 Ind. i49; 32 Am. Rep. 78. 339 CONSTRUCTION — USAGE. § 259 signee, unless there had been such survey, and a finding by the wardens that the goods had been stowed properly and were damaged by the perils of the sea, and that by a similar usage as between assurers and assured the surrey so made must be pro- duced, in order to charge the assurer, and that the preliminary proof is deemed insufficient unless the survey is exhibited as a part of it. 203 In a suit upon a policy of insurance to recover for a loss, where there is no question as to the rates of insurance charged and paid by the insured, evidence of the custom or usage of insurance companies as to the rates is immaterial. 204 103 Rankin v. American Ins. Co., 1 Hall (N. Y.), 619. J0< King v. Enterprise Ins. Co., 45 Tnd. 43. CHAPTER X. THE POLICY— ALTERATION AND MODIFICATION. | 2fi5. Material alteration without consent avoids contract. § 2G6. Immaterial alteration does not avoid contract. § 267. Alteration when contract is inchoate. § 2CS. Alteration by a third party. § 2G9. Alteration by the insurer. § 270. Material alterations may be made by consent. § 271. Same subject: Decisions. § 272. Alteration of contract by parol. § 273. Same subject: Decisions. § 274. Alteration with intent to obtain insurer's consent. § 275. Same subject: Decisions. fc 276. Alteration: Substitution of parties. § 265. Material Alterations Without Consent Avoids Contract. — If a completed contract of insurance is al- tered in any material part without the consent of the parties thereto, such alteration makes the entire contract void. 1 What constitutes a material alteration is a question of much import- ance. If the words are introduced into the body of the policy and increase the risk, they are certainly material, and in con- sequence nullify the contract; 2 and we apprehend that any al- teration would be material which would operate to so change the risk or subject matter as to make the policy essentially var- iant in terms from that intended by the parties at the time of its completion, and words which would legally effect this result wherever written, whether on the margin of the policy or elsewhere, constitute a material alteration, 3 for the nec- 1 Langhome v. Cnlogan, 4 Taunt. 330; 1 Duer on Insurance, ed, 1845, 78. sec. 24, et seq. ; Chitty on Contracts, 7th Am. ed., 78.5-85, notes; Fairlie v. Christie, 7 Taunt. 416. » Forshaw v. Chabert, 3 Brod. s. Jr. 71; Potts v. Bell, 8 Term. Rep. 548, 561; The Emulous. 1 Gall. €. C. 563, per Story, J. 351 WAR — ALIEN ENEMIFS. § 284 writers and the courts: In Brandon v. Curling 14 insurance was made during peace on goods on board a neutral ship from Lon- don. The consignees were French subjects, residing at Bay- onne. Although the ship left port at London one day before war w T as declared, yet it stopped at Gravesend for papers, and did not leave there until two days later. The goods were seized at a port in Spain by Spanish officers and condemned. It w T as held that no recovery could be had for the loss, thus de- termining that a prior legal insurance on such property is made void by war supervening between the attachment and termina- tion of the risk. Kellner v. Le Mesurier 15 was a case of a for- eign ship and British capture, where the insurance was held void, since it would be repugnant to state interests for a British subject to insure against British capture. In Potts v. Bell, 16 there was a war between Holland and Great Britain. The goods were purchased in Holland on account of British mer- chants, resident in England, and shipped on a neutral vessel. It was held that trading with the enemy without the King's license was illegal in British subjects, and the insurance was wholly void. In Bristow v. Towers, 17 the parties were alien ■enemies when the policy was effected and at the commence- ment of the voyage. The judgment was for defendant upon the ground that action could not be sustained by or in favor of alien enemies. In Bradon v. JSTesbitt 18 the parties were alien enemies at the inception of the voyage, and were re- siding in France, then at war with England. The court de- cided that an alien enemy could not sustain an action. In Fur- tado v. Rodgers, 19 the insurance was on a French ship during peace. The ship was seized in a war between England and France, and was condemned by the British government. Suit was brought after peace was restored, and the insurance was held not valid against British capture. In Gamba v. Le Mesu- w 4 East, 410. 15 4 East, 396. 16 S Term llep. 548. 17 G Term Rep. 35. is n Term Rep. 23. 19 3 Bos. & 1'. 191. 20 4 East, 407. §§ 285-287 WAR — ALTEN ENEMIES. 352 rier 20 insurance was effected during peace on a French ship and goads. This was a case of British capture after hostilities commenced between England and France, and suit was brought after peace was restored, and the underwriter was held not liable. § 285. Trading- with Enemy — Mistake or Ignorance no Excuse. — Mistake or ignorance is not a valid excuse for trading with the enemy. 21 § 286. Defense of Alien Enemy. — Although the ille- gality of such insurances is a valid defense, 22 the defense of alien enemy is not favored in law, 23 and it is held in Hume v. Providence and Washington Insurance Company 24 that al- though an alien may not own a vessel under pain of forfeiture, yet if he does own one, and insures it, and it is lost, the insurance company cannot set up his alienage as a bar to an action for the insurance money, and that it must be specially pleaded as a defense. It cannot be availed of where the fact of alienage merely falls out casually during the trial, and a plea that when a promissory note sued on was made, the plaintiff was a citizen of Minnesota and the defendant a citizen of Arkansas aiding the rebellion and public enemies of the United States was held good. 25 § 287. Binding Force Here of Laws of Belligerent Nations. — It is declared by an eminent jurist that the prize law of the British empire became our prize law after our separation so far as adapted to us; 26 and it is also said that the general doctrines applicable to subjects of belligerent nations were applicable to the late civil war between the north and the south so far as warranted. 2 ' 21 The Compte de Wohronzoff, 1 C. Rob. 206. 22 Griswold v. \Yaddington, 1G Johns. (N. Y.) 43S; 15 Johns. 57. 23 Shepeler v. Durant, 14 Com. B. 582; Society etc. Wheeler, 2 Gall. (C. C.) 105, 127, per Story, J- 24 23 S. C. 190. 25 Rice v. Shook, 27 Ark. 137; 11 Am. Rep. 783. 26 Thirty Hogsheads Sugar v. Boyle, 9 Craneh (U. S.), 19S, per Mar- shall, C. J. 27 Prize cases, 2 Black (TJ. S.). R35. See sec. i, preliminary chap- ter generally, as to how far binding are the decisions of other coun- tries. 353 WAR — ALIEN ENEMIES. § 288 § 288. Alien Enemies — Life Insurance. — Such insur- ances are not only invalid in respect to maritime risks, but it is also held that the life of an alien enemy cannot be insured by his creditor, 28 and if the insured engages in hostilities against his country, the policy is thereby voided. 29 So where the insured was post-quartermaster in the confederate service, it was held that the policy was invalidated. 30 In another case an insurance on the life of a person who went below a certain parallel fixed in the policy as the limit, and served on the staff of several confederate generals, was held voided thereby. The policy contained a condition that the party should not enter mil- itary service, and the court declared that it would not impose upon the party the necessity of producing a commission to prove military service, and that the moment the party con- nected himself in any way with the belligerent service the pol- icy became void', or even w T hen he became a member of the bel- ligerent government; 31 and it would necessarily follow that death in battle in the enemy's service would have like effect. 32 It is said by the court in the case of ISTew York Life Insurance Company v. Clopton 33 that in case of a neutral, even though his domicile would make him a technical enemy, the hos- tility does not subject his life, like his estate, to peril, and no belligerent right is affected by the continued validity of a life insurance, and that neither authority nor principle would avoid the policy; 34 and that a policy insuring property exempted by law from a belligerent power would not be avoided, but that a policy insuring the life of an actual enemy of the government would be invalid. The court also said that it would be "a 28 See Sands v. New York L. Ins. Co., 50 N. Y. G26, 635; 10 Am. Rep. 535. See note, "Civil war, effect of upon" life insurance, 9 Am. Rep. 169. 29 Hamilton v. Mutual L. Ins. Co., 9 Blatcbf. (C. C.) 234, 219; Sands v. New York L. Ins. Co., 50 N. Y. 626, 635; 10 Am. Rep. 535. so Drillard v. Manhattan L. Ins. Co., 44 Ga. 119; 9 Am. Rep. 164. 31 Mitchell v. Mutual L. Ins. Co. of N. Y. (Md.), cited in Bliss on Life Insurance, 699. 32 Bliss on Life Insurance, ed. 1872, sec. 407, citing Ex parte Lee, 13 Ves. Jr. 64. 33 7 Bush (Ky.), 179, 188; 3 Am. Rep. 290. w Citing Keir v. Andrade, 6 Taunt. 504. Joyce, Vol. I.— 23 § 289 WAR ALIEN ENEMIES. 354 grave question whether the implied condition as to perils of the war should be extended beyond the belligerent right of capture or destruction by the government of the insurer, and to that extent only we may admit that the continuation of the policy during war would be illegal and its pre-existing obligation be- come avoided." § 289. Effect of War on Pre-existingr Valid Contract. The effect of war between the countries of the assured and in- sured upon a pre-existing valid contract is a question upon which there is a decided conflict of authority. It is held in England that in such cases, if loss happens during the war, this discharges the insurer from all liability therefor, but that the contract is not thereby made totally void, and a liability exists, capable of enforcement, when peace ensues, for losses on such contract arising before the war. 35 So Lord Ellenborough 36 declares that policies of this kind must be considered to have incorporated therein, as a part thereof, a provision that "this insurance shall not extend to cover any loss happening during the existence of hostilities between the respective countries of the assured and assurer," and that during the continuance of the war such contracts are illegal and void. 37 It is declared by Washington, J., in Gray v. Sims, 38 that "if the contract be legal when it is made, and the performance of it is rendered illegal by a subsequent law, the parties are both discharged from its obligations. The insured loses his indemnity and the insured his premiums." 39 While in Furtado v. Rodgers 40 it was said that since the contract was legal in its inception, there should be no return of the premium. In the case of New York Life Insurance Company v. Clopton 41 the court argues that 35 Flindt v. Waters, 15 East, 260, 2G5, per Lord Ellenborough; 1 Duer on Insurance, ed. 1845, 444, sec. 45. See 11 Am. Law Rev. 221. 36 Brandon v. Curling, 4 East, 410. 37 See Furtado v. Rodgers, 3 Bos. & P. 191; Ganiba v. Le Mesurier, 4 East, 407. The facts to the cases cited in this and the last note are briefly noticed in sec. 284, herein. 38 3 Wash. C. C. 276. 39 See Leathers v. Commercial Ins. Co., 2 Bush (Ky.), 296; 92 Am. Dec. 483. 40 3 Bos. & P. 191, per Lord Alvanley. 41 3 Am. Rep. 290; 7 Bush (Ky.), 179. 355 WAR — ALIEN ENEMIES. §§ 290, 291 ''both principle and policy would have dissolved a contract made before the war for 'continuing performance/ such as partnership or affreightment," and that "insurance is a contract sui generis, governed by a peculiar and rather arbitrary code of the modern common law Its character, however, is so far matured and established as to distinguish it essentially from ordinary commercial contracts, and especially in the effect of war, on its pre-existing validity, which the war, as a general rule, destroys, whether the contract belong to the category of 'continuing performance' or not." And it is held in a Vir- ginia case 42 that assessments by a mutual assurance society, chartered under the laws of Virginia and located within the enemy's lines during the Civil War to pay for losses incurred during the war, can create no liability upon property insured in the company located in loyal territory. § 290. Same Subject — Loss Before War. — If a contract of insurance is otherwise valid, it would seem that war merely suspends the right of action where the loss and the right to a remedy accrues before the commencement of the war. 43 § 291. Same Subject — That War Merely Suspends the Contract. — Mr. Duer," after an exhaustive review of the cases, says: "There are doubtless many contracts of which a war suspends the existence without dissolving the obligation. The distinction is probably this: a vested right under a sub- sisting contract is not effected by a subsequent war, but where the contract is executory, and would have been illegal if made in time of war, it becomes so from the time that hostilities com- mence, as to all acts to be performed by either party during the war." Mr. Arnould 4o declares that if the policy be effected before and the loss occurs after hostilities, the assured can- 42 Mutual Assur. Soc. v. Berkeley Co., 4 W. Va. 343. 43 Semrues v. City F. Ins. Co., 6 Blatchf. 445; 13 Wall. (U. S.) 158; Flindt v. Waters, 15 East, 266; Chitty on Contracts, 7th Am. ed., 182, note. 44 l Duer on Insurance, ed. 1845, 478. 45 l Arnould on Insurance, Perkins' ed., 1850, 91, 92; 1 Id., Mac- lachlan's ed. 1887, 135. § 291 WAR — ALIEN ENEMIES. 356 not sue upon it, even after ihe return of peace, 46 but where the loss occurs before Avar commences, the right to sue is only sus- pended. 47 Both Mr. May and Mr. Parsons 4S adopt the lan- guage of the court in !New York Life Insurance Company v. Clopton. 49 While Mr. Bacon 50 relies principally upon the doctrine of the case of ]STew York Life Insurance Company v. Statham, 01 which holds that if a policy is conditioned to be void upon nonpayment of the annual premium, a failure to pay such premium subjects the policy to forfeiture if the assurer insists upon the condition, even though such failure to pay be caused by the intervention of war between territories in which the in- surance company and the assured respectively reside, and which makes it unlawful for them to hold intercourse, but in such case the insured is entitled to the equitable value of the policy arising under the premiums actually paid. This equi- table value is the difference between the cost of a new policy and the present value of the premiums yet to be paid on the forfeited policy when the forfeiture occurred, and may be recovered in an action at law or a suit in equity. The average rate of mortality is the fundamental basis of life in- surance, and as this is subverted by giving to the assured the option to revive their policies or not after they have been suspended by a war (since none but the sick and dying would apply), it would be unjust to compel a revival against the company. 52 In Spratley v. Mutual Benefit Life Insurance Com- pany 53 a citizen of Virginia, who had insured his life in I860 in a New Jersey company, died at Petersburg, Virginia, in 1863. In 1872 his widow presented proof of the death to the agent of the company at Louisville, Kentucky, and demanded payment, and instituted suit in 1873, and it was held ihat no- 46 Citing Flindt v. Waters, 15 East, 26G. 47 Citing Gamba v. Le Mesurier, 4 Bast, 407. 48 l May on Insurance, 3d ed., sees. 39, 39 s 49 7 Bush (Ky.), 179; 3 Am. Rep. 290. Quoted in the text herein in sec. 2S9, and also in this section. 50 Bacon's Benefit Societies and Life Insurance, sec. 35G. 51 93 U. S. (3 Otto) 24. 52 See, also, New York L. Ins. Co. v. Davis, 95 U. S. 425. 53 11 Bush (Ky.), 443. 357 WAR — ALIEN ENEMIES. § 291 tice and proof of the death should have been made and pay- ment demanded within a reasonable time after the close of the late war — by January 1, 1666 — and a suit thereon, either in Virginia or New Jersey, was barred by limitation; that the pol- icy, being payable in Is ew Jersey, was governed by the laws of that state as to limitation. In vVorthington v. Charter Oak Life Insurance Company 54 a policy was taken out in 1854 by a husband upon his own life for the benefit of his wife. The insuring company was located in Connecticut. The insured was located in South Carolina when the policy was effected, and continued to reside there until his death, and the insurance was made through a. local agent residing in the latter states. Premiums were paid to the agent until 1860, when he was withdrawn, and premiums were then remitted to the company in Connecticut. From 1862 to 1865 no premiums were paid, owing to the war and the President's proclamation forbidding intercourse between citizens of the loyal and confederate states. At the close of the war the insured tendered the premiums with interest, which were refused and liability on the policy denied by the company. Xo further premiums were ever paid. In 1869 the insured died, and it was held that the company was not liable. In Cohen v. New York Mutual Life Insurance Company 55 it was decided that a contract of life insurance be- tween citizens of different states, lawful in its inception, and upon which large sums of money have been paid for premiums, is not dissolved by war between the states. The contract re- mains. The remedy simply is suspended, but revives with the return of peace. In another ISTew York case the court held that vested rights under subsisting contracts are not affected by a subsequent war, except so far as relates to the remedy which is suspended during its continuance, but where the con- tract is executory, and would have been illegal if made in time of war, it becomes so from the time that hostilities commence as to all acts to be performed by either party during the war. 56 54 41 Conn. 372; 19 Am. Rep. 495. Two judges dissented upon this point. 55 50 N. Y. 610; 10 Am. Rep. 522, and note, 535. Be Sands v. New York L. Ins. Co. (N. Y. Sup. Ct. 1871), 4 Alb. L. J. 11; 50 N. Y. G2G; 10 Am. Rep. 535. § 291 WAR — ALIEN ENEMIES. 358 In a Virginia case 57 the court declares that "if the contract is partly executed, and rights under it have vested, and it cannot be dissolved without the loss or forfeiture of one of the parties, and cannot be carried into execution consistently with the duties of the parties to their countries respectively while the war lasts, in such case it should not be dissolved, but only sus- pended. But if it can be carried into execution notwithstand- ing the war, without conflicting with the obligations of alle- giance of either party, it will be neither dissolved nor suspend- ed." In this case the insurance was obtained through the agent of the company at Richmond, and the premiums subsequent to the first were there paid to the agent, and the premium for 1862 was tendered him, but he refused to receive it, and the insured died in that year, and it was held by the supreme court of Virginia, two judges dissenting, that the policy was not for- feited, but that the company must pay the sum insured, less the amount of unpaid premiums, and the court proceeded upon the theory that the insured had become vested with a right by the payment of premiums, not for a year, but for life, and that no new contract was necessary each year, but only the annual payment of premiums. "While in the Kentucky case already referred to ° 8 it is said that "where a single act, such as the payment of a debt would perform a contract made before the war, a belligerent policy interdicted it, because it might aid the enemy in the prosecution of hostilities, consequently suspen- sion of performance until the restoration of peace would effect- uate the whole aim of the law, without dissolving the contract, which may be ultimately enforced in perfect consistency with the principle and end of the temporary interdict. In that class of cases it is the contract, and not the performance, that is continuing, and a suspension of remedy, and not a dissolution of the contract, is all that is necessary, befitting, and just. But in such cases as partnership or affreightment the perform- ance is continuing and unremitting until the end of the con- C7 Manhattan L. Ins. Co. v. Warwick, 20 Gratt. (Ya.) 614, 635; 3 Am. Rep. 2is. 58 New York L. Ins. Co. v. Clopton, 7 Bush, 179, 184; 3 Am. Rep. 290. 359 WAR— ALIEN ENEMIES. § 29 J tract shall have been consummated, and, therefore, as super- vening war between the parties disables them from performing any of the incumbent duties and defeats the object of the con- tract, a dissolution of the contract is the natural and legal ef- fect of the war." The conclusion from these cases and opin- ions, and from other cases cited hereafter, would seem to be that where a right has vested under the contract, then a super- vening war merely suspends the remedy; but where the loss happens during the war and under a pre-existing valid con- tract of insurance, then if merely suspending the contract or its enforcement is within the reason and policy of the law, and would effectuate its whole aim and purpose, it will only be sus- pended, and not dissolved. Such a rule would not appear to be inconsistent with the reason of the rule, which prohibits all insurances of alien enemies, or their property, although it will be noted that nearly all the decisions relating to the Civil "War are those pertaining to life risks, w r hich from their very nature are of longer duration than marine and fire risks. Al- though in many cases these contracts of life insurance have been held to be contracts from year to year and voidable for nonpayment of premiums. 59 59 See Dillavd v. Manhattan L. Ins. Co., 44 Ga. 119; 9 Am. Rep. 167 (that war merely suspended). See Ex parte Bousmaker, 13 Ves. Jr. 71; Saltus v. United States Ins. Co., 15 Johns. (N. Y.) 523; Con- necticut Mut. L. Ins. Co. v. Duerson, 28 Gratt. (Va.) 630; Cohen v. Mutual L. Ins. Co., 50 N. Y. 610; 10 Am. Rep. 522; Bell v. Chapman, 10 Johns. (N. Y.) 1S3; Buchanan v. Curry, 19 Johns. (N. Y.) 137; 10 Am. Dec. 200; Clement v. New York L. Ins. Co., 76 Ya. 355; Hillyard v. Mutual B. L. Ins. Co., 35 N. J. L. 415; Manhattan L. Ins. Co. v. Warwick, 20 Gratt. (Ya.) 614; 3 Am. Rep. 21S; Mutual B. L. Ins. Co. v. Hillyard, 18 Am. Rep. 741; 37 N. J. L. (S Vroom.) 444; United States v. Wiley, 11 Wall. (U. S.) SOS; Martini v. International L. Assur. Soc, 53 N. Y. 339; 13 Am. Rep. 529; Mutual B. L. Ins. Co. v. Atwood, 24 Gratt. (Va.) 497; 18 Am. Rep. 652; Sands v. New York L. Ins. Co., 50 N. Y. 626; 10 Am. Rep. 535, 539; Statham v. New York L. Ins. Co., 45 Miss. 581; 7 Am. Rep. 737; New York L. Ins. Co. v. Clopton, 7 Bush (Ky.) 179; 3 Am. Rep. 290; New York L. Ins. 'Co. v. Hendren, 24 Gratt. (Va.) 536; contra, New York L. Ins. Co.,. v. Stathen, 93 U. S. 24; Billard v. Manhattan L. Ins. Co., 44 Ga. 119; 9 Am. Rep. 167; Abell v. Pennsylvania L. Ins. Co., 18 W. Va. 400; Worthington v. Charter Oak L. Ins. Co., 41 oCnn. 372; 19 Am. Rep. 495; Tait v. New York L. Ins. Co., 1 Flipp. C. C. 28S. See New York L. Ins. Co. v. Davis, 95 U. §§ 292, 293 WAR — ALIEN ENEMIES. 360 § 292. Right of Citizen to Bring- Property from Enemy's Country. — It is said by the supreme court of the United States that if an American citizen residing in an ene- my's country at the breaking out of the war has the right to withdraw- his property acquired before the war, it must be done within a reasonable time after knowledge thereof, and with due diligence, and that a shipment made eleven months after was too late. 60 But this right to withdraw property was sub- sequently denied by the same court, with the exception where the act is done with the consent of the citizen's own govern- ment. 61 § 293. War — License to Trade, — Inasmuch as the power of Congress to regulate commerce between the United States and foreign nations and among the several states is gen- eral, and has no limitations except those prescribed by the con- stitution itself, 62 there is no doubt of the power of the govern- ment to authorize trading with an enemy or the protection of enemy's property, and it may grant privileges or licenses to trade. 63 Thus, during the Civil War the subject was regulated S. 425. See generally, as to effect of war, Bliss on Life Insurance, ed. 1872, sees. 406-17. "No policy of insurance issued to a citizen of the commonwealth by an authorized company, organized under the laws of a foreign country, shall be invalidated by the occurrence of hostili- ties between such foreign country and the United States": Mass. Acts, 1887, c. 214, sec. 84. 60 The St. Lawrence, 9 Cranch (U. S.), 121, per Story, J.; 1 Gall. C. C. 467. See Amory v. McGregor, 15 Johns. (N. Y.) 24. 61 The Rapid, 1 Gall. (C. C.) 304; 8 Cranch (TJ. S.), 155; The Mary, 8 Cranch (U. S.), 621, per Story, J.; The Alexander, 8 Cranch, 169. See The Lady Jane, 1 Rob. 202; The Venus, 8 Cranch (U. S.), 253, Mar- shall, C. J., and Livingston, J., dissenting. See Walker's Interna- tional Law, ed. 1895, 125, et seq. "I adopt the conclusion that the property of subjects withdrawing themselves in good faith from a hostile country within a reasonable time after knowledge of the war Is not stamped with the illegal character of trading with an enemy, but it is to be considered, by a just exception from the general rule, as exempt from confiscation": See 1 Duer on Marine Insurance, ed. 1845, 505, sec. 11. 62 Gibbons v. Ogden, 9 Wheat. (TJ. S.) 1. 63 See The Schooner Rapid, 1 Gall. (C. C.) 295, per Story, J., who says: "It must be considered as a setlled principle of maritime and national law that all trade with the enemy, unless with the per- mission of the sovereign, is iuterdicted. 361 WAR — ALIEN ENEMIES. 8 294 by Congress, but by the act of July 16, 1861, 64 the President alone had power to license commercial intercourse between }. laces within the lines of military occupation by forces of the United States and places under the control of insurgents against it. "The sovereign may license trade, but in so far as it is done it is a suspension of war and a return to the condition of peace. It is said there cannot be at the same time war for arms and peace for commerce. The sanction of the sovereign is indis- pensable for trade." 65 It is held to be of itself an illegal act to sail under an enemy's license. 66 § 2J14. Who are Alien Enemies — Domicile. — Though the term ''enemies," when strictly construed, means public ene- mies, 6 ' the question whether a party is an alien enemy or not depends upon his domicile, rather than upon the place of his birth; for although one born out of the allegiance to the gov- ernment or out of the jurisdiction of the United States, and not naturalized, may be an alien, 68 yet domicile is the test of an alien enemy. And if one be domiciled in a country at war with the United States, he is an alien enemy without reference to his place of birth. 69 And if he has resided long enough in 64 See. also, Act of July 2, 1864. 65 Coppell v. Hall, 7 Wall. (U.S.) 542, 554, per Swayne, J. See McKee v. United States, 8 Wall. (U. S.) 163; Maddox v. United States, 15 Wall. (U. S.) 5S; The Sea Lion, 5 Wall. (U. S.) 630: The Ouachita Cotton, 6 Wall. (TJ. S.) 521; The Reform, 3 Wall. (U. S.) 617; United States v. Lane, S Wall. (U. S.) 185; Butler v. Naples, 9 Wall. (U. S.) 766; Mitchell v. Harmony, 13 How. (U. S.) 115; affirming 1 Blatchf. (C. C.) 549. Concerning licenses to trade, see Halleck's In- ternational Law and Laws of War, ed. 1861, 675; Hall's International Law. ed. 1S80, 478, sec. 196; Wheaton's International Law, ed. 1863, 554, 582. 690-92; Walker's International Law, ed. 1895, 123. 66 Craig v. United States Ins. Co., Pet. (C. C.) 410; The Ariadne, 2 Wheat. (U. S.) 143; The Julia, 1 Gall. (C. C.) 594; The Aurora, 8 Cranch (U. S.), 203; The Hiram, 1 Wheat. (U. S.) 140; Maisonnaire v. Keating, 2 Gall. (C. C.) 325; The Julia, 8 Cranch (U. S.), 181; The Langdon Cheves. 4 Wheat. (U. S.) 103. See Walker's International Law, ed. 1895, 115. 07 Monougahela Ins. Co. v. Chester, 43 Pa. St. 491. 68 See note "Who are aliens." 84 Am. Dec. 210-13. 69 The Venice, 2 Wall. (U. S.) 58; Sloop Charter, 2 Dall. (C. C.) 41; The Venus, S Cranch (U. S.). 253; Willeson v. Patterson, 7 Taunt. 438; United States v. Farragut, 22 Wall. (U. S.) 406; The Schooner Edward 8 294 WAR — ALIEN ENEMIES. 362 the enemy's country to acquire a domicile there, lie is subject to all the disabilities of an enemy with relation to his property. 70 A partnership between parties domiciled in Savannah and New York was held dissolved by the Rebellion. 71 But it is decided that securities held by a citizen and resident of New York prior to the Civil War upon a resident of North Carolina, could not be extinguished durante bello, either through the agency of the courts there or through the former agents and attorneys of such nonresident. 72 The residence of a consul or minister in a foreign country, on account of his official duties in such capacity, does not change his domicile, 73 but if he engages in mercantile business in such foreign country, the trade is af- fected by the hostile character of the country. 74 But the con- sul of a belligerent may, it is held, engage as a merchant in the commerce of a neutral state where he resides; 70 and it is declared that the character of property is determined by the Barnard, Blatchf. Pr. 122; The Mary and Susan, 1 Wheat. (U. S.) 46; The Flying Scud, 6 Wall. (U. S.) 263; Rogers v. Schooner Amado, Newb. Adm. 400; The Prize cases, 2 Black. (U. S.) 635; Potts v. Bell, 8 Term Rep. 548. See note "Enemies, who are," 88 Am. Dec. 779. 7*v>; 1 Kent's Commentaries, 13th ed., 74, et set].; Hall's International Law, ed. 180, 42S, sec. 168, et seq.; Wheaton's International Law, ed. 1863, 559, 565, 573; Walker's International Law, ed. 1895. 107, sec. 40. "0 United States v. Cargo Schooner El Telegrafo, Newb. Adm. 383; The Frances (Gillespie's Claim), 8 Cranch (U. S.), 363; affirming 1 Gall. (U. S.) 614. 71 AVoods v. Wilder, 43 N. Y. 104; 3 Am. Rep. 6S4. See The Will- iam Bagaley, 5 Wall. (U. S.) 379; The Cheshire, 3 Wall. (U. S.) 231; The San Jose Indiano, 2 Gall. (U. S.) 268; The Friendschaft, 4 Wheal. (U. S.) 105. 72 Blaekwell v. Willard, 65 N. C. 555; 6 Am. Rep. 749. 73 Wheat v. Smith, 50 Ark. 200"; 7 S. W. Rep. 161. See The In- dian Chief, 3 Rob. Adm. 12: Arnold v. United Ins. Co., 1 Johns. Cas. (N. V.i .".<'••■:; Bark Pioneer, Blatchf. Pr. 666. 74 The Indian Chief (Milton's case) 3 Rob. Adm. 12. 27. 28. Mr. Phillips Q Phillips ou Insurance. 3d ed.. 114; sec. 168) says: '-The commercial national character of a consul is not affected by his office, but is determined, like that of other persons, by his residence and the various other circumstances that constitute national character as affecting that of his property": Wheaton's International Law. ed. 1863, 57.".. sec 19; Hall's International Law. ed. 1880, 431. 75 The Sarah Christiana, 1 Rob. Adm. 239, per Sir Wm. Scott. 363 WAR — ALIEN ENEMIES. § 295 domicile of the owners. 76 In regard to corporations, they are now considered to be citizens of the state of their incorporation and transaction of business." So where a foreign insurance corporation, upon compliance with the insurance laws of New York, has been authorized to do business there, and has estab- lished a permanent general agency, and conducts its business there as a distinct organization in the same manner as domestic corporations, it will be regarded, as to the business transacted there, as domiciled and subject to the same obligations and lia- bilities as domestic institutions. 78 And substantially the same ruling obtains in Ohio.' 9 So a foreign corporation is an ''in- habitant" under the first section of the Judiciary Act of that district in which it is engaged in business. 80 An insurance company is also an inhabitant, for the purposes of taxation, of the town where it has its principal place of business. 81 § 295. Alien Enemy— What Constitutes Domicile. — "What constitutes domicile depends almost exclusively upon whether the party intends to remain in a given country 76 Arnold v. United Ins. Co.. 1 Johns. Cas. (N. Y.) 363, 368, affirmed, Jenks v. Hallett, 1 Caines (N. Y.). 60; The Yigilantia, 1 Rob. Adm. 13, 14, per Sir Wm. Scott; Livingston v. Maryland Ins. Co., 7 Crancn (U. S.), 542, per Story, J. 77 Louisville R. R. Co. v. Lelson, 2 How. (U. S.) 497; Shelby v. Hoff- man, 7 Ohio St. 450; Lafayette Ins. Co. v. French, IS How. (U. S.i 404. But it is said by Mr. Phillips that the national character of a corporation is that of its members: 1 Phillips on Insurance. 3d ed.. sec. 167; and so in Arnould on Insurance. Perkins' ed., 94, sec. 55. note 1, both citing Hope Ins. Co. v. Boardman. 5 Cranch (U. S.), 57; Bank of Cited States v. Devaux. 5 Cranch (U. S.), 62; Society etc. v. Wheeler. 2 Gall. (C. C.) 105. See Wood v. Hartford F. Ins. Co.. 13 Conn. 202; 33 Am. Dec. 395. note, 399; Hatch v. Chicago etc. R. R. Co., 6 Blatchf. (C. C.) 105; Minot v. Philadelphia etc. R. R. Co., 2 Abb. U. S. 323: Thompson on Corporations, ed. 1895, vol. i, see. 12; Id., vol. vi, sees. 7421-25. 78 Martin v. International L. Ins. Soc, 53 N. Y. 339; 13 Am. Rep. 529. 79 New York L. Ins. Go. v. Bert. 23 Ohio St. 105. so Gilbert v. New Zealand Ins. Co., 49 Fed. Rep. S84. si City of Portland v. Union Mut. L. Ins. Co. (Me.), 9 Atl. Rep. 613. But see International L. Assur. Soc. v. Commissioners Taxes. 28 Barb. (N. Y.) 318. A corporation is said not to be a citizen of tin 1 United States within the 14th amendment: Insurance Co. v. City of New Orleans, 1 Woods (C. C), 85. § 295 WAR — ALIEN ENEMIES. 364 or state, either permanently or for a definite period, or whether his abode is taken up for a temporary purpose with the intent to return. 82 Thus the intent to reside an in- definite time will establish a commercial domicile. 83 And if a citizen of one country goes into another and remains there, and engages in trade and commerce, he becomes by the law of nations a merchant of that country 'and acquires a domicile there. 84 So British subjects residing and trad- ing in Portugal are to be deemed Portuguese subjects. 85 A foreigner coming to the United States for health, and remaining and engaging in trade, acquires a domicile here. 86 If the domicile is acquired for mercantile purposes in the en- eny's country, the person acquiring such domicile becomes an alien enemy, 87 for the domicile in an enemy's country is, as has been stated, 88 the test of hostile status. So a business in a hostile country is stamped with the national character of such country. 89 So if a neutral who, having resided in the hostile country, withdraws therefrom, or who, never having re- sided there, retains a business or trading house there, the entire commerce of the house is stamped with the hostile character of S2 Hallowell v. Saco, 5 Greenl. (Me.) 143; Harvard College v. Gore, 5 Pick. (22 Mass.) 372. 374. For definition of "domicile," see note 34 Am. St. Rep. 313; Wood v. Boeder, 45 Neb. 311; 63 N. W. Rep. 853; Arnold v. United Ins. Co., 1 Johns. Cas. (N. Y.) 366, 367, per Kent, J.; Story's Conflict of Laws, 7th ed., c. iii, sec. 43, p. 36. "Domicile, how acquired," see note 34 Am. St. Rep. 314, and see note for defini- tion of "domicile." 59 Am. Dec. 111-15; note: terms "inhabitancy," "residence," "citizenship." 32 Am. Dec. 427, 429. 83 The Venus, 8 Cranch (U. S.), 279. 84 The Indian Chief, 3 Rob. Adm. 12. 85 The San Jose Indiano, 2 Gall. (C. C.) 293, per Story, J.; The Friendschaft, 3 Wheat. (U. S.) 52, per Marshall, C. J. 86 Elbers v. Union Ins. Co., 16 Johns. (N. Y.) 128. In this case there was a warranty in the policy that the property was Swedish,which the court held was not complied with. But see on this point. Dnguet v. Bhinelander, 2 Johns. Cas. (N. Y.) 476; reversing 1 Johns. Oas. (N. Y.) 360. 8T McConnell v. Hector, 3 Bos. & P. 114, per Alvanley, C. J.; Tabns v. Bendelack, 4 Esp. 107; 1 Kent's Commentaries, 13th ed., 74. See, also, as to neutral engaging in enemies' commerce, The San Jose In- diano. 2 Gall. (C. C.) 286. per Story. J. 88 See last section and cases thereunder. so The Friendschaft, 4 Wheat. (U. S.) 105. 365 WAR — ALIEN ENEMIES. § 296 the enemy. 00 The intention to return at some future period to one's native country does not destroy the presumption of domicile, since if there be any doubt as to the time or cer- tainty of the return, this will not avail against the presumption of hostile residence, or where the intention is fixed as of a defi- nite and certain time at a period distantly removed, this is not sufficient; 91 and where the intent to permanently reside in the country is avowed, or where it is otherwise ascertained, it makes no difference how recently the residence may have been estab- lished, or that it may have been for only a day or two. 92 So the character of the trade is immaterial where the party is dom- iciled bona fide in the United States, intending to indefinitely reside here, although he had emigrated here from a foreign country. 93 § 296. Residence with Intent to Return. — Where a per- son's residence in a country exists only for a special or tempo- rary purpose, with the intent to return within a short time to his own country, this does not constitute such residence his domicile, nor invest the party with a commercial character at variance with his actual domicile, 94 and this was held true in a 90 The Friendschaft, 4 Whaet. (U. S.) 107; The San Jose Indiano, 2 Gall. (C. C.) 268. 9i 1 Duer on Insurance, ed. 1S45, 500, sec. 9. 92 Case of Mr. Whitehall, cited in The Diana, 5 C. Rob. Adm. GO. per Sir Win. Scott; s. c, given in 1 Duer on Insurance, ed. 1845. 496, sec. 3, as follows: "The property of a British merchant, who had removed to a Dutch island in the West Indies at a time when a war between England and Holland was expected, at the breaking out of actual hostilities, was condemned as that of an enemy, although he had resided in the island only a day or two previous to its capitula- tion to a British force, but he was proved to have gone there with the avowed design of forming a permanent establishment, and by this design he was held to be concluded"; and in a note thereto he refers to remarks of Chief Justice Marshal on this case in The Venus, 8 Cranch (U. S.), 288. See, also, 1 Kent's Commentaries, 13th ed., 76, 77. 93 Livingston v. Maryland Ins. Co.. 7 Cranch (XL S.), 506, 542. 94 See The Harmony, 2 C. Rob. Adm. 324; Wheaton's International Law, ed. 1863, 560. As to evidence generally to show change of dom- cile, see Viles v. City of Walton, 157 Mass. 542; 34 Am. St. Rep. 311. § 296 WAR — ALIEN ENEMIES. 366 case where the stay was prolonged sixteen months and thf party intended to and did return; 95 and it was so held where the party was a naturalized citizen and had a commercial domi- cile in the United States, and was detained by business in an- other country over one year. 96 The intent to return, how- ever, must have some limit, for it cannot absolutely govern in all cases, since the time of the continuance of the residence and the attendant circumstances may make the party's domicile that of the place where he continuously resides, although his going to and residing in another country may have been in- cepted in a special purpose, 97 for if the residence, although originating in a special purpose, be continued for a long period of time, it may be reasonably assumed that the special purpose has become affected by other purposes and designs, or that the intent of returning has been indefinitely postponed. This in- tent, however, depends largely upon circumstances, and is sub- ject to some latitude of application. Thus, residing in a coun- try shortly before and up to the beginning of war, with intent to return, should not be held binding. The party should be permitted a reasonable time to disclose his actual intention, and disengage himself, but a continuous residing in such country thereafter and identifying himself with its interests and com- merce, and aiding its resources by payment of taxes, or other- wise adding to its strength as a belligerent, would establish a domicile there, against which the original special purpose ought not to avail as a defense. 98 But if a man is forcibly restrained and his residence is involuntary, that is not his domicile. 99 95 Sears v. City of Boston. 1 Met. (42 Mass.) 250. 96 The Ann Green, 1 Gall. (C. C.) 274; White v. Brown, 1 Wall. Jr. (C. C.) 217; The Friendschaft, 3 Wheat. (U. S.) 51. 97 See The Harmony, 2 C. Rob. Adm. 322, 328, per Sir Win. Scott; Whoaton's International Law, ed. 1863, 560. £•8 The Harmony, 2 C. Rob. Adm. 324, per Sir Wm. Scott; Fifty - two Bales of Col ton. Blatchf. Pr. Teecl not be Set Out in Policy. It is not necessary to the validity of the policy that the name of the assured should appear therein. He may be described in other ways than by name. 31 A party may insure as agent or trustee, naming the actual partv in interest; 32 or one may in- sure in his own name goods held in trust by him, and he can recover for their entire value, holding the excess over his own interest for the benefit of those who have intrusted the goods to him; 33 or an agent may insure in his own name as agent; 34 or a consignee may effect an insurance in his own name on account of whom it concerns, loss payable to him, and, in case of loss, may maintain an action thereon; 35 or the policy may be left blank and the name filled in, or it may be made for "whom it may concern," or to the "estate of" ; 36 and a policy on "account of — ," or "for — ," is equivalent to a pol- icy "for whom it may concern." 37 If property is insured "on ac- count of whom it may concern," there is a privity between the insurance company and the actual owner of the property from 29 Hunton v. Equitable L. Assur. Soc, 45 Fed. Eep. 661. 80 Taylor v. Charter Oak L. Ins. Co., 9 Daly (N. Y.), 489. 31 Weed v. London F. Ins. Co., 116 N. Y. 106, 114; 22 N. E.Eep. 231; Weed v. Ham burs-Bremen F. Ins. Co., 133 N. Y. 394. 31 Holmes v. United Ine. Co., 2 Johns. Cas. (N. Y.) 329. 33 California Ins. Co. v. Union Compress Co., 133 U. S. 387; 19 Ins. L. J. 385; 10 Sup. Ct. Rep. 365. 34 Davis v. Boardman, 12 Mass. 80; Marts v. Cumberland Ins. Co., 44 N. J. L. 478. 36 Sturm v. Atlantic Mut. Ins. Co., 63 N. Y. 77. 36 Fire Ins. Assn. v. Merchants' etc. Co., 66 Md. 339; Turner v. Burrows, 8 Wend. (N. Y.) 144; Clinton v. Hope Ins. Co., 51 Barb. (N. Y.) 647; 45 N. Y. 454. But see State v. Standard L. Assn., 38 Ohio St. 281. 37 Burrows v. Turner, 24 Wend. (N. Y ) 276; 35 Am. Dec. 622. See Turner v. Burrows, 8 Wend. (N. Y.) 141. § 311 PARTIES TO THE CONTRACT — THE INSURED. 388 the time of the insurance and the contract is with him as the assured. 38 And if one is named by mistake it may be cured by indorsement, 39 and in such case a recovery may be had in the name of the real party in interest, for the indorsement may be regarded as a new contract of insurance with him. 40 § 311. Name — Evidence Admissible to Show Actual Party in Interest. — If the name of the person for whose benefit the insurance is obtained does not appear upon the face of the policy, or if a blank is left in the policy for the name of the person on whose account the insurance is effected, or if the designations used are applicable to several persons, or if the description of the assured is imperfect or ambiguous, or the policy be "to whom it may concern," evidence aliunde may be resorted to to ascertain the meaning of the contract and to show who are the real parties in interest. 41 So in an action upon a policy in the name of a party not the owner, a letter from an owner, directing the plaintiff to obtain insurance on the vessel in his own name, and stating the interest of the plain- tiff in the vessel insured, is admissible in evidence for the plaintiff. 42 In such cases the risk attaches to the interest of the party actually intended to be covered, and he may sue, 43 even though such intention may have been unknown to the in- surer. 44 But the party intended must have been in contempla- tion of the contract, or the insured must have subsequent lv 38 Pacific Mail S. S. Co. v. Great Western Ins. Co., 65 Barb. (N. Y.) 334. 39 Sohns v. Rutgers F. Ins. Co., 4 Abb. A pp. (N. Y.) 279. 40 Sohns v. Rutgers F. Ins. Co., 4 Abb. App. (N. Y.) 279. 41 Weed v. London etc. Ins. Co., 116 N. Y. 106, 114; Clinton v. Hope Ins. Co., 45 N. Y. 454; Burrows v. Turner, 24 Wend. (N. Y.) 276; 35 Am. Dec. 622; Weed v. Hamburg-Bremen F. Ins. Co., 133 N. Y. 394; Protection Ins. Co. v. Wilson, 6 Ohio St. 553. " Yairin v. Canal Ins. Co., 10 Ohio, 223. 43 Crosby v. New York etc. Ins. Co., 5 Bosw. (N. Y. ) 369, 377; Hooper v. Robinson (98 U. S.), 8 Otto, 528; Cincinnati Ins. Co. v. Rie- man, 1 Disn. (Ohio) 396; Clinton v. Hope Ins. Co., 45 N. Y. 454; New- eon v. Douglass, 7 Har. & J. (Md.) 417; 16 Am. Dec. 317; The Sidney, 23 Fed. Rep. 88. 41 The Sidney, 27 Fed. Rep. 119; Buck v. Chesapeake Ins. Co., 1 Pet. (U. S.) 151; New son v. Douglass, 7 Har. & J. (Md.) 417; 16 Am. Dec- 317. See, also, Hurl hurt v. Pacific Ins. Co., 2 Sum. (C. C.) 471. 3S9 PARTIES TO THE CONTRACT THE INSURED. § 311 adopted it, for this clause does not cover any and everybody who may chance to have an interest in the thing insured. 40 "Where a party who has an insurable interest in a house owned by another takes out a policy in the owner's name, and upon its loss collects the insurance money as the owner's agent, he is liable to the owner therefor without a prior demand, and can- not defend on the ground that he intended the insurance to cover his own interest. 46 Where p, policy is issued by a mutual insurance company "for whom it concerns" to one who has no interest in the property insured, the owner of the property, by whose authority the policy was obtained, may maintain an ac- tion, subject to any right given to the insurers by the terms of the policy to deduct any amount due them from the in- sured. 47 But it was held in an Iowa case that an action at law could not be maintained by Caroline Zimmerman upon a pol- icy issued to "C. Zimmerman, where the application was re- ferred to as a part of the policy and was signed Conrad Zim- merman." 48 And a policy of insurance made in the name of a particular person who is the owner of a small proportion of the property insured cannot be made to cover the interest of others upon parol proof that the application for insurance was for such others, as well as for the party named, and that this was well known to the insurers, and that it was the intention of all the parties that the policy was to cover the interest of all the owners. 49 Where an Indiana Insurance Company located at Evansville, in said state, in order to do business in Ohio and avoid the laws of that state prescribing the terms upon which insurance companies might carry on business therein, issued to persons, who insured with their agents, H. & B., in Ohio, cer- tain slips, certifying that H. & B. were insured in the property therein described under an open policy, numbered 38, which 45 Newson v. Douglass, 7 Har. & J. (Md.) 417; 16 Am. Dec. 317; Hooper v.Robinson (98 U. S.), 8 Otto, 528; Waring v. Indemnity Ins. Co., 45 N. Y. 606. * 6 Looney v. Looney, 116 Mass. 283. 17 Cobb v. New England etc. Ins. Co., 6 Gray (Mass.), 192. * 8 Zimmerman v. Farmers' Ins. Co., 76 Iowa, 352; 41 N. W. Rep. 39. ' 9 Finney v. Bedford etc. Ins. Co., 8 Met. (Mass.) 348; 41 Am. Dec. 515. § 311 PARTIES TO THE CONTRACT — THE INSURED. 890 the insurance company had previously issued to H. & B., its own managing agent at Evansville. H. & B. insured plaintiff on a cargo of salt in a barge on the Ohio river; they received the premium from plaintiff and delivered to him a slip certify- ing that they, the agents, were insured under the open policy, number 38. The company knew that plaintiff was the owner of the salt, and knew everything material to the risk. The salt was shipped by plaintiff .to S. & Co., Memphis, who was expected to make advances thereon and pay charges therefor, and S., one of the firm, was made appointee in the slip or in- surance certificate to receive the insurance in case of loss. The salt became a total loss by the perils insured against ; proof was made of loss, and the plaintiff's interest therein. It was held that parol evidence was admissible to show that plaintiff was the party intended to be insured, although the contract was in writing and there was no ambiguity on its face concerning the same; that the company was bound to know what its agents, H. & B., knew, and could not set up the latter's want of in- terest in the property, and could not evade liability by saying that the contract was void; that even if it should be held void because H. & B., while acting as agents for the company, could not insure themselves, nevertheless the writings and parol proof showed a valid parol contract to insure plaintiff; that the action was properly brought in plaintiff's name. 00 The court says: "In applying insurance contracts to the proper subject matter and the party or parties intended to be covered by the risk, courts have been liberal in receiving parol testimony in fa- vor of the assured. It is well settled that when a written con- tract is made by an agent in his own name, the undisclosed principal may sue upon it, and prove by parol evidence that the contract was made for his benefit, and this may be done although the other party had no knowledge of the agency, and supposed he was dealing with the one who was acting for himself. 51 60 Daniels v. Citizens' Ins. Co., 5 Fed. Rep. 425. 61 Citing Huntington v. Knox, 7Cu«h. (Mass.) 371 : Story on Agency, sec. 61; Insurance Co. v. Chase, 5 Wall. (U. S.) 509; Shawmitt S. R. Co. v. Hampden Ins. Co., 12 Gray (Mass.), 540; Rider v. Ocean Ins. Co., 20 Pick. 259; Archangel v. Thompson, 2 Camp. 620; Thompson v. Rail- 391 PARTIES TO THE CONTRACT — THE INSURED. § 311 road Co., 6 Wall. (U. S.) 137; Insurance Co. v. Wilson, 6 Ohio St. 561; Anson v. Winnesheik Ins. Co., 23 Iowa, 85. On the point that parol insurance is valid, the court cites Relief Ins. Co. v. Eggleston, 96 U. S. 574; Sanborn v. Fireman's Ins. Co., 16 Gray (Mass.), 448; 77 Am. Dec. 419. CHAPTER XIII. PARTIES— MEMBERS OF MUTUAL INSURANCE COMPANIES. § 316. Parties: Members of mutual insurance companies. § 317. Membership exists when contract is completed. § 318. Obligations and rights of members generally. § 319. Relations of members of mutual companies: Partnership. § 316. Parties— Members of Mutual Insurance Com- panies. — Members of mutual insurance companies and of mu- tual benefit societies, the legal status of which is that of in- surance companies, sustain a dual relation, since each member is at once the insured and insurer. In one aspect his relation is substantially that of a policy holder, or a party who has con- tracted upon a consideration for an indemnity or for the pay- ment of money upon the happening of a specified contingency. He has all such rights against the corporation or association as are defined by his contract with it and which could validly be enforced thereunder. In another aspect he is a member of the corporation, and becomes an indemnifier of the other members as the corporation or association represents to each member the aggregate of the other members. The members have, or may have, a voice in the management of the company's affairs, 1 and their corporate rights depend upon the charter or articles of as- sociation, and the by-laws and rules of the organization, as these embody the compact between the corporation or associa- tion and its members, and to this resort must be had for the settlement of such questions as involve their duties and rights with relation to the organization. 2 It is held in Massachu- 1 See State v. Standard L. Assn., 38 Ohio St. 281. 1 Commonwealth v. Massachusetts F. Ins. Co., 112 Mass. 116, 120, per the Court; Planters' Ins. Co. v. Comfort, 50 Miss. 662, 668, per the Court; Rosen bergerv. Washington M. F. Ins. Co., 87 Pa. St. 207; Com- (392) 393 PARTIES — MEMBERS. § 316 setts 3 that a statute providing that the conditions of insurance shall be stated in the body of the policy 4 does not apply to the obligations of the insured as a member of the corporation; and that the contract of each member contains obligations on the part of the corporation which enter into and qualify the con- tract of every other member. It is necessary and equitable that each person who gets insured in such company or society should become subject to the same obligations toward his asso- ciates that he requires from them toward himself. But where a company is organized upon the mutual plan, having no cap- ital stock, and receives, as a substitute therefor, notes for pre- miums in advance, the makers of such notes do not thereby be- come stockholders of the corporation. 6 So where a person pro- cured a policy of insurance for a term of years at a fixed an- nual premium, and paid the first year's premium in advance, and gave a note payable in installments at the commencement of each of the years during which the policy ran, it was decided that the assured did not thereby become a stockholder, or liable for the debts of the company, and that Avhen the company failed all obligation to pay the note terminated. 7 And it is held in Maine 8 that a mutual insurance company has no stock- holders, and its original corporators cannot be regarded as such so as to be entitled to assets remaining after dissolution and paying the company's liabilities. But it is declared in a New York case that where the statute 9 provides that an insurance company may sue or be sued by any of "its members or stock- holders," the word "members" is synonymous with "stock- monwealth v. St. Patrick's Soc, 2 Binn. (Pa.) 441; 4 Am. Dec. 452. Bradfield v. Union Mut. Ins. Co., 9 Week. Not. Cas. (Pa.) 436; Cham- berlain v. Lincoln, 129 Mass. 70; Grosvenor v. United Soc, 118 Mass. 78: Diehl v. Adams Co. etc. Ins. Co., 58 Pa. St. 443; 98 Am. Dec. 302; Farmers' etc. Co. v. Mylin (Penn. 1888), 15 Atl. Rep. 710. 3 Commonwealth v. Massachusetts F. Ins. Co., 112 Mass. 116. * Mass. Stat. 1864, c. 196. 6 Baxter v. Chelsea Mut. F. Ins. Co., 1 Allen Mass.), 294; 79 Am; Dec. 730. 6 Hill v. Nautilus Ins. Co., 4 Sand. Ch. (N. Y.) 577. 7 Farmers' etc. Ins. Co. v. Smith, 63 111. 187. 8 Titcomb v. Kennebunk Mut. F. Ins. Co., 79 Me. 315, 316; 9 Atl. Rep. 732. » N. Y. Laws, 1853, c. 463, sec. 107. § 317 PARTIES MEMBERS. 394 holders." 10 Sometimes, however, the members of mutual in- surance companies are made stockholders by the statute of in- corporation. 11 Again the holders of certificates are not cred- itors within the meaning of a statute relative to proceedings in equity against corporations. 12 As such member, the company's books are, in law, as much his as other members; 13 but until the act of insurance is consummated he is a stranger to the organi- zation. 14 It is held in Pennsylvania that where one becomes a member of a mutual insurance company, he has a right to vote for the directors, and that they are none the less his repre- sentatives, though they are incompetent, extravagant, or care- less of their trust. 15 § 317. Membership Exists when Contract is Completed. A person becomes a member or co-corporator of a mutual in- surance company or mutual benefit society, whose legal status is that of an insurance company, when the contract is com- pleted, and prior to that time he is a stranger to the organiza- tion, 16 although where a party had a policy on his barn, and subsequently applied for insurance on its contents, it was de- cided that at the time of the latter application he was a mem- ber. 17 Where the secretary of defendant company, who was its general agent for that purpose, received applications of more than fifty persons for insurance and membership in the com- pany, accompanied by their premium notes, etc., and plaintiff's application and premium note were so received, and his due- 10 People v. Security L. etc. Co., 7S N. Y. 114; 7 Abb. N. C. (N. Y.) 198; 34 Am. Rep. 522. 11 "All persons insuring upon the mutual plan in any company or- ganized in accordance with the provisions of this act shall constitute its members and stockholders," etc. ; and providing also the extent of their liability: Kan. Laws, 1875, c. iii, sees. 5, 8. 12 Hill v. Nautilus Ins. Co., 4 Sand. Ch. (N. Y.) *77. 13 Diehl v. Adams Co. etc. Ins. Co., 58 Pa. St. 443; 98 Am. Dec. 302. " Cumberland etc. Co. v. Schell, 29 Pa. St. 31. 15 Koehler v. Beeber (Pa. 1889), 23 Week. Not. Cas. 558; 16 Atl. Rep. 354. 16 See sec. 53 herein. 17 Farmers' Mut. Ins. Co. v. Mylin (Pa.), 15 Atl. Rep. 710. See Ful- ler v. Madison etc. Co., 36 Wis. 599; Tyrell v. Washburn, 6 Allen (Mass.), 466. 395 PARTIES — MEMBERS. § 318 bill for the ten per cent and fees required to be paid in ad- vance was accepted by the secretary, and the board of directors thereupon completed the organization of the company, it was held that the plaintiff (like all other persons whose application, etc., had been so received up to the time of such organization) was a member of the company, liable to assessment for the payment of subsequent losses of other members, and entitled to a policy upon the property described in his application, al- though the directors had not formally approved of such appli- cation or indorsed their approval thereon, in the day of such or- ganization, as required by the by-laws. 18 § 318. Obligations and Rights of Members Generally. Where one becomes a member of such organizations as are the subject of consideration herein, he becomes bound by the char- ter >and by-laws or articles of association and rules of the soci- ety. 19 He is bound, aside from the express provisions of the pol- icy relating to the point at issue, to take notice of the by-laws of the company." ISTor can he, as such member, deny the valid- ity of by-laws which he has assented to by becoming a mem- ber, on the ground that they were not regularly adopted, 21 nor avail himself of any irregularity which affects the company's incorporation. 22 And such member is liable for his proportion- ate share of the losses which may occur while he is a member: that is, for the time during which his policy runs, and no longer; 23 but he is not bound by a by-law subsequently passed which is in conflict with the charter and to which 18 Van Slyke v. Trempealean etc. Ins. Co., 48 Wis. 683; 39 Wis. 390; 20 Am. Rep. 50. 19 Supreme Lodge etc. v. Knight, 117 Ind. 489: Hesinger v. Home B # Assn., 41 Minn. 516; 43 N. W. Rep. 481; Mitchell v. Lycoming Mut. Ins. Co., 51 Pa. St. 402; Walsh v. .Etna L. Ins. Co., 30 Iowa, 133; 6 Am. Rep. 664; Simeral v. Dubuque etc. Ins. Co., 18 Iowa, 319; Coles v. Iowa etc. Ins. Co., 18 Iowa, 425. See sec. 53, herein. 30 Tread way v. Hamilton etc. Ins. Co., 29 Conn. 68. 11 Pfister v. Gerwig, 122 Ind. 567; 23 N. E. Rep. 1041. " Traders' Mut. F. Ins. Co. v. Stone, 9 Allen (Mass.), 483; Nashua F. Ins. Co. v. Moore, 55 N. H. 48; Sands v. Hill, 42 Barb. (N. Y.) 651. 83 Manlove v. Naw, 39 Ind. 289; Manlove v. Binder, 39 Ind. 371; 13 Am. Rep. 280. § 319 PARTIES— MEMBERS. 396 he did not assent, unless he has expressly agreed that by- laws may be subsequently enacted; 24 nor is he bound by the business regulations and instructions to agents adopted by the officers of the company, 25 although it is held that as such member, the books of the company or association are evidence against him to show the action of the man- agers. 26 But before a party becomes such a member he can- not be bound by the acts of the company's agents, 27 nor by its charter and by-laws or articles of association and rules. 28 And one who is induced to become a member by fraud of the company or its authorized agents incurs thereby no obligations toward the company. 29 A valid contract with such a company or society is, however, binding on both parties, the insured and the company. 30 § 319. Relations of Members of Mutual Companies — Partnership. — The relations of members in companies or as- sociations, the legal status of which is Jthat of insurance com- panies, is declared in some cases to be that of partners, in others not. In Georgia, it is held that a mutual insurance company is governed by the general law of partnership as to division of profit and loss, so far as its charter does not change the rule, and in dividing profits equity will regard the rights of all those who have contributed premiums without regard to the fact whether they were members when the profits were distributed. 31 So in Pennsylvania it is declared that persons insuring in a 24 Great Falls Mut. F. Ins. Co. v. Harney, 45 N. H. 292; Northwest- ern B. etc. Assn. v. Vvarner, 24 Bradw. (111.) 361; New England Mut. F. Ins. Co. v. Butler, 34 Me. 451. 25 Walsh v. .Etna L. Ins. Co., 30 Iowa, 133: 6 Am. Rep. fi64. 26 Diehl v. Adam? Co. etc. Ins. Co.. 5S Pa. St. 443; 98 Am. Dec. 302. 27 Columbia Ins. Co. v. Cooper, 50 Pa. St. 331; Cumberland etc. Co. v. Schell, 29 Pa. St. 31. 28 Eilenber^er v. Protection Ins. Co., 89 Pa. St. 464; Columbia Ins. Co. v. Cooper, 50 Pa. St. 331. 29 Salmon v. Richardson, 30 Conn. 360; 79 Am. Dec. 255; Brown v. Donnell, 49 Me. 421 ; 77 Am. Dec. 266; Jones v. Dana, 24 Barb. (N. Y.) 3 5. 80 New England Mut. F. Ins. Co. v. Butler, 34 Me. 451. 81 Carlton v. Southern Mut. Ins. Co., 72 Ga. 371. 397 PARTIES — MEMBERS. § 3L& mutual insurance company are associated in the nature of lim- ited or special partners. 32 But in Xew Jersey it is held that the fact that an insurance company is mutual does not create a partnership among the insured, so as to make a contract con- tinuing; the insurance is between the corporation and the in- sured. 33 A provision, however, in the charter of a stock life insurance company that, after certain dividends to stock- holders, the net profits should be paid, twenty per cent to the stockholders and eighty per cent to the policy holders, was de- cided not to make the policy holders partners; such share was not profits, but simply an equitable adjustment of premiums paid. 34 But the holder of an unmatured life policy is entitled to share with other creditors in the assets; he is not a partner. 30 So a policy holder is not a partner of the company. 36 There is no trust relation between the policy holder of the mutual com- pany and the company, and an action in equity will not lie on such a theory. 37 In People v. Security Life Insurance and An- nuity Company, 6S (the organization was a regular insurance company, incorporated with a capital), the court said: "The argument that they are to be treated as partners is quite ingen- ious, but I think clearly unsound," and also declared that the stock was contributed by stockholders, and not policy holders, and managed by directors chosen by stockholders, and that the members had no voice in the election of officers unless they were stockholders, and had no voice in the management of the business. In another case, Mutual Benefit Life Insurance Company v. Hillyard, 39 the court says: "The suggestion that this being a mutual company the contract is therefore like a partnership, and dissolved, is disposed of by what Allen, J., 32 Krugh v. Lycoming F. Ins. Co., 77 Pa. St. 15. 33 Mutual etc. Ins. Co. v. Hillyard, 37 N. J. L. (8 Vroom) 444; 18 Am. Rep. 741. 3 * People v. Security L. Ins. etc. Co., 78 N. Y. 114; s. c, 7 Abb. N. C. (N. Y.) 198; 34 Am. Rep. 522. 35 People v. Security L. Ins. Co., 78 N. Y. 114; 7 Abb. N. C. (N. Y.) 198: 34 Am. Rep. 522. 35 Brown v. Stoerkel, 74 Mich. 269, 276. 37 Taylor v. Charter Oak L. Ins. Co., 59 How. Pr. (N. Y.) 468. 38 78 N. Y. 114; 34 Am. Rep. 522. 89 37 N. J. L. (8 Vroom) 444; 18 Am. Rep. 741. § 319 PARTIES — MEMBERS. 398 said in substance in Cohen v. New York Mutual Life Insurance Company, 40 that the company is a body corporate, capable of contracting as such, and the relation is between insurer, a cor- poration, and insured; that the members are not partners be- tween themselves. The contract is the contract of a corpora- tion, and whatever incidental advantages appertain to a mem- ber, that does not affect the contract in the policy." In Cohen v. Mutual Life Insurance Company, 41 referred to in the last case, the court, Allen, J., says: "But whatever analogies there may be between mutual companies and ordinary partnerships, and the relation of the members of the two organizations, an incorporated company, although organized on the mutual prin- ciple, is in no proper or legal sense a partnership. The defend- ant is a body politic and corporate, capable of contracting and of suing and being sued, and the relation between the plaintiff and the corporation is that of insured and insurer, and the rights and duties of the contracting parties are to be governed and determined by the terms of the policy by which the in- surance is effected, as in other cases. Other and incidental rights are secured to the plaintiff as a member of the company, one of the corporators; but this does not make the members partners as between themselves, or affect the express contract of the corporation." In Brown v. Stoerkel, 42 Morse, J., de- clares: "This association was in no sense a copartnership. There was no business carried on by it, and nothing involving a loss or profit in a business sense. It was purely a benevolent and social organization, having also in view the protection, benefit, and welfare of its members in their various employ- ments. It must now be considered as well settled that persons have a right to enter into such associations, and to bind them- selves, as to their membership and rights in such societies and the funds of the same, by the constitution and by-laws of the association which they adopt or subscribe to after adoption. Such an organization may be neither a partnership nor a corpo- ration. The articles of agreement of such an association, whether called a 'constitution,' 'charter,' or 'by-laws/ or any 40 50 N. Y. 624 ; 10 Am. Rep. 522. *' 50 X. Y. 624: 10 Am. Rep. 522. " 74 Mich. 2(39, 276. 399 PARTIES — MEMBERS. § 3l9 other name, constitute a contract between the members, which the courts will enforce, if not immoral or contrary to the public policy or the law of the land." In Gorman v. Bussell, 43 the association was unincorporated, and its purpose was to provide certain benefits to its members in case of sickness or death. The funds, therefore, were to be raised under its constitution by the collection of an initiation fee, weekly dues, fines, etc. Certain persons claiming membership were excluded from the meetings of the organization, and brought a bill for its disso- lution, and an accounting of the partnership. Although no American cases are cited in the opinion, the court apparently relying on the English decisions, it was decided that benevolent associations are partnerships; that voluntary organizations of this character for mutual relief in sickness or distress, provided for by funds raised as they were here, are partnerships, and could be dissolved in equity for improperly excluding a mem- ber, and be compelled to account. In Atkins v. Hunt, 44 the defendants signed articles of association in trade, under the name of "The Farmers and Mechanics' Store," by which it was provided that any stockholders might withdraw upon giving six months' notice, and that the business of the company should be done pursuant to a major vote of those present. The de- fendants subscribed a certain sum, and a by-law provided that each member should become a partner, and it was held that the defendants were partners in the company. This was not a contract to form a partnership in futuro, but an actual existing association, liable as partners, and the liability rested upon hav- ing signed by-laws forming a present company. It is held in New York, 40 in an action to dissolve it, that a voluntary associa- tion established for moral, benevolent, and social objects, where there is no power to compel the payment of dues, and where the right of the member ceases on his failure to make such payment, is not a partnership, and the court per Miller, J., says: "Nor are the plaintiffs entitled to the relief claimed upon the ground that the members of the society were copartners. 43 14Cal. 531. u 14 N. H. 205. 45 Lat'ond v. Deems ; 81 N. Y. 507, 514. § 319 PARTIES — MEMBERS. 400 Associations of this description are not usually partnerships. There is no power to compel payment of dues, and the right of the member ceases when he fails to meet his annual subscrip- tion. This certainly is not a partnership, and the rights of co- partners as such are not fully recognized. The purpose is not business, trade, or profit, but the benefit and protection of its members as provided for in its constitution and by-laws. In ac- cordance with well-established rules no partnership exists under such circumstances." Another important case is that of Ash v. Guie, 46 wherein it was decided that the members of a Masonic lodge are presumptively not partners. The action was assumpsit on a certificate of indebtedness executed by the master and wardens of the lodge, and was directed against a large number of the members. And the court said: "Copartnership has been defined to be a 'combina- tion by two or more persons of capital or labor or skill, for the purpose of business for their common benefit.' .... It would seem that there must be a community of interest for business purposes. Hence voluntary associations or clubs for social and charitable purposes, and the like, are not proper partnerships, nor have their members the powers and responsi- bilities of partners. A benevolent and social society has rarely, if ever, been considered a partnership Here there is no evidence to warrant an inference that when a person joined the lodge he bound himself as a partner in the business of purchasing real estate and erecting buildings, or as a partner, so that other members could borrow money-on his credit. The proof fails to show that the officers or a committee, or any num- ber of members, had a right to contract debts for the building of a temple which would be valid against every member from the mere fact that he was a member of the lodge. But tho>e who engaged in the enterprise are liable for the debts they contracted, and all are included in such liability who assented to the undertaking or subsequently ratified it. Those who par- ticipated in the erection of the building, by voting for and ad- vising it, are bound the same as the committee who had it in charge; and so with reference to borrowing money. A member « 6 97 Pa. St. 493; 39 Am. Rep. 818. 401 PARTIES — MEMBERS. § S19 who subsequently approved the erection or borrowing could be held on the ground of ratification of the agent's acts." In an English case 47 it is held that the right to participate in the profits of the company did not constitute the insured a partner with the proprietors of the company. Mr. Parsons' definition of partnership contemplates a division of profits as an element of partnership. 48 A right to receive a share of the profits, however, is held in IsTew Jersey not to be an invariable test. 49 But in Babb v. Reed 50 it is held that an association for purposes of mu- tual benevolence among its members only is not an association for charitable uses. If not incorporated, its members are re- garded in law as partners in relation to third persons. 47 In re English etc. Assur. Soc, 11 Week. Eep. 681; 8 L. T., N. S., 724. 48 Parsons on Partnerships, 4th ed., sec. 1. This is also true of the definition under Deering's Annot. Civ. Code of California, sec. 2395. *» Leabury etc. v. Bolles, 51 N. J. L. (22 Vroom) 103; 16 Atl. Eep. 54, and note. 50 5 Rawle (Pa.), 151; 28 Am. Dec. 650. Joyce— Vol. 1—26. CHAPTER XIV. PARTIES— THE INSURER. § 325. Insurer defined. § 326. Stock insurance companies defined. § 327. Legislation concerning insurance companies. § 328. Same subject: Foreign companies. § 329. Foreign company : Retaliatory and anti-compact laws. § 330. P^oreign companies: What constitutes "doing business," etc. § 331. Foreign company estopped to avoid contract by setting up noncompliance with statute. § 332. When contract valid although company has not complied with statute. § 333. When contract not valid where company has not complied with statute. § 334. Charter: Corporate powers: Ultra vires. § 335. Forfeiture of charter. § 325. Insurer Denned; — An insurer is the person who in a certain sense assumes the risk and undertakes to in- demnify or pay a certain sum on the happening of the specified contingency. 1 Such person may be a private individual or a corporation or association. Formerly, a large proportion of the risks were underwritten by private individuals, 2 but the business of insuring in this country is almost exclusively in the hands of corporations or associations, which are divided into either stock companies and mutual companies or associations. Sometimes a company combines both plans of insurance. 3 1 See 1 Phillips on Insurance, 3d ed. sec. 2. 2 See sec. iv, herein; 2 Parsons on Contracts. 7th ed.. 351. 3 The Pennsylvania act of February, 1870, provided that it should be unlawful to issue or execute any policy of insurance or guaranty against loss by fire or lightning, except under authority expressly conferred by a charter of incorporation. See Arrott v. Walker, 118 Pa. St. 249; 12 Atl. Rep. 280. (402) 403 PARTIES — THE INSURER. §§ 326, 327 § 326. Stock Insurance Companies Denned. — A stuck insurance company is one which has a capital stock owned by its stockholders, and which capital is the basis of its business, and is liable for losses and expenses. Those insured in such companies pay premiums as the basis of their contract with the company. 4 A share of stock may be defined as a right which its owner has in the management, profits, and ultimate assets of the corporation. A stockholder in an insurance company has the same rights as a stockholder in any other corporation, but he has no legal title to the property or profits of the corpora- tion until a dividend is declared or a division made on the dis- solution of the corporation. 5 § 327. Legislation Concerning- Insurance Companies. In most, if not all, the states of the Union statutes have been enacted principally for the protection of policy holders, prescrib- ing certain conditions upon which insurance companies or so- cieties may be permitted to organize or transact business within the state, and these apply to both domestic and foreign in- surance corporations or societies. The statutes will only be briefly noticed, however, in this work. The power of the state to enact such laws is inherent, since corporations, like natural persons, are subject to the laws which may be enacted for the regulation of the community and the protection of citizens. 6 These laws are numerous; they provide for the possession of a certain capital by insurance companies before commencing business, 7 for the deposit of a security fund with the state, 8 for 4 See Anderson's Law Dictionary, 558. 5 Commercial etc. Ins. Co. v. Board of Revenue, 99 Ala. 1; 42 Am. St. Rep. 47. 6 State v. Matthews, 44 Mo. 523. 7 People ex rel. Schindler v. Flint (Cal. 1892), 28 Pac. Rep. 495; In re Babcock, 21 Neb. 500; 32 N. W. Rep. 641, under Com. Stat. Neb., 1885. o. 16: People v. Manhattan Mut. F. Ins. Co., 34 N. Y. 570; 12 N. Y. Supp. 264, under N. Y. Laws, 1853, c. 460; State v. Trubey, 37 Minn. 97; 33 N. W. Rep. 554. Held in Williams v. Cheney, 3 Gray (Mass.), 215, that Stat. 1847, Mass., c. 273, sec. 2, and Rev. Stat., c. 37, sec. 42, with regard to payment, etc. of a certain amount of capital before doing business, did not apply to mutual insurance com- panies. See, also, Atlantic etc. Ins. Co. v. Concklin, 6 Gray, (Mass.), 73; State v. Critchet, 37 Minn. 13: 32 N. W. Rep. 787. 8 Attorney General v. North American L. Ins. Co., 82 N. Y. 172, § 327 PARTIES — THE INSURER. 404 giving bonds, 9 for an examination into the company's affairs, 10 for furnishing information to the superintendent of insurance by the companies regarding their business and financial condi- tion, 11 for making reports to the comptroller, 12 for returns to the insurance commissioners, 13 for the payment of a license tax or fee, 14 for the taxation of corporate property, 15 for proceed- under N. Y. Laws, 1866, c. 576; Employers' Liability Assur. Co. v. Commissioner of Insurance, 64 Mich. 614; 31 N. W. Rep. 542; under Mich. Stat. Laws, 1881, p. 279, Act 237; People y. Chapman, 5 Hun (N. Y.), 222. 9 Kaw Life Assn. v. Lemke, 40 Kan. 661; 20 Pae. Rep. 512, under Laws Kan. 1885, c. 131. io People v. State Ins. Co., 19 Mich. 392; Re World's etc. Ins. Co., 40 Barb. (N. Y.) 499. ii State v. Mathews, 44 Mo. 523; Commonwealth v. Hock A. Mut. B. Assn., 10 Phila. (Pa.) 554. 12 People v. National F. Ins. Co., 27 Hun (N. Y.), 188, under N. Y. Act, June 1, 1880. 13 Commonwealth v. Germama L. Ins. Co., 11 Phila. (Pa.) 553. 14 State v. New England Mut. Ins. Co., 43 La. Ann. 133; 8 S. Rep. 888, under La. Act 101, 1886, sec. 7 (act is constitutional); City of Col- umbus v. Hartford Ins. Co., 25 Neb. 83; 41 N. W. Rep. 140, under Neb. Laws, 1887, c. 66; New Orleans v. Salamander Co., 25 La. Ann. 650; iEtna P. Ins. Co. v. Reading, 5 Pa. (L. ed.) 570; 11 Cent. Rep. 858, under Pa. Act, 1873, April 4th, repealed act May 24, 1SS7. As to division of companies into several classes and graduation according to amount of premium received, see State v. Liverpool etc. Ins. Co., 40 La. Ann. 463; 4 S. Rep. 504. License tax on insurance companies need not be equal and uniform as to all companies: State v. Liver- pool etc. Ins. Co., 40 La. Ann. 463; 4 S. Rep. 504. Power of commis- sioner of insurance to grant license or revoke is only ministerial, and not judicial: Hartford F. Ins. Co. v. Commissioners, 70 Mich. 4S."i; 38 N. W. Rep. 474. 15 Notes and bills representing money loaned at interest are "prop- erty": City of New Orleans v. Mechanics' etc. Ins. Co., 30 La. Ann. 876; 30 Am. Rep. 232. Foreign corporations are not taxable for pre- miums uncollected: Railey v. Board of Assessors. 44 La. Ann. 765; 11 Am. St. Rep. 93. Income tax provided by acts of Congress. June 30, 1864, and July 13, I860, on premiums, assessments, etc., is not direct tax, but duty or excise: Pacific Ins. Co. v. Soule, 7 Wall. (U. S.) 433. .Mutual insurance companies are liable to taxation on amount of their capital or accumulated premiums the same as other companies: Sun Mut. Ins. Co. v. Mayor etc., 8 Barb. (N. Y.) 450; 8 N. Y. 241. Mu- tual life insurance company is taxable in town where principal place of business is for stocks, bonds, and other securities in which its funds and earnings have been invested: Rev. Stat. Me., c. 6, sec. 13; 405 PARTIES— THE INSURER. § 327 ings for the dissolution of insurance companies, 16 for obtaining the appointment of receivers of insolvent companies, 1 ' and for City of Portland v. Union Mut. L. Ins. Co., 9 Atl. Rep. 613 As to tax- ation of capital of mutual company, see Sun Mut. Ins. Co. v. New York. S N. Y. 241; Coit v. Connecticut M. L. Ins. Co., 36 Conn. 512; Mutual L. Ins. Co. v. Jenkins, 16 N. Y. 424. Capital stock invested in United States bonds are not exempt from taxation under law of N. Y. 1SS0, c. 542; amended by-laws 1SS1, c. 361; Home Ins. Co. v. New York, 119 U. S. 129; 8 Sup. Ct. 1385 (court divided). Whether inequal- ity is produced in singling out for taxation: Cooley on Taxation, 129; Franklin Ins. Co. v. State, 5 W. Ya. 349. What classes of property of insurance companies are liable to be taxed under Kentucky Stat- utes authorizing their taxation by municipal corporations: Kenton etc. Co. v. City of Covington, 86 Ky. 213; 5 S. W. Rep. 461. As to taxation of English joint stock insurance companies, see Oliver v. London etc. Ins. Co., 100 Mass. 531. Surplus profits of a mutual com- pany are not taxable under English Income Tax Act 1S53: Sched. D. New York L. Ins. Co. v. Styles (Eng. H. of L.), 42 Bait. Under S4. Taxation of surplus, see State v. Parker, 34 N. J. L. 479; 35 N. J. L. 574. State tax upon entire amount of premiums received by company does not conflict with federal constitution: Insurance Co. of North America v. Commonwealth, 87 Pa. St. 173; 30 Am. Rep. 352. Under Massachusetts Act 1864, c. 208, and Stat. 1S65, c. 2S3, as to whether tax on capital stock of mutual life insurance companies can- not be taxed on unredeemed guarantee capital: Commonwealth v. Berkshire etc. Ins. Co., 98 Mass. 25. Under Michigan Acts 200, Pub. Acts, 1S91, sees. 2, 4, mortgages held by insurance companies upon which they pay taxes are to be deducted from net assets: Standard L. & A. Co. v. Board of Assessors, 91 Mich. 78; 95 Mich. 466; 52 N. W. Rep. 17. Earned premiums are taxable as personal property under Comp. Stat. Neb.. 1885, c. 77; Stat. 1885, c. 13, sec. 25; Phoenix Ins. Co. v. City of Omaha, 23 Neb. 312; 36 N. W. Rep. 522. Liability of company to pay losses may not be deducted from assets or property liable to taxation: Kenton Ins. Co. v. City of Covington, 86 Ky. 213; 5 S. W. Rep. 461. Amount to which stockholders would be entitled, on distribution of money and credits due them and found reserved, to pay or reinsure policy holders, may be deducted from taxable prop- erty under Iowa Code, sec. 814: Equitable L. Ins. Co. v. Board of Equalization. 74 Iowa. 178; 37 N. W. Rep. 141. Tax is property and not a franchise tax, under N. J. Act, April 11, 1886, Rev. 1156, 15, et seq.: Merchants' Ins. Co. v. City of Newark, 54 N. J. L. 138; 23 Atl. Rep. 395. w Act of 111., Feb. 17, 1S74, providing for dissolution of insurance companies, is constitutional: Chicago L. Ins. Co. v. Auditor, 101 111. 82. Court of equity has power to decree dissolution of a mutual bene- fit society where it violates a statute in the conduct of its affairs; Chicago Mut. L. Assn. v. Hunt, 127 111. 257; 20 N. E. Rep. 55. " Attorney-General v. Atlantic Mut. Ins. Co., 77 N. Y. 336; Jer- § 328 PARTIES — THE INSURER. 406 instituting proceedings for an injunction to restrain companies from continuing their business, and for winding up the com- pany's affaire when a continuance of its business would be hazardous to the policy holders or the public. 18 § 328. Same Subject— Foreign Companies. — The legis- lature has power to prescribe the conditions upon which foreign insurance companies shall be permitted to transact business within its territory, and effect will be given such statutes in all the courts of the United States, 19 and it may prohibit foreign companies from transacting business within its territory and enforce its prohibition by penal enactments. 20 It is held that main v. Hendricks (N. Y. 1SS5), under sec. 7, c. 902, Laws 1SG9. Under this act the court may direct receivers to continue business: People v. Atlantic Mut. Ins. Co., 15 Hun (N. Y.), 84; 100 N. Y. 279. Appointment of Receiver under New York Act, 1S8G, does not dis- solve corporation: Receiver of Globe Ins. Co., 6 Paige (N. Y.), 106. 18 Chicago L. Ins. Co. v. Auditor, 101 111. 82; decided under 111. Act, Feb. 17, 1874; Fry v. Charter Oak etc. Co., 31 Fed. Rep. 197; Republic L. Ins. Co. v. Swigert, 135 111. 150; 25 N. E. Rep. 680, decided under 111. Rev. Stat. 18S9, c. 73, sec. 103, holds that such act is not in viola- tion of contract clauses of federal constitution ij9 Ehrmann v. Teutonia Ins. Co., 1 Fed. Rep. 471, 477; List v. Com- monwealth, 118 Pa. St. 322; 12 Atl. Rep. 277; State v. Phipps, 50 Kan. 69; 34 Am. St. Rep. 152* Phcenix Ins. Co. v. Burdett, 112 Ind. 204; 13 N. E. Rep. 705; Fire Department v. Helfens'tein, 16 Wis. 136; Lafay- ette Ins. Co. v. French, 18 How. (U. S.) 404; Hartford F. Ins. Co. v. Commissioners of Insurance, 70 Mich. 4S5 ; 3 Kent's Commentaries, 18th ed. 257, note b; Paul v. Virginia, 8 Wall. (U. S.) 168; Columbian F. Ins. Co. v. Kinyon, 37 N. J. L. 33; Farmers' and Mechanics' Ins. Co. v. Harrah, 47 Ind. 236. Under Indiana statutes, District of Colum- bia is a "state," so far as foreign insurance companies are concerned. Sta'ew York L. Ins. Co. v. Best, 23 Ohio St. 105, under Laws 1872, 69 Ohio Laws, 155 see. 18; People ex rel. Glens Falls Ins. Co. v. Judge of Jackson Circuit. 21 Mich. 577; 4 Am. Rep. 504. This case also holds that a writ of mandamus was not the proper remedy, even if the cause could be transferred: Morse v. Home Ins. Co., 30 Wis. 496; 11 Am. Rep. 5S0, under Wis. Stat. Laws 1870, c. 56, sec. 22. Overruled, see next note. 41 Morse v. Home Ins. Co. (U. S. Sup. Ct.), 13 Am. Rep. 297; over- ruling same case, 30 Wis. 496; 11 Am. Rep. 5S0. 42 Know v. Home Ins. Co., 25 Wis. 143. 43 Morton v. Mutual L. Ins. Co., 105 Mass. 141; 7 Am. Rep. 505, and lint.'. 507. 44 See statutes compiled in Richards on Insurance, 582, xxiv. 44 See statutes compiled in Richards on Insurance, 581, xxiii. 40 Clark v. Mobile, 66 Ala. 217; 10 Ins. L. J. 357. 47 Act 1S69. See Laws 1887, p. 121, sec. 12. 413 PARTIES — THE INSURER. § 329 been held to be constitutional and not repealed by subse- quently enacted general tax laws; 48 and the retaliatory law of Indiana 49 is declared in that state to be constitutional, and not open to the objection that it is an attempt to levy different fees for the same privilege from different members of the same class. It is also held not to be an enactment of the statutes of one state into those of another, nor unconstitutional on the ground of uncertainty. 00 So in New York such statute is held not unconstitutional, although the amount required for taxes may be greater than that required by other laws of the same state. 51 If a foreign corporation has complied with the Min- nesota laws, 52 it should not be excluded from doing business there where it is doubtful whether the laws of the state of in- corporation of such company would prevent corporations of Minnesota from doing business there, and a judgment of ouster against such corporation will be refused in such a case. 53 In State v. Moore u4 it is held that the insurance commissioners 48 Goldsmith v. Home Ins. Co., 62 Ga. 379. 49 Rev. Stat. Ind. 1883, see. 3773. See Acts 1SS9, e. 769, sec 2. so State v. Insurance Co., 115 Ind. 257; 17 N. E. Rep. 575; Blaekmer v. Royal Ins. Co., 115 Ind. 291; 17 N. E. Rep. 580. 51 People v Fire Assn., 92 N. Y. 311; 44 Am. Rep. 380. See 3 R. S.. 8th ed., p. 1617; Laws 1892, c. 690, sec. 38. 52 Gen. Stat. 1878, c. 34. sec. 269. See Stat. 1891, vol. 1, sec. 2907. 53 State Attorney General v. Fidelity etc. Ins. Co., 39 Minn. 538; 41 N. W. Rep. 10S. See Stat. 1891, vol. 1, sec. 2907. As to taxation, see State v. Reinmund, 45 Ohio St. 214; 13 N. E. Rep. 30, under Rev. Stat. Ohio, sees. 282, 2745. See Rev. Stat. 1S90, sec. 282. The rule requiring an order, etc., to withdraw securities under Wagner's Mo. Stat., p. 769, sec. 20, is not affected by the fact that the state of in- corporation of the foreign company does not require such order for such purpose: State v. Gates, 67 Mo. 496. See Rev. Stat. 1889, sec. 5932. For construction of Connecticut statutes, see Croke v. War- ner, 56 Conn. 234; 14 Atl. Rep. 798. Deposit with state treasurer, see Gen. Stat. 1888, sees. 2835, 2913, and Pub. Laws, 1889, e. 95; Wis. Acts of 1879, c. 171, requiring insurance commissioner to revoke license of foreign company upon persistent violation of law regula- ting such corporations; and Wis. Rev. Stat., sec. 1974, providing that such company shall not issue any new policy after sixty days from rendition of final judgment against it, do not apply to appeal taken in good faith from final .-judgment: State v. Spooner, 47 Wis. 438. See Sanb. & B. Annot. Stat. 1S89, vol. 1. see. 1221. 54 39 Ohio St. 486, under 80 Ohio Laws, 180, sec. 3630 e. See Rev. Stat. 1890, sec. 282. § 330 PARTIES — THE INSURER. 414 could not be compelled by mandamus to issue a certificate to a company organized in a state where Ohio companies were not permitted to carry on business on the same basis substantially as in Ohio. In an Illinois case 55 it is held that retaliatory leg- islation, which provides against future like legislation on the part of other states, does not become operative until the enact- ment by such other state of the laws so provided against. Some of the states 56 provide substantially that the license of any in- surance company not organized under the laws of the state, but doing business therein, may be revoked if it shall enter into any compact or combination with other insurance companies, for the purpose of governing or controlling the rates charged for fire insurance on property within the state, and such an act is held constitutional in Michigan. 5 ' § 330. Foreign Companies — what Constitutes " Doing Business," etc. — As has been stated, the object of legis- lation regarding foreign insurance companies seems to be the protection of the interests of the citizens of the legislating state, and certain of the statutory provisions above referred to are substantially conditions precedent to doing insurance business by such companies in states other than the one of incorporation. Therefore, the question of what constitutes doing an insurance business or making contracts becomes important. It is held that taking an application for a policy, and forwarding it to the home office of the company in another state, is not doing in- surance business. 58 So an agent who keeps his office and car- 55 Germania Ins. Co. v. Swigert, 128 111. 237; 21 N. E. Rep. 530, under Stat. 111. 1S74. c. 73. sec. -JO. Soe Cothian's Rev. Stat. 1891, p. 830, spc. 29; p. 833. see. 55; p. 840 g. see. 63 w. • r .': Ga. Laws 1890-91, vol. 1. p. 206; Kan. Gen. Stat. 1SS9. vol. l.see. 2499; Howell's Mich. Stat, Supp., 1S83-89, sec. 4340 c; N. H. Laws 1885, c. 93; Ohio Rev. Stat. 1892, sec. P.659. 57 Hartford F. Ins. To. v. Raymond, 70 Mich. 485; 38 N. W. Rep. 474. under Pub. Aets Mien. 1887, No. 285. See Howell's Stat., Supp., Tvvii-so. pec. 4340 c. 58 Haeheny v. Leary, 1-' Or. 40. "Not only the intent of the stnl- ute must be given effect, but the sweeping character of its penalty must be considered. This penalty extends to every contract. It ap- plies to one transition with as much force as it does to a hundred, and it reaches the case of a corporation that has no particular local- 415 PARTIES — THE INSURER. § 331 ries on his business in another state is not required to take out a license in Alabama, because he issues policies on houses there, nor does the single act of examining one house there, with a view to effect insurance thereon, bring the agent within the statute of that state in relation to foreign companies ; 59 nor does issuing a policy by a corporation of one state on property in another state constitute carrying on business in the latter state, 00 nor is adjusting a loss by an uncertified agent of a for- eign insurance company "transacting the business" of insu- rance. 61 But it is held that taking a note for an installment of premium and transmitting it to the company is "doing insurance business,"' 62 and although a foreign company makes a volun- tary assignment of its property, it will be considered as "doing business'' within the intent of the statute where such company has been transacting business in the state, although it ceases to take new risks; 63 and an agent who has received premiums for insurance, taken his commissions, advertised himself as agent, forwarded premiums to the insurance company, and received policies for delivery to the insured, is an agent of the company and a person aiding in the transaction of insurance business, under the Wisconsin statute, sufficiently so at least to give the court jurisdiction by the service of process upon him. 64 § 331. Foreign Company Estopped to Avoid Contract by Setting up Noncompliance with Statutes. — A foreign in- ity for transacting corporate business here, as well as the case of one that has such a place of business, but is unwilling to comply with the terms of the statute. No foreign corporation, therefore, can rely upon enforcing any contract here made by it in the courts of this state, unless it obeys the statute": Jones' Business and Corporation Daw, 111, 112. 59 Jackson v. State, 50 Ala. Ill, under Sess. Acts, 1868, p. 330, sec. 107. But see State v. Beazley, 60 Mo. 220. go Marine Ins. Co. v. St. Louis I. M. & S. R. Co., 11 Fed. Rep. 643; New Orleans v. Virginia F. & M. Ins. Co., 33 La. Ann. 10. 61 People v. Gilbert, 41 Hun (N. Y.), 522. "2 Thayer. J., dissenting ; Hacheny v. Leary, 12 Or. 10. 63 Williams v. Commercial Ins. Co.. 75 Mo. 38S; Relfe v. Commer- cial Ins. Co., 5 Mo. App. 173, under Wagner's Mo. Stat. 772. 64 State v. United States Mut. Ace. Assn., 67 Wis. 621; 31 N. W. Rep. 229, under Rev. Stat. Wis., sec. 1977. § 332 PARTIES — THE INSURER. 416 surance company cannot avail itself of its own turpitude in not complying with the statutes regarding insurance, to defeat an action against it on a policy. It is estopped, or at least pro- hibited, by the prohibition of the common law against unau- thorized corporate action, from denying its authority to tran- sact business as against innocent persons. 65 § 332. When Contracts Valid although Company has not Complied with Statutes. 66 — But preliminary contracts authorized to be entered into by an insurance company become valid on completing the organization as required by statute, 663 and the presumption attaches that a company has been duly in- corporated where a question arises between the receiver of a corporation and persons who have contracted with it as such, 67 nor is compliance with the statute as to transacting business necessary to enable a foreign insurance company to take securi- ties in the state of Wisconsin for debts due them from resi- dents thereof; 68 nor does such noncompliance invalidate the bond of an insurance agent, 69 and where the statute does not declare the transactions of the company void, in case of non- compliance with its provisions, a mortgage made by a foreign company will be upheld; 70 nor does it invalidate subscriptions 65 .Clay Fire etc. Ins. Co. v. Huron etc. Co., 31 Mich. 346; Water- town F. Ins. Co. v. Rust, 141 111. 851; 30 N. E. Rep. 772. under Rev. Stat. 1887, c. 73, sec. 124; Gauser v. Fireman's F. Ins. Co., 34 Minn. 372; Swan v. Watertown F. Ins. Co., 96 Pa. St. 37; Watertown F. Ins. Co. v. Simons, 96 Pa. St. 520. See next section. See, also, as to gen- eral rule, 2 Morawetz on Private Corporations, 2d ed., sec. 752. As to estoppel of corporation to plead that contract is ultra vires, see note 13 Am. Dec. 108. For cases where insurance company may set up ultra vires, see Hambro v. Hull etc. Ins. Co., 3 Hurl. & N. 7S9; Web- ster v. Buffalo Ins. Co., 2 McCrary (C. C.) 34S. When it is estopped, see Gray v. National B. Assn., Ill Ind. 531. And see generally. 5 Thompson on Corporations, ed. 1894, sec. 6015, et seq., and sec. 334, herein. 66 See sec. 1452, herein. 66a Williams v. Babcook. 25 Barb. (N. Y.) 109. See Daly v. Na- tional etc. Ins. Co., 64 Md. 1; National Mut. F. Ins. Co. v- Pursell, 10 Allen (Mass.), 231. 67 White v. Coventry, 29 Barb. (N. Y.) 305. 68 Charter Oak L. Ins. Co. v. Sawyer, 44 Wis. 387. 69 United Stiitos L. Ins. Co. v. Adams. 7 Biss. (C. C.) 30. 70 Northwestern etc. L. Ins. Co. v. Overholt, 4 Dill. (C. C.) 287. 417 PARTIES — THE INSURER. § 332 to the stock of such corporations, or notes given in payment therefor. Such contracts are not "taking risks" nor "trans- acting any business of insurance." 71 So it has been held' 2 that a statute requiring a certified copy of articles of asso- ciation to be filed with the county clerk did not affect the validity of contracts, as it was intended merely to furnish proof of corporate existence. 73 In Massachusetts, it is held that a foreign company may make a valid contract of in- surance there, 74 and under a statute providing that suits may be brought against foreign companies upon any contract made and delivered in the state, an action may be maintained on a policy delivered by an agent of the company within the state. 75 And in Michigan the statute does not apply to contracts made abroad upon property within the state, but only to operations therein. 76 In Arkansas, a failure to com- ply with the statutes relating to foreign insurance companies doing business in that state does not affect the validity of the policies issued by such company, but only renders the agents and brokers of such corporation liable to the penal- ties imposed by the statute. 77 So in Indiana, a policy is held not to be void for non-compliance with such statute. 78 'Nov is the policy void in Ohio under such circumstances, nor is the policy holder excused from payment of premiums under his contract, 79 and there are numerous cases which hold such policies valid and the premium or premium notes collectible. 80 n Bartlett v. Chouteau Ins. Co., 18 Kan. 369. 72 Jhous v. People, 25 Mich. 499, under Mich. Sess. Laws 1859, p. 1083, sec. 9. 73 Jhous v. People, 25 Mich. 499 See, also, American Ins. Co. v. Butler, 70 Ind. 1. 74 Kennebec Co. v. Augusta Ins. Co., 6 Gray (Mass.), 204. 75 Burns v. Provincial Ins. Co., 35 Barb. (N. Y.) 525. 76 Clay F. Ins. Co. v. Huron Salt etc. Co., 31 Mich. 346, under Mich. Stat. Comp. L. 1871, sec. 1683. 77 Ehrmann v. Teutonia Ins. Co., 1 McCrary (C. C.) 123. "8 Behler v. German Mut. F. Ins. Co., 68 Ind. 347. But see next section. 79 Union Mut. L. Ins. Co. v. McMillen, 24 Ohio St. 67. But see next section. 80 Hartford L. S. Ins. Co. v. Matthews, 102 Mass. 221; Insurance Joyce, Vol. 1—27 § 333 PAFiTIES — THE INSURER. 418 § 333. When Contracts not Valid where Company has not Complied with Statutes. — Notwithstanding some of the cases in the last section hold that a noncompliance with statutes regulating the business of insurance companies does not inval- idate the contract, there are numerous decisions which hold, that where the contracts are made within the state a strict compli- ance with such statutes is necessary to the validity of the con- tract. And it would seem reasonable, in view of what has been stated in the preceding sections herein, that it would nec- essarily follow that a contract made in violation of or noncom- pliance -with such laws could not be valid, or at least should be voidable on principle. 81 The decisions, however, are not unanimous, and it is extremely difficult to state any positive governing rule. In Illinois, it is held that a foreign corpora- tion cannot enforce such a contract, nor recover on a note given for stock and premiums, notwithstanding the law imposes a penalty for doing business in the state in violation of the stat- utory provisions relating thereto. 82 And in Nebraska a pre- mium note given to a foreign insurance company, which has not acquired the right to do business in the state, is not enforce- able. 83 So it is held in Vermont that an insurance contract is void when made by a foreign company before it has complied with the statute, obtained a license, and filed a copy of its by- laws with the secretary of state, and become responsible for the acts and neglects of its agents, 84 and such company can main- tain no action on a contract made before compliance with a stat- ute requiring the company to file a statement of its condition. 85 In Massachusetts, the statute prohibits the "making of any con- tract of insurance within the state," unless certain statutory conditions have been complied with, and it has been decided in Co. v. Whipple. 01 N. H. 61; Provincial Ins. Co. v. Lapsley, 15 Gray (Mass.), 202: Behler v. German Ins. Co.. 68 Ind. 347, overruling Sun Ins. Co. v. Slaughter, 20 Ind. 520; Clark v. Middleton. 19 Mo. 53. si Williams v. Cheney, 3 Gray (Mass.), 215 and following eases in this section. 82 Cincinnati Mut. H. Assn. v. Rosenthal, 55 111. 85; 8 Am. Rep. 626. 8* Harbor v. Roehm. 21 Neb. 450. 84 Lycoming F. Ins. CO. v. Wright, 55 Vt. 526. 85 jHtna Ins. Co. v. Harvey, 11 Wis. 394. 419 PARTIES — THE INSURER. § 333 that state that a noncompliance with such requirements pre- vents recovery on a premium note given a mutual company. 86 In a case in Illinois it appeared that after publishing notice and tiling an intention to organize an insurance company, the per- sons so intending secured an application for insurance and a pre- mium note payable to the company, which they presented to the state auditor, and on the day of the loss made the oath re- quired by statute, and it was held that as at the time of the con- tract the corporation had no legal existence, it could not be bound thereby. 87 It is also held that the failure to comply with the requirements of a statute prescribing the terms upon which, foreign insurance companies may do business in a state, such companies and their agents and brokers render them- selves liable to the penalties denounced by the act, but such failure does not affect the validity of the policies issued by them, or in any manner operate to the prejudice of the policy holder. 88 So in Indiana, there are cases which hold such con- tracts void, both as to the foreign company and its* agents, and the insured may sustain an action to recover back his pre- mium, and may do this independent of the doctrine of recover- ing back the consideration upon the rescission of a contract ; 89 and it has also been decided there that a premium note can- not be enforced in the state where no certificate has been is- sued to the agent of a foreign company, as required by the stat- ute, to enable him to transact business. 90 So in Pennsylvania, 86 Washington Mut. Ins. Co. v. Hastings, 2 Allen (Mass.), 398; Jones v. Smith. 3 Gray (Mass.). 500. But see National M. F. Ins. Co. v. Pinsel, 10 Allen (Mass.), 232. In this ease it appeared that statute provided that the contract should be valid, though provisions of stat- ute were not complied with: Leonard v. Washburn, 100 Mass. 251. 87 Gent v. Manufacturers' etc. Ins. Co., 107 111. 652; s. c, 13 111. App. 308. See American Ins. Co. v. Story, 41,Mich. 388. 88 Ehrman v. Teutonia Ins. Co., 1 Fed. Rep. 471, citing Union Mut. Ins. Co. v. McMillen. 24 Ohio St. 67; Clay F. Ins. Co. v. Huron Salt Co., 31 Mich. 346; Columbus Ins. Co. v. Walsh. 18 Mo. 229; Lamb v. Bowser, 7 Biss. C. C. 315; s. c, Id. 372; Hartford L. S. Ins. Co. v. Matthews, 102 Mass. 221. 89 Union Central L. Ins. Co. v. Thomas. 46 Ind. 44. See Farmers' etc. Ins. Co. v. Han-ah, 47 Ind. 236; Charter Oak L. Ins. Co. v. Saw- yer. 44 Wis. 387. But s^e preceding section. »o Hoffman v Banks, 41 Ind. 1. § 334 PARTIES — THE INSURER. 420 a foreign insurance company cannot recover from the bonds- man of a subagent for his default, he not having been commis- sioned by the insurance commissioner as required by the statute of that state. 91 § 334. Charter — Corporate Powers — Ultra Vires. — The charter of a corporation is the measure of its powers, and the enumeration of certain powers implies the exclusion of all others. 92 This rule, however, does not prohibit a corporation from exercising such powers as are requisite to carry on its bus- iness in a manner usual and necessary, for this it has authority to do; 93 but the rule does operate to restrain a corporation from engaging in transactions which are not calculated to effect the particular purpose for which it was incorporated. 94 An insur- ance company has no authority to invest its capital stock in an- other corporation under a statutory power to invest its money in "real or personal property, stocks, or choses in action" ; 9-J and a contract whereby a guaranty life 'association undertakes to pay losses which may accrue against another and similar asso- ciation is an attempt to divert the funds to objects not author- ized by its charter, and is therefore ultra vires and void. 96 An insurance company can borrow money to pay a loss or give a note to raise the money for that purpose, 97 and in making a loan it may lawfully require the borrower to insure the prop- 91 Mutual B. L. Ins. Co. v. Bates, 92 Pa. St. 352. See further what policy is void and note uncollectible, Franklin Ins. Oo. v. Louisville etc. Co., 9 Bush (Ky.), 590. 92 State v. Atchison & N. R. Co., 24 Neb. 143; 38 N. W. Rep. 43. 93 See Whitewater etc. Co. v. Vallette, 21 How. (U. S.) 424; Ohio L. Ins. Co. v. Merchants' Ins. Co., 11 Humph. (Tenn.) 22; 53 Am. Dec. 742. 94 See Penobscot Corp. v. Lamson, 16 Me. 224; 33 Am. Dec. 656; Beatty v. Knowles, 4 Pet. (U. S.) 162; People v. Utica Ins. Co.. l r > Johns. (N. Y.) 358; 8 Am. Dec. 243. This rule with its qualifications is fully considered in Morawetz on Private Corporations, ed. 1882, sees. 189, 209. See, also, in index thereto "Ultra Vires," "Construc- tion of Charter," and "Validity of Corporate Acts." See, also, Angell & Ames on Corporations, 9th ed., sec. 111. 95 Commercial etc. Ins. Co. v. Board of Revenue, 99 Ala. 1; 42 Am. St. Rep. 17. 96 Twiss v. Guaranty L. Assn., 87 Iowa. 733; 43 Am. St. Rep. 418. »7 Furniss v. Gilchrist, 1 Sand. (N. Y.) 53. 421 PARTIES — THE INSURER. § 33-4 erty with the company and to pay the premium in addition to the legal rate of interest. 98 It also has power to reject an ap- plication, and is not bound by a contract by its agent in retain- ing the premium note while endeavoring to induce it to recon- sider its action." "Where the charter provided that an insur- ance company might issue policies on lives and grant annui- ties, and authorized the setting apart of a portion of its capital as security for the payment of annuities, it was held that the company might insure lives and grant annuities before making such appropriation of the fund. 100 Where the charter of a company authorized it to insure property "against loss or dam- age by fire, lightning, and inland navigation and transporta- tion," a contract made by it, insuring horses against death by accident or disease, is void. 101 But it is held in Colorado that a fire insurance company could not avail itself of the defense of ultra vires when it had insured plaintiff's crop against loss from hail, and had received the premium therefor, even though the contract were ultra vires. 102 And a similar ruling has been made in Iowa, where it was held that a religious society insur- ing lives could not defend against a suit on one of its policies, upon the plea of ultra vires, when it had received assessments on the policy. 103 And an insurance company has no power to purchase upon credit the mortgage obligation of one in- sured by the company and entitled to indemnity for a loss, for the purpose of setting off such mortgage against the policy; 104 nor can such company treat as profits, subject to be divided, premiums received upon unexpired risks, when it has a fund sufficient, independent thereof, to meet all liabilities that might accrue on the pending risks, and dividends thus paid may be reclaimed by the corporation. 100 98 New York F. Ins. Co. v. Donaldson, 3 Edw. (N. Y.) 199. 99 Otterbein v. Iowa St. Ins. Co., 57 Iowa, 274. 100 Verplanek v. Mercantile Ins. Co., 1 Edw. Ch. (N. Y.) 84. ioi Rochester Ins. Co. v. Martin, 13 Minn. 59. See Burg-ess & Stock's case. 31 L. J. Ch. 749; 2 J. &.H. 441; Xatusch v. Irving, in Gow on Partnership, app. ii. 102 Denver F. Ins. Co. v. McClelland, 9 Col. 11; 59 Am. R p. 134. 103 Matt v. Roman Catholic Mut. Soc, 70 Iowa, 455; 30 N. W. Rep. 799. 104 Kansas Ins. Co. v. Craft. 18 Kan. 283. 105 Lexington etc. Ins. Co. v. Paige, 17 B. Mon. (Ky.) 412. § 335 PARTIES — THE INSURER. 422 § 335. Forfeiture of Charter. — Where the legislature repeals a statute under which an insurance company is organ- ized, and declares its charter forfeited except it comply with certain requirements, outstanding policies of the company are not canceled by such repealing act, notwithstanding the com- pany fails to comply with the provision of such act, 106 and an insurance company does not forfeit its charter because of non- user, by refusing to insure against extrahazardous risks. 107 106 Manlove v. Commercial Mut. F. Ins. Co., 47 Kan. 309; 27 Pac. Rep. 979. 107 Corwin v. Insurance Co., 14 Ohio, 6. Lloyds Associations and Lloyds Poliry. — A Lloyds voluntary associa- tion, consisting of natural persons merely, and unincorporated, cannot, it is held, be licensed to transact insurance business in Georgia : Fort v. State, 18 8. E. Rep. 14. See, also, In re License in Pennsylvania, 3 Pa. Dist. Rep. 822. In Ohio, however, such association has been held to so far act as a corporation that quo warranto will lie to oust it from the unlawful exercise of insurance business in that state: State ex rel. Richards v. Ackerman, 37 N. E. Rep. 828. A condition precedent in a Lloyds policy is void that an action at law shall be brought against at- torneys in fact of the underwriters : Faycon v. Fogg, 73 N. Y. St. Rep. 522. Stipulation in a policy of Lloyds association that notice and proofs of loss shall be served upon the attorneys in fact of the underwriters, when complied with : Walker v. Beecher, 71 N. Y. St. Rep. 458. An agent who assists a guarantee and accident Lloyds, which is a voluntary unincorporated association, to do business, is held not guilty of any offense in Georgia: Fort v. State, 18 S. E. Rep. 14; see, also, Common- wealth v. Reinochl (Pa.), 29 Atl. Rep. 896; Restrictions on Insurance Lloyds Associations, 25 L. R. A. 238. When liability of several under- writers of a marine Lloyds policy is several and not joint : Tyser v. Shipowners Syndicate, 12 B. (1896) 135; 65 L. J. Q. B., N. S.. 238. CHAPTER XV. PARTIES— MUTUAL COMPANIES. § 340. Mutual insurance companies defined. § 341. Mutual companies: Capital stock: Fund for payment of losses. § 342. Kinds of mutual insurance companies. § 343. Plans of mutual insurance companies. § 344. When mutual societies are and are not insurance companies. § 345. What societies are not insurance companies: Cases. § 346. What societies are insurance companies: Cases. § 340. Mutual Insurance Companies Denned. — A mu- tual insurance company is one in which the members mutually contribute to the pajonent of losses and expenses, where the benefit to accrue or indemnity is conditioned in any manner upon persons holding similar contracts. Such companies differ essentially from stock insurance companies. The former need many by-laws and conditions that are not required in stock companies, and each person who insures therein becomes a member of the association. 1 The statutes of some of the states define mutual insurance companies; 2 others exempt certain mutual benefit organizations from the insurance laws, although such societies might otherwise come within their operation. 3 § 341. Mutual Companies — Capital Stock — Funds for Payment of Losses. — The funds out of which damages and i Baxter v. Chelsea Mut. F. Ins. Co., 1 Allen (Mass.), 294; 79 Am. Dec. 730, under the general corporation law of New York, Laws 1S92, c. 687. A membership corporation includes benevolent orders: Jones' Business and Corporation Laws. ST. 2 Cal. Stat. 1891. c. cxvi, p. 126; sec. 14, p. 130. s See Cal. Stat. 1891, c. cxvi, p. 126, sec. 14, p. 130; 111. Stat. 1SS5. c. 32. sec. 31; Mass. Pub. Acts 1882. c. 115, sees. 8-10; Amendment, 1882, c. 195. sec. 2; Mo. Rev. Stat. 1879, sees. 972, 973; Wis. Laws, 1SS3, c. 94; Ohio Rev. Stat. 1880, sec. 3630. See cases in sees. 344-46, herein. 1423) § 341 PARTIES — MUTUAL COMPANIES. 424 losses are to be paid are tlie premiums, the earnings in the busi- ness, and premium and deposit notes, which latter are a sort of reserve fund. 4 These usually constitute the capital of the com- pany, 5 although an absolute reserve Or safety fund may be provided, and all the notes, whether in one department or an- other, must be resorted to if necessity exists. 6 So where a mu- tual company is authorized to and does issue policies on the cash principle to other than its members, the premium notes of the members represent the capital stock of the company to such other insurers. 7 So parol evidence is admissible to show whether a note executed prior to the completion of the organi- zation, and in form like those required to form part of the cap- ital, was intended to and did constitute a part thereof. 8 But a guaranty fund in approved notes to be used only in paying claims, and any part so used to be refunded out of the first sur- plus receipts, cannot be reckoned as assets in determining whether the company is solvent; 9 nor can a premium note be treated by a receiver of the company as capital, and the whole note collected, regardless of losses. 10 But it is held in another case that a note for premiums in advance passes to the receiver of a company on its becoming insolvent, 11 but the notes ad- vanced to the company by intending insurers do not constitute the makers stockholders ; 12 and if a note be proven to be a cap- ital stock note, given, taken, and used as such, on the organiza- tion of the company, the whole amount may be recovered with- out an assessment. 13 Where a mutual insurance company has deposited securities with the state treasurer, under a statutory requirement therefor, it has no absolute right to collect the in- come therefrom. But the treasurer may grant permission to 4 Planters' Ins. Co. v. Comfort, 50 Miss. 662, 668. 5 Id. c Sands v. Sanders, 28 N. Y. 416. 7 Hays v. Lycoming F. Ins. Co., 98 Pa. St. 184. 8 Dana v. Munson, 23 N. Y. 564. » Russell v. Bristol. 49 Conn. 251. io Bell v. Shipley, 33 Barb. (N. Y.) 610. See Farmers' Ins. Co. v. Smith. 03 111. 187. u Gmlkshank v. Brouwer, 11 Barb. (N. Y.) 22S. 12 Hill v. Nautilus Ins. Co.. 4 Sand. Ch. (N. Y.) 577. 13 Sands v. St. Johns, 36 Barb. (N. Y.) 62S. 425 PARTIES — MUTUAL COMPANIES. §§ 342, 343 the company to receive such income, should it be best for the interests of the policy holders. Should such permission be re- fused, the accrued interest, with the principal, goes to the pay- ment of the policy holders and creditors in the order named. 14 § 342. Kinds of Mutual Insurance Companies. — Mutual insurance companies may be divided into two general classes: 1. Those which are organized for the purpose of doing an in- surance business; 2. Those mutual societies or associations which have a social, benevolent, or like character, but the na- ture and prevalent purpose of which is that of insurance. 15 § 343. Kinds of Mutual Insurance. — There are nu- merous plans or schemes of mutual insurance. Premium notea may be given which are assessable from time to time to the amount stated therein; or the members may be assessed period- ically, or as required ; or they may be obligated to pay a fixed sum upon a loss; or notes may be given for a part only of the premium, the other part being payable in cash, or the entire premium be paid in advance in cash. Mutual companies are also organized to issue policies upon premium notes, and also for all cash premiums, and the fund thus realized may con- stitute a common fund for the payment of losses. 16 In the casih premium plan each member has an interest in the surplus pre- mium fund remaining after payment of losses and expenses, 17 for all persons insured on that principle are entitled to look to the premium notes of the members as the capital of the com- pany; 18 and a mutual company may, in !STew York, 19 issue pol- n Meies v. Economical Mut. L. Ins. Co., 12 R. I. 259. As to what is capital, subject to taxation, see People v. Supervisors, 20 Barb. (N. Y.) 81; Mutual Ins. Co. v. Supervisors, 4 N. Y. (4 Comst.) 442; Sun Ins. Co. v. New York, 8 N. Y. (4 Seld.) 241; 5 Sand. Ch. (N. Y.) 10; People v. Supervisors, 16 N. Y. 424. 15 As far as necessary we have also noticed the shipping clubs and Friendly Societies of England under sec. V, herein. 16 Lehigh Valley F. Ins. Co. v. Sehimpf, 13 Phila. (Pa.) 515. i" Spruance ex rel. v. Fire & M. Ins. Co.. 9 Col. 73, 77, 78, under Col. Hen. Stat., sec. 1704. 18 Hays v. Lycoming F. Ins. Co., 98 Pa. St. 184; Hummel's Appeal, 7S Pa. St. 320; Lehigh Valley F. Ins. Co. v. Sehimpf, 13 Phila. (Pa.l 515. 19 As organized under N. Y. Stat. 1849, c. 308. § 343 PARTIES — MUTUAL COMPANIES. 426 icies for a fixed cash premium, without liability to contribute by the assured. 20 Xor does such company under the Missouri statute, 21 expose itself to the charge of doing business upon the joint stock plan, by receiving all cash premiums on all policies running less than six years. 22 ISTor is a combined premium note, assessment, and cash premium plan ultra vires where the company is chartered to do business on the mutual plan onhv ,; . though where cash is accepted for premiums the insured is held, in Illinois, not to thereby become a member. 24 But where a New York company was authorized to receive subscriptions payable in cash, and give receipts therefor bearing interest, which receipts showed that the cash was received in advance for premiums only of insurance, but the charter did not pro- vide that those paying such cash should take policies of insur- ance the premiums on which should equal the cash so paid in, it was held that such plan was not that of mutual insurance un- der the Illinois laws. 25 It is said by the court in a Colorado case 26 that "the principle of mutuality exists when the persons constituting the company contribute either cash or assessable premium notes, or both, as the plan of transacting business may provide, to a common fund, out of which each is entitled to in- demnity in case of loss. 27 Persons so associated are said to be members of the company. They have, or may have, a voice in the management of its .affairs, and are practically both in- surers and insured. All are interested in what may be termed the profits and losses of the association; for if the assessable note system in any of its forms be adopted, the demands upon 20 Mygatt v. New York etc. Ins. Co.. 21 N. Y. 52. 21 Act. 1877, Rev. Stat. Mo. 1879, sec. 5988. 22 state v. Manufacturers' Mut. F. Ins. Go., 91 Mo. 311: 3 S. W. Rep. 383. 23 Lehigh Valley F. Ins. Co. v. Schimpf, 13 Phila. (Pa.) 515; Davl3 v .Oskosh Fpholstery Co., 82 Wis. 4S8, 771. 24 Illinois Mut. F. Ins. Co. v. Stanton. 57 111. 354. 25 Mutual F. Ins. Co. v. Swigert, 120 111. 3G, 44; 11 N. E. Rep. 410. 20 Spruance ex rel. v. Fire & M. Ins. Co., 9 Col. 73, 77, 78. 27 Citing Union Ins. Co. v. lingo. 21 How. (IT. S.) 35; Mygate v. New York Prot. Co., 21 N. Y. 52; Ohio M. Ins. Co. v. Manetta Wool. Fact., 3 Ohio St. 34S; White v. ITaight. 10 N. Y. 310; May on Insurance, sec. 548; Angell on Insurance, sec. 413. 427 PARTIES — MUTUAL COMPANIES. § 343 eacli member to meet assessments during' the life of his policy or risk are large or small, according to the multiplication or dim- inution of losses; while if a cash premium plan prevail, each member has an interest in the surplus premium fund remaining after payment of losses and expenses, and of course the amount of such surplus is governed by the extent of the losses suffered. The policy holder in the joint stock company is not thus situ- ated. He pays a certain definite sum as a premium, and the company agrees therefor to pay him a certain specific amount in case of loss. He has no voice whatever in the management of the business, and whether the profits or losses are large or small does not concern him, provided the company remains able to liquidate any losses contemplated by his contract The principle of mutuality has probably been more often rec- ognized and enforced in these associations through the assess- able note system in some of its numerous forms, but ... . it is perfectly consistent with the payment of cash pre- miums." 28 In case of deposit notes, contributions are ob- tained from the makers for losses and damages by pro rata as- sessments of a just proportion upon each member liable there- on, and payments thereof are required upon due notice. 29 Mr. Xiblack 30 makes three general divisions of the plans of insur- ance in mutual benefit societies, as follows: "1. Where the so- ciety agrees, upon certain conditions, to pay a certain sum of money on the death of a member ; 2. Where the society agrees to pay, on certain conditions, as many dollars as there are mem- bers of the society in good standing at the time of the death of a member; 3. Where the society agrees, upon certain condi- tions, on the death of a member, to levy an assessment upon its members of a certain sum of money, and to pay the proceeds of such assessment to the beneficiary of the member." This divi- sion is at once concise and comprehensive. 31 28 As to the government and organization of mutual companies in New York, and the statutes of that state down to and including that of 1849, as well as the relations of members, etc., see opinion of Denio, C. J., in White v. Haight, 16 N. Y. 310. 29 Planters' Ins. Co. v. Comfort, 50 Miss. 662, 668. so Niblack's Mutual Benefit Societies, sec. 384. si See further 16 Am. & Eng. Ency. of Law, 17-19. §§ 344, 345 PARTIES — MUTUAL COMPANIES. 428 § 344. When Mutual Societies are and are not Insur- ance Companies. — When a mutual benefit society or asso- ciation contracts for a consideration to pay a sum of money upon the happening of a certain contingency, and the preva- lent purpose and nature of such sociaty or association is that of insurance, the organization is a mutual insurance company. This is true whether the society be a voluntary one or incorpo- rated, and whether it be known as a relief, benevolent, or ben- efit society or by some similar name. ISTor does the manner or mode of the payment of the consideration or of the loss or ben- efit affect the question, and make the contract the less one of insurance. The test is, what is the real purpose and nature of such society, and if the prevalent purpose is to make con- tracts, which are in effect contracts of insurance within the meaning of that word, they are insurance companies. 32 Thus it is held in Arkansas that the rights of persons claiming under a contract must be fixed thereby, without regard to the char- acter of the society, where the statute affords no aid in deter- mining whether it be an insurance contract or not. 33 And it is held in Maine that if the prevalent purpose be that of insur- ance, its benevolent or charitable features do not affect its legal status as an insurance company. 34 This rule is, however, sub- ject to those exceptions which arise in favor of such companies by reason of statutory exemptions in some of the states. 35 § 345. What Societies are not Insurance Companies — cases. — It is held in Illinois that an association whose policies were payable only to the widow, orphan, heir, or dev- isee, and whose members might be assessed not to exceed twenty dollars each year, was exempted from the operation of the statute of that state requiring of life insurance companies a guaranty capital. 36 In Connecticut, it is held that although 32 See cases in sees. 345, 346. herein. 33 Block v. Valley Mut. Ins. Assn., 52 Ark. 201; 12 S. W. Rep. 477; 20 Am. St. Rep. 166. 34 Bolton v. Bolton. 73 Me. 299. 35 See sees. 345. 346, herein. 36 Commercial L. Assn. v. People, 90 ill. 166. under 111. Rev. Stat. 1874, c. 32, sec. 31, exempting from the operation of Act of March 26, 1869. 429 PARTIES — MUTUAL COMPANIES. § 345 a society, organized in another state as a secret and fraternal society, has an insurance plan as one of its corporate purposes, consisting in the participation in a benefit fund by members of local branches, who pay assessments, nevertheless it is not within a statute requiring foreign corporations, organized for the purpose of furnishing insurance on the assessment plan, to obtain authority from the insurance commissioner, in order to do business within the state, 37 but is within the statute except- ing from such requirement every "secret and fraternal soci- ety." 38 In Kansas, an insurance association organized on the co-operative plan, is exempt from the insurance laws where payments are made to a beneficiary by assessments on living members, but one of the requirements of the company is that each person, before becoming a member, shall make a deposit to form a guaranty fund for the payment of assess- ments. 39 In Kentucky, it is decided that the statute regulat- ing "stock or mutual" insurance companies does not include as- sociations organized before that act without capital stock or pre- mium notes to indemnify against loss of life, the performance of whose obligations is secured by a pledge of the property of each member to the extent of his own insurance, the entrance fees being intended only as a fund for paying the expenses. 40 In Michigan, a mutual or co-operative association is not a life insurance company, under the statutes of that state, although it has initiation fees and assessments, and pays a weekly amount for accidental disability. 41 And in the same state it is also held that its statute forbids the transaction of insurance business by companies, the policies of which do not distinctly show the amount of life benefits assured, and the premiums in which are not fixed nor contingent on losses. 42 In Missouri, the term 37 Gen. Stat. Conn., sec. 2892. 3S Gen. Stat. Conn., sec. 2903; Fawcett v. Supreme Sitting etc., 64 Conn. 170. 3e State v. Bankers' etc. Assn., 23 Kan. 499, under Laws 1871, p. 248. 40 Louisville German Mut. F. Ins. Assn. v. Commonwealth, 9 Bush (Ky.), 394, under Act of March 12. 1S70. 41 Rensenhouse v. Seeley, 72 Mich. 603: 40 N. W. Rep. 765, under How. Stat., sec. 4225, Laws 1877, Act No. 29. 42 National L. Ins. Co. v. State Commissioner, 25 Mich. 321, under Ins. Law 1872, p. 86. § 345 PARTIES — MUTUAL COMPANIES. 430 "insurance purposes" does not include associations which, aid families of deceased members. 43 In New York, a benevolent association organized under the general act, and which provides for the payment by the members of one dollar each for the benefit of the widow or minor children of a deceased member, is held not to be a life insurance company, 44 and in the same state it is decided that a society is not governed by the general insurance law where it maintains a relief fund for the benefit of members reaching a certain age, or when they shall become permanently disabled by disease or accident, but is controlled by the statute regulating charitable, benevolent, and benefici- ary associations or societies. 40 And in Pennsylvania a mutual aid association of another state is not a foreign insurance cor- poration within its statute, and is exempted under the statute relating to beneficial associations from the control of the insur- ance commissioner. 46 In Pennsylvania, a benefit society which does business through the lodge system is not an insurance com- pany under the statute of that state. 47 So under the Wisconsin statute, an Odd Fellows' association incorporated under the laws of another state for the purpose of fraternal benevolent in- surance upon the assessment plan, and which confines its mem- bership to persons belonging to its allied order, is held exempt from the state insurance laws relating to life insurance com- panies and is one of the "charitable and benevolent orders of .... Odd Fellows," within the meaning of the statute. 48 43 Barbaro v. Occidental Grove, 4 Mo. App. 429. 44 Durian v. Central Verein etc., 7 Daly (N. Y.), 168. 45 Supreme Council etc. v. Fairinan, 10 Abb. N, C. (N. Y.) 162; 62 How. Pr. (N. Y.) 386. 46 Commonwealth v. National M. A. Assn., 94 Pa. St. 4S1, under Acts of April 4, 1S73, and May 1, 1876. 47 Donlevy v. Supreme Lodge etc. (Pa. 1892), 49 Leg. Tntell. 145, under Act of May 11, 1881. >*8 state v. Whitroore, 75 Wis. 332; 43 N. W. Rep. 1133, under Laws 1883, c. 94; Laws 1879, c. 204. See, also, Cal. Stat. 1891, c. exvi, p. 126. sec. 14. p. 130. See further as to what are and are not insur- ance companies, State v. Federal Invest. Co., 4S Minn. 110; 50 N. W. Rep. 1028. Examine State v. Vigilant Ins. Co., 30 Kan. 585; State Mu- tual Prot. Assn.. 26 Ohio St. 19; State v. Moore. 38 Ohio St. 7; Re Na- tional Tndem. & E. Co.. 142 Pa. St. 450; 21 Atl. Rep. 879; Old v. Rob- son (L. R. Q. R.). 7 Rail. & Corp. L. J. 511; Martin v. Stubbings, 126 111. 387; 9 Am. St. Rep. 620; North western etc. Assn. v. Jones. 154 Pa. 431 PARTIES — MUTUAL COMPANIES. § 346 § 846. What Societies are Insurance Companies — Cases. — la Dakota, where the principal objects and purposes of an association organized under the general incorporation laws of the state is to secure to the beneficiary, or representative of each member on his death, the payment of a certain sum of money in accordance with the conditions and requirements of the char- ter and by-laws, such association is a life insurance company, and the relations sustained by the members are based upon con- tract. 49 In Iowa, a fraternal benevolent corporation of a sister state which provides a beneficiary fund for the payment of death benefits is a life insurance organization, and subject to the provisions of the statute requiring a guarantee capital as a prerequisite to transacting business in that state. 50 In another case in the same state it is held that where the prevalent pur- pose of a secret order is to create a benefit fund for sickness or disability of members, and to pay a certain sum to a designated person on a member's death, such association is an insurance company within the statutory insurance requirements of that state. 51 In Illinois, a society which sets apart a fund raised by voluntary contributions from its members, and which pays therefor a certain amount to designated beneficiaries of de- ceased members, and other sums to living members, holding numbers just above or just below that of the deceased, is an insurance company, and is not exempt under the statute provid- ing that societies shall not be deemed insurance companies, the purpose of which is to benefit widows, orphans, heirs, and de- visees of deceased members and members receiving perma- nent disabilities. 52 In Indiana, a mutual benevolent society which provides a certain sum for the beneficiary in the event of a member's death, to be paid from a fund raised by assess- ment on the surviving member's death is in effect a life insur- ance company. 53 In Kansas where such an association con- st. 99: 35 Am. St. Rep. 810; Chartrand v. Brace, 16 Col. 19; 25 Am. St. Rep. 235; Block v. Valley M. Ins. Assn., 52 Ark. 201; 20 Am. St. Rep. 106. 49 Masonic Aid Assn. v. Taylor, 2 S. Dak. 324; 50 N. W. Rep. 93. so State v. Miller, 66 Iowa. 20. si State ex rel. Graham v. Nichols, 7S Iowa. 747; 41 N. W. Rep. 4. 52 Rule v. People, 118 111. 492; 9 N. E. Rep. 342; 7 West. Rep. 219. 53 Elkhart Mufc A. Assn. v. Houghton, 103 Ind. 286, 287; 53 Am. Rep. 514; 1 West. Rep. 284. § 346 PARTIES — MUTUAL COMPANIES. 432 tracts to pay at stated periods certain sums as endowments to living members, or, in case of a member's death, then to pay the benefit to designated beneficiaries, such contracts con- stitute life insurance, both as to the endowments and the benefits; 54 and in the same state a mutual aid association which does business with its members upon a mutual life insurance plan is subject to the control of the insurance de- partment and to the laws relative to insurance companies. 55 In Kentucky, a mutual life association which has the essential ele- ments of a life insurance company comes within the provisions of the insurance statute. 56 In Maine, in the case of Bolton v. Bolton, 57 which was that of a Masonic relief association, the court declares that if the prevalent purpose be that of insurance, such purpose controls, whatever may be the association's name, and that the benevolent or charitable results to the beneficiaries will not change its legal character, and that the association and others of like nature were mutual life insurance companies. In Massachusetts, a contract by which an association, for a con- sideration, engages to pay money upon the death of a member to one who has an interest in the life, is not the less a contract of insurance, because the amount to be paid is not a gross sum, but is graduated by the number of members holding similar contracts; nor because a portion of the premiums is to be paid upon the uncertain periods of deaths of such members; nor because it provides nomeans of enforcing payment of the assess- ments; and the fact that the general objects of the association are benevolent, not speculative, will make no difference. Such an association is within the operation of a statute imposing re- strictions upon insurance companies. 58 In the Michigan ease of Rensenhouse v. Seeley, 59 it is said that mutual benefit and co-operative associations, whether corporations or mere volun- tary associations, are, strictly speaking, insurance organizations, m Endowment etc. Assn. v. State. 35 Kan. 253. 55 State v. National Assn.. 35 Kan. 51; State v. Vigilant Ins. Co.. 30 Kan. 585. 56 'Sherman v. Commonwealth. 82 Ky. 102. 57 73 Me. 299, 303. 58 Commonwealth v. Wetherbce, 105 Mass. 149, 161. 59 72 Mich. 003. 017. 433 PARTIES — MUTUAL COMPANIES. § 346 whenever, in consideration of periodical contributions, they en- gage to pay the member or his designated beneficiary a benefit upon the happening of a specified contingency. The Minne- sota courts hold that an association for the transaction of the business of life and casualty insurance on the co-operative or assessment plan is, in effect, a mutual benefit society, 60 and that an association which raises a fund by assessment of one dollar each on all the members, for the endowment of the wife of each member, is not a "benevolent society" under the state stat- ute relating to the incorporation of such societies. 611 In Mis- souri, a society kndwn as the Merchants' Exchange Mutual Benevolent Society had executive officers and a board of trus- tees. It divided its membership into classes, in each of which the fees paid by members of a certain class were kept separately ami exclusively for its benefit. Assessments and the interest on a fund raised by initiation fees were resorted to for making payments and furnishing aid to the widows, children, etc., of deceased members. It was determined that the society was a mutual insurance company, subject to the insurance laws of that state. 62 In another case in that state it is held that a contract of insurance existed where there was a promise, based upon a consideration, to pay upon a loss, and where the principal object and purpose of the associa- tion was to insure the member's under such contracts. In this organization there were salaried officers, and anyone was enti- tled to membership upon compliance with the required condi- tions as to age and health. Commissions were also paid by the society to its members on risks obtained for it. It was also decided that the contract could be made none the less one of in- surance by the organization calling itself a benevolent society, and obtaining a charter as such, and though the amount payable was not a gross sum. but graduated by the number of persons in a given class at the time of the death of the insured, and though there was no means of compelling the payment of an 60 Hesinsrer v. Home B. Assn.. 41 Minn. 516; 43 N. W. Rep. 481. 6i State v. Critchett, 37 Minn. 13: 32 N. W. Rep. 787. See State v. Truberg, 37 Minn. 97; 33 N. W. Rep. 554. 62 state v. Merchants' Exch. etc. Soc., 72 Mo. 146, 159. Joyce, Vol. 1—28 § 346 PARTIES — MUTUAL COMPANIES. 4S4 assessment made upon a member's death, and though the in- surer was not liable for the amount actually collected from members upon the happening of the loss, the agreement would nevertheless be an actual contract of insurance under th» above facts. 63 In New Hampshire, a mutual relief association which makes an assessment on surviving members of one dollar each for the payment of a benefit to an appointee of the deceased or a member of his family is a life insurance company. 64 In Ne- braska, an association for insuring the livestock of members is an insurance company, and subject to the requirements of the insurance statutes. In this case the membership was unlimited, though certificates of membership were issued and the premium was paid as an admission fee and by assessments. 65 In Pennsyl- vania, it is said that a beneficial assiciation for mutual assistance in sickness or inability to labor is virtually a mutual health in- surance company. 66 In Texas, i a corporation was held to be an insurance company, subject to the provisions of the insurance laws, where it had salaried officers and agents, required an ex- amination by a physician of intending insurers, and which, in consideration of a membership fee and assessments, agreed to provide for members during life and the payment of a certain sum to a member's family upon his decease. 67 In Virginia, only such assessment companies are entitled to be licensed, without making the deposit of bonds required under the stat- ute, as make an assessment upon surviving members in order to pay losses. 68 In Wisconsin, a benevolent mutual aid society was held subject to the same legal principles in determining its liability for a loss as apply to mutual life insurance com- panies. 69 In the United States circuit court it is held that a 6? State v. Citizens' B. Assn., 6 Mo. App. 163, under Mo. Acts 1874, p. 81, sees. 3, 5. €4 Smith v. Bullard, 61 N. H. 381, under N. H. Gen. Laws, c. 175. 65 State v. Northwestern Mut. L. S. Assn., 16 Neb. 549. «6 Franklin v. Commonwealth. 10 Pa. St. 357, 359. 67 Farmer v. State, 69 Tex. 561; 7 S. W. Rep. 220, under Rev. Stat. Tex., title 20. «8 Mutual B. L. Co. v. Mayre, 85 Va. 643; 8 S. E. Rep. 481, under Va. Act. May 18, 1887. 69 Erdmann v. Mutual Ins. Co., 44 Wis. 376, 379. 435 PARTIES — MUTUAL COMPANIES. § 346 Masonic life indemnity company whose business is on the assessment plan, but which has no fraternal, social, or like pur- poses, is an insurance company. 70 to Knights Templar etc. Co. v. Berry, 50 Fed. Rep. 511. See fur- ther on this subject, State ex rel. Clapp v. Federal Invest. Co., 48 Minn. 110; 50 N. W. Rep. 1028; State v. Standard L. Assn.. 38 Ohio St. 2S1; Supreme Commandary v. Ainsworth, 71 Ala. 436; 46 Am. Rep. 332; Ronald v. Mutual etc. Assn., 44 N. Y. 407; 30 N. B. Rep. 739; 21 Ins. L. J. 634; Swift v. San Francisco Board etc., 67 Cal. 567; Goodman v. Jedijah Lodge, 67 Md. 117; 8 Cent. Rep. 27S; 9 Atl. Rep. 13. CHAPTER XVI. PARTIES— MUTUAL COMPANIES, CONTINUED. § 350. Powers of mutual companies affecting the contract— Ultra vires. ( 351. Same subject: Guarantee fund. i 352. Benevolent and fraternal organizations subject to laws of state and jurisdiction of courts. § 353. Absolute right to become members under charter of mutual company. § 354. Contribution by subordinate lodge to supreme lodge: Specific purpose: Power of disposal of funds. § 355. Effect of decision by official body created by constitution of order. § 356. Delegation of power by supreme lodge of mutual benefit so- ciety. § 357. Subordinate association cannot be deprived of charter with- out hearing. § 358. Member of benevolent association cannot be expelled without hearing. SUBDIV. I. Mutual Companies: By-Laws. § PM. Definition of by-laws. § 365. Power to enact by-laws inherent. § 366. Charter: Provisions concerning by-laws. § 367. Adoption of by-laws by custom or usage. § 368. Incorporated societies: Unreasonable by-laws. § 369. Unincorporated societies: Unreasonable by-laws. § 370. By-laws must not be unequal. § 371. Validity of by-laws. § 372. By-laws excluding resort to civil courts. § 373. By-laws must not be contrary to laws of state or of United States. § 374. By-laws against public policy are void. § 375. By-laws must not contravene terms of charter. § 376. Enforcement of by-laws— Penalty. ? 377. Power to alter or change by-laws. § 378. By-laws: Changes, how made. § r.79. By-laws: Statutory or charter power to repeal, change, etc. ? .°.K0. Change of by-laws: Vested rights. § 381. Construction of by-laws. (436) 437 PARTIES — MUTUAL COMPANIES. § 350 § 350. Power of Mutual Companies Affecting the Con- tract — Ultra Tires. — In mutual companies or societies, whether they be incorporated or voluntary organizations, the charter or articles of association must be looked to as the meas- ure of their powers, as these constitute their fundamental and organic law, the compact governing their acts subject to the constitution and laws of the state. 1 A charter of a mutual in- surance company may provide that the corporation can divide applications for insurance into two or more classes, according to the degree of hazard, and that the premium notes shall not in such case be assessed for any losses, except in the class to which they belong, where such provision does not conflict with the terms of the act under which it was formed. 2 It is held that a mutual benefit society may change its plan of insurance, and such change does not violate its prior contracts ; 3 and where the general purpose of such society is the welfare of its members and their relief in times of sickness ajid distress, it may extend its benefits to the families of members and provide for widows of deceased members, 4 but a mutual company cannot by mere force of a by-law change from a corporation having no capital stock to one which has, 5 and mutual insurance companies on the assessment plan have no authority to provide for the pay- ment of an agreed annual deposit during the life of a policy, by which the holder shall be exempt from assessment for losses during the year of the prepayment, as such annual deposit is in fact a premium for carrying the risk, and not a specific assess- ment authorized by the statute; 6 nor can a mutual fire insur- 1 Chamberlain v. Lincoln, 129 Mass. 70; Bergman v. St. Paul Mat. B. Soc, 29 Minn. 275; Austin v. Searing, 16 N. Y. 112; 69 Am. Dec. 69; 1 Morawetzon Corporations, ed. 1882, c. vi>, 2d ed., c. xv; Golden Rule v. People, 118 111. 492; State ex rel. Bankers' etc. Assn., 23 Kan. 499; Grosvenor v. United Society, 118 Mass. 78; Stale ex rel. v. Monitor etc. Assn., 42 Ohio St. 555; Commonwealth v. St. Patrick's Soc, 2 Binn. (Pa.) 441 ; 4 Am. Dec. 453. See sees. 31, 46, 99, 274, herein. * White v. Coventry, 29 Barb. (N. Y.) 305. 3 Supreme Lodge v. Knight, 117 Ind. 489; 20 N. E. Rep. 479. * Gundlach v. Germania Mechanics' Assn., 4 Hun (N. Y.), 339; 49 How. Pr. 190. 3 State v. Utter, 33 N. J. L. (4 Vroom) 183. 6 State v. Monitor F. Assn., 42 Ohio St. 555. § 350 PARTIES — MUTUAL COMPANIES. 438 ance company, organized under the general laws of Wisconsin effect insurances on property other than that mentioned there- in. And an association organized "for the mutual protection and relief of its members, and for the payment of stipulated sums of money to the families or heirs of deceased members," has no authority to issue a certificate of membership payable to the beneficiary "or assigns," or, in the event of his death, payable to any other than his family or heirs. 8 But such com- pany incorporated in New York, and having a general power to insure under its charter, may issue policies on personal prop- erty in Canada owned by parties there. 9 A mutual insurance company may borrow money to pay its losses, and may give its note for such borrowed money, and a member of the company is liable to an assessment to pay a judgment on the note. 10 Such company, or its receiver, also has power to allow equitable claims for losses, though no actions to recover the same could be maintained by reason of the neglect of the claimants to bring them within the time prescribed by the charter or by-laws of the company, or that limited by statute; and actions upon pre- mium notes to collect money to pay such claims cannot be de- feated on the ground that payment of them might have been avoided. 11 But it cannot in a single instance deal with one of its members on a basis different from that on which all others are dealt with; 12 nor can such company appropriate as- sessments made to pay losses, nor the annual deposits received in view of assessments to the purchase of the assets of another like corporation, including unnecessary real estate, nor may it devote such funds to the payment of losses of the members of such other corporations, as such act constitutes a misapplication of trust funds. 13 Members of a mutual fire and marine insur- T O'Neil v. Pleasant Prairie Mut. F. Ins. Co., 71 Wis. 621; 38 N. W. Rep. 345. 8 State v. People's Mut. B. Assn., 42 Ohio St. 579 (organized under Ohio Rev. Stat., sec. 3630). 9 Western v. Genesee Mut. Ins. Co., 12 N. Y. 258. 10 Orr v. Mercer Co. Mut. F. Ins. Co., 114 Pa. St. 387. 11 Sands v. Hill, 42 Barb. (N. Y.) 651. " Clevenger v. Mut. L. Ins. Co., 2 Dak. 114. 1S State v. Monitor F. Assn., 42 Ohio St. 555. 439 PARTIES — MUTUAL COMPANIES. § 350 ance company are estopped to dispute the power of such corpo- ration to carry on two separate departments, without recourse by either to the assets of the other, where such act has been fully advertised for more than twenty years, and inenibers have had full knowledge of the arrangement. 14 Such corporations have the light to manage their own affairs and to control their members, 10 and an insurance association is bound by the act of the majority in the absence of restrictions in the articles of as- sociation. 16 Mutual benefit societies are estopped from defend- ing on the ground of ultra vires against one of its contracts where it has received assessments thereon. 17 And by accepting and retaining the dues and fees of a member, with knowledge of the facts, a mutual benefit association waives all irregularity in the organization of a subordinate lodge. 18 And where the cer- tificate of incorporation of a mutual benefit company declares its particular purpose to be that of giving "financial aid and benefit to the widows, heirs, or devisees of deceased members," certificates which undertake to pay a sum of money to mem- bers on arriving at a certain age are ultra vires and void; 19 and a corporation authorized by its charter to insure against fire, whether caused "by accident, lightning, or any other means," cannot insure against damage by lightning not result- ing in fire, although their by-laws provide for their doing so. 20 And wdiere the charter of an insurance company permits it to receive notes for premiums in advance, subject to be used by the company in payment of losses, etc., and requires the notes, so given, to be made payable within twelve months from date," the notes must be drawn in accordance therewith, and used for the purposes mentioned therein. 21 u Doane v. Millville Mut. M. & F. Ins. Co.. 43 N. J. Eq. 522: 11 Atl. Rep. 739. See, alao, Citizens' etc. Co. v. Sortwell, 8 Allen (Mass.), 217. ls Anacosta Tribe v. Murbach, 13 Md. 911; 71 Am. Dec. 625. 16 Korn v. Mutual Assur. Soc. of Va., 6 Cranch (U. S.), 192; Dean v. Tucker, 2 Cranch ( C. C), 26. 17 Matt v. Roman Catholic etc. Soc, 70 Iowa, 455; 30 N. W. Rep. 799. 18 Perine v. Grand Lodge of A. 0. U. W., 48 Minn. 82; 50 N. W. Rep. 1022: 21 Ins. L. J. 213. 19 Rockhold v. Canton Mas. Mut. B. Soc, 129 111. 440; 21 N. E. Rep. 794. 20 Andrews v. Mutual Ins. Co., 37 Me. 256. 11 Osgood v. Toplitz, 3 Lans. (N. Y.) 184. §§ 351, 352 PARTIES — MUTUAL COMPANIES. 440 § 351. Same Subject— Guaranty Fund.— It is held in "Wisconsin that in the absence of a charter provision therefor, or of a general power to raise a fund for losses and expenses, the act of a mutual company in contracting with its members for establishing a guaranty fund for its existing and future indebtedness is ultra vires and void. 22 In a !New Jersey case a mutual insurance company without authority by charter, es- tablished a guaranty fund of bonds secured by mortgages. It was held that as the company had no power to make the con- tract with the guarantors, it was absolutely void, and that the fund could not be reached in law or equity by a creditor of the company after its insolvency. 23 But it is held in other states that an insurance company has inherent power in the absence of positive restrictions to establish a guaranty fund, 24 and to receive a promissory note from one of its trustees as a part of such fund. Such note is a valid security in the hands of a re- ceiver, for the benefit of the company's creditors. The act of the company in undertaking business in another state, under an act of the legislature thereof requiring other and special se- curity, does not exonerate the signer of such a guaranty from liability thereon, at least in respect to policies not issued in such state. The inducement held out to the public to insure by reason of the security afforded by the guaranty is a suffi- cient consideration, or furnishes the ground for an estoppel. 20 § 352. Benevolent and Fraternal Organ izations Sub- ject to Laws of State and Jurisdiction of Courts. — It may be stated generally that all benevolent and fraternal organiza- tions or associations are subject to the laws of the state, and in all proper cases, where property rights are involved, the courts may entertain jurisdiction and afford relief. 26 « Kennan v. Rimdle, 81 Wis. 212: 51 N. W. Rep. 426. » Trenton Ins. Co. v. McKelway, 12 N. J. Eq. (1 Beas.) 133. 24 Hope Mut. Ins. Co. v. Perkins, 2 Abb. App. Dec. 383; 3S N. Y. 404; Hope Mut. Ins. Co. v. Weed, 28 Conn. 50. 25 Hope Mut. Ins. Co. v. Perkins, 2 Abb. App. Dec. 383; 38 N. Y. 404; Russell v. Bristol, 49 Conn. 251. 26 Reno Lodge etc. v. Grand Lodge etc., 54 Kan. 73, 80; 37 Pac. Rep. 1003, per Allen, J.; citing Bauer v. Samson Lodge, 102 Ind. 262; 1 N. E. Rep. 571; Genest v. L'Union St. Joseph, 141 Mass. 417; Torrey 441 PARTIES — MUTUAL COMPANIES. § 352 But they will take into consideration the objects and pur- poses of the organization in granting relief. They will further consider the modes provided by the charter, constitution, and by-laws for determining the rights of members. Courts, how- ever, ordinarily leave all questions involving policy or discipline to be settled in the manner pointed out by the regulations of the order. These organizations are formed by a purely volun- tary association of individuals for the accomplishment of agreed-upon purposes. The selection of the purposes intended and the determination of the means of accomplishment of those purposes are peculiarly matters within the decision of the association alone. Thus, the grand lodge of the state of Kansas of a certain order had for one of its fundamental ob- jects the care of orphans of deceased members. In order to make use of certain property conveyed to it in trust, it levied an assessment of so much per capita on all the subordinate lodges in Kansas, to pay off an indebtedness and make certain improvements for the benefit of a home for the maintenance and education of orphans of deceased members of the order. The right to do this Avas not in violation of any law of the state. An appeal existed from the grand lodge to the sovereign grand lodge, either with or without the consent of the grand lodge, and such sovereign grand lodge was conceded to have full legislative and judicial power in determining matters relat- ing to the order. iSTo appeal was taken to the latter lodge, and an injunction was sought to prevent the levy of the assess- ment, which was refused, it being held that the question of methods and amount to be raised was a matter of policy for the association to determine, and that courts will not undertake to direct or control the internal policy of such societies. 27 But v. Baker, 1 Allen (Mass.), 120; Austin v. Searing, 16 N. Y. 112; 69 Am. Dec. 665, and note; Dolan v. Court Good Samaritan, 128 Mass. 437; Goodman v. Jedidjah Lodge, 67 Md. 117. 71 Eeno Lodge etc. v. Grand Lodge etc. , 54 Kan. 73 ; 37 Pac. Rep. 1003, per Allen, J. : citing Niblack's Mutual Benefit Societies, sees. 79, 130: Bacon's Benefit Societies, sec. 94; Harrington v. Benevolent Assn., 70 Ga. 340; Chamberlain v. Lincoln, 129 Mass. 70; Lafond v. Deemes, 81 N. Y. 507 ; Osceola Tribe v. Schmidt, 57 Md. 98; Oliver v. Hopkins, 144 Mass. 175; 10 N. E. Rep. 776. §§ 353, 354 PARTIES — MUTUAL COMPANIES. 442 an arbitrary exercise by the ruler, of the power of removal of officers is not justified when made without notice or an oppor- tunity to appear and be heard. 28 So it is held in Connecticut that remedies within the order must first be exhausted where property rights are not involved, and that this rule is univer- sally accepted. 29 § 353. Absolute Right to Become Member Under Charter of Mutual Company. — If the charter of a mutual insur- ance company makes it the absolute right of a certain class of persons in a certain locality to become members, the conditions being subscribing the articles and applying for insurance on the terms and requirements of the charter and by-laws, upon compliance with the conditions such right may be insisted on, and cannot be cut off by an officer of the corporation, for he has no option on the subject. 30 § 354. Contributions by Subordinate Lodge to Supreme Lodge — Specific Purpose — PoAver of Disposal of Funds. — If the supreme lodge of a benevolent society receives, in re- sponse to a "distress call," funds by way of contributions from subordinate lodges, it has no power to withhold any part of such fund from the persons for whom intended, even though the approximation of the persons injured and intended to be benefited is of a greater number than actually injured. 31 In this case the court, per Bennett, C. J., said: ""We agree that when contributions are made to the common fund of a society, or as a special fund, to be used in whole or in 28 Caine v. Benevolent Order of Elks, 34 N. Y. Supp. 528; 88 Hun (N. Y.), 154. 29 Mead v. Stirling, 62 Conn. 586; 27 Atl. Rep. 591 ; citing and consid- ering Oliver v. Hopkins, 144 Mass. 175; Chamberlain v. Lincoln, 129 Mass. 70; McAlees v. The Iron Hall (Pa. 1888), 12 Cent. Rep. 415; Hawes v. Oakland, 104 U. S. 450; Schmidt v. Abraham Lincoln Lodge, 84 Ky. 490; Hall v. Knights of Honor, 24 Fed. Rep. 450. See Grand Grove A. O. of D. v. Duchein, 105 Cal. 226, 33 Pac. Rep. 947. per Har- rison, J., that acts under jurisdiction by rules of the order properly conferred are not subject to review. 30 Gay v. Farmers' Mut. Ins. Co., 51 Mich. 245. 51 Supreme Lodge K. & L. of H. v. Owens etc., 94 Ky. 327; 22 S. W. Rep. 327. 443 PARTIES — MUTUAL COMPANIES. §§ 355,356 part by it, at its discretion, for the benefit of such mem- bers as it might select, or in such proportion as it might agree, a court of equity cannot control its judgment either as to the amount or as to the proportion of the donation among the members. But, as said, the contributors raised a fund and placed it in the hands of appellant, as trustee, for a specific purpose, and the trustee was not given the power to pay the money or withhold it, or a part of it, at its discretion, but the only discretion given it was the power to distribute it according to the necessities of the donees. It was the trustee of an express trust for that purpose alone, and had no power to withhold any part of the fund from distribution, because it was not delegated to it. The whole was contributed for their benefit, and they, as far as the appellant is concerned, are en- titled to it." § 355. Effect of Decision by Official Body Created by Constitution of Order. — Where the endowment rank of an order is separate from the lodge, and is for insurance purposes only, and the constitution creates a board of con- trol having entire control over the endowment rank, sub- ject to certain restrictions by the supreme lodge, with au- thority to hear and determine all appeals, a record made by said board in pursuance of this authority and consequent upon certain other acts which it was authorized to do, operates as an authoritative construction of its regulations; the courts will follow its ruling, and it is not a decision res inter alios acta. 32 § 356. Delegation of Power by Supreme Lodge — Mu- tual Benefit Society. — Although the supreme lodge of a mu- tual benefit society may have the fullest power under its char- ter to pass all such reasonable laws as it may deem proper for the establishment and government of an endowment rank, and to enact general laws, yet where its charter vests that power alone in the supreme lodge, it cannot abdicate its authority and delegate the power to a board of control or other agency. 33 32 Supreme Lodge K. of P. of the W. v. Kalinski, 6 U. S. C. C. 373: 57 Fed. Rep. 348; 13 U. S. App. 574: 23 Ins. L. J. 44. 33 Supreme Lodge K. of P. v. La Malta, 95 Tenn. 158; 31 S. W. Rep. 493. § 357 PARTIES — MUTUAL COMPANIES. 444 § 357. Subordinate Association Cannot be Deprived of Charter without Hearing-. — If a corporation passes a by-law which authorizes a subordinate association to be de- prived of its charter without a hearing, such by-law is unrea- sonable and void. The opinion of the court in this case is important and we quote therefrom as follows: "The plaintiff is the supreme tribunal of Druidism in California, and the defendant, Garibaldi Grove, Xo. 71, is a sub- ordinate grove of Druids, of which the appellant, Duchein, is the treasurer. The relation between the plaintiff and the subordinate grove is established by the constitution and by-laws of the order, by virtue of which the grand grove is given 'sole right and full power to grant charters to subordinate groves, to receive appeals and redress grievances, and, in its discretion, for good cause shown, to suspend groves, arrest charters,' etc. By section 15 it is provided that when any subordinate grove shall violate the terms of its char- ter, or refuse or neglect to obey the direction and laws of the grand grove, or the general laws of the order, charges thereof may be preferred in writing to the grand grove, and a copy thereof shall be furnished to the grove complained of, and notice when and where to appear for trial. The grand grove holds an annual session on the third Tuesday of June in each year, and it is provided in section 9 of article 20 that 'during the recess of the grand grove the noble grand arch may, when- ever he shall deem it necessary, suspend a delinquent or offend- ing grove, such suspension to hold good until annulled by the grand grove.' On the 5th of September, 1892, the noble grand arch of the plaintiff suspended Garibaldi Grove, ]STo. 71, for the reason that he considered it was an 'offending grove,' and issued a proclamation of this fact to the other subordinate groves within the state. Article 19 of the rules of the order provides that the trustees shall be the custodians of the prop- erty of the grand grove, and that 'it shall be their duty to exe- cute all orders of the noble grand arch, to receive, by legal process or otherwise, all moneys, papers, and other property of dissolved or suspended proves in this jurisdiction,' etc. In De- cember, 1892, the noble grand arch reported this suspension 445 PARTIES — MUTUAL COMPANIES. § 357 to the trustees of the plaintiff, and directed them to commence the present action for the possession of the books and records of the suspended grove,, and for the moneys belonging to it. The court found that the appellant, Duchein, as treasurer of Garibaldi Grove, had in his possession nine hundred and fifty- four dollars and fifteen cents, moneys belonging to said grove, which he refused to deliver upon the demand of the trustees therefor, and rendered judgment directing him to pay the said money to the plaintiff herein or to its trustees. From this judgment and an order denying a new trial Duchein has ap- pealed." As to the law the court says: "It is a principle of natural justice that no one shall be condemned without an op- portunity to be heard in his defense. "Whoever would claim the right to deprive another of property or privilege, without giving him an opportunity to defend the same, must show some consent on his part to such action . . . . ; there is no distinction in principle between expelling a member from a subordinate grove and revoking the charter of the grove itself or suspending its charter We are of the opinion, how- ever, that the rules of the plaintiff do not authorize an arbi- trary suspension of the grove by him (the noble grand arch), but that whenever he proposes to take such action the grove which is charged with an offense for which he is authorized to suspend it has the right to be informed of such charge, and to be heard in its defense before he can act The limi- tation upon the power of the grand grove to itself suspend a subordinate grove 'for good cause shown' implies that formal charges must be presented and sustained, and the provision in section 15, that when charges are made against a subordi- nate grove a copy of the charges shall be furnished to it, and an opportunity given to be heard, show that the general prin- ciples under which a suspension may be had require such notice and hearing. The power of suspension which is conferred upon the noble grand arch is to be exercised by him only dur- ing the recess of the grand grove, and, in the absence of ex- press terms, ought not to be construed as greater than that of the grand grove itself, or to be exercised in any other mode than that provided for the grand grove. The authority given §§ 358-365 PARTIES — MUTUAL COMPANIES. 446 to this officer is not limited to a suspension until the next ses- sion of the grand grove, but holds good 'until annulled' by the grand grove. This provision indicates that it is to have the same effect as if the suspension had been made by the grand grove, since unless some action in the nature of an appeal is taken from the act of the noble grand arch, the grand grove is never required to exercise its will upon the subject We hold, therefore, that the action of the noble grand arch in suspending Garibaldi Grove, JNo. 71, was not in accordance with the rules of the order." 34 § 358. Member of Benevolent Association Cannot be Expelled without Hearing'. — It is well settled that a member of a benevolent association cannot be expelled without being given a hearing, and that a by-law which authorizes such a course is unreasonable and void. 30 SUBDIV. I. Mutual Companies: By-Laws. § 364. Definition of By-laws. — By-laws are the rules and regulations for the government and conduct of the affairs of the society, association, or corporation enacted within the limits and by virtue of the power conferred by the charter or articles of association. 36 § 365. Power to Enact By-laws Inherent.— The power to enact by-laws is inherent in every private corporation or " Grand Grove A. O. of D. v. Duchein, 105 Cal. 219; 38 Pac. Rep. 947, per Harrison, J. See Order of Iron Hall v. Moore, 47 111. App. 251. As to power of subordinate lodge of benevolent society to appropriate funds for support of lodge under the same jurisdiction, see Lady Lincoln Lodge v. Faist (Ct. C. N. J. 1894), 28 Atl. Rep. 555. 3f> Grand Grove A. O. of D. v. Duchein, 105 Cal. 219, 225; 38 Pac. Rep. 947, per Harrison, J., citing Fritz v. Muck, 62 How. Pr. (N. Y.) 69; Wa'chtel v. Noah Widows' etc. Soc, 84 N. Y. 28; 38 Am. Rep. 478; People v. Musical etc. Union, 118 N. Y. 108; Bacon's Benefit Societies, sec. 101. 36 See 1 Morawetz on Private Corporations, 2d ed., sec. 491, et seq.; ed. 1882, sec. 366. 447 PARTIES — MUTUAL COMPANIES. §§ 366, 367 association, 37 for it cannot be otherwise than reasonable that the power to prescribe rules and regulations as to the manner in which the corporate powers shall be exercised should reside in the corporation or association, subject to such limitations as exist in the charter or articles of association and the consti- tution and laws of the state. 38 Such power is generally exer- cised by the majority in the absence of a provision in the char- ter or articles of association, or some general statute to which the charter is subject, providing otherwise. 39 § 366. Charter Provisions Concerning- By-laws. — Where the charter prescribes the mode of enactment of by-laws, that mode must be followed. 40 If the president and directors are empowered to make by-laws, the power may be exercised by the president and a majority of the directors; 41 but where neither the statute nor charter gives the exclusive right to the directors to make by-laws, they may be duly passed by the members at a proper meeting. 42 § 367. Adoption of By-laws by Custom or Usage. — Where an association or corporation, or its officers and agents, have invariably and uniformly, for a sufficient length of time pursued a certain course of procedure in a matter which could properly have been regulated by a valid by-law, such custom and usage of the society is evidence of the adoption of a by- law, and while it might not strictly be construed into a by-law, yet it may have the force and effect of one 37 Supreme Lodge K. of P. v. Knight, 117 Ind. 489; 1 Blackstone's Commentaries, 496; "By-laws," 3 Salk. 76; Morawetz on Private Cor- porations, ed. 1882, sec. 366; 1 Id., 2d ed., sec. 491: Angell & Ames on Corporations, 9th ed., sec. 345. 38 See Commonwealth v. St. Patrick's Soc, 2 Binn. (Pa.) 441 ; 4 Am. Dec. 453. 39 See Morawetz on Corporations, ed. 1882, sec. 366; 1 Id., 2d ed., sec. 491: Angell & Ames on Corporations, 9th ed., sec. 327. 40 Dunston v. Imperial Gas Co., 3 Barn. & Adol. 125. 41 Cahill v. Kalamazoo Mut. Ins. Co., 2 Doug. (Mich.) 124: 43 Am. Dec. 457. 42 Borgards v. Farmer's Mut. Ins. Co., 79 Mich. 440; 44 N. W. Rep. 856. § 368 PARTIES — MUTUAL COMPANIES. 448 iu determining the rights of members or the obligations of the organization, 43 although a by-law will not be assumed to exist from a custom to pursue a particular course in regard to suspensions. 44 But the adoption of a code of by-laws in the regular manner excludes any presumption as to the existence or adoption of by-laws from custom or usage; 45 and in case the by-law provides for the specific manner of payment of as- sessments, payment in accordance with this requirement is sufficient even though there be a custom contrary thereto, in- asmuch as the company cannot avail itself of a custom, as against a by-law, to declare a forfeiture. § 368. Incorporated Societies — Unreasonable By-laws. In incorporated societies by-laws will not be upheld which are oppressive, vexatious, unequal, or arbitrary, and contrary to the provisions of its charter, for by-laws in such societies must be reasonable, and the power to enact them be exercised with discretion, and not in a manner manifestly detrimental to cor porate interest, 46 for by-laws which are unreasonable are void In determining the reasonableness of a by-law, the objects and purposes of the society must be considered, as this constitutes an important factor, for what might be reasonably necessary to 43 See State v. Curtis, 9 Nev. 335; Heney v. Jackson, 37 Vt. 431, 432: Masonic Mut. L. Ins. Co. v. Whitman, 52 Ga. 419; Union Bank of Md. v. Ridgely, 1 Har. & G. (Md.) 413; District Grand Lodge v. Cohn, 23 111. App. 344; American Ins. Co. v. Oakley, 9 Paige Ch. (N. Y.) 496; 38 Am. Dec. 561; Hamilton v. Lycoming Ins. Co., 5 Pa. St. 344; Angell & Ames on Corporations, 9th ed., sees. 328, 329; Morawetz on Private Corporations, sec. 369. 44 District Grand Lodge v. Cohn, 20 Bradw. (111.) 335. 45 District Grand Lodge etc. v. Cohn, 20 111. App. 335. 46 People v. Father Matthew etc. Soc, 41 Mich. 67; Angell & Amea on Corporations, sec. 347; Cartan v. Father Matthew etc. Soc, 3 Daly (N. Y.I, 20. But see Coleman v. Knights of Honor, 18 Mo. Apn. 189. "By-laws must be reasonable, and all which are nugatory and vexatious, unequal, oppressive, or manifestly detrimental to the interests of the corporation, are void": Angell & Ames on Corporations, 9th ed., sec. 347; Morawetz on Private Corporations, sec. 368. 47 Schmidt v. Abraham Lincoln Lodge, 84 Ky. 490; 2 S. W. Rep. 156; Kent v. Quicksilver Mining Co., 78 N. Y. 159; Allmutt V. High Court of Foresters (Mich.), 28 N. W. Rep. 802; Mulroy v. Supreme Lodge K. of H., 28 Mo. App. 463; People v. Father Matthew etc., 41 Mich. 67. 47 449 PARTIES — MUTUAL COMPANIES. § 369 effectuate the corporate purposes of one society and promote its welfare, might be unreasonable as outside the general pur- poses of another organization, and detrimental to its interest. 48 A by-law which provides for forfeitures, without due notice and opportunity for a hearing, is void; 49 but a by-law is rea- sonable which requires an initiation of the member in addition to a proposition fee and being elected, notwithstanding that the initiation ceremony is secret. 50 So a by-law is reasonable which provides for forfeiture where death is caused by intem- perance, 51 and the same is true of a by-law which provides that members of a railroad relief association shall release the rail- road from damages before claiming relief from the society. 52 So a by-law is reasonable which provides for the investigation by a committee of the condition of a member who applies for such benefits. 53 So is a by-law reasonable which limits relief in a benefit society from the time of the application therefor. 54 § 369. Unincorporated Societies — Unreasonable By- laws. — The rule that by-laws must be reasonable does not apply to unincorporated societies or voluntary associations. The question of their reasonableness will not be inquired into by the courts, nor will the court declare invalid a by-law of a voluntary association, agreed upon by its members, even though in the opinion of the court, it is unreasonable; 5o and a mem- ber is bound by all by-laws which are legal, so long as he re- mains in the society. The act is considered as voluntary on his part, and the terms of the contract his own to the extent, 48 Commonwealth v. St. Patrick's B. Soc, 2 Binn. (Pa.) 441, 449; 4 Am. Dec. 453; Dickinson v. Chamber of Commerce, 29 Wis. 49. * 9 In re Butchers' B. Assn., 38 Pa. St. 298; Roehler v. Mechanics' Aid Soc, 22 Mich. 89; Queen v. Saddlers' Co., 10 H. of L. Cas. 404. 60 Matkin v. Supreme Lodge K.of H., 82 Tex. 301; 18 S. W. Rep. 306. 51 St. Mary's B. Soc. v. Bonford, 70 Pa. St. 321; Harrington v. Benevolent Soc, 70 Ga. 340. 5i State v. Baltimore etc. Co., 36 Fed. Rep. 655. See, also, Fuller v. Baltimore etc. Employees' Relief Assn., 67 Md. 433; 10 Atl. Rep. 237. 63 Van Poucke v. Netherland etc. Soc, 63 Mich. 378; 29 N. W. Rep. 863. See Lucas v. Thompson, 146 Pa. St. 315; 23 Atl. Rep. 321; Har- rington v. Benevolent Soc, 70 Ga. 340. 6 * 3 Watts &S. (Pa.) 218. " Kehlinbeck v. Logemann, 10 Daly (N. Y.), 447. Joyce, Vol. I.— 29. §§370,371 PARTIES — MUTUAL COMPANIES. 450 at least, that he may withdraw at any time and determine his relations with the society. 56 § 370. By-laws must not be Unequal. — A by-law must apply equally and be capable of like operation as to all mem- bers. By-laws which discriminate against, or in favor of, cer- tain members, to the exclusion of others, are invalid. 57 § 371. Validity of By-laws. — A by -law is not invalid which is fairly within the scope of the general purposes of the organi- zation, and it has been held that in determining what are the purposes of an association the courts will liberally construe its articles, especially if the provisions are meritorious; 58 nor can by-laws be validly enacted which are retroactive and ex post facto.° 9 A mutual insurance company, unless prevented by the terms of its charter, may enact a by-law that if an assess- ment on a premium note is not paid within thirty days after demand, the policy for which said note is given shall be void until the assessment is paid. 60 A by-law which consists of sev- eral distinct and independent parts may be valid as to one part, though void as to the others ; 61 but it is otherwise where the by-law constitutes an entirety, each part of which depends upon the other parts, for it is void as to the whole if void in a material part. 62 A by-law is void which provides that the members of an insurance company shall bring a suit in a cer- tain countywhere their claimsare disallowed by the directors. 63 66 Grosvenor v. United etc., 118 Mass. 78; Kehlinbeck v. Logeman, 10 Daly (N.Y.), 447. 67 People v. Father Matthew etc. Soc, 41 Mich. 67; Taylor v. Gris- wold, 14 N. J. L. 223. See Clevenger v. Mutual L. etc., 2 Dak. 114. 58 Gundlaok v. Germania Mech. Assn., 4 Hun (N. Y.), 339, 341; 49 How. Pr. (N. Y.) 190. 69 Kent v. Quicksilver Mining Co., 78 N. Y. 159; Pulford v. Fire De- partment, 31 Mich. 458; Angell & Ames on Corporations, 9th ed., sec. 339, et seq. 60 Fogel v. Lycoming Ins. Co., 3 Grant Cas. (Pa.) 77. 61 Amesbury v. Bowditch Mut. F. Ins. Co., 6 Gray (Mass.), 596. 62 State v. Curtis, 9 Nev. 325; Angell & Ames on Corporations, sec. 358. 63 :Nnte v. Hamilton Mut. Ins. Co., 6 Gray (Mass.), 174. Whether by-law is void, see Matt v. Roman Catholic M. Prot. Soc, 70 Iowa, 455. 451 PARTIES — MUTUAL COMPANIES. §§372,373 § 372. By-laws Excluding Resort to Civil Courts.— That by-laws may not by their provisions wholly exclude mem- bers from resorting to the civil courts for remedies under con- tracts of insurance is substantially and by analogy held in sev- eral cases, 64 although cases to the contrary are numerous. 65 A distinction, however, should be made between those by-laws, or constitutional provisions which have reference to disputes of members among themselves, and those which apply to con- tests with the order over payment of losses under the contract. 66 So in Indiana, it is held that a by-law of a mutual benefit soci- ety which provides that a member claiming benefits must make proof of loss before certain subordinate officers, and, if their decision is against him, appeal to higher officers, whose deci- sion shall be final, is valid in so far as it requires such an appeal to be taken before suit may be brought on the membership cer- tificate, and void in so far as it declares the decision of the ap- pellate tribunal final so as to bar a resort to the courts. 67 § 373. By-laws must not be Contrary to Laws of State or United States. — All by-laws must be consistent with the constitution and laws of the state and of the United States, as well as with particular statutes which relate to the corporation and which do not impair the charter obligation. 68 A by-law which is against the laws of the state or government M Stephenson v. Insurance Co., 54 Me. 70; Supreme Council v. G >r- rigus, 104 Ind.133; 54 Am. Rep. 298; Kinney v. Baltimore etc. Employ- ees' Relief Assn., 35 W. Va. 385; 14 S. E. Rep. 8; 21 Ins. L. J. 176; Sweeney v. Rev. Hugh McLaughlin B. Soc, 14 Week. Not. Cas. 466; Mulroy v. K. of H., 28 Mo. App. 463; Bauer v. Sampson Lodge, 102 Ind. 262; Elkhart Mut. etc. v. Houghton, 98 Ind. 149; Kestler v. Indianap- olis etc. R. R. Co., 88 Ind. 460; Wood v. Humphrey, 114 Mass. 185. 65 Canfield v. Great Camp of Knights of the Maccabees, 87 Micb.626; 49 N. W. Rep. 875 ; 21 Ins. L. J. 3 ; 13 L. R. Annot. 625 ; Scott v. Avery, 5 H. of L. Cas. 811 ; Anacosta Tribe v. Murbach, 13 Md. 911: 71 Am. Dec. 625: Cincinnati Lodge etc. v.Littlebury, 6 Cin. L. Bull. 237. 66 Bukofzer v. United States Grand Lodge, I. O. S. of B. (N. Y. 1891), 15 N. Y. Supp. 922; 40 N. Y. 653. 67 Supreme Council of Order of Chosen Friends v. Forsinger, 125 Ind. 52; 25 N. E. Rep. 129. 68 Butchers' Beneficial Assn., 35 Pa. St. 151; Angell & Ames on Cor- porations, 9th ed., sec. 332, et seq. §§374,375 PARTIES — MUTUAL COMPANIES. 452 is void and totally inoperative, and an act relative to the con- tract cannot be permitted under a by-law when such act would contravene the laws of the state. 69 A by-law is therefore void which requires that a member shall take part in a strike.' So it is held that a mutual insurance company created with- out any capital stock cannot create a capital stock by virtue of a by-law passed for that purpose, and thereby withdraw from the class of mutual corporations without capital stock to which it belongs; 71 and where a mutual insurance company in Mas- sachusetts was authorized to do business as a stock company, a by-law which prohibited the continuance of the stock depart- ment and makes a division of the surplus accumulated there- under is contrary to the general insurance laws of that state, and void. 72 § 374. By-laws Against Public Policy are Void. — That a by-law which is contrary to public policy is void, is well set- tled. But a by-law of a railroad relief association which re- quires the release of the railroad from any claim for damages before a member can apply to the association for relief is not Invalid as against public policy. 73 § 375. By-laws must not Contravene Terms of Charter. By-laws are not valid which conflict with the charter or articles of association, for to acknowledge the power to enact such by- laws would admit the power of a corporation to re-create itself on such basis and for such purposes as it might desire, and wholly defeat the object of its original creation; 74 nor is a 69 Price v. Supreme Lodge etc., 68 Tex. 361 : 4 S. W. Rep. 633. 70 People v. New York Ben. Soc, 3 Hun (N. Y.), 361. See Snow v. Wheeler, 113 Mass. 179. 71 State v. Utter, 34 N. J. L. 489. 72 Traders & Mechanics' Ins. Co. v. Brown, 142 Mass. 403. 73 Owens v. Baltimore etc. R. R. Co., 35 Fed. Rep. 715; State v. Bal- timore etc. Co.. 36 Fed. Rep. 655; Fuller v. Baltimore etc. Employees' Relief Assn., 67 Md. 433; 10 Atl. Rep. 237. See further on invalidity of by-laws which are inconsistent with state laws, Briggs v. Earl, 139 Mass. 473; Angell & Ames on Corporations, sec. 333, et seq. 74 Diligent F. Co. v. Commonwealth, 75 Pa. St. 291; Prest. Mut. Assn. Fund v. Allen, 106 Ind. 593; Bergmann v. St. Paul Mut. 453 PARTIES — MUTUAL COMPANIES. § 376 member bound by his consent to by-laws which are invalid for the above reasons. 70 So a by-law which materially conflicts with the constitution of an unincorporated society is invalid, and must yield to the constitution. 76 Where a particular mode for obtaining funds for the payment of losses and ex- penses is provided by charter, a by-law is void which changes such specific provision and provides an entirely different mode therefor." But the courts will not sustain an action by a member of a corporation to restrain it from enforcing against him a by-law of a mutual society which provides that it shall be the duty of every member to refuse to perform in any orchestra in which are any persons not members in good stand- ing, and that it shall be deemed a breach of good faith between members to employ a suspended or nonmember, or to assist in a public performance given wholly or in part by amateurs, and which impose a penalty for their violation; 78 and a by-law cannot limit or extend benefits beyond the charter provisions prescribing the class entitled to benefits. 79 But a by-law which provides for forfeiture for nonpayment of an assessment does not contravene a charter provision that the officers may declare a policy forfeited for a like cause. 80 § 376. Enforcement of By-laws — Penalty. — The power to enact a by-law carries with it necessarily the power to en- force the same by a reasonable penalty, within the scope of the corporate purposes, and upon due notice and hearing. 81 So a Assn., 29 Minn. 278; Angell & Ames on Corporations, 9th ed., sec. 343, et seq. 75 People v. Benevolent Soc, 24 How. Pr. (N. Y.) 216. 76 Sherry v. Operative Plasterers' Mut. Union, 139 Pa. St. 470; 20 Atl. Rep. 1062; Powell v. Abbott, 9 Week. Not. Cas. 231. 77 State ex rel. Monitor etc. Assn., 42 Ohio St. 555. 78 Daniels, J., dissenting; Thomas v. Musical Mut. Protective Union, 121 N. Y. 45; reversing 49 Hun (N. Y.), 171. 79 Legion of Honor v. Perry, 140 Mass. 580; Kentucky Masonic etc. V. Miller, 13 Bush (Ky.), 489. 80 Equitable etc. v. McLennon (Tenn.), 6 Ins. L. J. 124. 81 See Beadle v. Chenango Co. Ins. Co., 3 Hill (N. Y.), 161; Angell & Ames on Corporations, 9th ed., sec. 360, et seq. 5 377 PARTIES — MUTUAL COMPANIES. 454 member may be suspended for nonpayment of assessments; 82 but a by-law which subjects the member to a quasi penalty of deprivation of benefits for three months after he has paid dues in arrears for a certain time, is unreasonable, oppressive, and detrimental to the interests of the corporation. 83 And .an amendment of the constitution which is ex post facto in its effect, in that it enforces a penalty not existing at the time of default in payment of dues by a member, is not valid. 84 § 377. Power to Alter or Change By-laws. — A mutual insurance corporation or association may change its rules, or dispense with their literal and rigorous enforcement, when by so doing no substantial rights of the company or the insured will be impaired. 85 The right of a corporation to alter, mod- ify, or change its by-laws is generally reserved in the charter or articles of association, but aside from the reservation of such power it is said to be incident to the very nature and purposes of such organizations that they should have the right to make changes in their laws. 86 This principle is undoubtedly true, but in its application the courts widely diverge. An attempt has been made by some of the decisions to reconcile the cases on the common ground of vested rights, but here again the question of what constitute vested rights has been the subject of much discussion, and the decisions are far from unanimous, nor is the question settled as to what extent such societies are authorized to change their by-laws, where the power so to do is reserved in the charter or articles of association. \Ve have seen that the fundamental law of organization of such societies, and the charter and by-laws constitute a part of the contract of each member, 87 and it would seem as if neither a corporation 82 Hansen v. Supreme Lodge K. of H., 140 11'. 301 ; 29 N. W. Rep. 11 21. 83 Cartan v. Father Matthew United B. Soc, 3 Daly (N. Y. ), 20. See Conolly v. Shamrock B. Soc, 43 Mo. App. 283; Cahill v. Kalamazoo Ins. Co., 2 Doug. (Mich.) 124; 43 Am. Dec. 457. 84 Pulford v. Fire Department, 31 Mich. 459. See sections herein on forfeiture, etc. 85 See Protection L. Ins. Co. v. Foote, 79 111. 361. 86 Fugure v. Society of St. Joseph, 46 Vt. 369. 87 Chapters 13, 15, herein. 455 PARTIES — MUTUAL COMPANIES. §§378,379 nor association would Lave the inherent power to enact a by- law which materially and radically changes the contract with members; such societies can certainly have no inherent power to arbitrarily abrogate the provisions of a contract which mem- bers have entered into in good faith, nor may it divest mem- bers of rights which have become vested under their contracts. And a charter reservation of the right to modify and change by-laws, and to which a party consents by becoming a member, ought not to be construed to warrant the passing of a by-law which would operate to annul a member's contract and abro- gate vested rights, or which would in effect be a repudiation of its obligations by the society. 88 § 378. By-laws — Changes, How Made, — Alterations or changes of by-laws must be made in the manner prescribed by its charter and by-laws, and where a by-law prescribes the time when such alteration can be made, and the number of votes re- quired therefor, such provision must be followed. 89 Where the articles of a corporation provide for the management of its business by a board of directors, and for meetings of that board, but do not provide for meetings of the corporation, and the first by-laws were adopted by the directors, the latter have power to amend the by-laws. 90 An attempted amendment of the by-laws of a mutual benefit society is not binding on a member who did not attend the meeting, unless it is affirma- tively shown to have been called and conducted as provided by the constitution. 91 § 379. By-laws — Statutory or Charter Power to Re- peal, Chang-e, etc, — It is undoubtedly true that a right may exist to repeal or amend by-laws, where pro- vision is made therefor in the charter, act of in- 88 Supreme Commandery v. Ainsworth, 71 Ala. 436; 46 Am. Rep. 332; Insurance Co. v. Connor, 17 Pa. St. 136; Stewart v. Lea Mut. F. Ins. Assn., 64 Miss. 499; 1 S. Rep. 743. See Korn v. Mut. Assur. Soc, 6 Cranch (U. S. ), 192. See sections next ensuing herein. 89 Torry v. Baker, 1 Allen (Mass.), 120. 90 Heintzelman v. Druids' Relief Assn., 38 Minn. 138; 36 N. W. Rep. 100. 91 Metropolitan Safety Fund Ace. Assn. v. Windover, 137 111. 417; 27 N. E. Rep. 538. § 379 PARTIES — MUTUAL COMPANIES. 456 coloration, or fundamental law of the corporation or association. Thus in the case of Stohr v. San Francisco etc. Society 92 the defendant was incorporated, and both the general laws of the state and the by-laws of the society gave it the right to repeal, alter, or amend its laws. After a mem- ber's sickness a by-law was passed limiting the allowance to which he was entitled to a certain amount, unless otherwise or- dered by the board of directors, and the by-law was declared to be valid. So it is held in aSTew York that where the con- stitution provides that the by-laws may be amended, the society may alter them, even after a member has been taken sick, and reduce the amount of his benefits. 93 It is declared in another case in the same state that the constitution and by-laws may be changed, and the member becomes bound where the amend- ment is made in accordance with the constitution and laws, even without notice to the member, in the absence of a provi- sion therefor in the constitution or by-laws. 94 Again, it is held that where, by statute, insurance companies have the right to amend their charters, a person who takes a policy from a company, the charter of which provides for the surrender of policies and compensation thereupon, cannot be heard to com- plain of a subsequent abrogation of this provision. 90 So a member who continues to pay assessments after a change in the by-laws in relation thereto is estopped to deny the power to amend such by-laws ; 96 and where there is an express pro- vision in the constitution of an association that the society may alter or change its by-laws, and the manner of doing it is specifically pointed out, such amendment may be made. 97 But if the power to alter a by-law is reserved, that power can- ■ 82 Cal. 557 ; 22 Pac. Rep. 196. 93 Poultney v. Backmann, 31 Hun (N. Y.), 49; overruling 62 How. Pr. (N. Y.)466. 91 McCabe v. Father Matthew etc. Soc, 24 Hun (N. Y.), 149. 9i Allen v. Life Assn. of America, 8 Mo. App. 52. 96 Struve v. Grand Lodge Ohio A. 0. of U. W., 5 Ohio C. C. 471; 26 Week. L. Bull. 471. 97 Fugure v. Society of St. Joseph, 46 Vt. 369. See, also, Poulteney v. Blackman„31 Hun. (N. Y.) 49; overuling 62 How. Pr. (N. Y.) 466, and 10 Abb. N. C. (N. Y.) 252. 457 PARTIES — MUTUAL COMPANIES. § 380 not be exercised to enact unreasonable by-laws, even though the by-law is substantially an enactment of another on the same subject. 08 It is also held that a total nonobservance of a by- law operates as a repeal thereof." And where, under the char- ter of a mutual fire insurance association, the incorporators are authorized to make such by-laws as they may deem advisable for the management of their corporate affairs, such by-laws can have no effect to modify contracts entered into between the corporation and the assured; 100 nor does the reservation of a right to alter or change a by-law enable the society to re- pudiate a debt and reduce the amount to which a member is entitled for benefits by a by-law enacted after the right of the claimant has accrued. 101 So resolutions passed by the board of directors of a mutual insurance company suspending the' policy of a member does not affect a policy holder having no notice of their passage. 102 § 380: Change of By-laws — Vested Right .*— It is the rule that by-laws cannot disturb a vested right; 103 but members may assent to a by-law which would not bind strangers or non- dissenting members, and such by-law would be good as a con- tract as to assenting parties. 101 But what constitutes a vested right is a question upon which the courts differ. Supposing the contingency has arisen which the contract provides against, and upon the happening of which the benefit is to accrue or the loss to be paid. The contract is to be interpreted like one of insurance, and it would reasonably seem that a power to ab- rogate the provision of the agreement would not exist, for the express terms of a contract of insurance cannot be changed by 98 Kent v. Quicksilver Mining Co., 78 N. Y.159. 99 Attorney General v. Middleton, 2 "Ves. Sr. 328. 100 Stewart v. Lee Mut. F. Ins. Assn., 64 Miss. 499; 1 S. Rep. 743. 101 Pellazino v. German etc. Soc, 16 Cin. W. L. Bull. 27. 102 Martin v. Mutual F. Ins. Co. of Montgomery Co., 45 Md. 51. 103 Morrison v. Wisconsin Odd Fellows' etc. Co., 59 Wis. 162. But see Fugure v. Society of St. Joseph, 49 Vt. 362. 104 Stetson v. Kempton, 13 Mass. 282. "What may be bad as a by- law as against common right may be good as a contract": Angell & Ames on Corporations, 9th ed., sec. 342. 8 380 PARTIES— MUTUAL COMPANIES. 458 a by-law without the consent of the insured. 105 So where a provision of the charter and a by-law of an insurance com- pany constitute part of a contract of insurance, their alteration without the consent of the insured cannot affect the contract. 106 Again, it is held that a by-law cannot be amended, after the right to benefits has accrued, so as to reduce the amount it would otherwise be obligated to pay. 107 There are decisions, however, which not only hold that where a member has no vested right in a fund the society may change the disposition of the fund, 108 and also that a by-law in existence when a mem- ber claims relief, and not the one in existence at the time he became a member, is the one under which he is entitled, as the society has the right to amend such a by-law. 109 It is further held that if a member has deceased, the society may amend its by-laws limiting the amount of recovery to which his widow would have been entitled before the alteration. 110 So in a California case 111 it is decided that a by-law limiting the amount of recovery, enacted after the right to claim relief has accrued, does not impair vested rights, since it is not retro- active. The commissioner's opinion adopted by the court is as follows: "It is contended for the respondent that the by-law giving a right to benefits constituted a contract, which could not be changed, and the question presented is, whether the de- fendant had power to change said by-law in the way it did. Undoubtedly, when the plaintiff complied with what was re- quired of him as a member, the by-laws constituted a contract; and unless the contract itself otherwise provided, it could not be changed without the consent of all the parties. But here the contract itself does provide otherwise; .... there is an express provision that the by-laws may be changed; .... the 105 Insurance Co. v. Harvey, 45 N. H, 292: Becker v. Farmers' Mut. etc., 48 Mich. 610; Gundlach v. Gerraania Mech. Assn., 49 How. Pr. (N. Y.j 190; Morrison v. Wisconsin Odd Fellows' etc., 59 Wis. 162. 106 Morrison v. Wisconsin Odd Fellows' etc., 59 Wis. 162. io7 Becker v. Berlin B. Soc, 144 Pa. St. 23 J; 22 Atl. Rep. 699. los Torrey v. Baker, 1 Allen (Mass.), 120. 109 St. Patrick's Male Soc. v. McVey, 92 Pa. St. 510. 110 Fugure v. Mutual Soc. of St. Joseph, 46 Vt. 362. 111 Stohr v. San Francisco etc. Soc, 82 Cal. 557; 22 Pac. Rep. 196. 459 PARTIES — MUTUAL COMPANIES. g 3S0 law provides that the by-laws may be changed. This provision must be held to enter into and form a part of the contract. .... In view of this power to alter the contract, it cannot be said that the defendant could not alter its by-laws in any respect. The respondent argues, however, that it had no power to alter them so as to impair a vested right. This must be conceded, but we do not think that the new by-law purported to impair a vested right. The term 'vested right' is often loosely used. In one sense every right is vested. If a man has a right at all, it must be vested in him; otherwise, how could it be a right? The moment a contract is made, a right is vested in each party to have it remain unaltered and to have it performed. The term, however, is frequently used to designate a right which has become so fixed that it is not sub- ject to le divested without the consent of the owner, as contra- distinguished from rights which are subject to be divested with- out his consent. jSTow, a right, whether it be of such a fixed character or not, must be a right to something; and when a man talks vaguely of his vested right, it conduces to clearness to ask : 'A vested right to what?' In the present case the plaintiff can have no right to have the contract remain unchanged, be- cause, as we have seen, the contract itself provides that it may be changed. Nor has he a right to remain unaffected by any change that may be made; for if such right be common to all the members, it is merely another way of saying that no change can be made, and if the right be not common to the other mem- bers, it would be to assert a privilege or superiority over them, of which there is no pretense. If the plaintiff has any right which is so fixed that it is not subject to change, we think it can only be to the fruits which ripened before the change was made; in other words, to such sums as became due before the new by-law was adopted. To express it differently, the change could not be retroactive. This is all that we think can be meant by 'vested right,' in a ease like the present. Now, un- der the contract, nothing was due before the sickness actually took place. Benefits do not accrue for future sickness. The right of the plaintiff to benefits for future sickness is not dif- ferent in its nature from the right of the well members to § 381 PARTIES — MUTUAL COMPANIES. 460 benefits for future sickness. In the one case the members have a right to future payment in case they become sick; in the other, the plaintiff has a right to future payments in case he continues sick, and if there was no power to change the by-law in the one case, there was no power to change it in the other; which is equivalent to saying that there was no power to change it at all. The cases where a specific sum becomes due upon the happening of a certain event, as upon death, are not like the present. In such cases an alteration in the con- tract cannot be made after the fact; for that would be to make that not due which had already become due. It might, per- haps, l:e argued that the foregoing would apply if the by-law under consideration had specified that the weekly payments were to continue as long as the sickness continued. But it does not so specify. The time during which the payments were to continue is left indefinite. The substance of the contract is, in our opinion, that, in case of sickness, the member is to re- ceive weekly payments for an indefinite period of sickness, sub- ject to the power of the defendant to change the provision au- thorizing such payments, so far as future payments are con- cerned." So in !New York, articles of association which pro- vide for the payment to widows of a certain sum a month may be amended so as to change the amount of benefits, but such change is not retroactive, and the beneficiary will be entitled to the benefits under the original provision. 112 So a society may limit the payments of benefits until there shall be a cer- tain sum in the treasury by a by-law enacted after the party claiming to be entitled to benefits had become a member. 113 § 381. Construction of By-laws. — In construing by- laws, they will be given effect as far as possible. 114 They will also be construed to sustain the contract, rather than uphold a forfeiture: 11 "' and a reasonable construction will be given, due 112 Gundlach v. Germania etc. Assn., 4 Hun (N. Y.), 341. 113 St. Patrick's etc. Soc. v. McVey, 92 Pa. St. 510. 114 Elsey v. Old Fellows' Assn., 142 Mass. 224. They should be con- strued liberally: Morawetz on Corporations, ed. 1882, sec. 369; 1 Id., 2d ed., sec. 497. 115 Evans v. Phoenix Mut. Relief Assn., 9 Lane. Law Rev. (Pa.) 59; 461 PARTIES— MUTUAL COMPANIES. § 381 regard being Lad to the rights of members and the purpose of their enactment; trivial reasons will not warrant their being held invalid, nor will they be closely scrutinized with that in- tent. 116 The reasonableness of a by-law is a question of con- struction for the court. 117 49 Leg. In tell. 15; Schinck v. Gegenzeiter, 44 Wis. 369: Erdmann v. Mutual Ins. Co., 44 Wis. 376. 116 St. Mary's B. Soc. v. Burford, 70 Pa. St. 321 ; Genest v. L. Union etc., 141 Mass. 417; Fritz v. Muck, 62 How. Pr. (N. Y.) 69, 72. 117 People v. Throop, 12 Wend. (N. Y.) 186; Commonwealth v. Worcester. 3 Pick. (Mass.) 462; Angell & Ames on Corporations, 9th ed., sec. 357. CHAPTER XVII. AGENTS OF INSURER: APPOINTMENT, ETC.-POWERS. § 386. Corporations act through agents. § 3S7. Charter provisions concerning agents. § 388. Who are insurance agents. § 389. Classification of agents. § 390. Appointment of agents. § 391. Appointment of agents: Statutes. § 392. Appointment of agents: Territory: Contract with principal. § 393. Relative powers of agents of stock and mutual companies. § 394. Same subject: Powers after completion of contract. § 395. Who is general agent. § 396. Power of agents to delegate authority. § 397. Officers of insurance corporations and associations and their powers. § 398. Powers of officers of mutual benefit societies. § 399. Powers of president. § 400. Powers of vice-president. § 401. Powers of secretary. § 402. Powers of assistant secretary. § 403. Powers of treasurer. § 404. Powers of directors. § 405. Powers of superintendent. § 406. Powers of general managers. § 407. Agency of subordinate lodges. § 408. Agency arising from necessity or emergency. § 409. Agent delegated for special purpose. § 410. Agency— Person referred to by company. § 411. Powers of clerk. § 412. Powers of medical examiner. § 413. Whether one is agent or broker. § 414. Whether broker is agent of insured or insurer. § 415. Partnership as agent: Joint agents. § 416. Powers of adjuster. § 386. Corporations Act Through Agents. — Insurance corporations must act through agents, especially so in case of corporations doing business in foreign territory. Every mem- 463 AGENTS OF INSURER. § 387 ber of a corporation or association is therefore presumed to agree, on becoming such member, that the organization shall act through such agents as are reasonably necessary for the transaction of its business, and unless the charter or act of appointment provides otherwise, that they shall possess or ex- ercise all such powers as the nature of their appointment shall require. 1 § 387. Charter Provisions Concerning- Agents. — We have already given some consideration to the question of limitations imposed upon insurance corporations and associations by the charter or articles of association. 2 There are certain class agents, such as general officers and boards of directors, manag- ing officers, and the like, who derive their authority, directly or impliedly, from the charter. Although their general au- thority permits the exercise of a wide discretion, nevertheless, if the charter prescribes the mode of exercise of their authority, and it is apparent that the legislature intended such mode as exclusive of all others, the prohibition must be observed. 3 An agent has apparent authority to insure in the modes authorized by the company's charter, and upon the terms and conditions inserted in their policies in ordinary use. 4 Insurance com- panies are bound by the acts of agents not prohibited by their charter and within the limits which may reasonably be pre- sumed by the public from the character of the business and the general mode of transacting it. 5 It is held in an Illinois case 6 i Woodbury Savings Bank v. Charter Oak Ins. Co., 31 Conn. 528, per Dutton, J.; Protection Life Ins. Co. v. Foote, 79 111. 361, per Sehol- field, J.; Insurance Co. v. Gibson, 72 Miss. 64, per Whitfield, J.; Lat- tornous v. Farmers' Mut. F. Ins. Co., 3 Houst. 404. See Angell & Ames on Corporations, 0th ed., sees. 231, 276, et seq.; Bliss on Life Insurance, ed. 1872, sec. 273, et seq. As to the powers of corporate agents generally, see Thompson on Corporations, ed. 1895-96, c. civ, sec. 4873, et seq. 2 See sees. 35, 36. 53, and chapters 13, 15 herein. 3 See sec. 35. herein. Examine Angell & Ames on Corporations, 9th ed., sees. 231, 280, 291. 4 De Grove v. Metropolitan Ins. Co., 61 N. Y. 594; 19 Am." Rep. 305, and note, 309. See Reynold v. Continental Ins. Co., 36 Mich. 131. r - Kenton Ins. Co. v. Shea, 6 Bush (Ky.), 174; 99 Am. Dec. 676. 6 Farmers' & Merchants' Ins. Co. v. Chestnut, 50 111. Ill; 99 Am. Dec. 492. § 388 AGENTS OF INSURER. 464 that an authorized agent lias power to sign an agreement giv- ing permission for an enhanced premium which was paid to re- move property, although the charter required that agreements relating to insurances should be signed by the president and secretary. 7 § 388. Who are Insurance Agents. — Insurance agents are persons expressly or impliedly authorized to represent either the insurer or insured in matters relating to insurance. Agents may directly represent the principal, or they may be- long to the class designated as subagents, who are employed by the principal agent, and frequently brokers are thus employed. 8 A person was held to be an agent of the company where it ap- peared that a circular signed by the general agent was ad- dressed to such person as "agent," referring to his "agency," and fully instructing him as to his duties in that capacity. He thereafter acted as agent, informed the general agent of the loss, and received a reply and instructions from him. 9 And the pos- session by an insurance agent of blank policies, to which the sig- natures are affixed of the company's president and secretary, afford sufficient evidence of a general agency to justify a per- son's contracting for insurance with him, and to accept a policy delivered by him. 10 So a party employed as a watchman by the owner of the property may issue a policy thereon as agent of an insurance company. 11 "Where a soliciting agent solicits one to become a member of a mutual benefit association, pretending to be its agent, and produces and fills out the application which is sent to the association, acted on by it in issuing a certificate, and said certificate is sent to the apparent agent, who delivers it to assured and collects the premium, an agency is established. 12 7 See sec. 35. 30, herein, for a consideration of this question. 8 See Ewell's Errans on Agency, c. i, for definitions of the different kinds of agents and distinctions between them. 9 Hamilton v. Home Ins. Co., 94 Mo. 353; 7 S. W. Reip. 201. io Howard Ins. Co. v. Owens, 94 Ky. 197; Ky. Law Rep. 237. 11 Northrup v. Germania P. Ins. Co., 48 Wis. 420; 33 Am. Rep. 815. 12 Whitney v. National Masonic Ace. Assn., 57 Minn. 472. 480; 59 N. W. Rep. 943, per Collins, J.; distinguishing Gude v. Exchange F. Ins. Co., 53 Minn. 220; 54 N. W. Rep. 1117; and citing Abraham v. 465 AGENTS OF INSURER. § 389 § 389. Classification of Agents. — In classifying agents a distinction has been made as to their powers, between the different kinds of agents, and between those representing the different kinds of insurance, such as Life, fire, and marine. 13 This distinction may be of some importance where third par- ties dealing with such agents have knowledge of whatever lim- itations such distinction may import. But the main questions are, "What authority was the agent held out by the principal to possess? Were the agent's acts within the scope of his real or apparent authority? Did the person dealing with such agent have knowledge of restrictions or limitations upon the agent's authority? 14 As a general rule, the general principles of agency applicable to all agents govern the acts of insurance aeents. 15 North German Ins. Co., 40 Fed. Rep. 717; Hahn v. Assurance Co., 23 Or. 576; 32 Pae. Rep. 683; Gosch v. Asociation, 44 111. App. 263; Pierce v. People, 106 111. 11; Deitz v. Providence etc. Ins. Co., 31 W. Va. S51; 8 S. E. Rep. 616; Insurance Co. v. Williams, 39 Ohio St. 5S4; Packbard v. Dorchester Mut. Ins. Co., 77 Me. 144; Stone v. Hawkeye Ins. Co., 68 Iowa, 737; 28 N. W. Rep. 47. 13. See Richards on Insurance, pp. 20-26, sees. 16-19. "There seems to be no very well defined distinction between the powers of general agents, local agents, and subagents": 1 May on insurance, 3d ed.. 221, sec. 126. "The distinction between special and general agents is of little or no practical value, so far at least as regards the principal and third parties": Ewell's Evans on Agency, 2. 14 See chapters, post, on Agents; Ewell's Evans on Agency, ed. 1879, c. i, p. 2, et seq; Story on Agency, sec. 127, note; Insurance Co. v. Wilkinson, 13 Wall. (U. S.) 235; 2 Wood on Fire Insurance, 2d ed. 860. sec. 416. 15 See Markey v. Mutual B. Ins. Co., 103 Mass. 78, 93. "There are no principles which belong exclusively to agency in insurance mat- ters; none, that is, which are not recognized as a part of the general law of agency. But there are some peculiarities in the application of these principles": 2 Parsons on Marine Insurance, ed. 1868, 416. "The same rules apply to insurance companies as apply in the case of indi- viduals, and a person who is clothed with power to act for them at all is treated as clothed with authority to bind them, as to all matters within the scope of his real or apparent authority": 2 Wood on Fire Insurance, 2d ed., 822, sec. 408. citing Bodine v. Exchange F. Ins. Co., 51 N. Y. 117; 10 Am. Rep. 566; Eclectic Fire Ins. Co. v. Fahrenkrug, 68 111. 463; Warner v. Peoria Mut. & F. Ins. Co., 14 Wis. 318, and numerous other cases. Joyce, Vol. 1—30 § 390 AGENTS OF INSURER. 466 § 390. Appointment of Agents. — An agent's authority may arise by virtue of a valid express appointment by deed, or writing under seal, or it may rest in parol. 10 It may be implied from usage, from custom, or from a course of dealing sanc- tioned by the principal; or it may exist under an express rati- fication by the principal; or the implied authority may arise where the party's own acts are such as to constitute him an agent, or the agency may be created by a necessity justifying immediate action.?- 7 And this is true not only of agents of the insurer, but also of agents of the insured. 18 Where the charter and by-laws prescribe the performance of certain formalities as conditions precedent to the agent's authority to act, such mat- ters relate to the management of the internal affairs of the com- pany. Therefore, a party who deals with such agents has, in the absence of notice to the contrary, the right to assume that such formalities have been complied with, and may deal with the agent within the scope of his apparent authority. The cor- poration is also estopped from setting np noncompliance by the agent with the prescribed conditions. 19 But so far as the ap- pointment itself is concerned, it is not valid unless made in con- formity .with such formalities as the charter prescribes, where the charter sets forth the requirements, 20 although an irregular .or informal appointment may be ratified, either expressly or " Ewell's Evans on Agency, 22-32, *16-*23; Swazey v. Union Mfg, Co., 42 Conn. 556; Perkins v. Washington Ins. Co., 4 Cow. (N. Y.) 646.' As to appointment of agents under statutes, see sec. 391, herein. " See Mechein on Agency, ed. 1889, c. iv, sec. 80, et seq. ; Story on Agency, 9th ed., c. v, sec. 45, et seq; Wbarton on Agency, sec. 134; Union etc. Min. Co. v. Rocky Mountain Nat. Bank, 2 Col. 248; and chapters, post, on Agents. is See Barlow v. Leckie, 4 Moore J. B. 8; Ewell's EVans on Agency, ed. 1879. 22-32, side pp. 16-23. 19 Bank of United States v. Dandridge, 12 Wheat. (U. S.) 64, 70. per Story, J.; Tn re County Life Assur. Co., L. R. 5 Ch. 293, per Gif- fard, L. J.; Insurance Co. v. McCain, 96 U. S. 84; 2 Morawetz on Pri- vate Corporations, 2d ed., sec. 637, et seq. 20 Henning v. United States Ins. Co., 47 Mo. 425; Head v. Provi- dence Ins. Co., 2 Cranch (U. S.), 127. See Commercial etc. Ins. Co. v. Union etc. Ins. Co., 19 How. (U. S.) 318; Badgers v. American etc. Ins. Co., 103 Mass. 244; 4 Am. Rep. 547. 467 AGENTS OF INSURER. § 391 impliedly, by acts of the corporation. 21 In regard to special or class agents, the charter may prescribe who shall act as agents in transacting and managing certain affairs of the corporation; such charter agents, therefore, must look to the charter as the source of their authority. 22 Where an agent's written com- mission expressly excludes authority to insure manufactories and other special hazards, it cannot be assumed merely from the fact that he is the company's local agent, that his authority is unlimited as to risks and terms. Xothing more can be implied therefrom than an authority to insure in the mode required by the company's charter, and to take only such risks as the pol- icies ordinarily used by the company would warrant. 23 A per- son may by his own acts become an agent where he had no prior authority. So where a third party collects and holds pre- miums, he thereby becomes a bailee of the company, and must account to it or its agent for money so received and held. 24 An agent's authority may arise from a habit and course of business acquiesced in by the principal. 25 §391. Appointment of Agents — Statutes.— In the case of foreign insurance companies, the statutes of many states impose certain conditions upon them in relation to the appointment of agents acting within the state. The failure to comply with such requirements goes to the question of the validity of acts done by such agents. 26 Where a person, as 2i See Farmers' Mut. Ins. Co. v. Taylor, 73 Pa. St. 342; 2 Morawetz on Corporations, 2d ed., sec. 637; Ewell's Evans on Agency, ed. 1879, c. iv, p. 192, side p. 136, et seq. 22 See Bank v. Danbridge, 12 Wheat. (U. S.) 113, per Marshall, C. J.: Beatty v. Marine Ins. Co., 2 Johns. (N. Y.) 109; 3 Am. Dec. 401; Washington T. Co. v. Crane, 8 Serg. & R. (Pa.) 521, 522; Angell & Ames on Corporaitions, 9th ed., sec. 279. 23 Reynolds v. Continental Ins. Co., 36 Mich. 131. 24 Fagan v. Missouri Ins. Co., 31 Ark. 54. 25 Franklin v. Globe Mut. Life Ins. Co., 52 Mo. 461; Putnam v. Home Ins. Co., 123 Mass. 324; 25 Am. Rep. 93. 26 Cases where failure to comply invalidates: Cincinnati Mut. Assur. Co. v. Rosenthal, 55 111. 85; 8 Am. Rep. 626; Thorne v. Travel- ers' Ins. Co. (Pa.), 5 Ins. L. J. 169; 80 Pa. 15; 21 Am. Rep. 89; Frank- lin Ins. Co. v. Louisville etc. Packet Co., 9 Bush (Ky.), 590; Williams v. Cheney, 8 Gray (Mass.), 206; Haverhill Ins. Co. v. Prescott, 42 § 392 AGENTS OF INSURER. 468 "inspector" of risks for a foreign company not authorized to do business in a certain state, solicits insurance therein, assum- ing to act as an agent, and reports a risk to the company, which issues in consequence a policy and receives the premium, he is an agent of the company, and is within the prohibition of the statutes relating thereto. 27 § 392. Appointment of Agents —Territory — Contract with Principal. — If a person secures an appointment for an insurance company as district agent for a certain territory, under a contract which does not stipulate for an exclusive right to act as sole agent therein, it is not a breach of the contract to appoint another agent in the same territory where the contract also provides that commissions shall be divided between him and other agents on business obtained by them acting con- jointly in the given district; 28 and where one is appointed as a manager of a certain department, embracing the whole of one state and such portions of two other states as are "acceptable to the association," the principal may terminate the contract, and is not liable in damages where the agent fails to secure a cer- tain amount of new business provided for in the contract, nor is the company unconditionally obligated to keep open the two other states, 29 and it is held that where an agent is appointed to act in a certain locality and its vicinity, the word "vicinity' ' will include a village within ten miles of such locality. 30 The company may validly stipulate that the agent shall serve on its president or secretary a written statement of his claim a certain number of days before bringing an action thereon against the N. H. 547; 80 Am. Dec. 123. Cases contra: Provincial Ins. Co. v. Lapsley, 15 Gray (81 Mass.), 2G2; Clark v. Middleton, 19 Mo. 53; The Manistee, 5 Biss. (C. C.) 81; Thornton v. Western Reserve Fire Ins. Co., 31 Pa. St. 529. See Orutcher v. Kentnek, 141 U. S. 47. See ac- tions against agents of foreign companies under chapter on Agents. 27 List v. Commonwealth, IIS Pa. St. 322; 12 Atl. Rep. 277, under Pa. Act, April 4, 1ST::. 28 Lester v. New York Life Ins. Co., 84 Tex. 87; 19 S. W. Rep. 35(5. 2» gjbley v. Mutual Reserve Fund L. Assn., 87 Ha. 738; 13 S. E. Rep. 838. 30 Howard Ins. Co. v. Owen, 94 Ky. 197; 13 Ky. Law Rep. 237. 469 AGENTS OF INSURER. § 393 company, and such an agreement is binding on the agent in the absence of fraud. 31 § 393. Relative Powers of Agents of Stock and Mu- tual Companies. — Some discussion has been had upon the point whether any distinction exists between the powers of agents of stock and mutual insurance companies. It is held by some courts that the agents of stock companies are invested with lar- ger powers, in matters relating to completion of thecontract and waiver of its terms, than are possessed by agents of companies formed on the mutual system, where the rights of all the mem- bers are alike regulated and governed by the by-laws which en- rer into and form a part of the contract with every member. 32 This distinction may be important, so far as concerns the au- thority of the agent to act on matters relating to the contract subsequent to its completion. But it is well settled that an applicant for insurance in a mutual company is a stranger to the by-laws, nor does the presumption of knowledge thereof arise against him until he becomes a member. 33 And the fact that one becomes a member of a mutual insurance company cannot operate to convert the previous acts of examination and description by the agent of the company into the act of the in- 31 Better v. Providential Ins. Co., 16 Daly (N. Y.), 344: 32 N. Y. 686; 11 N. Y. Supp. 70. 32 Pirney v. Glens Falls Ins. Co., 65 N. Y. 6. See Brewer v. Chelsea Mut. F. Ins. Co., 14 Gray (SO Mass.), 203; Kausal v. Minnesota Farm- ers' Mut. F. Ins. Assn., 31 Minn. 17; 47 Am. Rep. 776, per Mitchell, J.; Susquehanna Ins. Co. v. Perrine, 7 Watts & S. (Pa.) 348; Bacon on Benefit Societies and Life Insurance, sec. 147; 1 May on Insurance, 3d ed.. sec. 127. 33 Meyers v. Lebanon Mut. Ins. Co., 156 Pa. St. 420. 425, per Will- iams. J.; Columbia Ins. Co. v. Cooper, 50 Pa. St. 331, 340, per Wood- ward, €. J. See Kausal v. Minnesota Farmers' Mut. F. Ins. Assn., 31 Minn. 17; 47 Am. Rep. 776, 779; Eilenberger v. Protection etc. Ins. To.. 89 Pa. St. 464; In re County Life Assur. Co.. L. R. 5 Oh. 288, 293; Franklin F. Ins. Co. v. Martin, 40 N. J. L. 579; 11 Vroom, 568; 29 Am. Rep. 271. 280. per Depue, J. "There is no general rule compelling persons dealing with a eoi-poration at their peril to take notice of its by-laws": 2 Morawetz on Private Corporations, 2d ed., sec. 593. See TonoYpr v. Insurance Co., 1 N. Y. 292. But see Susquehanna Ins. Co. v. Perrine, 7 Watts & S. (Pa.) 348, 351, per Gibson, C. J. § 394 AGENTS OF INSURER. ■ 470 sured, and change them into representations made by him, 34 although it is held that all persons applying to become mem- bers of an incorporated insurance company must be presumed to have known the terms of its charter and by-laws. 30 Though there are many decisions to the contrary upon the general proposition in courts of last resort. 36 The better opinion, how- ever, would seem to be that by-laws as to persons not members of the company, in so far as they limit an agent's apparent au- thority, are substantially secret restrictions thereon, and, in the absence of actual or constructive notice, are not binding on those dealing with such agent. 37 At least such a rule ought to govern upon analogous principles with those from which a like rule is deduced in cases of agents of stock companies, es- pecially where the by-laws contain conditions of which the ap- plicant had no knowledge prior to the completion of the con- tract, and which he could not, under the law, be presumed to have had in contemplation in negotiating for insurance. § 394. Same Subject — Powers after Completion of Con- tract. — If, under the by-laws of a mutual insurance com- pany, its agent in a certain place has authority to take ap- 34 see Lycoming Fire Ins. Co. v. Woodworth, 83 Pa. St. 223, per Gordon, J.; Cumberland Valley Ins. Co. v. Schell, 29 Pa. St. 31; Kis- ter v. Lebanon Mut. Ins. Co., 12S Pa. St. 553; Lycoming F. Ins. Co. v. Langley. 62 Md. 196; Beebe v. Hartford Mut. F. Ins. Co.. 25 Conn. 51; Union Ins. Co. v. Cbipp, 93 111. 96; Commercial Ins. Co. v. Ives, 56 111. 402; Planters' Ins. Co. v. Myers, 55 Miss. 479; 30 Am. Rep. 531; Eilenberger v. Protection Ins. Co.. 89 Pa. St. 464; Kausal v. Minnesota Farmers' Mut. F. Assn., 31 Minn. 17; 47 Am. Rep 776. See chapters, post, on Agents. 35 Belleville Mut. Ins. Co. v. Van Winkle, 12 N. J. Eq. 333. 36 See Mnlrey v. Shawmut F. Ins. Co., 4 Allen (Mass.), 116; 81 Am. Dec. 689; Kibbe v. Hamilton Mut. Ins. Co., 11 Gray (77 Mass.), 163; Wilson v. Conway Mut. F. Ins. Co., 4 R. I. 141; Smith v. Farmers' Mut. Ins. Co.. 19 Ohio St. 287; Susquehanna Ins. Co. v. Perrine, 7 Watts & S. (Pa.) 348; McCoy v. Metropolitan L. Ins. Co., 1?.?. Mass. 85: Franklin F. Tns. Co. v. Martin. 41 N. .T. L. 56,9; 29 Am. Rep. 271. 37 See In re County Life Assur. Co., L. R. 5 Ch. 288, 293; Fay v. Noble. 12 Cush. (66 Mass.) 1, 16, et seq., per Shaw, C. J.; Union Mut. Life Ins. To. v. White. 106 111. 67. and other cases cited in 2 Mora- wetz on Private Corporations, 2d ed., sees. 593, 594. See, also, cases in note 34 above. 471 AGENTS OF INSURER. § 394 plications and receive premiums, and to deliver the same to the company, and no application or renewal is binding upon the company until approved by the secretary, and such agent only receives a specified sum, in case of acceptance, he ceases to be the company's agent immediately the contract is completed, and has no authority after the contract is completed to waive any of its conditions. 38 Where the contract has been completed and a person has become a member of a mutual insurance com- pany, the above considerations become merged in the fact that as such member such person is, as already stated, charged with notice of whatever restrictions on the agent's authority are imposed by the charter and by-laws. The question then re- solves itself into that of whether such inhibitions are conclus- ive or not. The determination of this point must necessarily involve the kindred ones, viz. : 1. To what extent, if at all, can the company itself, or through its agent, enter into contracts which are not strictly warranted by the charter? or 2. To what extent can it in a particular case waive by-laws which are appli- cable alike to all members by reason of the mutuality of the system of insurance ? In the case of Kausal v. Minnesota Far- mers' Mutual Fire Insurance Association 39 the court considers the question of whether any distinction exists between agents of stock and mutual companies, and holds that such a distinction did not exist in that case, for there the stipulations claimed to bind the assured were only in the policy, and the court adds: "We fail to see any distinction between the two kinds of com- panies, and we feel confident that the average applicant for in- surance is rarely aware of any." But the force of this state- ment is somewhat modified as to dealings with the agent subse- quently to effecting the policy, for it is evident that the court had in mind only negotiations concerning the application ; that is, acts and representations of the agent before completion of the contract. The court concludes as follows: "But in apply- 38 Bourgeois v. Mutual F. Ins. Co., 86 Wis. 402, 407; 57 N. W. Rep. 38, per Cassaday, J.; citing Haukins v. Rockford Ins. Co., 70 Wis. 4; Knudson v. Hekla F. Ins. Co., 75 Wis. 108: Bosworth v. Merchants? F. Ins. Co.. 80 Wis. 303; Stevens v. Queen Ins. Co., 81 Wis. 335. 39 31 Minn. 17; 47 Am. Rep. 776. § 394 AGENTS OF INSURER. 472 ing and contracting for insurance the applicant and the com- pany are as much two distinct persons as in case of a stock com- pany, and we see no reason for holding the agent who takes the application any less the agent of the insurer in the one case than in the other. The membership does not begin until the policy is issued. As to all previous negotiations the agent acts only for the company." Many courts of high 'authority have held to a strict construction in such matters in favor of the insurer, and have declared unequivocally that officers and agents of mutual insurance companies have no authority to waive its by-laws; 40 although it is held that the directors of a mutual company or their officers, by their direction or approval, may so act as to entitle a person to become a member who, by their fault, has been prevented from depositing his note, and as to authorize a court of equity to compel his being received, or to give the same relief he would be entitled to if he was. 41 We have seen, however, that the courts will, in certain cases, uphold contracts, even though made in excess of the charter powers of corporations, 42 although the general rule is to the contrary, 43 and that by-laws may likewise be waived, especially where the matter is not mandatory nor of the essence of the contract. 44 It is said in a Minnesota case that there is no dif- 40 See sees. 35, 36, ante; "Leonard v. American Tns. Co.. 97 Ind. 299; Behler v. German Ins. etc. Co., 68 Ind. 354; Brewer v. Chelsea Mur. F. Ins. Co., 14 Gray (80 Mass.), 209; Miller v. Hillsborough F. Assn.. 42 N. J. Eq. 459; Brewer v. Chelsea Mut. F. Ins. Co.. 14 Gray (80 Mass.), 203; Evans v. Tremontain Mut. F. Ins. Co., 9 Allen (91 Mass.), 329; Hale v. Mechanics' Mut. F. Ins. Co., 6 Gray (Mass.), 169; 66 Am. Dee. 410; Messereau v. Phoenix Mut. L. Ins. Co., 66 N. Y. 274. Exam- ine 1 Morawetz on Private Corporations, 2d ed., sec. 501. *i Belleville Mut. Ins. Co. v. Van Winkle, 12 N. J. Eq. 340, per El- mer, J. 42 Sees. 35, 36, herein. 43 gee sees. 35, 36, herein; Borgraefe v. Supreme Dodge etc., 22 Mo. App. 127; Head v. Providence Ins. Co., 2 Cranch (U. S.), 127; Leonard v. American Ins. Co., 97 Ind. 299; Brewer v. Chelsea M. F. Ins. Co., 14 Gray (80 Mass.), 203. 44 See sees. 35. 36, herein; Union Mut. F. Ins. Co. v. Keyser, 32 N. H. 313; 64 Am. Dec. 377; Morrison v. Wisconsin Odd Fellows' etc. Co., 59 Wis. 169; Peck v. New London Co. Mut. F. Ins. Co., 22 Coiin. 575; Splawn v. Chew, 60 Tex. 532; Cumberland Valley etc. Ins. Co. v. 473 AGENTS OF INSURER. § 395 ference between agents of stock and mutual companies, 40 and it would seem, in so far as their acts within the apparent scope of their authority are concerned, that there can be no differ- ence. If an agent of a stock company can waive express provis- ions of the policy, where his authority is broad enough, why should a contract with a mutual company be peculiarly pro- tected? The by-laws, though a part of a member's contract, ought not to impose greater obligations than the express stipu- lations of a policy in a stock company, and if the power to waive a by-law, which is neither mandatory nor of the essence of the contract, rests in the company, why not, then, in an agent having the requisite authority? Certainly, if the com- pany is empowered to vest discretionary powers in its agents in such matters, it cannot be said to abrogate the principle of mutuality. Thus in a jSTew York case 46 the court declares that it is the duty of incorporated companies to see to it at their peril that their officers and agents understand their powers and duties, and that they do not habitually transcend such powers. We believe the above expressions are in accord with the conclusions of other writers and with the tendency of opinion at the present time. 47 § 395. Who is General Agent. — A distinction is made under the law of agency, as to the extent of their authority, be- tween general and special agents. 48 This distinction Evans, in Schell. 29 Pa. St. 31. The courts of Massachusetts distinguish as to these by-laws which are not of the essence of the contract: Brewer v. Chelsea etc. Ins. Co., 14 Gray (80 Mass.), 209; Priest v. Citizens' Mut. F. Ins. Co.. 3 Allen (85 Mass.), 602. 45 Kausal v. Minnesota Farmers' Mut. F. Ins. Assn., 31 Minn. 17; 47 Am. Rep. 776. 40 Conover v. Mutual Tns. Co.. 1 Comst. (N. Y.), 200. 47 See 1 May on Insurance. 3d ed., sec. 126, p. 220, sees. 127, 139, 140, 145-49; Bacon on Benefit Societies and Life Insurance, ed. 188S, sees. 147, 151. 156-58, 171, 307, 426; Insurance Oo. v. Wilkinson. 13 Wall. (U. S.) 222: Peck v. New London Mut. F. Ins. Co., 22 Conn. 575. 48 Crugan v. Smith, 41 Ind. 288; Lattornous v. Farmers' M. it F. Ins. Co., 3 Houst. (Del.) 4040. See, also, 2 Wood on Fire Insurance, 2d ed. 873, sec. 421; Richards on Insurance, ed. 1892, p. 21, sec. 17 et spq. p. 95 sec. 93, p. 101 sec. 95. "There seems to be no very well-de- fined distinction between the powers of general agents, local agents, and subagents": 1 May on Insurance, 3d ed., sec. 126, p. 221. § 895 AGENTS OF INSURER. 474 his work on Agency, asserts to be of little or no practical value, and this is true, so far at least as regards the principal and third parties, since the question in case of dispute as to the agent's powers does not rest alone upon whether the authority is gen- eral or special, but inquiry is necessitated as to whether the agent's acts are within the scope of his real or apparent au- thority. 49 And this is especially applicable to insurance agents. We will consider, however, some of the decisions relating to general agents. An agent who is required to write policies, and is authorized to settle the terms of insurance and investi- gate losses, is a general agent, with authority to waive prelim- inary proofs of loss. 00 So agents are general agents where they fully represent the company within a certain district, are au- thorized to solicit insurance, receive moneys and premiums, is- sue and renew policies, appoint subagents, and adjust losses; 51 and an agent who has power within a certain territory to re- ceive proposals of insurance, to fix rates of premium, receive moneys, countersign, issue, and renew policies of insurance, is a general agent. 52 Where one writes up and delivers a policy to the assured indorsed with his name thereon as "agent," he is a general agent, with authority to waive conditions in the pol- icy. 53 So one is a general agent where he has control at times of the local agencies in the state, approves risks, attends to the details of the company's business, and at the request of the sec- retary examines the same, signs his name to letters, and uses letter-heads with his name thereon as general agent, 04 A per- son employed to negotiate and complete contracts of insurance, accept risks, receive premiums and premium notes, and renew 4& Ewell's Evans on Agency, p. 21. See Id., p. 134. side p. 101, et poq. See, also, Thompson on Corporations, ed. 1895-96, sees. 4878, 4879. 50 Travelers' Ins. Co. v. Harvey, 82 Va. 949; 5 S. E. Rep. 553. See Industrial etc. Assn.. 131 Ind. 68, 73 (held general agent without re- gard to extent of territory or scope of powers). 61 Insurance Co. v. Gray, 43 Kan. 497, 503, 504, per Johnston, J. 52 Phoenix Ins. Co. v. Munger, 49 Kan. 178; 30 Pac. Rep. 120. 63 Millville F. Ins. Co. v. Mechanics' etc. Assn.. 43 N. J. I;. ir.2. 54 King v. Council Bluffs Ins. Co., 72 Iowa, 310. 315; 33 N. W. Rep. 690. 475 AGENTS OF INSURER. § 395 policies, is a general agent. 55 An agent authorized to issue policies, to fix rates and premiums, and to countersign, renew, and sign the transfer of policies in a certain locality is a gen- eral agent within that district, 56 and as such agent he may take risks outside of the locality to which his agency is limited where the insured has no knowledge of such limitation. ' So an agent intrusted with blank policies 'and renewal receipts has impliedly a general authority to do everything necessary to their issue. 58 So a party is a general agent who acts in a certain locality under a written commission authorizing him to receive proposals for insurance, countersign, issue, and renew policies, and consent to the transfer of the same, although he is sub- ject to the instructions of the company's officers and to the rules and regulations of the company; 59 and the local agents of a foreign insurance company appointed by a general agent, lo- cated without the state, are general agents, and may bind the company by acts within the scope of their general authority, though in violation of limitations thereupon not brought home to the knowledge of the party dealing with them. 60 So a local agent of a foreign company is a general agent where he is em- powered to effect contracts of insurance, fix rates of premiums, consent to change in and increase of risks, and generally to ex- ercise supervision over the property covered by the company's policies issued through him. As such agent he may, in the ab- sence of known limitations on his authority, dispense with con- 55 South Bend etc. Co. v. Dakota F. & M. Ins. Co., 2 S. Dak. 17: 52 N. W. Rep. 86G; affirming s. c, 48 N. W. Rep. 310; Post v. JEtna Ins. Co., 43 Barb. (N. Y.) 351; Devendorf v. Beardsley, 23 Bnrb. (N. Y.) 656; Pitney v. Glens Falls Ins. Co., 61 Barb. (N. Y.) 335; 65 N. Y. 6, 21; Hartford F. Ins. Co. v. Orr, 56 111. App. 629. 56 West v. Insurance Co.. 10 Utah, 44S, per Bortch. J. 57 Lightbody v. North American Ins. Co., 23 Wend. (N. Y.) IS. 58 Carroll v. Charter Oak Ins. Co., 40 Barb. (N. Y.) 292. See Little v. Phoenix Ins. Co., 123 Mass. 380, 25 Am. Rep. 96, where it was held that agent was general agent with authority to settle loss and waive formal preliminary proofs. 59 Howard Ins. Co. v. Owen, 94 Ky. 197; 13 Ky. Law Rep. 237; Phoenix Ins. Co. v. Munger, 49 Kan. 178; 30 Pac. RepT 120. 60 Miller v. Phoenix Ins. Co., 27 Iowa, 203; 1 Am. Rep. 262. § 396 AGENTS OF INSURER. 476 ditions and waive forfeitures. 61 Again, a person is a general agent who has charge of the company's business for a state, and who acts under general instructions to such agents and without special limitations upon his authority. 62 An agent authorized to make contracts of insurance, collect premiums, and issue and renew policies, and to that end is furnished with printed forms of policies signed in blank by the president and secretary, to enable him without conference with them to countersign and L-sue policies, is the general agent of the company. 63 But an agent of a foreign life insurance company who has authority to solicit risks, take applications, issue and deliver policies, re- ceive premiums, and deliver receipts, is not necessarily a gen- eral agent in point of law, and as such empowered to waive payment of premiums; 64 nor is one a general agent who has merely authority to work a certain territory and to receive ap- plications under instructions from the company. 65 § 396. Power of Agents to Delegate Authority. — Au- thority is either original or derivative. "Whenever a person possesses the power in himself of his own right to do an act, he may delegate that power to another, for, in general, whatever a man can do by himself he can do by another, provided, of course, that the act is not illegal. 66 This consideration if of im- portance in connection with the right of agents of insurance companies to waive conditions of a policy, since in ease of in- surance corporations their powers are limited by charter. 67 If the authority is derivative, as where a person is appointed to act as the agent of another, and no express power to delegate ex- 61 Yiele v. Gerinania Ins. Co., 26 Iowa. 9; 96 Am. Dec. 83. and note, 112. B2 Southern Life Ins. Co. v. Booker, 9 Heisk. (Tenn.) 606; 24 Am. Rep. 344. 03 Machine Co. v. Insurance Co., 50 Ohio St. 55S; 35 N. E. Rep. 10, 60, per Williams, J. ' self had signed under a power of attorney, the act of tiie cieriv being held not to require the exercise of any discretion or judg- ment. Another factor entered into tihis ease which strength- ened the ruling, and that was, that the evidence showed no adoption of the policy by the underwriter. ro An agent, without express authority to appoint a subagent, cannot make another an agent of the company by agreeing, without the company's knowledge, to divide commissions with him on insurance procured. ' But a general agent of a life insurance company, with authority to employ subagents, may make a contract with a subagent as to salary, which will bind the company, and in such case it, and not the agent, is responsible therefor; 7 ' and an agent may employ a subagent to procure applications which he himself acts upon and forwards to the company. 78 So the acts of a subagent employed by a duly authorized agent to solicit insurance are as binding as those of the agent himself,' 9 and the general agent of a foreign insurance company is presumed to have power to appoint subagents. 80 So a general insurance agent authorized for several counties to receive applications, fix premium rates, receive money, countersign, issue, renew, and consent to the transfer of policies does not exceed his authority by ap- pointing a subagent to receive applications and forward them to him, 81 and it may be generally stated that an agent with gen- eral powers, such as the authority to make contracts, deliver policies, and collect premiums, may appoint subagents, clerks, surveyors, and other subordinates to exercise similar powers. 82 An agent of an accident insurance company, with absolute 75 Mason v. Joseph, 1 Smith (N. Y.), 406. One member of a partner- ship who are the agents of an insurance company has all the powers of the firm: Kennebec v. Augusta etc. Co., 6 Cray (72 Mass.), 204. 76 Phcenix Ins. Co. v. Spies (Ky.), 8 S. W. Rep. 453. 77 Cotton States Life Ins. Co. v. Mallard, 57 Ga. 64. 78 Rossiter v. Trafalgar Life Assur. Assn., 27 Beav. 377. 79 McGonigle v. Aurora F. Ins. Co., 168 Pa. St. 1; 31 Atl. Rep. 868. so Keeney v. Amazon Ins. Co., 36 Hun (N. Y.), 66. 8i Krumm v. Jefferson Fire Ins. Co., 40 Ohio St. 225. 82 Mayer v. Mutual L Ins. Co., 38 Iowa, 304; 18 Am. Rep. 34; Ec- lectic L. Ins. Co. v. Fahrmkrug, 68 111. 463. 479 AGENTS OF INSURER. § 396 power to .effect insurances, may appoint a sub-agent where the skill and discretion are not required and the tickets are made out and signed at the company's offices and sent to the various agencies to be sold indifferently to all who apply. 83 If an in- surance company specially authorizes its agent to cancel a pol- icy, he cannot delegate such power, but where all necessary acts to effect a cancellation have been performed by him, he is not personally obligated to deliver the notice and tender the pre- mium to the insured; these acts may be performed by another acting for such agent. 84 A local agent may appoint a subagent with the knowledge of the company, 85 and if one acts as agent for the original agent, with the knowledge and consent of the company, the latter is bound. 86 It is held that if the general agent employs a isubagent to procure risks, the company is bound, unless the subagent knew the general agent to be with- out authority to employ him. 8 ' If the power of substitution is exercised by an C,R; 34 Am. R,>p. 561, Earl, J., dissented. But see the same case. 67 N. Y. 500: 23 Am. Rep. 134. 247 Pudritzky v. Supreme Lodge Knights of Honor, 76 Mich. 428; 43 N. W. Rep. 373. 507 AGENTS OF INSURER. § 413 examiner is conclusive upon the company as to its recitals in the absence of fraud of the applicant in making the represen- tations or in concealing material facts; 248 and in answering the questions of the medical examiner the applicant has the right to rely upon his construction of them at the time, and may an- swer them in the light of such interpretation. 249 So if such agent, knowing the facts, suggests answers which are made in accordance therewith, the company is bound, 250 and the com- pany is estopped to show incompetency of its medical ex- 251 animer. § 413. Whether One is Agent or Broker. — Whether one is an agent or broker is a question necessarily dependent upon the particular facts of each case. Thus one employed to so- licit applications for insurance, and to fill up and issue policies, is not an insurance broker, within the terms of a city ordinance providing for the payment of a license fe-e by such broker. 252 Again in a New York case 253 it appeared that one K. was the agent of several insurance companies, but not of the de- fendant, whose agent was one J. R. wrote his own name on an application as "general agent," and took a premium note for the regular premium and another note for a portion of the premium payable, at a certain date thereafter, con- ditioned that the policy should become void in case of nonpayment of the note when due. The policy also con- tained a like condition. Thereafter, the insured delivered to R. another note for a larger sum, payable to his order, which he discounted and retained the proceeds. The two prior notes were delivered through J. to the defendant. Receipt of the payment of the first premium was acknowledged in the policy. 248 Holloman v. Life Ins. Co.. 1 Woods (C. C). 674. Rep Ho4. 32 Luce v. Springfield F. & M. Ins. Co., 1 Flip. (C. C.) 2S2, per Wit hey, J. 33 Lycoming F. In.s. Co. v. Waird, 90 111. 545. Examine Germauia F. Ins. Co. v. McKee, 94 111. 194. 523 AGENTS OF INSURER — POWERS. § 428 pany is bound by a policy issued by an agent for a particular city, though the property insured is in another city where the company had another agent, if the agent issuing the policy claims to have authority, and the fact of the existence of the other agency is not known to the assured. 34 § 428. Private Restrictions upon Agent's Authority. It is well settled that the rights of innocent third parties, deal- ing with an agent within the apparent scope of his authority, cannot be affected by private instructions to such agent, or secret limitations upon his authority, 35 unless such instructions be made public or the insured has notice, or unless the party dealing with the agent is, by reason of the attendant circum- stances, or something in the nature of the business, or by cus- tom or by a course of dealing or otherwise, put upon inquiry as to the exact limits of the agent's authority. 36 For the powers of an agent cannot be narrowed by limitations thereon not communicated to parties with whom he deals, and who rely in good faith upon his apparent authority. 37 So secret instruc- tions are not binding where an agent is authorized to solicit insurance, and is provided with applications, policies, and nec- essary blanks, and accepts the application, receives the pre- 31 Lightbody v. North America Ins. Co., 23 Wend. (N. Y.) 18. See iEtna Ins. Co. v. Maguire, 51 111. 342. 35 Connecticut etc. Ins. Co. v. State ex rel., 113 Ind. 331, *337; Walsh v. Tavier, 10 N. H. 533; Breckinridge V.American Cent. Ins. Co., 87 Mo. 62; Commercial Ins. Co. v. State, 113 Ind. 331 ; 4 Ind. (L. ed.) 449; 13 West. Rep. 47; Perkins v. Washington Ins. Co., 4 Cow. (N. Y.) 645, per Col. km, Sen.: Rivara v. Queen's Ins. Co., 62 Miss. 720: Howard Ins. Co. v. Owen, 94 Ky.197: 13 Ky. L. Rep. 237; Ruggles v. American Cent. Ins. Co., 114 N. Y. 421: Queen Ins. Co. v. Young, 86 Ala. 424; Union Mut. Ins. Co. v. Wilkinson, 13 Wall. (U. S.) 222, per Milier, J. ; Southern L. Tns. Co. v. McCain, 96 U. S. 84; Mechem on Agency, ed. 18^9, sec. 279. 36 Connecticut etc. Ins. Co. v. State ex rel., 113 Ind. 331, 337; Mar- key v. Mutual B. L. Ins. Co., 103 Mass. 82, 87, 93; United States L. Ins. Co. v. Advance Co., 80 111. 549; Kenton Ins. Co. v. Shea, 6 Bush (Ky.), 174 : 93 Am. Dae. 676; Breckinridge v. American Cent. Ins. Co., 87 Mo. 62. 37 See Insurance Co. v. Wilkinson, 13 Wall. (U. S.) 222, per Miller, J., and cases under first note to this section. § 428 AGENTS OF INSURER — POWERS. 524 mium,and executes and delivers the policy, 38 and a person is not bound by secret instructions to a general agent. 39 And it is held that any limitation upon the authority of the agent of a foreign life insurance company must be brought home to the knowledge of the beneficiary, in order to invalidate his claim. 40 If an officer of an insurance company assumes to possess certain powers, and the nature of his employment justi- fies the assumption of authority, and the party dealing with him has no notice of want of the claimed authority, and there is nothing to warrant an inference to the contrary, the com- pany is bound, even though he had no such power as claimed. 41 And where an agent issued a policy after his authority so to do had expired, and he notified the company, which im- mediately directed him to cancel and return the policy, which was not done till after loss by fire, it was held that such in- structions, being unknown to the insured, could not affect his rights. 42 And again where the directors of an insur- ance company has instructed the agent not to insure distillers, a policy on a distillery will nevertheless be valid, where the in- sured had no knowledge of such inhibition. 43 So an agent, supplied with policies signed in blank, may contract to renew at a stated period, and thereby render the company liable for a loss, notwithstanding private instructions limiting his au- thority. 44 And the fact that an insurance agent has instruc- tions from his principal, to take only a limited amount of in- surance in a specified place, cannot affect the right? of a party insured, unless he had notice of such fact. 45 So where the 38 American Employers' Liability Co. v. Barr (U. S. C. C. A., 8th Cir., 1895), 68 Fed. Rep. 873: 16 U. S. C. C. A. 51. 39 Commercial F. Ins. Co. v. Morris (Ala. 1895), 18 S. Rep. 31. 40 Mowry v. Home L. Ins. Co., 9 R. I. 346. 41 Lungstrass v. German Ins. Co.. 57 Mo. 107. See ^Etna Ins. Co. v. Maguire, 51 III. 342; Fayles v. National Ina. Co., 49 Mo. 380; Farmers' etc. Ins. Co. v. Chestnut, 50 111. Ill; 99 Am. Dec. 492. 4! Watertown F. Ins. Co. v. Rust, 141 III. 85; 30 N. E. Rep. 772. « Citizens' Mut. F. Ins. Co. v. Sortwell, 8 Allen (90 Mass.), 217. 44 Bambie v. .Etna Ins. Co., 2 Dill. (C. C. ) nil. 45 Hartford F. Ins. Co. v. Farrish, 73 111. lti(3. 525 AGENTS OF INSURER — POWERS. § 429 general agent of an insurance company received a policy taken by a local agent, and acquiesced in the risk, although taken outside the locality for which the local agent was appointed, the company cannot be permitted afterward to allege the want of authority in the local agent. 46 And it is held in New York that an agent may effect insurance outside of the limits pre- scribed by private instructions, where the limitation upon his authority is unknown to the assured. 47 § 429. Assured Bound by Knowledge of Limitations upon Agent's Authority. — Where parties dealing with an agent have knowledge of the extent of his authority they are bound thereby and cannot claim the benefit of any acts, declar- ations, or representations of the agent, done or made in excess of his known powers. Such knowledge may arise from an ex- press or implied notice of restrictions upon the agent's author- ity, or it may exist where the circumstances are such as to put such parties upon inquiry. It may also arise from a custom or course of dealing governing negotiations or transactions be- tween the parties. 48 So where it is well known that the au- thority of an agent is limited to underwriting marine risks to an amount not exceeding a certain sum, the company is not bound where such agent underwrites a policy for a larger risk. 49 And a custom of insurance companies to limit in ma- rine risks the authority of their agents at the different ports by instructions, operates as a notice of their powers, and must con- trol in cases relating thereto. 50 This rule refers to the custom 46 iEtna Ins. Co. v. Maguire, 51 111. 342. 47 Lightbody v. North America Ins. Co., 23 Wend. (N. Y.) 18. 48 See Walsh v. Hartford Ins. Co., 73 N. Y. 5; Insurance Co. v. Wil- kinson, 13 Wall. (IT. S.) 222; Baines v. Ewing, L. R. 1 Ex. 320; Win- nesheik v. Halzgrafe, 53 111. 524; 5 Am. Rep. 70; Vose v. Eagle Ins. Co., 6 dish. (GO Mass.) 42; Messereau v. Phoenix Ins. Co., GG N. Y. 274; Bartholomew v. Merchants' Ins. Co., 25 Iowa, 507; 96 Am. Dec. (5: Galbraith v. Arlington etc. Ins. Co., 12 Bush CKy.), 20; Marvin v. Universal L. Ins. Co., 85 N. Y. 27S; 39 Am. Rep. G57, G59. *- Ba.inas v. Ewing, 1 L. R. Ex. 320; 4 Hurl. & C. 511. 50 See 2 Duer on Insurance, ed. 184G, p. 351; 1 Arnould on Marine Insurance, Perkins' ed., 146, citing Drake v. Marryatt, 1 Barn. & C. 473. § 429 AGENTS OF INSURER — POWERS. 526 that Lloyd's agents acted under instructions which limited tlieir authority, but the principle underlying the rule is that an agent cannot do a binding act in excess of his known au- thority, and that such knowledge may well arise from the ex- istence of a well-known custom. In case an agent is given authority merely to receive applications for insurance, in ac- cordance with his instructions, and to collect and transmit the premium therefor, and to deliver the policies to the assured when issued, and the extent of his power is well understood, he has no authority to make a contract of insurance; nor, in such case, will the company be bound by his acts beyond the scope of his powers. 51 And a party who merely has possession of blanks issued by the company, and no written appointment from it, and whose want of authority is known to the applicant, has not power to bind the company to a contract for insurance by receiving payment of the premium. 52 So in a Wisconsin case it appeared that one B. was not in fact authorized to make contracts of insurance, but had power merely to receive and forward applications, deliver policies, and collect premiums thereon. The plaintiff knew that B. had no authority to issue the policy, but that it was to be issued by the general agent upon his approval of the application, and he took additional in- surance in another company in consequence of the delay in receiving a policy from the defendant. There was no evidence that defendant ever held B. out as clothed with authority to take risks for it, or that it knew that he was acting beyond his authority. But it was shown that when B. took plaintiff's ap- plication no money was paid, though the understanding was, that the premium should be paid on the receipt and delivery of the policy; that B. then assured plaintiff that the insurance would take effect from the date of the application ; that he was in fact authorized to make insurance to take effect from the lime of the application, subject to the approval of the general 61 Armstrong v. State Ins. Co., 61 Iowa, 212; Winnesheik Ins. Co. v. Holzgrafe, 53 111. 521; 5 Am. Kep. 70. - More v. New York Bowery F. Ins. Co., 29 N. E. Eep. 757; 42St. R. 540; 55 Hun (N. Y.),540, reversed; 13J N. Y. 537. 527 AGENTS OF INSURER — POWERS. § 429 agent, upon a certain class of property; that although the prop- erty here in question was not of that class, that plaintiff's in- surance with defendant was valid. Plaintiff's risk was not ac- cepted by the general agent, but was rejected by him after the property was burned, but before he had knowledge of the fact. In an action on the parol contract alleged to have been made, it was held that no recovery could be had.° 3 It is held in Iowa that the insured is chargeable with knowledge as to the limitations upon a soliciting agent's authority, and of his in- ability to bind the company contrary to the conditions of the policy by statements made prior to the issue of the policy. 54 And where an attorney at law is employed by the company to collect a premium note, and informs the assured of his re- stricted authority, his acts in excess of such known limitations of power do not bind the company. Therefore he cannot alter a contract of insurance nor waive a forfeiture. 00 So an agent has no power to change the contract either by parol or other- wise, where the insured has actual knowledge of an express limitation in the policy on the agent's powers. 06 Again it is held that if one has power only to receive and forward appli- cations, and the applicant knows or is bound to know this, and that the application signed by him was to be forwarded and submitted to the company, and formed the sole basis of the acceptance of the risk by the company, he must see that the statements and representations are not essentially untrue. 57 It is also held that bringing an action on an insurance policy, which contains limitations of the agent's authority, is conclus- ive evidence that the insured knew of and contracted with ref- erence to such limitation. 08 63 Fleming v. Hartford F. Ins. Co., 42 Wis. 616. 54 Dryer v. Security F. Ins. Co. (Iowa, 1895), 62 N. W. Rep. 798: 24 Ins. L. J. 541. 55 Continental Ins. Co. v. Cooras (Ky. Sup. Ct. 1S92), 14 Ky. L. Rep. 110. 56 Weidert v. State Ins. Co., 19 Or. 261; 19 Ins. L. J. 740; 24 Pac. Rep. 242. 57 Bartholomew v. Merchants' Ins. Co., 25 Iowa, 507; 96 Am. Dec. 65. 68 Hill v. London Assur. Corp., 34 N. Y. St. Rep. 65 ; 12 N. Y. Supp. 86. § 430 AGENTS OP INSURER — POWERS. 528 § 430. Obligation to Inquire as to Agent's Authority. As a general rule an obligation rests upon a person dealing with an agent known to be acting under an express or special authority to ascertain the limits of his authority to act for and bind his principal. 59 And so in case of a special agent, whether the authority be written or verbal, the party dealing with him is bound to inquire into the nature and extent of the agent's authority, for the principal cannot be bound without or be- yond the authority delegated by him. 60 And in case of such special agent, if the assured neglects to make such in- quiries as are necessitated by the circumstances, he is never- theless bound by the knowledge of the agent's limited powers which such inquiry would have disclosed. The above rule is not, however, inflexible, for there are impor- tant exceptions thereto, and in cases where such exceptions exist, it must appear that the party had actual knowledge that the agent was exceeding his powers; 61 for third persons cannot be affected by limitations upon an agent's authority, where the principal has so acted, or permitted the agent so 69 Mechem on Agency, ed. 18S9, sees. 273, 276, 289-91 ; Story on Agency, sec. 58, and note; Baxter v. Lamont, 60 111. 237: Harrison v. City F. Ins. Co., 9 Allen (Mass.), 233; 85 Am. Dec. 751; Payne v. Potter, 9 Iowa, 547; 2 Duer on Insurance, ed. 1846, p. 346. 60 Equitable L. Ins. Soc. v. Poe, 53 Md. 34; 9 Ins. L. J. 871 ; Mechem on Agency, ed. 1889, sec. 288. See Ewell's Evans on Agency, 134-J0, side pp. 101-7, as to distinctions between the general and special agent, and obligation to inquire as to the extent of the latter's authority ; Story on Agency, 2d ed. 73-133. As to implied powers and nature and extent of incidental authority, see Huntley v. Mathias, 90 N. C. 101 ; 47 Am. Eep. 516, and note, 518; Mechem on Agency, ed. 1889, sec. 285. 61 "But it is not in all cases that the obligation to inquire exists. There are important exceptions to the general rule, and in the excepted cases, in order to avoid the contract of the agent who has exceeded his powers, the actual knowledge of the party with whom the contract was made is necessary to be proved": 2 Duer on Insurance, ed. 1846, 346. Where the agent is a special agent "the assured must at his peril know whether the act relied on is within the scope of his real or of his appar- ent authority. He is bound to know when he has passed the precise limits of his power, and cannot rely upon the assumption of authority by the agent to do an act bi ymid the scope of his actual authority, real or apparent": 2 Wood on Fire Insurance, 2d ed.,p. 873, sec. 421. See, also, Story on Agency, sec. 133. 529 AGENTS OF INSURER — POWERS. § 430 to act, as to justify a belief that the agent had general or un- limited authority, 62 and the insured has a right to assume that the agent possesses the power to do all acts necessary to effect the purposes which the apparent scope of his authority war- rants, as where an agent has possession of blank policies or re- newal receipts. 03 But an agent authorized to adjust a partic- ular loss cannot adjust a different loss. 64 Xor is a bare author- ity to make a contract of insurance sufficient to warrant a can- cellation thereof. 65 So if an agent's authority is apparently limited, one dealing with him is bound to inquire concerning the extent of said authority before trusting it. 66 And since one who is a member of a mutual insurance company is pre- sumed to have knowledge of its charter and by-laws, he can- not be considered a stranger to the powers committed to the local agents of the company under its rules. 6 ' So where an agent's employment is such as to indicate limited powers, it is held that those dealing with such special agent are put upon inquiry as to the extent of his authority. 68 It is also held in Colorado that an applicant for fire insurance through a solic- iting agent is obligated to ascertain the scope of such agent's 62 Keenan v. Missouri State Ins. Co., 12 Iowa, 12G. "But the scope and extent of his powers must be determined by his actual authority, or by his acts and the recognition thereof by hia principal. The insured has no right to infer authority in the agent farther' than he is justified in doing so from the nature and requirements of the business intrusted to him, and what he has previously done in the prosecution thereof with the assent of the insurers, express or implied": 2 Wood on Fire Insurance, 2d ed., p. 873, sec. 421. 63 See, generally, Gloucester Mfg. Co. v. Howard F. Ins. Co., 5 Gray (Mass. ), 497 ; 66 Am. Dec. 376 ; Carroll v. Charter Oak Ins. Co., 40 Barb. (N. Y.) 292; Bambie v. ^Etna Ins. Co., 2 Dill. (C. C.) 156; Hotchkiss v. Germania F. Ins. Co., 5 Hun (N. J.), 90, and cases throughout this chapter. 61 Hartford F. Ins. Co. v. Smith, 3 Col. 422. 65 Stilwell v. Mutual L. Ins. Co., 72 N. Y. 385. 66 Allen v. St. Lawrence Co. Farmers' Ins. Co., 8S Hun (N. Y.), 461 ; distinguishing Ellis v. Albany City F. Ins. Co., 50 N. Y. 402; Van Loan v. Farmers' etc. Assn., 90 N. Y. 280. 67 Mitchell v. Lycoming etc. Ins. Co., 51 Pa. St. 402. 68 Bohart v. Oberne, 36 Kan. 284. See Beebe v. Equitable Mut. L. & E. Assn., 76 Iowa, 129; 40 N. W. Eep. 122. Joyce, Vol. I.— 31 § 431 AGENTS OP INSURER — POWERS. 530 authority. 69 So a form of counter-signature of a policy as "W. agent, per K.," may be sufficient to put the insured upon in- quiry as to the extent of the agent's authority. But in such case the receipt of a circular by the company, stating that "W. had formed a partnership with K\, does not impose on the com- pany any obligation to deny K's authority. 70 And third par- ties dealing with the officer of an insurance corporation are, as a general rule, charged with nc tice of whatever limitations are imposed upon their powers by the charter and by-laws. 71 § 431. What is not Notice of Agent's Limited Authority. Exactly what does and does not constitute notice of an agent's limited authority, must necessarily depend upon individual cases and their attendant circumstances. Of course this does not cover cases of actual notice. If there is nothing in the ap- plication or the policy, and no actual notice is given to the ap- plicant, evidence of instructions, and rules of a foreign mu- tual insurance company are inadmissible to prove limitations of the local agent's authority. 72 And where there was printed upon the back of a policy of life insurance a notice to the pol- icy holders, that payment to agents would not be deemed valid, unless a receipt, signed by certain specified officers of the com- pany was received at the time, such notice was held not to con- stitute a limitation of the power of a general agent, and that payment to him was valid without a receipt, and the company was also held to have waived whatever limitation such notice imported, where it authorized the agent, upon the termination 69 Sun Fire Office v. Wich (Colo. 1895), 39 Pac. Rep. 587. 70 McClure v. Mississippi Valley Ins. Co., 4 Mo. App. 148. » Adriance v. Roome, 52 Barb. (N. Y.) 390, 411, per Gilbert, J. 72 Markey v. Mutual B. etc. Ins. Co., 103 Mass. 78. Not charged with notice oi special restrictions on authority of 'o •al agent authorized to so licit insurance, examine risks, deliver polices, collect premiums, grant special permits, and waive conditions in writing: Forward v. Continental Ins. Co., 142 N. Y. 382, 389 ; 66 Hun (N. Y. ), 546 ; 59 N. Y. St. Rep. 777 ; 37 N. E. Rep. 615, ( wo jmlges dissenting. The cases cited were Insurance Co. v. Wilkinson, 13 Wall. (U. S.) 222; Mersereau v. Phoenix Mut. L. Ins. Co.. en x. Y. 278; Bodine v. Exchange F. Ins. Co., 51 N. Y. 117; Arff v. Starr F. Ins. Co.. 125 N. Y. 57. 531 AGENTS OF INSURER POWERS. §§432.-133 of bis agency, and the return of receipts in his hands, to there- after receive premiums without receipts. 73 It one is appointed as agent or surveyor the word "surveyor" does not limit the word "agent," 74 and it is held that the mere fact that an appli- cation is forwarded by the agent to the home office for ap- proval, does not charge the applicant with notice of the exact nature and limits of an agent's authority. 75 § 432. Stipulation that only Certain Agents may "Waive. — If the policy stipulates that waiver of forfeitures can only be by certain officers, another agent cannot waive un- less the company, subsequently to the execution of the con- tract, permits the waiver or gives such agent the requisite authority, 76 or unless there be a usage or course of business justifying the act. 77 § 433. Limitation of Agent's Authority in Policy is Valid. — It is undoubtedly within the power of the parties to stipulate that an agent's authority shall be exercised only within certain limits. It is equally true that an insurance company may validly, as between itself and its agent, define and limit his powers, and this will affect all third parties, deal- ing with an agent, who have knowledge or notice thereof. 78 73 McNeilly v. Continental L. Ins. Co., 66 N. Y. 23. 74 Lyooaning F. Iais. Co. v. Woodworiih, S3 Pa. St. 223. 75 American Ins. Co. v. Gallatin, 48 Wis. 36. 76 So held in Porter v. United States L. Ins. Co., 160 Mass. 183; 35 N. E. Rep. 678. 77 Stewart v. Mutual L. Ins. Co., 76 Hun (N. Y.), 267; 27 N. Y. Supp. 724; 59 N. Y. 118. 78 See generally as to limitations on agent's pow r er brought to notice of assured, Walsh v. Hartford Ins. Co., 73 N. Y. 5, 10; Cleaver v. Traders' Ins. Co., 65 Mich. 527; 32 N. W. Rep. 660; Mersereau v. Phoe- nix Mut. L. Ins. Co., 66 N. Y. 274; Clevenger v. Insurance Co., 2 Dak. 114; 3 N. W. Rep. 313; Gould v. Dwelling-House Ins. Co., 90 Mich. 302, 308; 51 N. W. Rep. 455: 52 N. W. Rep. 754; Leonard v. Insurance Co., 97 Ind. 306; Whitehead v. Germania F. Ins. Co., 76 N. Y. 415; New York L. Ins. Co. v. Fletcher, 117 U. S. 531; distinguishing Insurance Co. v. Wilkinson, 13 Wall. (U. S.) 222, and Insurance Co. v. Ma hone, 21 Wall. (U. S.) 152, where notice of limitation was not given assured; OTN-iWy v. Corporation of L. Assur., 101 N. Y. 575; 5 N. E. Rep. 508; Kyte v. Assurance Co., 144 Mass. 43. § 434 AGENTS OF INSURER — POWERS. 532 And an agent is bound by such instructions, and lias no right to ect upon his own judgment as to the expediency of such di- rections. 79 But it is decided that a provision that "no officer, agent, or representative" of the company, should be held to have waived any condition of the policy, unless such waiver should be indorsed thereon, riot being a limitation on the au- thority of any particular agent, or class of agents, but in effect on the capacity of the corporation's future action, is invalid, 80 and an inhibition against taking risks on distilleries and steam saw mills, does not prohibit taking risks on buildings erected for such use, but not in use. 81 § 434. Authorities Holding- that Restrictions in Pol- icy on Agent's Authority Bind Insured. — There are numer- ous decisions which uphold the doctrine that restrictions in the policy upon an agent's authority are binding upon the assured, and operate as a notice to him of the extent of the agent's pow- ers. Irrespective of the question whether such a rule conflicts with the weight of authority, there are undoubtedly many cases where the circumstances would well warrant such rul- ings. Some of the courts have held that such a limitation in the policy has the force of a stipulation, and therefore binds the parties agreeing thereto. Thus it is said, by the court in a Wisconsin case, 82 "We must hold that when the assured has accepted a policy containing a clause prohibiting the waiver of any of its provisions by the local agent, he is bound by such inhibition, and that any subsequently attempted waiver, merely by virtue of such agency, is a nullity." So it is held in a California case that where there is an express provision in the policy that statements not in the written application, nor in- dorsed on the policy, shall not bind the company, such condi- to Kraber v. Union Ins. Co., 129 Pa. St. 8; 24 Week. Nat. Cas. 547; 18 Atl. Rep. 491. 80 Lamberton v. Connecticut F. Ins. Co., 39 Minn. 129; 39 N. W. Rep. 76. si /Etna Ins. Co. v. Magllire, 51 111. 342. 82 Hawkins v. Rockford Ins. Co., 70 Wis. 1; 35 N. W. Rep. 34. 533 AGENTS OF INSURER — POWERS. § 434 tion binds the assured. 83 And in another case in that state it is determined that if the policy provides that the agent has no authority to waive except upon special authority in writing, such condition operates as a notice of limitation of the agent's powers. 84 So in a Michigan case 80 the policy provided against other insurance, and also that no agent should have power to waive or modify any of its conditions, and it was held that the agent's declarations, permitting fur- ther insurance, could not operate to estop the company from denying its liability for loss. Another decision in the same state holds that an agent cannot alter or vary the terms of a policy in the face of express inhibitory provisions. 86 In Kan- sas 8 ' it is asserted that if a policy has been executed and deliv- ered to the assured, and has gone into full force and effect, he is presumed to take notice of, and to be bound generally by, re- striction upon the agent's authority set forth upon the face of the policy. So in Oregon 88 it is held that the acceptance by the assured of a policy, containing an express limitation on an agent's powers, estops the assured from claiming, as against the assurer, the benefit of acts of the agent done in excess of such restricted authority. And similar rulings have been made in Pennsylvania, 89 in Missouri, 90 in Illinois, 91 in Iowa, 9 '" 2 in Dakota, 93 and in New Jersey. 94 So in a New York case 95 the court holds that a restriction permitting a waiver only in 83 Enos v. Sun Ins. Co., 67 Gal. 621. 84 Shreggart v. Lycoming F. Ins. Co., 55 Cal. 408. 85 Cleaver v. Traders' Ins. Co., 65 Mich. 527; 32 N. W. Rep. 660. 86 Mclntyre v. Michigan State Ins. Co., 52 Mich. 188. 87 Burlington Ins. Co. v. Gibbons, 43 Kan. 15; 22 Pac. Rep. 1010 (soliciting agent). 88 Weidert v. State Ins. Co., 19 Or. 261; 24 Pac. Rep. 242. 89 Greene v. Lycoming F. Ins. Co., 91 Pa. St. 3S7; 9 Ins. L. J. 811. See G'trard F. Ins. Co. v. Hebard, 95 Pa. St. 45; Kroeger v. Birming- ham Ins. Co., 2 Norris (Pa.), 264; Commonwealth Mut. F. Ins. Co. v. Hunzinger, 98 Pa. St. 41. so Greenwood v. New York L. Ins. Co., 27 Mo. App. 401. si Equitable L. Ins. Co. v. Cooper, 60 111. 509. . 92 Zimmerman v. Home Ins. Co., 77 Iowa, 685; 42 N. W. Rep. 462. 93 Cle(venge>r v. Mutuail L. Ins. Co., 2 Dak. 114: 9 Ins. L. J. 129. »4 Catoir v. American etc. Ins. Co., 33 N. J. L. (4 Vroom) 4S7. 95 Walsh v. Hartford Ins. Co., 73 N. Y. 5. § 435 AGENTS OP INSURER POWERS. 534 a specified manner operates as notice of the agent's limited au- thority. And it is held in the same state that a provision in the policy that an agent has no authority to collect premiums, except upon a renewal receipt signed by the president and secretary, is, in effect, a notice to the assured of the extent of the agent's powers. 96 It is also determined in that state that if the policy expressly stipulates that the agent has no power to make representations on his own re- sponsibility, that his opinion given the assured, as to certain advantages of the company's plan, did not bind the latter, es- pecially where a pamphlet setting forth the details of the plan is shown to the assured, 97 and as high an authority as the United States supreme court has held that where a general agent's authority to waive forfeitures or conditions as to non- payment of premiums is expressly limited by the policy, such limitation governs. 98 And in Canada we find substantially the same ruling. 99 § 435. Restrictions in Policy as to the Manner of Exercising Authority hy Agent. — There is a class of cases which hold, in accordance with the principle of the deci- sions given under the last section, that where the policy pro- vides that the agent has no authority to waive, except in a cer- tain manner stated in the policy, or that only specified agents can waive the terms of the contract, such restriction binds the assured. Thus where the condition was that no waiver by any agent would be valid without a written indorsement of consent by the company, it was held that such indorsement was neces- sary to operate as a waiver of a forfeiture, notwithstanding the 96 Mersereau v. Phoenix Mut. L. Ins. Co., 06 N. Y. 274. 07 S'imioes v. New York L. Ins. Co., 38 I Fun (N. Y.t, 309. »8 Insurance Co. v. Wilkinson, 13 Wall. (U. S.) 222. See Insurance Co. v. Fletcher, 117 U. S. 519. 99 Hendrickson v. Queen Ins. Co., 30 U. C. Q. B. 108; Cleaver v. Traders' Ins. Co., 71 Mich. 414; 39 N. W. Rep. 571 (case of additional insurance even though agent had authority to consent in a certain way thereto); Worcester Bank v. Hartford F. Ins. Co., 11 Cush. ("Mass.) 205; 59 Am. Dec. 145 (case of other insurance and agent said he would have it indorsed, but did not). 535 AGENTS OF INSURER — POWERS. § 435 policy was given the agent to obtain the required consent, and the agent returned the policy with the statement that all proper formalities had been complied with. 100 So where the by-law of a mutual company required the consent of directors to certain acts, it was held that an agent could not bind the company by acts done otherwise. 101 And a local agent has no power to waive the conditions of a policy where it expressly provides that such waiver must be made by the secretary of the company, and such restriction in the policy is notice to the assured of the local agent's want of authority to make the waiver, 102 so where consent to other insurance is required to be indorsed on the policy by the company, a soliciting agent has no authority to waive such provision. 103 !Nor can a local agent verbally waive proofs of loss, where the policy provides that a waiver must be in writing indorsed upon, or attached to, the policy, and this case also decides that it must be presumed that the insured had knowledge of such stipulation. 104 So an extension of the time of payment of premiums, contrary to the stipulations of the policy, which required any alteration or waiver to be made at the head office, and signed by an officer of the company is invalid, when made by a general agent at an- other place than that specified. 105 So where an agent, being informed that the premises were vacant, said it was all right since he had been notified, it was held that there was no waiver, as the policy provided that no waiver should be valid except it were made in writing and signed by the secretary. 106 Again, 100 Hill v. London Assur. Corp., 30 N. Y. 539; 9 N. Y. Supp. 500. 101 Rehler v. German Mut. F. Ins. Co., 68 Ind. 347. 102 Wilkins v. State Ins. Co., 43 Minn. 177; 45 N. W. Rep. 1; O'Brien v. Prescott Ins. Co., 134 N. Y. 2S; 45 St. R. 3S9; 31 N. E. Rep. 265; re- versing 11 N. Y. Supp. 125. See, also, Quinlan v. Providence-Wash- ington Ins. Co., 133 N. Y. 356; 31 N. E. Rep. 31; 45 St. R. 200; 21 Ins. L. J. 650. 103 Hartford F. Ins. Co. v. Small (U. S. C. O. A., 5th Cir., 1S95), 66 Fed. Rep. 490. 104 Gould v. Dwelling-House Ins. Co., 90 Mich. 302, 30S; 51 N. W. Re]). 455. loc Marvin v. Universal L. Ins. Co.. 85 N. Y. 278; 39 Am. Rep. 657. 106 O'Brien v. Prescott Ins. Co., 134 N. Y. 2S; 31 N. E. Rep. 265. § 435 AGENTS OF INSURER — POWERS. 536 where the condition was that only a written indorsed agree- ment should be valid as a waiver, such stipulation excludes an authorization of increase of risk in any other mode. 107 In the case of Walsh v. Hartford Fire Insurance Oonipany, 107a the court distinctly admits that the company can itself waive conditions by oral consent, although the policy requires a writ- ing, 108 and that the agent, unless restricted, would possess equal power. The agent in that case had authority to solicit risks, receive applications for insurance, fix rates of premium, and is- sue and renew policies. But the court unequivocally held that such limitation in the policy could "mean nothing less than that agents shall not have power to waive conditions except in one mode, viz., by indorsement on the policy." 109 In a Vermont case it was held that the agent could waive proofs of loss only in the manner provided in the policy. 110 Sub- stantially the same ruling has been made in Wisconsin. 111 So in Mississippi, 112 it is declared that an agent who is not au- thorized to issue policies, nor to alter them, cannot orally con- sent to additional insurance where the policy requires written consent. 113 So where an agent was informed of an encum- brance at the time of the application, and said it was "too trifling," it was decided that there was no waiver. In this case the charter of the company required an encumbrance to be expressed, and a memorandum was indorsed on the policy that the company would not be bound by any statement made to an agent not contained in the application. 114 And in a similar 107 Gladding v. California Farmers' etc. Ins. Co., 66 Cal. 6. 107a. 73 N. Y. 5. ios Citing Trustees etc. v. Brooklyn F. Ins. Co., 19 N. Y. 305. 109 Three judges dissented. See Hill v. London Assur. Soc, 26 Abb. N. C. (N. Y.) 203; 16 Daly (N. Y.), 120. no Smith v. Niagara F. Ins. Co., 60 Vt. 6S2; 1 L. R. Annot. 216 (powers of local agent and general agent distinguished.) in Knudson v. Hekla F. Ins. Co., 75 Wis. 198; 43 N. W. Rep. 954. 112 Liverpool. London & Globe Ins. Co. v. Sorsby, 60 Miss. 302. us See, also, German Ins. Co. v. Heiduk, 30 Neb. 2SS; 40 X. W. Rep. 4S1. 114 Loehner v. Home Mut. Ins. Co.. 17 Mo. 247; 19 Mo. 628. To simi- lar effect, see Lycoming F. Ins. Oo. v. Langley, 62 Md. 196; Insurance Co. v. Mowry, 96 U. S. 544; New York L. Ins. Co. v. Fletcher, 117 N. Y. 519. But see Emery v. Piscatuqua etc. Ins. Co., 52 Me. 322. 537 AGENTS OF INSURER — POWERS. § 435 case in Xew Jersey, 115 a like ruling was made, although the agent was a collecting agent, and there was no evidence that he possessed or had before attempted to waive forfeitures or re- vive a lapsed policy. So any course of action on the part of an insurer which leads an insured honestly to believe that by conforming thereto, a forfeiture of his policy will not be in- curred, followed by due conformity on his part, estops the in- surer from insisting upon a forfeiture, ""hough it might be claimed under the express letter of the contract, and a state- ment by a general agent of a corporation, in the course of his employment, as to a fact within his official knowledge touching the status of a matter intrusted to him, is admissible in evi- dence on behalf of the party with whom the corporation was dealing at the time. 116 Again, in a New York case, 117 the provision in the policy prohibited waiver of the conditions in the printed policy, which was in the New York standard form, but the agent was permitted to waive, in writing, indorsed upon or attached to the policy, conditions added to the author- ized form. The agent had possession of the policy, and the in- sured pleaded ignorance of its conditions in the above respect, but the court held that he was bound thereby. So where a waiver is required to be in writing, signed by the president and secretary, the company may defend on the ground that the suit on the policy was not commenced within the limited time, notwithstanding the fact that the insured had been induced to delay suit by the representations of the company's general 115 Metropolitan L. Ins. Co. v. McGrath, 52 N. J. L. 358:19 Atl.3S6. H6 Agricultural Ins. Co. v. Potts, 55 N. J. L. 158; 39 Am. St. Rep. 637 (case of additional assurance obtained without written consent and notification to special agent, who notified insurer, who directed policy canceled, but it was not done until after loss. The general agent of the insurer, however, visited assured after fire, and en- deavored to adjust the loss for a less sum than the amount insured, and saying that the agent had been notified by the company to can- cel, but had failed so to do, and the assured not having received no- tice, and the company having knowledge, assured had a right to as- sume tliat the insurer had acquiesced in the obtaining further insur- ance). H7 Quinlan v. Providence-Washington Ins. Co., 133 N. Y. 35G; 45 St. R. 200; 31 N. E. Rep. 31. § 436 AGENTS OF INSURER — POWERS. 538 agent, that it was unnecessary to sue, and that the company would make assessments and pay without suit. 118 § 436. That Restrictions in Policy on Agent's Powers Only Relate to Acts After Policy Delivered. — There is a class of cases which incline to a more liberal construction of an agent's powers in favor of the assured, than those considered in the two preceding sections. The substance of these deci- sions is that restrictions upon an agent's authority, set forth in the policy, are not conclusive upon the assured as to matters connected with the contract prior to its completion, but only re- late to the exercise of his authority in matters concerning the policy after its delivery and acceptance. The ground of such rulings is that no presumption can reasonably attach, that the assured was cognizant of or could anticipate that such provi- sions would be made. 119 Such decisions are an important ad- vancement in the direction of what seems, by the weight of authority to be the true rule, and which will be stated here- after. Thus the court in a Minnesota case, 120 declares that "it would be a stretch of legal principle to hold that a person deal- 118 Waynesboro Mut. F. Ins. Co. v. Conover, 98 Pa. St. 384; 42 Am. Rep. 618. H9 Continental Ins. Co. v. Ruckman, 127 111. 364; Tubus v. Dwell- ing House Ins. Co., 84 Mich. 646, 651-53; Crouse v. Hartford F. Ins. Co., 79 Mich. 249; Farnuni v. Phoenix Ins. Co., 83 Cal. 247; 23 Pac. Rep. SG9. See Hoose v. Prescott House Ins. Co., 84 Mich. 309; 47 N. W. Rep. 587; Kister v. Lebanon Mut. Ins. Co., 12S Pa. St. 553; Gris- tock v. Royal Ins. Co., 84 Mich. 161; 47 N. W. Rep. 549; Partridge v. Commercial Ins. Co., 17 Hun (N. Y.), 95; Beebe v. Ohio Farmers' Ins. Co., 93 Mich. 514; 70 Mich. 199; 32 Am. St. Rep. 519; North British etc. Ins. Co. v. Crutchfield, 108 Ind. 518. "In regard to waivers before issue, it is by no means clear that the constructive notice supplied by provisions of a policy not yet in the hands of the applicant should be held binding upon hirn Only where the custom of limiting the authority of a general agent in the policy has become so general that it is part of the ordinary business knowledge of the world that such provisions exist, and are to be examined, will it be proper to hold the applicant bound by them, in respect to negotiations prior to the pol- icy": 1 May on Insurance, Parson's ed., sec. 138, p. 245. 120 Kausal v. Minnesota Farmers' Mut. F. Ins. Assn., 31 Minn. 17; 47 Am. Rep. 77G, per Mitchell, J. 539 AGENTS OF INSURER — POWERS. § 436 ing with an agent apparently clothed with authority to act for his principal in the matter in hand, could be affected by notice given, after the negotiations were completed, that the party with whom he had dealt should be transformed from the agent of one party into the agent of the other. To be efficacious such notice should be given before the negotiations are com- pleted. The application precedes the policy, and the insured cannot be presumed to know that any such provision will be inserted in the latter. To hold that, by a stipulation unknown to the insured at the time he made the application, and when he relied upon the fact that the agent was acting for the com- pany, he could be held responsible for the mistakes of such agent, would be to impose burdens on the insured which he never anticipated," and a clause in a policy withholding from agents authority "to make, alter, or discharge this or any other contract in relation to the matter of this insurance," is not a limitation of the powers of the agent in preparing and accept- ing the application. The provision takes effect only after the policy is effected and issued. 121 So it is held in Illinois, 122 that acts and omissions of an agent of the insurer, which took place before the delivery of the policy, cannot be set up in avoidance thereof. And in Pennsylvania, 123 it is likewise declared that the company cannot evade its liability on a policy, because of the fraud or mistake of its agent, by setting up a stipulation in the policy that the agent shall be deemed the agent of the in- sured, where the latter was ignorant of an intent to insert such a condition. So where the policy was issued on oral applica- tion, it was held that a condition in the policy, that the com- pany would not be bound by any act or statement made to or by an agent, unless the same were contained in the policy or application, did not bind the assured except as to statements and 121 Mutual B. L. Ins. Co. v. Robinson, 19 U. S. App. 274, per Cald- well, J.; 58 Fed. Rep. 723; 7 U. S. C. C. A. 444. 122 Commercial Ins. Co. v. Ives, 56 111. 402; Reaper City Ins. Co. v. Jones. 62 111. 45S. 123 Eilenberger v. Protective Mut. F. Ins. Co., 89 Pa. St. 404. § 437 AGENTS OF INSURER — POWERS. 540 acts of the agent made and done after the delivery and accept- ance of the policy. 124 § 437. That Restrictions in Policy on Agent's Powers Only Relate to Acts Before Loss. — There is still an- other class of decisions which hold that restrictions in the pol- icy upon an agent's powers do not relate to conditions to be per- formed after loss has occurred. 125 Therefore it is held that a condition in an accident policy prohibiting waiver of any con- ditions in the policy by an agent of the company, except au- thority to waive, should be conferred on the agent by a writing signed by the president and secretary, do not relate to condi- tions to be performed subsequently to the loss. 126 A stipula- tion requiring waiver by an agent to be indorsed upon a policy in writing, does not apply to these conditions to be performed subsequently to the loss, and an adjuster has power to waive the condition as to arbitration, and make a different agreement concerning the same, 127 so an agent may waive proofs of loss by parol notwithstanding such inhibition. 128 Substantially the same ruling has been made in Missouri, 129 in Iowa, 130 in Kan- sas, 131 in Maryland, 132 in Mississippi. 133 So in California 134 it is 124 Hoose v. Prescott Ins. Co., 84 Mich. 309; 11 L. R. Annot. 340; 32 Cent. L. J. 226; 47 N. W. Rep. 587. 125 O'Brien v. Ohio Ins. Co., 52 Mich. 131; Loeb v. American Cent. Ins. Co., 99 Mo. 50; 12 S. W. Rep. 374; Dibbrell v. Georgia Home Ins. Co., 110 N. C. 193; 14 S. B. Rep. 783; Dwelling-House Ins. Co. v. Dow- dall, 159 111. 179, 184; Franklin F. Ins. Co. v. Chicago Ice Co.. 30 M<1. 102; 11 Am. Rep. 469. See Friest v. Citizens' Ins. Co., 3 Allen (85 Mass.), 602; Forward v. Continental Ins. Co., 142 N. Y. 382. 126 Travelers' Ins. Co. v. Harvey, 82 Va. 949; 5 S. E. Rep. 553. 12T Harrison v. German-American F. Ins. Co. (U. S. C. C. S. D., Iowa, 1895), 67 Fed. Rep. 577. 128 Carson v. Jersey City F. Ins. Co., 43 N. J. L. 300; 39 Am. Rep. 584. 129 Loeb v. American Ins. Co., 99 Mo. 50; 12 S. W. Rep. 374. 130 Stevens v. Citizens' Ins. Co., 69 Iowa, 658. ]?7 Wis. 422; 58 Am. Rep. 869, 872, per Taylor, J. 189 Citing numerous eases. £ 440 AGENTS OF INSURER POWERS. 556 agent; the company cannot deal with its patrons in any other way. Justice and law, therefore, require that the company shall be held to sanction what the agent agrees to and upon which the insured relies. To allow the company to enforce a condition or forfeiture of the policy for a neglect to do that which the agent informs the assured shall not avoid the policy, would work the greatest injustice." Again, in a Texas case, 190 the court, per Henry, J., says: "The limitation contained in the policy as to the powers of agents of the corporation and the manner of their exercise are not conclusive. The corporation cannot so limit or regulate its own powers to contract, and if it chooses to bind itself, through its agents, otherwise in any respect, it may unquestionably do so. If the act is within the scope of the authority of the agent at the time it is done, it will be binding upon the corporation, without reference to its con- formity to restrictions contained in the policy." In a New York case, decided in 1894, the question was as to the con- struction of the standard policy, issued under the require- ments of chapter 488 of the laws of 1886, and Bartlett, J., said: "The precise point involved in this case has been before this court frequently, since the enactment of the law of 1886. The use of the standard policy was com- pelled by legislative enactment to remedy existing evils, and, among others, to protect insurance companies from the perils of alleged parol waivers by their local agents. Every person who now enters into a contract of insurance is required to agree that no officer or agent or other representa- tive of the company shall have power to waive any provision or condition of the policy, except such as by the terms there- of may be subject of agreement indorsed thereon, and as to such provisions and conditions the waiver must be written up- on or attached to the policy, and he specially covenants that he will not claim any privilege or permission unless it be in writ- ing." The case was this: A policy was issued to the owner of mortgaged premises; no mortgagee clause was attached to the policy; simply the provision, "loss, if any, first payable to ioo Niagara Ins. Co. v. Lee, 73 Tex. G4G. 557 AGENTS OF INSURER — POWERS. § 440 mortgagee, as interest may appear." An action was brought to foreclose the mortgage, judgment was obtained and the premises were advertised to be sold. Before the date fixed for sale the premises insured were destroyed by fire. Before the commencement of the foreclosure proceedings, plaintiffs to the action against insurers informed a duly authorized agent of the company that they were about to commence said pro- ceedings, and the agent agreed that they might be commenced without injury to said plaintiffs' rights under the policy. It did not appear that the agent ever noted upon any register kept by him said fact of the commencement of foreclosure. The policy was signed by the president and secretary of the in- surer, and by said agent. And it was said: "The judgment appealed from ignores the plain provisions of the contract of the parties relating to foreclosure and waiver, and is contrary to the decisions of this court on the precise point presented now and others which involve the same principles of construc- tion. In Quinlan v. Providence-Washington Insurance Com- pany 191 the necessity of notice in the case of foreclosure was considered. Judge Andrews, in discussing the question of al- leged waiver, said: 192 'It is to be assumed that Kelsey' (the agent of the company) 'learned of the commencement of the foreclosure proceedings, and thereupon assured the plaintiff that his rights under the policy would not be prejudiced thereby.' Again, .... after holding that the principle that courts lean against forfeitures is unimpaired, the court says: 'But where the restrictions upon an agent's authority appear in the policy, and there is no evidence tending to show that his powers have been enlarged, there seems to be no good reason why the authority expressed should not be regarded as the measure of his power, nor is there any reason why courts should refuse to enforce forfeitures plainly incurred which have not been expressly or impliedly waived by the company.' " 193 iw Anderson v. Manchester F. Assur. Co. (Minn. 1S05), GO N. W. 192 id., p . 3G3. 193 Moore v. Hanover F. Ins. Co.. 141 N. Y. 210; reversing 71 Hun (N. Y.). 100; citing as "in harmony" with the above. Armstrong v. Agriculture Ins. Co., 130 N. Y. 560; Baumgarten v. Providence etc. §441 AGENTS OF INSURER — POWERS. 558 Again, where a standard form of policy is required, an agent may not, by verbal assent to other insurance, waive a condition requiring such assent in writing indorsed on or annexed to the policy. 194 § 441. Restrictions in Policy — Oral Waiver. — An agent w T ith sufficient authority to waive conditions in the policy may dispense with such conditions, orally as well as in writing. So a general agent has power to orally waive a condition, even though the policy provides that the use of general terms or anything less than a distinct, specific agreement, clearly expressed and indorsed on the policy shall not be construed as a waiver of any printed condition or restriction in the policy; 195 and where the policy required the company's indorsed consent in case the building insured became unoccupied, and the agent, upon be- ing informed of the vacancy, said "all right," there was held to be a waiver of the condition. 190 So a general agent may, after a loss, bind the company by parol waiver of proofs of loss, notwithstanding the policy provides that a waiver shall be void unless in writing, signed by the agent and indorsed thereon. 107 And where the agent was informed of additional insurance, and said he would write to the company for it, which he did, and told the assured it was all right, but failed to indorse the re- quired consent upon the policy, the company was held bound Ins. Co., 136 N. Y. 547; Allen v. German-American Ins. Co., 123 N. Y. 6; Messelback v. Norman, 122 N. Y. 5S3; O'Brien v. Preseott Ins. Co., 134 N. Y. 2S; Lett v. Guardian Ins. Co., 125 N. Y. 82. But see Forward v. Continental Ins. Co., 142 N. Y. 3S2. 194 Anderson v. Manchester F. Assur. Co. (Minn, 1895), 60 N. W. Rep. 1095; 20 Ins. L. J. 222; distinguishing Lamberton v. Insurance Co., 39 Minn. 129; 39 N. W. Bep. 76. Rehearing granted upon point of constitutionality of statute cannot waive where standard policy: Parker v. Rochester German Ins. Co., 162 Mass. 479; 39 N. E. Rep. 179. 195 Steen v. Niagara F. Ins. Co., 89 N. Y. 315; distinguishing Walsh v. Hartford F. Ins. Co., 73 N. Y. 5; Van Allen v. Farmers' Joint Stock Ins. Co., 64 N. Y. 469; Marvin v. Universal L. Ins. Co., 85 N. Y. 278. 196 Palmier v. St. Paul P. & M. Ins. Co., 44 Wis. 201. 197 Phoenix Tns. Co. v. Munger, 49 Kan. 178; 30 Pac. Rep. 120: 12 Rail. & Corp. L. J. 105; 21 Ins. L. J. 082. 559 AGENTS OF INSURER — POWERS. § 441 by the agent's representations. 198 So it is held in Tennessee that a written provision that the stipulations and conditions of the policy shall not be waived except by a certain officer may itself be waived by parol. 199 So the agent may bind the com- pany by a parol agreement extending the time of payment of the premium, although the policy requires the consent of the company to be indorsed thereon in writing. 200 So a general agent may, it is held, waive a condition by parol, even though the policy requires that a waiver can only be made by a writ- ing signed by the secretary, especially where the element of ratification exists; 201 and a local agent may orally waive proofs of loss, notwithstanding such conditions as to indorsement thereof on the policy. 202 But in a "Washington case, where the policy contained the usual provision against waiver by agents except by writing or indorsement upon the policy, and the policy was delivered to the assurer's agent for indorsement of •consent to the removal, under a promise to make the requested indorsement, and while the policy was in the agent's hands, and before indorsement made, the goods were destroyed by fire, and the insurer was held estopped from setting up the ne- glect of its own agent in order to relieve itself of liability. 203 The court, per Stiles, J., did not consider the case one of tech- nical waiver, but of estoppel, and said: "The only material ques- tion then is, whether the agent had power to make the required indorsement in writing. He assumed to have it, for he agreed to do it, and received the policy for that purpose, thus lulling the respondent into a feeling of security, and in all probability pre- venting him from procuring insurance elsewhere. And while there is no evidence on the subject disconnected from the joolicy itself, we think that, as a fact, he did have the authority. The los Minnock v. Eureka F. & M. Ins. Co., 90 Mich. 236, 242; 51 N. Y\ T . Rep. 3G7. 199 Dale v. Continental Ins. Co., 95 Tenn. 38. 200 Young v. Hartford F. Ins. Co., 45 Iowa, 377; 24 Am. Rep. 7S4. 201 Pedhnar v. Phoenix Ins. Co.. 65 X. Y. 195; 6 Lans. (N. Y.) 411. 202 Van Allen v. Farmers' Joint Stock Ins. Co., 64 N. Y. 409. 203 Hensehel v. Oregon F. & M. Ins. Co., 4 Wash. 470; 30 Pac. Rep. 735; 31 Pac. Rep. 332, 765 (two judges dissenting, a rehearing was denied). § 442 AGENTS OF INSURER — POWERS. 560 appellant was a foreign corporation, whose agent was at Ta- eoma. This policy was, and presumably all policies issued by him were, in printed form, with the signatures of the president and secretary stamped, and only requiring the written signa- ture of the agent to make it complete. He was a local gen- eral agent, wdio, in the absence of some restriction in the policy brought home to the respondent, was as to him, the appellant itself. Maryland Fire Insurance Company v. Gusdorf 2W is a case on all fours with this one, in pleadings, conditions of pol- icy, and facts, except w T here the facts tended to show a waiver only. The court, speaking of the position of the plaintiff after receiving the assurance of the company that he could remove his goods without the indorsement, and acting upon it, said: 'By so acting he did that which prejudiced his interest under the policy. He thereby gave the company the advantage of retaining the premium without further continuance of the risk, and also the advantage of setting up this defense against their liability after the loss had occurred. "Would not the suc- cess of this defense operate as a fraud upon the assured? We think it clear the company ought to be, and are, estopped from making it. Whilst the law affords ample protection to these companies, as well as to individuals, against frauds, misrepre- sentations, and breaches of warranty, it w T ill not, and ought not, to help them to perpetrate frauds upon' those with whom they make contracts, in which good faith on both sides, as well in their continuance as origin, has always been regarded as a ruling consideration? ' So in this case the appellant, having re- ceived the premium for a year's insurance, now, without any offer to return any portion of the unearned premium, sets up what w T e deem an unconscionable defense, when it claims that, after actually insuring the respondent less than thirty days, the neglect of its own agent to do what he ought to have done should relieve it of all liability." § 442. Same Subject — Cases Contra. — Notwithstanding the preceding cases, it is held in a case in the United States cir- cuit court of appeals that, although an inspector of a steam- 204 43 Md. 50C». The company in this case was held estopped by the acts aud declarations of its president. 56 1 AGENTS OF INSURER — POWERS. § 442 boiler insjDGction and insurance company acts as its agent in procuring an insurance on steam-boilers, nevertheless he has no authority to modify by oral agreement a policy issued by the company, where the company has no knowledge of said agreement and has never ratified the same. 200 The court, per Sanborn, C. J., said in this case: "It is true that a written con- tract may be modified by a subsequent oral agreement, and that a contract of insurance may be made by parol. But it is nevertheless true .... that the customary method of modi- fying policies of insurance and of making contracts of insur- ance for long terms is by written agreements . . . . , and that the method pursued by the defendant when this policy was is- sued was to issue a written policy upon a written application. The fact that this talk was twenty-six days before the explosion and that no steps had been taken by either party meanwhile to put any contract of modification or of insurance in writing, and no demand had been made by the plaintiff for any such evidence of its contract, strongly indicates that no such contract was ever made. In Head v. Insurance Company 206 Chief Jus- tice Marshall, in delivering the opinion of the supreme court, said: 'A contract varying a policy is as much an instrument as the policy itself, and therefore can only be executed in the manner prescribed by law. The force of the policy might, in- deed, have been terminated by actually canceling it; but a con- tract to cancel is as solemn an act as a contract to make it, and, to become the act of the company, must be executed accord- ing to the forms in which by law they are enabled to act.' .... There is another reason why the judgment below should be affirmed, and that is that there is no sufficient evidence in this record that the inspector had authority from the defend- ant to modify the policy or make a supplemental contract of insurance in its behalf." And the case turned upon the facts that there was no sufficient evidence of a modification or of authority of the agent to modify. So in Hill v. Commercial 206 Laclede Fire Brick Mfg. Co. v. Hartford Steam Boiler Inspec- tion & Ins. Co., 60 Fed. Rep. 351; 9 U. S. C. C. A. 1, Caldwell, Circuit Judge, dissenting. 20G 2 Cranch (U. S.), 127, 168. Joyce, Vol. I. — 30. § 443 AGENTS OF INSURER — POWERS. 562 Insurance Company 207 it is held that an agent having power to grant written and printed permits has no authority to bind the company by an oral agreement to grant such per- mit. So it is also held that a local agent, with authority to receive premiums and issue policies, cannot bind the company by an oral waiver of conditions where the policy requires the company's written or printed consent to a waiver. In this case the agent was chairman of the board of selectmen of a town, and in such capacity issued a license for the sale of intoxicating liquors to the assured, assuring him that it would not affect his insurance. 208 In another case it is de- cided that in the face of such restriction and provision as to the manner of waiver the adjuster cannot orally waive a condi- tion as to the time within which proofs of loss shall be fur- nished. 209 So in New York it is held that the agent's state- ment that it would be all right if the house was vacant did not operate as a waiver where the policy required the company's indorsed consent on the policy, although in this case the evi- dence as to the agent's authority was very meager, and the case turned upon the insufficiency of the evidence upon this point. 210 It is also held, where the policy provides that the waiver must be made at the head office and signed by an officer of the com- pany, that an oral extension of the time of payment of the premium given by the general agent at another pla.ee is void. 211 § 443. "Where Agent Promises to Make Proper In- dorsement on Policy but Fails to do so. — In a case in Utah on this point the court says: "Counsel for appellant contend that the plaintiff cannot recover because he had other in- surance on the property, and failed to have the consent of the defendant company thereto indorsed on the policy in question, which failure was a violation of that clause in the policy which provides that 'the entire policy, unless otherwise provided by 207 ir,4 Mass. 40G. 208 Kyte v. Commercial Union Assnr. Co., 149 Mass. 11G; 10 N. E. Rep. 518. 200 Smith v. Niagara F. Ins. Co., 00 Vt. 082; 15 Atl. Rep. 353. 2i"o Messelback v. Norman, 122 N. Y. 578; 20 N. E. Rep. 34. 2ii Marvin v. Universal L. Ins. Co., 85 N. Y. 278; 39 Am. Rep. C57. ■303 AGENTS OF INSURER POWERS. § 443 agreement indorsed hereon or added hereto, shall be void if the insured now has or shall hereafter make and procure any other contract of insurance, whether valid or not, on property cov- ered, in whole or in part, by this policy.' If this clause be literally construed, and the agent cannot waive a compliance therewith by his acts or neglect, and bind the principal as is insisted, then indeed the insured is wnthout a remedy. The agent was authorized to issue policies to parties seeking in- surance to fix rates and premiums, and to countersign, renew, and sign the transfer policies in. Ogden and vicinity. Where such pow r ers are conferred upon an agent of an insurance com- pany, he becomes the general agent of such company within his district, and his acts performed within the scope of his agency will be binding upon his principal, and his knowledge and consent will be that of his principal. The company is bound, not only by his acts, but also by .whatever may be said or done by him regarding the contract or risk. Through him the company has knowledge of every fact in relation to the in- surance or contract, and when he issues additional insurance on the same property, he becomes the agent of both companies, and the f ormer company will be conclusively presumed to have knowledge of the additional insurance. If, then, such com- pany fail to avail itself of its right under its contract to ob- ject to such additional insurance, and to declare the policy void, so long as there is no apparent danger of loss, it will be es- topped from insisting upon a forfeiture of the policy after loss has occurred, because its consent to other insurance was not indorsed thereon in writing. These policies are in a printed form, and, as a general thing, the insured knows little about their conditions and restrictions, but the agent is presumed to ' know them, and justice and fair dealing will not permit him to lull the insured into a state of security by promises, con- tinue to receive the premiums, and then, when loss occurs, allow the company to deny its liability because the agreement of its agent was not indorsed as required by the insurance contract. In the case at bar the insured requested the agent of the de- fendant to make the proper indorsement, which he promised to do, but, after having issued the new policy, for some cause § 443 AGENTS OF INSURER — POWERS. 564 failed to fulfill his agreement, and it is apparent from the record that the agent issued the additional insurance with the full knowledge of the existence of the policy in question. Un- der these circumstances the clause of the policy now under consideration cannot avail the defendant. A verbal agreement is of as high a legal degree as one in writing, and either one may be varied or abrogated by subsequent agreement, parol or written, and upon principle there appears to be no good reason why this rule should not apply to insurance companies, as well as private individuals. Therefore, the agreement of the agent, by which he promised to indorse on the policy permission for further insurance, is regarded as the agreement of the de- fendant company and is binding upon it. The fact that it had no actual knowledge of it at the time it was made, and did not actually assent to it, is entirely immaterial, because it was within the scope of the agent's authority to make it. Nor does the fact that the policy in question contained a clause restrict- ing the agent's power to waive any provision or condition of the policy add force or give effect to the clause under consid- eration, because the agent had the legal capacity to agree that other insurance might be procured on the property, and he having agreed to do this, and then failed to perform, the de- fendant cannot now be heard to complain because the neglect and failure of the agent was the neglect and failure of the company. It is true the question has been attended with much difficulty, and the decisions of the courts are by no means uni- form. Many of the earlier decisions appear to hold the parties rigidly to the terms of the insurance contract. Upon exam- ination of the more recent authorities it seems clear that the rule of strict construction in regard to the terms of an insur- ance policy has been much relaxed, and the courts now hold that where an insurance company or its agent has been notified of additional insurance, or of changes in the condition of the property, and no objection has been made, the company will be estopped from insisting on a forfeiture, because permission in writing was not indorsed on the policy. An agent who has power to enter into contracts of insurance and issue policies 565 AGENTS OF INSURER — POWERS. $ 444 may also waive forfeiture. 212 .... In Pelkington v. Insur- ance Company, 213 Mr. Justice "Wagner . . . . , reversing the lower court, said: 'The court, by its ruling in striking out the replication, virtually decided that it was absolutely neces- sary to obtain the written indorsement of the company's assent to the additional insurance before any recovery could be had. There are cases which undoubtedly sustain this position, but the tendency of the modern decisions is to relax and modify this stringent doctrine. It is emphatically averred that the agent was duly notified of the subsequent and additional in- surance, and assented to the same. Notice to the agent was notice to the principal, and the company was bound by that notice.' " 214 § 444. Restrictions in Application on Agent's Au- thority. — An application is in itself a mere proposal. It is not a contract. It is not incumbent upon the company to accept it. 215 When accepted it generally becomes a part of the contract and the answers to the interrogatories therein are re- lied on in determining whether or not the policy should issue. They are made the basis of the contract and are warranted to be true, so far, certainly, as they are material to the risk. Ap- plications for fire policies generally contain other conditions relative to change in risk, etc. Although applications are fre- quently oral, they are generally in printed form, prepared by the company, and intrusted to agents authorized to solicit in- surance. So that while the application is a mere proposition of a party for insurance, it is, when written, an offer controlled largely, if not exclusively, so far as any proposed stipulations 212 2 Wood on Fire Insurance, sec. 415. 213 55 Mo. 172. 214 West v. Insurance Co., 10 Utah, 442, per Barton, J.; citing 2 May on Insurance, sees. 3G9, 370; Kahn v. Insurance Co. (Wyo.), 34 Pac. Rep. 1059; Insurance Co. v. Earle, 33 Mich. 143; Insurance Co. v. Ruckman, 127 111. 364; 20 N. E. Rep. 77; Insurance Co. v. Munger, 49 Kan. 178; 30 Pac. Rep. 120; Insurance Assn. v. Griffin, 66 Tex. 232; 18 S. W. Rep. 505; Cobb v. Insurance Co., 11 Kan. 97; Insurance Co. v. Taylor, 73 Pa. St. 342; Weed v. Insurance Co., 116 N. Y. 106; 22 N. E. Rep. 229. 215 Covenant Mut. B. Assn. v. Conway, 10 Bradw. (111.) 348. § 444 AGENTS OF INSURER POWERS. 566 therein are concerned, by the insurer. The agents to whom these blanks are intrusted are held out to the public as pos- sessing, and they do possess, full power to do all things neces- sary and requisite in relation to the application. If an appli- cation contains no limitation upon the powers of an agent, their powers are coextensive with the business intrusted to them. 216 But sometimes the application limits, either expressly or im- pliedly, the authority of such agent, and the question arises as to what the effect is of such limitations. It is held that if the applicant has actual knowledge of the provisions of the applica- tion and of the limited authority of the agent, that he is bound thereby. 217 It is also held that if the form of the application and the questions contained in it show that the answers made by the apj)licant are to form the basis of the contract of insur- ance, this alone is sufficient to put the assured upon notice of the extent of the agent's authority. 218 And in Ryan v. World Mutual Life Insurance Company, 219 the court declares that the failure to read the application is of itself inexcusable negli- gence. This case was one of life insurance, and it was claimed that the agent had erroneously written the answers in the ap- plication. The court, however, refused to apply the doctrine of estoppel, and said: "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." 22 ° Other cases, however, have held directly to the contrary, and set forth the doctrine that even if an application containing such limitations be shown to the applicant, he is not concluded thereby. 221 And in a Kansas 216 Mutual B. L. Ins. Co. v. Robinson, 19 U. S. App. 274, per Cald- well, J.; 58 Fed. Rep. 723; 7 U. S. C. C. A. 444. 217 See Bartholomew v. Merchants' Ins. Co., 25 Iowa, 507; 96 Am. Doe. 65. 2is Galbraith v. Arlington Mut. L. Ins. Co., 12 Bush (Ky.), 29. 219 41 Conn. 168. 220 See New York L. Ins. Co. v. Fletcher, 117 U. S. 529, per Field, J.; Globe Ins. Co. v. Wolf, 95 U. S. 329. The first case distinguishes Insurance Co. v. Wilkinson, 13 Wall. (U. S.) 222, and Insurance Co. v. Mahone, 21 Wall. (U. S.) 152. 221 See State Ins. Co. v. Cray, 44 Kan. 731; Tubbs v. Dwelling- House Ins. Co., 84 Mich. 046. 567 AGENTS OP INSURER — POWERS. § 445 case 222 it is decided that the company cannot take advantage of false answers written in the application by the agent, which application the owner signs without knowledge of its contents, notwithstanding the application has a contrary stipulation. And where the application prohibits the agent from taking certain risks, this does not operate as notice of a limitation of the authority of an agent, who has full power to accept risks and issue policies, but applies only to soliciting agents. 223 Even if the assured be held to have notice of such prohibitory terms in the application, he may avail himself, as against the com- pany, of the doctrine of estoppel in many cases where the agent has exceeded such pretended limitations of his authority. 224 There would seem to be no valid reason, however, why a less liberal rule should govern in case of limitations in the applica- tion on the agent's powers than obtains as to similar inhibitions in the policy, 220 and we have seen, under a prior section, that in the latter case an agent whose powers are broad enough may by acts within the limits of his express or implied authority, bind the company by a waiver of the conditions of the policy, notwithstanding the policy provides contra. § 445. Agency — Custom, etc. — Course of Business — Similar Acts. — It is well settled that an agency may arise from custom, usage, a course of dealing, or from similar acts, and the principal will be bound where he has sanctioned a course of dealing by the agent, even though the latter had primarily no authority to do the act in question. 226 So the 222 Continental Ins. Co. v. Pearce, 39 Kan. 396; IS Pac. Rep. 291. 223 Howard Ins. Co. v. Owen, 94 Ky. 197; 13 Ky. L. Rep. 237. It may be stated that the report in the Kentucky Law Reporter pre- sents the case as stated in the text, while in the regular report it does not appear thnt it was the application which contained the limita- tion, but a letter of instructions. 224 See Continental Ins. Co. v. Chamberlain, 132 U. S. 304; Beebe v. Ohio Farmers' Ins. Co., 93 Mich. 514; Robison v. Ohio Farmers' Ins. Co., 93 Mich. 533; 53 N. W. Rep. 821. 225 See Tubbs v. Dwelling-House Ins. Co., 84 Mich. 646. 226 Fayles v. National Ins. Co., 49 Mo. 380. See Mound City Mut. L. Ins. Co. v. Huth, 49 Ala. 429. §§ 446, 447 AGENTS OF INSURER — POWERS. 568 company may be bound by the acts and knowledge of an agent in taking a risk, although he is not a regular agent of the com- pany, where he had previously taken insurance for the latter and had been paid his commissions therefor; 227 and where the company for a long time encourages an agent to exercise powers outside his written authority, and so induces the public to rely on his enlarged agency, it cannot after a loss fall back on the agent's written authority to avoid acts done by its en- couragement in the general scope of the business. 228 | 446. Agency Custom — Signing for Principal. — An agency may be inferred from other acts of the company recog- nizing the agent's authority as in case of payment of losses with- out objection, on other policies issued by the agent, 229 when such evidence is coupled with proof of the agent's signature. 230 So evidence of prior similar acts in signing policies are admissible to show a subagent's authority to sign a policy. 231 Where an agent of the underwriters has been constantly accustomed to subscribe policies for them, and has subscribed several policies for the assured with the underwriter's knowledge, these acts and the implied ratification warrant the agent's exercise of such assumed authority to subscribe. 232 § 447. Agency — Custom, etc. — Waiver of Conditions. An agent may also waive conditions and stipulations in the policy when authorized by a course of business, notwithstand- ing the policy provides to the contrary. 233 So an agent waives the right to enforce a forfeiture for nonpayment of premiums where he has on prior occasions waived such forfeitures for the 227 Keith v. Globe Ins. Co., 52 111. 518. 228 Farmers' Mut. Ins. Co. v. Taylor, 73 Pa. St. 343. 229 Houghton v. Eiwbank, 4 Camp. 88, per Lord Ellenborough. 230 Hougbton v. Ewbank, 4 Camp. 88; Brockelbank v. Sugrue, 5 Car. & P. 21. 231 Grady v. Central Ins. Co., 60 Mo. 116. 232 Neal v. Irving, 1 Esp. 61, per Lord Kenyon; contra, Courteen v. Touse, 1 Camp. 43. note, per Lord Ellenborougb. We believe, how- ever, that the text best expresses the law. 233 Insurance Co. v. Norton, 96 U. S. 234. 5G9 AGENTS OF INSURER — POWERS. § 447 same party, 234 and where the conduct, declarations, and course of dealing of the company and its agent warrant the belief that the agent has authority to waive forfeitures and receive over- due premiums, recovery cannot be defeated by a stipulation on the back of the policy to the contrary. 235 So where the general agent was in the habit of crediting the insured with the pre- mium and calling for it when he wanted it, and the insured was induced, after the agent died, to take a paid-up policy under the belief that the original policy had lapsed, a recovery may be had on the original policy ; 236 and a tender to the local agent of an annual premium, when due, will prevent a for- feiture of the policy where the insured has been in the habit of paying such premium to the local agent, although the policy provides for payment at the company's principal office, and even though the company had failed to place the receipt for the premium in such agent's hands. 237 So the company may be bound by a custom of the agent to give credit for the premium, although the renewal receipt is retained in the agent's office at the request of the insured. 238 And mutual benefit associa- tions may be bound by the acts and declarations of its agent by which a member is induced to believe that the time for payment of assessments would be extended as in former cases, even though the secretary and manager of the associa- tion has told the assured that such assessments were overdue. 239 And the same rule applies where the agent has been in the 234 Alexander v. Continental Ins. Co., 67 Wis. 422; 58 Am. Rep. 8(39. 873. 235 Mound City L. Ins. Co. v. Huth, 49 Ala. 529; Insurance Co. v. Norton, 9G U. S. 234; Zell v. Herman Farmers' Mut. Ins. Co., 75 Wis. 521: 44 N. W. Rep. 82S; Wyman v. Phosnix Mut. L. Ins. Co., 119 N. Y. 274; 45 Hun (N. Y.), 184; 29 St. R. 567; 23 N. E. Rep. 907; Insur- ance Co. v. Wolff, 95 TJ. S. 326; Unsell v. Hartford L. & A. Ins. Co., 32 Fed. Rep. 443. See Hastings v. Brooklyn L. Ins. Co., 138 N. Y. 473; 53 St. R. 63; Kenyon v. Knights Templar etc. Assn., 122 N. Y. 247; Conway v. Phoenix Mut. L. Ins. Co., 140 N. Y. 79; 55 St. R. 571; De Frece v. National L. Ins. Co., 136 N. Y. 144; 48 St. R. 909. 23« People v. Globe Mut. L. Ins. Co., 65 How. Pr. (N. Y.) 239. 23" Morey v. New York L. Ins. Co., 2 Woods (C. C), 663. 238 Tennant v. Travelers' Ins. Co., 31 Fed. Rep. 322. 239 Odd Fellows' Mut. Aid Assn. v. Sweetser, 117 Ind. 97; 19 N. E. Rod. 722. § 447 AGENTS OP INSURER POWERS. 570 society's employ for years, and his acts have been sanctioned by the company, where there is nothing in the act of incorporation to restrict the company to written contracts, and in such case the agent may by his representations continue the policy in force for another year. 240 Where the evidence does not show that there was any distinction made in granting extensions for the payment of premiums before or after maturity of the notes, and the practice of the agent has been to make extensions for such payment, the fact that it was granted after maturity of the note makes no difference, since it is binding in either case. 241 In such cases as the above the act is, as to the assured, the same as if the agent had a special permission or grant of authority from the company to so act, and the act has the same force as if executed under an original express authority. 242 In a recent case, which was an action to recover premiums paid on a policy of life insurance, it was held, on the question whether the defendant's agent was authorized to allow a rebate of pre- miums, that evidence was admissible that the agent had made contraotswith other policyholders, and that the company had ac- cepted their contracts for such rebate and recognized the agent's authority to make them. But there is no recognition of such au- thority where it appears that the company had repudiated the agent's contracts, so far as the rebate of premium was concerned, and a settlement had been made with the policy holders after suit brought on the basis of the risk incurred by the company during the continuance of their policies, but an acceptance of the premium thereafter from the defendant, less the rebate, is a ratification of the agent's acts. But evidence is inadmis- sible that a year after plaintiff's contract the agent made agree- ments for rebate with other policy holders in a distant state, of which he had notified the office, but stating that the amount of rebate should be deducted from his commissions, and the com- 240 Zell v. Herman Farmers' Mut. Ins. Co., 75 Wis. 52; 44 N. W. Rep. 828. 241 insurance Oo. v. Norton, 90 U. S. 234. 242 See Wyman v. Phoenix Mut. Ins. Co., 119 N. Y. 274; 45 Hun (N. Y.), 184; 29 St. R. 507; 23 N. E. Rep. 907; Brockelbank v. Sugrue, 5 Car. & P. 21; 1 Wuod & Rob. 102; 1 Bajrn. & AdoL SI. 571 AGENTS OF INSURER POWERS. §§ 448-450 pany indorsed its approval on the letter written by the agent to it stating these facts. 243 § 448. Agency — Custom — Alteration of Contract. — An agent's authority to modify or alter a policy by an oral or written agreement may be inferred from a course of dealing- acquiesced in by the principal. 244 This is illustrated by a case decided by Lord Tenterden, where it was held that the agent had authority to indorse over his signature a memorandum on the policy, permitting a change of voyage, where he was in the habit of so acting and notifying the company thereof. This case further holds that it was unnecessary for the plaintiff to produce the other policies on which similar memorandums had been so indorsed and signed. 245 But in such case the evi- dence must show, in order to bind the principal, at least several cases in which the agent, without asking the sanction of his acts bv the principal, had made alterations of a like nature, on which the principal had acted, and in which he had acquiesced when such alterations came to his knowledge ; or it must tend to prove that although communicated by the agent, they were acquiesced in as acts which he was competent to perform, and as binding on his principal; or that he was held out to the pub- lic as authorized to do such acts. 246 § 449. Agency — Custom, etc. — Submission to Award. The previous acts of an agent may be such as to raise an impli- cation of authority to submit to an award. 247 § 450. Agency — Custom — Proofs of Loss. — Where a local agent has been permitted on prior occasions to receive 243 Thompson v. New York L. Ins. Co., 21 Or. 466; 2S Pac. Rep. 023. 244 See Day v. Mechanics' & Traders' Ins. Co., 88 Mo. 325; 57 Am. Rep. 41G. 245 Brockelbank v. Susrrue, 5 Car. & P. 21. See Bunten v. Orient etc. Ins. Co., 4 Bosw. 254. 246 Bunten v. Orient etc. Ins. Co., 4 Bosw. (N. Y.) 254. See Peck v. New London etc. Ins. Co., 22 Conn. 575; Clevenger v. Mutual L. Ins. Co., 2 Dak. 114. See Fayles v. National Ins. Co., 49 Mo. 380. 247 Goodson v. Brooke, 4 Camp. 1G3. §§ 451-454 AGENTS OF INSURER — POWERS. 572 proofs of loss for the purpose of furnishing the particular state- ment required, he may by his statements waive a delay in fur- nishing such proofs, although a provision of the policy requires a waiver to be in writing, signed by an officer of the company. 248 § 451. Agency — Custom, etc. — Surrender of Policy. — An agent may accept a surrender of a policy where he has been accustomed to do so with the consent of the company, and such surrender is in effect a cancellation of the policy, even though the agent fails to forward it to the company as he was bound to do. 249 § 452. Agency — Custom — Transfer of Insurance. — A transfer of an insurance from one company to another, made by an agent in accordance with a custom of insurance brokers of that place, may bind the company in which it is placed where the agent represents both companies and acted in good faith, one company having refused to carry the risk. 200 § 453. Agency — Custom, etc. — Negotiation of Drafts. Where the general agent is authorized to settle claims and is in the habit of drawing drafts on the company for the same, evidence that the company has honored such drafts is admissible in an action on one of them. 251 § 454. Agency — Custom, etc. — Cancellation of Policy. Evidence is inadmissible to show a local custom of insurance agents to cancel their policies after their agency had expired, since such custom is unreasonable and void, and tends to sub- vert the principles underlying the relations of principal and agent; 252 nor is it competent to prove a custom that notice to the broker operates to cancel a policy. 253 248 Allen v. Farmers' etc. Ins. Co., 6 Thomp. & C. (N. Y.) 591. 249 Train v. Holland Purchase Ins. Co., 68 N. Y. 208. 250 Connecticut F. Ins. Co. v. Kavanagh (Mont. L. Rep.), 5 Sup. Ct. 262. 251 Faylea v. National Ins. Co., 49 Mo. 380. 252 Merchants' Ins. Co. v. Prince, 50 Minn. 53; 52 N. W. Rep. 131. 253 Grace v. American Cent. Ins. Co., 109 U. S. 278. See Frank- lin Ins. Co. v. Sears, 21 Fed. Rep. 290. 573 AGENTS OF INSURER — POWERS. §§ 455, 456 § 455. Ratification of Agent's Acts — Generally. — It is a principle which may be universally applied to the law of agency that a principal may ratify the unauthorized acts of his agent. Such ratification may be express or implied. It rests, however, upon knowledge of the facts by the principal, for the latter must be cognizant of what has been done, or must have intentionally accepted the benefit without inquiry. Xo rati-. fication can be implied of an act of which the principal was ig- norant at the time of the claimed ratification, or where ratifi- cation was made under a misapprehension of the full scope of the act. 2 ° 4 But it is another general principle that a ratifica- tion affords presumptive evidence of everything necessary to sustain it. It supposes a knowledge of the thing ratified, and, in case of a contract, the inference from the ratification is that its terms were known, and to rebut this inference evidence of a mistake or misapprehension is required. 2oa If the authority of an agent arises by inference from the adoption or recog- nition of his acts, the company is bound by such acts. 256 § 456. Ratification of Agent's Acts Operates Retro- actively. — The ratification or adoption of an agent's acts operates retroactively, and relates back to the original trans- action, and has the same force and effect as if done under 254 Wells v. Hickox, 1 Kan. App. 490; 40 Pac. Rep. 821; Miller v. Board of Education. 44 Cal. 166; Dean v. Bassett, 57 Cal. 640; Terry v. Providence Fund Soc, 13 Ind. App. 1; 41 N. E. Rep. 18; Hughes v. Insurance Co., 40 Neb. 626; Jewell Nursery Co. v. State, 5 S. Dak. 623; 59 N. W. Rep. 1025; iEtna Ins. Co. v. Northwestern Iron Co., 21 Wis. 458; Zoebisich v. Rauch, 133 Pa, St. 532. See Spooner v. Thomp- son, 48 Vt. 259; Holm v. Bennett, 43 Neb. 80S; 62 N. W. Rep. 194; notes. 22 Am. St. Rep. 190; 5 Am. St. Rep. 109; 79 Am. Dec. 387; 27 Am. Dec. 343. 255 Blen v. Bear River etc. Co., 20 Cal. 602. 256 Mowry v. World Mut. L. Ins. Co., 74 N. Y. 360; Terry v. Provi- dence Fund Ins. Co., 13 Ind. App. 1; 41 N. E. Rep. 18. See Illinois P. Ins. Co. v. Stanton, 57 111. 354; Burlington Ins. Co. v. Threlkeld, 60 Ark. 539; Warren v. Ocean Ins. Co., 16 Me. 439; 33 Am. Dec. 674; Farmers' Mut. Ins. Co. v. Taylor, 73 Pa. St. 342; Franklin v. Globe Mut. L. Ins. Co., 52 Mo. 461; Goldbeck v. Kensington Nat. Bank, 147 Pa. St. 267. §§ 457, 458 AGENTS OF INSURER — POWERS. 574 an original authorization, except perhaps where the rights of strangers may be prejudiced. 207 § 457. Ratification of Agent's Acts Must be Entire. The ratification must be entire; therefore, a ratification of part ratifies the whole, for a part cannot be rejected, as to the same transaction, and a part ratified. 258 § 458. Ratification of Agent's Act Must be One Which Principal could have Authorized. — Ratification must be of an act which the principal could himself have author- ized. 259 So an agent may bind the company by a ratifi- cation of another's act where such ratification is within the scope of the agent's authority; 200 and the acts of a mere stranger in procuring insurance may be ratified by the general agent by receiving the premium from him, and giving him the policy to deliver, and the company is bound by the policy thus effected, 261 although a vote to allow losses which is passed at a meeting of directors of an insurance company where there was not a quorum present, may be ratified by a subsequent valid vote to make an assessment to pay such losses, 262 and where the act is one in disregard of formalities prescribed by 257 Hughes v. Insurance Co. of North America, 40 Neb. 626; Lowry v. Harris, 12 Minn. 255; Fleckner v. United States Bank, 8 Wheat. 363, per Story, J.; Excelsior F. Ins. Co. v. Royal Ins. Co., 55 N. Y. 343- Heermans v. Clarkson, 64 N. Y. 171; Clement v. Jones, 12 Mass. GO; Mechem on Agency, ed. 1889, sec. 1G7; 1 Chitty on Contracts, 11th ed., 290, et seq.; Augell & Ames on Corporations, 9th ed., sec. 304. 25S Rogers v. Empkie Hardware Co., 24 Neb. 653; 39 N. W. Rep. 844; Farmers' Loan & Trust Co. v. Walworth, 1 N. Y. (1 Comst.) 433; Southern Express Co. v. Palmer, 48 Ga. S5; Benedict v. Smith, 10 Paige (N. Y.), 127; Wells v. Hickox, 1 Kan. App. 485; 40 Pac. Rep. 82lTwinpenny v. French, 18 Ohio St. 469; Rolling Stock Co. v. Rail- road, 34 Ohio St. 450, 463; Mechem on Agency, ed. 1SS9, sec. 130. But see Miller v. Board of Education, 44 Cal. 166. 259 O'Connor v. Arnold, 53 Ind. 205; Swett v. Relief Soc, 78 Me. 545; Mechem on Agency, ed. 1SS9, sec. 126; citing Zottman v. San Francisco, 20 Cal. 96; 81 Am. Dec. 96, and other cases. 200 Mound City Mut. L. Ins. Co. v. Huth, 49 Ala. 530. 2Gi Camden C. Oil Co. v. Ohio Ins. Co., 5 Cin. L. Bull. 193. 262 Atlantic Ins. Co. v. Sanders, 36 N. H. 252; contra, Price v. Grand Rapids R. R. Co., 13 Ind. 58. 575 AGENTS OF INSURER — POWERS. §§ 459, 460 the charter, and the benefits have been derived from the sub- ject matter of the contract, there is every reasonable presump- tion in favor of validity of the contract. 263 § 459. Ratification of Agent's Acts — Signing- for Principal. — The company ratifies an agent's assumed au- thority where the latter signs an application as agent, and the former, on receipt thereof, indorses his name on the policy is- sued thereon. 204 So if an agent signs an approval of an assign- ment ''for secretary," and immediately reports the same to the company, it vail operate as the act of the secretary, 265 and where a subagent signs a policy for the agent, who thereafter takes the policy, redelivers it, and receives the premium with full knowledge of the fact, it is a ratification of the subagent's assumed authority. 266 § 460. Ratification of Agent's Acts — The Premium. A waiver by an agent of nonpayment of the premium on the specified date is ratified by the acceptance thereafter by the company, from its agents, of such payments without making objection to the assured, notwithstanding the policy provides that agents cannot waive such nonpayment, 267 and the com- pany is bound by the act of its agent in extending the time for the payment of premiums where it has been accustomed to ratify such act by accepting the premiums. 268 The company may likewise ratify the agent's acts in receiving overdue pre- miums by such acceptance or retention of the premium. 269 263 In re Post of London Assur. Co., 5 De G., M. & G. 465; Wal- ter's case, 3 De G. & S. 149. That their principal's conduct should be liberally construed in favor of ratification, see Wilson v. Forder, 20 Ohio St. 97; citing Story on Agency, sec. 293. 2G4 Packard v. Dorchester Mut. F. Ins. Co., 77 Me. 144; 1 East. Rep. 138. See Dunn v. Grand Trunk Ry., 58 Me. 1S7; 4 Am. Rep. 207. 265 Farmers' Mut. Ins. Co. v. Taylor, 73 Pa. St. 343. 2fi6 Grady v. American Cent. Ins. Co., GO Mo. 116. 2r.T National L. Ins. Co. v. Tullidge, 39 Ohio St. 240. 2«3 Wyman v. Phoenix etc. Ins. Co., 119 N. Y. 274; 45 Hun (N. Y.), 184; 23 N. E. Rep. 907. 2G9 Mutual B. L. Ins. Co. v. Robertson, 59 111. 123; 14 Am. Rep. 8; § 461 AGENTS OF INSURER — POWERS. 576 And there is a ratification of the agent's acts in accepting a promissory note for the premium where the company accepts proofs of death, and transmits a draft in payment of the loss which is diverted by the agent's fraud. 270 But an agent can- not ratify a void contract by receiving the premium, 271 and the company does not, by receiving the money from an agent with- out knowledge of the facts, ratify his acts in accepting the un- paid part of a premium after death of the insured, the policy having been forfeited. 272 § 461. Ratification of Agent's Acts — Retaining Benefits. — A ratification of an agent's acts may be inferred from the act of the principal in accepting and retaining the benefits arising therefrom, with knowledge thereof, 273 and a foreign company, by availing itself of the benefits of acts of persons acting for them, is bound thereby. 274 So an inference of ratification may arise where the principal's acts and conduct are inconsistent with any other hypothesis. 275 So where the company receives and retains the premium received from the general agent, it is estopped to set up its rules forbidding in- suring that class of persons to which the assured belongs. 276 In Northwestern Iron Co. v. JEtna, Ins. Co., 2G Wis. 78. See Zell v. Her- man Farmers' Mut. Ins. Co., 75 Wis. 521; 44 N. W. Rep. 828; Tennant v. Travelers' Ins. Co., 31 Fed. Rep. 322. 270 New York L. Ins. Co. v. McGowan, 18 Kan. 300. 271 Swett v. Citizens' Mut. Relief Soc, 78 Me. 541, 545, per Lib- bey, J. 272 Union Mut. L. Ins. Co. v. McMillen, 24 Ohio St. 67. 273 Roilgers v. Empkie Hardware Co., 24 Neb. 655, per Maxwell, J.; 39 N. W. Rep. 844; Rich v. State National Bank, 7 Neb. 201; 29 Am. Rep. 385, 3S6; Ely v. James, 123 Mass. 36; Wilson v. Forder, 20 Ohio St. 97, per White, J. See Haar v. Industrial B. Assn., 71 Hun (N. Y.), 554; 54 St, R. 890; 24 N. Y. Supp. 1035; Fitch v. Lewiston Steam Mill Co., 80 Me. 34, 36, 37: 12 Atl. Rep. 732; National L. Ins. Co. v. Minch, 5 Thomp. & C. 545; 53 N. Y. 144; Tuscaloosa Cotton Seed Oil Co. v. Perry, 85 Ala. 158; 4 S. Rep. 055. But see Woodruff v. Roches- ter etc. Co.. 108 N. Y. 30: 14 N. E. Rep. 832; Boyntou v. Lynn Gas. Light Co., 124 Mass. 197. 274 Continental Ins. Co. v. Buckman, 127 111. 364. 275 Maddox v. Bevan, 39 Md. 485. See Ketehum v. Verdell, 42 Ga. 534. 276 Esch v. Home Ins. Co., 78 Iowa, 334; 43 N. W. Rep. 229. 577 AGENTS OF INSURER — POWERS. 3 462 another case A made a written application, which the agent, without the knowledge of A, copied into the blanks of another company for which he was also agent. The .company issued a policy and received several premiums thereon. In an action on the policy, it was held that the company was estopped to set up that the application was not made or signed by A. 2 ' 7 And a society was held bound by an agent's acts in a case where an ap- plicant was within two months of the age required by the by- laws of a mutual benefit society, and the agent told him he was near enough, and that it would make no difference, in conse- quence of which he paid the admission fee and two advance assessments, which the association retained after suit was brought. 2 ' 8 So where a policy is issued upon an unoccupied house, and the agent knows such fact and receives an extra premium, usual in such risks, which premium the company ac- cepts and does not offer to return, there is a waiver of a condi- tion requiring written consent of the company, although the policy provides that no agent may waive the conditions of the policy. 2 ' 9 But the receipt and retention of the money by the company does not operate as a ratification of the agent's acts in receiving an overdue premium and reviving the policy, where there is no proof that the company had knowledge of the facts. 280 § 462. Ratification of Agent's Acts — Neglect to Dis- affirm. — A ratification may also be implied from the neglect of the company to promptly repudiate the agent's acts done within the scope of his authority even though the policy prohibits the doing of such acts by the agent, 281 for it is incum- 2"7 Bohnriger v. Empire Mut. L. Ins. Co., 2 Thornp. & C. (N. Y.) 610. 278 Gray v. National B. Assn., Ill Ind. 531; 11 N. E. Rep. 477. The statute, however (Rev. Stat. Ind. 1881, sec. 3727), in this case gave the society power to insure the life of any person without regard to age. 270 Haight v. Continental Ins. Co., 92 N. Y. 51. 2S0" Busby v. North American L. Ins. Co., 40 Md. 572; 17 Am. Rep. 624. 2?i Niagara Ins. Co. v. Lee, 73 Tex. 041. 040; 11 S. W. Rep. 1024. relying upon Morrison v. Insurance Co., GO Tex. 3G3. Joyce, Vol. I.— 37 § 462 AGENTS OF INSURER — POWERS. 578 bent upon the principal to disaffirm an agent's acts or dissent upon receiving notice thereof, otherwise he will be bound thereby. 282 So where the policy does not require the payment of the premium in money, and the agent accepts, in lieu of money, the promise of the broker to whom the insured had paid the premium, the silence of the company, after knowledge of the fact, will constitute a ratification of the agent's act, and the company cannot cancel the policy without repaying the assured the premium. 283 And if the agent of the insurers makes an adjustment of a loss, they are bound thereby where 1 they ex- amine it and do not dissent. 284 An insurance company may, by its failure to object to delays in proofs of death, ratify the acts of its agent, who assumes to represent the company in re- ceiving such proofs and in granting delays, in furnishing the same, although the policy requires that notice shall be given the home office. 285 So the company is bound where its agent receives proofs of loss which are furnished too late and are for- mally inaccurate, where he forwards the same to the company, which does not object, but permits the agent to repair another building covered by the same policy, and allows the amount of his expenditures thereon. 286 But it is held that the company is not estopped where the written notice of loss given after the expiration of the time limited stated that the insured had given oral notice of loss to the agent, although the company does not object at the time. 287 Where an agent indorsed a consent to an assignment upon a policy after its forfeiture therefor, and with full knowledge of the facts,' and reported it to the com- pany, which made no objection, as was its custom when the agent's acts were disapproved, the company was held bound by 2S2 See Bennett v. Maryland F. Ins. Co., 14 Blatchf. (C. C.) 422; 17 Allb. L. J. 363; Gaines v. Bleeeker, 12 Johns. (N. Y.) 300; Siaveland v. Green, 40 Wis. 431; Armstrong v. Gilchrist, 2 Johns. Cas. (N. Y.) 424; Hawkins v. Lance, 22 Minn. 557; Fonn v. Evans, 28 La. Ann. 57G. 283 Bennett v. Maryland F. Ins. Co., 14 Blatchf. (C. C.) 422. 284 Bordes v. Ilallett, 1 Caines (N. Y.), 444 b. 2S5 Travelers' Ins. Co. v. Edwards, 122 U. S. 457. 286 Hibemia Ins. Co. v. O'Connor. 20 Mich. 241. 287 Connell v. Milwaukee etc. Ins. Co., 18 Wis. 387. 579 AGENTS OF INSURER — rOWKRS. § 4G3 such waiver by its agent. 288 In some of the ca-es of agency a dis- tinction is made between transactions in progress and those com- pleted in determining how far silence or neglect to dissent oper- ates as a ratification, it being held in the former case that the principal must dissent within a reasonable time after notice, and in the latter, that although silence may afford an inference of ratification, no estoppel can arise against the principal. 289 So in cases where a party acts for another and no relation of principal and agent exists between them, the failure of the in- tended principal to dissent, upon receiving notice of the as- sumed agent's acts will often operate to effect an adoption of such acts and establish by ratification the relation of principal and agent. 290 § 463. Ratification — Agent Must have Assumed to Act for Claimed Principal. — Although an insurance company may ratify the unauthorized act of a party who professes to act as its agent in procuring insurance, 291 it is a general rule that the agent must have assumed to act in behalf of the person who is claimed to have ratified. 292 Mr. Evans says: "That no con- tract is valid unless there are parties existing at the time who are capable of contracting, is an elementary principle of the law of contracts. 293 To this principle the rule which makes the validity of a ratification depend upon the existence of the person who ratifies appears manifestly to be a corollary." 294 288 Imperial F. Ins. Co. v. Dunham, 117 Pa. St. 464, 472; 12 Atl. Rep. 668. 2S9 See Union Gold Mining Co. v. Rocky Mountain Nat. Bank, 2 Col. 248, 565; 96 TJ. S. (6 Otto) 640; Meyer v. Morgan, 51 Miss. 21; 24 Am. Rep. 617; Hawkins v. Lange, 22 Minn. 557. As to ratification of unauthorized acts by silence, see note 79 Am. Dec. 387-89. 290 See Story on Agency, sec. 258. See discussion of this point, 2 , Duer on Insurance, ed. 1846, 178, et seq. 29i Farmers' Mut. Ins. Co. v. Marshall, 29 Vt. 23. 292 Mitchell v. Minnesota F. Assn., 48 Minn. 278; 51 N. W. Rep. R08; Roby v. Cassett, 78 111. 638, 642; Commercial Bank v. Jones, IS Tex. 811; Condit v. Baldwin, 21 N. Y. 219, 225; 7S Am. Dec. 137;*A11- dred v. Bray, 41 Mo. 4S4. 293 See Guim v. London & Lancashire F. Ins. Co., 12 Com. B., N. S., 694. 294 Ewell's Evans on Agency, 75. See, also, Id. 72, et seq. § 464 AGENTS OF INSURER — POWERS. 580 And where the party, during the act for which a ratification is claimed, neither has, nor professes to have, authority to rep- resent the party sought to be charged, no ratification can be implied from the latter's subsequent assent. 295 So the court, per Collins, J., says in a Minnesota case: "But the law is, that where the party acting has no authority to act for the third party, and does not profess at the time to act for him, the sub- sequent assent of such third party to be bound as a principal has no operation, and ratification is only effectual when the act is done by a person professedly acting as the agent of the party sought to be charged as principal." § 464. Ratification of Agent's Acts — Other Insur- ance. — A company may be bound by the acts of its agent in waiving a condition providing against other insurance, where it acquiesces in such acts with full knowledge thereof, even though the policy provides that the agent has no power to bind the company in violation of the printed terms of the policy. Thus the principal was held where the general agent knew of other insurance, and promised to make the proper indorsement of the same, and just before loss arranged for renewal of the policy at its expiration, and made a memorandum thereof, al- though he never made the indorsement. 297 So the company is bound by acts of its local agent, done within the scope of his authority, where he expressly agrees with the insured to ob- tain, and does obtain, additional insurance, after which, with a full knowledge of the facts, the company receives the pre- mium, notwithstanding a condition in the policy that it shall be void in case additional insurance is obtained without notice thereof to the company, and an acknowledgment thereof in writing. In such case there is a waiver of the condition. 298 205 Mitchell v. Minnesota F. Assn., 48 Minn. 278; 51 N. W. Rep. 60S. '296 Id. 284. 207 Morrisson v. Insurance Co. of North America, 00 Tex. 353. 208 Horwltz v. Equitable Mut. Ins. Co., 40 Mo. 557; 03 Am. Dec. 321 (local agent). 581 AGENTS OF INSURER— POWERS. § 465 § 465. Power to Bind Insurance Company by Con- tracts Other than Those of Insurance. — It is held in a New York case decided under an act of incorporation of an insur- ance and loan company, that a purchase by an agent is a pur- chase by the company employing him. 299 But it is declared elsewhere that a general district agent for a stated territory, with authority to solicit and forward applications, and who is to receiye a stated compensation, has no implied authority to bind the company by a purchase of furniture for his office, as such an act is without the scope of his employment, even though he advertises his agency as a branch office, it not ap- pearing that the company had knowledge of such fact. 300 l^or can an agent appointed in another city bind the company for the rent of an office where he receives commissions in payment for his services and the agency is revocable at pleasure; 301 nor has a general agent, as such, any power to bind the company by representations respecting the purchase of the goodwill of a local agency and the right of the vendee to sell the same there- after. 302 And a local agent, who has authority to receive pro- posals for insurance, to countersign and renew policies, and re- ceive premiums, has no authority to draw and negotiate a draft drawn in full settlement of a claim under the policy, notwith- standing the company's secretary authorized the agent by letter to "make draft to the order of the court, for the benefit of whom it may concern," for the sum due. This was so held in an action by the person who cashed the draft where the agent had absconded with the money. 303 J^or has an agent any im- plied power to institute criminal proceedings so as to bind the company, although in matters relating to the ascertainment of 209 Farmers' F. Ins. Co. v. Edwards, 26 Wend. (N. Y.) 541; 21 Wend. (N. Y.) 467 (the clause was, "In all cases where the said cor- porations have become the purchasers of any real estate upon which they have made loans," etc.). soo Beebe v. Equitable Mut. L. & E. Assn., 76 Iowa, 129; 40 N. W. Rep. 122. 301 Brander v. Columbia Ins. Co., 2 Grant (Pa.), 470. 302 Barber v. Connecticut Mut. L. Ins. Co., 15 Fed. Rep. 312. 303 Commercial Assur. Co. v. Rector, 55 Ark. 630; 17 S. W. Rep. 878. § 465 AGENTS OF INSURER — POWERS. 582 the cause of a loss under a policy lie may have authority to em- ploy a detective, as the insurer in such case may have a private interest to subserve, distinct from that of the public at large. 304 Where a party applies for a renewal of a loan and the local agent of a foreign company says that he will communicate with the home office, and thereafter grants the application, the ap- plicant is justified in assuming that the agent had authority to so act. 305 304 Norman v. Insurance Co. (C. Ot 111.), 4 Ins. L. J. 827. 305 Union Mut. L. Ins. Co. v. Slee, 110 111. 35. CHAPTER XIX. AGENT OF INSURER-POWERS PRIOR TO ISSUE OF POLICY. § 472. Powers of agent concerning the application— Misrepresenta- tions. § 473. Misrepresentations of agent— Continued. § 474. Misrepresentations by agent in application: Statements made warranties. § 475. Where true answers are given but agent inserts different ones iin application. § 476. Same subject: Cases. § 477. Where answers are unintentionally incorrect: Agent's knowl- edge. § 478. False answers by clerk of agent. § 479. Misrepresentations: Application signed by agent without ap- plicant's authority. § 480. Where agent agrees to note facts in application. § 481. Omission or negligence of agent in filling out application. § 482. View that not question of waiver" and estoppel, but whether condition attached. § 483. Mistake of agent in filling out application. § 4S4. Misrepresentations by agent with full knowledge of facts. § 485. Misrepresentations by agent: Applicant signs in blank. § 486. Misrepresentations by agent: Application sent unsigned to company. § 487. Where agent fills out application without inquiry; or of his own knowledge. § 488. Where applicant has no knowledge of facts and agent fills out application. § 489. Misrepresentations by agent: Where applicant signs appli- cation without reading or knowing contents. § 490. Misrepresentations by agent: Where applicant is illiterate. § 491. Fraud of agent in preparing application. § 492. Agent's knowledge of falsity or incorrectness of applicant's statements. § 493. Where applicant is assured by agent that application is cor- rect. § 494. Misrepresentations by agent: Insured may rescind. § 495. Broker's misrepresentations: Application. § 496. Oral application: Agent's knowledge. (.5-3 J § 472 AGENTS OF INSURER — POWERS. 584 § 497. Information obtained from others by agent: Application. § 498. Where agent writes down such answers as he deems material: Application. § 499. Where agent dictates or advises the answers: Application. § 500. Where agent tells assured no answers are necessary. § 501. Policy issued on agent's representations or recommendation. § 502. Where application gives notice of agent's limited authority. § 503. Misrepresentations by agent: Copy of application or by-laws annexed. § 504. Misrepresentation: Agent's collusion with applicant. § 505. Misrepresentation by agents: Parol evidence admissible. § 506. Same subject: The opposing view. § 507, Same subject: When agent's authority is limited. § 508. Agents of insured: When this provision in the policy inoper- ative. § 509. Same subject: Mutual companies and benefit societies. § 510. Authority of subordinate officers of benefit association to waive requirements as to application. § 511. Agents of insured: Knowledge of insured. § 512. 'Statutes: Soliciting agent is company's agent. § 513. Cases holding that agent is agent of insured. § 514. Misrepresentations of insurer's agent to induce insurance. § 515. Notice to and knowledge of agent generally. § 51G. Presumption as to agent's knowledge. § 517. Reformation of policy to conform with actual contract. § 472. Powers of Agent Concerning 1 the Application — Misrepresentations. — Where an agent acting within the scope of his authority fills out an application for a policy, his acts and representations are those of the company, and if in such case the agent, by reason of mistake, neglect, omission, fraud, or otherwise, inserts erroneous answers in such applica- tion, such misrepresentations are not binding upon the assured, unless he has knowledge thereof or there has been fraud or fault on his part, or collusion with the agent. And knowledge by him that the answers are incorrect does not always vitiate the contract, as in case he has been advised that the answers in question were the proper ones to make. The cases are very numerous and the question has been much discussed, but the weight of authority supports the rule above given. This rule is founded upon legal, as well as equitable, grounds. The agents represent and act for the company. It is a fair pre- sumption that they have a more intimate knowledge of the 585 AGENTS OF INSURER — POWERS. § 472 business of insurance than those with wmom they deal; that they understand the requirements of the company, and are competent to properly and legally fill out applications and such other papers as they are intrusted with by the company; that they are familiar with the details that should be set forth in the application. These are matters with which the general public are not as a rule familiar, and in most cases are entirely ignorant of. They rely, and have a right to rely, upon the agents as possessing the requisite skill and knowledge in such matters, and as possessing the authority which they assume to possess, and the exercise of which the company itself sanctions. It sends its agents abroad to solicit insurance, and holds them out to the public as possessing authority to represent them in soliciting insurance and in the matter of the application. Again, the forms and requirements of different companies are different. When, therefore, an agent, duly authorized to act for the company in soliciting insurance, assumes to know what information the principal possesses, and with knowledge of the facts draws what he asserts to be, or leads the applicant to believe, is the proper form of an application, the applicant has a right to rely upon his skill and knowledge, upon his presumed duty to his principal, upon his honesty, and to believe that the paper which he is induced to sign is legally and correctly drawn. Such applicant is further warranted in his belief by the fact that the principal for whom the agent acts accepts such paper and forwards a contract based thereon, which purports to give him the indemnity which the agent has induced him to apply for and obtain, and for which the company receives and retains the premium. To hold that after the property is destroyed the company could repudiate such contract on the ground of its agent's unskillfulness, mistake, carelessness, or fraud, would be unjust to the assured. 1 And the decisions up- i jEtna Ins. Co. v. Olmstead, 21 Mich. 240; 4 Am. Rep. 483. per Cooley, J.; Continental Ins. Co. v. Chew (Ind. A. C. 1S94). 38 N. E. Rep. 417; Campbell v. Merchants' etc. Ins. Co., 37 N. H. 35; 72 Am. Dec. 324,' per Eastman J.; Home Fire Ins. Co. v. Fallon (Neb. 1895), 03 N W. Rep. 860; 24 Ins. L. J. 690; Miller v. Phcenix Mut. Fife Ins. Co. 107 N. Y. 290, per Ruger, C. J.; Kausal v. Minnesota Farmers' Mut. F. Ins. Assn., 31 Minn. 17, per Mitchell, J.; 47 Am. Rep. 776; § 472 AGENTS OF INSURER — POWERS. 586 holding this doctrine may rest either upon waiver or estoppel. 2 In a New York case 3 the policy contained this condition: "Any interest in property insured not absolute 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 com- pany and expressed in this policy in writing, otherwise the insurance shall be void." Part of the insured property was on leased ground, and the insurance agent was told of that fact, but it was not expressed in the policy in writing. The defend- ant company claimed that thereby the insurance was void. The court, in a well-considered opinion, says: " 'We cannot sup- pose that either plaintiff or defendant would do the utterly absurd thing of making, with deliberation and knowledge, a contract that was void from inception, and was in contradic- tion 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. 4 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 premium accepted by them without insisting upon the fact and the condition. He makes that action of the company with that knowledge his reply to their defense, based on that condition and its breach. .... 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 by Whitney v. Nat. Masonic Ace. Assn. (Minn. 1894), 59 N. W. Rep. 943; Union Mut. Ins. Co. v. Wilkinson, 13 Wall. (U. S.) 222. per Miller, J. This last case is criticised in Franklin F. Tns. Co. v. Martin, 40 N. J. L. 508: 11 Vroom, 508; 29 Am. Rep. 271; Molure v. Pennsylvania F. Ins. Co., 5 Rawle (Pa.), 342; 28 Am. Dec. 075; Home Friendly Soc. v. Berry (Ga. 1S95), 21 S. E. Rep. 583; New Jersey Mut. Life Ins. Co. v. Baker, 94 IJ. S. 010, per Hunt, J. And see, also cases cited in the sections next following. 2 Lasher v. Northwestern Nat. Ins. Co., 55 How Pr. (N. Y.) 324; Mowry v. Rosendate, 74 N. Y. 300. 3 Van Schoick v. Niagara Fire Ins. Co., 08 N. Y. 434, per Folger, J. (Court stood four to throe.) 4 Cone v. Niagara F. Ins. Co., 00 N. Y. G19. 587 AGENTS OF INSURER — POWERS. § 472 both sides to the contract before it is delivered may, by force of some condition crouched unseen in the jungle of printed matter with which a modern policy is overgrown, make a defense for the company 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 harmony in regard to it. There are cases which hold that where an application is made a part of the policy by 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. 5 There are others where the fact fell within the condemnation of some condition in the policy; yet as the fact, as it existed, was known to the company, it w r as held to be estopped from the setting up the condition as against a recovery. 6 There are others in which there was a suit in equity seeking a reformation of the con- tract, and it was held that the facts showed unmistakably that the parties never meant to enter into a contract with such a condition or description in it as was set up against a recovery. 7 .... It has also been held that a warranty, part of the printed matter of the policy has been dispensed with by the oral agree- ment of the parties made before the delivery of the policy. 8 On the other hand, in an action at law it has been held, 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 exchanging a contract such as was requested and as agreed with the facts in the situ- ation of the policy; 9 and so it has been held that parol proof c Bowley v. The Empire Ins. Co., 3 Keyes (N. Y.), 557; Plumb v. Cattaraugus Ins. Co.. 18 N. Y. 392; 72 Am. Dee. 526; Ames v. New York Ins. Co., 14 N. Y. 253. c Ames v. New York Inis. Co., 14 N. Y. 253; Bidwell v. N. W. Ins. Co., 24 N. Y. 302; Bodine v. Exchange Ins. Co., 51 N. Y. 117; 10 Am. Rep. 566. 7 Cone v. Niagara Ins. Co., 60 N. Y. 619; Maher v. Hibernia Ins. Co., 67 N. Y. 283. s McCall v. Sun Mut. Ins. Co., 60 N. Y. 505. 8 Pindar v. Resolute Ins. Co., 47 N. Y. 114. See also, Rohrback V. Germania Ins. Co., 62 N. Y. 47; 20 Am. Rep. 451. § 472 AGENTS OF INSURER — POWERS. 588 is not admissible to show that both parties knew that a state- ment in an application for a policy was not true. 10 .... 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 any liability on the part of the defend- ant. Yet there is no doubt, too, that a condition in a policy may be waived by the insurer, or, as some cases put it, he be estopped from setting it up, and that such a result may be worked by parol or by act without words 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 believe, and such imputation can be avoided only by supposing that it had overlooked this condition, and so for- gotten to express the fact as to the building in writing upon the policy; or that it waived the condition or held itself estopped from setting it up 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. ... It is difficult to make all the cases upon this subject harmonize; but by the force of authority we are con- strained to hold that such a condition 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 fraudu- lent purpose, and as will estop him from setting up the con- dition against the insured." n In a Wisconsin case 12 the agent was fully informed of the facts, but wrote down only such answers as he deemed necessary, and the court says: "The recent cases upon this subject fully sustain the position that upon this state of facts the company is responsible for the 10 Ripley v. JEtna Ins. Co., ?,0 N. Y. 136; 86 Am. Dee 302. n The court distinguishes this case from Pindar v. Resolute Ins. Co., 47 N. Y. 114, and from Ripley v. /Etna Ins. Co.. 30 N. Y. 13G; 80 Am. Dec. 3C2. 12 May v. Buckeye Ins. Co., 25 Wis. 291; 3 Am. Rep. 76. 589 AGENTS OF INSURER — POWERS. § 472 accuracy and omissions of its agent, even without any express undertaking to be so, and that it cannot avoid liability by reason of any discrepancy between the real facts disclosed to him and his presentation of them in the papers. The ten- dency of modern decisions lias been strongly to bold these companies to that degree of responsibility for the acts of the local agents which they scatter through the country that justice and the due protection of the people demand, without regard to private restrictions upon their authority." 13 It is also said in a case in the United States supreme court 14 that "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 advan- tage, which it would be against equity and good conscience for him to assert, he would not, in a court of justice, be per- mitted to avail himself of that advantage, and although the cases to which this principle is to be applied are not as well defined as could be wished, the general doctrine is well under- stood, and is applied by courts of law as well as equity where the technical advantage thus obtained is set up and relied on to defeat the ends of justice or establish a dishonest claim. .It has been applied to the precise class of cases of the one before us, in numerous well-considered judgments by the courts of this country. Indeed, the doctrine is so well understood and so often enforced that if in the transaction we are now consider- ing Ball, the insurance agent who made out the application, had been in fact the underwriter of the policy, no one could doubt its applicability to the present case." In New TIamp: shire the legislature has enacted that applications taken by the company's agents shall not be void by reason of any error, mistake, or misrepresentation, unless it shall appear to have been intentionally and fraudulently made. The act, however, 13 But see Dewees v. Manhattan Ins. Co. (G Vroom), 35 N. J. L. 36fi, and cases cited in following sections. 14 Union Mut. Ins. Co. v. Wilkinson, 13 Wall. (U. S.) 222, per Miller, J. § 473 AGENTS OF INSURER POWERS. 590 has been held not to apply to foreign corporations 15 and th* statute of Maine so provides. 10 But a distinction is made by the New York court of appeals between cases of the class under consideration and those where there is a question as to the subject of insurance. The case was this: A policy was issued upon a written application and survey made by the local agent, who signed the applicant's name thereto. The negotiations related to an insurance on a mill house, but the property was described as a tenant house. The agent's acts in making the application, survey, and representations, and in signing the policy, were done without the knowledge or authority of the assured. The agent's authority was to "make surveys and take applications for insurance." In an action on the policy it was held that the contract made related to an insurance upon a tenant house, and did not apply to the mill house, and that the contract could not be made to cover another subject matter by proof that the agent, by mistake, described the wrong prop- erty. The court said: "If the contract of insurance relates to one definite and distinct subject, it cannot be turned into a contract for the insurance of another and different subject, on proof that the agent of the company, by mistake, described the wrong property in his application." 17 § 473. Misrepresentations of Agent — Continued. — Rep- resentations made to an insurance company by their own agent as to the situation and nature of the interest of the assured are binding upon the company, nor can it avoid the policy on the ground that representations are erroneous, where there has been no fraud, fault, or collusion on the part of the assured. 18 15 Campbell v. Merchants' etc. Ins. Co., 37 N. H. 42; 72 Am. Dec. 324. 16 Stat. Me. 1861, c. 34, sec. 2; Caston v. Monmouth etc. Ins. Co., 54 Me. 170. 17 Landers v. Cooper, 115 N. Y. 279. is Atlantic Ins. Co. v. Wright, 22 111. 402; Western etc. Co. v. Rec- tor, 85 Ky. 294; Phoenix Ins. Co. v. Allen, 109 Ind. 273; Phoenix Ins. Co.' v. Stark, 120 Ind. 444; 22 N. E. Rep. 413; Dunbar v. Phoenix etc. Co.. 72 Wis. 492; Menk v. ITowe M. I. Co.. 76 Cal. 50; IS Pae. U«>]>. 17; Tonemink v. Metropolitan L. Ins. Co., 72 Mich. 388; 40 N. W. Rep. 409. 591 AGENTS OF INSURER — POWERS. § 473 So in case of a misdescription as to the location of personal property by the agent of the company, without the applicant's knowledge, the fact may be alleged and proved, and the com- pany is estopped to avail itself of the error by way of defense, 19 and the representations made by the agent conclude the com- pany where he fills out the policy and presents it to the appli- cant for his signature without acquainting him with its contents. 20 So where an agent corrected an old application on the same property to accord with such changes as he supposed existed in the property, and forwarded such application instead of waiting to send one which contained the applicant's answers, it was held that the company was estopped from availing itself of misrepresentations as a ground of forfeiture, and that the agent was the company's agent. 21 It is held that if the contract contains a stipulation that statements made to or by an agent must be inserted in the contract to bind the company, it does not aid the assured that the agent who wrote the application misrepresented the interest. 22 The following is substantially the classification of cases where the doctrine of estoppel applies made by the court in a New York decision, and which ref ers to the acts of the agent prior to the comjDletion of the contract: 1. Misrepresentations by an agent as to some fact material to the risk, or made so by the terms of the contract contained in an application written by the agent in the name of the insured, without his authority, in which case recovery is not defeated; 23 2. Where the agent is authorized to fill out the application in the name of the insured, and by mistake or inadvertence misstates the information given by the insured, the company is bound; 24 in both the cases the fault is that of the company's 19 Phoenix Ins. Co. v. Allen, 109 Tnd. 273; 10 N. E. Rep. 85. 20 Dunbar v. Phoenix Ins. Co., 72 Wis. 492; 40 N. W. Rep. 386. 21 Wilson v. Conway Mut. F. Ins. Co., 4 R. I. 141. 22 Shoup v. Dwelling-House F. Ins. Co.. 51 Mo. App. 286. 23 Bennighoff v. Agricultural Ins. Co.. 93 N. Y. 490; Sprague v. Hol- land Purchase Ins. Co., 69 N. Y. 128; Vilas v. New York C. Ins. Co., 72 N. Y. 590; 28 Am. Rep. ISO; Ames v. New York Union Ins. Co., 14 N. Y. 253. 24 Rowley v. Empire Ins. Co., 36 N. Y. 550; Baker v. Home Life Ins. Co., 64 N. Y. 648; Grattan v. Metropolitan Life Ins. Co., 92 N. Y. 274; 44 Am. Rep. 372; Bennett v. Agricultural Ins. Co., 106 N. Y. 243. 474 AGENTS OF INSURER POWERS. 592. agent, and the company must sustain the loss, rather than the insured; 3. Where the authorized agent of the company has knowledge of the existence of a fact or situation which would render the contract void under its conditions if not represented to the company and indorsed on the policy, here the company is estopped from availing itself on noncompliance with the con- dition, on the ground of fraud or injustice ; 2u 4. Cases where the acts of the agent in filling up the application and signing the policy is not authorized by the insured, and where the sub- ject of insurance is clearly defined in the contract, and the unauthorized act of the agent does not relate merely to some incident of the risk, but to the subject matter itself, in which case the company is not bound. 26 § 474. Misrepresentations by Agent in the Applica- tion — Statements Made Warranties. — There are numerous decisions which hold that where an agent of the com- pany, without knowledge or fault of the applicant, makes false statements in the application or omits to state facts therein of which he has knowledge, the policy is not for- feited, even though it provides that the statements in the application shall be warranties; and in such cases the com- pany may not show a breach of warranty by proof of errors material to the risk in the application or the survey. 27 So it is held that misstatements in the application as to the dis- tance of buildings from the one insured made by the agent 25 Van Shoick v. Niagara F. Ins. Co., 68 N. Y. 434; Richmond v. same, 79 N. Y. 230; Short v. Home Ins. Co., 90 N. Y. 1G; 43 Am. Rep. 138. 26 Landers v. Cooper, 115 N. Y. 279, reversing supreme court. 27 Coombs v. Hannibal S. & I. Co., 43 Mo. 148; 97 Am. Dec. 3S3; Susquehanna Mutual F. Ins. Co. v. Cusick, 1UD Pa. St. 157; Reynolds v. Iowa N. Ins. Co., 80 Iowa, 563; 46 N. W. Rep. 659; Plumb v. Cat- taraugus etc. Ins. Co., 18 N. Y. 392; 72 Am. Dec. 526; Stone v. Hawk- eye Ins. Co., 68 Iowa, 737; 56 Am. Rep. 870; Dwelling-House Ins. Co. v. Brodie, 52 Ark. 11; 11 S. W. Rep. 1016; Continental Life Ius. Co. v. Pierce, .°>D Kan. 396; 18 Pae. Rep. l ; <»1 ; Western Assur. Co. v. Stoddard, 8S Ala. 600; 7 S. Rep. 379; Bennett v. Agricultural Ins. Co., 106 N. Y. 243; 12 X. E. Rep. 609; Lasher v. Nor) Invest, rn Nat. Ins. Co., 55 How. I'r. (N. Y.) 318: Mowry v. RosendaleJ 74 N. Y. 360; Germania L. Ins. Co. v. Lunkeii'heimer, 127 Ind. ."»:!(;; 26 N. E Rep. inxi> : Kister v. Le- banon Mut. Ins. Co., 128 Pa. St. 553; IS Atl. Rep. 447; 5 L. R. AnuoL 646; Texas Banking etc. Co. v. Stone, 49 Tex. 4. 593 AGENTS OF INSUREH — POWERS. § 475 shall be deemed expressions of opinion only where the agent knew all the facts as well as the assured, even though the policy provided that the statements in the application were war- ranties. 28 But it is held that where the application provides that the statements shall be warranties, that it is the applicant's statements, that the company will not be bound by any act or statement of the agent not contained in the application, and the agent inserts false statements as to the title, value, and encum- brances, the company is not responsible therefor, and it is incumbent upon the applicant to carefully examine the paper containing the statements before signing. 29 § 475. Where True Answers are Given but Agent Inserts Different Ones in Application. — Where the insured at the time of making the application, gives full, true, and cor- rect answers, relying upon the skill, honesty, and good faith of the company's agent to fill out the application correctly, and such agent makes out the application incorrectly or inserts answers different from those given or false answers, the com- pany cannot take advantage thereof, and where the applicant is ignorant of the discrepancy or wrongful act of the agent he may recover on the policy, 30 even though the agent in such case 28 TTiorrinis v. Hartford F. Ins. Co., 20 Mo. A pip. 150. 29 Holloway v. Dwelling-House Ins. Co., 48 Mo. App. 1; (St. L. C. A. 1S92) 21 Ins. L. J. 379. 30 Home Ins. Co. v. Fallon (Neb. 1S95), 63 N. W. Rep. 860; 24 Ius. L. J. 690; Stone v. Ilawkeye Ins. Co., 68 Iowa. 737; 56 Am. Rep. 870; Kausal v. Minnesota Farmers' Mut. F. Ins. Assn.. 31 Minn. 17. per Mitchell, J.; 47 Am. Rep. 776; Whitney v. Nat. Masonic Aid Assn. (Minn. 1894), 59 N. W. Rep. 943; Germania L. Ins. Co. v. Lunken- heimer, 127 Ind. 536; 26 N. E. Rep. 1082; Continental Ins. Co. v. Pierce, 39 Kan. 396; 18 Pac. Rep. 291; German Ins. Co. v. Hayden (Col. 1895), 40 Pac. Rep. 453; O'Brien v. Home Ben. Soc, 27 N. Y. St. Rep. 326; Commercial Assur. Co. v. Eliott (Pa.), 12 Cent. Rep. 668; 13 Atl. Rep. 980: O'Rourke v. John Hancock M. L. Ins. Co.. 33 N. Y. St. Rep. 522; 31 N. Y. Supp. 130: 24 Ins. L. J. 160: Kansas Protective Union v. Gardiner, 41 Kan. 397; 21 Pac. Rep. 233; Lueders v. Hart- ford Life & Ann. Ins. Co., 12 Fed. Rep. 465; Lasher v. Northwestern Nat. Ins. Co., 55 How. Pr. (N. Y.) 318; Langdon v. Union M. L. Ins. Co., 14 Fed. Rep. 272; Rowley v. Empire Ins. Co., 36 N. Y. 550; Rogers v. Phoenix Ins. Co., 121 Ind. 570, 582; Phoenix Ins. Co. v. Allen, 10» Ind, 273; 276; Flynn v. Equitable Life Ins. Co., 7S N. Y. 56S; 34 Am. Joyce, Vol. l.—Zi § 476 AGENTS OF INSURER — POWERS. 594 lias transcended his actual authority. 31 So it is held in Ala- bama that if application for insurance is made to an agent authorized to issue policies of fire insurance, to whom the applicant fully and truly stated his interest in the property, and the agent, being fully informed, drew up the application, received the premium, and turned over the policy to the appli- cant, it cannot be avoided on the ground that he was not the unconditional and sole owner of the property, and that his interest therein was not correctly stated in the application. 32 § 476. Same Subject —Cases. — Where the applicant states fully and truthfully the circumstances relating to the title and ownership of the property insured, and the agent, knowing all the facts, states the title incorrectly and issues a policy, the company camiot take advantage thereof; 03 and where the applicant truly states all the facts relative to keeping a watchman, and the agent writes answers which are not strictly true, the company is bound by its agent's statements. 34 So Rep. 561; G rattan v. Metropolitan Life Ins. Co., 80 N. Y. 281; 36 Am. Hep. 617. That false answer without privity of applicant substituted by agent estops the company, see Bernard v. United Life Ins. Assn. (N. Y. 1895). 33 N. Y. Supp. 22; 66 N. Y. St. Rep. 521; Michigan Mut Life Ins. Co. v. Leon, 138 Ind. 636; 37 N. E. Rep. 5S4; Bowlus v. Phoenix Ins. Co., 133 Ind. 106; 32 N. E. Rep. 251; Oorbitt v. Metropoli- tan Life Ins. Co. (N. Y. 1894), 30 N. Y. Supp. 1069; 63 N. Y. St. Rep. 309; Kansas Farmers' F. Ins. Co. v. Saindon, 52 Kan. 486; 35 Pac. Rep. 15; Provident Sav. Life Assur. Soc. v. Reutlingea- (Ark. 1S94), 25 S. W. Rep. 835; Alger v. Metropolitan Life Ins. Co., 84 Hun (N. Y.), 271; 32 N. Y. Supp. 323; 65 N. Y. St. Rep. 481; Bourgeois v. Mutual F. Ins. Co., 86 Wis. 402; 57 N. W. Rep. 38; Mutual B. L. Ins. Co. v. Robinson, 58 Fed. Rep. 723; 1!1 U. S. App. 266; 7 U. S. C. C. A. 444; Continental Ins. Co. v. Chamberlain, 132 TJ. S. 304. See New York L. Ins. Co. v. Fletcher, 117 U. S. 519; Thomas v. Commercial Assur. Co., 162 Mass. 29: 37 N. E. Rep. 672; Level! v. Royal Arcanum (N. Y.. 1S94), 60 N. Y. St. Rep. 579. 31 Dayton Union Ins. Co. v. McGookey, 33 Ohio St. 555. 32 Creed v. Sun Fire Office, 101 Ala. 522; 46 Am. St. Rep. 134. 33 rhcenix Ins. Co. v. Whiteleather, 34 111. App. 60; Pwclling-ITouse Ins. Co. v. Dowdall, 55 111. App. 622; Williamson v. New Orleans Ins. Co., 84 Ala. 106; 4 S. Rep. 36; Peck v. New London County Mut. Ins. Co., 22 Conn. 575; Woodlmrys Savings Bank v. Charter Oak Ins. Co., 31 Conn. 517. 34 Malleable Iron Works v. Phoenix Ins. Co., 25 Conn. 465. 595 AGENTS OF INSURER— POWERS. § 47C where the agent is informed of the facts, but makes misstate- ments in filling out the application, the company is bound. 35 In another case the solicitor and agent of the company, who was in the habit of filling out applications with the knowledge of the company, propounded the questions and assumed to enter in writing in the blanks left for that purpose in the appli- cation the answers given by the applicant, who informed the agent that the house was unoccupied, but that when occupied it was occupied by the tenant as a hired man. The agent untruly represented the assured as answering that the house was occupied as a residence by a tenant, and the latter, suppos- ing that the answers given by him to the questions were cor- rectly entered, signed the application without noticing the misstatements. There was a conflict of evidence, but the facts were found as stated, and it was held that the misstatements could not be imputed to the assured, and the application was reformed. 36 So the policy cannot be avoided, on the ground that the insured was only a life tenant, when that fact was made known to the insurer's agenf at the time the policy was issued, notice to him being constructive notice to the prin- cipal; 37 and where the applicant apprised the company's agent of all the facts concerning a mortgage on the property, and the policy required the whole amount of encumbrance on the prop- erty to be stated, the assured has a right to assume that the agent, in filling out the application, has conformed to such requirement, and has set forth the matter with such accuracy as is deemed necessary or important by the principal. 38 "Where the assured truthfully answers as to encumbrances, and the agent states that there is no encumbrance, the insured is not precluded. 39 So the company cannot defend on the ground that the application failed to state the title correctly where the agent is fully informed that a deed to the insured is 35 McArtliur v. Globe L. Ins. Co., 14 Hun (N. Y.), 348. •■^Bennett v. Agricultural Ins. Co., 106 N. Y. 243; 12 N. E. Rep. 609. 37 Western Assur. Co. v. Stoddard (Ala.), S8 Ala. 606; 7 S. Rep. 379. 38 Michigan etc. Ins. Co. v. Lewis, 30 Mich. 41; Springfield F. & M. Ins. Co. v. Phillips (Ky. Sup. Ct. 1894), 16 Ky. L. Rep. 352. 39 Bowlus v. Phoenix Ins. Co., 133 Ind. 106, 109. § 476 AGENTS OF INSURER — POWERS. 596 only a mortgage, and latter's interest only that of a mortgagee. 40 The same rule obtains where the agent states that the applicant is the owner in fee, and that no other person is interested in the premises, when he has been informed to the contrary, 41 and the company is estopped from availing itself of the agent's mis- statements in relation to the property where he is fully informed of all the facts and acquainted with the location of the property. 42 The company is also estopped from denying the description adopted in the policy. So where the facts in rela- tion to the title are fully disclosed by the applicant to the company or its agents, or in case the company is otherwise cog- nizant of the facts, and it dispenses with any act on the part of the assured, if it erroneously determines that the assured has one kind of interest in the premises when he has another, it cannot be heard to say that they were mistaken, and by that means escape liability. 43 So where an applicant for an acci- dent policy informed the agent that one of his feet had been frozen and part of the bones of such foot removed, and that the foot was sometimes numb, and was told by the agent that this was of no consequence and the latter wrote in the applica- tion that the applicant had never had any bodily or mental in- firmity, it was held that the insured was not chargeable with fraud in not having read the application. 44 And it is held that where a clerk of the agent conducts the examination of the ap- plicant within a few feet of the agent, who hears the answers, and it appears that clerk had been in the habit of soliciting in- surance and collecting premiums, the company cannot, set up false answers inserted by the clerk without the applicant's knowledge in defense to an action on the policy. 45 It is held, however, in Massachusetts that the fact that the property was 40 Tarboll v. Vermont Mut. Fire Ins. Co., 63 Vt. 53; 22 Atl. Rep. 533. 41 Crouse v. Hartford etc. Co., 79 Mich. 249; 44 N. W. Rep. 497. 42 Wytheville Ins. etc. Co. v. Strelz, 87 Va. 629; 13 S. E. Rep. 77; 15 Ya. L. J. 328. 43 Andes Ins. Co. v. Fish, 71 111. 620. 44 Whitney v. National Masonic Ace. Assn. (Minn. 1894), 59 N. W. Rep. 943. 45 Syndicate Ins. Co. v. Catchings (Ala. 1894), 16 S. Rep. 46. 597 AGENTS OF INSURER — POWERS. § 477 fully described to the agent cannot be shown to vary the writ- ten contract. 46 § 477. Where Answers are Unintentionally Incorrect — Agent's Knowledge. — If a local agent intrusted with printed policies of the company, signed by its officers, to be filled out and delivered as in his judgment he shall deem advis- able, issues a policy and receives the premium, and the same is retained by the company, and the policy allowed to remain in force, it is bound by the policy, although there are repre- sentations made as to encumbrances which unintentionally are incorrect, but are known to be so by the agent. So it has been said that: "Perhaps in the earlier history of insurance it may have been the requirement that a written application should be made to the company at its central place of business, and that upon the information so obtained the executive officers of the company determined whether or not it was advisable to issue a policy for which application had been made. In such case the local agent had no duty to perform, except such as required the exercise of no discretion or judgment on his part. In modern times, however, this primitive method of doing business has been abandoned, and the local agent is intrusted with poli- cies to be filled out and delivered as in his judgment he shall think advisable. The necessity of an application has, there- fore, in a large measure ceased, and while the company may still disapprove of the issue of a policy, this right will be found to exist by virtue of reservations in the policy itself. Until the right of disapproval is exercised, the policy is treated by the company as binding at least as against the insured. Under these conditions it is but fair that the right to revoke the policy should continue no more than a reasonable time. In the case under consideration there was no disapproval of the policy until a lapse of nearly four months after it had been issued, 40 Thomas v. Connecticut Union Assur. Co., 162 Mass. 29; 37 N. B. Rep. 672; citing Barrett v. Union Ins. Co., 7 Cush. (Mass.) 175; Jenkins v. Quincy Ins. Co.. 7 Cray (Mass.), 370; McClnskey v. Providenco- Wash. Ins. Co., 126 Mass. 306; Batchelder v. Queen Ins. Co., 135 Mass. 449. § 477 AGENTS OF INSURER — POWERS. 598 and then only after a total loss had been sustained. To inflex- ibly hold now that the representations made in the application amounted to a warranty, and that if in any respect they were untrue, the liability of the company would be avoided, irre- spective of the fact that the policy was not in fact issued in reliance upon the representations made in the application, would be to sacrifice matters of substance for those of mere form There had been no proof as to the scope of the powers of the local agent. He had been furnished by his prin- cipal with a printed blank, in which were contained one hundred and forty questions to be answered by the applicant for insurance. The answers to the questions were written by the local agent of the company. In relation to some of the answers made, this agent knew of the inaccuracy. The answer to which most criticism is now directed was not recorded as given. It would be manifestly unfair to hold liable only the applicant for each of these inaccuracies. It is insisted, how- ever, that to allow evidence as to the real facts which surround and, in our view, which should qualify the effect of the inaccu- rate statements in the application, would be to permit of the introduction of parol evidence to vary the terms of a written contract, and this contention is made, because by the terms of the policy the representations referred to are made a part of the policy itself. In this contention there is some plausibility, yet we think it should no more be rigidly enforced than a stipu- lation in an executory contract for the recovery, in case of a failure to perform, of a fixed amount carefully described as liquidated damages, as to which it is permitted to be shown that in fact not liquidated damages, but a penalty, was intended. The application signed is competent evidence to show what rep- resentations were made by the applicant, but there is no good reason for holding that this precludes all other evidence. The application cannot be made a contract, either in form or sub- stance, even though it is therein agreed that it shall have that force. It is, at most, evidence of representations of facts pre- liminary to, and it may induce, the making of a contract of insurance. When these representations are written out by the agent of the insurance company, the signing of them is com- 599 AGENTS OF INSURER — POWERS. §§ 478, 479 petent evidence that such representations were made by the ap- plicant. In view of the fact, however, that the company does not issue its policy on the faith of these representations, it is per- missible to show what representations were actually made to the agent who in fact issued the policy and received the premium. His principal is bound to abide by the exercise of such dis- cretion as has been vested in him as its agent. If, upon the policy being forwarded with the application, and even upon other evidence, the company is dissatisfied, it may disaffirm the act of its agent, return the premium, and cancel the policy. It cannot, however, return the premium and cancel or repu- diate the policy when by reason of a loss of the insured property it becomes its interest so to elect to do." 47 § 478. False Answers by Clerk of Agent. — Where the clerk of an agent is accustomed to solicit insurance and col- lect premiums, and he examines an applicant within a short dis- tance of the agent, and without applicant's knowledge writes down false answers to the questions, the company cannot avail itself thereof as a defense. 48 § 479. Misrepresentations — Application Signed by Agent Without Applicant's Authority. — There is a class of cases which hold that although the representation is of some fact material to the risk, or made so by the terms of the con- tract, the insurance is nevertheless binding upon the company where the application was prepared by the agent in the name of the assured, but without his authority. 49 So if an agent fills out and signs an application without the knowledge of the applicant, the company is liable on the policy, notwithstanding provisions therein concerning misrepresentations. In this case the assured in his oral application referred to a mortgage on the 47 German American Ins. Co. v. Hart, 43 Neb. 441; 61 N. W. Rep. 5S2. per Ryan, C. 48 Syndicate Ins. Co. v. Catching*? (Ala. 1894), 16 S. Rep. 46. 49 Sprague v. Holland Purchase Co.,69 N. Y.128; Ames v. New York Union Ins. Co., 14 N. Y. 253; Benninghoff v. Agricultural Ins. Co., 93 N. Y. 496; Vilas v. New York C. Ins. Co., 72 N. Y. 590; 28 Am. Rep. 1S6. See Landers v. Cooper, 115 N. Y. 279, 286, per Andrews, J. §§ 480, 481 AGENTS OF INSURER — POWERS. 600 property, but the application stated that it was unencumbered. 50 So where the risk is erroneously described in an application pur- porting to be that of the person whose name is signed thereto, but which signature the company knows to be in their agent's handwriting, and which signature was unauthorized, the appli- cant is not bound thereby, even though the application is referred to in the policy as a part thereof. 51 And the insured will not be bound by a written application which fails to dis- close the true title of the assured, although the policy refers thereto, where such application is not signed by the assured, and it is not shown that he authorized it to be made or ratified its execution, nor will lie be bound in such case by false repre- sentations therein. 52 But it is held in a Maine case 03 that the assured was bound by a representation concerning encum- brances made by an agent in an application, although he was correctly informed of the facts, and although he signed the assured's name to the application without his knowledge,, it appearing that the assured applied by letter to the company's agent for insurance, and that the policy issued referred to the application as a part thereof. The court held that by accepting the policy the assured covenanted and agreed that the state- ments contained in the application were full, just, and true in regard to the condition, situation, value, and risk of the prop- erty insured. § 480. Where Agent Agrees to Mote Fact in Applica- tion. — The company will be estopped to avail itself of a misrepresentation contained in the application as to an encumbrance on the property where the applicant relied upon an agreement made with the agent that the fact of an encum- brance on the property should be set out in the application. 54 § 481. Omission or Negligence of Agent in Filling out Application. — If an agent, acting within the scope BO Baker v. Ohio F. Ins. Co.. 70 Mich. 190; 38 N. W. Rep. 216. Bi Landers v. Watertown F. Ins. Co., 19 Hun (N. Y.), 174; 80 N. Y. 41 1: 40 Am. Rep. 554. 52 Lycoming Fire Ins. Co. v. Jackson. 83 Til. 302; 25 Am. Rop. 3S6. 03 Richardson v. Maine Ins. Co.. 40 Mo. 394; 7! Am. Dec. 459. w Copeland v. Dwelling-Houselns. Co., 77 Mich. 554; 43 N. W. Rep. 091. (}01 AGENTS OF INSURER — POWERS. § 481 of his authority, undertakes to fill out a blank application, and omits or neglects to state facts therein which are material to the risk, or conceals material facts of which he is fully informed, or of which he has knowledge, or if by his fault or negligence it contains statements which are false and not authorized by the instructions of the assured, such omission, negligence, or concealment is that of the agent, and not of the assured, and does not relieve the company of its obligations under the policy, 55 for the company cannot insist upon a con- dition in the policy declaring the contract to be void if certain facts or situations exist which are not represented to the com- pany, where the agent or company is informed of, or knows at the time, all the facts relied upon to defeat the contract, but docs not require a statement thereof in the application. 06 And where the local agent and medical examiner fails to note facts concerning the applicant's health, of which he had knowl- edge, the company is estopped. In this case, however, the illness was a trivial one, and did not cause the applicant's death. 57 So, although the policy provides for waiver of con- ditions onlv by express indorsement thereon, nevertheless the company may be estopped by the fact that assured informed the agent, when making the application, of the existence of a lien; 58 and where the policy provided that it should be void if 55 2Etna Life Ins. Co. v. Paul, 10 111. App. 431; State Ins. Co. v. Gray. 44 Kan. 731; 25 Fae. Rep. 197; Phoenix Ins. Co. v. Stark, 120 Ind. 444, 448; Campbell v. Merchants' etc. Ins. Co., 37 N. H. 35; 72 Am. Dee. 324; Rowley v. Empire Ins. Co., 36 N. Y. 550; Burson v. Fire Assn., 13G Pa. St. 267; 20 Atl. Rep. 401; 26 Week. Not. Car?. 408; Pickil v. Phoenix Ins. Co.. 119 Ind. 291, 297; Lycoming Fire Ins. Co. v. Jackson, 83 111. 302; 25 Am. Rep. 386; Beebe v. Fire Ins. Co.. 25 Conn. 51; 65 Am. Dec. 553; Commercial Ins. Co. v. Spankneble, 52 111. 53; 4 Am. Rep. 5S2. 56 p.pe Atlantic Ins. Co. v. Wright, 22 111. 402; Van Schoick v. Niag- ara Fire Ins. Co., 68 N. Y. 434; Short v. Home Ins. Co., 90 N. Y. 10; 43 Am. Rep. 13S. 07 Coolidge v. Charter Oak Life Ins. Co., 1 Mo. App. 109. 58 McGonigle v. Susquehanna Mut. F. Ins. Co., 168 Pa. St. 1. 14; 31 Atl. Rep. S68; citing MeFarland v. Insurance Co., 134 Pa. St. 590. See also Trundle v. Providence-Wash. Ins. Co., 54 Mo. App. 188. So the insurer may be estopped by knowledge of the soliciting agent at the time of taking the application that the building stood on leased § 482 AGENTS OF INSURER POWERS. GU2 the interest of the assured were not fully stated to the com- pany, where it was other than the entire and sole ownership of the property, and the general agent, though correctly in- formed, omitted to state the true interest of the assured, the company w r as held liable on the policy on the ground of waiver of the condition, and the same was held as to a condition relat- ing to other insurance; 59 nor can material concealment be pleaded by the company where the company's agent makes a personal and thorough examination of the premises. 60 And the same rule obtains if the agent omits to mention encum- brances in the application where he has been fully informed concerning the same and procures the applicant's signature, accepts the premium, and closes the contract. 61 So the com- pany is bound where its agent, in filling up the application, omits part of the statements of the applicant as immaterial, although the omitted facts were material to the risk; 62 and where the soliciting agent fails to disclose facts concerning the title of which he has knowledge, the company is bound, the agent's knowledge being constructive notice to the company, and this is so even though the policy provides that the appli- cation is a warranty. 63 And the policy is not avoided by an omission of the company's surveyor and agent to mention a mortgage of which, he was informed by the applicant, nor by his omission to mention neighboring buildings where he had personally viewed the premises, even though by the terms of the policy such omissions would avoid the same. 64 § 482. View that not Question of Waiver or Estoppel but Whether Condition Attached. — If local agent au- ground: Phoenix Ins. Co. v. Phillips (Ky. 1894), 16 Ky. L. Rep. 122. And the same rule was held to apply in another caise where no claim was made in the application as to ownership of land: Parsons v. Knoxville F. Ins. Co. (Mo. 1805), 31 S. W. Rep. 117. si Richmond v. Niagara Fire Ins. Co., 79 N. Y. 230; reversing 15 Hun, 24S. oo Michael v. Mnt. Ins. Co.. 10 La. Ann. 737. ei German Ins. Co. v. Gray, 43 Kan. 497; 23 Tac. Rep. 637. 62 TTnvard l ns . Co. v. Rrnner, 23 Pa. St. 50. 88 Reynolds v. Tnwa & N. Ins. Co., SO Iowa, 503; 46 N. W. Rep. K59; Van Scimick v. Niagara Ins. Co.. OS X. Y. 434. 64 Masters v. Madison Co. Mut. Ins. Co., 11 Barb. (N. Y.) 624. 603 AGENTS OF INSURER — POWERS. § 482 thorized to solicit insurance, examine risks, deliver policies, and collect premiums is informed of the condition as to title of the property, the company is chargeable with the agent's knowl- edge, and cannot avail itself of a condition that no agent of the company should have power to waive any condition ex- cept such as by the terms of the policy were made the subject of agreement, and as to those only by indorsing the waive* upon or attaching the same to the policy. "In such cases the company is deemed to have waived the condition, or, by the delivery of the policy with the condition avoiding it in case the insured is not the sole owner, or that the prop- erty is encumbered, and accepting the premium, is held es- topped from setting up the condition as a defense. It was never supposed that such a condition was intended to apply to a state of facts in regard to which the company had been fully informed when it accepted the risk. The cases on this point are numerous, and it is impossible to make any distinction in principle between the conditions considered and that involved in the case at bar. 65 In these cases it was held either that the company had waived the condition, or was estopped by the delivery of the policy, and the receipt of the premium, since under such circumstances it could not be supposed that it in- tended to deliver to the insured a policy which it knew to be void. Where the underwriter, before the inception of the con- tract, is informed by the owner that the property is encum- bered, but still delivers the policy with the condition embodied in it, then, as it seems to me, it is not so much a question of waiver or estoppel as a question whether the condition ever at- tached or operated upon the facts thus disclosed. It can, of course, operate in future upon transfers or encumbrances as the facts arise, and then the question is one of waiver. But when the facts are all known before any contract is made, a condition against a state of things known by all the parties 65 Citing Van Schoick v. Niagara Falls Tns. Co.. 68 N. Y. 434; Waited v. Gerraania Ins. Co., 76 N. Y. 415; Woodruff v. Imperial Ins. Co., 83 N. Y. 134: Short v. Home Ins. Co., 90 N. Y. 16; McNally v. Phoenix Ins. Co., 137 N. Y. 3S9; Carpenter v. German Ins. Co., 135 N. Y. 298; Cross v. National F. Ins. Co., 132 N. Y. 133; Berry v. American Central Ins. Co., 132 N. Y. 49. § 483 AGENTS OF INSURER POWERS. 604 to exist cannot be deemed to be within their intention or pur- pose. This case cannot be taken out of the rule by any possi- ble distinction unless it be the character and powers of the agent of the defendant"; and it was held that the agent's au- thority was sufficiently large to bind defendant by the commu- nication made to him. 66 § 4SI5. Mistake of Agent in Filling- out Application. "Where the agent of the company is correctly informed by the applicant of all the facts, and he makes a mistake and states them incorrectly in the policy, the Company is responsible therefor. 67 So where the agent by mistake writes the wrong name for that of the medical attendant; 68 or where the agent knows of the existence of a prior insurance, and states in the application that there would be none after a given date, and it appeared that he was mistaken ; bd or where the agent makes a miscalculation as to the age of the insured who gave to the agent the year of his birth; 70 or writes the husband's name by mistake for that of his wife as the assured, the agent well knowing that the property belonged to the wife. 71 In all such cases the error or mistake of the agent does not furnish suffi- cient ground for avoiding the policy by the company, and the issuance of a policy is a waiver of the inaccuracy of statements by the agent as to encumbrances; 72 and recovery is not de- feated on a policy issued in the name of a deceased person, from whom the parties for whose benefit the policy was is «8 Forward v. Continental Ins. Co., 142 N. Y. 382, 3S7, 388, per O'Brien, J.; 6G Hun (N. Y.), 546; 6 N. Y. St. Rep. 777; 37 N. E. Rep. 615. 67 Farmers' Ins. Co. v. Williams, 39 Ohio St. 584; 48 Am. Rep. 474; Pauisrhkeepsde Slav. Bank v. Manhattan F. Ins. Co., 30 Hun (N. Y.i. 473; St. Paul F. & M. Ins. Co. v. Shaver, 7G Iowa, 2S2; 41 N. W. Rep. 19; Insurance Co. v. Gray, 43 Ivan. 497. 63 Langdon v. Union Mut. Life Ins. Co., 14 Fed. Rep. 272. 60 Fmery v. Mutual etc. F. Ins. Co.. 51 Micih. 460: 47 Am. Ren. r.90. 70 Brink v. Guaranty Mut. Ace. Assn., 28 N. Y. 921; McCall v. Fhoenix Mut. L. Ins. Co., 9 W. Ya. 237; 27 Am. Rep. 558. 71 Dletz v. Providence-Washington Ins. Co., 33 W. Ya. 526; 11 S. F. Rep. 50. 72 Holmes v. Drew. 10 nun (N. Y.V 491. See Sentell v. Oswego Co. Farmers' Ins. Co., 10 Hun (N. Y.), 510. 605 AGENTS OF INSURER — POWERS. § 434 sued had inherited the property insured, and the agent had full knowledge of the fact, the heirs being owners of the property when application was made and at the time of the loss. 73 But where the agent writes the application from a memorandum of answers made by the applicant, and applicant siffns it after it is read to him, this does not make the answers those of the agent. Other proof of mistake must be shown to bind the company. If the insured charges a mistake, lie must prove it. 74 And it is held that the policy will be void where there is such a material variance in the description as amounts to a breach of warranty. The fact that an agent intended to effect an insurance on the property by whatever description should be correct will not prevent a forfeiture. 75 § 484. Misrepresentations by Ag-ent with Full Knowl- edge of Facts. — Although there are errors material to the risk in the application sufficient to amount to a breach of warranty, the company is estopped from showing them in de- fense to an action on the policy, where it appears that the mis- representations were made by the company's agent with full knowledge of the facts. 76 So misstatements in the application are not prejudicial where the agent of the company who made them was familiar with the property. 77 So the fact that the F"ent knew that the building stood on leased ground excuses compliance with a condition in the policy requiring such fact to be represented to the company, and expressed in the written 73 Anson v. Winnesheik Ins. Co., 23 Iowa, 84. 74 Alabama Gold Life Ins. Co. v. Garner. 77 Ala. 210. 75 Tesson v. Atlantic M. Ins. Co., 40 Mo. 33; 93 Am. Dec. 293. 76 Coombs v. Hannibal S. & Ins. Co., 43 Mo. 14S; 97 Am. Dec. 383; Pwelling-Honse Ins. Co. v. Rrodie, 52 Ark. 11: 11 S. W. Rep. 1010;' Egglestone v. Council Bluffs Ins. Co., 65 Iowa, 308. An agent who is fully aware at the time of issuing the policy of all the circumstances, and assents thereto, the company will be estopped to insist upon broken conditions, although consent is required to be indorsed on the policy, and it is not: Thaeker Min. & Smelt. Co. v. American F. Ins. Co. (Kan. C. C. A. 1895), 1 Mo. Aw. 585. 77 Mink v. Home Mut. Ins. Co., 76 Cal. 50; 14 Pac. Rep. 837. See Crescent Ins. Co. v. Camp. 71 Tex. 503; 9 S. W. Rep. 47L1. § 484 AGENTS OF INSURER — POWERS. 606 part of the policy, otherwise the policy should be void; 78 nor if the insured liable for misrepresentations in the survey of the premises made by the agent of the company who was as famil- iar with the premises as the assured. 79 So where the agent who prepared the application, made the surveys and measure- ments contained therein, and presented the policy to the appli- cant for his signature, representing that he had full authority to act in the premises, and the applicant relied on the agent's statements that they were correct, and made no examination as to their correctness, it was held that the company was es- topped to show a breach of warranty for material errors in such surveys and measurements. 80 And where the canvassing agent who prepared the application had knowledge of the ex- istence of other insurance, the company was held estopped thereby; 81 and the assurer is nevertheless liable for the repre- sentations, although the rules of the company require the ap- plicant to either make a survey himself in conformity with certain conditions or apply to the company's agent, which lat- ter is done. 82 Nor can the company avail itself of a misde- scription in the premises where its agent personally examines the property and fills up an application which the assured signs believing it all right, 83 and in such ease it is not neces- sary that the policy be reformed before suing thereon, 84 and where the assurer's agent was fully aware of the fact that the applicant was deaf, and prepared an application for accident insurance, stating that he was not subject to bodily infirmity, which the applicant signed, the company was held liable. 83 78 Manhattan F. Ins. Co. v. Weill. 28 Gratt. (Va.) 389; 26 Am. Rep. 3G4; Petzer Mfg. Co. v. Sun Fire Office, 36 S. C. 214, 216; 15 S. E. Rep. 562; Germania Ins. Co. v. Hick, 125 111. 361; 17 N. E. Rep. 792. 79 Roth v. City Ins. Co., 6 McLean, 324. so rinmb v. Cattaraugus etc. Tns. Co., 18 N. Y. 392: 72 Am. Dec. 526; Beal v. Park F. Ins. Co., 16 Wis. 241; 82 Am. Dec. 719. 8i AmiePiiCHD Ins. Co. v. Leuttrell, 89 111. 314. 82 Roth v. City Ins. Co., 6 McLean (C. C), 324. 83 Susquehanna Mut. V. Ins. To. v. Cusick, 109 Pa. St. 157; People'*. Ins. Co. v. Spencer, 53 Pa. St. 353; 91 Am. Dec. 217. R4 st.ito Ins. Co. v. Schreck, 27 Neb. 527; 43 N. W. Rep. 310; 6 L. R. An not. 524. 85 Follette v. United States Mut. Ace. Assn., 107 N. C. 240; 14 S. E. Rep. 923. £07 AGENTS OF INSURER — POWERS. §§ 485, 486 But in a !New York case, where the application which formed part of the policy erroneously described the buildings which were within a certain distance of the premises, the court over- ruled a defense that the agent had full knowledge of the situ- ation of the premises and its neighborhood, and that he drew the application and specified in it such buildings as he chose. 86 It is also held that where the agent of the company knows that the premises are to be used as a stable, and the use is de- scribed otherwise in the policy, no estoppel is thereby raised against the company to insist upon the warranty that the build- ing was to be used for the purpose specified in the policy. 87 § 485. Misrepresentations by Agent — Applicant Signs in Blank. — If the applicant signs the application in blank, but it is drawn up by the agent of the company, and contains material errors and omissions, it does not bind the assured where he acted in good faith. 88 Nor is the insurer re- leased from liability, by reason of misstatements in the applica- tion, where it appears that the applicant signed the same in blank and that the assurer's agent, upon his own motion and without authority or direction, filled out the blanks. 89 § 486. Misrepresentations by Agent — Application Sent Unsigned to Company, — Where theagentwrites the appli- cation and is informed that the premises are mortgaged, and states in the application that there is no encumbrance, and the application is sent to the company unsigned, the misstate- ment is that of the company's agent, notwithstanding the pol- icy provided that statements made by assured to the agent should be deemed made to the company "unless reduced to writing and incorporated in the application." 90 86 Kennedy v. The St. Lawrence Co. Mut. Ins. Co., 10 Barb. (N. Y.) 285. 87 Dewees v. Manhattan Ins. Co., 35 N. J. L. (6 Vroom) 366. The court denies the authority of Plumb v. Cattaraugus etc. Ins. Co., IS N. Y. 392, 72 Am. Dec. 526, cited above. For misrepresentations by agent with knowledge of circumstances, see Columbia Ins. Co. v. Cooper, 50 Fa. St. 331. 88 Howard Ins. Co. v. Bruner, 23 Pa. St. 50. 89 Kingston v. JEtna Ins. Co., 42 Iowa, 46. »o Mowry v. Agricultural Ins. Co., 64 Hun (N. Y.), 137. See Con- g§ 487, 488 AGENTS OF INSURER — POWERS. 608 § 487. Where Agent Fills Out Application Without Inquiry or of His Own Knowledge. — Where the company's agent, without authority from the applicant, fills out an appli- cation of his own motion and without inquiry, merely pre- senting it for signature, his representations, if false or incor- rect, cannot conclude the assured. In such case the answer may be considered stricken from the application, or it may be treated as true. 91 So where the agent answers the questions from his own knowledge as to the title and situation of the property, the company cannot avail itself of the fact that the building stood on leased ground, and therefore that the con- tract is void under a condition in the policy requiring a special agreement in writing in such case ; 92 and where the son of the insured was the general agent of the defendant, and knew, by reason of a personal examination of the buildings, that the premises were vacant and unoccupied, and also knew the nature of the title, and no representations are made to nor inquiries by the agent, the company is bound, notwithstanding misrepre- sentations by the agent as to the title and condition of the property, and this is so although the policy provides that the true title must be expressed in the policy, where the assured is not the sole and unconditional owner, otherwise it will be void. 93 § 488. Where Applicant has no Knowledge of Facts and Agent Fills Out Application. — Where the insurer's agent fills up the application, writing in the representations to tinemtal Life Ins. Co. v. Chamberlain, 10 Sup. Ot. Rep. 87; Enos v. Sun Ins. Co., 67 Cal. 021; New York Life Ins. Co. v. Fletcher, 117 U. S. 519. ot Dunbar v. Phoonix Ins. Co., 72 Wis. 492. 500; 40 N. W. Rep. 386; Hingston v. iEtna Ins. Co., 42 Iowa, 46. See, also, Alex- ander v. Gennania F. Ins. Co., 5 Thounp. & C. (N. Y.) 208; 66 X. Y. 464; 23 Am. Rep. 761. So. also, where no inquiries wore mado of the owner or his agent, and no statement made by him in regard to the matter: rhoenix Ins. Co. v. Phillips (Ky. 1S94), 16 Ky. L. Rep. 122. Sop further on I lie general proposition. Homo Ins. To. of New- York v. Gibson, 72 Miss. 58; 17 S. Rep. 13; 24 Ins. L. J. 458; West v. Norwich Ins. Co., 10 Utah, 442; 37 rae. Rep. 685; Hart v. Niagara Ins. Co., !i Wash. 620; 27 L. R. Annot. 86; 24 Ins. L. .T. 87. 02 Germania F. Ins. Co. v. Hick, 125 111. 361; 17 N. E. Rep. 792. 93 Cross v. National Fire Ins. Co., 132 N. Y. 133; 43 St. R. 4S2; 30 N. E. Rep. 390. See sec. 472 herein. 609 AGENTS OF INSURER — POWERS. § 48S suit himself, upon the insured telling him that he knows noth- ing of the particular subject of inquiry, and upon the refusal of the insured to make any statement about it, the insurer is estopped to deny the validity of the policy. 94 The company is also bound where the applicant refuses to make any state- ment about his age, and the agent computes it from data claim- ed to have been given by the assured, who signed the appli- cation without knowing its contents. 95 § 489. Misrepresentations by Agent — Where Appli- cant Signs Application without Reading or Knowing Con- tents. — As to the question as to how far it is obligatory upon the applicant to read the application prepared by the company's agent, the courts are divided. It can be easily understood that an applicant for insurance, with his limited knowledge of the requirements of the company in the matter of filling out the application, would naturally rely upon the experience and skill of an agent who has ostensible authority to represent the company, and who may reasonably be assumed to possess the requisite knowledge concerning such matters, and the large number of cases upon this point attest the habit of business men to sign such applications so prepared without careful ex- umination. The cases may be divided as follows: one class be- ing those where the assured relies in good faith upon the hones- ty, skill, and fair dealing of the agent as possessing the requi- site knowledge as to what is necessary to be done to properly and legally fill out the application, and as possessing sufficient authority so to do; another class of decisions being those where the assured is illiterate or ignorant, and trusts entirely to the agent to make the proper representations; another class being those where the assured is induced by the representations of the agent to rely upon him, and for that reason neglects to read the application or have it read to him, and another class being where the assured neglects to read the application, through carelessness or negligence arising from a complete reliance up- 94 Union Mut. Ins. Co. v. Wilkinson. 13 Wail. (T T . R.I 222. 95 Miller v. Phoenix Mut. Life Ins. Co., 107 N. Y. 292; 14 N. E. Rep. 271. Joyce, Vol. I.— 39 § 489 AGENTS OF INSURER — POWERS. 610 on the agent's honesty and good faith. Where the agent of the company is authorized to fill out a blank application, and assumes the responsibility thereof, and the applicant, relying upon his skill and honesty, signs the application without read- ing or hearing it read, or knowing its contents, he is not con- cluded by the agent's representations, even though they may be materially false, provided, of course, that the assured has himself acted honestly in the matter. 96 So it is asserted in an Indiana case that if assured truthfully, in good faith, and fully, answers all required questions, and the agent prepares the appli- cation, assured is not guilty of negligence in signing it without reading. 97 Thus, it is said in an Illinois case that it is doubtful if the delivery of the policy is notice of its contents where the as- sured is unable to read and has never seen a blank policy be- fore, the agent assuring the insured that the policy is drafted according to contract. 98 So, in Minnesota it is held that if an applicant for life insurance informs the agent of the facts, and is told that they are of no consequence, and the agent writes, contrary to such facts, that assured has never had any bodily or mental infirmity, the company is estopped, although the ap- plicant fails to read the application, nor is the applicant in such case chargeable with fraud. 99 And it is held that the fact that the assured could have read the application will not aid the- company; 100 and on trial of such a case the assured may testify that he did not read the application, thus showing a reliance 96 Tublbs v. Dwelling-House Ins. Co., 84 Mich. 040: Senimenk v. Metropolitan L. Ins. Co., 72 Mich 388; 40 N. W. Rep. 409; Daklberg v. St. Douis Mut. etc. Inis. Co., 6 Mo. App. 121; Phoenix Ins. Co. v. Coomes, (Ky. Sup. Ct. 1891), 13 Ky. L. Rep. 23S; Dunbar v. Phoenix Ins. Co., 72 Wis. 492; 40 N. W. Rep. 38G. 97 Germania etc. Ins. Co. v. Lnnkenheimer, 127 Ind. 530, 542. 93 Continental Ins. Co. v. Rnckmnn. 127 111. 364. The policy con- tained notice that no agent had the right to waive, modify, or strike out any printed conditions, and the policy delivered was to contain a condition as promised by the agent that the premises might remain unoccupied for a specified time. 99 Whitney v. National Masonic Ace. Assn., 57 Minn. 472; 59 N. W. Rep. 943, and cases cited by respondent's counsel. ioo Fehwarzbach v. Ohio Valley Protective Union, 25 W. Va. 022; 52 Am. Rep. 227. 611 AGENTS OF INSURER — POWERS. § 490 on the agent's acts. 101 And the rule applies to a case of over- valuation by the agent of the company in the written applica- tion, where the insured signs the application without reading it, and without knowing the value inserted therein, and where he acts in good faith, even though the application k made a part of the policy and such statements warranties. 102 But it is expressly declared in a Connecticut case 103 that sign- ing an application for a life risk without reading or having it read is inexcusable negligence on the part of the applicant; that when he signed it he was bound to know what he signed; that the law requires the applicant to "use reasonable diligence to see that the answers are correctly given. It is for his in- terest 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." It has also been held in other cases inexcusable negligence not to read the application. 104 Thus, it is decided in Colorado that if one can read, and signs without reading an application filled out by the soliciting agent, he assumes the risk of falsity or misstatements of fact written out by the agent. 105 m So in the absence of proof to the contrary it will be presumed that the applicant knew and indorsed the contents of the application when he signed it. 106 § 490. Misrepresentations by Agent — Where Applicant is Illiterate, etc. — Where the applicant has no accu- rate knowledge as to the facts, and the agent who assumes to act for the company in filling out the application has full lW Mighian v. Hartford Fire Ins. Co., 24 Hun (N. Y.), 141, 58 (ease of representations as to title). 102 Whoa ton v. North British & Mercantile Ins. Co., 76 Cal. 415; IS Pac. Pep. 758. See, also, Cumberland Valley Mut. Prot. Co. v. Schell, 29 Pa. St. 31. 103 Ryan v. World Mut. L. Ins. Co., 41 Conn. 16S; 19 Am. Rep. 490. 104 See New York Life Ins. Co. v. Fletcher, 117 U. S. 519; Walker v. State Ins. Co., 46 Kan. 312: 26 Pac. Rep. 71S; Outhbertson v. North Carolina Home Ins. Co.. 96 N. C. -180; 2 S. E. Rep. 258; Brisks v. Fire- man's Ins. Co., 65 Mich. 52; Chatillon v. Canadian etc. Ins. Co., 27 U. C. C. P. 450; Susquehanna M. F. Ins. Co. v. Swank, 102 Pa. St. 17. ins Sun Fire Office v. Wich (Col. 1S95), 39 Pac. Rep. 587. io<3 Hartford Fire Ins. Co. v. Gray, 80 111. 28. 8 491 AGENTS OF INSURER POWERS. 612 knowledge of all the facts, and writes out the answers from such knowledge, and the applicant, who is an illiterate man, relies upon the agent and signs the application, the com- pany is bound, and the statements will be held to be rep- resentations and not warranties. 107 So where a woman not versed in legal terms states the facts as to her title to the com- pany's agent, and he writes in the application that she has a fee simple, when she has not, and also puts other statements therein knowing them to be false, the assured is not concluded thereby, but may recover ; 108 and the company will be obligated where its agent willfully writes false answers in the application know- ing that the assured is unable to read. 109 So where the agent of the insurer in filling out the application knew the assured had only a part interest in the property, but stated otherwise, and the assured was unable to read or write, but trusted to the agent, and she herself acted honestly in the matter, the com- pany cannot evade its liability on the policy, even though it provides that an interest other than a fee simple must be truly represented, 110 and the company is estopped from availing itself of the acts of its agent in taking advantage of the insurer's in- ability to read and in misleading him as to the amount of ad- ditional insurance allowed, and as to making proofs of loss. 111 And where the applicant was a German, unfamiliar with busi- ness or the English language and referred the agent to a ten- ant, who signed the application, and the policy contained no statement of the tenant's interest, the insurer was held entitled to recover to the extent of his interest. 112 § 491, Fraud of Agent in Preparing: Application. — "Where the assured acts honestly, but is misled by the acts and conduct of the agent of the company into believing that his lor O'Rourke v. John Hancock M. L. Ins. Co.. 63 N. Y. St. Rep. 522: 31 N. Y. Supp. 130: 24 Ins. L#. J. 160; Phnenix Ins. Co. v. Golden, 121 Ind. 524; 23 N. E. Rep. 503; O'Brien v. Home Benefit Soc, 117 N. Y. 310. 108 The Roekford Ins. Co. v. Nelson. 75 111. 548. 109 Sullivan v. Pho?nix Ins. Co., 34 Kan. 170. no Hartford F. Ins. Co. v. Haas, 87 Ky. 531; 9 S. W. Rep. 720. 111 Rivara v. Queen's Tns. Co.. 62 Mis-.. 720. lis Dlebold v. Phoenix Ins. Co. of Brooklyn, 33 Fed. Rep. 807. 613 AGENTS OF INSURER — POWERS. § 4i>l answers are taken down truly and as given, and by fault of the agent he does not learn to the contrary, the company cannot es- cape liability by reason of answers to material questions being falsely and fraudulently put down by the agent in the ap- plication as those given by the applicant. 113 And in such case the assured is justified in accepting in good faith and without examination the act of the company's agent, who in filling out such application is acting within the apparent scope of his au- thority. 114 And where such agent, acting for a life company, falsely stated the applicant's age, forged a medical certificate which was a part of the application, and materially changed the policy before delivering it to the insured, which frauds were perpetrated without the knowledge of either the assured or the company, it was held that the company was nevertheless liable on the policy. 115 So the company is bound by the acts of its agent in changing an application after it is signed by in- serting therein an additional piece of property, and also chang- ing answers relating to the title and to encumbrances on and concerning the value of the property, where the assured and the principal were both ignorant of such fraudulent acts of the agent. The court held, however, that the failure of the as- sured after a reasonable time to object, bound him to the terms of the policy; 116 and so the company is bound where the as- surer's agent substitutes another and different application for that made by the assured. 117 In opposition to these decisions is a Connecticut case. 118 There the agent of a life insurance company with authority to receive and forward applications, countersign and deliver policies, and collect premiums, fraudu- lently put down false answers to material questions in the ap- U3 Bartholomew v. Merchants' Ins. Co., 25 Iowa, 507; 96 Am. Dec. 65; Swain v. Waitertown F. Ins. Co., 96 Pa. St. 37; Sullivan v. Phoenix Ins. Co., 34 Kan. 170. 114 Keister v. Lebanon Mut. Ins. Co. (Pa.), 18 Atl. Rep. 447; 5 L. R. Annot. 646. H5 McArthur v. Home Life Assn., 73 Iowa, 336; 35 N. W. Rep. 430. H6 Swan v. Watertown Fire Ins. Co., 96 Pa. St. 37 (two judges dis- senting as to the effect of the retention of the policy.) ut Massachusetts Life Ins. Co. v. Eshelman, 30 Ohio St. 647. H8 Ryan v. World Mut. Life Ins. Co., 41 Conn. 108; 1!) Am. Rep. 490. See, also, N. Y. Life Ins. Co. v. Fletcher, 117 U. S. 519. § 491 AGENTS OF INSURER — POWERS. 614 \ plication, which were not the answers given by the applicant and the court declared the agent's acts a gross violation of his duty in fraud of the insurer. 118a The opinion, however, dis- tinguishes between the powers of agents of fire and life com- panies saying that in the former case, where the agent has power to fill up and issue the policies, "the acts and knowl- edge of the agent are the acts and knowledge of the corpora- tion, and there is a manifest propriety in holding the corpora- tion liable accordingly. " 118b A distinction is also made H8a The eouirt says: "In this case we are a.sked to .... clothe the agent with an authority not given him in fact, and to hold the principal responsible for an act which could not by any possibility have been contemplated as being within the scope of the agency. .... It cannot be supposed that these defendants intended to cloitihe this aigent with authority to perpetrate a fraud upon them- selves. That he deliberately intended >to defraud them is manifest. .... Prompted by some motive he sought to obtain a policy by means of false answers. His duty required him not only to write the answers truly as given by the applicant, but also to communi- cate to his principal any other fact material to the risk which might have come to his knowledge from any other source. His con- duct in this case was a gross violation of duty in fraud of his prin- cipal and in the interest of the other party. To hold the principal responsible for his acts and assist in the consummation of the fraud would be monstrous injustice. Where an agent is apparently act- ing for his principal, but is really acting for himself or third per- sons and against his principal, there is no agency in respect to that transaction, at least as between the agent himself or the person for whom he is really acting and the principal We are con- strained, 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 in- sured, especially where it is in the power of the insured by the use of reasonable diligence to defeat the fraudulent intent," nsb The force of the argument and conclusion of the court is also somewhat modified by the declaration that "the court very properly instructed the jury that 'an untrue or fraudulent statement or de- nial 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 company or by a local agent, there must be additional proof of specific authority given them, or the company will not be bound.' " This instruction 615 AGENTS OF INSURER — POWERS. § 491 which is somewhat refined between the case before the court and that where the representation in the applica- tion made by the company's agent was not fraudulent, but still "not strictly true," in which case the company was declared bound. 119 The court also distinguishes those cases sustained by the courts of that state, in prior decisions which hold that where the applicant stated fully and truth- fully 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, the company could not take advantage of it, saying: "The court regarded the transaction as equivalent to an agreement that for the purpose of the insurance the title should be con- sidered as stated by the agent." 12 ° Another fact upon which the court placed some stress was that the negligence of the plaintiff in not reading the application aided in the perpetra- tion of the fraud upon the company and the situation of the applicant as to health was such that no company would have jirobably accepted him, and that the plaintiff would therefore be injured only to the extent of the premiums paid. The case, therefore, can hardly be said to establish a rule of law appli- cable to even all life risks. The most that can be claimed for must necessarily have had reference to the special facts of the case and in this connection the court thereafter says: "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 bis agency conveyed no authority to waive conditions or forfeitures, or to agree to false and fraudulent answers to any of the interroga- tories, or to make any other contract to bind the company. Pre- sumptively, the insured and the plaintiff knew all this before pay- ing the premium, for the printed policy, which was in their hands for several days, contained at the bottom this note: 'Tbe president and secretary of the company 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 au- thority given them' (the local agent and the medical examiner) 'or the company will not be bound.' " 119 Referring to Malleable Iron Works v. Phoenix Ins. Co.. 25 Co;i". 465 and also to Beebe v. Hartford etc. Ins. Co., 25 Conn. 51; Hough v. City Fire Ins. Co., 29 Conn. 10; 70 Am. Dec. 581. 120 Referring to Peck v. New London etc. Ins. Co., 22 Conn. 575; Woodbury Sav. Bank v. Charter Oak Ins. Co., 81 Conn. 517. § 491 AGENTS OF INSURER — POWERS. 616 it is, that it determines that the fraudulent answers in an ap- plication made by an agent with limited powers, of which the applicant had constructive notice, precludes a recovery on a policy on a life which no reliable company would have insured had the truth been stated, and the failure to recover on which would, therefore, cause the plaintiff no pecuniary loss, except possibly that of the premium paid and not that if he were in- nocent. In the case of Fletcher v. New York Life Insurance Company 121 the agent's authority was limited, and notice of such limitation was embodied in the application. The agent represented that it was only necessary to answer certain ques- tions merely as a form. The agent wrote in false statements concerning the applicant's physical condition and the latter signed the application without reading the same. The court says: "The instruction given to the jury in. the case before us is, in effect, that the insured was bound by his application if it was not avoided by fraud, and that it was so avoided by reason cf the false statements contained in it, and that therefore the plaintiff, as his representative, could recover. But if the appli- cation was avoided it would seem to be a necessary consequence that the policy itself was also voided and his right limited to recovering the premiums paid. But such was not the conclu- sion of the court. It directed the jury that if the application was avoided for fraud he could recover. It does not seem to have occurred to the court that had the answers been truthfully reported, and that the fact of the assured having had diabetes within a recent period been thus disclosed, the insurance would in all probability have been refused. If the policy can stand with the application avoided it must stand upon parol state- ments not communicated to the company. This, of course, cannot be seriously maintained in the face of its notice that only statements in writing forwarded to its officers would be considered. A curious result is the outcome of the instruction. If the agents committed no fraud, the plaintiff cannot recover, for the answers reputed are not true; but if they did commit the imputed fraud, he may recover, although upon the an- 121 117 IT. S. 531, roivrrsin? 14 Ff>d. Foin. SAC: 3 MeCnary, COS; 11 Fed. Rep. 377; 12 Fed. Uep. 557; 13 Fed. Rap. 520. 617 AGENTS OF INSURER — POWERS. § 4 ( J2 swers actually given, if truly reported, no policy would have is- sued. Such anomalous conclusions cannot be maintained"; and it was held that the policy was avoided. There is another class of cases which are somewhat analogous to the Connecticut ease above considered, in that they are based upon constructive notice to the assured by reason of a provision in the policy that the agent cannot bind the company by any promise, represen- tation, or information not contained in the application, the force of which condition is held so far binding upon the as- sured as to preclude him from proving by parol evidence that the answers were false and not those given, and that the appli- cant relied upo i the agent to insert the true answers as given, and did not know the contents of the application. 122 It would seem, however, that where an insurance company has put it into the power of an agent to represent it in procuring applications, and the agent acting within the scope of his ostensible authority commits a fraud upon his principal, by inserting fraudulent answers in the application, of which act the assured is ignorant, he himself having acted in good faith and having no knowledge of limitations on the agent's powers, that the company cannot avail itself of its agent's fraudulent acts to avoid a contract to the prejudice of the insured or of his beneficiary, or other in- nocent party to whom the loss may be payable. 123 § 492. Agent's Knowledge of Falsity or Incorrectness of Applicant's Statements. — In considering this ques- tion regard should be had to the fact whether the applicant's statements are willfully false or merely untrue, and made by him without fraudulent intent. "Where they are willfully false, and the agent has knowledge of their falsity, there would 1.22 Fitzmaurice v. Mut. Life Ins. Co., 84 Tex. 61; 19 L. W. Rep. 301; Enos v. Sun Ins. Co., G7 Cal. G21. See Stensgaard v. St. Taul Real Estate Title Co., 50 Minn. 429; 52 N. W. Rep. 910. See, also, in this connection, Continental L. Ins. Co. v. Chamberlain, 10 IT. S. Sup. Ct. Rep. 87. 123 See Senimenk v. Metropolitan L. Ins. Co., 72 Mich. 3SS; 40 N. w*. Rep. 4G9; Mowry v. Rosenilale, 74 N. Y. 3G3; Schwarzbach v. Ohio Valley Prot. Union, 25 W. Va. 022; Sullivan v. Phoenix Ins. Co., S4 Kan. 170; Plumb v. Cattaraugus etc. Ins. Co., 18 N. Y. 392; 72 Am. Dec 526; Eggleston v. Council Bluffs etc. Ins. Co., 65 Iowa, SOS. § 492 AGENTS OF INSURER — POWERS. 618 certainly be a close approach to the border line of collusion, even though there were no actual collusion. Some cases have gone to the extent of holding that even though an applicant makes an untrue and fraudulent statement of a material fact, that a recovery could nevertheless be had against the company where its agent knew the truth at the time, and the company received the application and premium and issued the policy, provided there was no actual collusion. 124 So in a Washington case it is held that if a broker who acts for and is agent of the insurer, in dealing with the applicant, fails to disclose a fact material to the risk which has been truthfully stated in the original application, the knowledge of the fact will be imputed to the insurer, and the latter cannot avoid the policy on the ground that the insured has violated its conditions. 120 Other cases hold that the policy is not avoided where the soliciting agent inserts misrepresentations in the policy and the applicant has knowledge thereof, but, acting without any fraudulent in- tent, and induced by the representations of the agent that it will make no difference, he permits them to stand as written. 126 So it is held in Missouri 127 that evidence is admissible that be- fore the policy was made out and delivered, and the premium paid, the applicant informed the agent that he was only a part owner of the insured property, and that the agent said it would make no difference, or used words of like effect. In an- other case 128 where it appeared that the agent erroneously stated in the application that there was no encumbrance, and he was notified of the mistake by the assured before he received the policy, and the company was also informed thereof, the court upheld the right of the assured to recover. Other cases, however, hold that where the applicant makes a false state- ly Guardian etc. Life Ins. Co. v. Hogan, SO 111. 35; 22 Am. Hep. 180; Miller v. Mut. etc. Ins. Co.. 31 Iowa. 216; 7 Am. Hep. 122: TUna etc. Ins. Co. v. Olmstead, 21 Mich. 24G; 4 Am. Rep. 4S3; Miller v. Hartford F. Ins. Co., 70 Iowa, 704; Withered! v. Marine Ins. Co., 49 Me. 200. 125 Mesterman v. Home Mut. Ins. Co., 5 Wash. 524; 34 Am. St. Rep. 877. 12c Reynolds v. Iowa & N. Ins. Co.. SO Town. 50?,: 40 N. W. Rep. G59. 127 Franklin v. Atlantic etc. Ins. Co., 42 Mo. 450. 128 Anson v. Winneshiek Ins. Co., 23 Iowa, 84. 819 AGENTS OF INSURER — POWERS. § 493 ment to the agent, and the latter has knowledge of the falsity, the company may nevertheless avoid the contract. Thus, where the applicant untruly states the purpose for which a building is used, the agent's knowledge as to its use constitutes no defense to false statements in proofs of loss. 129 So the agent's knowledge that representations in the application are false does not conclude the company where such statements are made warranties. 130 And the same rule obtains where the applicant states that he has applied to another insurance com- pany, and has not been rejected, which is false, for in such case the company may set up the breach of warranty notwithstand- ing its agent's knowledge of the fact that the statement was untrue; 131 nor is evidence admissible that the soliciting agent knew at the time of the falsity of representations as to health made by the insured. 132 § 493. Where Applicant is Assured by Agent that Application is Correct. — The assured is not concluded by a warranty or representation where the company's agent has knowledge of the facts, but assures the applicant that the form in which the facts are stated in the application is correct. Thus where a husband owned property located on land belonging to his wife, and the agent, with full knowledge thereof, filled out the application for them as joint owners, assuring them that it was correct, in reliance of which representation of the agent they signed the application, it was held that they might sue jointly on the policy. 133 So the company ia bound, where the application contains representations which are ambiguously expressed by its agent, when he assures the ap- plicant that it correctly embodies his own statements. 134 And 129 Hansen v. American Ins. Co., 57 Iowa, 541. 130 Sullivan v. Metropolitan L. Ins. Co., 36 N. Y. St. Rep. 38; 12 N. Y. Supp. 923. 131 Clemens v. Supreme Assembly of the R. S. of G. F., 131 N. Y. 495: 43 N. Y. St. Rep. 571; 30 N. E. Rep. 400. 132 Galbraith v. Arlington Ins. Co., 12 Bush (Ky.), 29. 133 Kausal v. Minnesota Farmers' etc. Assn., 31 Minn. 17; 47 Am. Rep. 77. 134 jEtna etc. Ins. Co. v. Olmstead, 21 Mich. 246; 4 Am. Rep. 483; See May v. Buckeye etc. Ins. Co., 25 Wis. 21)1; 3 Am. Rep. 76. §§ 494, 495 AGENTS OF INSURER — POWERS. 620 where there was a misdescription of the distance of the adja- cent buildings from the premises insured, and the agent of the company had made the measurements and obtained the signa- ture of the insured on representing that the application was all right, the court declared that evidence of such fact was not admissible to alter or contradict the written contract, but was admissible as an estoppel in pais; 13 ° and such contract obliga- tion may be sustained against the company in such, case on the ground either of waiver or estoppel. 136 § 494. Misrepresentations by Agent — Insured may Rescind. — If the company's agent in filling out the appli- cation makes misstatements or misrepresentations therein with- out the knowledge of the assured which are material and which would have avoided the policy had they been made by the lat- ter, he may rescind the contract, although the company would be bound. 137 § 495. Broker's Misrepresentations — Application. — The question whether the assured is precluded in case of in- correct, untrue, or false representations made by the broker in filling out the application has been held to depend upon the fact whether the broker was the agent of the applicant or the company, it having been declared that the applicant was con- cluded where the broker was his agent and otherwise where he was the company's agent, and that the applicant was bound where he made false statements to the broker. 138 And in a Vermont case 139 it was decided that the company could not avoid liability where the broker, who had an office with the company's agent, was, upon the return to the agent of the ap- plication, requested to go out and obtain information as to the ownership of the property, and he, although being correctly 135 Plumb v. Cattaraugus County Mut. Ins. Co.. 18 N. Y. 382: 72 Am. Dee. 520; denied in Dewees v. Manhattan Ins. Co., 35 N. J. L. (G Vroom) 366, 374. l?6 Lasher v. Northwestern Nat. Ins. Co.. 55 How. Pr. (N. Y.) 324. 137 Michigan Mut. Life Ins. Co. v. Reed, 84 Mich. 524; 47 N. W. Rep. HOG. 138 Commercial etc. To. v. EMiortt (Pa. 1888), 13 Atl. Rep. 970. 139 Mullen v. Vermont Mut. F. Ins. Co., 58 Vt. 113. 621 AGENTS OF INSURER — POWERS. § 49G informed by the assured, knowingly made false statements con- cerning the matter. 140 But where an insurance broker, with- out the knowledge or authority of the owner, stated that the building was used for one purpose when in fact it Was used for another, which was a more hazardous risk, it was held that there was no contract, as the minds of the parties never met on the subject matter. 141 And where a person at the time the application was made was acting as an insurance broker, and had not prior thereto been acting for the company, a notice to him that the property was mortgaged, or was situated on leased ground, is not notice to the company. 142 So in a federal case it is held that the broker is the agent of the assured to procure the policy, and that concealment by him of material facts avoids the policy. 143 In connection with this subject, however, the limited powers of the broker, when acting as the company's agent, should not be overlooked. § 496. Oral Application — Agent's Knowledge. — It may be stated as a general rule that, if there is no written applica- tion and the company issue a policy without one, or without any written request or without any representation, oral or writ- ten, the policy may be assumed to have been written upon the knowledge of the company or its agent, and in such case the company cannot after a loss set up that the interest or title of the assured is other than that evidenced by the policy. And it may be further stated that in such case the knowledge of the agent through whom the insurance is effected defeats the com- pany's right to avail itself of a fact contrary to that stated in the policy and known at the time the insurance was effected. 144 In a Pennsylvania case 145 there was a condition in the policy 140 See May v. Western Assur. Oo., 27 Fed. Rep. 260. 141 Goddard v. Monitor Mnt. F. Ins. Co., 10S Mass. 50; 11 Am. Rep. 307. 142 Ea.st Texas F. Ins. Co. v. Brown. 82 Tex. 631; 18 S. W. Rep. 713. H3 Hamblett v. City Ins. Co., 36 Fed. Rep. 118. See section 114 upon the point whether broker is agent of insured or assured. 144 Kenyon v. Knights Templnrs & M. Mut. Aid Assn. 122 N. Y. 247, 257; 33 N. Y. St. St. Rep. 467; 25 N. E. Rep. 299. 145 Philadelphia Tool Co. v. British American Assur. Co., 132 Fa. St. 236; 19 Atl. Rep. 77. § 498 AGENTS OF INSURER — POWERS. 622 that it should be void if the assured was not the sole and uncon- ditional owner of the property, or if the building stood on ground not owned in fee simple by the assured, or if the inter- est of th'e assured was not truly stated in the policy. The pol- icy was written without any application or written request de- scribing the interest of the assured in the building. It did not appear that any actual representation, either oral or written, was made by the assured. The defense of the company was that the only title of the assured was that of lessee, and the policy was therefore void, and the court held that the policy was writ- ten on facts within the knowledge of the insurer, and was in- tended to and did cover such interest as the assured had. 146 In another case a policy was issued upon an oral application made to the company's agent by the assured; the company set up the defense that the policy was void, because of misrepre- sentations as to title and encumbrances, and because the true state of the title was not indorsed on the policy in accordance with certain provisions therein. The agent was fully informed, and was cognizant of the true state of the title at the time the application was made, and it was decided that the company was bound. 147 And the court declared "we do not think that it would carry out the intention of the parties, or be a fair 146 See, also, Dwelling-House Ins. Co. v. Hoffman, 125 Pa. St. 62(1; 18 Atl. Rep. 397. 147 Hoose v. Prescott Ins. Co., 81 Mich. 309; 32 Cent. L. J. 226. The court said: "We must look at the situation of the parties, the condition of the thing insured, and what was said or done at the time the insurance was effected, in order to arrive at the intention of the parties, which, as before stated, must control in the construc- tion of the warranties contained in the instrument. If the repre- sentations are in writing, that is the evidence of what they are. If no application is made in writing, and no statements contained in any written application for insurance as to the risk and the subject matter of it, then oral proof of such facts may be introduced Now, the first important provision contained in the warranty is, that any application or statement connected with procuring this insurance is true, and shall be a part of the policy. This provision makes the oral application and statement made at the time the pol- icy was applied for to the agent of the defendant a part of the con- tract, and the finding of the jury in the case is conclusive upon the defendant that its agent was informed of the condition of the title to the real estnte on which the building mentioned in the said pol- icy stood and of the mortgage thereon The further provision €23 AGENTS OF INSURER — POWERS. § 496 -and just construction of this instrument, to hold that when it was issued and accepted by the assured, and the premium Is not a warranty, namely: This company shall not be bound under this policy by any act of or statement made to or by any agent or other person which is not contained in this policy or in any written paper above mentioned.' Nor under the circumstances under which this policy was made and delivered, can it have any binding effect at all upon the assured, except as to statements and acts of agents and others after the delivery and acceptance of the policy; and this, for the reason that the company is bound by verbal stat< meats made to its agent, upon which it assures insurance and receives the pay therefor. And it cannot, in the Instrument by which it agrees to insure, repudiate the authority of the agent or repudiate responsi- bility for his acts as such." The court then refers to the con- ditions relating to sole and unconditional ownership, and to the title and interest of the assured and to change in title, interest, etc., and the indorsement thereof on the policy, and continues: "In construing this portion of the policy, the whole must be taken together. Now, the object sought to be accomplished by the per- son applying for insurance was to obtain indemnity against loss by fire of her interest in the building. If the insurance company which made out this policy upon the verbal application to its agent had desired to know what interest it was insuring, it should have stated it in that part of the policy pertaining to the risk. It was the intention of these parties to issue a valid and binding contract of insurance, valid and binding from the time of acceptance of the same by the assured, not that after it had been accepted by the assured then the assured should apply to the com- pany and obtain, its consent in writing indorsed on the policy, stat- ing that the assured was the sole and unconditional owner of the property, or stating that the building intended to be insured stood on ground not owned in fee simple by the assured, or stating by indorsement on the policy the interest which the assured had in the property covered by the insurance, and yet the language of this part of the policy is, that the entire policy, and every part thereof, shall become void, that is, void in the future, unless such consent in writing is indorsed by the company thereon. To give any rea- sonable force and effect to this clause of the policy, it can only be held to apply to such changes as arise, after the policy has been delivered and accepted, in the ownership of the property, or if a building stood upon leased ground, the ownership of the building, and it does not apply to an existing state or condition of the prop- erty at the time the policy was issued. It looks to the future for protection of the insurer, and not to the present, only in so far as the preceding portion of the policy is violated by a misstatement or concealment of any fact material to the risk. Construing this portion of the policy with the testimony in the case, and with the fact that the company issued the policy to Mrs. Hoose, without stating in the policy what her interest was, but insuring the build- §§ 497, 498 AGENTS OF INSURER — POWERS. 624 paid, it was void from that moment, because it did not con- tain the indorsements required." 148 § 497. Information Obtained from Others by Agent — Application.— Where an agent is furnished with a blank application which he is authorized to fill out by the company, and he relies in so doing upon information obtained from others, rather than upon that from the applicant, and a policy is issued thereon, the company cannot avoid liability on such policy, but is bound by its agent's acts, even where the appli- cant signs such application, provided he is ignorant of the false statements therein. 149 § 498. "Where Agent Writes Down such Answers as He Deems Material — Application. — If the agent of the com- pany be fully informed as to the facts, and the policy be issued on a written application signed by the assured, wherein is set forth, in answer to printed interrogatories, only such portions of the answers given by the assured as the agent deems mate- rial, he having been fully informed as to the facts, the com- pany w T ill be liable upon the policy, notwithstanding the appli- cation sets forth falsely the existence of certain necessary con- ditions concerning the care of the property insured. This was ing against loss by fire to an amount not exceeding the interest of the assured in the property, we think that it must be held that the defendant understood the condition of the title, and intended to insure whatever interest Mrs. Hoose had which was insurable, not exceeding the amount named in the policy." 148 Spp. also, Oilman v. Dwelling-House Tns. Co.. 81 Me. 488: 17 Atl. Rep. 544; Pelzer Mfg. Co. v. St. Paul F. & M. Ins. Co. (U. S. C. C), 19 Ins. L. J. 372; Commonwealth v. Hide & Leather Ins. Co., 112 Mass. 136; 17 Am. Rep. 72; Blake v. Exchange Mut. Ins. Co., 12 Gray i Mass.). 265; Sibley v. Prescott Ins. Co., 57 Mich. 143; Western Assur. Co. v. Mason, 5 Bradw. (111.) 141; Washington Mills etc. Co. v. W. & B. Mut. F. Ins. Co., 135 Mass. 503; Castner v. Farmers' Mut. F. Ins. Co., 46 Mich. 15; Trade Ins. Co. v. Barraeliff, 45 N. J. L. H6 Yroom) r>43; 46 Am. Rep. 792; Agricultural Ins. Co. v. Yates. 10 Ky. L. R. 9S4; Guest v. New Hampshire F. Ins. Co.. 66 Mini 98; 31 X. W. Rep. 31; O'Brien v. Ohio Ins. Co.. 52 Mich. 131: "The elites of Waller v. Northern Assur. Co.. 10 Fed. Etep. 232, and Ross v. Citizens' Ins. Co., 3 Pngs. & B. (N. B.) 126, hold contrary to this rule, but they are overwhelmed by the weight of authority in favor of the rule": Newman v. Springfield F. & M. Ins. Co., 17 Minn. 123. 149 Dounelly v. Cedar Rapids Ins. Co., 70 Iowa, 693. 625 AGENTS OF INSURER POWERS. § 499 so held where the company sought to evade its liability on the ground that certain conditions regarding a watchman and a pump were not complied with where the insurance was upon the plaintiff's factory. 150 § 499. Where Agent Dictates or Advises the Answers —Application. — Where an agent, acting for the company in filling out the application, receives correct answers to the questions asked the applicant by him, and dictates or suggests the answers, and such answers are incorrect, the insured is not concluded thereby, provided that he himself acts in good faith. 151 And the same rule obtains where, by the special ad- vice of such agent, certain answers alleged by him to be imma- terial are omitted, and the assured is induced to sign the appli- cation by reason of such agent's representations that the answers are properly and sufficiently set out therein, even though the certificate issued thereon provides that the application is a part of the contract, and the statements therein -warranties, and that the certificate shall be void if the applicant omits to state all the facts relating to his health or which may materially af- fect the risk; 152 and where the agent told the applicant that it was unnecessary to state that he had had a sunstroke, the com- pany is estopped from setting up that such concealment was a breach of the condition of the policy. 153 So the company is bound where its agent is fully informed as to the existence of certain mortgages on the property, and the answer that there were no encumbrances is written in the application by the ad- vice and consent of such agent, on the ground that the mortga- gees had no insurance, and the company is not aided by a provi- sion in the policy that the application was a part thereof and a warranty. 154 But the policy was held void where the agent was 150 May v. Buckeye Mut. Ins. Co.. 25 Wis. 201: 3 Am. Rep. 70. 151 Planters' Ins. Co. v. Myers, 55 Miss. 470: 30 Am. Rep. 521. 152 Kansas Protective Union v. Gardner, 41 Kan. 397; 21 Tae. Rep. 233. 153 Boos v. World etc. Ins. Co., G4 N. Y. 23G; G Thomp. & C. (N. Y.) 304:4 Hun, 133. i">4 iEtna Live Stock v. Olmstead, 21 Mich. 24G, 251; 4 Am. Rep. 4S5. Joyce, Vol. I.— 40 §§ 500, 501 AGENTS OF INSURER POWERS. 626 informed by the applicant, in answer to the question as to en- cumbrances, that he had given a note, but did not know whether it had been entered up or not, and, in response to the question whether he should put down the answer as encum- brance or no encumbrance, said the agent might put it down as he pleased, and it was written in the application by him as no encumbrance. 105 § 500. Where Agent Tells Insured No Answers are Nec- essary — Application. — When the company's agent informs the assured that no answers are necessary, and thereafter, with- out the applicant's knowledge, fills out the application by in- serting false answers therein, the company cannot avail itself of such answers in defense to an action on the policy. 156 So the company is estopped to deny its liability where its agent, upon being informed by the applicant that he intended to take out additional insurance, told him it would not be necessary to notify the company until such further insurance was ob- tained. 157 § 501. Policy Issued on Agent's Representations or Recommendations. — A policy cannot be avoided by reason of verbal misrepresentations as to the condition of the prop- erty made by the company's agent, unless the assured has with full knowledge thereof ratified his acts. 158 And where the agent, being fully informed by the applicant as to the existence of a mortgage on the property, states in his daily report to the company that there is no mortgage, and a policy is issued in consequence, the agent's knowledge is that of the company, and the latter is liable on the policy. 159 In another case, the agent of the company, being informed of the facts, made false statements in the application as to encumbrances on the prop- 155 Blooming Grove Mut. F. Ins. Co. v. McAnerney, 102 Fa. St. 335; 48 Am. Rep. 209. 156 Phoenix Ins. Co. v. Stark, 120 Ind. 444: 22 N. F. Rep. 4-13. 157 Kitchen v. Hartford F. Ins. Co., 57 Mich. 135; 58 Am. Rep. 344. 158 McGraw v. Gennania F. Ins. Co., 54 Mich. 145, one judge dis- senting. 159 Gristock v. Royal Ins. Co.. ST M1ch. 42S; 49 N. W. Rep. 634; affirming 84 Mich. 161; 47 N. W. Rep. 549. 627 AGENTS OF INSURER — POWERS. §§ 502, 503 erty, and also stated therein that he had inspected the property, that the answers were correct, and recommended the risk, and it was held that there was a waiver of the condition against en- cumbrances; 1G0 and the policy is not avoided by a misrepre- sentation as to value where the agent certifies that he has ex- amined the risk and recommends its acceptance. 161 And where the agent is fully informed as to the stovepipes and chimneys, pronounces them safe, and recommends the risk, the company is liable on the policy issued. 162 § 502. Where Application Gives Notice of Agent's Limited Authority. — Where the application gives notice of the agent's limited authority to waive conditions, the assured is bound thereby, as where it provides that the company shall not be bound by any act or statement of its agent not con- tained in the application. 163 So where the application signed by the insured contains a provision to that effect, the agent's knowledge of the falsity of a warranty will not avail the in- sured. 164 § 503. Misrepresentations by Ajrent — Copy of Appli- cation or By-laws Annexed to Policy. — Tn many of the states, as has been stated, the statute requires that the policy shall contain, or have attached thereto, correct copies of the ap- plication, as signed by the applicant, and of the by-laws re- ferred to or relied on, as well as of the constitution and rules of the company. The question, therefore, arises as to how far a receipt of the policy, with a copy of the application annexed, 160 Reiner v. Dwelling-House Ins. Co., 74 Wis. 89; 42 N. W. Rep. 208. i6i Daeey v. Agricultural Ins. Co., 21 Hun (N. Y.), S31. See. also, Continental Ins. Co. v. Pierce, 39 Kan. 390; 18 Pac. Rep. 291; Phoen- ix Ins. Co. v. La Pointe. 17 111. App. 248. 162 Waterbury v. Dakota F. & M. Ins. Co., 6 Dak. 4G8; 43 N. W. Rep. 697. 163 Holloway v. Dwelling-House Ins. Co. (St. L. C. A. 1S92), 21 Ins. L. J. 379; Shawmut Mut. F. Ins. Co. v. Stevens. Allen (Mass.). 332. See Loekner v. Home Mut. Ins. Co., 17 Mo. 247; Walsh v. Hartford F. Ins. Co., 73 N. Y. 5; Messelbach v. Normnn, 122 N. Y. 57S; Insurance Co. v. Wolff, 95 U. S. 329. 164 Chase v. Hamilton Ins. Co., 20 N. Y. 52. § 503 AGENTS OF INSURER— POWERS. 628 operates to conclude the assured by misrepresentations made by the agent of the company in tilling out the application. In such cases, the insured, upon actual receipt of the policy, is enabled to ascertain exactly what representations have been made in the application, and to determine their truth or falsity. Is it, then, incumbent upon him to at once repudiate them, if they are materially false or untrue or incorrect? May he, un- der certain circumstances, rest upon the belief that the com- pany, through its agent, has filled out the application correctly? Or, to go further, has he a right to assume that the company has waived certain conditions through its agent? Can he sub- sequently claim that the company is estopped, and that the writing offered in evidence is not the instrument made by him, or that he has been misled to his prejudice? If he is justified in relying upon the company's agent in signing an application without reading it, would he be equally justified, for the same reasons, in not reading the copy of the application annexed to or contained in the perfected contract? What is the object intended to be accomplished by the statu- tory requirements that the policy shall contain or have attached thereto a copy of the application? These questions are perti- nent. Again, assume a case where the assured cannot read. How far would such a party be bound with a knowledge of the contents of the application, even though annexed to the policy, especially where the agent, at the time it was filled out, had as- sured him that it was all right. 105 In a federal case 166 fraud- ulent answers regarding the applicant's physical condition were inserted in the application by the agent, whose powers were limited, and notice thereof was given in the application. This was signed, however, by the assured without reading. In the opinion of the court it is said: "Assuming that the answers of the assured were falsified as alleged, the fact would be at once disclosed by the copy of the application annexed to the policy to which his attention was called. Tie would have discovered by 185 Soo on this last suggestion, Continental Ins. Co. v. Ruckmnn, 127 111. 364. v,6 Fletcher v. New York Life Ins. Co., 117 U. S. 571; reviewing nr, F. S. ?,29; 00 U. S. 240; 17 Mo. 247: 13 Wall. (U. S. - ) 222: 21 Wall. (U. S.) 152; 41 Conn. 1CS; 39 Conn. 100; 74 Mo. 1G7; 43 Me. 394. 629 AGENTS OF INSURER — POWERS. § £03 inspection that a fraud had been perpetrated, not only upon himself, but upon the company, and it would have been his duty to make the fact known to the company. lie could not hold the policy without approving the action of the agents, and thus becoming a participant in the fraud committed. The re- tention of the policy was an approval of the application and its statements. The consequences of that approval cannot after his death be avoided"; and in this view of the case such answers w r ere held fatal to a recovery. So it is held in another case that the assured is estopped from denying his knowledge of the fraud practiced upon both him and the company by the act of the latter's agent in inserting false answers in the application, where the policy is in his possession and has a copy of the application indorsed thereon, and where the fraud is such that it could have been easily detected by the assured had he read such copy. 167 So the policy is declared in a Maine case 168 to be avoided by a materially false statement inserted in the application by the company's agent, although done without his knowledge, where the contract provides that the assured becomes responsible for the truth of the statements in the application by accepting the policy, and the policy makes the application a part thereof. 169 There are, how- ever, decisions which clearly uphold the opposite doctrine. Thus, where an agent acting for the company signed an appli- cation for a fire risk w T ith the name of the assured, but without his authority, consent, or knowledge, and the application con- tained untrue answers, it was held that the policy was not avoided, even though it was indorsed with a copy of the appli- cation, 170 and although the assured in such case fails to give no- tice to the company that the statements are false. 171 It w T ill be seen, therefore, that the decisions are conflicting. There eer- ie? Johnson v. Dakota F. & M. Ins. Co. (N. Dak.), 45 N. W. Rep. 799. 168 Richardson v. Marine Ins. Co.. 40 Me. "94: 74 Am. Dec. j "D. 169 See, also, Goddard v. Monitor Ins. Co., 10S Mass. 56; 11 Am. Rep. 307; Hale v. Mechanics' Mut. F. Ins. Co., 6 Gray (Mass.), 1G9; G6 Am. Dee. 410; American Ins. Co. v. Niober.^er, 74 Mo. 107. ito state Ins. Co. v. Taylor, 14 Col. 409; 24 Pac. Rep. 333. iti Donnelly v. Cedar Rapids Ins. Co., 70 Iowa, 693. § 504 AGENTS OF INSURER — POWERS. 630 tainly are circumstances under which the fact that the application with its statements is again presented to the assured when he receives his policy ought not to conclude him any more than it would have done had it not been so brought to his notice. To illustrate: Suppose the agent has advised, dictated, or suggested the answers, and the applicant has relied upon the agent's skill, honesty, and presumed knowl- edge of the company's requirements, and of what is legally proper and necessary to be done in filling out the application. Do the answers in such case become more binding upon the as- sured than they would have been had the application not been annexed to or set forth in the policy? Again, in those cases where the agent writes down only such answers or parts of answers as he considers material, or where he assures the ap- plicant that the application is correct or the statements therein all right, or the agent waives certain conditions within the scope of his apparent authority. By what principle would the assured be precluded, in case a copy of the application were annexed, indorsed on, or otherwise contained in the policy, any more than he would be if it were not? We must confess that a careful examination and comparison of the cases fails to dis- cover to us any general rule which will be applicable to all the different cases, nor is there any common ground which affords a basis from which to deduce a satisfactory conclusion which will operate to establish a just rule for both the assured and assurer. There are certainly many decisions which, in holding that the assured is precluded, are just and reasonable, but to these decisions the rule stare decisis should not apply, for they do not establish a principle of law, but are rather in the nature of special rulings under the particular circumstances, and the same remarks are equally applicable to other decisions which hold that the assured is not precluded in the class of cases under consideration. § 504. Misrepresentations — Ajrent's Collusion With Applicant. — It is assumed that the agent has communi- cated to his principal all necessary facts concerning the nogo- tiations arising in the course of his agency, and if he honestly discharges his duty to the company he will do so. It is on this 631 AGENTS OF INSURER POWERS. § 504 ground that his knowledge is presumed to become the knowl- edge of his principal, for the protection of innocent third per- sons. It is, therefore, ordinarily true that the principal is bound by knowledge of such facts as come to the agent in the course of the business. 172 But where the company's agent vio- lates his trust, and colludes with the applicant to cheat and defraud the principal, the applicant cannot avail himself, as against the insurer, of the agent's knowledge in reference to matters to which the co-operation for the fraudulent purpose relates. And it makes no difference whether the acts done in fraud of the principal are intended to promote merely the in- terest of the applicant or the common interest of the applicant and the agent, for in neither case are such fraudulently con- certed acts binding upon the person intended to be defrauded, and the same rule applies whether the agent conspires with the assured to defraud the company by false statements, or whether the act of the applicant is merely permissive. It is sufficient that the latter assents that the agent may insert the false state- ments in the application, both knowing them to be false; 173 nor can the assured, with knowledge of the extent of an agent's authority, obtain any benefit from a contract made in excess of his authority by collusion by such agent. 174 So in case the agent of a mutual aid association conspires with the applicant to falsely state his age, the company is not bound where the rules of the association forbids the insurance of any person over fifty years of age, and both the agent and the applicant had knowledge of the restriction. 175 172 See Centennial Mut. L. Ins. Assn. v. Parham, 80 Tex. 518, 526; 16 S. W. Rep. 316, per the court; Roctford Ins. Co. v. Nelson, 75 111. 54S. 173 See Centennial Mut. L. Ins. Assn. v. Parham, SO Tex. 518: 16 S. W. Rep. 316, per the court; Blooming Grove Mut. Ins. Co. v. Mc- Anerney, 102 Pa. St. 335; 48 Am. Rep. 209; National Ins. Co. v. Mineh, 53 N. Y. 150, per the court; Lewis v. Phoenix Mut. Ins. Co., 39 Conn. 100; Smith v. Insurance Co., 24 Pa. St. 320, per Woodward, J. 174 Smith v. Insurance Co., 24 Pa. St. 323; Hanson v. American Ins. Co., 57 Iowa, 741; Galbraith v. Insurance Co., 12 Bush (Ky.), 29. 175 HauE v. Northwestern Masonic Aid Assn., 76 Wis. 450; 45 N. W. Rep. 315. § 505 AGENTS OF INSURER — POWERS. 632 § 505. Misrepresentations by Agent — Parol Evidence Admissible. — It may be considered as a well-settled rule that parol evidence is admissible to show that the agent of the company at the time, when acting within the apparent scope of his authority in tilling out the application, had been truly and fully informed by the applicant of the facts, or that he had actual knowledge thereof, and that he had nevertheless, without the authority, consent, or knowledge of the applicant, misstated the facts in the application, or that he had omitted to insert certain facts therein. 1 ' 6 Such evidence is not admitted to vary or contradict the writing, but is based upon the princi- ple that the writing was procured under such circumstances that it cannot lawfully be used against the party whose name is signed to it. It is not his instrument, so far as the claimed erro- neous statements are concerned. 177 Thus, it may be shown by the assured that he had signed the application, supposing the an- swers actually given by him had been written down by such agent. 178 So the circumstances attending the application may be shown by parol evidence. 179 The writing in such case is not the applicant's statement, although signed by him, and the in- surance company is estopped to claim that the representation is that of the insured. The error is chargeable to the insurer and not to the insured, 180 for such evidence is admissible, notwith- 176 Continental Ins. Co. v. Pierce, 39 Kan. 396; 18 Pac. Rep. 291; Columbia Ins. Co. v. Cooper, 50 Pa. St. 331; Hartford Life Ins. Co. v. Gray, 80 111. 28; Howard Ins. Co. v. Brnnner, 23 Pa. St. 50; Grattan v. Metropolitan L. Ins. Co., 80 N. Y. 281; 36 Am. Rep. 617; 92 N. Y. 274; 44 Am. Rep. 372; Woodbury Savings Bank v. Charter Oak Ins. Co., 31 Conn. 517; Bacon on Benefit Soci- eties and Life Insurance, sec. 458; McFarland v. Kittaning Ins. Co., 134 Pa. St. 590; 19 Am. St. Rep. 723; Manhattan Ins. Co. v. Webster, 59 Pa. Si. 227; 98 Am .Dec. 332; Planters' Ins. Co. v. Sorrels, 1 Baxt. (Tenn.) 352; 25 Am. Rep. 780; Patten v. Farmers' F. Ins. Co., 40 N. H. 3S3; Kausal v. Minnesota Farmers' Mut. F. Ins. Co., 31 Minn. 17; '7 Am. Rep. 776: McCall v. Phoenix Ins. Co., 9 W. Va. 237; 27 Am. Rep. 558. See note, 77 Am. Dec. 721. 177 Union Mut. Ins. Co. v. Wilkinson. 13 Wall. (U. S.) 222, per Miller, J. 178 Smith v. Farmers' etc. Mut. F. Ins. Co., 89 Pa. St. 2S7. 179 Planters' Ins. Co. v. Myers, 55 Miss. 479; 30 Am. Rep. 521. 180 Kausal v. Minnesota Farmers' Mut F. Ins. Co., 31 Minn. 17; 47 Am. Rep. 770, per Mitchell, J. 633 AGENTS OF INSURER — POWERS. § 505 standing the rule that parol evidence is inadmissible to vary or control written contracts; that rule must yield to the rule that the company cannot take advantage of the mistakes, omissions, or misstatements of its agents within the apparent or real scope of their employment. 181 This rule has been upheld where the agent, with full knowledge as to the condition of the premises, misrepresented the facts; 182 where the agent was a soliciting agent, with authority only to fill out and forward applications, and to receive and forward premiums to the company, and he misrepresented as to encumbrances; 183 where the misrepresenta- tion, was concerning encumbrances, although the policy pro- vided that the statements in the application should be warran- ties;' 184 where the interest of the asssured was wrongly de- scribed; 180 where the insured was cheated into signing the ap- plication and the policy was issued upon the agent's own false statements; 1 ^ where the. building in which the goods were kept was misdescribed, as used for mercantile purposes and one room as a sleeping room, the defense being that it was used as a board- ing-house, and the insured had relied upon the agent to prepare the papers; 187 where the policy was signed and incorrectly filled out by the agent after he went to his office, and without the knowledge of the assured; 188 where the defense is a breach of warranty in misrepresenting the title and encumbrances; 189 where the applicant signed, without reading the application, upon the agent's stating that it was all right, and the agent made no inquiries relative to encumbrances. 100 Such evidence is also, in such case, admissible to show a mistake, as that the agent had neglected to insert the name of one of the partners, where the isi Beal v. Park F. Ins. Co.. 16 Wis. 241: 82 Am. Dec. 719; Menk v. Home Mut. Ins. Co.. 76 Col. 50; 14 Pac. Rep. 837. 1S2 Menk v. Home Mut. Ins. Co., 76 Col. 50; 18 Pac. Rep. 117. 183 Boetrher v. Hawkeye Ins. Co.. 47 Iowa, 253. 184 North American Ins. Co. v. Throop, 22 Mich. 146; 7 Am. Rep. 638. 185 Hough v. C. F. I. Co.. 29 Conn. 10: 76 Am. Doe. 581. 186 Kister v. Lebanon Mut. Ins. Co., 128 Pa. St. 553; 18 Atl. Rep. 447: 5 L. R. Anno*. 646. 187 Texas Banking & Ins. Co. v. Stone, 49 Tex. 4. 188 Brown v. Metropolitan L. Ins. Co., 65 Mich. 306; 32 N. TV. Rep. 610. 189 Combs v. Hannibal S. & Ins. Co., 43 Mo. 148; 97 Am. Dec. 3S3. loo Geib v. International Ins. Co., 1 Dill. (C. C.) 443. g 505 AGENTS OP INSURER — POWERS. 634 policy was taken out on the whole partnership property, 191 al- though such evidence of mistake is not admissible in courts of law, except on the ground of estoppel or waiver. 192 It is like- wise admissible to show the acts and declarations of such agents either at the time of taking the risk or renewing the same. 193 So evidence is competent that the agent agreed to note in the application the existence of an encumbrance on the property, 194 and statements made by the agent, in answer to printed inter- rogatories on the back of a blank application furnished by the company, are admissible to show that the agent had knowl- edge of the facts and of the falsity of the statements written in the application by him. 195 So it is decided in another case that the agent's report to the company made after the applica- tion, which contained a misstatement as to encumbrances, is in- admissible against the insured. 196 But it is held, however, that the assured can avail himself of the right to introduce such parol evidence only by the proper allegations. 197 In a New York case the assured defended on the ground of a breach of warranty in omitting to mention in the application an encum- brance on the property, and the court excluded evidence to show that the agent was informed of the mortgage, but omitted to mention it in the application, but offered to allow the plain- tiff to amend, alleging the mistake. This offer the plaintiff refused, and he was nonsuited. Thereafter, but not within the year limit provided in the policy, another suit was brought, and it was held not maintainable. 198 101 Manhattan Ins. Co. v. Webster. 59 Pa. St. 227; 98 Am. Dec. 332. 192 Examine Cooper v. Farmers' M. F. Ins. Co., 50 Pa. St. 299; 88 Am. Dec. 544. 193 Beal v. Park F. Ins. Co., 16 Wis. 241; 82 Am. Dec. 719. 194 Copeland v. Dwelling-House Ins. Co., 77 Mich. 554; 43 N. W. Rep. 991. 195 Continental Ins. Co. v. Pierce, 39 Kan. 39G: 18 Pac. Rep. 291. 196 Phoenix Ins. Co. v. La Pointe, 17 111. App. 248. 197 Sullivan v. Cotton States etc. Ins. Co., 43 Ga. 423; Texas Bank- ing Co. v. Stone. 49 Tex. 4; O'Donnell v. Connecticut F. Ins. Co., 73 Mich. 1; 41 N. W. Rep. 95. 198 Arthur v. Homestead F. Ins. Co., 78 N. Y. 402; 34 Am. Rep. 550; Mr. Browne, in his excellent work on parol evidence, agrees with the rule as stated in the text, and cites numerous cases with the condi- tions appended where it lias been sustained: Browne on Parol Evi- dence, pp. 100-15. sec. 48: vr>. 74, 7.". sec. 42. He also refers to and considers cases holding th"^ contrary doctrine. 635 AGENTS OF INSURER — POWERS. § 506 § 506. Same Subject — The Opposing View. — It is not doubted but that parol evidence is competent of a mistake or . fraud in an action on the contract where the statement is a mere representation and not a warranty, without resort to a court of equity ; 199 and the policy of courts of equity has been and is to grant relief, by way of reformation or otherwise, on the ground of mistake or fraud in cases of warranty. Many of the courts have refused to go beyond the rule stated in the first proposition, while others have expressly decided that the only remedy in such cases as are under consideration is in courts of equity. Thus it is held in a recent Texas case 200 that the as- sured cannot, in an action on the policy, overcome the defen-e that certain answers are false by evidence that the agent wrote down the answers, and that he signed the application without knowledge of its contents. The policy in this case limited the powers of the agent, and provided that the company would not be bound by any representation or information received by its agent, or any promise made by him not contained in the application. So parol evidence is held inadmissible, in an ac- tion on the policy, to show that a false description of the prem- ises was inserted in the application by the agent, he knowung at the time that the property was used for a purpose which would come under a more hazardous class, and the premium for which was higher, such evidence not being competent to prove that under the description adopted, the defendant intended to in- sure the premises as in fact occupied and used. 201 The doctrine of Insurance Company v. Wilkinson 202 is criticised by the court in the last case as establishing a rule that parol evidence is ad- missible to vary or alter a written contract. In another case the defendants agreed to insure a building occupied as a store and the stock of goods therein, the terms employed being a warranty under the policy that the building was used for the purpose specified. An action of assumpsit was brought on the policy to recover a loss. The company proved on the trial of 1M State Mut. Ins. Co. v. Arthur, 30 Pa. St. 315. son- Fitzmaurice v. Mut. L. Ins. Co., 84 Tex. 61; 10 S. "W. Rpp. 301. 201 Franklin F. Ins. Co. v. Martin, 40 N. J. L. (11 Vroom) 5GS: 29 Am. Pep. 271; three judges dissenting. 202 13 Wall. (U. S.) 235. § 506 AGENTS OF INSURER POWERS. 636 the case that a private stable was kept on the premises, from the date of the policy up to the time of the fire, which use, under the conditions of the policy, avoided it as an extrahaz- ardous risk. To offset the defense it was attempted to be shown that the policy was obtained for the plaintiff by the agent of the defendant company, and that he was informed and knew that the building in question was, at the time of procuring said policy, used as a stable. Such evidence was held inadmissible, as tending to vary the terms of a written contract. 202 * And it 202a Dewees v. Manhattan Ins. Co., 35 N. J. L. (6 Vroom) 366. The court said: "The assumption is, and must be, that the warranty in its present form was a mistake of the agent. But a mistake can- not be corrected, in conformity with our judicial system, in a court of law. No one can doubt that in a proper case of this kind an equitable remedy exists It is possible, therefore, that in this case in equity the present contract might be reformed so as to con- tain a permission for the plaintiff to keep his stable in this build- ing; but I think it has never been supposed that this end could be reached in this state by proof before the jury in a trial at the cir- cuit. The principle would cover a wide field, for if this mistake can be there corrected, so can every possible mistake. If the plaintiff can modify the stipulation, with respect to the restricted use of the premises, on the plea of a mistake in such stipulation, on similar grounds it would be open to the company to modify the policy with respect to the amount insured. I am at a loss to see how, on the adoption of the principle claimed, we are to keep separate the func- tions of our legal and equitable tribunals. Nor do I think, if this court should sustain the present action, that it could be practicable to preserve in any useful form the great primary rule that written instruments are not to be varied or contradicted by parol evidence." The court then, considering the question of estoppel, says its appli- cation to written contracts in such cases is an entire novelty, and would accomplish, by circuity of action, precisely the same results as though the instrument had been reformed in conformity to the claimed evidence "that the facts now before us do not present the elements of an estoppel. Such a defense rests on a misconception as to a state of facts induced by the party against whom it is set up. The person who seeks to take advantage of it must have been misled by the words or conduct of another. Now, in the present case, the agent did not make any statement, nor did he do anything which led the plaintiff to alter his condition. The most that can be laid to his charge is that from carelessness he omitted properly to describe the use of the premises insured. But this was not a misstatement of a fact on which the plaintiff acted, because the plaintiff was aware of the circumstances that the building was put to another use." 637 AGENTS OF INSURER — POWERS. § 507 was declared that "the alleged error in the description is plain on the face of the policy, and the law incontestably charges the defendant with knowledge of the meaning and legal effect of his own written contract. Certainly, the entire state of things was as well known to the plaintiff as it was to the agent of the defendants. To found an estoppel on the ignorance of the plaintiff of the plainly expressed meaning of his own contract Avould be absurd." 203 § 507. Same Subject— Where Agent's Authority is Limited. — In an Iowa case it is held that evidence is not admissible to show that the agent wrote down the statements incorrectly or otherwise, where the agent's authority was limited to receiving and forwarding applications for insurance, but that the rule would be to the contrary where the agent had power to issue, and did issue, the policy without submitting it to his principal. 204 So where the agent had authority only to re- ceive applications and transmit policies, and he described the building as containing only one chimney, it was held that parol evidence was inadmissible that the agent had knowledge that the facts were to the contrary, and that he agreed with the applicant that a proper chimney and secured pipe should be put in before a fire should be lighted. 205 In a Connecticut case 206 a distinction is made between the attempt to prove that truthful 20S Dewees v. Manhattan Ins. Co., 35 N. J. L. (6 Vroom) 366; citing Jennings v. Chenango Mut. Ins. Co., 2 Denio (N. Y.), 75; Kennedy v. St. Lawrence Co. Mut. Ins. Co., 10 Barb. (N. Y.) 285; Vander- voort v. Columbia Ins. Co., 2 Caines (N. Y.), 155; Weston v. Emes, 1 Taunt. 115; Parks v. General Int. Assur. Co.. 5 Pick. (Mass.1 34; Angell on Fire and Life Insurance, sees. 20, 21, and other authori- ties; denying Plumb v. Cattaraugus Co. Mut. Ins. Co., 18 N. Y. 392; 72 Am. Dec. 526. See. also, Sheldon v. Hartford P. Ins. Co., 22 Conn. 335; 58 Am. Pec. 420; Barrett v. Mutual Ins. Co., 7 Cush. (Mass.) 175; Ripley v. .'Etna Ins. Co., 30 N. Y. 136; 86 Am. Dec. 362; and cases cited and considered in Browne on Parol Evidence, pp. 74, 7.".. sec. 42; p. 106. et seq; sec. 48. Examine New York Life Ins. Co. v. Fletcher, 117 U. S. 519. 204 Ayres v. Hartford etc. F. Ins. Co., 17 Iowa, 170; S5 Am. Dec. 553. 205 Smith v. Insurance Co.. 24 Pa. St. 320. 20G Ryan v. World Mut. Life Ins. Co., 41 Conn. 16S; 19 Am. Rep. 490. § 508 AGENTS OF INSURER — POWERS. 638 answers were given to the interrogatories and that the incorrect answers written in the application were those of the agent, and the attempt to show that different answers w r ere given and that the local agent, without the consent or knowledge of the in- sured, wrote down wrongly the answers. The court declared that the latter was an effort to substitute for a part of the written contract another and different parol contract, which could not be done, but that in the first case the question whether the defendant company would be bound would depend upon the extent of the agent's authority. The express author- ity of the agent here was limited to receiving the application, forwarding it to the home office, receiving, countersigning, and delivering the policy, and collecting the premiums. The ap- plication was a part of the policy. The representations or war- ranties related to the health of the insured. Truthful answers were given, but were written incorrectly by the agent. The court held that the agent had no authority to bind the com- pany by false answers. § 508. Agent of Insured— When Such Provision in Policy is Inoperative. — A question which has been the source of much litigation is, whether the company's agent, with apparent authority to act for it, in procuring the insurance and preparing the application, is made the agent of the insured, in transactions relating to the insurance, by a provision to that ef- fect inserted in the policy. The provision is substantially this, that any person other than the assured who procures the in- surance for the company shall be deemed the agent of the assured, and not of the company, under any circumstances or in any transactions relating to the insurance. While this pro- vision has been held operative in some cases, 207 it has met with an almost universal condemnation on the part of the courts, and has been declared ineffectual to accomplish the purpose in- tended by the insurer. Such a stipulation in the policy cannot be presumed to have entered into the contemplation of both the parties to the contract when it was not known to the assured at any time prior to the delivery of the policy, or where he had 207 See sec. 527 herein. 639 AGENTS OF INSURER POWERS. § 508 no knowledge of the intention to so stipulate at the time of contracting. The company cannot escape the consequences of the fraud, mistake, or negligence of its agent by such a provis- ion- 208 nor can it change the ostensible authority which the agent has been held out by the company to possess. It cannot be a valid rule of law that a party can abrogate the authority of the agent so soon as the agent has accomplished the purpose which he was appointed to perforin. Strong language has been used by some of the courts in discussing this ques- tion. Thus it is said in a New York case: 209 "This is a provision which deserves the condemnation of courts when- ever it is relied upon to work out a fraud, as it is in this case. The policy might as well say that the president of the company should be deemed the president of the insured. Such a clause is no part of a contract. It is an attempt to reverse the law of agency, and to declare that a party is not bound by the agent's acts." It is also declared in a leading case 210 that agents author- ized to procure applications for insurance, and to forward them to the company for acceptance must be deemed the agents of the insurer, and not of the insured, in all that they do in pre paring the application or in making representations to the in sured as to the character or effect of the statements contained in the application. Such a rule rests not only on principle, but on considerations of public policy, and also upon the fact that the present manner and methods of doing business by insurance companies in sending agents abroad to procure insurances, and by stimulating them to their best efforts by various induce- ments, makes the business one of the sale of insurances, and agents hold themselves out with the consent of the companies as representing them in all that is said and done in regard to the application, and the public so look upon them, and had a right so to do. And the court says: "It would be a stretch of legal principles to hold that a person dealing with an agent, ap- parently clothed with authority to act for his principal in the 208 E'ilenberger v. Protective etc. Ins. Co., 89 Pa. St. 464, per the court. 209 Partridge v. Commercial Ins. Co., 17 Hun, 95, per Learned, J. 210 Kausal v. Minnesota Farmers' etc. Assn., 31 Minn. 17; 47 Am. Rep. 776. § 50S AGENTS OF INSURER POWERS. 640 matter in hand, could be affected by notice given after the ne- gotiations were completed, that the party with whom he had dealt should be transformed from the agent of one party into the agent of the other. To be efficacious, such notice should be given before the negotiations are completed. The applica- tion precedes the policy, and the insured cannot be presumed to know that any such provision will be inserted in the latter. To hold that by a stipulation unknown to the insured at the time he made the application, and when he relied upon the fact that the agent was acting for the company, he could be held respon- sible for the mistakes of such agent, would be to impose bur- dens upon the insured which he never anticipated. Hence we think that if the agent was the agent of the company in the matter of making out and receiving the application, he cannot be converted into the agent of the insured by merely calling him such in the policy subsequently issued. Neither can any mere form of words wipe out the fact that the insured truth- fully informed the insurer, through its agent, of all matters pertaining to the application at the time it was made. We are aware that in so holding we are placing ourselves in conflict with the views of some eminent courts. But the conclusion we have reached is not without authority to sustain it, and is, we believe, sound in principle and in accordance with public policy." 211 So it is held in New York that the company can- 211 See. also, riedmont etc. Ins. Co. v. Young, 58 Ala. 476: 29 Am. Rep. 770; Commercial F. Ins. Co. v. Allen, 80 Ala. 571, 576; 1 S. Rep. 202; Union Ins. Co. v. Chipp, 93 111. 96; Commercial Ins. Co. v. Ives, 56 111. 402: Boetch'er v. Hawkeye Ins. Co.. 47 Towa, 253; McArthur v. Insurance Co., 35 N. W. Rep. 430, and note; Continental Ins. Co. v. Pierce, 39 Kan. 396; 18 Pac. Rep. 291 (annotated case); Sullivan v. Phoenix Ins. Co., 34 Kan. 170; Planters' Ins. Co. v. Myers, 55 Miss. 479; 30 Am. Rep. 521: Oates v. Penn. F. Ins. Co.. 10 Hun (N. Y.l. 489 White v. Germania F. Ins. Co., 76 N. Y. 415; Rowley v. Empire Ins. Co., 36 N. Y. 550; Partridge v. Commercial F. Ins. Co.. 17 Hun (N. Y.i, 95; Spragiie v. Holland Purchase Ins. Co.. 69 N. Y. 128; Columbia Ins. Co. v. Cooper, 50 Pa. St. 331; Susquehanna Mut. F. Ins. Co. v. Cusiek, 109 Pa. St. 157; Insurance Co. v. Lee, 73 Tex. 641; Grau v. American Cent. Ins. Co., 109 N. Y. 278; Insurance Co. v. Mahone. 21 Wall. (U. S.^i 152; Bassell v. American F. Ins. Co.. 2 Hughes (C. C), 531 ; note, c >2 Am. Dec. 723. An agent of a foreign company is not an ngont of insured: Commercial Ins. Co. v. State ex rel., 113 Ind. 331,. 336. 641 AGENTS OP INSURER POWERS. § 508 not make its agent in fact the agent of the applicant, by a stip- ulation to that effect in the policy. 212 So, also, in Indiana it is decided that a condition that the agent is the agent of as- sured is void, as applied to a local agent upon whose countersig- nature the policy depends. 213 And in "Washington the fact that the policy recites that the soliciting agent shall be assured's agent does not make him such where he is in fact assurer's agent. 214 So the fact that the company instructs its agent to regard himself as the applicant's agent does not alter the rule, such instructions being unknown to the applicant. 210 So the company is bound, notwithstanding such provision, where the agent receives a policy through an insurance broker and de- livers it to the assured, although the assured's interest was not stated therein as required. 216 And where a local agent, acting for several companies, is directed to and does obtain policies for the assured in the companies which he represents, he is agent of the insurer, and not of the insured. 21 ' So where the policy contains a warranty that a diagram of the premises is correct, and it is not, the solicitor who obtained the same is the company's agent. 218 So an agent authorized to procure applica- tions and forward them to the company for acceptance or rejec- tion is the company's agent, 219 and a subagent employed by a local agent, in pursuance of a custom knowm to and approved by the company, to solicit and forward applications is the com- pany's agent. 220 In another case the policy provided, in addi- 212 Bernard v. United Life Ins. Assn. (N. Y. 1S95), 33 N. Y. Simp. 22; 6G N. i r . St. Rep. 521. 213 North British etc. Ins. Co. v. Crutebfield. 10S Ind. 51S, 528. 214 Hart v. Niagara F. Ins. Co., 9 Wash. 620. 215 Beebe v. Hartford Mut. F. Ins. Co., 25 Conn. 51. 216 Partridge v. Commercial Fire Ins. Co.. 17 Hun (N. Y.), 95. See, also, McGraw v. Germania F. Ins. Co., 54 Mich. 146. Examine Fame Ins. Co. v. Mann, 4 111. App. 485; Kings Co. F. Ins. Co. v. Swigert, 11 Brad. 590; Pottsville Mut. F. Ins. Co. v. Minnequa Springs Imp. Co.. 100 Pa. St. 137. 2ir Commercial Union Assur. Co. v. State. 113 Ind. 331; 15 N. E. Rep. 518. 218 Spratt v. New Orleans Ins. Co.. 53 Ark. 215; 13 S. W. Rep. 799. 219 State Ins. Co. v. Jordan. 29 Neb. 514; 45 N. W. Rep. 702; Dietz v. ProTidence & Washington Ins. Co.. 31 W. Ya. 851; 8 S. E. Rep. 616 Woodbury etc. Bank v. Charter Oak etc. Ins. Co., 31 Conn. 517. 220 Woodbury Bk. v. Charter Oak etc. Ins. Co., 31 Conn. 517. Joyce, Vol. T.--41 § 508 AGENTS OF INSURER — POWERS, 642 tion to such clause, that the application must be made out by the company's authorized agent, and it was held that the agent represented the company, and not the insured; 221 and the same is true where the validity of the policy is made to depend on the countersignature of the agent, 222 and the same rule obtains where such provision in the policy, as to agency, is obscure or ambiguous. 223 So an agent who takes an application for a life insurance is the company's agent, notwithstanding such con- dition, where the paper signed by him purports to be that of an agent of the company, and there is no proof that he had an agency for the applicant; 224 nor is the company's agent made the agent of the insured by the fact that one of the trustees of the insured building agreed with the agent that the latter should place the insurance. 225 Again, an insurance company, whose agent indorses upon a policy issued by him that a mort- gage is in the process of foreclosure for the purpose of perfect- ing the title and delivers such policy to other insurance agents with a statement that it is contrary to his orders to write pol- icies on mortgaged property, but that he will submit it to his company, is liable on the policy for a loss occurring two days later if the policy is delivered to the insured by such agent, and the premium obtained from him without notice of the nature of the transaction or of any limitation on the power of the agent issuing the policy, although it contains a provision that in mat- ters relating to the procuring of insurance no person, unless duly authorized in writing, shall be deemed the agent of the company. 226 There is another class of cases wherein the stip- ulation in the policy, although different, is intended to accom- plish the same result as the clause set forth at the beginning of this section. This provision is, in substance, that the company shall not be bound by statements made by or to any agent or 221 Sprague v. Holland Turcliase Ins. Co., 69 N. Y. 128. 222 North British etc. Ins. Co. v. Crutcb field, 10S Ind. 518; 7 West Rep. 85. 223 Sullivan v. Phoenix Ins. Co., 24 Kan. 170. 224 Rawls v. M. L. Co., 27 N. Y. 294; 84 Am. Dec. 280. 225 Commercial Ins. Co. v. State (Ind.), 13 West. Rep. 47. See sec. 527 herein. 220 Miller v. Scottish Union & Nat. Ins. Co., 101 Mich. 49; 45 Am. St. Rep. 3S9. 643 AGENTS OF INSURER POWERS. § 509 other person procuring the insurance, unless such statements are in writing in the application when the same is received by the company at its home office. This clause has been held to be inoperative to effect the purpose intended by the company. 227 § 509. Same Subject — Mutual Companies and Benefit Society. — The rule that the company cannot, by a provi- sion in the policy, convert its agent into the agent of the as- sured, in the absence of knowledge by the latter of such stipula- tion, is applicable to mutual companies, and such agent is not an agent of the assured because a by-law or the policy so pro- vides. He is nevertheless the company's agent, and his acts in the matter of the application within the apparent scope of his authority binds the company. 228 And this rule should be equally applicable to mutual benefit societies whenever the facts are similar. 229 The rule laid down in a Minnesota case 230 is, that agents of an insurance company authorized to procure applications for insurance and to forward them to the company for acceptance must be deemed the agents of the insurers in all that they do in preparing the application, or in any repre- sentations they may make as to the character or effect of the statements therein contained, and applies in the case of a mu- tual benefit association organized for the purpose of indemni- fying its members on account of accidents occurring to them, the necessary money being raised solely by assessments upon . said members. 231 But in a ISTew York case the company was a 227 Continental Life Ins. Co. v. Chamberlain, 132 U. S. 304; 10 Sup. Ct. Rep. S7; Lycoming F. Ins. Co. v. Langley, 62 Md. 196; Tubbs v. Dwelling-House Ins. Co., 84 Mich. 646. But see sec. F>27 herein. Zis Kister v. Lebanon Mut. Ins. Co., 128 Pa. St. 553; 18 Atl. Rep. ; 447; 5 L. R. Annot. 646; Eilenberger v. Protective etc. Ins. Co., 89 Pa. St. 464; Clark v. Union F. Ins. Co., 40 N. II. 333; 77 Am. Dec. 721; Nassauer v. Susquehanna Mut. F. Ins. Co., 109 Pa. St. 507; Kausal v. Minnesota Farmers' Mut. F. Ins. Assn., 31 Minn. 17; 47 Am. Rep. 776; Masters v. Madison etc. Ins. Co., 11 Barb. (N. Y.) 624. 229 This last is also Mr. Bacon's conclusion: Bacon on Benefit Soci- eties and Life Insurance, sec. 158. 230 Kausal v. Minnesota Fanners' etc. Assn., 31 Minn. 17; 16 N. W. Rep. 430; 47 Am. Rep. 776. 23i Whitney v. National Masonic Ace. Assn., 57 Minn. 472; 59 N. W. Rep. 943. § 510 AGENTS OF INSURER — POWERS. 614 co-operative one. The act under which, it was organized pro- vided that every person insured in such companies should sign a written application for such insurance, as required by the ar- ticles of association and by-laws of the company, and thereby become a member thereof. The application signed by the as- sured required that it be received at its office in a certain city, and that it be signed by some director or agent thereof, other- wise the company would not be bound. The agent 'effecting the insurance informed assured that upon his signing the appli- cation and paying the fee the insurance would be in force from that time. JSTo policy was delivered and it was held that there could be no recovery. 232 § 510. Authority of Subordinate Officers of Benefit Association to Waive Requirements as to Application. Although no formal application has been made, and no phys- ical examination had as required under the by-laws of a ben- efit association or relief department of a railroad company, or- ganized for the benefit and protection of railroad employees in case of sickness or death, nevertheless the company may be estopped to deny the membership where the department is un- der the general management of a superintendent, and the mem- ber has become such by the acts of the department, even though in a manner different from that prescribed by the by- laws, and where all the steps toward that end are made with the knowledge of the superintendent. In such case there is no question of the right of subordinate employees to waive re- 232 Allen v. St. Lawrence Farmers' Ins. Co., 88 Hun (N. Y.\ 401. The court said: "There is no proof that Crandall had any authority to make any other or different agreement than that provided for in the by-laws and requirements of the company. Indeed, there is no proof that he had any authority to make any agreement -whatever for insurance, or to do anything beyond solicit ins: and receiving appli- cations for insurance. He did not appear to be clothed with authority to contract for the company. He was not provided with policies, and did not deliver any. The plaintiff must have understood that the policies were only issued by the company from its office at Ogdens- burg, and that an insurance was not effected until his application reached there and was acted upon. The mere declaration of Crandall that the insurance began at once was ineffectual to bind the com- pany": Id. 4G2, per Fursinan, J. 645 AGENTS OF INSURER — POWERS.. §§ 511. 512 quirements, as their acts, under the circumstances, are those of the department. 233 § 511. Agents of Insured — Knowledge of Insured. — If the insured, however, has notice or knowledge before the negotiations are completed that stipulations of the character of those under consideration are to be inserted therein, or if they, or either of them, are contained in the application, it is held that the insured is bound to see that his statements and representations are true. 234 § 512. Statutes — Soliciting- Agent is Company's Agent. In a majority of the states the legislature has intervened, by en- acting statutes which make any person other than the appli- cant who solicits, procures, or transmits applications the agent of the company or association. 235 A recent writer crit- icises these laws as "the cause of much injustice" if "the courts were not wiser than the legislatures"; 236 but such statutes are, however, constitutional. 237 And it is also declared that they 233 Burlington Vol. Relief Department of Chicago v. White, 41 Neb. 547; 43 Am. St. Rep. 701. 234 Atlantic Ins. Co. v. Carlin, 58 Md. 330. See sees. 508, 514 herein. South Bend Tor Mfg. Co. v. Dakota F. & M. Ins. Co., 2 S. Dak. 17; 4S N. W. Rep. 310; Planters' Ins. Co. v. Myers. 55 Miss. 500; 30 Am. Rep. 524. Examine Bartholomew v. Merchants' Ins. Co., 25 Iowa, 507: 96 Am. Dec. 65. 235 Conn. Gen. Stat. 1888, sees. 289S, 2923; Georgia Laws, 1887, p. 121. sec. 9; loAva (Mcl.ain's) Co.le, 1SS8, sec.1732; IS G. A., c. 211, sec. 1; Maine Rev. Stat. 1883, p. 445. sec. 19; Mass. Acts. 1SS7. e. 214. sec. 87; Miss. Annot. Code, 1892, sec. 2327; Mo. Rev. Stat.' 1889, sec. 5915; Neb. Comp. Stat. 1891, c. 16, sec. 8; N. TT. Laws, 1SS9, c. 94, see. 2; N. Dak. Laws, 1S91, p. 203, sec. 28: Ohio Rev. Stat. 1890 (Smith & B.), sec. 3644; Oklahoma Stat. 1890, p. 637 sec. 23; R. I. Tub. Laws, Jan. 1SS4, p. 55, sec. 7; Fub. Laws, Tan. 1SS5, p. 63, sec. 1; S. C. Stat. 1S83, p. 4HO, sec. 6; Vt. Rev. Laws, 1S80, sec. 3620. p. 697; Va. Acts. 1887. p. 349, c. 271, sec. 5; Wis. (Sanborn & B.) An not. Stat. 1SS9, vol. 1, p. 11S6, sec. 1977. Under a statute making one who solicits insurance and receives compensation the agent of company, service of process may be made on him a year and a half after policy issues, even though the policy makes such agent assured's agent only: Fred Miller Brewing Co. v. Council Bluffs Ins. Co. (Iowa, 1895), 63 N. W. Ret>. 565. 23fi Ostrander on Fire Insurance, sec. 34. p. 102. 237 Continental Life Ins. Co. v. Chamberlain, 132 U. S. 304. § 512 AGENTS OF INSURER POWERS. 616 control stipulations in the policy to the contrary. 238 Under the Iowa statute, any person who solicits insurance, or procures ap- plications therefor, is the soliciting agent of an insurance com- pany or association issuing a policy on such application, or on a renewal thereof, anything in the application to the contrary, notwithstanding; a person who procures an application for in- surance is the company's agent, and the company cannot make him assured's agent by any stipulation or provision in the ap- plication, nor by any indorsement on the back of the policy is- sued on said application. 239 Again in the same state it is held that a person is agent of the company where the insured applies to him for insurance, and he procures it from the recording agents of a company, who are authorized to ac- cept risks and issue the policy, and that the company was re- sponsible for mistakes occurring between such person and such agent. 240 It is also held in that state that the person procuring an application is the company's agent, not only in soliciting in- surance but in drawing up the policy, and that information to him as to the true state of the title bound the company. 241 Un- der the Wisconsin statute, 242 whoever solicits insurance on be- half of any insurance company, or transmits an application to such company, or a policy to or from such corporation, or col- lects or receives any premium for insurance, or in any manner acts or assists in doing either, or in transacting business for such company, must be deemed and held to be an agent of such cor- poration, to all intents and purposes, in each of the several things mentioned, and the company cannot disclaim his agency in the doing of 'anything necessarily implied in the specific acts thus authorized. 243 So the agent represents the company and not the assured, under the statute of that state, although there 238 Continental Life Ins. Co. v. Chamberlain, 132 U. S. 304, 239 Continental Ins. Co. v. Chamberlain, 132 U. S. 304. 240 St. Paul F. & M. Lns. Co. v. Sharer, 7G Iowa, 282; 41 N. W. Rep. IS. 241 Jamison v. State Ins. Co., 85 Iowa, 229; 52 N. E. Rep. 185. 242 Rev. Stat, sec. 1977. 243 Bourgeois v. Mutual Fire Ins. Co., 86 Wis. 402, 405; 57 N. W. Rep. 3S, per Cassoday, J.; Renier v. Dwelling-House Ins. Co., 74 Wis. 89, 95, per Cassoday, J. See, also, Continental Ins. Co. v. Chamber- lain, 132 U. S. 304. 647 AGENTS OF INSURER POWERS. § 513 is no communication between it and the assured, and the latter had applied to the agent for insurance, and he had placed the risk in companies represented by other agents. And in such case knowledge by the agent that the building was unoccupied binds the company. 244 In another case in the same state A, in pursuance of a local custom, by agreement with B, both being insurance agents, placed insurance in two companies represented by B, but not by A. The policies were issued, A delivered the policies, which were countersigned by B, and collected the pre- miums, and commissions were divided between A and B. The assured did not know of the agreement between A and B, nor that A was not the agent of the insurers. It was held that A's knowledge at the time the application was made, as to further insurance, bound the company, and that he was an agent of the two companies under the statute of that state. 240 It is also de- clared in the same state that by the word "whoever" in the statute 246 is meant an authorized agent of the company. 247 So, under an Indiana statute, one who negotiates for policies of insurance for a commission paid by the company is an agent of the company, although he has no authority to bind the com- pany by contracts. 248 § 513. Cases Holding that Agent is Agent of Insured. Notwithstanding the rule that the agent procuring and filling out the application is, in all acts within the apparent scope of his authority, the agent of the company, even though the policy provides to the contrary, except the assured has knowledge of limitations upon his authority, there are well-considered cases which hold that such provision in the policy is binding, and makes the agent the agent of the assured. 249 It is also held 244 Alkan v. N. H. Ins. Co., 53 Wis. 136. 245 Schonier v. Hekla Fire Ins. Co.. 50 Wis. 575. See Knox v. Ly- coming Fire Ins. Co., 50 Ws. 671; Mathers v. Union Mut. Ace. Assn., 78 Wis. 588; 11 L. R. 83. 246 Rev. Stat. Wis., sec. 1077. 247 Hankins v. Rockford Ins. Co., 70 Wis. 1; 35 N. W. Rep. 34, per the court. 248 Ford v. Buckeye St. Ins. Co., 6 Bush (Ky.). 133; 99 Am. Dec. 663. 249 Wood v. Firemen's Ins. Co., 126 Mass. 316; Rohrbach v. Ger- mania Ins. Co., 66 N. Y. 464; 23 Am. Rep. 76; Grace v. American Cent. § 513 AGENTS OF INSURER POWERS. 64S that where the policy recites that the statements in the applica- tion are those of the applicant, and that the company will not be bound by any act or statement not written in the application, that such stipulation binds the assured; 250 and the courts have sustained such a condition, when contained in the application, where there are similar recitals in the policy. 251 So in case the policy contains such provision, also the other provision that the agent procuring the application is the agent of the insured, it is declared that the assured is bound thereby. 202 It is intimated that if the company's agent fills up the application at the re- quest of the insured, he then becomes the latter's agent. 253 And it is expressly declared in a New York case 254 that an agent authorized to receive and forward applications was the agent of the assured where he wrote in the answers to a signed application, under an agreement with the insured, and mis- stated the facts as to encumbrances. And the same decision was given where the surveyor of a mutual company failed to properly describe the buildings, and the act of incorporation mania Ins. Co., 66 N. Y. 464; 23 Am. Rep. 76; Grace v. American Cent. Ins. Co., 16 Bla'teM. (C. C.Y433. 250 Kabok v. Phoenix Mut. L. Ins. Co., 4 N. Y. Supp. 718; Clevenger v. Mutual L. Ins. Co., 2 Dak. 114; Lookner v. Home Ins. Co., 17 Mo. 247; Shawmut Ins. Co. v. Stevens, 9 Allen (Mass.), 332; New York Life Ins. Co. v. Fletcher, 117 TT. S. 519: Chase v. Hamolton Ins. Co.. 20 X Y. 52; Lycoming Ins. Co. v. Langley. 62 Mrl. 196; Bleakley v. Niagara Dist. Mut. F. Ins. Co., 16 Grant Ch. (U. C.) 19S; McCullough v. Mutual L. Ins. Co., 55 Hun (N. Y.), 103; 124 N. Y. 642; Moore v. Connecticut Mut. F. Ins. Co., 41 U. C. Q. B. 497; Simons v. New York Life Ins. Co.. 38 Hun (N. Y.), 309; Bnos v. Sun Ins. Co., 67 Cal. 621. But see see. 515, herein. 251 Holloway v. Dwelling-House Ins. Co. (St. L. C. A. 1892), 21 Ins. L. J. 379. 252 Shawmut v. Mut. F. Ins. Co., 9 Allen (Mass.), 332, and cases cited in note preceding last. 253 See Smith v. Empire Ins. Co., 25 Barb. (N. Y.) 497; Fame Ins. Co. v. Mann, 4 111. App. 485; Young v. Insurance Co., 22 Atl. Rep. 32. But examine Clark v. Union etc. Ins. Co., 40 N. H. 333; 77 Am. Dec. 721: Patten v. Merchants' etc. Ins. Co., 40 N. H. 375; 2 Wood on Fre Insurance, 2d ed., sec. 412, p. 846, et seq. We agree, however, with Mr. Wood, that "it would make no difference whether the agent is to be treated as the agent of the insurer or the assured, as knowledge on his part, in reference to the risk is the knowledge of the company": Id., D. 847. 254 Smith v. Empire Ins. Co., 25 Barb. (N. Y.) 497. 649 AGENTS OF INSURER — POWERS. § 514 made the insured a member of the company and bound by its by-laws, and the by-laws made the surveyor the agent of the ap- plicant. 255 In another case it was held reversible error where the court charged that an agent procuring the insurance was the company's agent, where the sole evidence w T as the testi- mony of the latter that he acted for the assured, and told him that he represented several reliable companies. 206 § 514. Misrepresentations of Insurer's Agent to Induce Insurance. — Where an agent of the company acting within the apparent scope of his authority, by means of false representations, deceit, or fraud, induces another to insure in the company, the latter is obligated thereby, or the insured may rescind or may defend in an action on the premium note. It is essential, however, that the representation -should be made in the course of the agent's employment, for the company is not bound if the agent's want of authority to make a contract for it, was known, nor if the act, however extensive the agent's authority, was done in his private capacity. The insurer, by employing the agent, puts trust and confidence in his skill and integrity. In addition to this, he puts him in a position where- by he is enabled to accomplish the deceit and to mislead the in- sured to his prejudice. It w r ould, therefore, seem more reason- able that the insurer should be the loser, rather than an inno- cent third party. This rule should, perhaps, be more strictly enforced in contracts of insurance, especially of fire and ma- rine risks, than in case of other contracts ; 2 °' for insurance is a contract necessitating good faith, and requires, especially in marine risks, that material statements, both of the assured and the assurer, should be substantially true, nor should there be any fraudulent concealments of material facts by either party. 208 A distinction should, however, be made as to those 255 Snsque-Tianna Ins. Co. v. Perrine. 7 Warts & S. (Pa.) 348. 256 East Texas F. Ins. Co. v. Brown, 82 Tex. 631; 18 S. W. Rep. 713. 25T For the rule relating to other contracts, see E well's Evans on Agency, pp. 605-20, side pp. 466-80; Du Souchet v. Dutcher (Ind.). 15 N. E. Rep. 459 (annotated case); note, 52 Am. Dec. 57, 58; Van Duzer v. Howe, 21 N. Y. 531. 258 gee Tones v. Dana. 24 Barb. (N. Y.) 395. holdinc that where par- ties have been induced to enter into contracts of insurance, upon a § 514 AGENTS OF INSURER — POWERS. 650 representations which are of facts material to the risk, and which are calculated to deceive or impose upon the applicant, and those which are mere expressions of opinion or recommen- dations upon which the insured has no right to rely; 2 ° 9 al- though it is intimated that if such representations approach too closely to the border line of fraud, they may in cases of in- surance vitiate the contract, especially in oases of fire and ma- rine risks. 260 So fraudulent representations of the agent are a complete defense to assessments or an action on a premium fraudulent representation by the agents or officers of the company in regard to its capital or pecuniary resources and ability, or any other matter which rightfully influenced them in the negotiation, they may be relieved against their contracts: Farmers' F. Ins. Co. v. Marshall, 29 Vt. 23, where it is held that parol representations or concealments affecting the risk will, in many cases, avoid a policy, when they would not have that effect, or perhaps be permitted to be shown in reference to a contract of a different character; United States Life Ins. Co. v. Wright. 33 Ohio St. 533, where a fraudulent representation by an agent of insurer to a person to induce application for insur- ance, that for a specified annual premium a policy would be fully paid at a given period and further entitle the holder to certain spe- cified benefits, induced the person to apply for a policy and to pay the premium, it was held that the applicant may rescind the contract and recover back the premium, where the policy issued is materially dif- ferent from what was represented; Brown v. Donnell, 49 Me. 421; 77 Am. Dec. 266, holding that if officers of a company hold it out as sol- vent, when by the exercise of due care and diligence they might know it was insolvent, there would be good reason for holding them guilty of fraud; Thompson v. Phoenix Ins. Co.. 75 Me. 55; 46 Am. Rep. 357, where insured was induced to settle for a loss, upon false representa- tion of agent as to effect of nonoccupancy of the building; held not actionable if statements of law, though false, and if statement of fact and not of law, it was only expression of opinion, and did not sustain an action; Lovell v. St. Louis Mut. Life Ins. Co., Ill U. S. 264. It was here held that the neglect to pay a premium on a life policy would not work a forfeiture where the neglect was caused by repre- sentation of agent of insurer, though without authority, that it would be converted into a paid-up policy by the company, on the basis of the premiums already paid: New Era Life Assn. v. Weigle, 128 Pa. St. 577: IS Atl. Rep. 393: Pevendorf v. Reardslov. 23 Barb. (N. Y.1 656, whore insured was induced, by fraudulent representations of agent, to enter into contract; Keller v. Equitable Fire Ins. Co.. 28 Ind. 170; Eilenberger v. Protection Mut. F. Ins. Co., 89 Pa. St. 464. 259 Simons v. New York L. Ins. Co.. 38 Hun (N. Y.). 309. sco Farmers' Mut. F. Ins. Co. v. Marshall, 29 Vt. 23, per Redfield, C. J. 651 AGENTS OF INSURER — POWERS. § 514 note, 201 especially where the agent's representations that the company was solvent and in good condition were made by the aiithoiiry of the directors. 262 And like representations by a general agent to the local agent who repeats them to a third party, thereby inducing him to insure, may be set up in de- fense to an action on the premium note, 263 although it is held in another case that such representations are not admissible against the company where they were beyond the scope of the agent's authority, he being empowered only to receive and transmit applications to the company. 264 It is also held that intrusting an agent with blank forms for applications for in- surance and also of premium notes, and giving him authority to receive applications, does not, of necessity, empower him to bind the company by declarations as to the amount of its cap- ital. 265 So if the policy issued is materially different from what the agent represented it to be, the assured may rescind and re- cover back the premium paid; 266 and the assured may rescind where the agent misrepresents the solvency and financial con- dition of the company. 267 He may also rescind where he is in- duced to insure by the agent's false statements that certain per- sons had insured in the company, and he may, in such case, re- cover back the premium paid from the agent. 268 And if he is induced, by the fraud of an agent of a mutual company, to become a member, he is not obligated thereby. 269 So the agent's representations, in response to inquiries by the appli- cant as to the amount of capital stock paid in and invested, will bind the company, especially wdiere the company's officers au- thorized such representations; 270 and, in case of a mutual com- pany, its local agent may bind it by representations made in 26i Lycoming Ins. Co. v. Woodworth. 83 Pa. St. 223. 262 Boland v. Whitman, 33 Ins. 64. 265 Sunbury F. Ins. Co. v. Humble. 100 Pa. St. 495. 264 Fosg v. Pew. 10 Gray (Mass.). 409: 71 Am. Dec. 662. 2C5 Kelly v. Troy Fire Ins. Co.. 3 Wis. 229. 241. 266 United Life Ins. Co. v. Wright, 33 Ohio St. 533. 2«Y New Era Life Assn. v. Weigle. 128 Pa. St. 577: 18 Atl. Rep. 393. 268 Hedden v. Griffin, 136 Mass. 229; 49 Am. Rep. 25. 269 Brown v.Donnell, 47 Wis. 421; 77 Am. Dec. 26G; Jones v. Dana, 24 Barb. (N. Y.) 395. 210 Fogg v. Griffin, 2 Allen (Mass.), 1. § 514 AGENTS OF INSURER POWERS. 652 response to inquiries regarding its financial standing and con- dition or otherwise. 271 But the agent's fraud in procuring the application is no defense to an action by the receiver of a com- pany to recover assessments where the assured has slept on his rights for a long period, and the policy has been canceled, and the unearned premiums returned by the company and rights of innocent third parties, such as those of new members of mutual - companies, has intervened; 272 nor does the rule apply where the assured has a fair opportunity to ascertain the truth, and hecould easily have done so, as where he is given a pamphlet which he reads and which fully describes the plan of insurance. 273 So where plaintiff's agent falsely asserts that the "life clause," so called, was not contained in the policies issued by a certain company, and said agent left his blank form to compare with the other contract, and defendant was subsequently insured in plaintiff's company, it was held that he could not refuse to receive the policy, nor avoid his agreement to pay the pre- 271 Devendorf v. Beardsley, 23 Barb. (N. Y.) 656. 272 Mansfield v. Cincinnati Ice Co. (Ohio, 1892), 28 Week. L. Bull. 113; Dettra v. Kestner, 147 Pa. St. 566; 23 Atl. Rep. 889. 273 The court in this case said: "It was the claim of the plaintiffs counsel on the argument of this appeal that this action was for fraud, and that the exclusion of the representations made by the agent of the defendant when he solicited the application was erro- neous, because the fraud was then and there perpetrated by him in that subject. If, after that, the agent made representations respeet- authcrity of the agent to make representations was limited to state- ments made in writing and presented to the officers of the company in the application. And the plaintiff was made aware of this re- striction because it is contained in the policy itself; more than that, the pamphlet containing a full and true description and representa- tion of the tontine plan of insurance was read by the agent to the plaintiff, and there was no concealment or misrepresentation on that subject. If, after that, the agent made representations respect- ing the advantages of the plan over other systems and forms, they were quite immaterial, and amounted simply to recommendation and opinion. They had no tendency to deceive or mislead the plain- tiff or her husbaud so long as the plan itself was explained to and understood by them. Commendation is not misrepresentation; even exaggeration differs widely from intentional falsehood. General as- sertions as to value or advantage cannot be made the basis of an action for deceit; an expression of opinion is not a representation of fact upon which a charge of fraud can be predicated": Simons v. New York L. Ins. Co., 3S Hun, 309. 653 AGENTS OF INSURER — POWERS. § 514 mium therefor, because of said false statement. 274 ]STor is evidence admissible that the company's agent represented to the insured that he would be liable to only a live per cent as- sessment during any one year, and the application stipulated that the company would not be bound by any act or statement made to or by the agent restricting its rights, or varying its written or printed contract, unless inserted in the application in writing; 2 " and unauthorized and false representations by an agent to receive applications for insurance, and the premium, for a mutual insurance company, as to the place where risks were taken, are not admissible as a defense to an action on a premium note to the company. And so of similar representa- tions by the president of the corporation to the agent at the time of his appointment. 2 ' 6 In an Illinois case the owner of a building occupied by a tenant was told by the company's agent, at the time of effecting insurance thereon, that it would not matter if the premises should become vacant. The policy, when issued, provided that it should be void if the building be- came vacant at any time. The insured had no knowledge of the condition, the agent having kept the policy in his posses- sion until after the loss. It was held that the company having failed to notify the insured of the change, so that he might re- pudiate or ratify the contract, was liable under the actual con- tract as made with the agent, and which the insured had a right to suppose was the one contained in the policy. 277 And the assured has the right to assume, without examination, that a new policy given to him on continuing his insurance is sub- stantially the same as the first one, wmere the soliciting agent told him he would so make it out, with the exception that it w r ould be changed so that the company need only give a re- ceipt in the future, instead of making a new policy. 278 So where an insurance agent, who procures an application, fraudu- lently conceals the fact that the policy contains a clause, under 274 American Steam B. Ins. Co. v. Wilder, 39 Minn. 350; 40 N. W. Rp-n. 2r>2. 275 Lycoming Fire Ins. Co. v. Langley, 62 Md. 190. 276 Hackney v. Allegheny Mut. Ins. Co.. 4 Pa. St. ISo. 277 St. Paul F. Ins. Co. v. Wells, S9 111. 82. 27S Burson v. Fire Assn., 136 Pa. St. 267; 20 Atl. Rep. 401; 2G Week. Not Cas. 408. § 515 AGENTS OF INSURER POWERS. 654 which the insured could not cancel it, to take out insurance in other companies without forfeiting the premium, such clause does not bind the insured. 279 But it is held, however, that if an agent has power only to solicit applications, and not to issue policies, that his representations that mortgages would not in- validate the policy is not binding upon the company in the face of a condition in the policy that, in case the property was mortgaged without the written consent of the superintendent indorsed on the policy, the contract should be void. 280 And the same rule applies where the agent represented to the insured that the policy would not prevent his keeping gunpowder, which was not true. 281 So if a partner is induced by the rep- resentations of the agent to insure the firm property in his own name it is held that the whole firm interest is covered. 282 § 515. Notice to and Knowledge of Agent — Generally.' As a general rule, notice to an agent and knowledge obtained by him while acting within the scope of his authority is notice to the principal. 283 So an insurance company is estopped from asserting the invalidity of its policy at the time it was issued 2, " > Hartford Steam Boiler Inspect. & Ins. Co. v. Cartier, 89 Mich. 41; 50 N. W. Rep. 747. 289 Smith v. Continental Ins. Co., 6 Dak. 433; 43 N. W. Rep. 810. 2,1 Western Assur. Co. v. Rector, 85 Ky. 294; 3 S. W. Rep. 415. 282 Manhattan Ins. Co. v. Webster, 59 Pa. St. 227; 98 Am. Dec. 332; Anson v. Winnesheik Ins. Co., 23 Iowa, 84. But see Peoria Ins. Co. v. Hall, 12 Mich. 202. See sec. 417, herein. M Notice to president of company of prior insurance is notice to the company: National Ins. Co. v. Crane, 16 Md. 260; 77 Am. Dec. 2S9. Payment of debt to creditor's agent binds creditor with knowledge of debtor's insolvency, where creditor's agent had such notice: Mat- thews v. Riggs, 80 Me. 107; 5 N. Eng. Rep. 863. Where traveling agent who has authority to solicit insurances, make surveys and re- ceive applications, receives notice of another insurance, such notice is binding upon the company, though it never reached it: McEwen v. Montgomery Co. Mut. Ins. Co., 5 Hill (N. Y.), 101; Sexton v. Mont- gomery etc. Ins. Co., 9 Barb. nor is the company responsible be- yond the value of the vessel for the negligence of its wrecking master by reason of the knowledge of such agent. 316 And it is held in Kentucky 317 that notice to the agent that the assured •311 Fulton v. Metropolitan Life Ins. Co., 19 N. Y. Supp. 660. 312 MoGurk v. Metropolitan Life Ins. Co., 56 Conn. 528; 1 L. R. Annot. 563. 313 Peoria Ins. Co. v. Hall, 12 Mich. 202. The court said in this case: "We do not see how the agent's knowledge of the interest of the parties, nor his belief or assurance that Hall had the right to in- sure the whole, can affect the question, so long as the insurance was not in fact made on the account and for the benefit of the firm. One partner cannot, by reason alone of his interest as such, insure in his own name and for his own benefit the interest of his copartner in the partnership stock. And though such may tnve been the intention both of the insured and of the company on entering into the contract, the policy, in legal effect, can operate only as an indemnity against loss to the extent of the plaintiff's undivided half of the goods": Ex- amine Aurora F. Ins. Co. v. Eddy, 55 111. 213, 222. And see sec. 546 herein. 314 Stennett v. Pennsylvania F. Ins. Co., 68 Iowa, 674. 315 Carpenter v. German-American Ins. Co.. 59 Hun (N. Y.), 249. 816 Craig v. Continental Ins. Co., 26 Fed. Rep. 798. 317 Galbraith v. Arlington Mut L. Ins. Co., 12 Bush (Ky.), 29. 659 AGENTS OF INSURER — POWERS. §§ 516, 517 was afflicted with a dangerous disease did not estop the com- pany. So it is declared that notice to an agent, whose au- thority is limited to taking applications and delivering policies does not bind the company. 318 § 516. Presumption as to Agent's Knowledge. — Where an agent represents a fire insurance company, it is held that a presumption attaches that he is familiar with the construction of the building insured, with the description thereof, its divi- sions, as well as of its manner of use, and that the company is bound by such presumed knowledge of the agent. 319 § 517. Reformation of Policy to Conform with Actual Contract. — So a policy will be reformed to express the actual contract made with the agent in obtaining the insurance, although such contract differs from the expressed terms of the policy, and notwithstanding it is provided that agents have no authority to make, alter, or discharge contracts. 320 318 Alexander v. Gernrania F. Ins. Co., 66 N. Y. 464; 23 Am. Rep. 76. See Residence F. Ins. Co. v. Hannawald, 37 Mich. 103; 2 W. Ins. Rev. SS; Mitchell v. Lycoming Mut. Ins. Co., 51 Pa. St. 402. See, also, pre- ceding sections under this chapter. 3io Pettet v. State Ins. Co., 41 Minn. 299; 43 N. W. Rep. 378. 320 Metropolitan Life Ins. Co. v. Wood (Ohio, 1S95), 33 Week. L. Bull. 346. See Frank v. Pacific Mut. L. of Cal., 44 Neb. 320; 62 N. W. Rep. 454; 24 Ins. L. J. 538; Mutual B. L. Ins. Co. v. Robinson (U. S. C. C. A. 1S94), 58 Fed. Rep. 723; 7 U. S. C. C. A. 444. CHAPTER XX. AGENTS OF INSURER— POWERS— THE POLICY. § 525. Agent: Power to make oral contract. § 526. Power of agent to accept risks and make contracts. § 527. When contract of agent is personal. § 528. Power of agent to subscribe policy. § 529. Power of agent to execute retroactive policy. § 580. Countersigning policy by agent. § 531. Where subagent signs for agent. § 532. Signature of assured— Waiver by agent. § 533. Estoppel by acts of agent generally. § 534. Waiver and estoppel by agent: Conditions subsequent and precedent. § 535. What agents may waive conditions— Knowledge before and after contract made. § 536. Waiver of forfeitures by agent— Generally. § 537. Power of agent to bind company by construction of policy. § 538. Agent: Power to renew. § 539. Revival of policy by agent. § 540. Power of agent to orally waive. § 541. When agent fails to take advantage of forfeiture. § 542. Waiver by receiving premium— Agent. § 543. Waiver by delivery of policy — Agent. § 5-!4. Knowledge not obtained in course of agent's employment. § 545. What agent might have learned by ordinary diligence. § 546. Agent's knowledge obtained in individual capacity. § 547. Knowledge of company, at whose instance another company issues policy. § 548. Agent's power to grant permits affecting risk. § 549. Agent's power to alter policy. § 550. Agent's powers in relation to the premium. § 551. Agent's authority to fix rates for premium. § 552. Agent's agreement to give notice when premium due. § 553. Agent's authority in regard to first and subsequent premiums. § 554. Agent's power in relation to premium — What agent may waive. § 555. Agent's power in relation to premium — When no waiver — Oases. § 556. Agent's power — Other insurance — Waiver. § 557. Broker : Other insurance — Waiver. § 558. Agent : Other insurance — When no waiver — Cases. § 559. Agent's powers : Change of risk — Waiver. (6C0) 661 AGENTS OF INSURER — THE POLICY. § 52E § 560. Agent's powers — Alienation — Assignment — Waiver. § 561. Alienation: Assignment — When company not bound by agent's acts. § 562. Agent: Keeping prohibited articles— Waiver. § 563. Agent's authority: Encumbrances — Waiver. § 564. Agent's authority: Encumbrances — When no waiver. § 565. Agent's authority: Vacant— Unoccupied— W T aiver. >j o6ti. Agent's authority : When no waiver. § 567. Agent's authority : Cancellation. § 568. Agent's authority: Removal of property. § 525. Agent — Power to Make Oral Contract. — As we have stated in a preceding chapter, 1 the company may be bound by an oral contract of insurance or an oral agreement to in- sure, so an agent intrusted with blank policies, signed by the president and secretary, with authority to negotiate, fill up, and issue the same, may bind the company by a parol contract to insure, 2 and an agent authorized to make the necessary sur- veys, and negotiate and conclude all the terms of the contract, and to fill up and countersign the policy, may bind the com- pany by a parol contract to issue a policy. 3 So an unrestricted authority to negotiate a contract of insurance by issuing a pol- icy includes authority to make a valid preliminary contract for such insurance. 4 And an agent with authority to survey risks, fix the rate of premium, issue policies, and effect insurance may make a valid oral contract of insurance. 5 And a local agent of a foreign company, with similar authority, may bind the company by parol to contracts of original or renewal insur- ance. 6 So an agent authorized to bind the company pending correspondence concerning the policy may make a valid parol contract to insure. 7 A general agent may bind the company by an oral agreement that an open policy may cover other prop- i Chapter iii, herein. 2 Hotchkiss v. Germania F. Ins. Co., 5 Hun (N. Y.), 9; Angell v. Hartford F. Ins. Co., 69 N. Y. 171; 17 Am. Rep. 322. s Ellis v. Albany City F. Ins. Co., 50 N. Y. 402; 10 Am. Rep. 495, and note, 502. 4 Humphrey v. Hartford F. Ins. Co., 15 Blatchf. (C. C.) 504. 5 Sanborn v. Fire Ins. Co., 16 Gray (Mass.), 448; 77 Am. Dec. 419. 6 Banbie v. .^tna Ins. Co., 2 Dill. 156; Taylor v. Germania Ins. Co., 2 Dill. (C. C.) 282. i Fish v. Cottinett, 44 N. Y. 538. § 526 AGENTS OF INSURER THE POLICY. 662 erty than that already embraced therein, where the property covered is of a changeable and substantially the same character as that insured originally. 8 So the principal clerk of .an insur- ance company, with authority to receive applications, fill poli- cies and renewals, and to generally attend to the office busi- ness, has power to bind the company by a parol contract of in- surance; 9 and an agent may bind the company by a parol agreement extending the time of payment of the premium, al- though the policy prohibits such waiver by any agent of the company. 10 But it is held that a soliciting agent authorized to receive applications and to forward the same to the com- pany for approval or rejection, and to collect and transmit premiums, has no authority to make an oral contract to insure, even though he had told the insured, on a prior occasion, that the insurance would take effect from the time of the applica- tion, and a policy had been issued on that application. 11 No presumption exists, however, that the company's agents have authority to make a parol contract to insure; such authority must be proved affirmatively. 12 § 526. Power of Agent to Accept Risks and Make Contracts. — An agent of an insurance company has power to take risks upon property outside of the locality for which he was appointed, especially where the general agent receives the policy and accepts the risk; 13 and a risk accepted by him upon property which the company has prohibited him from in- suring will be valid, provided the insured has no knowledge of the inhibition, 14 and, in general, where he has author- 8 Kennebec Co. v. Augusta Ins. etc. Co., 6 Gray (Mass.), 204. © Cooke v. ^Etna Ins. Co., 7 Daly (N. Y.), 555. io Young v. Hartford F. Ins. Co., 45 Iowa, 377; 24 Am. Rep. 7S4. li Morse v. St. Paul F. & M. Ins. Co., 21 Minn. 407; 5 Ins. L. J. 409; Winnesheik Ins, Co. v. Holzgrafe, 53 111. 516; 5 Am. Rep. 64. 12 ^Etna Ins. Co. v. Northwestern Iron Co., 21 Wis. 458. See this ease as to where declarations are insufficient to prove such author- ity. 13 iEtna Ins. Co. v. Maguire, 51 111. 342. See, also, Lightbody v. North America Ins. Co., 23 Wend. (N. Y.) 18. 14 Gloucester Mfg. Co. v. Howard Ins. Co., 5 Gray (Mass.), 497; 66 Am. Dec. 376. 663 AGENTS OF INSURER THE POLICY. § 526 ity to exercise discretion in relation to the issuance of policies, and the risk is a legal one, and one which the company itself has the power to accept, the latter is bound by all risks under policies issued by such agent, upon the familiar principle that an agent's acts within the scope of his real or apparent author- ity bind the principal; 15 although it is held that a general au- thority to take risks does not necessarily include authority to take a risk on a blacksmith-shop. 16 And an agent with power only to solicit risks and receive applications has no power to ac- cept them, nor agree that the risk attach at a certain time, 11 or at the date of the application. 18 So an agent authorized to receive applications for insurance in accordance with instruc- tions from the company, and to forward the same to the com- pany for approval, and to collect and transmit premiums, is a soliciting agent, and as such has no authority to make a con- tract of insurance; 10 nor can an agent contract without the ap- proval of the directors where his authority to issue certificates is given subject to such approval. 20 So an agent with general . powers cannot validly agree to receive a less premium than that fixed by the policy; 21 nor can an agent with authority to issue policies in one company, but not in another without the insured's consent, rescind a contract on the former company and place the risk in the latter. In such case the former con- tract holds, and the latter company is not bound. 22 But a risk accepted by a local agent cannot be rejected without no- 15 See Lighfhody v. North America Ins. Co., 23 Wend. (N. Y.) IS. i« Smith v. State Ins. Co., 58 Iowa, 487. 17 Stockton v. Fireman's Ins. Co.. 33 La. Ann. 577; 39 Am. Rep. 277. See Dickinson v. Mississippi etc. Ins. Co., 41 Iowa, 286. is Winnesheik Ins. Co. v. Holzgrafe, 53 111. 516; 5 Am. Rep. 64. See Todd v. Piedmont Ins. Co., 34 La. Ann. 63; Dencens v. Mer- chants' etc. Ins. Co., 83 N. Y. 168. 19 Morse v. St. Pan! F. & M. Ins. Co., 21 Minn. 407; 5 Ins. L. J. 409; Armstrong v. State Ins. Co., 61 Iowa, 212. See, also, Chase v. Hamilton Mux. Ins. Co., 22 Barb. (X. Y.) 527; Bartholomew v. Mer- chants' F. Ins. Co., 25 Iowa, 507; 96 Am. Dec. 65. 20 Insurance Co. v. Johnson, 23 Pa. St. 72. 2i Brown v. Massachusetts L. Ins. Co., 59 N. H. 298; 47 Am. Rep. 205. 22 Massasoit Steam Mills Co. v. Western Assur Co., 125 Mass. 110. §§ 527-529 AGENTS OF INSURER THE POLICY. 664 tice to the assured. 23 Where an agent to contract life assur- ances was to signify his acceptance of all risks by a memoran- dum signed by him and the company's medical officer, and the memorandum was signed by the medical officer and subagent, it was held that the contract was that of the agent. 24 § 527. Where Contract of Agent is Personal. — Where an insurance company has ceased to do business, and an agent pretends to act for it, he cannot bind his claimed principal by a contract of insurance, although he may bind himself. 25 In Pennsylvania, the statute provides that policies of insurance against loss by fire or lightning will be void, unless authority to issue or execute the same be expressly conferred by charter of incorporation. Under this statute an agent's contract to place certain insurance for an applicant against loss by fire, to take effect at a certain time, but which did not specify the com- pany in which it was to be insured, was held to be a personal contract, and void. 26 § 528. Power of Agent to Subscribe Policy. — A con- tract of insurance may be subscribed by the underwriter or by his duly authorized agent or attorney. In England, the under- writer's agent may subscribe the policy, either by virtue of a custom on his part so to do, acquiesced in by the principal, or by the authority conferred under a power of attorney, or where the principal has held him out to the world as authorized to per- form such act. 27 § 529. Power of Agent to Execute Retroactive Policy. A member of a mutual insurance company with a power to 23 Commercial Union Assur. Co. v. State, 113 Ind. 331; 15 N. E. Rep. 518. 24 Rossiter v. Trafalgar L. Assur. Assn., 27 Beav. 377. 25 Montross v. Roger Williams Ins. Co., 49 Mich. 477. 2S Arrott v. Walker, 118 Pa. St. 249; 12 Atl. Rep. 280; 10 Cent. Rep. 008. 27 Haughton v. Ewbank, 4 Camp. 88; Neale v. Enring, 1 Esp. 01. See Oourtenn v. 'Ponse. 1 Camp. 43, note a: 1 Arnould on Insurance Perkins' erl.. 38; 2 Pliillips on Insurance. 3d ed., sees. 1S72, 2016, 2114; 1 Duer on Insurance, ed. 1845, sec. 8, p. G5. 665 AGENTS OF INSURER THE POLICY. § 530 sign policies, subject to a rule that the risk should attach from the day of acceptance by the principal, may execute a policy which is retrospective, containing the words "lost or not lost," where the policy has conformed to the rule above given, not- withstanding both parties, assured and agent, knew that two average losses had happened to the ship at the time of the exe- cution of the policy. 28 § 530. Countersigning 1 Policy by Agent. — Where the insurer is a corporation or association, the policy or certificate is required to be attested by certain designated officers or agents in accordance with the charter or by-laws, 29 and the piilicy may provide in express terms for the countersignature of the agent, which may be made a condition precedent to the validity of the policy or attachment of the risk, in which case there must be a compliance with such condition to entitle the assured to a recovery, unless a waiver can be shown, 30 even though the agent himself is the party insured, and the policy has been received and retained by him. 31 And a policy is only completely executed when duly attested by the signatures of the proper officer-? and countersigned by the agent. 32 So where there was a condition that the policy should be void in case of prior or subsequent insurance without written consent thereon, an unsigned consent of the general agent was held to be invalid in the absence of proof of authority to bind the company in euch manner, or unless the company had in some way ratified the act. 33 But where a policy of insurance has been signed by the president and secretary of an insurance company, a con- tract written across the face of it, by which a deviation from 28 Mead v. Davison, 3 Ad. & E. 313. 29 In re County L. Assur. Co.. L. R. 5 Ch. App. 2SS; Perry v. New- castle F. Ins. Co., 8 U. C. Q. B. 363. 30 Hardie v. St. Louis Mut. L. Ins. Co.. 26 La. Ann. 242; Prall v. Mutual Prot. L. Ins. Co., 5 Daly (N. Y.), 29S; Lynn v. Burgoyne, 13 B. Mon. (Ivy.) 400. 31 Badger v. American Popular L. Ins. Co., 103 Mass. 244; 4 Am. Rep. 547. But see Norton v. Phoenix etc. Ins. Co., 3G Conn. 503; 4 Am. Rep. 98, noted hereafter in this section. 32 Peoria etc. Ins. Co. v. Walser, 22 Ind. 73. 33 Security Ins. Co. v. Fay, 22 Mich. 467; 7 Am. Rep. 670. § 530 AGENTS OF INSURER THE POLICY. 666 the voyage insured is healed, need not be re-signed by them in order to make such contract binding on the company, where it has been the uniform practice for the president to waive devia- tions in that manner. 34 In case the contract is to be com- pleted and take effect only by a delivery of the policy when countersigned by the agent, and it is neither countersigned nor delivered, there is no contract, even though the premium note has been given to the agent; the agent having only authority to receive applications and collect premiums. 35 But the re- quirement by statute or charter, or otherwise, of the counter- signature of an agent does not prevent making a valid agree- ment to deliver a policy. 36 The rule, however, requiring the signatures of the president and secretary, when provided for by the charter or by-laws, does not prevent making a valid oral contract to issue a policy or to insure or to renew an insurance, as has been stated in a prior chapter, 37 and this is true as to a countersignature by the agent, even though the policies and certificates of renewal issued by the company declare that they shall not be valid unless countersigned by the agent, 38 for such provisions may be dispensed with where the intention to execute is sufficiently plain. 39 The countersigning being an evidence of delivery, it seems that a delivery by letter would be equivalent. 40 So although it is expressly stated on the re- newals issued by a life insurance company, and signed by its secretary, that in order to be valid they must be countersign- ed by the local agent, they are still presumptive evidence of payment where the policy is on the agent's own life, although not countersigned by himself. It is immaterial in such a case whether he countersigned them or not. 41 And where the charter does not require a countersignature, a policy contain- 34 Warren v. Ocean Ins. Co., 16 Me. 439; 33 Am. Pec. 674. 35 McCully v. Phoenix Mut. L. Ins. Co.. 18 W. Va. 782. 35 Walker t. Mutual Ins. Co., 56 Me. 371. 37 See Chap Hi, herein. ss Post v. JFAna, Ins. Co., 43 Bai'b. (N. Y.) 351. 39 Kantrener v. Peun Mat. L. Ins. Co., 5 Mo. App. 581; Westches- ter F. Ins. Co. v. Earle, 33 Mich. 143. 40 Myers v. Keystone etc. Ins. Co., 27 Pa. St. 268; 67 Am. Pec. 463. 41 Norton v. Phoenix etc. Ins. Co.. 36 Conn. 503; 4 Am. Rep. 98. But see cases at beginning of this section. 667 AGENTS OF INSURER THE POLICY. §§ 531, 532 ing a blank form for the countersignature of the agent need not necessarily be filled out by the agent, as the policy may be valid when delivered without. 42 So a new benefit certificate issued to change the beneficiary, upon application made in ac- cordance with the by-laws of the union, and signed by the su- preme president and secretary of the union, and sealed with the seal of the supreme union, is not invalid because not signed and sealed by the officers of the subordinate union. 43 And where the premium is paid and the policy delivered to the assured as a completed contract, the company is estopped to say that it was not countersigned by the agent, although the policy pro- vided for such countersignature. The provision is a formal- ity which the company may dispense with, and it will in such case be presumed to have so done. 44 So an agent may accept a premium, though the receipt is not to be effectual until coun- tersigned by him. 45 But the agent's countersignature is not waived by delivery of the policy without such signature by an unauthorized party, although he signs for the agent. 46 § 531. "Where Subagent Signs for Agent. — Inasmuch as an agent may delegate his authority where he is expressly em- powered to appoint subagents, or in matters which do not in- volve the exercise of skill and discretion, 47 it would seem that such subagent could validly countersign policies for the agent, especially where the act is done with his full acquiescence, and he delivers the policy. 48 § 532. Signature of Assured — Waiver by Agent. — The term "underwriter" arose from the custom to underwrite, or 42 O'Donnell v. Confederation L. Ins. Co., 2 Russ & Geld. (Nov. Sco.) 231. « Fisk v. Equitable Aid Union (Pa.), 11 A. 84. 44 German F. Ins. Co. v. Laggart, 47 Kan. 6G3; 28 Pac. Rep. 718; Hibernia Ins. Co. v. O'Connor, 29 Mich. 241; Chapman v. Delaware M. Ins. Co.. 23 N. B. R. 121. 45 Carroll v. Charter Oak Ins. Co., 1 Abb. Dec. (N. Y.) 316; 40 Barb. (N. i\) 292. 46 Lynn v. Burgoyne, 13 B. Mon. (Ky.) 400. 47 See sec. 395. herein. 4S Grady v. American Cent. Ins. Co., 60 Mo. 116, 123. But see cases under sec. 395, herein. § 533 AGENTS OF INSURER THE POLICY. 668 subscribe, the policy by the insurers, and they only subscribed the policy; 49 and although the policy is subscribed only by the insurer, it evidences the contract between both parties, and binds them to the performance of its conditions, and it is valid so long as the conditions are complied with. 50 But where a certificate of membership is required to be signed by the appli- cant, as a condition precedent to its validity, the company's agent may consent that the husband may sign for his wife where he makes the application for her in her absence, and the company is bound thereby where the wife subsequently ratifies her husband's act; 51 and the policy is not rendered void, for want of consideration, by the omission to sign the premium note where it is the custom of the company to dispense with such signature until after the policy is recorded. 52 § 533. Estoppel by Acts of Ag-ent — Generally. — An es- toppel may arise from the representations of the party where they relate to matters of fact which exist at the time, or which relate to a past state of tlrings. The doctrine of estoppel also applies to representations which would otherwise operate as a fraud upon one who has been induced to rely upon them, or where one has been designedly induced by another to change his conduct or alter his condition in reliance upon such repre- sentations, or to abandon existing rights and representations as to future conduct; it will operate as an estoppel where made to influence others, and by which they have been induced to act, and which relate to an intended abandonment of existing rights. 53 So the company is estopped to deny the right of an agent to do acts which are within the scope of his authority, where the violation of the conditions of the contract is brought about by the agent's acts. 54 And the company must also bear a loss sustained by the misconduct or disobedience of its agent 49 1 Arnould on Marine Insurance, Perkins' ed. 1850, 37; 1 Id., Mac- la eh Inn's Pd. 1SS7, 248. 50 Veile v. Germania Ins. Co., 26 Iowa, 9; 90 Am. Dec. 83. si Souiers v. Kansas Prot. Union, 42 Kan. 019; 22 Pac. Rep. 702. 52 Warren v. Ocean Ins. Co., 10 Me. 439; 33 Am. Dec. 674. 53 Union Mut. L. Ins. Co. v. Mowry, 90 U. S. 544, per Field, J. 54 Mes.solback v. Norman, 122 N. Y. 5S3, per the court. 669 AGENTS OF INSURER THE POLICY. § 533 acting within the scope of his authority, rather than the in- sured, who has dealt fairly with him without notice. 00 So where a certain state of facts exists, of which the agent, acting within the apparent scope of his authority, has knowledge at the time he was so acting, such knowledge will act as a waiver of conditions inconsistent with such facts, or will estop the com- pany from availing itself of the inconsistent conditions, provid- ed the assured is without notice of the agent's want of author- ity to waive, and there is no fraud or collusion. 06 So if one claims authority to represent the company as its agent in nego- tiating the contract, and forwards an application signed by him as agent, and the company issues a policy, and the pre- mium is paid, the company is estopped to deny the agency, and is bound by the policy, even though the policy is altered by the agent without the knowledge of the assured, and although the agent forged the papers in the application. 5 ' So where an agent authorized to make contracts and issue policies verbally agrees with the assignee of the contract that the assigned pol- icy shall be of the same force as a new policy, it estops the company, although the assignee, without the company's knowl- edge, had purchased the insured premises and satisfied a mort- gage thereon. 58 So the court in Insurance Company v. Wil- kinson, 59 referring to the claim of the insured that the agent had inquired about the facts and was fully informed concern- ing the same, says: "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 repre- sentations or his conduct induced the other party to a trans- action to give him an advantage which it would be against equity and good conscience for him to assert, he would not, in 55 Commercial etc. Co. v. State, 113 Ind. 331. 56 See Miner v. Phoenix Ins. Co., 27 Wis. f>93; 9 Am. Rep. 479; Winans v. Insurance Co., 39 Wis. 342; Hartford L. etc. Ins. Co. v. Hayden, 90 Ky. 39; 13 S. W. Rep. 585; Mtna. Ins. Co. v. Maguire, 51 111. 342; Masters v. Madison etc. Ins. Co., 11 Barb. (X. Y.) G24. See also, cases under the preceding chapter. 57 McArthur v. Home L. Assn., 73 Iowa, 33(>: 35 N. W. Rep. 430. 5S Amazon Ins. Co. v. Wall, 31 Ohio St. 62S; 27 Am. Rep. 533. 50 ?3 Wall. (U. S.) 222, Miller, J. § 534 AGENTS OP INSURER THE POLICY. 670 a court of justice, be permitted to avail himself of that advan- tage." § 534. Waiver and Estoppel by Agent — Conditions Precedent and Subsequent, — Conditions may be precedent and relate to facts actually existing and which must be per- formed. Otherwise the formation of a valid contract is pre- vented, unless there be a waiver or an estoppel; or conditions may be subsequent, a breach of which may occur after a valid contract is completed. The former class is illustrated by the case where a building stands on leased ground, which fact is re- quired to be stated or waived, or the contract under the provi- sions of the policy, will be void. 60 The latter class is illustrated by a case where the property is insured and the policy delivered, but the state of facts then existing is thereafter changed. As in case of occupancy of the building when insured, and there is a breach of condition by the premises becoming vacant there- after. 61 And, as has been stated in the last section, there may be an estoppel by representations as to future conduct by which a party has been induced to act, and which relate to an aban- donment of existing rights. 62 These rules are further illus- trated by the following cases: Thus, the use of kerosene does not avoid the policy, notwithstanding a condition that it shall so operate, where the agent, at the time of the application, in- spected the premises and saw and was informed that kero- sene was used for lighting them; 63 and where the agent knew that the factory insured was to be run at night and lighted by an oil, which was a product of petroleum, the condition was held to be waived. 64 But where at the time the insurance was effected the agent knew that one barrel of petroleum was kept for lighting purposes, and the insured continued afterward to keep that amount, it was held that the policy was avoided, al- though it was also decided that the condition as to keeping eo Vnn Schoick v. Niagara P. Ins. Co., 68 N. Y. 434. en Wustum v. City F. Ins. Co.. 15 Wis. 138. 62 See Union Mnt. L. Ins. Co. v. Mowry, 96 U. S. 544. per Field. J. 63 Bennett v. North British Ins. Co., 81 N. Y. 273; 37 Am. Rep. 501. C4 Couch v. Rochester German F. Ins. Co., 25 Hun (N. Y.), 469. 671 AGENTS OF INSURER THE POLICY. § 535 petroleum did not apply to that used for lighting purposes; 65 although if the condition of the premises when the loss occurs is the same as when insured, and the agent knew of the con- dition at that time, the policy covers the loss. 06 So where an insured distillery always had been and continued to be run at night, of which fact the agent who delivered the policy had knowledge, there is a waiver. 67 And knowledge of the agent that certain prohibited articles were, and were to be, used on the premises is knowledge of the company, and there is a waiver of the prohibitory condition. 68 So a condition against keeping gunpowder without written permission in the policy is waived where the agent knew it was kept and was to be kept; 69 although directly the contrary has been held in Ken- tucky. 70 So the knowledge of the agent that the insured had kept fireworks in another store does not operate as a waiver of a clause in the policy prohibiting the keeping of fireworks on the insured premises. 71 It is also held that where the guar- anty relates to future conduct, and is not a part of the form of the contract, that the agent's knowledge of prior conduct does not affect a promise to do differently thereafter, and does not affect the company, as in case of keeping a watchman in the future, the representation or warranty being promissory in such case. 72 Such a state of facts is distinguished by the court in a New York case 73 from that where the agent knew, at the time of insuring, of the existence of facts which then constituted a ground of forfeiture. § 535. What Agents may Waive Conditions — Knowl- edge Before and after Contract Made. — Where the agents 02; 5 N. Eng. Rep. 2S8. $73 AGENTS OF INSURER THE POLICY. § 536 plicant keeps gunpowder in the insured premises is held not to be notice to the company. 82 iSTor is there any waiver where the agent only has authority to take applications and deliver them, and the knowledge of the facts constituting a breach comes to him after the contract is completed; 83 nor is there a waiver of forfeiture by the agent's acts in assisting to make a mortgage ten months after the insurance is effected, 84 and the company is not chargeable with notice acquired by the solicit- ing agent subsequently to the delivery of the policy, for the reason that his functions are held to have ceased. 8j Thus, where such agent obtains knowledge after the issue of a pol- icy of the sinking of a well, and a gas jet is struck in so do- ing, which ignites and destroys the property, the company is Dot chargeable with the agent's knowledge. 86 In all of the above and similar cases, however, the question must be deter- mined by the rules: 1. Whether the agent was acting within the scope of his apparent authority; 2. Whether the insured had knowledge or was bound to have knowledge, of the limi- tations upon and extent of the agent's authority; 3. Whether such acts of waiver have been ratified; 4. Whether they are sanctioned by custom. 87 And it would be competent to show an actual express power to waive conditions, or an implied au- thorization so to do, arising from the acts of the company, or from what he has previously done with the knowledge and con- sent of the principal. 88 § 536. Waiver of Forfeitures by Agent — Generally. It is held in California 89 that the assured is justified in assum- ing that the company's agents have the right to waive forfei- 82 Liverpool & London etc. Ins. Co. v. Van Orr. 63 Miss. 431. 83 Sun Mut. Ins. Co. v. Texarkana etc. Co. (Tex.). 15 S. W. Rep. 34. 84 Stevens v. Queens Ins. Co., 81 Wis. 335; 55 N. W. Rep. 555. 85 Crane v. City F. Ins. Co., 3 Fed. Rep. 558; Heath v. Spring- field F. & M. Ins.' Co., 58 N. H. 414; Putnam Tool Co. v. Fitchburg Mut. F. Ins. Co.. 145 Mass. 265; 13 N. E. Rep. 902; 5 N. Eng. Rep. 2SS. 86 Crane v. City Tns. Co.. 3 Fed. Rep. 558. 87 New England F. & M. Ins. Co. v. Schettler, 3S 111. 1C6. 88 See Sohnes v. Insurance Co. of North America, 121 Mass. 43S r 441. 89 Silverberg v. Phoenix Ins. Co., 67 Cal. 36. Joyce, Vol. I.— 43 §§ 537, 538 AGENTS OF INSURER THE POLICY. 674 tures, unless the policy otherwise provides. And where the agent makes statements not intended to warrant the assured in doing an act which constitutes a breach of conditions, in con- sequence of which a forfeiture arises, there is no waiver nor estoppel. 90 So it is held that a mutual company may by its agent waive a forfeiture if the agent acts within the scope of his authority and with full knowledge of the facts. 91 In gen- eral, it may be stated that it is conceded that a general agent may, in the absence of known limitations on his authority, waive a forfeiture as well as the company. 92 § 537. Power of Agent to Bind Company by Con- struction of Policy. — Where a foreign insurance company has no general agent in the state, but employs a local agent to rep- resent it, such local agent may bind the company by his answer to a policy holder when applied to by the latter for information as to the construction of doubtful language in the policy. 93 So an agent may bind the company by an expression of opin- ion, and his error in so doing is that of the company. 94 It is held, however, in Iowa that the company is not bound by a representation to an applicant as to the legal effect of the pol- § 538. Agent — Power to Renew. — A contract of renewal must be complete. Thus where an agent who represented sev- 90 St. Paul F. & M. Ins. Co. v. Parsons, 47 Minn. 352; 50 N. W. Rep. 240. 91 Towle v. Ionia etc. Mut. F. Ins. Co., 91 Mich. 219; 51 N. W. Rep. •987. 92 See Goit v. National Protection Ins. Co., 25 Barb. (N. Y.) 189; Carroll v. Charter Oak Ins. Co., 1 Abb. Dec. (N. Y.) 31G; Insurance Co. v. Eggleston, 90 U. S. 572. ppr the court; Insurance Co. v. Wilk- inson, 13 Wall. (IJ. S.) 222; Miller v. Phoenix Ins. Co., 27 Iowa, 203; 1 Am. Rep. 202; Kenyon v. Knights Templar, 122 N. Y. 247. And see sections following under this chapter. 93 Hotchkiss v. Phoenix Ins. Co., 70 Wis. 209; 44 N. W. Rep. 1100. JW Campbell v. International L. Assur. Soc, 4 Bosw. (N. Y.) 298, 310. »5 Dryer v. Security F. Ins. Co. (Iowa, 1S95), 02 N. W. Rep. 70S; 24 675 AGENTS OF INSURER THE POLICY. § 53D eral companies failed, by mistake, to renew policies to the full amount requested by the insured, those companies in which the agent had not renewed were declared not bound. 90 But the company cannot question the authority of an agent to re- new where it furnishes such agent with blank policies and re- newal receipts, signed by the company's president and secre- tary, and the particular receipt in question also provided that it was not valid unless countersigned by the agent. 97 So a local agent has authority to renew, 98 and an agent supplied with blank policies, signed by the company's officers, and empow- ered to fill up and deliver them without consulting the com- pany, may bind the company by a parol agreement to renew the policies issued by him, and to keep the plaintiff's property insured. 99 But the company is not bound by its agent's mere naked parol promise to renew a policy when it runs out; 100 al- though a general agent may make a valid agreement to ex- tend a policy where he is authorized to receive applications for insurance and reinsurance, with power to make the application binding until the company's disapproval is communicated to the assured, and it appears that the policy in question was not disapproved. 101 § 539. Revival of Policy l>y Agent. — In case the agent has no actual authority, nor any apparent authority ac- quiesced in by the company, he has no power to waive a for- feiture so as to revive a lapsed policy; 102 nor has a life insur- ance agent any authority to revive a policy forfeited for non- Ins. L. J. 541. See Southern Ins. Co. v. White, 58 Ark. 277; 24 S. W. Ron. 425. 96 Johnson v. Connecticut F. Ins. Co., 84 Ky. 470; O'Reilly v. Cor- poration of London Assur. Soc, 101 N. Y. 575. See Dunning v. Phoe- nix Ins. Co., 68 111. 414. or Carroll v. Charter Oak Ins. Co., 40 Barb. (N. Y.) 292. os Banbie v. Mtna. Ins. Co., 2 Dill. (C. C.) 156. so Banbie v. JEtna Ins. Co., 2 Dill. (C. C.) 156. See, also, Taylor v. Germania Ins. Co., 2 Dill. (C. C.) 282. ioo Croghan v. New York Underwriters' Agency, 53 Ga. 109. See O'Reilly v. Corp. London Assur., 101 N. Y. 575; Taylor v. Phcenix Ins. Co., 47 Wis. 365. ioi Soods v. Mechanics' Ins. Co.. 8 N. Y. (4 Sold.) 351. 102 Metropolitan L. Ins. Co. v. McGrath (N. Y.), 19 Atl. Rep. 3S6. § 539 AGENTS OF INSURER THE POLICY. 676 payment of premium by giving an antedated receipt there- for; 103 nor can an agent revive a canceled policy rejected by the company unless authorized so to do in the specific case. 104 And where a policy is delivered for cancellation to an agent authorized to cancel, it is not revived in case a redelivery is made by the agent, a loss having intervened of which the agent has knowledge. 105 But in so far as an agent of the company has power to waive a forfeiture of the policy, he has author- ity to revive the same, inasmuch as a waiver of forfeiture oper- ates as a revival. This may arise from the agent's giving a renewal receipt with a knowledge of the facts from which a forfeiture may arise, 106 or by a receipt of the premium, 107 or by some other unequivocal act of waiver of the forfeiture. 108 In case, however, the policy is absolutely forfeited, it is inti- mated that there must be a new contract, founded on a valid consideration, or such conduct by the company or its agent as misleads the insured to his prejudice and operates as an es- toppel. 109 The general rule, however, to be deduced from the 103 Diboll v. iEtna L. Ins. Co., 32 La. Ann. 179. 104 Hartford F. Ins. Co. v. Reynolds. 36 Mich. 502. 105 Crown Point Iron Co. v. .Etna Ins. Co., 53 Hun (N. Y.), 220. 106 Minor v. Phoenix Ins. Co., 27 Wis. 693; 9 Am. Rep. 479; Whited v. Germania F. Ins. Co., 76 N. Y. 415; 32 Am. Rep. 330. 107 Walsh v. iEtna L. Ins. Co.. 30 Iowa, 133; 6 Am. Rep. 664. las See Weed v. London L. F. Ins. Co., 116 N. Y. 106; Ludwig v. Jersey City Ins. Co., 48 N. Y. 379; 8 Am. Rep. 556; Rice v. New Ens- land Mut. Aid Soc, 146 Mass. 24S; Cotton v. Fidelity & Cas. Co., 41 Fed. Rep. 506. ior. New York Cent. Ins. Co. v. Watson, 23 Mich. 486; Brink v. Han- over Ins. Co., 70 N. Y. 593, per the Court; Smith v. Saratoga Mut. F. Ins. Co., 3 Hill (N. Y.), 508; Neely v. Onondaga Mut. Ins. Co. 7 Hill (N. Y.), 49. The last two cases have been cited (1 Parsons on Marine Insurance, ed. 1868, 42) as sustaining the proposition that "where a policy is made absolutely void by a breach of any of its conditions, it is not revived by a mere waiver." But in Sherman v. Niagara F. Ins. Co., 46 N. Y. 526; 7 Am. Rep. 380, the court, per Church, C. J., says: "I am aware that there is an intimation by Bronson, J., in Smith v. Saratoga Co. Mut. F. Ins. Co., 3 Hill (N. Y.), 508, that a mere waiver would not revive such a policy. He says 'it is difficult to see how anything short of a new creation could impart vitality to this dead body.' He did not, however, intend to decide the question of waiver, and added: 'But it is unnecessary to put this case upon the ground that the forfeiture could not be waived; and then proceeds to show Mint there had been no waiver. In 7 Hill (N. Y.), 49, in a simi- lar case, Beardsley, J., said: 'Whether a policy, after having become G77 AGENTS OF INSURER THE POLICY. § 540 eases may be stated as follows: If an agent's authority is such that he may issue policies and make contracts of insurance, such power necessarily implies, as incident thereto, the right to revive lapsed or voided policies or to renew contracts, provided the original contract at its inception was neither illegal nor against public policy; and the same rule would apply in any case where the agent had apparent authority to act in the premises, and the assured had no knowledge, actual or con- structive, of any limitations thereon to the contrary. 110 But no new agreement entered into between the agent and the as- sured can validly, by renewal or otherwise, carry into effect the provisions of another agreement which is contrary to public policy and void at common law. 111 § 540. Power of Agent to Orally Waive. — If it bt conceded, as it must be, that an agent has power to waive con- ditions, then, in the absence of known restrictions upon his au- thority, such waiver may be made by parol. The oral waiver need not necessarily be an actual agreement, but may arise from statements made by the agent from which a waiver may be inferred. 112 So it is held in Kansas that a general agent may modify the written contract, or waive conditions therein, by parol, notwithstanding restrictions upon the agent's powers void by the alienation of the property insured, can be restored to vi- tality by a mere act of waiver on the part of the underwriters need not now be decided.' Precisely what is intended as a mere act of waive!-' is not very clear, but it is probable that both the learned judges intended to make a distinction between such an act and an act which would amount to an agreement to revive and continue the contract. I have been unable to find any adjudged case holding that such a forfeiture may not be waived and such policy revived by an act from which the consent of the underwriters may fairly be in- ferred." no See Wolfe v. Security F. Ins. Co., 39 N. Y. 51; Howell v. Knick- erbocker F. Ins. Co., 44 N. Y. 276; 4 Am. Rep. 675; Keeler v. Niagara F. Ins. Co., 16 Wis. 523; 84 Am. Dec. 714; Shearman v. Niagara F. Ins. Co., 46 N. Y. 526; 7 Am. Rep. 3S0, opinion of the Court; Frank- lin F. Ins. Co. v. Murray. 73 Pa. St. 13, 2S; Washington F. Ins. Co. v. Davidson. 30 Md. 91. And see, also, chap. XVIII, herein. in Gray v. Hook, 4 N. Y. 449; Woodworth v. Bennett, 43 N. Y. 273: 3 Am. Rep.. 706. ii2 See Kruger v. Western F. & M. Ins. Co., 72 Cal. 91. See sees. 441, 442 herein. § 541 AGENTS OF INSURER THE POLICY. 678 in the policy. 113 But in case the assured places an encum- brance upon his property, and requests the agent to do certain acts to secure him, which the agent says he cannot do, but that "it would be all right anyway," there is no waiver. 114 In another case the assured, who was going away, requested the agent to renew his policy before he left, which he agreed to do, saying it would be "all right." The assured went away, and after his return the property was destroyed by fire. No new premium was paid, as was required under a condition in the old policy. It was held that there was no waiver of the condi- tion as to payment of the premium. 110 There is also a class of cases which hold that where the policy makes provision as to the manner in which conditions can be waived, that it must be done in that way. We have, however, considered this question elsewhere. § 541 . Where Agent Fails to Take Advantage of For- feiture. — If an agent has knowledge that a ground for for- feiture exists, and thereafter by some act recognizes the con- tract as valid, there is a waiver; 116 and if the local agent is in- formed of the removal of goods before a loss, and the com- pany neglects to cancel the policy, it is liable. 117 So in ease of such knowledge on the part of an agent, and his neglect to take advantage of the forfeiture, there is a waiver, as where he knows of other insurance and fails to cancel the policy, there is no forfeiture, even under a condition requiring the indorse- ment in the policy of such other insurance. 118 And where a local agent consents to a conveyance contrary to the stipula- tions of the policy, and no forfeiture is declared, the company will be presumed to have assented to the conveyance; 1 ' 19 and the same rule obtains in case the agent writing the insurance H3 Insurance Co. v. Gray, 43 Kan. 497, distinguishing between authority of general agent and of soliciting agent. H4 Bosworth v. Cleary, 80 Wis. 393; 49 N. W. Rep. 750 H5 Taylor v. Phoenix Ins. Co., 47 Wis. 365. H6 Van Schoick v. Niagara F. Ins. Co., 68 N. Y. 434. H7 Williamsburg City F. Ins. Co. v. Cary, 83 111. 453. H8 Hamilton v. Home Ins. Co., 94 Mo. 353; 7 S. W. Rep. 261; 13 West. Rep- 602. no Illinois F. Ins. Co. v. Stanton, 57 111. 354. 679 AGENTS OF INSURER — THE POLICY. § 542 knows of the use of gasoline on the premises, and the general agent, with like knowledge, fails to cancel the policy, the com- pany is bound, notwithstanding a condition prohibiting such use. uu In another case an application was made to A and B, local agents, who were mere surveying agents. The applica- tion was forwarded to the company, which sent the policy di- rectly to the assured. A and B dissolved partnership. A be- came the company's "recording agent," with power to issue policies, etc. B continued as surveying agent. A being thereafter applied to by the assured for further insurance, referred him to B, who sent him to agents of other companies. Other insurance was obtained, and B was informed thereof, but made no objection, nor was the assured informed that his policy was rendered void by additional insurance. The con- sent of the secretary of the company to such other insurance was not indorsed on the policy as required by the terms of the policy. It was held that the agent's acts amounted to a waiver or estoppel. 121 But it is held in Iowa 122 that if an agent has knowledge of acts of the assured which would avoid the pol- icy, and fails to object, the company is not bound. It is also decided in Texas 123 that the failure of the agent to have the policy declared forfeited, where he knows that the building insured is to be used for a different purpose, does not consti- tute a waiver where the agent only has authority to take ap- plications and deliver them. § 542. Waiver by Receiving- Premium — Agent. — \ waiver of a condition of a forfeiture may arise from the re- ceipt of the premium by the company's agent with knowl- edge of the breach of the condition or of the forfeit- ure. So there may be a waiver of defenses which might have been pleaded in avoidance of the policy where the 120 Farmers & Merchants' Ins. Co. v. Nixon, 2 Col. App. 205; 30 Pac. Rep. 42. 121 American Ins. Co. v. Gallatin, 48 Wis. 36, Ryan, C. J., dissent- ing. 122 Ayres v. .Hartford Ins. Co., 17 Iowa, 17fi: So Am. Dee. 553. 123 Sun Mut. Ins. Co. v. Texarkana F. etc. Co. (Tex.), 15 S. W. Rep. 34. § 542 AGENTS OF INSURER — THE POLICY. 680 agent, with knowledge of the facts, receives the unpaid pre- mium from the beneficiary after the death of the assured; 124 and a forfeiture for violation of a condition for resid- ing in a restricted district may be waived by the agent's re- ceiving the premium with knowledge of the fact. 125 There is also a waiver by the agent's receiving the renewal premium after knowledge of a change in the location of the goods in- sured, 126 or after knowledge of other insurance, 127 or that the insured had sold the property and taken back a mortgage; 128 and if the case is one where the rule would apply that knowl- edge of the agent is knowledge of the company, the receipt •of premiums by the company after knowledge by the agent of a breach of a condition or of a forfeiture operates as a waiver or an estoppel; 120 as where the company was held estopped by laying an assessment to defend a suit on the policy on the ground that benzine was kept upon the premises contrary to a condition of the policy. 130 But if an assessment is made by mistake by an agent of the company, and never collected, there is no waiver of a forfeiture for over-insurance. 131 The mere act, however, of receiving a premium or an assessment does not operate as an estoppel against a life insurance company availing itself of a forfeiture, unless the assured made the pay- ment relying upon the acts, declarations, or silence of the com- pany or its agents that the forfeiture was or would be waived. 132 !N"or is the company estopped from setting up a forfeiture by reason of an assessment made under a policy on property over- insured where the agent was instructed not to collect the same, 124 Cotton v. Fidelity etc. Ins. Co., 41 Fed. Rep. 506. 125 Walsh v. JEtna L. Ins. Co., 30 Iowa, 133; 6 Am. Rep. 664. 13(3 Ludwig v. Jersey City Ins. Co., 48 N. Y. 379; 8 Am. Rep. 556. 127 Carroll v. Charter Oak Ids. Co., 1 Abb. App. Dec. (N. Y.) 316. 128 Whited v. Germania F. Ins. Co.. 13 Hun (N. Y.), 191; Miner v. Phoenix Ins. Co., 27 Wis. 693; 9 Am. Rep. 479. 129 See McGurk v. Metropolitan L. Ins. Co., 56 Ccnn. 52S; 1 L. R. Annot. 563. 130 Carrigan v. Lycoming F. Ins. Co., 53 Vt. 418; 38 Am. Rep. 687. 131 Elliott v. Lycoming Co. Mut. Ins. Co., 66 Pa. St. 22; 5 Am. Rep. 323. 132 Northwestern Mut. L. Ins. Co. v. Ammerman, 119 111. 329; 10 N. E. Rep. 225. 6S1 AGENTS OF INSURER — THE POLICY. §§ 543, 544 but made demand therefor, although he did not collect the same. 133 § 543. Waiver by Delivery of Policy — Agent. — A waiv- er may exist or an estoppel arise where the authorized agent of the company, with knowledge of a breach of a condition in the policy, or of the existence of a state of facts prohibited by the terms of the contract, delivers the policy to the assured. This rule has been applied to cases of other insurance, 134 where the agent has full knowledge of the state of the title, 135 or where he knows that petroleum oil is kept, 136 or that the building stands on leased land. 137 § 544. Knowledge not Obtained in Course of Agent's Employment. — It is necessary that the knowledge of an agent, in order to bind the company, should have been ob- tained by him in the course of his employment. If obtained while doing an act in no way connected with his agency, the company is not bound. Thus, if an agent be employed as an attorney, and in that capacity draws up certain papers transfer- ring the property covered by the policy, his declarations to the transferee as to the need of the transfer and the validity of the policy do not bind the company. 138 But it is declared in Wis- consin 139 that although the information in question was not ac- quired by the agent in his capacity as such, nor while engaged in the transaction of his principal's business, the insurer will nevertheless be bound if the agent possessed such knowledge when he received the policy. 140 But knowledge acquired by 133 Elliott v. Lycoming Co. etc. Ins. Co., 66 Pa. St. 22; 5 Am. Rep. 323. 134 Putnam v. Commonwealth Ins. Co.. 4 Fed. Rep. 753; citing Whited v. Gerrnania F. Ins. Co., 76 N. Y. 415. 135 Liverpool & London etc. Ins. Co. v. Ende, 65 Tex. 118. 136 Kruger v. Western F. & M. Ins. Co., 72 Cal. 91; 13 Pac. Rep. 156. 137 Home Ins. Co. v. Stone River Nat. Bank, 88 Tenn. 369; 12 S. W. Rep. 915. 138 St. Paul F. & M. Ins. Co. v. Parsons, 47 Minn. 352, 355; 50 N. W. Rep. 240. See Satterfield v. Malone, 35 Fed. Rep. 445, as to gen- eral rule relating to agency. 139 Shafer v. Phoenix Ins. Co., 53 Wis. 361. HO See Miller v. Oswego etc. Ins. Co., 18 Hun (N. Y.) 525. §§ 545, 546 AGENTS OF INSURER — THE POLICY. 682 rumor by a director or other agent does net bind the company, for an agent is not obliged to charge his mind with rumors or loose information coming to his knowledge. 141 But it is held that if the matter of additional insurance be spoken of only incidentally in the course of conversation, or if the secretary or clerk of the company accidentally learns thereof, there is such notice as binds the company. 142 § 545. That Agent Might have Learned hy Ordinary Diligence of the Existence of certain facts will not oper- ate to relieve the assured from a forfeiture, as where he might have learned of a prior insurance when he issued a later policy, the company is not liable. 143 § 546. Agent's Knowledge Obtained in Individual Capacity. — If an agent has merely authority to take appli- cations and deliver them, and his knowledge of a breach of warranty comes to him in his individual capacity after the con- tract of insurance is made, there is no waiver of forfeiture. 144 It is also held that if a director receives notice in his private capacity, the company is not bound. 145 And the defendant company was declared not bound by knowledge ascertained by an agent of another company, although such agent sometimes represented the defendant; 146 and where a broker obtained a policy for another through the company's proper agent, it was held that a waiver did not arise from such broker's knowledge of the use of forbidden articles on the premises insured. 147 i« General Ins. Co. v. United States Ins. Co., 10 Md. 517; 69 Am. Dec. 174; Schaefer v. Phoenix Ins. Co., 53 Wis. 361. See, also, Kee- nan v. Dubuque Ins. Co., 13 Iowa, 375. Examine Farrell Foundry v. Dart, 26 Conn. 376, and text ending of sec. 404 herein. 142 Eureka Ins. Co. v. Robinson, 56 Pa. St. 266-68; 94 Am. Dec. 65. 143 Landers v. Cooper, 115 N. Y. 279; 22 N. E. Rep. 212. 144 Sun Mut. Ins. Co. v. Texarkana etc. Co. (Tex.) 15 S. W. Rep. 34. See, also, Ayres v. Hartford Ins. Co., 17 Iowa, 176; 85 Am. Dec. 553. 145 General Ins. Co. v. United States Ins. Co., 10 Md. 517; 69 Am. Dec. 174. 146 Lycoming Ins. Co. v. Mitchell, 48 Pa. St. 367. 1*7 Kings County F. Ins. Co. v. Swigort. 11 111. App. 590. See Solms v. Rutgors etc. Ins. Co., 8 Bosw. (K. Y.) 578. 683 AGENTS OF INSURER — THE POLICY. §§ 547, 548 But in Deitz v. Providence-Washington Insurance Company 148 the distinction made in an instruction between knowledge of an agent as such and knowlege in his individual capacity is declared to be too refined for the average juryman to compre- hend. § 547. Knowledge of Company at Whose Instance Another Company Issues Policy. — It is held in a New York case 149 that if an application is made to an insurance company for a policy, and, at such company's instance, another company issues the policy, that the latter company is not chargeable with material facts known to the former but not communicated to the latter. § 548. Agent's Power to Grant Permits Affecting- Risk. An agent may, while acting within the apparent scope of his authority, consent to a waiver of conditions, or grant permits which are in effect a waiver of the same, even though he has no actual authority so to do, provided the insured has no knowledge of his limited powers. Thus, a special agent may grant permits to reside in restricted territory, although he is only authorized to receive applications and money for such permits, but may not grant them ; 15 ° and an agent empowered to make and renew policies, and to indorse thereon permission to vary the risk under the company's instructions, may give a permit to run an insured factory day and night. 151 So an agent with authority to receive premiums may grant permis- sion to remove insured property, especially where he is paid a premium for the extra risk incurred thereby; lo2 and a policy will cover property in an addition to a building in which the insured property is located where the agent indorses on said policy permission to make such addition, "all policies concur- rent," and he knows at the time that the other policies referred to had been extended to cover the entire property. 153 So if a 148 33 W. Va. 520. 545; 11 S. E. Rep. 50. 149 Solms v. Rutgers etc. Ins. Co., 8 Bosw. (N. Y.) 578. iso Walsh v. .Etna L. Ins. Co.. 30 Iowa, 133; 6 Am. Rep. 004. 151 North Berwick Co. v. New England etc. Ins. Co., 52 Me. 330. 152 New England etc. Co. v. Schettler. 3S 111. 100. 153 Butterworth v. Western Assur. Co., 132 Mass. 4S9. § 549 AGENTS OF INSURER — THE POLICY. 684 local agent has been accustomed to grant -permits for removal of goods, and has always notified insurer thereof upon blanks furnished by insurer for that purpose, and has never been notified to discontinue the practice, and such permission is given, the company is bound. 154 But an agent authorized to solicit and forward applications has no power to grant oral permission to store an explosive on the premises, and, in case he does so, the company is not estopped, unless it be shown that it had permitted like acts, or had knowledge of such per- mission and did not object, or unless the agent held himself out as authorized so to act. 155 § 549. Ag-ent — Power to Alter Policy. — A general agent has authority to so alter the description of the property covered by the policy as to make it accurate, 156 and the com- pany is bound by the act of its agent in erasing a material stip- ulation in the policy before its delivery where the applicant had no knowledge of the agent's want of authority to so act, and the agent was intrusted with intermediary certificates signed by the secretary, and authorized to deliver the same to the applicants. 157 So an agent with power to fill out and issue policies may, before its delivery and acceptance, change the description by a memorandum added to the policy stating that the buildings were being constructed, 158 and a memorandum indorsed on the policy by the agent before its delivery and ac- ceptance, as to the manner of settling losses, binds the com- pany, although the same be inconsistent with the printed terms of the policy. 159 So the authority of an agent to modify the contract may be inferred from a course of dealing with insured and the company's recognition of these acts. 160 And a general agent may, in case of mistake, change the name of the party to 154 Burlington Ins. Co. v. Threlkeld, GO Ark. 539. it>5 Bartholomew v. Merchants' Ins. Co., 25 Iowa 507; 96 Am. Dec. 65. 156 Warner v. Peoria etc. Ins. Co., 14 Wis. 318. 157 Dayton Ins. Co. v. Kelly. 24 Ohio St. 3-15; 15 Am. Rep. 612. 158 Gloucester Mfg. Co. v. Fire Ins. Co., 5 Gray (Mass.), 497; 66 Am. Dec. 376. 159 Hugg v. Augusta Ins. etc. Co., Taney (C. C), 159. 160 Day v. Mechanics' etc. Ins. Co., 88 Mo. 325; 4 West. Rep. 614. 685 AGENTS OF INSURER — THE POLICY. § 550 whom the loss is payable. 101 Again, it is within the power of an agent with authority to issue and countersign policies to strike out certain parts of a condition as to keeping books locked in a fire-proof safe at night. 162 And in general, where he has apparent authority to act in the premises and the as- sured has no knowledge of restrictions to the contrary, or where there is no limitation in the policy on his authority, his power to alter or modify is coextensive with that of his prin- cipal. 103 If an agent, without authority, alters a policy to conform to the contract agreed upon, and it becomes void in consequence, the company is liable after a loss upon the agree- ment as made. 164 But a local agent is not necessarily author- ized, by virtue of his general powers as such, to alter, change, or vary the terms of the contract; 16i> and where such agent has only authority to solicit risks, receive and write applications, deliver policies, and collect premiums, he is not thereby empow- ered to waive forfeitures or alter any of the material conditions of the contract, nor agree to other insurance; 166 nor has an agent with similar powers authority to change the policy by making the loss payable to another than the assured. 167 § 550. Agents — Powers in Relation to the Premium. A general agent may give credit for a renewal premium or take a note therefor, 168 although it is held that a broker employed 161 Solms r. Rutgers F. Ins. Co., 3 Keyes (N. Y.), 416. 162 Parsons v. Knoxville F. Ins. Co. (Mo. 1895) 31 S. W. Rep. 117. 163 See Sehomer v. Insurance Co., 50 Wis. 575; 7 N. W. Rep. 544; Pechner v. Phoenix Ins. Co., 65 N. Y. 194; Alexander v. Insurance Co., 67 Wis. 422: 30 N. W. Rep. 727; Washington F. Ins. Co. v. David- son. 30 Md. 91; Banbie v. Mtna. Ins. Co., 2 Dill. (C. C.) 156; Newman v. Springfield F. & M. Ins. Co., 17 Minn. 123; Silverberg v. Insurance Co. (Cal.), 7 Pac. Rep. 38; 67 Cal. 36; New England etc. Ins. Co. v, Schettler. 38 111. 166; Wood v. Poughkeepsie Ins. Co., 32 X. Y. 619. 164 Bunten v. Orient Mut. Ins. Co., 2 Keyes (N. Y.). 667. 165 Clevenger v. -Mutual L. Ins. Co.. 2 Dak. 114. IBS American F. Ins. Co. v. Hampton, 54 Ark. 75, 7S; 14 S. W. Rep. 1092. 167 Duluth Nat. Bank v. Knoxville F. Ins. Co., 85 Tenn. 76. ies Post v. JFAna, Ins. Co., 43 Barb. (N. Y.) 351; Franklin F. Ins. Co. v. Massey. 33 Pa. St. 221; L. Ins. Co. v. Colt. 20 Wall. (U. S.) 560; Marsh v. Northwestern Nat. Ins. Co.. 3 Biss. (C. C.) 351, 358; Heaton r. Manhattan F. Ins. Co., 7 R. I. 502. § 550 AGENTS OF INSURER — THE POLICY. 686 to affect insurance cannot waive prepayment of the premmn> by giving credit. 100 So an agent clothed with apparent au* thority may receive a note for the premium, 170 and agree with the insured that it will be returned if the policy is rejected. The company is bound by such acts of its agent, and, in case of rejection, it cannot sustain an action on the note. 171 And an agent authorized to take and approve risks and issue policies is by general usage empowered to allow credit for premiums, 172 and he may accept a check therefor ; 173 and it is so held where the check has even been dishonored. 174 But an agent has no authority to accept personal property in lieu of money for the premium; such act is a fraud upon the company, and no valid contract can arise therefrom; 17a and the soliciting agent may only receive cash, 170 although payment to an agent in confed- erate notes, while the confederacy existed as a government de facto, has been declared valid. 177 So an agent may, however, receive premiums on deposit on incompleted contracts where he has authority to receive them on accepted risks, 178 and delivery of the premium to an expressman to be forwarded at the agent's request is delivery to the company, although the carrier embezzles the money. 179 A life insurance agent authorized to collect premiums, but having no authority to issue policies, 1C9 Maryland v. Royal Ins. Co., 71 Pa. St. 303. no Mississippi Valley L. Ins. Co. v. Neyland, 9 Bush (Ky.), 430; New York L. Ins. Co. v. McGowan, 18 Kan. 300. 171 Jacoway v. German Ins. Co., 49 Ark. 320; 5 S. TV. Rep. 339. 172 Tennant v. Travelers' Ins. Co., 31 Fed. Rep. 322; Insurance Co. v. Colt, 20 Wall, 560; Homer v. Guardian L. Ins. Co., 67 N. Y. 478. See, also, Bodine v. Exchange F. Ins. Co., 51 N. Y. 117; 10 Am. Rep. 566. 173 Taylor v. Merchants' F. Ins. Co., 9 How. (U. S.) 390; Lycoming M. F. Mut. Co. v. Bedford (Fa.), 2 Week. Not. Cas. 529. But see Neill v. Union Mut. L. Ins. Co., 45 U. C. Q. B. 593; 7 Ont. App. 171. 174 .Etna L. Ins. Co. v. Green, 38 U. C. Q. B. 459. 175 Hoffman v. Hancock Mut. L. Ins. Co., 92 U. S. (2 Otto) 161. 176 Kaub v. New York Ins. Co., 14 N. Y. 573. See Hoffman v. John Hancock L. Ins. Co., 92 U. S. (2 Otto) 161. 177 Robinson v. International L. Ins. Co., 42 N. Y. 54; 1 Am. Rep. 400. 178 Hallock v. Insurance Co., 26 N. .T. L. (2 Dutch.) 268. 179- Currier v. Continental L. Ins. Co., 53 N. H. 538; Whitley v. Piedmont etc. Co., 71 N. C. 480. 687 AGENTS OF INSURER — THE POLICY. § 550 can grant no extension of time for the payment of an install- ment of the premium note. 180 But it has been held that a general agent, with authority to solicit applications and receive the first premiums, may make himself personally responsible for a portion of the first premium. 181 An agent authorized to deliver the policy may receive the premium and bind the com- pany thereby, the important thing being the payment of the money; it is sufficient if it is paid to and accepted by one hav- ing the apparent authority to act in the matter, whether such payment be strictly in conformity to the terms of the contract or not. 182 Where a policy provides that premiums must be paid at the home office, but there is an indorsement on the pol- icy requiring receipts for premiums paid at agencies to be signed by certain officers of the company, the contract is not thereby varied so as to make any particular agency the place of payment. Notice is merely given that if the insured pays an agent, he must obtain a receipt signed by the designated officers. 183 If an agent receives and negotiates a draft for the premium, without giving the receipt signed as required, the issue of the policy is a waiver by the company. 184 So one to whom a policy is given for delivery becomes an agent to receive the premium where the policy acknowledges the receipt there- of; 18a but where the local agent, who had a policy on his own life and who was also an express agent, sent the money by ex- press several days after it was payable, and it was not, for some reason, received by the general agent until after the assured died, it was held that the company was not liable, although the policy gave thirty days' grace after the premium was due, sub- ject to the option of the company, to receive it. 186 180 Critchett v. American Tns. Co., 53 Iowa, 404; 36 Am. Rep. 230. 181 Mississippi Valley L. Ins. Oo. v. Neyland, 9 Bush (Ky.), 430. 182 Gosch v. State Mat. F. Ins. Co., 44 111. App. 263; 24 Chi. Leg. N. 276; Greenwich Ins. Co. v. Union etc. Co., 14 Daly (N. Y.) 237. See, also, Lycoming F. Tns. Co. v. Ward, 90 111. 545; Sun Mut. Ins. Co. v. Saginaw Barrel Co., 114 111. 99; Riley v. Commonwealth Mut. F. Ins. Co., 110 Pa. St. 144. 183 Insurance Co. v. Davis, 95 U. S. (5 Otto) 425. 184 Leonard v. Washburn, 100 Mass. 251, 254. 185 Lebanon Mut. Ins. Co. v. Erb, 112 Pa. St. 149. 186 Donald v. Life Ins. Co., 4 S. C. 321. §§ 552-554 AGENTS OF INSURER — THE POLICY. 688 § 551. Agent's Authority to Fix Rates for Premium. Although an agent be only authorized to act in a limited ca- pacity, yet if he has apparent authority to represent the com- pany in relation to fixing rates of premiums, and does so, the company is bound thereby, unless the assured has knowledge of the agent's limited powers. 187 § 552. Agent's Agreement to Give Notice Where Pre- mium Due.— Where an agent of a company agrees to give notice of the falling due of eacli premium note, aud neglects to do so, this operates as a waiver of a forfeiture aris- ing from nonpayment of the note at maturity; 18S although it is held that a promise made by a local agent of a life company to give such, notice is not binding upon the company, unless the agent was specially authorized to make the agreement. 189 § 553. Agent's Authority in Regard to First and Subsequent Premiums. — Where an agent has only authority to countersign and deliver policies and to receive the advance premium, it is held that he is not thereby empowered to act in relation to subsequent annual premiums. 190 § 554. Agent's Powers in Relation to Premiums — What Agent may Waive. — Where the general agent of an insur- ance company has been accustomed, with the knowledge and acquiescence of the company, to receive payments of overdue premiums, it will be presumed that he has special authority to extend the time of payment of the same. 191 And upon the 187 Perkins v. Washington Ins. Co.. 4 Cow. (N .Y.) 645. This was held in a case where a bill in equity was brought to compel the execution of a policy and payment of a loss. The agent was appointed as surveyor of the defendant company, with au- thority to state probable rates, subject to acceptance by the com- pany, and he acted under private instructions. The company had uniformity accepted former risks under the same or not more favor- able terms, and it was held bound. 188 Alexander v. Continental Ins. Co., 67 Wis. 422; 30 N. W Rep 727. iso Morey v. New York L. Ins. Co., 2 Wood CC. C), 663. 190 Ronton v. American Mut. L. Ins. Co.. 23 Conn. 5-12; Critehett v. American Ins. Co.. 53 Iowa. 404; 36 Am. Rep. 230. See next section. i»i Wyman v. rhoonix Mut. L. Ins. Co., 119 N. Y. 274; 23 N. E. Rep. 907. See Insurance Co. v. Norton, 96 U. S. 234. 689 AGENTS OF INSURER — THE POLICY. § 554 question of the agent's authority to extend the time of payment of the premium, a note given to the agent on a former occasion when he extended such time of payment is admissible in evi- dence, it also appealing that the company then acquiesced in the agent's acts. 192 So the company is bound by a common practice of its agents to receive the premium after it becomes due. 193 A foreign insurance company is bound by the knowl- edge of its general agent of the fact that the insured was in the habit of paying premiums after they became due, 194 and where the company receives the amount of a note from its agent after it becomes due, it is bound, although there is conflicting evidence whether the agent extended the time of its payment or not. 195 And the company is liable where the assured pays the premium to an agent under a policy delivered by the latter, and which contains no condition relative to forfeiture for non- payment thereof. 196 Again, if the agent creates by indulgence the belief in the mind of the assured that a forfeiture for non- payment of the premium is waived, it is waived. 197 So the company is bound by a notice given by its general agent that the premium was due May 29th, and that the policy would be void unless the same was paid on or before thirty days from date, and the thirtieth day falling on Sunday, a tender was held good made on the Monday following. 198 And where the agent has notice that the insured is sick when a premium is due, and he takes the money and turns it over to the company, there is no forfeiture. 199 So if the agent receives after loss an overdue assessment, which he transmits to the company, and the latter 192 Dean v. iEtna L. Ins. Co., 4 Thoinp. & C. (N. T.) 497. 198 Bucklee v. United States Ann. & Trust Co., 18 Barb. (N. Y.) 541; TJnsell v. Hartford L. & A. Ins. Co.. 32 Fed. Rep. 443; Thomp- son v. St. Louis Mut. L. Ins. Co., 52 Mo. 469; Piedmont & Arlington L. Ins. Co. v. McLean, 31 G-ratt. (Va.) 517; Mound City L. Ins. Co. v. Twining, 19 Kan. 349; Insurance Co. v. Norton, 90 U. S. 234. 194 Phoenix Mut. L. Ins. Co. v. Hinesly. 75 Iud. 1. 105 Hodson v. Guardian L. Ins. Co., 97 Mass. 144. 196 Pennsylvania etc. Co. v. Carter (Pa. 1S87), 11 Atl. Rep. 102. 197 Winindger v. Globe Mut. L. Ins. Co., 3 Hughes (C. C.) 257. 195 Campbell v. International L. Soc, 4 Bosw. (N. Y.) 298. 199 Piedmont etc. L. Ins. Co. v. Lester, 59 Ga. 812. Joyce, Vol I. — 44 § 554 AGENTS OF INSURER — THE POLICY. 690 retains it, there is a waiver of forfeiture, 200 and if the assured is misled by the insurer's agent to believe that prompt payment of the premium would not be strictly enforced, and four days after it became due the assured died, an offer to pay after death was held good. 201 So if the agent who solicited the insurance, and whose duty it is to collect the premium, fails to demand its payment, and upon the tender thereof tells the insured to let it rest until it is determined by the company whether it will cancel the policy, there is a waiver of payment at the time ; 202 and where the agent said he had not the receipt with him, but would keep the policy good, prompt payment was held to be waived. 203 In Knickerbocker Life Insurance Company v. Norton, 204 the policy provided, by an indorsement thereon, that "agents of the company are not authorized to make, alter, or abrogate contracts or waive forfeitures." Notes were given by the assured for the payment of the unpaid balance of the last premium, part of it having been paid in cash. These notes were not paid. Nonpayment of the premium, or of notes given therefor, voided the policy under its conditions, and the rules provided for forfeiture of the policy if they were not paid at maturity, this being the usual form of such notes. It had been the custom of the company to extend the time of pay- ment of prior premium notes given by the insured. Evidence was also admitted as to the practice of the company in allow- ing its agents to extend the time for payment of premiums and of notes given for premiums, and agents were permitted to grant indulgence in such cases for periods of ninety, then of sixty, and then of thirty days. This evidence was objected to, but held admissible. The company had also authorized its agents to take notes, instead of money, for premiums by a con- stant practice of receiving such notes when taken by its agents. Tt also appeared that the agent had permitted an extension of the first note, but did not extend the second note; that before 200 Lycoming Co. Ins. Co. v. Schollenberger, 44 Pa. St. 259. 201 Mayer v. Mutual L. Ins. Co., 38 Iowa, 304. 202 Mallory v. Ohio Farmers' Ins. Co., 90 Mich. 112; 51 N. W. Rep. 200. 203 Shonr v. Phoenix Mut. Ins. Co., 4 Hun (N. Y.), S00. 204 9G U. S. 234. 09 1 AGENTS OF INSURER THE POLICY. § 554 the latter was due a tender was made of the amount due on the iirst note, which was refused. The agent, however,, two days prior thereto, upon being informed that the assured desired to pay both notes, had given the figures showing the amount due on them. The agent testified that he did not recollect agreeing to extend the time on the first note, and the question was left to the jury to determine whether such agreement to extend time of payment had been made by the agent, and the jury found that there had been, which submission to the jury of said fact was held no error. Stress was laid upon the fact that the extension claimed was not given until after the first note became due, and forfeiture had occurred. It did not ap- pear from the evidence that any distinction was made in grant- ing extensions before or after maturity of such notes. A judg- ment for the plaintiff in the circuit court was affirmed, and it was held that the objection that the note was already past due when it was agreed to extend it was not sufficient to prevent the agreement from operating as a waiver of the forfeiture. 204 * In another case the policy was assigned as collateral security for a debt. Upon inquiry whether provision had been made to pay the premium made by the pledgee at the agent's office, the book-keeper stated that a part had been paid and the balance would be paid the next week. The pledgee, relying thereupon, did not meet the premium when due. The money referred to by the bookkeeper had, however, without his knowledge, been deposited by the pledgor for another purpose. It was held that the pledgee was entitled to the amount of his debt under a new policy which had been issued to the pledgor when the original policy had lapsed. 205 And although the agent has no authority to waive forfeitures, but receives payment when overdue of a premium note, and accounts therefor to the principal, who re- ceives it without inquiry, forfeiture for delay in the payment is waived. 206 So an agent's representations as to the time of payment of premiums bind the company, 207 and the company -Ma The opinion was driven by Mr. Justice Bradley; three of the judges dissented, however. 205 Norwood v. Guerdon, 60 111. 253. 200' Hodsrlon v. Guardian L. Ins. Co.. 97 Mnss. 144: 98 Am. Dee. 7.1. 207 Campbell v. International etc. Assur. Soc, 4 Bosw. (X. Y.) 29S. § 554 AGENTS OF INSURER — THE POLTCY. 692 is bound by its agent's statements that failure to pay the pre- miums when due would not operate as a forfeiture. 208 In an- other case the agent wrote twice for the amount on a premium note after its maturity, and requested its return by mail or ex- press. The assured placed the amount in the mail on the same day he received the letter, but the money never reached the agent, and it was held that there was no forfeiture of the pol- icy. 209 And where the agent, being indebted to the firm of which the insured was a member, agreed to debit the premium and pay the same to the company, it was held a sufficient pay- ment. 210 Again, where a party obtained what he believed to be a participating policy, and orally notified the agent before the premium became due that he wished a paid-up policy, and the agent said it was "all right," and repeatedly promised to attend to it, but did not do so, and in consequence the insured failed to pay the premium, it was decided that the company was estopped to set up a forfeiture for such nonpayment. 211 So a person appointed as a special agent under a written con- tract which states his duties to be soliciting applications for membership, collecting membership fees, and building up the company, has power to waive the time of payment of dues on the policy, and he may extend the time of payment. 212 And a subagent may consent to a part payment of the premium. 213 In another case part of a premium had been paid to a local agent, to whom the duty of collecting the premiums was in- trusted, and he, in excess of his limited powers, had given time for the payment of the balance, and it was held that the policy was not avoided. 214 So a local agent authorized to take risks and receive premiums has power to waive a forfeiture by receiving successive premiums after knowledge that the insured has traveled outside the limits prescribed in the policy without 208 Lovell v. St. Louis Mut. L. Ins. Co., Ill U. S. 264. 209 Palmer v. Phcenix Mut. L. Ins. Co., 84 N. Y. 63. 210 Chickering v. Globe Mnt. L. Ins. Co., 116 Mass. 321. 2ii Piedmont etc. L. Ins. Co. v. Young, 58 Ala. 476; 29 Am. Rep. 770. 212 Painter v. Inclustrinl L. Assn., 131 Ind. 68: 30 X. E. Rep. 876. 213 Bodine v. Exchange F. Ins. Co., 51 N. Y. 117. 214 Murphy v. Southern L. Ins. Co., 3 Baxt. (62 Tenn.) 440; 27 Am. Rep. 214, 761. 693 AGENTS OF INSURER — THE POLICY. § 555 a permit; 210 and the officers of the company have power to make a parol contract for renewal, 216 and the president or sec- retary has authority to waive a forfeiture for nonpayment of premium, even though the terms of the policy are contra. 217 § 555. Agent's Powers in Relation to Premium — When no Waiver — Cases. — Where there was no payment nor tender of interest on the premium note for three months before the death of the assured, it was held that the forfeiture might be enforced. 218 So a mere book-keeper cannot bind the com- pany by receiving an overdue premium on a forfeited policy, where he has never done so except under instructions from the company's secretary. 219 And where an overdue premium was still unpaid when the assured died, and evidence was offered to show that the agent of the company, prior to the delivery of the policy, told the assured that it would make no differ- ence if the premiums were not regularly paid, and it was also attempted to prove a custom of the company to receive pay- ments of overdue premiums, it was held inadmissible to obli- gate the company to receive premiums after the death of the assured ; 22 ° and it is declared that neither a clerk nor an agent authorized to solicit insurance and renewal of policies can waive payment on the contract. 221 It is also held that an agent, with authority to issue policies and receive premium notes, cannot waive a forfeiture for nonpayment of said notes 215 Schmidt v. Charter Oak L. Ins. Co., 2 Mo. App. 339. 216 Trustees of Baptist Clrareh v. Brooklyn Ins. Co., 19 N. Y. 305. 217 Church v. Lafayette F. Ins. Co., 66 N. Y. 232. That a forfeiture for nonpayment of premium may he dispensed with by the acts or agreement of the agent, see, also, Halloek v. Commercial Ins. Co.. 2 Dutch. (26 N. J. L.) 268; Viele v. Germania Ins. Co.. 20 Iowa. 9; Walsh v. JEtna L. Ins. Co., 30 Iowa, 133; Mississippi Valley L. Ins. Co. v. Neyland. 9 Bush (Ky.), 430; Bowman v. Agricultural L. Ins. Co., 59 N. Y. 521. 2is Bergman v. St. Louis L. Ins. Co., 2 Mo. App. 262. 219 Nashville L. Ins. Co. v. Ewing, 5S Tenn. 305. 220 Sullivan v. Cotton States L. Ins. Co., 43 On. 423. 221 Hambleton v. Home Ins. Co., 6 Biss. (C. C.I 91, per the Court. Sec Waldman v. North British & M. Co.. 91 Ala. 170; 8 S. Hep. 666; Kolgers v. Guardian L. Ins. Co., 58 Barb. (N. Y.) 185. § 555 AGENTS OF INSURER — THE POLICY. 694 at maturity; 222 and that a mere authority to collect premiums does not imply an authority to waive a forfeiture; 223 and that a payment of an overdue premium note to a clerk, who receives the money under protest, does not bind the company; 224 and that local agents with limited powers cannot, even by a course of dealing, waive a provision in renewal certificates that no agent has power to receive premiums after they become due without special authority. 225 And it is held, if the policy states that an agent has no authority to waive forfeitures, that evidence is inadmissible that the general agent had consented to accept the overdue premium and give a receipt. 226 It is decided in Texas 22 ' that an agent, with authority only to receive applications and collect premiums, and not empowered to make contracts of insurance, cannot waive a forfeiture for nonpay- ment of premiums by demanding payment thereof when over- due and threatening suit therefor, nor can such agent extend the time of payment of renewal premiums. 228 And the fact that the agent to whom the premium note was given was in- debted to the assured, and promises to pay said note to the company, but does not, will not aid the assured when the com- pany sends the assured notice of the time when the note will become due, and states therein that the policy will be avoid- ed if the note is not paid. 229 A waiver cannot be deduced from ambiguous circumstances, and it is also held that neither the consent of a broker nor subagent, with only ordinary au- thority, can establish a waiver. 230 Where it was provided that if the premium note was not paid at maturity the policy should become void, and that the full amount of the premium should be considered as earned, it was held that an agreement by the 222 Wall v. Home Ins. Co., 8 Bosw. (N. Y.) 597. 223 "Union Mut. L. Ins. Co. v. McMullen, 24 Ohio St. 67. 224 mhleman v. National Ins. Co., 6 W. Va. 508. 225 Lewis v. Phoenix etc. L. Ins. Co., 44 Conn. 72. See Brown v. National Mut. L. Ins. Co., 59 N. H. 298. 226 Caton v. American Trust Co., 33 N. J. 4S7. But examine sees. 438, 439. 227 Cohen v. Continental Ins. Co., 67 Tex. 325; 3 S. W. Rep. 290. 228 Critehett v. American Ins. Co., 53 Iowa, 404: 36 Am. Rep. 230. 229 Ferehee v. North Carolina Home Ins. Co., 68 N. C. 11. 230 Pontinentnl Tns. Co. v. Willets. 24 Mich. 268; Marland v. Royal Ins. Co., 71 Ta. St. 393. See preceding sections in this chapter. 695 AGENTS OF INSURER — THE POLICY. § 555 agent of the company that the note might lie over a few days, did not operate to continue or revive the policy, but was merely an agreement not to press payment of the note. 2:$1 In another case, one who acted merely as an insurance broker received a note for a portion of the premium, which note provided that the policy would become void if the note were not paid at matu- rity, which condition, as to forfeiture, was also contained in the policy. Receipt of the payment of the first premium was also acknowledged therein. The policy was subsequently assigned with the company's consent, "subject to all the conditions" thereof. The note in question was forwarded to the company through its agent in New York. Soon after the assignment the assignee took the policy to the company's agent at Phila- delphia, and requested that it be changed, so that payment of premiums could be made quarterly, instead of annually, and at the latter place instead of New York. This agent for- warded the policy to the home office at Boston before the pre- mium became due, but did not hear from it until about a month thereafter. In the mean time the assignee had called at the agent's office on several occasions to pay the premium. The agent stated that he had no authority to receive the same, but would send for renewal receipts, and that the delay should not prejudice her rights. Before the reply was received to the agent's letter, the assured died. The premium note was un- paid when due, and of this fact the Philadelphia agent knew nothing. It was decided that under the assignment the com- pany could set up the forfeiture as well against the assignee as the assured; that the former had no right to rely upon the belief that the first premium had been paid in cash; that no waiver arose either from the retention of the notes by the com- pany, nor its delay in answering its agent's letter, nor from the agent's acts. 232 So in another case, after the local agent of a benevolent society had returned the receipt for nonpayment of assessments, the secretary again forwarded them to the agent for collection, mentioning a day certain beyond which the time of payment would not be extended. Payment not being made within the period specified, ten days thereafter the agent 23t Wall v. Home Ins. Co., S Bosw. (N. Y.) 597: 36 N. Y. 157. 232 How v. Union Mut. L. Ins. Co., 80 N. Y. 32. § 556 AGENTS OF INSURER — THE POLICY. 696 forwarded the money to the company which he had collected by contributions from friends of the assured. The society re- fused to receive the money, and it was returned to the donors. Upon an action against the company, it was held that the for- feiture was not waived. 233 And it is held that though an agent has power to make the contract of insurance and receive the premium, he has no authority, without an express authoriza- tion, to bind the company by receiving it a.ftc it becomes due; 234 and that a general agent may not waive such a con- dition where such exercise of authority is prohibited by the policy. 235 It is also declared that a collecting agent has no power to waive a forfeiture or bind the company by the receipt of overdue premiums, there being no evidence that the agent had possessed or before attempted to exercise such authority, and the policy also providing that no agent can waive for- feiture except in a certain manner. 236 The question, however, in relation to premiums must rest upon the apparent authority of the agent and the question whether the insured had actu- ally or constructively notice of any limitations on the agent's powers. 237 § 556. Agent's Powers — Other Insurance — Waiver. — An agent may waive a condition as to other insurance although the policy requires that the consent of the company be written on the policy; 238 and although there be such provisions in the policy, the company is estopped to deny consent to other in- surance where the policy was given its agent for the purpose of having such consent indorsed thereon, and the other insurance was requested by the agent, 239 and notice of such insurance is 233 Illinois Masons B. Soc., 86 111. 479. 234 Bonton v. American Mut. L. Ins. Co., 25 Conn. 542. 235 Marvin v. Universal L. Ins. Co., 85 N. Y. 278. See New York L. Ins. Co. v. Fletcher, 117 U. S. 519. 230 Metropolitan L. Ins. Co. v. McGrath, 52 N. J. L. 358; 19 Atl. Rep. 386. See Mesereau v. Phoenix Mut. L. Ins. Co., 66 N. Y. 274. As to brokers' powers to waive prepayment of premium, see Pottsville Mut. Ins. Co. v. Minnequa etc. Co., 100 Pa. St. 137. 237 See chapter xviii. 238 Lycoming Ins. Co. v. Barrinner. 73 111. 230. 239 Cobb v. Insurance Co. of North America, 11 Kan. 93. 697 AGENTS OF INSURER — THE FOLICY. § 556 sufficient if given to the agent who effects the policy. 240 So in another case, where the policy stipulated that consent to other insurance must be indorsed thereon, it was held that such pro vision could be orally waived by the company's agent.'" 41 And the declarations of an agent that a second insurance had been indorsed on the first policy estops the company from objecting to the want of an indorsement. 242 So the company is bound if the agent has notice and neglects to indorse it on the pol- icy. 243 There is also an estoppel against the company where the agent receives the policy to do what is necessary concerning additional insurance, and he afterward returns the same, say- ing it is all right, although such insurance was not in fact in- dorsed or otherwise acknowledged in writing on the policy as required by the by-laws, the company being a mutual one; 2_u and where 'the agent had acted in canceling and substituting policies for the assured, and so had full knowledge of the exis- tence of other insurance, there was held to be a waiver of the condition against other insurance, and that the company was estopped to deny the same. 245 So in case of a foreign com- pany the local agent, in the absence of special limitations upon his powers, may waive a condition in the policy against other insurance, even though the policy provides for indorsement thereon of a specific agreement. 246 So an estoppel to deny consent to such insurance will arise where after the loss the agent, knowing of other insurance, requires proof of loss, etc., at a great expense to assured ; 247 and where the agent was in- formed of other insurance on the property, and did not object, but promised to indorse it thereon, and the assured relied upon his agreement, and just before loss the agent arranged to renew the policy and made a memorandum thereof, but never in- 240 Hayward v. National Ins. Co.. 52 Mo. 181. 2n Liverpool etc. Ins. Co. v. Sheffy (Miss. 1895). 10 S. Rep. 307. 242 Mentz v. Lancaster F. Ins. Co., 79 Pa. St. 47.".. 243 National Ins. Co. v. Crane. 16 Md. 260; New England F. & M. Ins. Co. v. Sebettler. 3S 111. 166. 244 Redstrake v. Cumberland Mut. F. Ins. Co., 44 N. J. L. 294. 245 Hadloy v. New Hampshire F. Ins. Co., 55 N. H. 110. 240 Goldwater v. Liverpool etc. Ins. Co., 39 Hun (N. Y.), 170; 12 Cent. Rep. 49. 247 Webster v. Phoenix Ins. Co., 36 Wis. 67. § 556 AGENTS OF INSURER — THE POLICY. 698 dorsed the same, it was held that the company was bound, even though the policy provided that there could be no waiver, by any agent except by distinct agreement contained in the body of the policy. 248 And where all the companies are repre- sented by the same agent, and he delivers the policies, there is a sufficient notice of other insurance. 249 So a general agent has authority to indorse permission on the policy for other in- surance "without notice," and insurance effected by him after he has so done does not work a forfeiture; 25 ° and where the agent informed his company that if it could not take the whole risk he would place a portion in some other company, which was done, and thereafter the agent indorsed his consent to other insurance on the policy, it was held, after the loss, to be a suf- ficient notice to the company, 251 and the knowledge of the agent is that of the company where he procures the first policy and afterward effects other insurance in another company. 252 So where the agent who issued the policy had issued the other insurance, and had requested the insured to take out additional insurance, his knowledge binds the company. 253 So an agent authorized to make and revoke contracts of insurance may bind the company by receiving notice, 254 and if the agent at the time of issuing the policy knew of other insurance on the property, and did not object on that account to issuing it and receiving the premium, this will waive the condition against other insur- ance. 255 So if a policy mentions a prior insurance, this is sufficient notice, although it provides that consent to such in- surances must be given by the directors, and indorsed on the policy under the hand of the president and secretary, nor is further notice necessary for its renewal in such case, 256 and 24.s Morrisson v. Insurance 'Co. of North America, 69 Tex. 353; 6 S. W. Rep. 605. 249 Insurance Co. of North America v. McDowell, 50 111. 120. 250 Warner v. Peoria etc. Ins. Co., 14 Wis. 318. 251 Farmers' Mut. Ins. Co. v. Taylor, 73 Pa. St. 342. 252 von Boires v. United etc. Ins. Co.. S Bush (Ky.), 133. See, also, Brandup v. St. Paul F. & M. Ins. Co., 27 Minn. 303; Russell v. State Ins. Co.. 55 Mo. 585. 253 Home Ins. Co. v. Wood, 47 Kan. 521; 28 Pac. Rep. 167. 254 Planters' Mut. Ins. Co. v. Lyons. 38 Tex. 253. 255 Lycoming Ins. Co. v. Barringer, 73 111. 230. 250 First Baptist Soc. v. Hillsborough Mut. F. Co., 19 N. II. 5S0. 699 AGENTS OF INSURER — THE POLICY. § 556 the agent's knowledge in this respect binds the company, even though consent to other insurance he not indorsed upon the pol- icy as required thereon. In such cases there is a waiver or es toppel as against the company. 20 " So the company is bound where its local agent examines other policies on the same property. 208 So notice of another insurance given to the agent, and his consent thereto, express or implied, binds the princi- pal. This is so in case notice is given to a local agent of a foreign company, 209 or where notice of prior insurance is given to an agent authorized to make surveys and receive applica- tions, or to a soliciting agent authorized to negotiate contracts of insurance. 260 And the same is true of an oral notice. 261 And the rule applies to a local agent, 262 and an agent to take and revoke risks may consent to a prior or subsequent insur- ance on the property; 263 and the knowledge of an agent of such insurance at the time of the issue of renewal policies es- tops the company. 264 Where the same persons are directors of both insuring companies, and examine the applications, there is an estoppel to deny notice or consent, notwithstanding the 257 Fishbeck v. Phoenix Ins. Co., 54 Cal. 422; Goodall v. N. E. Mut. Ins. "Co., 25 N. H. 109; Kenton Ins. Co. v. Shea, 6 Bush (Ky.), 174: National Ins. Co. v. Crane, 16 Md. 260; Geib v. International Ins. Co., 1 Dill. (U. S.) 443; Carrugi v. Atlantic P. Ins. Co., 40 Ga. 135; 2 Am. Rep. 567; Hadley v. New Hampshire F. Ins. Co., 55 N. H. 110. 258 Pechner v. Phoenix Ins. Co., 6 Lans. (N. Y.) 411. 259 Goldwater v. Liverpool etc. Ins. Co., 39 Hun (N. Y.), 176. 260 Pelkington v. National Ins. Co., 55 Mo. 172; Geib v. Interna- tional Ins. Co., 1 Dill (C. C), 443; Sheldon v. Atlantic Ins. Co.. 26 N. Y. 460; Schenek v. Mercer etc. Ins. Co., 24 N. J. L. (4 Zab.) 447; Van Bories v. United etc. Co., 8 Bush (Ky.), 133; Wood v. Poughkeepsie Ins. Co., 32 N. Y. 619; Insurance Co. of North America v. McDowell, 50 111. 120; Carroll v. Charter Oak Ins. Co., 40 Barb. (N. Y.) 292; Ilay- ward v. National Ins. Co., 52 Mo. 181; Hamilton v. Home Ins. Co., 94 Mo. 353; McEwen v. Montgomery Co. Mut. Ins. Co., 5 Hill (N. Y.), 101; Kenton Ins. Co. v. Shea, 6 Bush (Ky.), 174; American Ins. Co. v. Gallatin, 48 Wis. 36. Ryan, C. J., dissenting. 261 Wilson v. Genesee Mut. Ins. Co., 16 Barb. (N. Y.) 511; Schenok v. Mercer Co. Mut. F. Ins. Co., 24 N. J. L. (4 Zab.) 447; Sexton v. Montgomery Co. Ins. Co., 9 Barb. (N. Y.) 191. 262 Phoenix Ins. Co. v. Spiers, 87 Ky. 285; 8 S. W. Rep. 453. 263 Carrugi v. Atlantic F. Ins. Co., 40 Ga. 135: 2 Am. Rep. 567. 264 Carroll v. Charter Oak Ins. Co., 40 Barb. (N. Y.) 292; 38 Barb. (N. Y.) 402; Carrugi v. Atlantic F. Ins. Co., 40 Ga. 135; 2 Am. Rep. 567. § 557 AGENTS OF INSURER — THE POLICY. 700 policy provides that notice be given the secretary and the di- rectors' consent obtained. 265 And where application is made to the agents for a certain amount of insurance, of which they do not take all, but the assured procures the balance and notifies the agents immediately, the company is bound by the notice, although the policy provides for a written indorsement of con- sent. 266 So notice of additional insurance may before receipt of the policy be given to an agent of the insurer who effected the isurance, and to whom the policy was given for delivery, and the indorsement of such additional insurance on the policy by the agent is the act and assent of the company. 267 And in case of a mutual company, where it appeared that a member informed the agent that he had effected other insurance, and the agent replied that it was all right, the company was held bound. It further appeared in this case that one of the additional policies was afterward canceled, and another written for the same amount in another company, and the agent told the assured that notice of such substitution was unnecessary and it was held that the notice to the agent was notice to the company; 2G8 and there is a valid consent to other insurance where the secretary of the company acknowledges by letter that notice thereof is received, for in such case the assured has the right to assume an approval by the company. 209 But it is held that a mere soliciting agent cannot waive a condition relative to additional insurance. 270 Nor is the company bound by an agreement betweeen the agent and subagent that additional insurance, when applied for, should be divided between de- fendant and two other companies for which the general agent was also acting. 271 § 557. Broker — Other Insurance — Waiver. — It is de- clared in a New York case 272 that if an agent be considered a 265 Goodall v. New England Mut. P. Ins. Co., 25 N. H. 169. 206 Horwitz v. Equitable Mut. Ins. Co., 40 Mo. 557. 2fi7 Dayton Ins. Co. v. Kelly, 24 Ohio St. 345; 15 Am. Rep. 612. 26S Combs v. Shrewsbury Mut. F. Ins. Co., 34 N. J. Eq. 403. 269 Potter v. Ontario Mut. Ins. Co., 5 Hill (N. Y.), 147. 270 phoenix Ins. Co. v. Copeland, 90 Ala. 386; S S. Rep. 4S. 2H Blake v. Hamburg-Bremen F. Ins. Co., 67 Tex. 160; 2 S. W. Rep. 368. 272 Arte v. Starr F. Ins. Co., 125 N. Y. 57; 25 N. E. Rep. 1073; cited 701 AGENTS OF INSURER THE POLICY. § 55S mere insurance broker, a forfeiture is not saved by notice to him of other insurance; 2,J but the agent, however, in that case was found to be a clerk of the company's agent, and it was held, therefore, that notice to him of other insurance was suf- ficient to bind the company. On the same line with this in- timation of the court is another case in the same state, where it is held that the mere employment of the same broker who pro- cured the first policy to obtain other insurance in another com- pany does not operate as constructive notice to the insurer is- suing the original policy, where the condition therein requires that notice of other insurance be given with all reasonable dili- gence to the company. 274 § 558. Agent — Other Insurance — Where no Waiver — Cases. — It is held that where the policy requites that prior insurance must be mentioned in or indorsed thereon, a verbal notice of prior insurance is insufficient when given to the agent of the company issuing the second policy, although he makes a memorandum thereof in a book of his own wherein are other entries concerning insurance matters. 275 It is also decided that notice of such insurance to the agent at the time the policy is issued does not estop the company, unless the agent is a general agent, with full power to make contracts, and not an agent to receive and forward applications. 276 So where the applicant told the agent that he intended to take an additional insurance, and the agent expressed a desire to write the policy, but thereafter he took out such insurance without the agent's knowledge, the first policy was held invalidated. 277 It is also held that the insured must be deemed to have knowledge of the in More v. New York Bowery F. Ins. Co., 130 N. Y. 537, 54S; 29 N. E. Rep. 760. 273 gee. also. Devens v. Insurance Co., 83 N. Y. 1G8. 274 Mellen v. Hamilton F. Ins. Co., 5 Duer (N. Y.), 101; 17 N. Y. 609. See sees. 413, 414. 275 Pendar v. American etc. Ins. Co., 12 Cush. (Mass.) 469; Cleaver v. Insurance Co., 65 Mich. 527. 276 Reed v. Equitable F. & M. Ins. Co., 17 R. I. 7S5; 24' Atl. Rep. 833; Hamilton v. Aurora Ins. Co., 15 Mo. App. 59. But see Saxton v. Montgomery Ins. Co., 9 Barb. (N. Y.) 191. 277 New Orleans Ins. Assn. v. Griffin, 66 Tex. 232; IS S. W. Rep. 505. § 558 AGENTS OP INSURER — THE POLICY. 702 conditions of his contract of insurance, even though he hay never seen the policy, where no adequate reason is shown why he could not have seen it, had he so desired, and that a forfeiture by taking additional insurance contrary to the conditio) -~ of the policy is not saved by proof that the agent had authority, in a certain manner, to consent to additional insurance, and had done so in other cases, where it is not shown that he consented in assured' s case, within the line of his authority or in the man- ner prescribed in the policy, or that he was authorized to waive any of its conditions. But a forfeiture of a policy, by taking additional insurance in violation of its conditions, may be waived by the company where, with knowledge of the forfei- ture, and supposing it to be waived, it fails to notify assured of its intention to insist on the forfeiture until after its adjuster has visited the insured and obtained from him all the informa- tion asked for in relation to the extent and value of his loss. Such action by the company will warrant the jury in finding a waiver of forfeiture, and that question should be submitted to it.' ?78 In another case it is ruled that knowledge of an agent of subsequent insurance, or of a change in existing insurance, is not notice to the company where the policy provides for no- tice in writing, acknowledged by the secretary. 279 It is also decided that a subagent authorized to solicit applications, re- ceive premiums, and deliver policies cannot consent to addi- tional insurance in other companies, and that notice to him of such insurance does not bind the company, 280 and that* where a by-law of a mutual company provides for the consent of the di- rectors to other insurance, its agent cannot obligate the com- pany by consenting to a second policy. 281 If the by-laws pro- vide that consent of the directors to other insurance be set forth in the policy, or for an indorsement signed by the secretary, it is not sufficient if the consent of one director be indorsed on 278 Cleaver v. Traders' Tns. Co., 71 Mich. 414; 15 Am. St. Rep. 275; 39 N. W. Rep. 571; 05 Mich. 527. 279 Commonwealth Mut. F. Ins. Co. v. Huntzinger, 98 Pa. St. 41. Sec also, Warwick v. Monmouth Co. Mut. F. Ins. Co., 44 N. J. L. (15 Vroom) 83; 43 Am. Rep. 343. 280 Heath v. Springfield F. Ins. Co., 58 N. H. 414. 28i Behler v. German Mut. F. Ins. Co., G8 Ind. 347. 703 AGENTS OF INSURER — THE POLICY. § 559 the application. 282 So consent by a director or secretary is not sufficient where the charter and by-laws provide for consent to other insurance by the president and secretary; 283 and where upon the evidence it appears that the persons to whom the notice of such insurance was given had no authority to act for the company in any way, and the policy provides for indorse- ment of prior insurance on the property, and, in case of subse- quent insurance, that notice thereof be given with reasonable diligence, and be also indorsed on the policy, notice to such person of other insurance is insufficient, 284 and it is held inad- missible to show consent to other insurance by evidence other than that of indorsement on the policy, signed by the secretary, where the company's charter provides for such manner of con- sent. 280 So if the policy be seen by the general agent, and thereafter another agent in another place consents to other in- surance, the latter's authority to so consent must be proved. 286 "Where a policy of insurance provided that it should be void for additional insurance not consented to by the company in wanting on the policy, and the agent of the company, in reply to a letter of the insured, wrote him stating that the company would allow other concurrent insurance and would place it for him at the same rate, it was held that this did not waive the condition of the policy, as it was not a consent to specific additional insurance and was a mere revocable offer. 287 § 550. Agent's Powers — Change of Rislc — Waiver. — An agent's power extends to a waiver of forfeiture for change of risk where he is authorized to arrange the terms upon which such change may be made. 2S8 So a foreign company will be bound by a notice of a misappropriation of the premises given to its resident agent, 2S9 and if an agent has power to cancel pol- 282 Forbes v. Agawam Mut. F. Ins. Co.. 9 Cush. (Mass.) 470. 283 stark Co. Mut. Ins. Co. v. Hnrd. 19 Ohio, 149. 254 Gilbert v. Phoenix Ins. Co., 36 Barb (N. Y.) 372. 255 Crouch v. City F. Ius. Co., 3S Conn. 181. 286 So held in Security Ins. Co. v. Fay, 22 Mich. 407. 287 Alemannia F. Ins. Co. v. Hurd, 37 Mich. 11; 26 Am. "Rep. 491. 28S North Berwick Co. v. New England F. & M. Ins. Co., 52 Me. 33H. 2S9 Keenan v. Missouri etc. Ins. Co., 12 Iowa, 120. § 560 AGENTS OF INSURER — THE PuLlCY. 704 icies for increase of risk, lie may waive a forfeiture therefor. 290 And notice to a general agent of the erection of a new building renders the company liable for the destruction of the insured property. by a fire, communicated thereto from the new one, where the agent, upon being informed thereof stated that such erection would not increase the risk nor affect the insurance. 291 So where the agent stated to the assured after the risk had at- tached that putting in rope machinery would not be a breach of condition against an increase of risk, the policy is not invali- dated; 292 nor does a change of residence vitiate the policy where the local agent, upon being notified thereof, said it would not avoid the policy if the premiums were promptly paid. 293 And where the circumstances under which the insurance was obtained are such as to induce the belief by the assured that one is the agent of the company, he has authority to waive written assent to material alterations in the property, as where such party, being applied to for insurance, wrote the application, and it was forwarded to the company with his name thereon as agent, and the company issued the policy and wrote his name on the back, and sent it to him to deliver, and the premium was received through him. 294 But it is held that a local agent only authorized to receive premiums and issue policies cannot waive conditions requiring the company's assent to a change of risk; 295 and that an agent's knowledge of the making of a lease does not put the company on inquiry as to any other rights in property, such as the privilege of the lessee to buy the § 560. Agent's Power — Alienation — Assignment — Waiver. — An agent may waive a forfeiture for a transfer of 200 yiole v. Germania Ins. Co., 26 Iowa, 9. 201 Kins v. Council Bluffs Ins. Co. (Iowa), 33 N. W. Rep. 690. 202 Aurora F. Ins. Co. v. Eddy, 55 111. 213. 293 Wing v. Harvey, 27 Eng. L. & Eq. 140. 204 Packard v. Dorchester Mut. F. Ins. Co., 77 Me. 144. See, also, as to increase of risk and waiver by agent, Warner v. Peoria M. & H\ Ins. Co., 14 Wis. 318. 295 Kyte v. Commercial Union Assur. Co., 144 Mass. 43. 21-6 Fire Assn. of Philadelphia v. Flourney, 84 Tex. G32; 19 S. W. Rep. 793. 705 AGENTS OF INSURER THE POLICY. § 560 tlie property by assenting thereto and renewing the policy after the conveyance is made. 297 So the company is bound by the promise of its agent to indorse consent on the policy to a con- veyance of the property and his agreement that the contract should be valid until the policy was brought from another city, and the proper indorsement made, and the property was pur- chased by one who relied on such promise. 298 And where the directors knew that an agent had consented to an assignment of the policy, and duly recorded the same upon their register, the company is obligated thereby; 2 " and an agent with appa- rent authority may generally consent to an alienation, and a waiver of forfeiture will exist. 300 So an agent may agree that the policy remain in force, notwithstanding a transfer and sale of the property insured, and a condition that consent thereto must be indorsed on the policy. 301 In another case a policy of insurance issued to a mortgagee contained a stipulation that if any change took place in the title or possession the policy should be void. Without the knowledge of the company the owner sold and conveyed the property, and satisfied the mort- gage, and it was decided that a subsequent assignment of the policy by the mortgagee to the purchaser, and a verbal agree- ment between the latter and an agent of the company having power to make contracts and issue policies that such assigned policy should have the force and effect of a new policy to the purchaser, would bind the company. 302 So the company is bound by the statement of the agent that a sale and mortgage of the property would be all right, notwithstanding the policy provides that nothing but a distinct, specific agreement in- dorsed on the policy shall be valid, and that the agent shall 297 Shearman v. Niagara F. Ins. Co., 46 N. Y. 526; 7 Am. Rep. 3S0. See Buchanan v. Exchange etc. Ins. Co., 61 N. Y. 26; Fire Ins. Co. v. Miller, 2 Tex. Civ. Oas. 333. Examine Walton v. Agricultural Ins. Co., 116 N. Y. 317. 298 Illinois F. Ins. Co. v. Statton, 57 111. 351. But see Equitable Ins. Co. v. Cooper, 60 111. 509. £99 Durar v. Hudson County Ins. Co., 24 N. J. L. (4 Zab.) 171. 300 Fire Ins. Co. v. Building Assn., 43 N. J. L. (14 Yrooml <:.":_>. 301 St. Paul F. & M. Ins. Co. v. Parsons, 47 Minn. 352, 356; 50 N, W. Rep. 240. 3,02 Amazon Ins. Co. v. Wall, 31 Ohio St. 62S; 27 Am. Rep. 533. Joyce, Vol. I.— 45. § 560 AGENTS OF INSURER — THE POLICY. 706 be deemed the agent of the assured. In this case the policy was procured through the duly authorized agent of the com- pany, who countersigned it as such, and it was three times re- newed; each receipt, signed by the president and secretary, pro- viding that it was not valid unless countersigned by the de- fendant's duly authorized agent, and being signed by said agent, he receiving the premiums and transmitting them to the defendant; and the information as to sale and mortgage was given said agent on the third renewal, and the agent's declara- tion that it was all right was then made; 303 and where the transfer is made and the agent consents to the necessary assign- ment of the policy, and the company neglects to object thereto, there is a waiver. 304 So in case a policy of fire insurance is for- feited by a change in the title of the insured property, and the agent of the insurers informs the person for whose benefit the policy was issued that the policy will be allowed to stand, the insurers cannot after a loss by fire elect to declare the policy void. 305 A policy is not avoided by the sale of the land upon which the insured buildings are located where the agent knows thereof and makes indorsements on policy with reference thereto; 306 and although the policy requires on its face a written approval of a transfer, the company is estopped from insisting upon such requirement where the agent assures the insured that a written approval is unnec- essary. 30 ' Where the agent, at the time he promised to re- insure the property and receive the new premium therefor, knew of the purchase and sale of the property, and that the pol- 303 Whited v. Germania F. Ins. Co., 70 N. Y. 415; 32 Am. Rep. 330. 304 Benninghoff v. Agricultural Ins. Co., 93 N. Y. 495. 305 Pratt v. New York Cent. Ins. Co., 55 N. Y. 505; 14 Am. Rep. 304. In this case it appeared that plaintiff, who had a mortgage interest in property, applied to defendant's agent for an insurance thereon. The form of the policy was left to the judgment of the agent, who made out a policy to the mortgagors, payable to plain- tiff in case of loss. The policy contained a condition that a change in the title of the property, without defendant's written consent. would avoid the policy. The mortgage was subsequently fore- closed and plaintiff became the purchaser, riaintiff informed the agent of the change in title and was told that the policy might stand. 306 Bonenfant v. Insurance Co., 70 Mich. 053; 43 N. W. Rep. 082. 307 Stolle v. iEtna F. & M. Ins. Co., 10 W. Ya. 510. 707 AGENTS OF INSURER — THE Pol. ICY. § 560 icy had not been assigned, his promise and knowledge is that of the company, and the agent will be presumed to have authority to so agree in the absence of proof to the contrary. 308 So an in- dorsement by an agent on the policy, after knowledge of a con- veyance, of consent that a certain person should be payee of the loss may be proven by parol. 309 Again, if the policy requires the company's written consent to an assignment, an indorse- ment on the policy of such consent, attested by the agent, is sufficient. 310 And where the policy is issued to partners, and provides that if the property is "sold or conveyed without the consent of the company obtained in writing on the policy, it shall be void," a sale by one partner to the other avoids the policy; but if after such sale the purchaser, supposing the pol- icy to be still in force, and desiring to assign it to a third party, applies to the company through its agent for its consent, and upon communicating the facts attending his purchase obtains the consent of the company in writing to the assignment, and that the loss, if any, should be paid to the assignee, this consti- tutes a waiver of the forfeiture, and continues the policy in force. Such consent and waiver may be made by the agent of the company without communication with his principal. 311 If the president indorses consent to an assignment on a separate piece of paper, and it is attached to the policy by a wafer, such indorsement binds the company where the policy requires con- sent to an assignment to be indorsed by the secretary or other officer; 312 and the president has authority to consent to a trans- fer of the policy where the articles of incorporation provide that he or the secretary, jointly or separately, shall sign or in- dorse all commercial paper and all contracts or written instru- ments. 313 If an agent uses such language as reasonably leads the assured to believe that the agent had power to consent to an alienation of the property, and the policy contains no re- 30s Pierce v. Nashua Ins. Co.. 50 N. H. 297; 9 Am. Rep. 235. See Sanders v. Insurance Co., 44 N. H. 244. 3C9 Oakes v. Manufacturers' Ins. Co., 135 Mass. 248. But see Bates v. Equitable Ins. Co.. 10 Wall. (U. S.) 33. 310 New Orleans Co. v. Holberg, 64 Miss. 51. ail Keeler v. Niagara Ins. Co.. 16 Wis. 523: 84 Am. Dec. 714. 312 Pennsylvania Ins. Co. v. Bowman, 44 Pa. St. 89. 313 Glover v. Wells etc. (111. 1892) 29 N. E. Rep. GS0. § 561 AGENTS OF INSURER — THE POLICY. 708 strietions on the agent's authority, and the assured has no in- timation whatsoever of any limitation thereon, and the agent is a general agent, the company is bound by his representations. 314 In another case, the title of the property was transferred to plaintiff March 4th; a renewal was effected March 21st by the insured; on the 15th of April the policy was assigned to plain- tiff, who, on the same day, informed the company's agent that the property and policy had been transferred to him and re- ceived the conmrjany's written consent, signed by the agent. It . was held that the renewal after the transfer was valid, and that the consent of defendants to the transfer waived the for- feiture and revived the policy. 310 So although an agent is pro- hibited by the terms of the policy from waiving its conditions, yet if he has authority to consent to an assignment he may waive forfeiture of a transfer by thereafter consenting to an assignment to the transferee of the property, where the com- pany has immediate notice thereof and neglects to make objec- tion till after a loss. 316 So the acts and declarations of the agent may evidence a waiver of a condition of forfeiture for assignment without consent. 317 § 561. Alienation — Assignment — When Company not Bound by Agent's Acts. — It is held that an agent has no authority to waive notice of an assignment where he is only authorized to receive applications, transmit policies, and re- ceive premiums. 318 And a mere soliciting agent cannot con- sent to an assignment of the policy, 319 nor has an agent implied authority to consent to an assignment of the policy where he- has only power to receive applications and make them tem- porarily binding, and to receive premiums on renewals; 320 nor 3.14 Millville F. Ins. Co. v. Mechanics' etc. Assn.. 43 N. J. L. (14 Yroom) 652. 3.15 Shearman v. Niagara F. Ins. Co., 46 N. Y. 526; 7 Am. Rep. 3S0. 316 Benninghoff v. Agricultural Ins. Co., 93 N. Y. 495; Imperial F. Ins. Co. v. Dunham, 117 Pa. St. 460; 10 Cent. Rep. 575 (agent had power to renew policies). 3,17 Pierce v. Nashua etc. Ins. Co., 50 N. H. 297; 9 Am. Rep. 235. 3is Tate v. Citizens' etc. Ins. Co., 13 Gray (Mass.). 79. 3io Strickland v. Council Bluffs Ins. Co.. GC> Iowa. 466. 320 Stringham v. St. Nicholas Ins. Co., 4 Abb. App. Dec. (N. Y.) 315. 709 AGENTS OF INSURER — THE POLICY. §561 is authority to give such consent to be inferred from the fact that such agent was authorized to purchase the necessary books for the record of his business on behalf of the company, in which books his record of such assignment was made, although the person applying for the consent to the assignment may have supposed that such agent had authority to grant such con- sent. 321 And where the local agent was informed of the trans- fer, and promised to indorse it on the policy, and thereafter two premiums were paid to the agent, and he changed the pol- icy so as to transfer the insurance in part, it was held that there was no waiver, the policy prohibiting waivers by agents. 322 Xor is the company chargeable with all the conse- quences of the knowledge of a person, to whom policy money has been paid to be turned over to the assignee, respecting the policy and its assignment, and his alleged fraudulent conduct in connection with it, whether such knowledge was acquired or acts done by him as agent for the company, acting within the scope of his duties, or otherwise. 323 So the company is not liable where the property is sold and the purchaser is re- quested to bring the policy for the necessary indorsement, and he fails to do so; 824 and the right to subsequently transfer the property cannot arise from a consent of the agent to a former alienation, 320 and an agent cannot bind the company by con- senting to an assignment of his own policy. 326 So it is held that a condition against alienation is not waived by the fact that the agent wrote, acknowledged, and witnessed the deed of con- veyance. 327 So where A and B, partners, assured as such, and C afterward joined the firm, and before loss A sold out to B and C, taking a chattel mortgage, and the agent, after a loss, said that he supposed the company would pay B's share, this does not constitute a waiver. 328 321 Stringharn v. St. Nicholas Ins. Co., 4 Abb. App. Dec. (N. Y.) 315. 322 Shuggart v. Lycoming P. Ins. Co., 55 Cal. 40S. 323 Northwestern Mwt. L. Ins. Co. v. Roth, 118 Ta. St. 329; 12 A. 2S3. 324 Equitable Ins. Co. v. Cooper. 60 111. 509. 325 Moulthrop v. Farmers' Mut. F. Tns. Co.. 52 Vt. 123. 326 Ex parte Hennessy. 1 Con. & L. 559. 327 Lahiff v. Ashuelot Ins. Co.. 60 N. II. 75. 328 Card v. Phoenix Ins. Co., 4 Mo. App. 424. § 562 AGENTS OF INSURER — THE POLICY. 710 § 562. Agent — Keeping- Prohibited Articles — Waiver. The knowledge of the agent that the assured is keeping inter- dicted articles, where the prohibition in the policy against such act is printed in small type and difficult to read, and the agent neglects to notify the assured of the stringent character of such conditions, but consents that he may keep the articles, operates as a waiver of the forfeiture. 329 So if the agent knew when the insurance was effected of the use of paints and benzine in the business and on the insured premises, this is knowledge of the company. 330 So the forfeiture is waived where the agent tells the assured that the small amount of petroleum kept by him will make no difference, and the company accepts the premium; 331 and an agent authorized to take risks and issue policies may waive by parol a condition against the use of gaso- line by consenting to its use until a change is effected in the manner of lighting the insured premises. 332 So the knowledge of the agent that the assured kept gunpowder in stock and in- tended to continue to keep it estops the company, 333 and where the use of a steamboiler was known to the agent when the ap- plication was made, the company is thereby estopped to avail itself of a prohibition against insuring premises in which steam- boilers are used. 334 So where the agent who procured the policy and the general agent both knew at the time the policy was issued, and subsequent agents also knew, of the use of a gasoline stove, which use was prohibited, and took no steps to- ward cancellation of the policy, such use is waived; 330 and where the agent, with the knoivledge of the keeping of gun- powder, renews the policy and accepts the premium, there is a waiver. 336 But if the agent only has authority to solicit in- 329 Reaper City Ins. Co. v. Jones, 62 111. 458. 330 McFarland v. Peabody Ins. Co., 6 W. Va. 425; Same v. iEtna F. & M. Ins. Co., 6 W. Va. 437. 331 Kruger v. Western F. & M. Ins. Co., 72 Cal. 91; 1 Rail. & Corp. L. J. 242. 332 Winans v. Alemannia Ins. Co., 38 Wis. 342. 333 Peoria F. & M. Ins. Co. v. Hall, 12 Mich. 202. 334 Campbell v. Merchants & Farmers' Mut. F. Ins. Co., 37 N. IT. 35. 335 Farmers' etc. Ins. Co. v. Nixon, 2 Col. App. 265; 30 Pac. Rep. 42. 336 Reaper City Ins. Co. v. Jones, 62 111. 458. 711 AGENTS OF INSURER — THE POLICY. § 563 surances, deliver policies, and receive premiums, his consent that the building might be used as a restaurant, which included the use of a gasoline stove, does not waive a forfeiture for such use of gasoline, 337 and such agent has no power to waive a pro- vision against keeping gunpowder. 338 § 563. Ag-ent's Authority — Encumbrances — Waiver. Where a general agent, after receiving notice of the existence of encumbrances, writes a letter to the husband of the assured, recognizing therein the policy as subsisting, and invites proofs of loss, which are furnished, such act and statements of the agent estop the company to insist upon the invalidity of the policy by reason of the encumbrances, 339 and the company is likewise estopped to insist upon the forfeiture clause in case of encumbrances where its agent, with power to make and de- liver policies, has notice of existing encumbrances and of an intent to further incumber the property, and agrees to note the fact on the application, although no indorsement thereof is made upon the policy. 340 So if the agent consents in writing that the policy shall continue in force, notwithstanding a mort- gage on the property, the company is bound, 341 and a condition of the policy requiring notice to be given the company of en- cumbrances on property insured is sufficiently complied with where it is shown that its agents had notice thereof, and in- dorsed on the policy that the loss, if any, would be paid to the persons holding the encumbrances. 342 If the company's soliciting agent asks no questions relative to assured's title at the time of the application, and no references as to title are made by assured, the company is estopped to deny the assured's own- ership in the property, even though the policy stipulates that 337 Garretson v. Merchants & Bankers' Ins. Co., SI Iowa. 727: 45 N. W. Rep. 1047. 33S Bartholomew v. Merchants' F. Ins. Co., 25 Iowa. 507. 339 Reiner v. Dwelling-House Ins. Co., 74 Wis. 89; 42 N. W. Bep. 20S. 340 Copeland v. Dwelling-House Ins. Co., 77 Mich. 554; 43 X. W. Ben. 901. 341 Mattocks v. Des Moines Ins. Co., 74 Iowa. 233; 37 X. W. Rep. 174. 342 Insurance Co. of North America v. McDowell, 50 111. 120; 99 Am. Dec. 497. § 564 AGENTS OF INSURER — THE POLICY. 712 it shall be void if the assured's interest be other than the un- conditional sole ownership. 343 And where the vendor and ven- dee of property insured went to the local agent and notified him of the sale and a mortgage back for a part of the pur- chase price, and an assignment was filled out, which was for- warded to the company, but the latter had no knowledge re- garding the mortgage other than that possessed by said agent, the giving of such mortgage does not avoid the policy; 344 and evidence is admissible, without a plea of waiver, to show that the assured told the agent of the existence of a mortgage where the company's answer sets up that the assured concealed from it all knowledge thereof. 345 § 564. Agent's \utliority — Encumbrances — When no Waiver. — It is held that one who is not a general ngent cannot waive a condition against encumbering the insured prop- erty, 346 and that in case an agent with power to consent to an assignment authorizes the assured to assign his interest, which he does, taking a mortgage for a part of the purchase money, the policy is thereby rendered void. 347 Although the agent is informed that the interest of the assured (is that of a mortgagee at the time of making the application, the policy is voided by the creation of a new mortgage after the policy is issued, where it provides that notice of encumbrances shall be given the directors in writing. 348 And where an existing mortgage is paid off and a new one substituted, the local agent orally agreeing to waive the condition against encumbrances, and the policy providing for the written consent of the secre- tary, there is no waiver. 349 And the statements of the agent, after a second mortgage was placed upon the property, that it 343 Hart v. Niagara F. Ins. Co., 9 Wash. 620; 24 Ins. L. J. 87; 27 L. R. Annot. 86. 344 Herman Ins. Co. v. York, 48 Kan. 4SS; 29 Pac. Rep. 586. 345 Crittenden v. Springfield F. & M. Ins. Co., S5 Iowa, 052; 52 N. W. Rep. 548. 346 Martin v. Farmers' etc. Ins. Co., S4 Iowa, 516; 51 N. W. Rep. 29. 347 German & American Bank v. Agricultural Ins. Co., 8 Mo. App. 401. 348 Tarbell v. Vermont Mut. F. Ins. Co.. 63 Vt. 53; 22 Atl. Rep. 533. 349 Haukins v. Rockford Ins. Co., 70 Wis. 1; 35 X. W. Rep. 34. 713 AGENTS OF INSURER — THE POLICY. § 565 would be all right, does not operate as a waiver of the forfeiture therefor where waiver by an agent is required to be written upon or attached to the policy. 350 So it is held that the policy is voided by an encumbrance, notwithstanding notice to the agent who received the application, where the charter of a mu- tual company gave it a lien on the insured property and pro- vided that a statement of the encumbrance should appear in the application. 351 § 565. Agent's Authority — Vacant — Unoccupied — Waiver. — A general :igent may consent in the policy to a va- cancy for a certain period. 302 Where a policy contains a con- dition that it shall be void if the building becomes vacant or unoccupied, and also prohibits a change in its conditions by an agent unless consent be given in writing, the company will nevertheless be bound by the declarations of its agent, who issued the policy, that it would be good for thirty days, such declaration being made when informed that the premises had become vacant. It was held, however, that there was not a waiver, but merely a construction of the meaning of the con- ditions as to vacancy by the agent. 303 So a general agent may orally waive such a condition, notwithstanding the policy re- quires an indorsement therein of consent thereto. 304 And there is a waiver of such conditions where the agent, upon being in- formed of the vacancy, says it is all right. 300 So it is held that the knowledge of an agent at the time the insurance is effected that the house is vacant estops the company, the agent in this case having authority to solicit, fill out applications, receive premiums, make surveys, and describe the property; 306 and the 350 Bosworth v. Cleary, SO Wis. 393; 49 N. W. Rep. 750. 351 Smith v. Farmers' etc. Ins. Co., 19 Ohio St. 287. 352 Continental Ins. Co. v. Ruckman, 127 111. 364. 353 Hotchkiss v. Phcenix Ins. Co., 76 Wis. 209; 44 N. W. Rep. HOG. 354 Walsh v. Hartford F. Ins. Co., 9 Hun (N. Y.), 421. 355 Palmer v. St. Paul F. & M. Ins. Co., 44 Wis. 201. 356 Alexander v. Germania F. Ins. Co.. 5 Thomp. & C. (N. Y.) 20S; Hun (N. Y.), 665; 5 N. Y. S. C. 208; reversed, 66 N. Y. 464; 13 Alb. L. J. 247; Germania L. Ins. Co. v. Klener. 27 Bradw. (111.) 590; Jor- dan v. State Ins. Co., 64 Iowa, 216; Sentell v. Oswego Co. F. Ins. Co., 16 Hun (N. Y.). 518; Dodge Co. Mut. Ins. Co. v. Rogers, 12 Wis. 337. But examine England v. Westchester F. Ins. Co., SI Wis. 5S3; 51 N. W. Rep. 954. § 566 AGENTS OF INSURER — THE POLICY. 714 policy is not avoided where, upon the building becoming va- cant, the assured informed the secretary, and he said the com- pany waived the forfeiture. 357 Where the premises were va- cant at the time the policy was effected, it was held no defense to a recovery that the assured then agreed orally with the agent that they should be occupied; 358 but contra where the build- ing was a new dwelling-house to be occupied when com- pleted. 359 And the company is bound where the premises at the time of loss are in the same condition as when insured, al- though there may have been an intervening occupancy, if such original condition was known at the time to the agent. 360 If the general agent, after a change in the occupancy of an in- sured building, involving an increase of the risk, consents to the continuance of the policy on condition that an iron door shall be put into the building, but without designating any particu- lar time within which this shall be done, the assured is entitled to a reasonable time to put it in, and if, after the exercise of reasonable diligence to get the door put in, the building is destroyed by fire, the company cannot resist payment of the loss on the ground that the door was not in. 361 § 566. Agent's Authority, when no Waiver. — Though no- tice to the agent that the premises were unoccupied and his con- sent thereto might operate as a waiver, yet it 13 held that such a waiver does not extend beyond the time of renewal, and that the fact that the premises then continued unoccupied the com- panywas held not liable for a loss. 362 Eor is the companybound by the knowledge of its agent that the house was occupied only as a summer residence, where it afterward became vacant; 363 nor can a recovery be had by the assured where the building re- mains vacant against the prohibition of the policy, although the agent, with a knowledge of the vacancy, consented to a 357 Adams t. Greenwich Ins. Co., 9 Hun (N. Y.) 45. SRS Kimball v. JEtna Ins. Co., 9 Allen (Mass.), 540. 359 Lubelsky v. Royal Ins. Co., 86 Ala. 530. 360 Vanderhoff v. Agricultural Ins. Co., 46 Hun (N. Y.). 328. 361 Yiele v. Germania Ins. Co., 26 Iowa, 9; 96 Am. Dee. 83. 362 Hotehkiss v. Home Ins. Co., 5S Wis. 297; Hartford Ins. Co. v. Walsh, 54 111. 164. 863 Hermann v. Adriatic F. Ins. Co., 85 N. Y. 163. 715 AGENTS OF INSURER THE POLICY. § 567 transfer of the policy. 364 So the policy will become void for vacancy of the building, notwithstanding a notice to the agent, where he only has authority to receive and forward applica- tions, collect premiums, and bind the company on special haz- ards for a limited period. In this case the condition as to va- cancy provided that the policy should become void "where the occupant personally vacates the premises, unless immediate no- tice be given to this company and additional premium paid." Xo notice other than that above stated was given, nor was any additional premium paid. It was also declared that it was im- material that the insured did not know the limited extent of the agent's authority; 360 and although the vacancy is caused by a change of tenants, the company is not bound by its agent's knowledge that the building is occupied by tenants. 366 § 567. Agent's Authority — Cancellation. — An insur- ance policy cannot be canceled except by virtue of a power re- served to the company, by a stipulation in the policy or by an extraneous agreement; 36 ' and, in case there is a beneficiary, then his consent is necessary. 368 So that the company's general agents have no authority to cancel policies and substitute for them policies in other companies without the consent of the in- sured, and where the insured has no knowledge thereof until after loss, such substituted policies are void ; 3G9 and such acts are invalid, even though the company has become insolvent and they were done to forestall action by the receivers. 370 So there is no cancellation where the agent, although directed to cancel the policy, agrees with the assured that the policy shall be valid until another policy is procured; 371 nor is a cancella- 364 North American Ins. Co. v. Garland, 108 111. 220, Craig. J., dis- senting. 365 Harrison v. City F. Ins. Co., 9 Allen (Mass.), 231; 85 Am. Dec. 751. 3fro Ridge v. Insurance Co., 9 Lea (Tenn.), 507. 367 Rothschild v. American Cent. Ins. Co., 74 Mo. 41; s. c. 41 Am. Rep. 303. SM Knapp v. Homoepathic Mut. L. Ins. Co., 117 U. S. 411; Chace v. Insurance Co., 67 Me. 85. 369 London L. F. Ins. Co. v. Turnbull. 86 Ky. 230; 5 S. W. Rep. 542. 370 United States F. & M. Ins. Co. v. Tardy. 2 Ins. L. J. 673. 37i Goit v. National Protection Ins. Co., 25 Barb. (N. Y.) 1S9. § 568 AGENTS OF INSURER — THE POLICY. '< 16 tion effected by a notice given the agent by the company to cancel and return the policy where such instructions are un- known to the assured, 372 although it is held that a notice of cancellation given the agent will bind the assured from the time he learns thereof. 373 A request by the insured to cancel, made under the provisions of the policy or a statute, may be made to any agent with the requisite authority to act in the matter, and it may be sent by mail or otherwise, provided, however, it reaches such agent. 374 In another case the local agent, being instructed by the general agent to cancel the pol- icy, sent the assured a canceling card, and stated in a letter inclosing the same that he had the unearned premium, subject to the assured's order. Before the letter was received the lo- cal agent told the assured not to mind the card, but he would carry the risk until he heard from him again. Thereafter, the local agent was requested by the assured to transfer the policy to another company; a loss, however, occurred before it was done. It was decided that there was no cancellation. 373 Again, it was held that the company was liable where the plain- tiff, upon the representations of defendant's agent that the pol- icy had been canceled and one in another company substituted, assented to the substitution and gave a receipt for the unearned premium. But he never received the latter, nor was another policy substituted. 376 The directors of a company have the right to cancel a policy where a by-law gives the company such right, or where, by virtue of the articles of incorporation and by-laws, they have the right to recover overdue assessments or to annul the policy. 377 § 568. Agent's Authority — Removal of Property. — The company is bound by the knowledge of the agent as to a re- moval or change of location of the goods. 378 The consent of an 372 Watertown F. Ins. Co. v. Rust, 141 111. 85; 30 N. E. Rep. 772. 373 Springfield F. & M. Ins. Co. v. McKinnon. 59 Tex. 507. -74 Crown Point Iron Co. v. iEtna Ins. Co., 127 N. Y. 608. 37? jEtna Ins. Co. v. Maguire, 51 111. 342. 376 Holden v. Putnam F. Ins. Co., 46 N. Y. 1; 7 Am. Rep. 2S7. 377 Coles v. Iowa State Mut. Ins. Co., 18 Iowa, 425; Emmott v. Slater Mut. F. Ins. Co., 7 R. I. 562. 37s Ludwig v. Jersey City Ins. Co., 4S N. Y. 379. 717 AGENTS OF INSURER THE POLICY. § 568 agent that property may be removed to another building- in which "'hazardous" articles are stored, and his agreement to make the proper indorsement on the policy which he take- for that purpose, and to continue it in force notwithstanding such storage, constitutes a waiver by the company of a condition voiding the policy if ''hazardous" articles should be stored in the building without the company's consent indorsed on the policy. 3 ' 9 So where the agent consents in writing to the re- moval of the building and receives an additional premium therefor, which the company retains, it is estopped to deny the agent's authority to so consent. 380 And where the secretary of the company indorsed on the policy and signed a memorandum transferring it to cover similar property in another store, the insured intending to remove the goods insured in such store, the company is liable, even though the goods are destroyed by fire before removal. 381 But it is held that a special agent whose authority is limited to receiving and forwarding applications, delivering policies, and receiving premiums cannot consent to the removal of a part of the property without written notice as required by the policy, and that the fact that a calendar was furnished the agent with his name thereon as "agent," and which contained an account of the company's financial stand- ing, did not confer any additional authority upon him to waive such condition. 382 3T9 Rathbone v. City etc. Ins. Co., 31 Conn. 193. sso New England F. & M. Ins. Co. v. Schettler, 3S 111. 166. ssi Kunzee v. American Ex. Ins. Co., 41 N. Y. 412. 3S2 Putnam Tool Co. v. Fitchburg, 145 Mass. 265; Mutual F. Ins. Co., 13 N. E. Rep. 502. CHAPTER XXI. AGENTS OF INSURER— POWERS— THE LOSS. § 575. Agent's authority: Notice of loss. § 576. Agent's authority: What is not sufficient notice of loss. § 577. Misstatements lay agent in proofs of loss— Estoppel. § 578. Where agent aids in preparing proofs of loss — Waiver. § 579. Agent: Waiver proofs of loss— Condition conflicting with set- tled rule of law. § 580. When formal proofs are waived: Agent. § 5S1. Delivery of proofs of loss to agent. § 582. Proofs of loss— Place of delivery: Waiver by agent. § 583. What agent may waive: Proofs of loss. § 584. Waiver by acts of adjuster: Proofs of loss. § 585. Wihen no waiver by adjuster: Proofs of loss. § 5S6. Acts of agent adjusting loss: How far binding on company. § 587. What agent may not waive: Proofs of loss. § 588. Proofs of loss: What is not a waiver— Agent. § 589. Retention of proofs of loss by agents— Failure to object. § 5fin. Proofs of loss: Examination by agent — Waiver. § 591. Proofs of loss: Waiver— Agent's denial of company's liability on other grounds. § 592. Proofs of loss: Delay caused by agent. § 593. Custom of other agents: Proofs of loss: Waiver. § 594. Fraud of agent inducing settlement— Waiver: Proofs of loss. § 595. Adjustment of loss: Agent. § 59G. Particular account: Loss: Waiver by agent. § 597. Marine protest: Waiver: Agent. § 598. Agent's powers after loss— Generally. § 599. Fraud of agent: Settlement: Award: Assignment. § GOO. Agent's authority: Arbitration: Appraisement. § 601. Agent's authority: Subrogation. § 602. Agent's authority: Time limit for suing: Waiver. § 603. Abandonment to insurer's agent. § 575. Agent's Authority — Xotiee of Loss. — Notice of loss to the proper agent is notice to the insurer. 1 So verbal no- tice to the agent is held sufficient, 2 and where a policy of fire in- 1 Bennett v. Maryland Ins. Co., 14 Blafchf. (C. C.) 422. See Peo- ple's Ins. Co. v. Spencer. 53 Pa. St. 353. * Killips v. Putnam F. Ins. Co., 28 Wis. 472. (7js; 719 AGENTS OF INSURER — THE LOSS. § 575 suranee requires that the insured shall give immediate notice in case of loss, and the loss is made payable to a mortgagee, notice by the mortgagee and assignee of all the interest of the insured to the local agent is valid, if knowledge of it comes to the gen- eral agent. 3 So service of notice and proof of loss on a general agent of a fire insurance company is service on the company. 4 And where a resident agent of waiver. 19 An adjusting agent may waive notice of loss, not- withstanding the policy provides that no agent has authority to waive its conditions by any act or declaration. 20 So the adjust- ment of a loss by the company's agent estops the company, in the absence of fraud, from denying that proper notice was 21 given. § 576. Agent's Authority — What is not Sufficient Notice of Loss. — Knowledge of the fire by an agent of a mutual insurance company does not relieve the assured from the obligation of giving notice and making proof of loss, pursuant to the by-laws of the company. 22 So no waiver of compliance with a condition as to notice of loss arises from the act of the secretary in writing that the notice had been laid before the directors and action thereon postponed indefi- nitely: 23 and no waiver arises from the act alone of an agent in stating by letter to the assured that the company would be notified and an adjuster sent. 24 Again, notice by parol to an agent of an insurance company is of no effect where the char- ter contains a condition requiring notice of the loss to be given in writing to the secretary, or one of the directors. 20 Xor, under a similar condition, is there a sufficient compliance there- with by giving oral notice to the local agent two days after the fire, and a written notice to the secretary a month thereafter; 26 nor does any presumption arise that the soliciting agent or ad- juster has power to waive notice. It must be proven. 27 And no estoppel arises against the company from the denial of liabil- ity by the general manager when served with notice, and upon being asked how much was due. 28 So where the policy re- 19 Schenck v. Mercer Co. Mut. F. Ins. Co., 24 N. J. 447. 10 Stevens v. Citizens' Ins. Co., 69 Iowa, G58. " Home Ins. Co. v. Myer, 93 111. 271. 22 Smith v. Haverhill Mut. F. Ins. Co., 1 Allen (Mass.), 297; 79 Am. Dec. 733. 13 Patrick v. Farmers' Ins. Co., 43 N. H. 621; 80 Am. Dec. 197. " Forest City Ins. Co. v. School Directors, 4 111. App. 145. 55 Patrick v. Fanners' Ins. Co.. 43 X. H. 621: SO Am. Dec. 197. * Connell v. Milwaukee etc. Ins. Co.. 18 Wis. 387. 27 Bar re v. Council Bluffs, 76 Iowa. 609. 28 Devens v. Mechanics & Traders' Ins. Co., 83 N. T. 16«. Joyce, Vol. I.— 46 §§ 577, 578 AGENTS OF INSURER — THE LOSS. 722 quired that notice of loss should be given within a certain time at a certain place, and the assured, the day following the fire, gave notice at another place to the company's agents, who said it was all right, and that they would give notice to the company, and that the adjuster would pay, and subsequently stated that the adjuster would come around and pay the loss, but thereafter refused to pay anything on another ground, it was held that there was no waiver. 29 § 577. Misstatements by Agent in Proofs of Loss — Estoppel. — The company is estopped to take advantage of its agent's misstatements made in the proofs of loss, and it is not error in such case for the court to refuse an instruction that the company was never furnished by the insured with the claim for indemnity contemplated under the policy. 30 § 578. Where Agent Aids in Preparing Proofs of Loss — Waiver. — Where the preliminary proofs are prepared under the advice, aid, or instructions of the company's author- ized agent, such acts will operate as a waiver of defects therein, for if a party complies with the agent's instructions more can- not be required. 31 And where the assured acts in good faith, and the agent, with his assistance, prepares the proofs, they do not conclude the assured. 32 So where the local agent aids the assured in preparing such proofs, and the company retains them without objection for four months, and until suit is brought upon the policy, the company cannot object. 33 And if proofs are made by the company's adjusting agent within the proper' time, and all material facts are furnished, they are suffi- cient. 34 So where the local agent receives notice of the fire * Engelbretson v. Hekla F. Ins. Co., 58 Wis. 301. 80 Young: v. Travelers' Ins. Co., SO Me. 250; 6 New Eng. Rep. 432. The request was that the court instruct the jury "that the plaintiff has never furnished to the defendant company a claim for indem- nity such as is contemplated by the policy." 31 Sims v. State Ins. Co., 47 Mo. 54; Security Ins. Co. v. Foy, 22 Mich. 467; Pratt v. New York Cent. Ins. Co., 55 N. Y. 505. 82 Crittendon v. Springfield F. & M. Ins. Co., S5 Iowa, 652; 52 N. W. Ron. 548. 85 Palmer v. St. Paul F. & M. Ins. Co., 44 Wis. 201. 84 Jennison v. State Ins. Co., 85 Iowa, 229; 52 N. W. Rep. 185. 723 AGENTS OF INSURER— THK LOSS. §§ 579, 580 and writes the proofs, it is evidence that they were received by the principal, and that all objections were waived by a failure to make them. 35 But where the proofs of death are filled out under the agent's instructions, and he promises to lay the mat- ter before the board upon the president's return, and states that it will probably be paid, no waiver arises from these acts. 30 § 579. Agent — Waiver of Proofs of Loss — Condition Conflicting With Settled Rule of Law. — It is held that a condition in the policy which conflicts directly with a settled rule of law will not be allowed to bind the assured, although he accepts the policy, unless it appears that his attention was spe- cially called thereto. § 580. Where Formal Proofs are Waived — Agent. — Conditions in a fire policy as to proofs of loss are for the insur- er's benefit, and can be waived by the company or its authorized agent, 38 for it is a general rule that stipulations which relate to procedure as in case of proofs of loss are to be reasonably, and not rigidly construed. 39 Such waiver or an estoppel against the company may arise from the acts, representations, or omissions of it or such agent upon which the assured may fairly rely, and by which he is reasonably induced to believe that a strict compliance with this condition has been excused or dispensed with in this case, and in consequence of which, acting in good faith, he fails or neglects to strictly comply with 35 "Warner v. Peoria M. & F. Ins. Co., 14 Wis. 318. See, also Atlan- tic Ins. 0o. v. Wright, 24 111. 462; Frost v. Saratoga Ins. Co., 5 Denio (N. Y.). 154. 30 Ronald v. Mutual Res. F. L. Assn., 132 N. Y. 378; 44 N. Y. St. Rep. 409; 30 N. E. Rep. 739; 23 Abb. N. C. (N. Y.) 271. 37 Pitney v. Glenn Falls Ins. Co., Gl Barb. (N. Y.) 335. This rule was applied to a stipulation that no waiver of any condition concern- ing preliminary proofs of loss could arise from any act or omission of the company, its officers, or agents, except the same should bo iu writing, signed by certain officers of the company. 38 Bennett v. Maryland Ins. Co., 14 Blatchf. (C. C.) 422; Peninsu- lar etc. Mfg. Co. v. Franklin Ins. Co., 35 W. Ya. 66G; 14 S. E. Rep. 437; Newman v. Springfield F. & M. Ins. Co., 17 Minn. 123; Travelers' etc. Ins. Co. v. Harvey, 82 Ya. 949. w raltrovitch v. Phcenix Ins. Co., 143 N. Y. 73; GO N. Y. St. Rep. 4G2. § 5S0 AGENTS OF INSURER — THE LOSS. 724 sucli requirement as to proofs of loss. 40 The acts of an agent, within the scope of his authority, in negotiating a settlement and inducing a belief, on the part of assured, that a settlement may be had without suit, and that the time limitation will hot be set up in defense, will estop the company from urging such limitation. 41 And there is distinct evidence of a waiver requir- ing proofs to be made within a certain time where, upon re- ceiving notice of the loss from a person who had an interest therein, the general agent and adjuster, ten days after the time limit had expired, went with a director to the place to settle the loss. The agent came again for the same purpose, but the insured was not present, and the agent, on being so informed and told that proofs of loss had not been furnished, said it would make no difference, and that the assured could make them on his return, which was done, and the same were re- tained several days by the company when they were returned. 42 So an agent of a foreign company, even though he may have no actual authority to waive proofs of loss, may bind the company thereby, it appearing that he was supplied with blank forms with the officers' lithographic signatures appended, and had power to solicit policies and collect premiums. 43 So proofs may be waived by parol, notwithstanding the policy provides that no condition shall be waived except by written indorsement. 44 And the question of waiver is properly submitted to the jury where the assured submits evidence that the company's general agent told him that proofs need not be furnished and the gen- eral agent denies the same. 45 And the sufficiency of prelim- inary proofs is admitted by the acts of the agent where, upon such proof being submitted, he ascertains the amount due and 40 Peninsular etc. Mfg. Co. v. Franklin Ins. Co., 35 W. Va. 666; 14 S. E. Rep. 437. 41 Fireman's Fund Ins. Co. v. Western Refrigerating Co., 55 111. App. 334. 42 Owens v. Farmers' Joint Stock Ins. Co., 10 Abb. Pr., N. S. (N. Y.), 166, n.: 57 Barb. (N. Y.) 518. 4 ' Syndicate Ins. Co. v. Catchings (Ala. 1894), 16 S. Rep. 46. 44 Lowry v. Lancashire Ins. Co., 32 Hun (N. Y.), 329. 48 Bishop v. Agricultural Ins. Co. (N. Y. 1892), 42 N. Y. St. Rep. 369; 30 N. Y. St. Rep. 600; 9 N. Y. Supp. 350; 29 N. E. Rep. S14. 725 AGENTS OF INSURER — THE LOSS. § 581 brings it into court. 46 So where the secretary of the company, upon inquiry as to whether further proofs are required, tells the assured he may make other proofs if he pleases, and fails to point out the defects, and rests the defense on other grounds, this constitutes a waiver. 47 In another case the assured, before the time expired within which, under the terms of the policy, proofs must be made, inquired of the agent who effected the insurance as to what should be done, and the agent stated that he would write to the general agent, who would come, and that they would straighten up matters with him. They called upon the assured about a month after the loss. An affidavit containing an account of the loss was pre- pared and verified, and the agent promised to arrange the mat- ter, and took away the affidavit. They called again the same day and talked over the loss. Thereafter, the assured sent proofs to the secretary, which were rejected because not sent in ten days as required by the terms of the policy. It was held that this was evidence for the jury of a waiver. 48 Where the company's officer goes upon the ground and agrees as to the valuation, this waives formal proof. 49 Again, if the company, knowing that a certain person assumes to act as its agent, has represented and undertaken that certain statements will be ac- cepted as proofs of loss, and that assured has relied thereon and does not notify him to the contrary, but permits and encourages such belief, it is estopped to assert that such statements are not proofs of loss. 50 § 581. Delivery of Proofs of Loss to Agent. — There is a sufficient delivery of proofs when made to an authorized agent of the company or to one having apparent authority to act in the matter, 51 and in the absence of any provision to the contrary, the delivery of proofs of loss to the local agent will *• Johnston v. Columbian Ins. Co., 7 Johns. (N. Y.) 315. 47 Peoria F. & M. Ins. Co. v. Whitehall, 25 111. 466. * Underwood v. Farmers' Joint Stock Co., 48 How Pr. (N. Y.) 367; 57 N. Y. 500. 49 Coventry Mut. etc. Assn. v. Evans. 102 Pa. St. 281. M Enos v. St. Paul F. & M. Ins. Co., 4 S. Dak. 639. 51 North British etc. Ins. Co. v. Crutchfield, 10,9 ind. 51S; Dohn v. Farmers' Joint Stock Ins. Co., 5 Lans. (N. Y.) 275. § 582 AGENTS OF INSURER — THE LOSS. 726 be a sufficient delivery to the company. 52 So proofs may be made to a resident agent of a foreign company, 53 or to the com- pany's officers, 54 or to a general agent of a foreign company authorized to transact business in the state, 55 or to the general agent through whom the policy was issued, 56 or to an adjuster authorized to settle the loss. 57 If, however, the policy provides that notice be given to a particular officer, as to the secretary, president, or specified agent, it must be done. 58 § 582. Proofs of Loss — Place of Delivery — Waiver by Agent. — There is a* waiver of compliance with a condi- tion requiring delivery of proofs to the secretary at the home office where the agent upon whom they were served at another place refused to receive the proofs solely on the ground that the policy was canceled. 59 So if the local agent is notified and fur- nished with the particulars of the accident, and thereafter an- other agent at another place writes the assured that the com- pany had decided to pay him a certain sum, but that he had not established his claim by the proofs forwarded, there is a waiver of strict compliance with a condition requiring immediate no- tice in writing to the home office; 60 and it is sufficient if the delivery is made at the place of loss to the agent of the com- pany and at his request. 61 So a condition in the policy that it M Insurance Co. v. Hope, 58 111. 75; 11 Am. Rep. 48. See, also, Commercial Union Assur. Co. v. State, 113 Ind. 331; 15 N. E. Rep. 518; 13 West Rep. 47. 83 Phoenix Ins. Co. v. Bowdre, 67 Miss. G20; 7 S. Rep. 596. M Thierolf v. Universal F. Ins. Co., 110 Pa. St. 37; Edgerly v. Far- mers' Ins. Co., 48 Ind. 644. M Phoenix Ins. Co. v. Bowdre, 67 Miss. 620; 7 S. Rep. 596. 56 Pennington v. Pacific Mut. I,. Ins. Co., 85 Iowa, 468; 52 N. W. Rep. 482. 67 Merchants' Ins. Co. v. Vining, 67 Ga. 661. 58 Rokes v. Amazon Ins. Co., 51 Md. 512. See, also. Inland Ins. etc. Co. v. Stauffer, 33 Pa. St. 397; German Ins. Co. v. Ward, 90 111. 550; Patrick v. Farmers' Ins. Co., 43 N. H. 621; Excelsior Mat. Aid Assn. v. Riddle, 91 Ind. 84; Sparrow v. Universal F. Ins. Co., 17 Phila. (Pa.) 329. 69 Maher v. Hibernia Ins. Co.. 67 N. Y. 283. 90 Unthank v. Travelers' Ins. Co., 4 Biss. (C. C.) 357, citing several cases. 61 Badger v. Phoenix Ins. Co., 49 Wis. 396. 727 AGENTS OF INSURER — THE LOSS. § 583 is payable at the company's office at a designated city, or at the general agency issuing it, is not a requirement that proofs be made at the company's office. 02 A delivery, however, of the re- quired proofs to any officer at the company's office satisfies a re- quirement of delivery to the company. 63 § 583. What Agent may Waive Proofs of Loss. — An agent duly authorized may bind the company by an express waiver of proofs. 64 So a general agent appointed under a stat- ute of Massachusetts 65 may waive proofs of loss where the com- pany is a foreign stock company, and letters to such agent, not made known to the assured, are inadmissible to show a limita- tion of the agent's authority. 66 And the company's general agent may waive notice of death. 67 So a general agent may waive proofs by going to adjust the loss, and Saying it makes no difference when they are prepared, and can be prepared by the plaintiff, he being then absent, on his return. 68 And an agent intrusted with policies signed in blank, and authorized to fill out and deliver them, may waive proofs of loss. 69 So a gen- eral agent authorized to transact business in the state may waive such proofs; 70 and where informal oral proofs are received by the officers, who recognize the company's liability, there is evi- dence of waiver of the time limit for furnishing such proofs. 71 So a local agent who effects the insurance may waive proofs, 72 02 Pennington v. Pacific Mut. L. Ins. Co., 85 Iowa, 468; 52 N. W. Rep. 482. 63 Edgerly v. Farmers' Ins. Co., 48 Iowa, 644. * 4 Perry v. Mechanics' Mut. Ins. Co., 11 Fed. Rep. 478. 85 Massachusetts Gen. Stat., c. 58, sees. 66-7S. ** Eastern Railroad v. Relief etc. Ins. Co., 105 Mass. 570. 87 Prentice v. Knickerbocker L. Ins. Co., 43 N. Y. Sup. Ct. 352; 77 N. Y. 483; 11 Jones & S. (N. Y.) 352. es Owen v. Farmers' etc. Ins. Co., 57 Barb. (N. Y.) 518. e " Franklin F. Ins. Co. v. Coates, 14 Md. 2S5; Imperial F. Ins. Co. v. Murray, 73 Pa. St. 13; Hibernia Ins. Co. v. O'Connor, 29 Mich. 241; Ide v. Phoenix Ins. Co., 2 Biss. (C. C.) 333; Norwich etc. Trans. Co. v. Western Mass. Ins. Co., 34 Conn. 561; McBride v. Republic F. Ins. Co., 30 Wis. 562. 70 Phcenix Ins. Co. v. Bowdre, 67 Miss. 620; 7 S. Rep. 596. 71 Thierolf v. Universal F. Ins. Co.. 110 Pa. St. 37. 72 Ide v. Phoenix Ins. Co., 2 Biss. (C. C.) 333. But see next section and sec. 476, herein. § 584 AGENTS OF INSURER — THE LOSS. 728 although it is held in Minnesota that a local agent has no au- thority to bind the company by his statements as to the neces- sity of furnishing proofs of loss, as the proceedings to estab- lish and enforce such claim are outside the implied authority of a local agent; 73 but an agent whose duty it is to keep a register of deaths, give notice thereof to the company, and furnish blanks for such proofs, may by his acts waive furnishing proofs in time, even when such acts are done after the pre- scribed time, nor in such case is a new consideration necessary. 74 § 584. "Waiver by Acts of Adjuster — Proofs of Loss. — An adjuster of the company may waive proofs of loss, 75 as where he is sent to effect a settlement, and after examination into the matter, states that the company neither admits nor de- nies liability and refuses to further consider the facts. 76 So the refusal by such agent to pay, based upon other grounds than defects in the proofs, also constitutes a waiver. 77 And where the adjuster, the day after the fire and at the place where it oc- curred, tells the insured he need not send notice or proofs of loss, he is excused. 78 If an adjuster is empowered to adjust and settle a loss and to receive proofs thereof, and goes to the assured's house, and finding that he is away, makes inquiries of his wife as to the cause of the fire and the ownership of the land, and leaves a request for the assured to call upon him next morning and bring his policy, and promises to pay the loss, this constitutes a waiver of the requirements that proofs be made in a specified time where the assured relies upon the statements of such agent and acts accordingly. 79 In another case the ad- 73 So (held in Shapire v. St. Paul F. & M. Ins. Co. (Minn. 1895), 63 N. W. Rep. 614. See sec. 587, herein. 74 Meyer v. Knickerbocker L. Ins. Co., 73 N. Y. 516. 75 Barre v. Council Bluffs Ins. Co., 76 Iowa, 609; 41 N. W. Rep. 373; Slater v. Capitol City Ins. Co.. S9 Iowa. 62S; 57 N. W. Rep. 422; Kahn v. Traders' Ins. Co. (Wyo. 1893), 34 Pac. Rep. 1059. See Searles v. Dwelling-House Ins. Co.. 152 Mass. 263. 76 Deitz v. Prov. ere. Ins. Co., 33 W. Va. 526; 11 S. E. Rep. 50. 77 .^tna Ins. Co. v. Shryer. 85 Ind. 362. w Phoenix Ins. Co. v. Pickel, 3 Ind. App. 332; 29 N. E. Rep. 432. 79 Harris r. Phoenix Ins. Co., 85 Iowa. 238; 52 N. W. Rep. 128; dis- tinguishing Barre r. Insurance Co., 76 Iowa, 609; 41 N. W. Rep. 373. See East F. Ins. Co. v. Brown, 82 Tex. 631; Mitchell v. Oriental Ins. 729 AGENTS OF INSURER — THE LOSS. § 5S4 j uster and general agent told the assured that he need not fur- nish proofs of loss, and that the adjuster would soon be therf, and settle, and it was held that there was a waiver of proofs.^ And where the proofs of loss are prepared under the adjuster's supervision, and after the adjustment such agent tells the as- sured that the company will not pay the loss, there is a waiver. a So where such agent adjusts and compromises the loss and agrees to pay in a few days, the company is estopped. 82 And formal proofs are waived where such agent spends several days with the assured's son in making a list of the property de- stroyed, and both employ a builder to make estimates as to the value of certain buildings, and refer such value to the deter- mination of arbitrators. 83 And an adjusting agent may waive proofs by telling the assured that nothing further is required. 84 There is also a waiver where the adjuster tells the assured's at- torney that the company would not pay, because of suspicious circumstances attending the fire. 8a So an adjuster sent to ad- just the loss may waive requirements as to proofs, though not a general adjuster. 86 Proofs of loss were also held to be waived where the adjuster called upon the insured, who presented him with a schedule of the property destroyed and damaged by the fire, and the adjuster told him that he did not care for the proofs, and that they were not necessary. 87 If an agent is spe- cially authorized to settle a loss, he may extend the time within which statement of loss may be made. 88 And there is also evi- dence of a waiver of strict proofs of loss where the adjuster in- spects the premises, offers to compromise, and thereafter the Co., 40 111. App. Ill; Home Ins. Co. v. Sorsby, 60 Miss. 30£; iEtna Ins. Co. v. Schryer, 85 Ind. 362. See Iowa Stat., McLains' Annot. Code. sec. 1734, as to written notice of loss. 80 Bishop v. Agri cultural Ins. Co., 30 N. Y. St. Rep. 600; 9 N. Y. Supp. 350. 81 East Texas F. Ins. Co. v. Brown, 82 Tex. 631; 18 S. W. Rep. 713. 85 Wagner v. Dwelling-House Ins. Co., 143 Pa. St. 338. 83 Gristoek v. Royal Ins. Co., S7 Mich. 428; 49 N. W. Rep. 634. 84 Indiana Ins. Co. v. Capehart. 108 Ind. 270. w McPike v. Western Assur. Co., 61 Miss. 37. 86 Liverpool etc. Ins. Co. v. Tiliis (Ala. ISO")). 17 S. Rep. 672. See Mix v. Royal Ins. Co. of Liverpool, 169 Pa. St. 639; 32 Atl. Rep. 460. 87 Young v. Ohio Farmers' Ins. Co.. 92 Mich. 68; 52 N. W. Rep. 454. 88 Lycoming Co. Mut. Ins. Co. v. Sehollenberger, 44 Pa. St. 259. §§ 585, 5S6 AGENTS OF INSURER THE LOSS. 730 company furnishes blank proofs, which are filled out in the presence of the company's officers. 89 So, for the purpose of showing a waiver of defects in proofs, evidence is admissible of interviews between the assured's attorney and the company's adjusting agent, wherein he endeavored to see the proofs which were claimed to be defective, and a letter written after such interview is also admissible. 90 § 585. When no Waiver by Adjuster of Proofs of L.oss. It is held that no waiver of the required proofs of loss arises from the fact that the adjuster went to the place of fire, made an examination of the assured, and offered to settle the loss, said offer being rejected. 91 And that where the company continu- ously insists upon strict proofs of loss and an appraisement, no waiver exists because the adjuster goes upon the premises after the loss and commences an examination into the matter. 92 Nor can a waiver be based upon the fact that the general agent and adjuster offers to advise the company to pay if the assured will settle on a certain basis. 93 Nor is there any waiver of the required proofs where, at his request, a statement of the prop- erty lost and its value is made to the adjuster. 94 Where a pol- icy provided that there could be no waiver of any of the con- ditions therein, except by the secretary, and by him only in writing indorsed on the policy, it was held that an adjuster of the company could not orally waive proof of loss. 95 § 586. Acts of Agent in Adjusting- Loss — How Far Binding on Company. — The insurer may show that an adjust- ment made by its agent is erroneous. 96 If the adjuster, with 89 Argall v. Old North State Ins. Co., 84 N. C. 355. 90 Birmingham F. Ins. Co. v. Pulver, 126 111. 329; 18 N. E. Rep. 804. n Liverpool etc. Ins. Co. v. Lorsby, 60 Miss. 302. 92 Scottish Union Nat. Ins. Co. v. Clancey, S3 Tex. 113; 18 S. W. ReD. 439. 03 Knudson v. Hekla F. Ins. Co., 75 Wis. 198; 43 N. W. Rep. 954; 46 N. W. Rep. 483; 49 N. W. Rep. 751. 04 Knndson v. Hekla F. Ins. Co., 75 Wis. 19S; 43 N. W. Rep. 954; 46 N. W. Rep. 483; 49 N. W. Rep. 751. 06 Kirkman v. Farmers' Ins. Co., 90 Iowa, 457; 57 N. W. Rep. 952. " Bordes v. Hallett, 1 Oaines (N. Y.), 444. 731 AGENTS OF INSURER — THE LOSS. § 586 full knowledge of the facts constituting a forfeiture, recognizes the validity of the policy, and negotiates with the assured for a settlement, the forfeiture is waived. 97 So a breach of all con- ditions of the policy is waived by the acts and statements of the adjuster in adjusting and compromising a loss and agreeing to pay the same in a few days; 98 although it is held that no pre- sumption arises that the adjusting agent, as such, has authority to waive forfeitures. 99 It is also held that no waiver of a for- feiture can be inferred by the mere reference of the matter after a fire to the adjuster for investigation and appraisal, where the policy provides that no officer of the company can waive the provisions of the policy except by proper indorse- ment. 100 In another case the defendant's agent joined with other companies in adjusting the loss, and promised to pay his company's proportion. The assured settled with the other in- surers on the basis of the adjustment. Subsequently the agent paid back part of the unearned premium, retaining a part thereof. It was held that the company was estopped by the acts of the agent from denying its liability. 101 So where the agent examined the premises after the fire, and with full knowledge of all the facts, voluntarily paid, or caused the company to pay, the amount of loss, the principal cannot re- cover back the money so paid on the ground that the policy did not cover the loss. 102 But a forfeiture for additional in- surance is waived by the adjuster, with knowledge thereof, putting the assured to the expense of making and correcting proofs of loss from time to time, and representing that the company will not claim the forfeiture. 103 • T Oshkosh Gaslight Co. v. Germania F. Ins. Co., 71 Wis. 454; 37 N. W. Rep. 819. 08 Wagner v. Dwelling-House Ins. Co., 143 Pa. St. 33S. w Hollis v. State Ins. Co., 65 Iowa, 454. ino Hill v. London Assur. Corp., 16 Daly (N. Y.), 120; s. c. 30 N. Y. St. Rep. 539; 9 N. Y. Supp. 500; 34 N. Y. St. Rep. 65. 101 Fisbbeck v. Phoenix Ins. Co., 54 Cal. 422. lS Nebraska & I. Ins. Co. v. Segard, 29 Neb. 354; 45 N. W. Rep. 681. 103 Pennsylvania F. Ins. Co. v. Kittle, 39 Mich. 51. See further as to powers of adjuster, Fishbeck v. Phoenix Ins. Co., 54 Cal. 422; Lit- tle v Phoenix Ins. Co., 123 Mass. 318; Hollis v. State Ins. Co., 61 Iowa, 454; New Orleans Ins. Co. v. Matthews, 05 Miss. 301. §§ 587, 588 AGENTS OF INSURER — THE LOSS. 732 § 587. What Agent May not Waive Proofs of Loss. — There are numerous cases which hold that a local agent, having authority only to receive proposals for insurance, fix rates of premium, countersign and issue policies, has no power, after issuing the policy, to waive compliance with conditions of a policy, concerning proofs of loss; 104 nor does the power of such agent extend to adjusting losses, and the fact that he assumes to act in the particular case does not establish his authority so to do. 105 So it is held that the president cannot waive prelim- inary proofs where the company's charter provides that all business shall be transacted by the president and one-third of the directors. 106 There can be no waiver of proofs of loss by a special agent of the company where it appears that the insured had notice that such agent had no power to waive any of the conditions of the policy. 107 § 588. Proofs of Loss — What is not a Waiver — Agent. "No sufficient evidence of waiver arises from the fact that the company's traveling agent, upon being told of the loss, replied that it would be all right with the company, 108 and where the by-laws of a mutual company require proofs of loss to be made within a specified time, no waiver arises from a subsequent di- rection of the board of directors that the assured should send vhem a statement of the loss, and they would take the subject into consideration, or by a subsequent vote of directors that m Smith v. Niagara Falls Ins. Co., 60 Vt. 6S2; 1 L. R. Annot. 216; 15 Atl. Rep. 353. See sec. 5S3, herein; Hanison v. Hartford F. Ins. Co., 59 Fed. Rep. 732; 23 Ins. L. J. 161; Sohnes v. Insurance Co., 121 Mass. 439; Knudson v. Hekla F. Ins. Co., 75 Wis. 19S; 43 N. W. Rep. 954; 46 N. W. Rep. 483; Bowlin v. Hekla F. Ins. Co., 36 Minn. 433; Van Allen v. Farmers' etc. Ins. Co., 64 N. Y. 469; Reynolds v. Conti- nental Ins. Co., 36 Mich. 131; Forest City Ins. Co. v. School Direc- tors, 4 111. App. 145; Bush v. Westchester F. Ins. Co. 63 N. Y. 531; Bonneville v. Western Assur. Co., 68 Wis. 298; 32 N. W. Rep. 34. That local agent with authority to sign and issue policies may not ■waive requirements as to proofs of loss, see Burlington Ins. Co. v. Kennerly, 60 Ark. 532; 31 S. W. Rep. 155. 105 Bush v. Westchester F. Ins. Co., 63 N. Y. 531, per Rapallo. J., reversing case below. inu Dawes v. North River Ins. Co., 7 Cow. (N. Y.) 462. 107 Dwelling-House Ins. Co. v. .Tones, 47 111. App. 261. 10s Boyle v. North Carolina Ins. Co., 7 Jones L. (N. C.) 373. 733 AGENTS OF INSURER THE LOSS. § 5S9 the assured be required to make a statement under oath in re- gard to the loss; 109 nor is there any waiver of the required proofs from the fact that the agent stated that he was not pre- pared to pay the loss; 110 nor does a waiver of service of proofs of loss arise from the acts of the secretary in acknowledging the receipt of notice of loss, and stating therein, in response to a request for proof blanks, that there were none on hand, and that the adjuster would not probably reach the case in two weeks; 111 and where the company sends an agent to inspect the premises and investigate the loss, this is not sufficient evidence of waiver where it appears that the agent requested the assured to send proofs to the company. 112 So it is held that if an agent's power is restricted in the policy, he cannot orally waive proofs of loss. 113 § 589. Retention of Proofs of Loss by Agent — Fail- ure to Object. — If the proofs of loss are insufficient, and the assured, acting in good faith, intends to comply with the requirements of the policy when he prepares them, it is the duty of the authorized agent who receives them to object at once. Good faith requires this, so that the assured may ascer- tain and obviate such defects as exist. And the silence of the company or its authorized agents in such case may so mislead the assured to his disadvantage as to estop the company. So the refusal of the agent to receive the preliminary proofs, on the ground that the company is not liable for the loss, prevents the latter from raising objections to the sufficiency of the proofs. 114 So where the agent receives and retains notice and affidavits of loss without objecting thereto, the company i3 thereby estopped to aver that they are defective or not properly 1M Smith v. Haverhill Mut. F. Ins. Co., 1 Allen (Mass.), 297; 79 Am. Dee. 733. 110 MeOann v. JEtna Ins. Co., 3 Neb. 198. 111 Birmingham v. Farmers' etc. Ins. Co., G7 Barb. (N. Y.) 595. 112 Buseh v. Insurance Co., 6 Phila. (Pa.) 252. 113 Gould v. Dwelling-House Ins. Co., 90 Mich. 302. We have con- sidered this question fully, however, under sections in a prior chap- ter on agency, as to the effect of limitations in a policy on agent's authority. 114 Lycoming F. Ins. Co. v. Dunmore. 75 111. 14. See Whitmore v. Dwelling-House Ins. Co., 148 Pa. St. 405; 23 Atl. Rep. 1131. § 590 AGENTS OF INSURER THE LOSS. 734 made or presented. 115 And this rule applies where additional proofs made to remedy defects in the first proofs are received by the agent and he fails to object. 116 So where the adjuster visits the premises after the fire, and makes and submits an es- timate of the cost of rebuilding, and fails to object to the proofs of loss either as to their sufficiency or nonservice in time, these defects are waived. 117 And there is a waiver of a strict com- pliance with the requirements as to proofs where the agent who receives them retains them, and fails to specify the details wherein they are deficient, although he tells the assured in a general way that they are insufficient. 118 So there is no error in instructing the jury that if proofs are served on the agent, who keeps and never returns them, and fails to object to delay in furnishing them, such delay is waived, although it is bad practice to instruct the jury to infer a fact from other facts; and it was also held in this case that a provision that nothing less than a distinct agreement indorsed on the policy should constitute a waiver of conditions therein, referred to other pro- visions 'than those relating to proofs of loss. 119 But it is held that there is no waiver where the agent receives the proofs of loss without objecting to the failure to furnish the magistrate's certificate of loss, as required by the policy. 120 § 590. Proofs of Loss — Examination by A^ent — Waiver. If the company's authorized agent examines the premises and investigates the loss, and refuses to pay, all questions are waived as to the sufficiency of proofs of loss. 121 So where the company sends a man to examine into the facts connected with the loss, and he takes the assured's affidavit and prosecutes in- quiries, the company thereby waives its right to insist upon 115 Hartford etc. Ins. Co. v. Walsh, 54 111. 164. 116 Home Ins. Co. v. Cohen, 20 Gratt. (Va.) 312. 117 Capitol City Ins. Co. v. Caldwell, 95 Ala. 77; 10 S. Rep. 355. m Madsden v. Fhopnix Ins. Co.. 1 S. C. 24. "• Wheaton v. North British & Mercantile Ins. Co., 76 Cal. 415; 18 Fac. Rep. 758. 120 Daniels v. Equitable F. Ins. Co., 50 Conn. 551. 121 Fisher v. Crescent City Ins. Co., 33 Fed. Rep. 544; McBride v. Republic F. Ins. Co., 30 Wis. 502. 735 AGENTS OF INSURER — THE LOSS. § 591 proofs of loss. 122 But if the company continuously insists upon proofs of loss, no waiver arises from the fact that its adjuster and agent went to the scene of the fire and commenced an ex- amination into the matter of loss. 123 § 591. Proofs of Loss — Waiver — Agent's Denial of Company's Liability — Other Grounds. — The company will be estopped from making any formal objections to proofs of loss, or from defending on the ground of defects in form, where the agent, upon tender of the jDroofs, refuses them on the ground that the company is not liable for the loss. 124 And evidence is admissible of a letter written by an authorized officer of the company to the assured acknowledging receipt of the proofs and denying liability of the company for the loss, and that the proofs were held subject to his order. 120 So if the agent repre- sents that the assured had been released by reason of an alien- ation of the property, and that proofs would be of no avail, and the assured, in consequence thereof, does not make proofs, the company is estopped. 126 And all objections are waived where the agent, when proofs are delivered to him, asserts that the policy has been canceled, and the company is not liable. 127 And the same rule obtains if the agent, on application there- for, refuses the necessary blanks for proofs, on the ground that the company does not recognize the claim. 128 The rule also ap- plies where the agent, on being notified of the death, declares that the policy is forfeited for nonpayment of premium, 129 where he states that it is useless to make proofs, as the policy is 122 Baile v. St. Joseph F. & M. Ins. Co.. 73 Mo. 371; Cumberland Valley Mat. Prot. Co. v. Schell, 29 Pa. St. 31. 123 Scottish Union etc. Ins. Co. v. Clancey, 83 Tex. 113; 18 S. W. Rep. 439. 124 Lycoming F. Ins. Co. v. Punmore, 75 111. 14; Manhattan Ins. Co. v. Stein, 5 Bush (Ky.), 652; Williamsburg City F. Ins. Co. v. Cary, 83 111. 453. 125 Capitol Ins. Co. v. Fleasanton. 50 Kan. 449; 29 Pac. Rep. 576. 126 Manhattan Ins. Co. v. Stein. 5 Bush (Ky.), 652. 127 Commercial Union Asur. Co. v. State. 113 Ind. 331; 15 N. E. Rep. 518; 13 West. Rep. 47; La Sooiete v. Morris. 24 La. Ann. 347. 12 ' Dean v. ^EJtna L. Ins. Co., 2 Hun (N. Y.), 35S; 4 N. Y. S. C. 497; 62 N. Y. 642. 129 Marston v. Massachusetts L. Ins. Co., 59 N. H. 92. § 592 AGE.NTS OF INSURER THE LOSS. 736 void, 130 or in case he declares that the company will not pay, because the sales were greater than the purchases, and denies all liability. 131 And in case the agent terminates negotiations for settlement by refusing to pay, by reason of a defect in title, this waives conditions as to notice and proofs of loss. 132 So where the adjusting agent refuses to pay on other grounds, there is a waiver. 133 And a letter from the secretary, in re- sponse to a notice of loss made after the time limited, promis- ing to lay the matter before the executive committee, and a subsequent letter denying liability and refusing to pay on the ground of failure to pay assessments, is a waiver of proof. 134 So where the local agent makes out the proofs of loss wrongly, and sends them to the company, and it does not object thereto on that ground, but on others, there is a waiver. 13a And the refusal to pay on the ground that the property did not belong to the insured constitutes a waiver of preliminary proofs. 136 Again, where the general agent, after investigating the acci- dent, stated to the assured that he had no case, and took from the attendant physician the blank notice and proof of death, this constitutes a waiver of notice and proof. 137 So if the pres- ident refuses payment of the loss on grounds other than the want of the required preliminary proofs, there is evidence of waiver. 138 But where proofs are delayed, there is no waiver by the acknowledgment by the agent of receipt thereof, although the agent specifies certain other conditions as having been broken by the assured. 139 § 592. Proofs of Loss — Delay Caused by Agent. — Where the conditions of the policy specify a time limit within which proofs of loss shall be furnished, a waiver of such provi- 130 Kantreuer v. Pennsylvania Mut. L. Ins. Co., 5 Mo. App. 581. 181 McBride v. Republic F. Ins. Co.. 30 Wis. 502. 132 iErna Ins. Co. v. Sparkes, 02 Ga. 187. 153 iEtna Ii\s. Co. v. Shryer. 85 Ind. 302. 154 Noyes v. Washington Ins. Co.. HO Vt. 059. 188 Whittle v. Farmville Ins. etc. Co., 3 Hushes (C. C.) 421. 136 Franklin F. Ins. Co. v. Coates. 14 Md. 285. in Travelers' Ins. Co. v. Harvey. 82 Va. 949; 5 S. E. Rep. 553. 138 Stetson v. Insurance Co., 4 Phila. 8. "* Brown v. London Assur. Corp., 40 Hun (N. Y.), 101. 737 AGENTS OF INSURER— THE LOSS. § 592 sion, or an estoppel against the company to insist on a compli- ance therewith, may arise from the acts or declarations of its agents, done or made with knowledge of the loss, in conse- quence of which the assured has delayed furnishing such proofs within the required time. 140 Thus, where a policy provides that no action shall be brought on it unless begun within twelve months from the loss, the condition is waived by such designed conduct on the part of the general agents of the company as en- courages and authorizes the insured to believe that his claim will be adjusted and paid after the limited time has elapsed. 141 So the company is estopped where the delay in furnishing proofs is occasioned by the act of the company's secretary. 142 In a Massachusetts case the agent was authorized to fill out and de- liver blank policies, duly signed. He was told by the secretary of the insured, a railroad company, that they were carefully examining into claims made for fires along the road, which were numerous. The agent replied that this was satisfactory, and that a schedule of the claims paid should be given the in- surer when they had been settled, and they would be attended to. This was held a waiver of preliminary proofs, the secre- tary of the insured, about eight months after all the claims had been settled, and long after the time for making proofs had expired, having forwarded a sworn statement thereof to the company. 143 So there is a w r aiver where the assured is unable to make the proofs in time because the company or its agent has possession of the books, and it also appears that when the agent took possession thereof he agreed to waive any defense for failure to serve proofs in time. 144 And where the local agent, upon being notified of the loss, induced the assured to neglect making formal proofs of loss by representations that it would be useless, by reason of the bankruptcy of the com- pany, it was held that the other creditors could not, in an action against the receiver, profit by such neglect of the assured. 145 140 Georgia Home Ins. Co. v. Kinnier, 28 Graft. (Va.) SS; Dohn v. Farmers' Joint Stock Ins. Co., 5 Lans. (N. Y.) 27;". '« Little v. Phoenix Ins. Co.. 123 Mass. 380; 25 Am. Rep. 96. 14i State Ins. Co. v. Todd, 83 Pa. St. 272. 143 Eastern R. R. Co. v. Relief F. Ins. Co.. 10-5 Mass. 570. 144 Mack v. Lancashire Ins. Co.. 4 Fed. Rep. 50. 62. 145 Pennell v. Chandler (111.) 7 Chi. Leg. News, 227. In this ease Joyce, Vol. 1—47 § 503 AGENTS OF INSURER — THE LOSS. 738 But it is held that delay in furnishing the required proofs is not justified by the declarations of the company's agent that the claim was all right, and that the adjuster would be around and settle in a few days; 146 nor is there sufficient evidence of waiver from the fact that a person who represented himself as presi- dent, told a witness at the company's office that he did not be- lieve the premises would hold the amount of stock claimed, and that he was so informed by an agent who had been sent to the place of the fire, and the witness denied the correctness of the information, and inquired what further proofs were required, and stated that he would supply them, to which the president replied by referring witness to the policy. There was no evi- dence on the trial as to the contents of the claimed proofs, nor were they produced, although demanded of the company. 147 § 593. Custom of Other Ag-ents — Proofs of Loss- Waiver. — Evidence is inadmissible that it was the custom of other agents not to require proofs of loss where such evi- dence is offered to bind the particular company by such cus- tom. If, however, it is attempted to show the extent of au- thority of the agent acting in the matter, evidence may be ad- missible of the custom and usages of the company charged with the liability, and upon which the assured relied, or was justified in relying. 148 the assured inquired, after his loss had been sustained, for the offices of the company in Chicago, but they had recently ceased to do busi- ness there, although it had formerly been their home office. He notified the local agents of the town wherein the loss occurred, and being informed by them that the company was then wholly bank- rupt, was led to believe that recovery was impossible and proof of loss useless: Per Walker, J. 140 Engebretson v. Hekla F. Ins. Co.. 58 Wis. 301. 147 Spring Garden Mut. Ins. Co. v. Evans, 9 Md. 1. 148 Phenix Ins. Co. of Brooklyn v. Hunger, 49 Kan. 178: 30 Pac. Hop. 120, reversing decision of district court upon appeal. Green, J., said: "In this case there was a written contract expressing what was to be done by the parties, and we do not think this agreement could be modified by the custom of other insurance companies or their agents in regard to dispensing with proofs of loss. We are clearly of the opinion that this evidence wns incompetent and pre- judicial to the rights of the defendant company." 739 AGENTS OF INSURER — THE LOSS. §§ 594, 595 § 5i>4. Fraud of Agent in Inducing Settlement — Waiver — Proofs of Loss. — The doctrine that fraud viti- ates a contract applies to a compromise of a claim for loss under a policy when the same is induced by the fraud of the insured or its authorized agents. But if the assured repudiates such compromise as to the amount, he does not lose the benefit of a waiver arising therefrom of proofs of loss. 149 § 595. Adjustment of Loss — Agent. — It is declared in a JCew York case 150 that an agent merely authorized to re- ceive proposals for insurance and countersign and deliver pol- icies has no power to adjust losses; that some authority there- for, or a ratification of the agent's acts, or usage warranting the exercise of such authority, must be shown. It is held, however, in an English case 101 that an agent who has implied, authority to subscribe a policy for the underwriter is empowered to adjust a loss and to use the necessary means therefor. This latter case, however, under the usual course of business of insurance companies in the United States, can hardly be said to govern. A broker has no authority as such to adjust and pay a loss for the underwriter, and in case he does so, he cannot recover back the sum paid. 152 "Whether an agent to subscribe has author* ity to pay or adjust a loss must depend greatly upon the actual relations existing between the principal and his agent as well as upon the custom of doing business pursued by the agent 149 Piatt v. Continental L. Ins. Co., 62 Vt. 166; 19 Atl. Rep. 637. Upon appeal the court said: "If the compromise was fraudulent, it did not bind the plaintiff, and the evidence offered tending to show it should have been received, and the plaintiff permitted to recover the actual loss under the policy. Any question of waiver of proof was immaterial. We think the offer to show the compromise fraud- ulent was distinct. We do not decide that a compromise made in good faith would bind the assured, but the court erred in not sub- mitting the question as to fraud or not to the jury; for if fraudulent the plaintiff is not bound by it." 150 Bush v. Westchester P. Ins. Co., 63 N. Y. 531. 151 Richai'dson v. Anderson, 1 Camp. 43, n. ia Ben Y Auldjo, 4 Doug. 48; Wilson v. Creighton, 3 Doug. 132; Baker v. Langhorn, 4 Camp. 396; Moody v. Webster, 3 Pick. (20 Mass.) 424. As to mode of settlement between the assured, the broker, and the underwriter in England, see 1 Arnould on Marine In- surance, Perkins' ed., p. 14. § 596 AGENTS OF INSURER — THE LOSS. 740 and acquiesced in by the principal. Usage of the place or trade is also important; likewise what authority the agent ia held out to possess. ISTo general rule can be established with- out reference to these facts, since it could hardly be assumed that a mere limited authority to sign could be extended by im- plication, so as to warrant an adjustment and payment of a loss, unless some other fact or authorization exists which would jus- tify the exercise of a more extended power. 103 An agent who is specially authorized to adjust a particular loss has no author- ity by virtue of such employment to adjust a different » loss. An agent can only act within the scope of his actual or appar- ent authority. 154 Although an average bond is signed by the insurer's agent without authority therefor and by stipulation whatever sum is found due for general average must be paid by the insurers, the vessel's valuation must be taken as provid- ed in the average bond. 155 Again, there is an adjustment if a person employed by an insurance company has gone to the premises, made calculations, and stated the amount to be paid. 106 Where a policy is void because the insured kept pro- hibited articles in the house, a promise on the part of the in- surer's agent to pay a loss will not bind them, although the agent having authority to adjust and pay losses has knowledge that the prohibited articles were kept in the house at the time of the fire. 157 And if the assignee of the policy is not per- mitted to participate in an adjustment by the company's agent, such adjustment is not binding upon him. 158 § 596. Particular Account — Loss — Waiver by Asrent. The time for rendering the particular account required is ex- tended by the acts of the adjusting agent in examining the premises and books of the assured; 109 and an agent may waive 168 See 2 Phillips on Insurance, 3d ed., 541, sees. 1873, 1874; Bush v. Westchester F. Ins. Co., 63 N. Y. 531. 154 Hartford F. Ins. Co. v. Smith, 3 Col. 422. 155 "Wheaton v. China Mut. Ins. Co., 39 Fed. Rep. 879. 1BS Fame Ins. Co. v. Norris. 18 111. App. 570. 187 Pho?nix Ins. Co. v. Lawrence, 4 Met. (Ky.) 9; 81 Am. Dec. 521. ,Bff London F. Assn. v. Leon, 03 Tex. 2S2. ,5 ' J Jones v. Mechanics' F. Ins. Co., 36 N. Y. 29. See Ligon v. In- surance Co., 87 Tenn. 341. 741 AGENTS OP INSURER — THE LOSS. § 597 particulars of the loss where lie lias authority to make contracts and is furnished with properly signed and attested blanks to countersign and deliver. 160 So where an examination is made by agreement with the insured, of his books, and the president of the company acknowledges receipt of a statement of the claim, but rejects it for general reasons, there is a waiver of delivery of a particular account. 161 And furnishing such account is waived where the general agent uses such language as is calcu- lated to induce the assured to delay preparing the same, espe- cially where the company afterward rejects the proofs of loss on other grounds than delay in furnishing them. 162 So the resident agent of the company to which it refers the assured, and who is instructed to obtain a statement of the loss, is there- by invested with authority to extend the time for making a particular account of loss. 163 But a waiver by an agent of no- tice of the loss does not include a waiver of the particular ac- count or proofs required to be furnished. 164 § 597. Marine Protest — Waiver — Agent. — If the policy requires a protest to be made by the master and crew before the nearest convenient notary as soon as practicable after the disacter, such protest to set forth substantially the cause of dis- acter and the extent of the damage, such condition must be per- formed, nor is the right of the underwriter to a legal protest waived by a direction of the company's agent to one of the crew to make a protest before an officer, nor by such agent's remark made before the issuance of the policy that he would send the master word, which he did not do, nor by the fact that the mas- ter and crew had no knowledge that the vessel was insured. 165 But where the agent upon notification of the loss demands the master's protest, and having received the same denies lia- bility, there is a waiver of preliminary proofs. 166 160 Imperial F. Ins. Co. v. Murray, 73 Pa. St. 13. 161 Franklin F. Ins. Co. v. Updegraff, 43 Pa. St. 350. ia Dolin v. Farmers' etc. Ins. Co., 5 Lans. (N. Y.) 275. ,cs Lycoming Co. Ins. Co. v. Scliollenberger, 44 Pa. St. 259. 164 Deliver v. State etc. Ins. Co., 38 Pa. St. 130. 165 p e oria etc. Ins. Co. v. Walsev, 22 Ind. 73. l6,; Maryland Ins. Co. v. Bathurst, 5 Gill & J. (Md.) 159. § 598 AGENTS OF INSURER — THE LOSS. 742 § 598. Agent's Powers After Loss — Generally. — If an agent lias authority to fill up a blank policy with which he is intrusted, and which is duly signed and attested by the proper officers of the company, he may af ter a loss has occurred fill up the policy in conformity with a parol preliminary agreement. The assured in such case is entitled to the policy as his prop- erty, and may enforce his right to its possession by a proper action therefor; or he may sue for the loss in case of refusal of the company to deliver it up; 1G7 but if no binding contract is made at the time the loss occurs the agent has no authority to ratify an attempted contract and issue a certificate after loss; 108 nor has a general agent, although authorized to issue policies, any authority to issue a policy on property already de- stroyed, and while the application for the policy is on its way from the applicant to the agent; 169 nor does the authority of an insurance agent to countersign policies on his own property extend to such policies antedated before a loss, but signed thereafter. 170 And where an agent, being directed by com- pany to cancel a policy, exchanges such a policy after a loss for one in another company of which he is also agent, no re- covery can be had against the latter company, it appearing that it had refused the agent leave to issue a policy to the assured. 171 An agent who issues the policy may after the loss accept an order of the assured to pay the loss to another person, such agent having authority to assent to assignments and transfers, circulars issued by him stating that losses would be paid through him and in bankable funds. 172 But an agent for soliciting insurance cannot estop the company by admissions after loss. 173 And where the agent through whom the policy had been obtained, upon being consulted by an intending pur- chaser of the policy after a loss by fire, stated that the claim 167 Franklin F. Ins. Co. v. Colt, 20 Wall. (U. S.) 5G0; 4 Ins. L. J. 367. note. 168 Blake v. Hamburg-Bremen F. Ins. Co., 67 Tex. 160; 2 S. W. Rep. 368. 168 Bentley v. Columbia Ins. Co., 17 N. Y. 421. 170 Glens Falls Ins. Co. v. Hopkins, 16 111. App. 220. 571 Wilson v. New Hampshire F. Ins. Co., 140 Mass. 210. 17a Miller v. Phoenix Ins. Co., 27 Iowa, 203. 175 Phoenix Ins. Co. v. Gopeland, 86 Ala. 551; 6 S. Rep. 143. 743 AGENTS OF INSURER THE LOSS. § 599 was all rig-lit and would be paid, it was held that a replication setting up such facts was good on demurrer, the defense being misrepresentations by the assured as to encumbrances, etc. 174 § 599. Fraud of Agent — Settlement — Award — Assign- ment. — If an agent authorized to act in relation to the loss or its adjustment, or the settlement thereof, misleads or in- duces the assured by false and fraudulent representations to settle for less than the amount, such settlement does not bind the assured. Thus, in the case of a life risk it appeared that the agent fraudulently represented to the executor of the as- sured, whose mental faculties were impaired, that the company would contest and defeat the policy; that it had sufficient evi- dence to prove it void; and the executor was thereby induced to settle for a grossly inadequate sum, and it was held that the assured might have the settlement set aside and recover the balance. 1 ' The same rule applies where the adjuster fraudu- lently represents the policy to be void for breach of conditions, and induces a settlement. 176 And where the beneficiary is so induced to compromise, he may retain the money received and sue for the damages consequent upon the deceit. 177 So in case an award is signed when incomplete, by reason of the false statements of one of the adjusters, the adjusters of other inter- ested companies being present and acting in concert with him, the insurers cannot claim the benefit of the falsehood. 178 In another case, where the company's agent was authorized to obtain the surrender of a certain paid-up policy for the sum of three thousand dollars, and by fraudulent acts obtained the assignment for two thousand dollars and retained the balance, it was held that the company was liable for such balance. 179 But it is held that a settlement induced by such fraudulent 174 Phoenix Ins. Co. v. Copeland. 86 Ala. 551; 6 S. Rep. 143. 175 McLean v. Equitable L. Assur. Soc., 100 Ind. 127; 50 Am. Rep. 779. 170 Berry v. American Cent. Ins. Co.. 132 N. Y. 49; 43 N. Y. St. Rep. 400; 30 N. E. Rep. 254; 8 N. Y. Supp. 7f>2: 45 Alb. L. J. 402. m Michigan Milt. L. Ins. Co. v. Naugle, 130 Ind. 79; 29 N. E. Rep. 393. 178 ITorndon v. Imperial P. Ins. Co.. 110 N. C. 279; 14 S. E. Rep. 742. 179 Atkins v. Equitable L. Assur. Soc., 132 Mass. 395. § 600 AGENTS OF INSURER THE LOSS. 744 representations of the agent does not authorize the assured to ignore the compromise while retaining its benefits and to sue on the policy, 180 and that the assured has no cause of action against the company for such representation. 181 It is also de- cided, where an offer of settlement is made by an adjusting agent, his statement that the assured would not be likely to re- cover more in an action for the loss is only an expression of opinion, and not an assertion upon which the assured could re- ly, and that the settlement having been made, no further re- covery could be had upon the ground of misrepresentation 1S2 § fiOO. Agent's Authority — Arbitration — Appraisement. An agent who subscribes the policy as such, or who is author- ized to settle losses, may after loss agree to submit a claim to arbitrators. 183 "Where the company's adjuster represents that the appraiser named by him was disinterested, but, on the con- trary, he was an employee of the company employed in esti- mating losses in its interest, the award will be set aside; 184 and if through the fault of the company's adjusters the award is limited to the damage to certain goods only, and not of the entire amount, the award is not conclusive. 185 So in case the adjuster of the company denies the company's liability after the insured refuses to sign a proper submission to an appraisal, there is no waiver under a policy requiring a submission to arbitrators. 186 And where the policy expressly provide? for arbitration, and that the same shall not operate as a waiver of any of the conditions in the policy, no waiver of forfeiture arises in such case by reason pf the fact that the company's agent goes to the place of the fire, makes inquiries, and re- w Home Ins. Co. v. McRich'ards, 121 Ind. 121; 22 N. E. Rep. 875. 191 Thompson v. Phoenix Ins. Co.. 75 Me. 55; 46 Am. Rep. 357. 151 American Ins. Co. v. Crawford, 7 111. App. 29. ,,s Coodson v. Brooke, 4 Camp. 103. ™ Bradshaw v. Agricultural Ins. Co. (N. Y. 1S92), 42 N. Y. St. Rep. 79. 185 Hong Sling v. Scottish Union Nat. L. Ins. Oo., 7 Utah, 441; 27 Pae. Rop. 171. i™ TMoneer Mfg. Co. v. Phoenix Assur. Co., 110 N. C. 176; 10 S. E. Rep. 1057. 745 AGENTS OF INSURER — THE LOSS. § 601 quests an arbitration, 187 nor is a condition as to appraisement waived by the agent and adjuster of the company appearing on the scene of the fire and commencing an examination into the matter of damage. 188 A distinction has been made in many of the cases between an arbitration, in the proper sense of that term, and an appraisement or valuation, 189 and it is held that a forfeiture arising from a breach of other conditions is not waived by insisting upon a condition for arbitration. 190 In so far, however, as the condition or stipulation regarding arbitra- tion may be valid, there would seem to be no reason why it cannot, as well as other conditions, be waived by the company, or its authorized agent with adequate authority to act in the premises. § 601. Agent's Authority — Suhrog-ation. — An insurance policy provided that on the payment of a loss the company should be subrogated to any right of action arising to the in- sured against the person whose act or omission occasioned the loss. It appeared that the building in which the insured prop- erty was stored stood on land leased from a railroad company, and a contract existed, of which the local agent had -knowl- edge, by virtue of which the lessor was exempted from liabil- ity in case of loss by fire communicated from its locomotives, as well as of the fact of the lease. It was held that the court properly refused to charge that such agent could not, without express authority, waive the condition as to subrogation, or that his knowledge of the contract operated as a waiver. 191 mt Briggs v. Firemen's Fund Ins. Co., G5 Mich. 52; 31 N. W. Rep. 616. ,ss Scottish Union etc. Ins. Co. v. Clancey, 83 Tex. 113; 18 S. W. Rep. 439. 189 See Collins v. Collins, 26 Beav. 306; Kelly v. Crawford, 5 Wall. (U. S.) 7S5. wo Briggs v. Firemen's Fund Ins. Co., 65 Mich. 52; 31 N. W. Rep. 616. See Zimmerman v. Home Ins. Co., 77 Iowa, 6S5; 42 N. W. Rep. 462; Russell v. Cedar Rapids Ins. Co., 78 Iowa, 216; 42 N. W. Rep. 654. 191 Felzer Mfg. Co. v. Sun Fire Office, 36 S. C. 270; 15 S. E. Rep. 562 (10 cases). In this case the court said: "We must keep in mind the well-settled rule that the refusal of a request to charge an ab- stract principle of law, even though it be correct, unless it appears § 602 AGENTS OF INSURER — THE LOSS. 746 § 602. Agent's Authority — Time Limit for Suing- — "Waiver. — Where a general agent, with authority to act in re- lation to proofs of loss, misleads the assured so that he delays to bring action within the time limited in the policy therefor, the company is estopped from availing itself of such delay. 192 So where the time limit for suing as provided in the policy was "within one year after the loss," and by the acts and omissions of the insurer's general agent the insured delayed five months in making the preliminary proofs of loss, it was held that that time must be excluded in determining the time within which action must be brought. 193 And where the period limited in the policy for suing has expired, and the company's agent thereaf- ter recognizes its liability, there is waiver of the limitation. 194 So there is a waiver of the limitation clause where the com- pany's agent calls on the assured to adjust the loss, and this is- by reason of the requirements of the agent that the assnred procure duplicate bills of invoice, delayed beyond the time lim- ited for suing, even though the policy provides that no agent can w T aive conditions except by indorsement on the policy in writing. 195 And if the insured is led to believe by the com- pany's agent that his claim will be settled without suit, such condition is not enforceable. 196 So the president of the com- pany may waive such limitation, although the policy provides that no agent can waive conditions without special authority, the president being held not within the meaning of the word "agent" in such inhibitory clause. 197 And in case of a foreign by the testimony applicable to the case, affords no ground for a new trial. What was the scope of the agency in these cases does not ap- pear, and we do not think tbe question sought to be raised is properly before us. In New York L. Ins. Co. v. Fletcher, 117 U. S. 531, it ap- peared not only that the authority of the agent was limited, but that such limitation was made known to the insured by being embodied in the application which the assured had signed." 1W Little v. Pboenix Ins. Co., 123 Mass. 380; Bish v. Hawkeye Ins. Co.. 60 Iowa, 184; Brady v. Western Assur. Co.. 17 U. C. C. P. 597. 103 Killips v. Putnam F. Ins. Co., 28 Wis. 472. ,M Horst v. Insurance Co., 73 Tex. 67. ,n; Dibbrill v. Georgia Home Ins. Co., 110 N. C. 103; 14 S. E. Rep. 783. IM Mickey v. Burlington Ins. Co., 35 Iowa, 174. 107 Universal F. Ins. Co. v. Stewart, 3 Penny. (Pa.) 536. 747 AGENTS OF INSURER — THE LOSS. § G03 company, failure to bring the action within the limited time is excused where no agent can be found upon whom to serve process. 198 So suit may be brought before the time specified where the authorized agent of the company states that it will not pay. 199 So the insured is justified in delaying action until after the period limited expires, where the secretary of the com- pany states in a letter to him that the loss will be paid at a cer- tain date. 200 And such a condition is waived where one of the firm of insurance agents, representing the company, and through which the policy was effected, agreed with the assured that since his partner was absent, the claim would be paid if he would await the absent member's return, which was done. 201 But it is held, however, that the fact that the insured, in con- sequence of parol declarations of the general agent that it was unnecessary to sue, and that the company would make assess- ments and pay without suit, is induced to delay bringing suit, that the company is not estopped to avail itself of a breach of such condition, especially where the policy provides that a waiver must be a writing signed by certain officers of the com- pany. 202 § 603. Abandonment to Insurer's Agent. — As a gen- eral rule, an abandonment to the agent of assurers is an aban- donment to the insurers, 203 although the known limited char- acter of the agency may preclude the existence of an author- ity of this kind. 2 " 188 Peoria Ins. Co. v. Hull, 12 Mich. 202. M Georgia Home Ins. Co. v. Jacobs, 56 Tex. 366. 200 Ames v. New York Union Ins. Co., 14 N. Y. 253. See Mayor v. Hamilton Ins. Co., 39 N. Y. 45. :01 Brady v. Western Assur. Co., 17 U. C. C. P. 507. 202 Waynesboro Mut. F. Ins. Co. v. Conover, 9S Pa. St. 384; 42 Am. Rep. 618. See Higgins v. Windsor Co. Mut. F. Ins. Co., 54 Vt. 270. 203 Fosdick v. Norwich Ins. Co., 3 Day (Conn.), 108. 20* T nuSj where an agent at a foreign port is merely authorized to communicate information and give advices affecting insurer's inter- ests, notice of abandonment to such agent is not binding, although even here there seems to be some question. See Drake v. Maryat, 1 B. & Cr. 473, per Lord Tenterden; Read v. Bonham, 3 Brod. & Bing. 147, 155, per Burroughs, J. Examine the preceding sections of this chapter. CHAPTER XXII. AGENT OF INSURED. § 608. Agent of insured— Authority how conferred. § 609. Right of general or special agent. § 610. Agency arising from situation with reference to the property. § 611. Agency may be created by possession of the policy. § 612. Agency: Possession of written application. § 613. Agent with general power to insure: Mutual company. § 614. Authority of partner. § 615. Authority of part owner. § 616. Authority of joint owner. § 617. Authority of tenant in common. § 618. Authority of ship's husband. § 619. Agent effecting insurance for whom it may concern. § 620. Right of agent to insure in cases of emergency. § 621. Agency arising from custom or course of dealing. § 622. Del credere agents. § 623. Insurance by factors. § (124. Supercargo — Power to insure. § 625. Authority of commission merchants: Consignees. § 626. Bailee may effect insurance: Warehouseman. § 627. Authority of trustees. § 628. Treasurer of local lodge may be trustee. § 629. Authority of prize agents to insure. § 630. Agent: Insurance by carrier. § 631. Where husband acts as agent of wife. § 632. Insured's agent: Adjustment of loss. § 633. Authority of insured's agent as to proof of loss. § 634. Authority of agent to make abandonment: Master. § 635. Broker not agent: Insured to receive notice of transfer policy. § 636. Agent or broker procuring insurance cannot cancel. § 637. . Notice of cancellation to agent or broker procuring insur- ance. § 638. Cancellation: Condition that notice be given party procuring insurance. § 639. Cancellation: When notice to insured's agent is sufficient. § 640. Cancellation: Agent of both parties. § 641. Agents of insured: Cancellation: Custom. § 642. Ratification by insured of agent's acts. § H43. Concealment by assured— General rule. § 644. Concealment by principal from agent to effect insurance. i74ij 749 AGENT OF INSURED. §§ 608, 609 § 645. Concealment by principal from general agent. § 646. Concealment by agent to effect insurance. § 647. Concealment by agent other than one to effect policy. § 64S. Concealment where agency has ceased. § 649. Concealment by agent: False advices: Doss by another peril. § 650. Degree of diligence required to communicate information- Agent. § 008. Agent of Insured — Authority, how Conferred. An authority to act for another in procuring insurance, or in matters relating thereto, after the policy is effected may be ex- press or implied. It may arise from express directions to in- sure in behalf of another, or the principal may directly em- power another to act in all matters relating to insurances on his property, and both before and after the policy is effected. An authority may be implied from the relation of the parties. It may be a duty arising from the nature of the correspondence with the principal. It may arise from a person's situation with reference to the property or from its peculiar condition. It may exist in cases of special emergency or under peculiar cir- cumstances necessitating immediate action, or by reason of a course of dealing, or by an adoption or ratification, or from possession of the policy; 1 and a party may so employ an agent of the company as to make him his agent. 2 § 609. Right of General or Special Agent to Insure. — In the absence of usage to the contrary, it is not incumbent upon nor has a special or general agent having charge of the principal's business authority as such to insure. 3 So Marshall says: "jSTo general authority which he may have in relation to a ship or goods w r ill make him an agent for the purpose of insuring on behalf of the parties interested." 4 But there is authority for the proposition that a general agent may insure, 1 'See Smith v. Lascelles. 2 Term Rep. 1ST. per Butler J.; Wallace v. Telfair, 2 Term Rep. 188, n.; French v. Reid, 6 Binn. (Pa.) 308; Randolph v. Ware, 3 Cranch (U. S.), 503; Brisban v. Boyd, 4 Paige (N. Y.), 17; Story on Agency, sec. 190; 1 Marshall on Insurance, ed. 1810, 297. See sections next following herein. 2 See Smith v. Empire Ins. Co., 25 Barb. (N. Y.) 497; Mittenberger v. Beacon, 9 Pa. St. 198. 8 Shirtleff v. Whitfield, 2 Brev. (S. C.) 71. 4 1 Marshall on Insurance, ed. 1810, side p. 297. § 610 AGENT OF INSURED. 750 without orders therefor, where it is for the interest of his corre- spondent that he should do so. 5 An agent to procure consign- ments has no authority to insure for either consignor or con- signee. This rule, however, is subject to exceptions; 6 but if the agent has been in the habit of effecting insurances for his principal, or if a prior course of dealing warrants it, or if the universal practice gives such implied authority, the agent would have the right to insure. Again, the control of his prin- cipal's funds and the general superintendence and manage- ment of his affairs would give the right to procure the neces- sary insurances. An absolute discretion vested in the agent as to the disposal of goods consigned, and as to the mode and time of investing and returning the proceeds, raises an inference of implied authority to insure return cargoes. Thus, a general agent employed by a foreign merchant to procure consign- ments and make shipments or advances on the latter's behalf, having absolute discretion as to the selection of persons, time, goods, and vessels, may insure, and if by the terms of the agree- ment it is made his duty to insure, he should do so. 7 An agent may procure substitute insurance upon property after cancel- lation of a policy, and this without previous notice to princi- pal. 8 § 610. Agency Arising from Situation with Reference to the Property. — A person's situation with reference to the property of another may operate to establish an agency in connection therewith. Thus, a consignee whose open pol- icy covers property of his consignor is the latter's agent in ref- erence to the insurance, and may thereby be authorized to receive payment of the amount due his principal. 9 • Wolfe v. Horn castle, 1 Bos. & P. 316. See remarks upon this case, 2 Duer on Insurance, ed. 1846, p. Ill, sec. 10. 6 Randolph v. Ware, 3 Cranch (U. S.), 503, per Patterson, .7. T Substantially the same illustrations as are given in 2 Duer on Insurance, ed. 1S45, 112, 113. See Schiinmelpennick v. Bayard, 1 Pot. (IT. S.) 275. * Buick v. Mechanics' Ins. Co., 103 Mich. 75; 61 N. W. Rep. 337; 24 Ins. L. .7. 375. • Ballard v. Merchants' Ins. Co., 9 La. 258; 29 Am. Dec. 444. 751 AGENT OF INSURED. §§ 611-613 § 611. Agency may be Created by Possession of the Policy. — An agency may be created in behalf of the in- sured by a delivery to or retention of the policy by the agent. Mere possession, however, of the policy does not necessarily, in itself alone, warrant an implied authority to act in the inter- ests of the insured in all matters connected therewith. Par- ticular circumstances may exist, or it may have been given the agent for a special purpose, or it may have come into his hands through another party. These and other facts, such as past and subsisting relations of the parties, general usage or the course of dealings between them, and the character of the agent's business, are important circumstances bearing upon the agent's authority to act in relation to the principal's interest thereunder. 10 In England, if the policy is left in the broker's hands, he is intrusted with the adjustment of the loss. 11 § 612. Agency — Possession of Written Application. — The possession of a written application for insurance raises an implication of authority to act for the applicant in negotiating a policy, and, in the absence of evidence to the contrary, ren- ders the party the agent of the insured so far as notice of facts material to the risk is concerned. 12 So where a party remains in possession of the policy after its execution, he alone is en- titled to recover therein in case of loss, and the insurer issuing the policy and dealing with such party only has the right to assume that the latter has authority to consent to changes in the policy for the benefit of the assured. 13 § 613. Ag-ent with General Power to Insure— Mutual Company. — It is held that an agent with general power to 10 See 2 Phillips on Insurance, 3d ed. 543, sec. 1881; Bethune v. Neilson, 2 Gaines (N. Y.). 139; Gray v. Murray, 3 Johns. Ch. (N. Y.) €7; BoiMsfield v. Gresswell, 2 Camp. - r »-)5: Ligutbody v. North Ameri- can Ins. Co., 23 Wend. (N. Y.) 18; Dutleigh v. Gatliff, 4 Dall. (C. C.) 446; Chesapeake Ins. Co. v. Stark, 6 Cranch (U. S.), 268; Cassidy v. Louisiana Ins. Co.. 6 Mart. (La., N. S.) 421; Power v. Butcher, 10 Barn. & C. 328; 5 Man. & R. 327; Shee v. Clarkson, 12 East, 507, 11 1 A mould on Marine Insurance. Perkins' ed. 1850, 120, sec. 65. Examine 1 Id., Maclachlan's ed., 1S87, 211, 224, See sees. 517, 523, herein. 12 Fame Ins. Co. v. Mann, 4 111. App. 485. 13 Martin v. Tradesman's Ins. Co., 101 N. Y. 502. § G14 AGENT OF INSUKED. 752 obtain insurance cannot effect a policy in a mutual company. The theory upon which this decision rests is that of the rela- tions which parties insuring in mutual companies sustain to each other, whereby every member becomes insurer to every other member. 14 § 614. Authority of Partner. 15 — One partner may in- sure in his own name his undivided interest in the partner- ship, 16 and a policy in the name of a single partner without general words limits the contract to his undivided share, and no action lies on the policy in the firm's name. 17 A partner has authority to insure the firm property in the name or, by general words, on account of the firm, or he may direct such insurance to be effected, 18 for he has an insurable interest in the entire partnership stock, and, in case of a loss, he must ac- count to the firm for such sums as he receives under the pol- icy. 19 But a partner has no authority to effect insurance for account of other part owners, unless the business be a partner- ship and the insurance is made in the partnership name. 20 And an insurance effected by a member of a partnership "on his new hotel" only covers his legal interest therein, it being partnership property, where it does not appear that he intended to insure any equitable interest he might have therein against 14 White v. Madison, 26 N. Y. 117. 16 See sees. 944, 945, herein. 16 3 Kent's Commentaries, 5th ed. 258; Graves v. Boston Marine Ins. Co., 2 Cranch (U. S.) 419, 440. 17 Graves v. Boston M. Ins. Co., 2 Cranch (U. S.), 419. See Cohen v. Hannarn, 5 Taunt. 101. See Pierson v. Lord, 6 Mass. 81; Bell v. Ansley, 16 East, 141; CaiTuthers v. Sheddon, 6 Taunt. 14; Lawrence v. Sebor, 2 Caines (N. Y.), 203; Turner v. Burrows, 5 Wend. (N. Y.) 541; Hibbert v. Martin, 1 Camp. 538. 18 Hooper v. Lusby, 4 Camp. 66; Osgood v. Glover, 7 Daly (N. Y.), 367: rho?nix Ins. Co. v. Hamilton, 14 Wall. (U. S.) 504; Foster v. United States Ins. Co., 11 Pick. (Mass.) 85; Lawrence v. Van Home, 1 Caines (N. Y.), 276; Graves v. Boston M. Ins. Co., 2 Cranch (U. S.), 4.19; Lawrence v. Sebor, 2 Caines (N. Y.), 203; Hillock v. Traders- Ins. Co., 54 Mich. 531; Parsons on Partnership, 4th ed., sec. 119; 1 Lindley on Partnership, ed. 1891, 139; Story on Partnership, sees. 101, 102. 19 Manhattan Ins. Co. v. Webster, 59 Fa. St. 227; 98 Am. Dec. 332. 20 Hooper v. Lusby, 4 Camp. 66. 753 AGENT OF INSURED. § 615 Lis partner on adjustment of the firm's affairs; 21 although it is held that a partner may insure on his own account, in his own name, the whole stock to its full value. 22 If a partner assures "on account of whom it may concern" a cargo belonging to the firm, and makes any loss which may occur payable to him- self, he may sue on the policy in his own name. 23 Where the partnership is a special one, limited to a special purpose, and the whole control of a voyage or adventure is given to a partic- ular partner, he has, by virtue of his general authority, the right to insure for the benefit of all. 24 So a partner who has a lien on the goods by reason of advances may insure a cargo in his own name to the full value. 20 In an English case it is held that if a partner effects a policy on the firm's account through a broker, the members are all liable to the latter for premiums and commissions. 26 The course of dealing there be- tween the insured, the broker, and the underwriter differs from that in the United States. § 615. Authority of Part Owner. 27 — A part owner in a vessel has no authority as such to insure for his co-owners, so as to bind them or charge the joint proceeds therewith, unless they consent or the ship be partnership property; 28 but he may insure his actual interest in the ship, 29 even though he do not state to the underwriter its nature and extent. 30 If, however, n Bailey v. Hope Ins. Co., 56 Me. 474. M Millandon v. Atlantic Ins. Co., 8 La. 557. M Voison v. Commercial Mut. Ins. Co. (N. Y. 1S91), 41 N. Y. 884. ** Lawrence v. Sebor, 2 Caines (N. Y.), 203. ** Millaudon v. Atlantic Ins. Co.. 8 La. 557. * Hooper v. Lushy. 4 Camp. 66. " See sees. 944-46, herein. 18 Finney v. Fair-haven Ins. Co., 5 Met. (Mass.) 192; 38 Am. Dec. 397; Foster v. United States Ins. Co., 11 Pick. (Mass.) 85; Lindsley v. Oibbs, 28 L. J. Ch. 692; Blanehard v. Waite, 38 Me. 51; 48 Am. Dec. 474; Bell v. Humphries, 2 Stark. 345; Craves v. Bositon M. Ins. Co., 2 Cranch (IT. S.) 319; French v. Backhouse. 5 Burr. 2727; Hooper v. Lusny. 4 Camp. 66; Sawyer v. Freeman, 35 Me. 542; Turner v. Bur- rows, 5 Wend. (N. Y.) 541: Reid v .Pacific Ins. Co., 1 Met. (Mass.) 166; Holmes v. United States Ins. Co.. 2 John®. Cas. (N. Y.) 329. " Finney v. Bedford Ins. Co., 8 Met. (Mass.) 348. 80 Finney v. Warren Ins. Co., 1 Met. (Mass.) 16; 35 Am. Dec. 343. See also Lawrence v. Van Home, 1 Caines (N. Y.), 276; Tappan v. Joyce, Vol. L— 48 § 615 AGENT OF INSURED. 754 he insures as owner, or a policy be taken upon the whole vessel in his own name without previous authority or subsequent rati- fication by the other owners, it is invalid, except as to the inter- est of the part owner obtaining it, 31 and he cannot recover any- thing for the shares or interests of his co-owners. 32 And even if the policy be intended by the insurer to cover the whole ves- sel for the benefit of all concerned, but is invalid except as to the interest of the part owner procuring it, the insurer is onlv liable to such part owner for such a portion of the sum insured as his interest bears to the whole. 33 But one part owner may insure the ship for the interest of all, where they are partners and an order is given by one to insure; 34 and a part owner of a vessel who has chartered the remaining portion, with a cove- nant to pay the value in case of a loss, may insure the whole vessel as his property. 33 So if he does not own the whole ves- sel insured he may recover for an undivided interest held in his own right, and also for another undivided interest held by him as administrator of a deceased co-owner. 36 "Where A pur- chased the whole of a cargo, in which B was to be interested one-third, and which was charged to him by A, and the in- voices and bills of lading being made out in their joint names, and some time after B directed his correspondent to place the proceeds of the cargo to the credit of A, it was held that A had not such a lien on the one-third belonging to B as amount- ed to an insurable interest, nor could A, who had insured the whole and had averred an interest in the whole cargo, recover for more than two-thirds. 37 Insurance of a vessel by one part owner for all may be ratified by the others, even after a loss by suing on the policy; 38 and if an express authority to make Alkinson, 2 Mass. 365; Murray v. Colorado Ins. Co., II Johns. (X. Y.) 302. 81 Knijrht v. Eureka M. Ins. Co., 2G Ohio St. 004; 20 Am. Rep. 77S. 82 Finney v. Warren Ins. Co., 1 Met. (Mass.) 16; 35 Am. Rep. 343; Dumas v. Jones, 4 Mass. 047; Pearson v. Lord, Mass. 81. 83 Knight v. Eureka M. Ins. Co., 20 Ohio St. 004; 20 Am. Rep. 778. 84 Hooper v. Lusby, 4 Camp. 00. 85 Oliver v. Oreene, 3 Mass. 133; 3 Am. Dec. 90. 86 Finney v. Warren Ins. Co., 1 Met. (Mass.) 10; 35 Am. Dec. 343. n Murray v. Columbian Ins. Co., 11 Johns. (N. Y.) 302. 88 Finney v. Fairhaven Ins. Co., 5 Met. (Mass.) 192; 38 Am. Dec. 397. 755 AGENT OF INSURED. § 016 the insurance or a subsequent ratification be shown, a recovery mav be had. 39 In a Massachusetts case one of three part own- ers and also master of a brig directed a broker to insure prop- erty on board for a certain voyage, and by the order it was in- tended to insure the interests of all the owners. It did not ap- pear that the other part owners had authorized such insurance, either originally or by ratification, and neither was there any evidence of their disaffirmance of the broker's acts. It was de- cided that the insurance covered only the interest of the part owner directing the insurance, and not the interests of the others. 40 If one part owner insures for the others, a ratifi- cation of his act is shown by the others signing a note for the premium and commencing an action for the loss. 41 In an English case the part owners and managing owners directed in- surance; the broker who executed the order sued the other part owners for the premium, and it was held, in the absence of proof of distinct authority by the part owners sued to effect the insurance, that they were not liable, although it was claimed ed that they had received the benefit of the insurance, and that the managing owners could not authorize insurance for other part owners. 42 If a part owner, without authority, insures in his own name the whole interest, and recovers only for his sep- arate interest, the other part owners have no claim against him for any portion of the money received for the loss. 43 § 616. Authority of Joint Owner. 44 — Joint owners have not the authority of partners, and where the ownership is that of vessels, they are not partners in matters concerning their management. 45 And it is held in ISTew York 46 that ship- ** Blanchard v. Waite, 3S Me. 51; 48 Am. Dec. 474. 40 Foster v. United States Ins. Co., 11 Pick. (Mass.) 85. 41 Blanchard v. Waite, 28 Me. 51; 48 Am. Dec. 474. 42 Bell v. Humphries, 2 Stark. 385. per L/ord Ellenborough. 43 Harrel v. Hanna, 5 Har. & J. (Md.) 412. 43 See sec. 944, herein. 45 Adams v. Carroll, 85 Pa. 209; Green v. Briggs, 6 Hare, 395; French v. Price. 24 Pick (Mass.) 13. 18; Knowlton v. Reed, 3S Me. 24G; Ward v. Bodeman, 1 Mo. App. 272; Patterson v. Chalmers, 7 B. Mon. (Ky.) 595. 46 Xicoll v. Munford, 4 Johns. Ch. (N. Y.) 522. § 617 AGENT OF INSURED. 756 owners are tenants in common of the vessel, and not joint tenants or partners. So one of two joint shippers has no au- thority as such to insure for both, 47 although they may form a special partnership. 48 And it is held that part owners by em- ployment of a ship become partners in respect of the adven- ture. 49 But if the entire direction and management of the ves- sel, or of the cargo or joint adventure, devolves by consent upon one of the parties so justly interested, it would seem that he has the right to effect insurance for all, for it is held that such parties have all the rights of general partners. 50 The in- terest of other joint owners is not covered by a policy in the name of one joint owner, "as property may appear," without the clause stating that the insurance is for the benefit of all con- cerned. 51 Where one of two persons who owned goods jointly sought to effect an insurance thereon, and the insurance agent informed the owner that to insure the interest of both there was no necessity for placing both names in the policy, and the policy was issued in the name of one, it was held that upon a total loss the whole interest might be recovered by the party to whom the policy had been issued. 52 § 617. Authority of Tenant in Common. — One tenant in common of a vessel cannot, without authority, procure in- surance on property on board for his cotenants.° 3 He can in- sure only for his individual share, or for the benefit of those by whose order or direction it is effected. 54 47 Lawrence v. Sebor, 2 Caines (N. Y.), 203. See Foster v. United States Ins. Co., 11 Pick. (Mass.) S5, and section last preceding. 48 Hardy v. Sproule, 29 Me. 258; Munford v. Nicoll. 20 Johns. (N. Y.) 611; Holderness v. Shackels, 8 Barn. & C. 612, 618; Hinton v. Law, 10 Mo. 701. 40 Bovil v. Hammond, 6 Barn. & C. 149. *" See Compston v. McNair, 1 Wend. (N. Y.) 457, per the Court. 81 Peoria Ins. Co. v. Hall, 12 Mich. 202. See Graves v. Boston M. Ins. Co., 2 Cranch (U. S.), 419. 62 Manhattan Ins. Co. v. Webster, 59 Pa. St. 227. 53 Foster v. United States Ins. Co., 11 Pick. (Mass.) S6. 64 French v. Backhouse, 5 Burr. 2727; Roberts v. Ogilby, 9 Price, 269; Bell v. Humphries, 5 Burr. 2727; 2 Stark. 345; Holmes v. U. Ins. Co., 2 Johns. Cas. (N. Y.) 329. 757 AGENT OF INSURED. § 619 § 618. Authority of Ship's Husband.— The ship's hus- band cannot borrow money, give a lien on the freight, make insurance, or buy a cargo, without special authority; 5u nor has he any authority to insure either the whole or any part of the vessel without the express direction of the owner thereof, or a general direction from all, 56 and if he does insure, no re- covery can be had for advances in effecting the contract, unless it be proven that the several owners authorized his acts. 57 In an English case a ship's husband was appointed to that office by a deed executed by all the joint owners, empowering him to do acts as such husband in the customary manner. He ef- fected insurance on the ship and brought an action against a part owner for the premium. It was held that the husband's authority to insure for any part owner must arise from a par- ticular direction; or, if an authority to insure for all the owners was claimed, then a general direction to insure, or something equivalent thereto, must be given, and that a direction by a part owner to insure did not bind the rest. 33ut that informa- tion given, of the insurance being effected, to all the owners. and their failure to object, was decided to have bound them. 58 § 619. Agent Effecting: Insurance "for Whom it May Concern." — An insurer is entitled to know when he in- sures, or that he insures unknown persons, so as to know what terms to make; 59 but the insurer need not know the persons entitled to claim under a policy "for whom it may concern." 60 A policy "for whom it may concern" supposes an agency, and he for whose benefit the insurance is procured is the principal, the person contemplated in the contract. 61 A policy "on ac- 85 The Ole Olson, 20 Fed. Rep. 3S4. M Turner v. Burrows, 8 Wend. (N. Y.) 144; affirming 5 Wend. (N. Y .)541, French v. Backhouse, 5 Burr, 2727; McCready v. Woodhull, 54 Barb. (N. Y.) 80; Finney v. Warren Ins. Co., 1 Met. (Mass.) 16; Bell v. Humphries, 2 Stark. 345. 67 McCready v. Woodhull. 34 Barb. (N. Y.) SO. 59 French v. Backhouse, 5 Burr. 2727. F9 Pumas v. Jones. 4 Mass. 647. 00 The Sidney, 23 Fed. Rep. 88. 61 Newson v. Douglass. 7 Hnr. & J. (Md.) 417, per Buchanan, J. "He who effects insurance or causes himself to be insured by name § 619 AGENT OF INSURED. 758 count of " is equivalent to a policy "for whom it may concern." The real party in interest may be shown by proof aliunde, and one interested has an action to' recover his propor- tion of a loss paid to others. 62 So where the party effecting in- surance signs himself as agent, parol evidence is admissible to show for whom the insurance was really effected. 63 But it is held that where forwarders of wheat insure it in their own names, parol evidence is inadmissible to show that the insurance was for the benefit of "whom it may concern." 64 The rule in these cases is undoubtedly this, that if a policy is issued "for ac- count of whom it may concern," it is not only to be limited to those who have an insurable interest in the property, which may be lawfully insured, but must also be restricted to the . party or parties for whom the insurance was intended, and by whom it was previously authorized or subsequently adopted, and not any and every person who may chance to have an inter- est in the property. This rule, has, however, been qualified in some decisions. 65 Referring to the point as to who may claim for the account of another is not bound in his own name; neverthe- less the ordinary practice is opposed to this, and we know that in commerce custom is easily victorious over legal theory": Emerigon on Insurance, Meredith's ed. 1850, c. v., sec. 3. p. 110. "In every country in Europe, with the possible exception of England, the per- son named as the assured in the policy may recover a loss upon proof of his insurable interest. It is presumed that the interest proved was the interest meant to be insured": 2 Duer on Insurance, ed. 1846, sec. 28, pp. 42, 43. •» Burrows v. Turner, 24 Wend. (N. Y.) 276. 68 Davis v. Boardman, 12 Mass. 80; Hibbert v. Martin, 1 Gamp. 53S. See Lawrence v. Sebor, 2 Caines (N. Y.), 203; Stephenson v. Piscataqua F. & M. Ins. Co., 54 Me. 55. M The Sidney, 23 Fed. Rep. 88. w See Frierson v. Brenham, 5 La. Ann. 542; 52 Am. Dec. 603; Irv- ing v. Richardson, 2 Barn. & Adol. 193; Forgay v. Atlantic Mut. Ins. Co., 2 Rob. (N. Y.) 79; Baudrey v. Union Ins. Co., 2 Wash. (C. C.) 391; Newson v. Douglass, 7 Har..& J. (Md.) 417; Routh v. Thompson, 11 Easit, 428: 13 East, 274; Lawrence v. Sebor, 2 Caines (N. Y.), 203; Grant v. Hill, 4 Taunt. 3S0; Duncan v. China Mut. Ins. Co. (N. Y. C. A. 1802), 41 N. Y. St. Rep. 368; 29 N. E. Rep. 76; Buck v. Chesapeake Ins. Co., 1 Pet. (U. S.) 151; Lawrence v. Van Home, 1 Caines (N. Y.), 270: The Sidney, 23 Fed. Rep. 88; Alliance M. Ins. Co. v. State Ins. Co., 8 La. 1; Hancox v. Fishing Ins. Co., 3 Sum. (C. C.) 142; Lee v. Massachusetts F. & M. Ins. Co., 6 Mass. 208; Bell v. Jansen, 1 Maulo 759 AGENT OF INSURED. § 619 under this clause, it is said. "They must be persons who at some time or other during the risk have an insurable interest in the property, the original parties and their assignees. Beyond this it must be shown that the person giving the order to effect the insurance either intended it for their benefit, or at all events did not intend it exclusively for the benefit of others having a conflicting or inconsistent interest, but that it was meant to ap- ply generally, so as to cover the interest of those who should ultimately appear concerned; if this be shown, a subsequent adoption of the policy by the parties so intended to be insured, or so appearing ultimately to be concerned in interest will be held equivalent to a previous order, and entitle them, under the words of the general clause, to avail themselves of the bene- fit of the insurance. The intention at the time of the party who directs the insurance to be effected is the great point to be ascertained in determining whose interests the policy can be ap- plied to protect Where the intention of the party di- recting the insurance is to embrace the interests of any person whatever who may ultimately appear to be concerned, there can be no doubt that any person coming within that category who subsequently chooses to adopt the policy may obtain the benefit of it The true rule, then, would appear to be, that any party to whom an interest in the property insured 'doth, may, or shall appertain' at any time during the pendency of the risk, may under the general words, by subsequent adoption, take advantage of the policy to protect such interest, unless it ap- pears from extrinsic evidence that the person directing the pol- icy to be effected intended at the time so to confine the insur- ance as not to embrace such interest." 66 So again, Mr. Ar- nould says: "As no act of one man can be ratified by another unless that other is cognizant of what has previously been & S. 202. The clause used in the United States, "himself or whom it may concern," is equivalent to the English clause, "as well in his own name as in the name and names of all persons whatsoever to whom the same may in any way appertain": 1 Phillips on Insurance, 3d ed., 212, sec. 382; 2 Duer on Insurance, ed. 1845, p. 29, sec. 21. But see Henshaw v. Mutual S. Ins. Co., 2 Blatchf. (C. C.) 99. Examine Mos'ser v. Donaldson (Pa. 18ST), 10 Atl. Rep. 76G; sees, 901, 903, herein. 86 1 Arnould on Marine Insurance, Madachlan's ed. 18S7, 110-12. § GlO AGENT OF INSURED. 760 done, so the party for whom the insurance is intended to be made cannot by any after authority to insure be considered to adopt the previous insurance, unless at the time of giving such authority he knew as a fact that the prior insurance had been made. This, indeed, is so plain on principle that it requires no authority to enforce it." 67 Mr. Phillips says: "A policy made in the name of a particular person 'for whom it may concern,' or with any other equivalent clause, will be applied to the in- terest of the party or parties, and only the party or parties for whom it is intended by the person who effects it, if such party has authorized its being made beforehand or subsequently adopts it." 68 Mr. Duer says: "The terms used, however broad and comprehensive, must also be restricted to those for whom the insurance was in fact intended, and by whom it was previ- ously directed or authorized, or subsequently in due season adopted. All other parties, though they may equally fall with- in the description in the policy, are not parties, but strangers to the contract." 69 If the words "for whom it may concern" are not used, but words of similar import, it is held that none but the persons named can claim the indemnity, 70 and where such a policy is effected without any warranty or representation of national character, it will cover the interest of any person, whether an American or foreigner, who has authorized the in- surance, 71 and parol evidence is admissible to show the parties intended under such clause. 72 And such a policy, where there is no warranty of neutrality, includes the property of belliger- ents, as well as that of Americans. 73 So where an agent de- scribes himself in the policy as the agent of a particular person, the principal so named is protected. 74 And where the policy e7 1 Arnould on Marine Insurance, Perkins' ed. 1850, 1G9, *16S. 88 1 Phillips on Insurance, 3d ed., 213, et seq., sees, 383-85. 09 2 Duer on Marine Insurance, ed. 1845, p. 30, et seq., sec. 22, et seq. See, also, 2 May on Insurance, 3d ed., sec. 452 e. 70 Nowson v. Douglass, 7 Har. & J. (Md.) 417. 71 Seamans v. Loring, 1 Mass. 127. 72 Bell v. Western M. Ins. Co., 5 Rob. (La.) 423, 442. 73 Hodgson v. Marine Ins. Co., 5 Cranch (U. S.), 100. 74 Russell v. N. E. M. Ins. Co., 4 Mass. 82. See Holmes v. "United States Ins. Co., 2 Johns. Cas. (N. Y.) 329. See Dumas v. Jones, 4 Mass. G-17; Newson y. Douglass, 7 Har. & J. (Md.) 417. 761 AGENT OF INSURED. § G19 is "for account of ■whom it may concern," payable to A or order, an action may be brought by A in his own name for the benefit of other owners, 10 and the ■whole amount being- collected, he holds as trustee for the others, so far as their in- terests are concerned. 76 And generally, where an agent or broker insures in his own name on account of a third person named in the policy, or if the assured be described by general ■words therein, suit may be brought, either in the principal's name or that of the agent or broker effecting the policy." And in such case action may be maintained by the real owners of the property, although the by-laws of the company provide that none but members of the company shall be insured there- in, 78 for not only the interest of the person named is covered, but also that of any other person comtemplated wdio has an interest, and who has authorized the insurance; * 9 and there is notice to the insurers where a policy is effected in the name of one "for whom it may concern" that other interests were in- tended to be covered. 80 An agent insuring for the principal and suing in his own name may recover to the extent of his in- terest where the principal has not ratified the contract. 81 Where a policy against fire insured two individuals by name, and the words "or whom it may concern" were added, and a clause was inserted that the loss, if any occurred, should be paid to the individuals named, it was held that an action might 75 Walsh v. Washington etc. Ins. Co., 3 Rob. (N. Y.) 202 (under code provision). 76 p ro ,toetion Ins. Co. v. Wilson, 8 Ohio St. 553. 77 Davis v. Boardrnan, 12 Mass. 80; Dugan v. United States, 3 Wheat. (U. S.) 172; ealing. — A general agent or consignee may be authorized by the usage or the general custom of merchants, or by a course of business between the parties, or by the usage of a particular trade to which his agency and the course of business relates, to effect an insurance. 95 As to the duty of a merchant from whom goods are ordered to insure them, if the dealings between the parties for a long time have been that the party ordering the goods has never directed them insured, and the cus- tom of the place where they are ordered has never been to in- sure goods under such circumstances, the course of dealings be- tween the parties control their rights, and evidence of a custom to insure at other places is inadmissible in such case. 96 If a merchant is accustomed to effect insurances for his corre- spondent, and neglects to effect an order to insure, he makes himself the insurer, and may recover the premium. 97 And in general, an authority to act for another in a foreign country implies the power to transact the business in accordance with the general customs and laws of such place. 98 § 622. Del Credere Agents. — An agent is not bound for the solvency of the insurers unless there is an agreement therefor, or unless he has been guilty of fraud or special neg- ligence. But if an agent guarantees the solvency of the un- derwriters, he may become liable for the loss. 99 This last a del credere agent does. His relation, generally, to his princi- pal is that of debtor or creditor, and he must see that the latter is paid. 100 He receives higher commissions as an addi- 05 2 Duer on Insurance, ed. 1845, 127; De Forest v. Fulton Ins. Oo., 1 Hall (N. Y.), S4. See criticism of this case in 2 Duer on Insurance, ed. 1845, 160, note 2; French v. Reed, 6 Binn. (Pa.) 30S; Brisbain v. Boyd. 4 Paige Ch. (N. Y.) 17, per Walworth, €.; Story on Agency, sec. 190. 08 Walsh v. Frank, 10 Ark. 270. 07 Morris v. Cummerl, 2 Wash. (C, C.) 203. 88 Owings v. Hull, 9 Pet. (U. S.) <>f»7. 2, side p. 24G. "It is not to be inferred .... that cases do not occur in which a consignee may rightfully insure in his own name, even before the arrival of the goods consigned to him. His right to do so seems unquestionable when he is in the actual possession as a trus- tee, and the nature or terms of his trust confer the authority or im- pose the duty to insure": 2 Duer on Insurance, ed. 1846, 173. nf Wolff v. Horncastle, 1 Bos. & P. 316. i«n De Forest v. Fulton F. Ins. Co., 1 Hall (N. Y.), 84, 108. See criticism of this case, in 2 Duer on Insurance, ed. 1S46, 109, 160, note 2, where it is said that "the insurable interest of a factor or consignee is limited to his advances constituting a lien on the prop- erty." citing Carruthers v. Shedden, 6 Taunt. 80; Gordon v. London Assur. €o., 1 Burr. 489; 1 W. Black. 103; Russell v. Union Ins. Co., 4 Da II. (U. S.) 421; Sea mans v. Loring, 1 Mason (C. C), 128. And Phillips (2 Phillips on Insurance, 3d ed., sec. 1859, p. 536). referring to the De Forest decision, says: "This position is not sustained by the jurisprudence on the subject." But see Story on Agency, sec. 111. n. 4. 769 AGENT OF INSURED. § G25 bill of lading, with a general balance due; where he has power to sell, and has a lien or claim on the goods for advances; where he is a commission agent with possession for the purpose of sale. So the right to insure for the consignor or owner may arise by implication from the fact that he has also an insurable in- terest. 116 And although a person has no pecuniary interest in property, but merely has it in his possession or custody, never- theless he has the right to insure it in his own name for the benefit of the owners, and this is true even though no responsi- bility rests upon him to keep it safely, and the owner may subsequently ratify such act. 117 So insurance by a consignee "on merchandise, his own, or held by him in trust or on com- mission," covers the interest of the consignee and consignor. 118 And where consignees effected insurance, and in an action thereon averred an interest in the consignor, and in the second 116 JEtna Ins. Co. v. Jackson, 16 B. Mon. (Ky y 242; Shaw v. .Etna Ins. Co.. 49 Mo. 578; Aldrick v. Equitable Safety Ins. Co., * Wood. & M. (C. C.) 272; Waring v. Indemnity Ins. Co., 45 N. Y. 600; Randolph v. Ware, 3 Craneh (U. S.), 503; Caldwell v. Bell, 1 Durn. & E. (Term Rep.) 205; De Forest v. Fulton Ins. Co., 1 Hall (N. Y.), 84; Lagrave v. Union etc. Ins. Co., L. R. 1 C. P. D. 305; Home Ins. Co. v. Baltimore Warehouse Co., 3 Otto (U. S.). 527; Lee v. Adsit, 37 N. Y. 86; Parts v. Gen. Int. Ins. Co., 5 Pick. (Mass.) 34; Godin v. London Assur. Corp., 1 Burr. 4S9; 1 W. Black. 103; Law v. God- dard. 12 Mass. 112; Seter v. Motts, 13 Pa. St. 218; Williams v. Crescent etc. Ins. Co., 15 La. Ann. 651; Stillwell v. Staples, 19 N. Y. 401: Russell v. Union Ins. Co., 1 Wash. (C. C.) 409; Robertson v. Ham- ilton, 14 East, 52l; Shaw v. JEtna Ins. Co., 49 Mo. 578; Morris v. Summed. 2 Wash. C. C. (U. S.) 203; M'Andrew v. Bell, 1 Esp. 373; Johnson v. Campbell, 120 Mass. 449; Waters v. Monarch Ins. Co.. 5 El. & B. 870; Buck v. Chesapeake Ins. Co., 1 Pet. (U. S.) 151. Criti- cised in 2 Duer on Insurance, ed. 1846, 173, as not supported by the authorities: Barker v. Marine Ins. Co., 2 Mason (C. C), 369; 1 Ar- nould on Marine Insurance, Perkins' ed., 252, side p. 246, et seq.; 1 Wood on Fire Insurance, 2d ed., 662-65. He may effect an insurance in his own name on account of whom it may concern, loss payable to him, and in case of loss may sue therein: Sturm v. Atlantic Mut. Ins. Co., 63 N. Y. 77. But see London etc. Ry. Co. v. Glynn. 1 El. & E. 652. 117 Herkimer v. Rice, 27 N, Y. 163; Waring v. Indemnity Ins. Co., 45 N. Y. 606; 6 Am. Rep. 146; Dourand v. Thourand, Port. (Ala.) 238; Lee v. Adsit. 37 N. Y. 86. 118 Johnson v. Campbell. 120 Mass. 449; Waring v. Indemnity Ins. Co., 45 N. Y. 606; 6 Am. Rep. 146. Joyce, Vol. I.— 49 § 625 AGENT OF INSURED. 770 count, in themselves for advances, the whole value of the cargo was recovered. 119 But a consignee to insure cannot take the risk himself, and recover the premium from his principal. 120 Where commission merchants invite consignments of goods, under a statement that they will be covered by insurance, such promise is carried out if they obtain the requisite insurance, and it does not imply that they personally will become insurers. 121 So an obligation to insure may be imposed upon a consignee by a general custom or as agent, and his neglect to insure will in such case render him liable; 122 and if he has been accus- tomed to insure goods consigned to him with orders to insure, the owner has a right to rely upon the belief that such course of dealing has been complied with. 123 "When a consignee accepts a consignment with instructions from his principal to insure for his benefit, it becomes his duty to insure. If he neglects to do so, and a loss occurs, he is liable, and he may, in such case, insure to the full value of the goods consigned. If, m such case, the insurance is made in the name of the consignee, the policy inures to the benefit of the principal, and the consignee, as trustee, may recover the in- surance. 124 In such case the consignee need not insure in his name, nor need he place the policy in the consignor's 118 Wolff v. Horncastle, 1 Bos. & P. 316. 120 Keane v. Branden, 12 La. Ann. 20. 121 Johnson v. Campbell, 120 Mass. 449. 122 Kingston v. Wilson, 4 Wash. (C. C.) 310, 315; Brdsban v. Boyd, 4 Paige Ch. (N. Y.) 17, per Walworth, J. See French v. Reed, 6 Binn. (Pa.) 808; De Forest v. Fulton Ins. Co., 1 Hall (N. Y.), 84. 'See criti- cism on this, '_ Duer on Insurance, ed. 1846, 160, note 2. 123 Smith v. Lascelles, 2 Term Rep. 187. 124 Shaw v. iEtna Ins. Co., 49 Mo. 578; 8 Am. Rep. 150, and note. In this ease there was an action on a policy of insurance; the petition alleged that the plaintiffs, being the owners of a quantity •of ice, consigned it to S. and K., to be sold, by them on commission; that plaintiffs ordered the consignees to have the ice insured, which they agreed to do, but instead of insuring it in the names of plain- tiffs, they made the insurance in their own names; that a portion of the ice Avas lost, by a peril provided against, and the consignees assigned the policy to plaintiffs. Defendants demurred, on the ground that the consignees had no insurable interest in the ice, and the demurrer was sustained. This was held to be error. 771 AGENT OF INSURED. & G25 custody. 120 Although usage may impose upon the con- signee a duty to insure, yet if he notifies the shipper that he will not insure without express orders, he is not bound to in- sure, 120 for a general custom for the consignee to insure is for his benefit and security, and may be waived by him. 127 And if directions to insure be given to one to whom it would natu- rally be made in the course of trade, he must obey the direc- tion, or give notice of his dissent, otherwise he will be liable for his neglect to insure, since the owner should be given an op- portunity to apply elsewhere. 128 But if the insurance directed to be effected would have been void, the agent is not responsi- ble for failure to comply with orders. 129 The reason that a correspondent who receives a bill of lading with directions to insure is bound, by accepting the same, to obey the order is, that if he accepts, he must take it according to the terms of the consignment. If he refuses to accept, he should promptly give notice thereof. 130 If he omits to insure to the full value as instructed, he is liable 131 or if he fails to follow instructions and no insurance is effected, he is liable. 132 If a consignee who receives a bill of lading with directions to insure, and transfers the bill and order to another, who effects the insur- ance, and, on arrival of the goods received, sells them and be- comes insolvent, the consignee is liable for the value of the goods, since the confidence reposed in an agent is personal, and his authority cannot be delegated. 133 But the evidence must be conclusive to warrant a recovery against a consignee for m Johnson v. Campbell, 120 Mass. 449. 328 Randolph v. Ware, 3 Cranch (U. S.), 503. "■ Kingston v. Wilson, 4 Wash. (C. C.) 310, 315. 128 Smith v. Lascelles, 2 Term Rep. 187, per Ashurst, J. 129 Alsop v. Coit. 12 Mass. 40. 130 De Tastet v. Counsillat, 2 Wash. (C. C.) 136; Wolff v. Horncastle, 1 Bos. & P. 31 G; Corlett v. Jordan, 3 Camp. 472; Smith v. Lascelles! 2 Term Rep. 187; Elee v. French, 11 N. H. 356; 1 Arnould on Marine Insurance, Terkins' ed., 153, side p. 152; 2 Duer on Insurance, ed. 184G, 131, sec. 19. 131 Elee v. French, 11 N. H. 356. 182 Stour v. Eaton, 50 Me. 219. 138 Corlett v. Gordon, 3 Camp. 472. See opinion per Lord Ellen- borough. §§ 626, 627 AGExNT OF INSURED. 772 neglect of his duty to insure. 134 After an abandonment, the consignee of the goods insured becomes the agent of the in- surer, and his acts, if done in good faith, are at the risk and for the benefit of the insurer. 135 § 626. Bailee may Effect Insurance — Warehouseman. Where a warehouse company have the actual and physical possession of goods, and a railroad company have only taken constructive possession of the property, by acquiring receipts of the bailee, and issuing bills of lading therefor, the ware- house company may effect insurance, as bailee or agent, for the railroad company's protection, or may insure for its own bene- fit. 136 § 627. Authority of Trustees. 137 — One who holds goods in trust may insure them in his own name, and, in case of a loss, may recover the whole amount due under the policy. The excess over his own insurable interest will be held by him, as trustee, for the benefit of those by whom the goods were intrusted to his care. 138 If a party in- sures goods as his property, or as held in trust, and the owner does not ratify the insurance till after loss is paid, the owner cannot recover from such trustee a proportionate part of such sum, it not being sufficient to cover the loss of the in- sured. 139 If a trustee has full power under the deed to select the company, due care is required in the exercise of his discre- tion, but he does not become a guarantor of their solvency, 140 and an executor who procures a life policy to secure a debt to the estate, and thereafter suffers it to lapse, becomes a trustee thereof for the benefit of the estate, and is liable for the iU Tonge v. Kennett, 10 La. Ann. 800. 136 Gardiner v. Smith, 1 Johns. Cas. (N. Y.) 141. 130 California Ins. Co. v. Union 'Compress Co., 133 U. S. 387; 10 Sup. Ct. Rep. 365. See sec. 926, herein. 137 See sec. 932, herein. 138 Insurance Co. v. Chase. 5 Wall. (U. S.) 509; Pratt v. Phoenix Ins. Co., 1 Browne (Pa.). 267; California Ins. Co. v. Union Com- press Co.. 133 U. S. 387; 10 Sup. Ct. Rep. 365. •» Stillwoll v. Staples, 19 N. Y. 401. " u Ceilings v. Scudder, 71 111. 86. 773 AGENT OF INSURED. § 628 amount insured, less the premiums paid by him. 141 So trustees holding the legal title, or having the disposal of ships and goods in accordance with instructions which they may receive from another, may insure the same for the use of the benefici- ary. 142 Thus, a trustee holding the legal title to a vessel may insure her for the use of the beneficiary, 143 and one of several cotrustees may insure for the whole for the benefit of the cestui que trust; nor is it necessary in such case to incorporate the character of the interest in the policy, unless the insurers would have been so influenced thereby as not to have underwritten at all, or except at a higher premium than that charged. 144 So where the property was vested in a testamentary trustee, in trust for the heirs of the former owner, and such trustee, being authorized by the will to do so, insured the property for the benefit of the heirs and representatives of the testator, it was decided that the trustee, although not named in the policy, could enforce it for the beneficiaries under the will. 140 And, in gen- eral, money received by the trustee under the policy is a trust in his hands for the beneficiary, subject to such lien as he may have for premiums paid out of funds of his own. 146 So where the trustees of an asylum, in pursuance of an act of the legisla- ture, conveyed such asylum to the people, and a fire policy was issued in the name of the people, it was held that they had a right to insure in their own name for the benefit of the owners, and to bring an action, as trustees, for a loss under the pol- icy. 147 § 628. Treasurer of Local Lodgre may be Trustee. — Money paid upon assessments to treasurers of local societies by members thereof is held by them 'as trustees of 'the society, lfl Carner v. Moore, 24 L. J. Ch. 687; 3 Drew. 277. 142 Savage v. Howard Ins. Co., 52 N. Y. 502; 1 Marshall on Marine Insurance, ed. 1810, *109; Crauford v. Hunter, 8 Term. Hep. 13; Hughes v. Mercantile Ins. Co., 55 N. Y. 265; 44 How. Pr. (N. Y.) 351. See sec. 514, herein. 143 Young v. Union Ins. Co., 24 Fed. Rep. 279. »" Insurance Co. v. Chase, 5 Wall. (U. S.) 509. 145 Savage v. Howard Ins. Co., 52 N. Y. 502; 11 Am. Rep. 741. ,4e Ex parte Andrews. 1 Madd. 573; Holland v. Smith. 6 Esp. 11. 147 People v. Liverpool etc. Ins. Co., 2 Thonip. & C. (N. Y.) 2GS. §§ 629, 630 AGENT OF INSURED. 774 and may be garnished as its property, where such agents are, by force of the constitution and by-laws of the association, authorized to receipt for all payments so made by members of the local branches, to make a monthly report, and to remit said moneys to the society, and are under bonds therefor. 148 § 629. Authority of Prize Agents to Insure. — By the English decisions, a prize agent who has power to act, in his discretion, on behalf of all interested persons may insure for his principal. Thus, commissioners authorized by statute to take into their care certain ships in certain ports, and dispose thereof according to directions from the privy council, may insure such ships in their own names after seizure at sea. In a certain sense, the prize agent is a trustee, having the disposal of ships and goods; the insurance need not be made by the party in his own right, but as trustee for those persons who should be eventually entitled to it. 149 But in this country there must be an actual grant from the government, to warrant any insurable interest whatever in prizes. 100 § 630. Agent — Insurance by Carrier. 101 — The owner has an interest in an insurance made by a carrier for his benefit upon goods in his possession, where it is not limited to the lat- ter's liability or interest, such an insurance being made for the 148 Jepson v. International Fraternal Alliance, 17 R. I. 471; 23 Atl. Hep. 15. 149 See Cranfosrd v. Hunter, 8 Term. Rep. 13. As to the last state- ment, see opinion of Mr. Justice Ashurst; Lucuna v. Cranford, 2 Bes. & P. (N. R.) 269; 3 Bos. & P. 75; Stirling v. Vaughan, 11 East, 619; Robertson v. Hamilton, 14 East, 522; Routh v. Thompson, 13 East, 274. These eases are exhaustively considered in 1 Arnould on Marine Insurance, Perkins' ed., 268-79, art. 8, sec. 114; 1 Marshall on Insur- ance, ed. 1S10, side p. 108, et seq. See 1 Phillips on Insurance, 3d ed. p. 182, 183, sees. 320-24. iBo Tbe Joseph 1 Gall. (C. C), per Story, J. It was considered in the celebrated case of Crauford v. Hunter, 8 Term. Rep. 13, per Lord Kenyon, that at common law an insurance might have been made without interest, although in that case commissioners were author- ized by statute to take possession, and the plaintiffs were therefore said to be in tho nature of agencies. ul See sees. S98, 925, herein. 775 AGENT OF INSURED. §§ 631, 632 whole value. 152 In a case in the United States circuit court, 153 a railroad company, which had contracted with the plaintiff to carry a cargo of rails to a certain point, and to forward from there by water to Duluth, agreed, through its agent, with de- fendant that the latter should insure, and forward the cargo between said points. The defendant received the cargo, and, having procured certificates for an insurance, the policy to be issued, deposited them with the railroad's agent. It was held that the plaintiff was estopped to object, either to the amount of insurance or to the form of the policies, by the act of said agent in receiving and retaining said certificates, although the defendant did not deal directly with the plaintiff. § 631. Where Husband Acts as Agent of Wife. — Al- though a husband acts as agent for his wife in procuring a pol- icy of life insurance, he is not thereby vested with authority to surrender it without her consent, nor does a ratification of such act arise from the fact that she was informed thereof when done, but did not dissent nor notify the company until a month after the dearth of the insured, where his health was such a9 to necessitate her constant care and attention. 154 So where he surrenders the policy without her consent, and a failure to pay the premiums arises from the company's neglect to send notices when they are due, in consequence of such surrender, a forfeiture is not necessarily incurred thereby. 155 § 632. Insured's Agent — Adjustment of Loss. — An agent may undoubtedly be expressly authorized by the assured to adjust a loss. An agent to insure may be authorized to collect "' Lancaster Mills v. Merchants' Cotton Press etc. Co., 89 Tenn. 115; 14 S. W. Rep. 317. See Savage v. Com. Exch. etc. Ins. Co., 36 N. Y. G55; Herkimer v. Rice, 27 N. Y. 163; Mittenberger v. Beacon, 9 Pa. St. 198, as to the right of a person having the mere custody of property to insure. 153 Scranton Steel Co. v. Ward's etc. Line, 40 Fed. Rep. S86. ,S4 Srillwell v. Mutual L. Ins. Co., 72 N. Y. 385. 155 Whitehead v. New York L. Ins. Co.. 102 N. Y. 143; 55 Am. Rep. 787; reversing 33 Hun (N. Y.), 425, under N. Y. Laws 1840, c. 80, mak- ing the husband the agent of the wife and children where he insures his life for their benefit. See sec. 633, as to proofs of loss executed by husband for wife. § 633 AGENT OF INSURED. 776 a loss where lie retains the policy. If such agent corresponds with his principal in relation to the matter of collecting the money, and does collect it, the presumption exists that he does retain the policy, and his principal will, in such case, be liable to another for whom he himself acted for the money so col- lected. 156 In England, an authority to effect an insurance im- plies an authority to adjust a loss or to agree therefor. 157 But in that country, however, the policy is, in the usual course of business, generally left in the hands of the agent or broker to have it adjusted, and in such case he is presumed to obtain a speedy adjustment and settlement from the underwriter, and to use all reasonable diligence to that end. 158 To the extent then that an agent or broker to effect an insurance may be authorized by usage or by retaining possession of the policy to adjust and settle a loss, the English cases will be an authority supporting the affirmative of such a proposition. 159 But an authority to adjust a particular loss does not warrant an adjustment of a different one. 160 § 633. Authority of Insured's Agent as to Proofs of Loss. — In fire policies an agent may, in certain cases, make proofs of loss. 160a So where a person effects a policy for his principal, receives the same, pays the premium, and is in every manner recognized by the company as such agent, it cannot question his authority, in case of loss by fire, to make pre- liminary proofs. 161 And a third person may sign proofs of in6 r>e Ro v. Cordes, 4 Gal. 117; Erick v. Johnson, 6 Mass. 193. See sec. 611. 167 Richardson v. Anderson, 1 Camp. 43, n. 65, n. 158 Bonsfield v. Cressfield. 2 Camp. 544. As to the mode of adjust- ment of a policy and settling a loss in England, see 1 Arnould on Ma- rine Insurance. Perkins' ed., 110, et seq., 126, art. 3, et seq. 159 See Rindle v. Moore, 3 Johns. Oas. (N. Y.) 36. 100 Hartford F. Ins. Co. v. Smith, 3 Colo. 422. >6 °a O'Connor v. Hartford F. Ins. Co., 31 Wis. 160; Farmers' Mut. Ins. Co. v. Graybill, 74 Pa. St. 17; Frost v. Saratoga Ins. Co., 5 Denio (N. Y.), 54; Pratt v. New York Cent. Ins. Co., 55 N. Y. 505; McGraw v. Germania Ins. Co.. -A Miss. 145; Ayres v. Hartford Ins. Co., 17 Iowa, 176; Grahaim v. Phoenix Ins. Co., 17 Hun (N. Y.), 156; German F. Ins. Co. v. Grunert, 112 111. 68. 161 Swan v. Liverpool etc. Ins. Co., 52 Miss. 704. 77 AGENT OF INSURED. § 634 loss at the request of the assured, and such signing is suffi- cient. lb2 And if the agent executes the premium note, corre- sponds with the company, and conducts the entire business for the assured, who does not appear in the transactions or know anything of the policies, he may swear to the certificate of loss, although the policy requires that it shall be sworn to by the as- sured. 163 Upon this point, the court said: "The policy was obtained by the agent, the application was ma,de and signed by him, and the premium note was executed by him; he had other policies in the same company, obtained also as agent. In his whole correspondence with the company at their home office, and in his interviews with their agents, he acted as agent for the insured, and it does not appear that the latter was known to the officers of the company, or knew anything about the policies, or whether he had any. Under these circumstances, if the proof is not to be made by the agent, it cannot be made at all, and the position assumed by counsel places the officers of the company in the attitude of issuing policies and receiving premiums, knowing from the nature of the case that no legal proof could be made of the loss, if it should occur. We will not place them in that position, 'but, on the other hand, hold that proof and cer- tificate made by the man with whom they had all their deal- ings, who was in sole possession of the property insured, and who alone knew the facts necessary to be embodied in the paper — who in fact was, as it Avere, insured as agent — is a compliance with this requirement of the policy." 164 A husband may exe- cute proof of loss where he conducts the whole transaction re- lating to the insurance as agent for bis wife, whose property was insured, and she has no personal knowledge concerning the property. 165 § 634. Authority of Agent to Make Ahandonment — Master. — If the assured's agent has the authority to effect the insurance, or if he has effected it and has possession of the 165 Stimipson v. Monmouth Mut. F. Ins. Co., 47 Me. 349. 168 Sims v. State etc. Ins. Co.. 47 Mo. 54; 4 Am. Rep. 311. 1,4 Sims v. State Ins. Co.. 47 Mo. 54: 4 Am. Rep. 312, per Bliss. J. m Finderson v. Metropole Ins. Co., 57 Vt. 520. § 634 AGKNT OF INSURED. 778 policy, or if the loss is payable to assured under a policy "on account of whom it may concern/' or if one is a part owner, it is held that he has authority to abandon and make demand for a total loss, even without a formal power of attorney; and if he has a formal power of attorney he may abandon. 106 So if the agent is empowered to exercise discretion as to aban- donment, he may abandon or not if he acts in good faith. 167 It is said by Mr. Phillips that the agent's authority to abandon should not rest upon doubtful evidence, since a transfer of title is involved, and the underwriters should be bound if they accept, or if the insured insists upon it. 168 Mr. Duer, how- ever, is of opinion that where a claim of total loss, dependent upon abandonment, is relied upon, the agent whose authority still continues, as where the policy is retained for that pur- pose with the consent of the principal, must abandon on behalf of his principal and must take care that it is prop- erly expressed and delivered in due season. 169 As we have seen in a preceding section, the possession of the policy cre- ates an agency under certain circumstances. 170 So also the cases noted under the last section, 171 as to the right of an agent to make proofs of loss, sustain some analogy, although they are not perhaps direct authority. The true rule would seem to be this, that special reference must be had to the character of the agency, and the dealings, practice, and relative situation of the parties and the terms of the contract, and if from all the circumstances it may reasonably be assumed that the agent has 1,6 Chesapeake Ins. Co. v. Stark, 6 Craneh (U. S.), 268, per Mar- shall. C. J.; Cassedy v. Louisiana State Ins. Co., 18 Mart. (La.) 421; Reynolds v. Ocean Ins. Co., 22 Pick. (Mass.) 191; Parker v. Towers, 2 Browne App. 80; Hunt v. Royal Exch. Ins. Co., 5 Maule & S. 47; Lattonius v. Farmers' M. F. Ins. Co., 3 Housit. (Del.) 404; Briggs v. Call, 5 Met. 504. See Emerigon on Insurance, Meredith's ed. 1850, 112, c. v, sec. 4, where it is said that an agent insuring on account of others may abandon. Examine Hurtin v. Phoenix Ins. Co., 1 Wash. (C. C.) 400. As to authority of mortgagor to abandon, see sec. 2902, herein, "Abandonment by ... . mortgagor," etc. 167 Comber v. Anderson, 2 Camp. 545. ies 2 Phillips on Insurance, 3d ed., p. 544, sec. 1881. 189 2 Duer on Marine Insurance, ed. 184G, 245, sec. 42. 170 Sec. Gil, herein. 171 Sec. 033, herein. 779 AGENT OF INSURED. §§ 635, 60S authority to abandon, it should be held to exist. But the in- surer should not, especially where assured is at a distance, be permitted to reject the claimed authority without such reason- able notice as will enable the required evidence of authority to be produced in time. 172 The right to abandon cannot be de- stroyed on the ground that the master acted as agent for the assured, while it was doubtful whether or not he would aban- don. 173 And it is held that if the protest and offer to abandon, made by the master's direction, had been communicated to the insurers directly by the master without authority shown on his part to abandon, it would have been invalid. 174 § 635. Broker not Agent of Insurer to Receive Notice of Transfer of Policy. — If the evidence shows affirma- tively that a broker is not the agent of an insurance company, and does not assume to act as such, he will not be held an agent of the company to receive notice and accord assent to a transfer or assignment of a policy. 175 § 636. Agent or Broker Procuring Insurance Can- not Cancel. — Although there are decisions otherwise, yet the authority of an agent or broker, specially employed to pro- cure insurance for his principal, terminates with the procure- ment of the policy. It cannot, in reason, be held to continue after the purpose for which the agency was created has been accomplished, and the policy delivered to the principal. An agent to make a contract has no power to discharge it, implied from the original authority alone. If he possesses that power, it must arise from some actual or apparent authority super- added to that arising from the mere fact of a special employ- ment to procure a policy. These principles are well settled. 176 171 See as to the last of these points, 2 Phillips on Insurance, 3d ed\, p. 544, see. 1881. 173 Dickey v. American Ins. Co., 3 Wend. (N. Y.) 608; 20 Am. Dec. 76?. 174 Tatapsco Ins. Co. v. Sonthgate. 5 Pet. (U. S.) 604. 175 Richmond v. Phoenix Assur. Co., 88 Me. 105. See Rev. Stat. Me., c. 40, sees. 19, 90. 176 Mutual Assur. Soe. v. Scottish etc. Ins. Co., 84 Va. 116; 4 S. E. Rep. 178; Hermann v. Insurance Co., 100 N. Y. 411, per Andrew, J.; § 637 AGENT OF INSURED. 780 The fact that a policy is assigned as security for a debt does not authorize its cancellation and substitution of another policy, even though done at the request of the agent of the assured. The latter's consent is necessary in such case, unless he has notice or knowledge thereof. 177 There are cases, however, in which such agent may be authorized to rescind, which will be noted hereafter. § 637. Notice of Cancellation to Agent or Broker Pro- curing - Insurance Insufficient. — The insured does not, by specially employing an agent or broker to effect a policy, make him his agent to receive notice of cancellation and return of the premium, and a notice of cancellation given to such agent or broker is ineffectual to accomplish that result. This rule is based upon the same reasons as are given under the last section. 178 And sending the unearned premium to the agent or broker who effected the policy is not sufficient to effect a cancellation. 170 Nor is the policy canceled by returning to such broker part of the unearned premium in cash, and cred- iting him with a premium equal to the balance thereof on a Franklin Ins. Co. v. Cars, 21 Fed. Rep. 229; Latoix v. Germania Ins. Co., 27 La. Ann. 113; Rothschild v. American Cent. Ins. Co., 5 Mo. App. 596; 74 Mo. 41; 41 Am. Rep. 303; Insurance Co. v. Forcheimer (Ala.), 5 S. Rep. 870; Quong Tue Sing v. Anglo-Nevada Assur. Corp., 86 Cal. 566; 25 Pac. Rep. 50; 10 L. R. Anno*. 144; Broadwater v. Lion F. Ins. Co., 34 Minn. 465; 26 N. W. Rep. 455; Grace v. American Cent. Ins. Co., 109 U. S. 278; 3 Sup. Ct. Rep. 207; Von Wein v. Scot- tish etc. Ins. Co., 52 N. Y. Sup. Ct. 490; Insurance Co., v. Raden, 87 Ala. 311; Adams v. Manufacturers' etc. F. Ins. Co., 17 Fed. Rep. 630; Insurance Co. v. Hart well, 100 Ind. 566; Stillwell v. Mutual L. Ins. « French v. Backhouse, 5 Burr. 2227; Finney v. Fairhaven Ins. Co., 5 Met. (Mass.) 192; Robinson v. Gleadou, 2 Bing. N. C. 156. 217 Finney v. Fairhaven Ins. Co., 5 Met. (Mass.) 192. 2,8 Blanchard v. Waite, 38 Me. 51; 48 Am. Dec. 474. 219 Monitor Ins. Co. v. Buffum, 115 Mass. 343. "° Emerigon on Insurance, Meredith's ed. 1850, c. v, sec. 6, p. 117. 221 Amory v. Hamilton, 17 Mass. 103, per Parker, C. J. § 643 AGENT OF INSURED. 788 been made, ratifies the prior act. 222 So the other trustees may ratify an insurance effected by one of their number of the trust estate. 223 In another case, the company's agent, through whom the assured procured the policies, canceled them, and substituted others therefor in other companies. The assured was a foreigner, and ignorant of her rights. ' The acts in ques- tion were done without her knowledge or consent. After loss she brought suit on the substituted policies. It appeared, how- ever, that this was induced by representations by said agent to her attorneys that notice of cancellation of the first policies had been properly served on her agent. It was held that there was no ratification of the agent's acts in assuming to cancel the orig- inal policies. 224 § 643. Concealment by Assured — General Rule. — As a premise to the principles underlying the propositions under the following sections, we will state here the general rule relating to concealment by the assured. It is well understood that the contract of insurance is one of the utmost good faith between the parties and a duty rests upon both tbe assured and assurer to suppress, at least in marine contracts, no material fact in re- lation to the subject matter of the contract which may increase the liability to loss. It is incumbent, therefore, upon a party effecting a marine policy, and it seems in England in all risks, to communicate to the underwriter every material fact or cir- cumstance which be knows, or is bound in the ordinary course of business to know, and which may influence the underwriter in determining whether he will accept the proposal at all, or whether he will underwrite at a higher premium. This is the basis of the contract between them, and any concealment of a fact which ought to have been communicated by the assured at the time of effecting the policy, or any misrepresentation by the assured, will wholly vitiate the contract. This is also true where the fact suppressed is material at the time, even though » Bell v. .Tanson, 1 Mairie & S. 202. 2:3 Insurance Co. v. Chase, 5 Wall. (Vj. S.) 509. - 4 Niagara F. Ins. Co. v. Racier (Ala.), 5 S. Rep. S76. See Qnong- Tue Sing v. Anglo-Nevada Assur. Corp., 86 Cal. 566; 25 Pac. Rep. 5S; 10 L. R. Anuot. 144, noted under see. 496, herein. 789 AGENT OF INSURED. § 643 it afterward proves to be false, or proves not to have in reality affected the risk, or even though the loss arose from another peril. So a mistake or omission material to the risk, whether it be willful or accidental, or from mistake, negligence, or vol- untary ignorance, avoids the policy, although in this country the rule is not so strict in other than marine risks. 225 And the same rule obtains even though the assured did not suppose the as p ee chapters 42. 43. herein, on Concealment; Proudfoot v. Monte- fiere, L. R. 2 Q. B. 511, per Cockburn, C. J.: Stoner v. Union Ins. Co.. 3 McCord (S. C), S87; Washington Mills Mfg. Co. v. Weymouth Ins. Co., 135 Mass. 503; Carter v. Boehm, 3 Burr. 1903; 1 W. Black. 503; Hoyt v. Gilman, S Mass. 33G; Seamen v. Fonnerrau. 2 Strange. 1183; Clark v. Union M. Ins. Co., 40 N. H. 333; 77 Am. Dee. 721; Elton v. La.rklns, 5 Car. & P. 392; Richards v. Murdoek, 10 Barn. & C. 527: Howe Machine Co. v. Farrington. 82 N. Y. 126; Moens v. Hayworth, 10 Mees. & W. 155; Currey v. Commonwealth Ius. Co., 10 Pick. (Mass.) 535; Neptune Ins. Co. v. Robinson. 11 Gill & J. (Md.) 256; Haywood v. Rodgers, 4 East, 590; Mallory v. Travelers' Ins. Co., 47 N. Y. 52; Ely v. Hallett, 2 Gaines (N. Y.), 57; Gladstone v. King, 1 Maule & S. 35; North British Ins. Co. v. Lloyd. 10 Ex. 523; Kohne v. Insurance Co. of North America, 1 Wash (C. C.) 161; Hartford Protection Ins. Co. v. Harmer, 2 Ohio St. 452; 59 Am. Dec. 684; Biay v. Union Ins. Co., 1 Wash. (C. C.) 506; Burritt v. Saratoga F. Ins. Co.. 5 Hill (N. S'.), 188. per Bronsou, J.; Lynch v. Hamilton, 3 Taunt. 37; 14 East. 494; Loudon Assur. Co. v. Mansel, L. R. 11 Oh. D. 363: Shirley v. Wilkinson, Doug. 306; Moses v. Delaware Ins. Co., 1 Wash. (C. C.) 385; Stocker v. Merrimack Ins. Co., 6 Mass. 220. In this case the court said: "For losses incurred by a superior force, not to be prevented by human foresight, the assured may justly claim an indemnity; but not for losses incurred in his own wrong by the failure of a contrivance, or, as it would be styled in the ju- risdiction of a belligerent nation, a fraud of which the agent of the assured took the risk; and for his conduct the assured is respon- sible: Elton v. Larking, 5 Car. & P., per Lyndall, C. J.; Blackburn v. Haslan, L. R. 21 Q. B. D. 144; Denniston v. Thomaston Mut. Ins. Co., 20 Me. 125. "A person about to effect insurance must reveal all the facts which it imports the insurers to know, before signing the policy. Pothier says that 'the good faith that should reign in this contract, as in all others, binds each of the parties to dissimu- late nothing from the other of what he knows in connection with the subject matter of the contract, for such dissimulation is a fraud.' .... But honorable merchants .... when effecting insurance for themselves they omit no circumstance of the risks to which their insurers are about to expose themselves": Emerigon on Insurance, Meredith's ed. 1S50, c. i, sec. 5, p. 18; c. xv, sec. 3, pp. 632, 634. "It is a condition precedent to every contract of marine insurance that the insured shall make a full disclosure of all facts materially af- § 644 AGENT OF INSURED. 790 fact to be material. 226 The doctrine in this country relating to concealment is not so strict, however, in life and fire risks as in marine insurance, in case the insurer makes no express in- quiries. 227 This question will, however, be more fully con- sidered hereafter. The underwriter has, in addition, the right to assume that the assurer will take necessary measures, by the employment of competent and honest agents, to obtain all such information in relation to the subject matter as may, by due and reasonable diligence, be obtained through such chan- nels of intelligence as are ordinarily in use in the commercial world. 228 But it is not incumbent, in the absence of proof upon the owner, to use all accessible means to ascertain the condition of the property up to the time of procuring a policy, so that the fact that he had not called at the postofHce for sev- eral days did not render the policy invalid, although, had he done so, he would have received a letter written him by the master, informing him of the loss; it not being proved that he had any cause to expect information, or that any duty rested upon him to call at the postoffice on said days. 229 § 644. Concealment by Principal from Agent to Effect Insurance. — In marine risks the insurance is void fecting the risk, which are within his personal knowledge at the time tbe contract is made": Blackburn v. Vigors, L. R. 12 App. Cas. 531, per Lord Watson. ■ m Vose v. Eagle Ins. Co.. 6 Cnsh. (Mass.) 42; Curry v. Common- wealth Ins. Co., 10 Pick. (Mass.) 535; American Ins. Co. v. M ah one, 56 Miss. 192; Bunday v. Union Ins. Co., 2 Wash. (C. C.) 243; Burritt v. Saratoga Ins. Co., 5 Hill (N. Y.), 188; Von Lindeau v. Desborough 3 Car. & P. 353. 227 See Browning v. Home Ins. Co., 71 N. Y. 508; Hartford Protec- tion Ins. Co. v. Hammer, 2 Ohio St. 452; 59 Am. Dec. 684; Clark v. Manufacturers' Ins. Co., 8 How. (U. S.) 235; Wytheville Ins. Co. v. Stultz, 87 Va. 629; Washington Mills Mfg. Co. v. Weymouth Ins. Co., 135 Maps. 503; Holmes v. Charlestcwn etc. Ins. Co., 10 Met. (Mass.) 211; Clark v. Union Mut. Ins. Co., 40 N. H. 333; 77 Am. Dec. 721. 228 Proudfoot v. Montenere, L. R. 2 Q. B. 511. per Cockburn, C. J. See Ruggles v. General Int. Ins. Co., 12 Wheat. (U. S.) 383; 4 Ma- son (U. S.) 74; Blackburn v. Vigors, L. R. 12 App. Cas. 531, per Lord Watson. Ew Neptune Ins. Co. v. Robinson. 11 Gill & J. (Md.) 256. 791 AGENT OF INSURED. § 644 if the principal withholds from his agent employed to effect a policy, information which he possesses, or ought to possess, and which the underwriter ought to know. This is so although the agent acts in good faith, and it equally applies whether such information is known by the principal at the time the order is given or subsequently obtained; provided he acquires it in time to have revoked the order or to have regulated the terms of the contract. This rule is based upon the principles stated in the preceding section, and also upon the fact that, in relation to the underwriter, the agent effecting an insurance represents and stands in place of the principal, and it is assumed that the lat- ter will communicate to the underwriter, through the agent, all the facts necessary to be disclosed, and that he will exercise due and reasonable diligence to convey to his agent all material information acquired subsequently to giving the order, where it is probable that it will reach him before the completion of the contract. 230 Thus, when the plaintiff knows that the vessel con- taining the insured goods had sailed in bad weather, three days before another vessel which had arrived, and that fears are en- tertained as to her safety, the policy is avoided where such fact is not communicated to an agent at another place ordered to ef- fect a policy. 231 But where a letter lay on the table of the principal, conveying intelligence of the loss at the same time the broker at another place effected the insurance, the policy was held not avoided for want of diligence in communicating such fact. 232 s» Hoyt v. Gilman, 8 Mass. 336; Fitzberbert v. Mather, 1 Term Rep. 12; McLanahan v. Universal Ins. Co., 1 Pet. (U. S.) 170, per Story, J.: Watson v. Delafield, 2 Gaines (N. Y.), 224; 1 Jobns. (N. Y.) 152; 2 Johns. (N. Y.) 526; 1 Arnould on Marine Insurance, Perkins' eel., 541, side p. 437; Green v. Merchants' Ins. Co., 10 Pick. (Mass.) 402; Johnson v. Phoenix Ins. Go., 1 Wash. (C. G.) 378; Andrews v. Marine Ins. Co., 9 Johns. (N. Y.) 32; 2 Duer on Insurance, ed. 1845. 410, et seq. Emerigon says the insurance is null "if the principal was informed of the loss when he gave orders to effect insurance, although the agent may have acted in good faith So, also, if the principal, informed in time to revoke the order, has omitted to revoke it": Emerigon on Insurance, Meredith's ed. 1850, c. xv, sec. 8, n. 646. 231 Vale v. Phoenix Ins. Go., 1 Wash. (C. C.) 283. m Wake v. Atty, 4 Taunt. 493. §§ 645, 646 AGENT OF INSURED. 792 § 64:5. Concealment by Principal from General Agent. There seems to be some doubt upon the question whether the rule stated in the last section is applicable to the case of a gen- eral agent who, acting in good faith, effects insurance for hia principal, without a special order and unknown to him. Mar- shall, basing his opinion upon A'alin and Pothier, says the pol- icy, under such circumstances, is valid where the general agent was ignorant of the loss. 233 Duer, however, says it is difficult to believe that any distinction exists, in this respect, between the procurement of a policy by a general agent or by an agent specially authorized, since the failure of the principal to exer- cise reasonable diligence to communicate knowledge material to the risk, in time to prevent the completion of the policy or to regulate its terms, is fatal in either case ; that it is not by ref- erence to the nature of the agent's authority that the validity of the insurance is to be determined; that the nature of the agent's authority cannot affect the duty of the principal to com- municate material facts known to him : and that if the insurers know the authority of the agent to be general, they have a right to believe that the principal has disclosed all necessary advice and information material to the risk. And this author is also of the opinion that the ratification by the principal of an insurance made by a voluntary agent entitles the underwriter to the same defense as to concealment as if the policy had been effected under a prior authority. 234 § 646. Concealment by Agent to Effect Insurance. — It is a general rule that where the employment of the agent is such that, in respect to the particular matter in question he rep- resents the principal, the agent's knowledge is that of the prin- cipal. So the latter is as responsible for any knowledge of a material fact acquired by his agent employed to obtain the in- surance, as if he had acquired it himself, and the misrepre- '-' 3 1 Marshall on Insurance, ed. 1810, 466. as* .; French v. Reed, f> Binn. (Pa.) SOS. 73 2 Duer on Marine Insurance, ed. 1S4G, 122. sec. 15. See sec. GG8 here in. 77 2 Phillips on Insurance, 3d ed., 548, sec. 1887. 821 AGENTS DUTIES AND LIABILITIES. § 6G9 terms, and circumstances arise, of which the principal has knowledge, which would necessitate a much higher rate pre- mium, as in case of war, the principal has no right to expect that the insurance will be effected unless the necessary funds are remitted. 78 An agent obligated to insure must effect in- surance within a reasonable time, 79 and must make a reasonable effort to execute the order, 80 and a direction by a principal to his agent to effect a policyis not satisfied by a parol contract for insurance. 81 In such case he is liable for the loss, and if the contract be valid, he may sue thereon in the principal's name, and have it assigned to him. 82 "Where the order is general, if an agent acts in the usual manner, and does what is usual at the usual place to effect the insurance, that is sufficient. 83 But it is incumbent on a broker to effect insurance with under- writers of reputed responsibility and good credit. 84 If an agent pretend that he has effected a policy and none has been effected, trover will lie against him for it, and, upon proof of loss, recov- ery may be had to the same amount which assured would have been entitled to recover against the underwriters had a policy been effected. 85 Thus, if an agent takes his principal's money, expressly agreeing to obtain insurance, and unjustifiably fails to secure the same, or make an effort in that direction, he assumes the risk, and, in case of loss, becomes liable to pay as much of the same as would have been covered by the contract of in- surance for which the principal has paid, had insurance been effected as directed. 86 If an agent, acting under general orders, undertakes to effect a particular insurance, he is obligated to 78 2 Duer on Marine Insurance, ed. 1846, 122, et seq., sees. 15-17. These cases, as will be observed, turn upon the question of funds and the obligation of the agent to make advances. la Turpin v. Bilton, 5 Man. & G. 455. M Smith v. Laseelles, 2 Term Rep. 1S7. 81 Manny v. Dunlap, 1 Woohv. (U. S.) 372. 82 Manny v. Dunlap, 1 Woolw. (U. S.) 372. 83 Smith v. Cologan, 2 Term Rep. 118, note. 84 2 rhillips on Insurance, 3d eck, 553, see. 1895. 85 1 Marshall on Insurance, ed. 1810, *300, *303, reporting Harding v. Carter. M Lindsay v. Pettigrew, 5 S. Dak. 500, 503; 59 N. W. Rep. 72G, per Fuller. J.; citing Mechem on Agency. 475; 3 Sutherland on Damages, 9; Perkins v. Insurance Co., 4 Cow. (N. Y.) 045; Thome v. Deas, 4 § 669 AGENTS — DUTIES AND LIABILITIES. 822 do so, 87 and an agent, under a general agreement to execute all his principal's orders, must execute each order received, the ob- ligation being an express contract. 88 So an agreement, based upon a valuable consideration, to procure insurance for another obligates the party so agreeing, and he is liable if he neglect to perform the obligation. 89 And it is obligatory on a broker to effect insurance at any rate of premium where the order to insure is absolute, provided there are sufficient funds in his hands, or, if the course of dealing warrants, to credit or ad- vance the premiums to the necessary amount. 90 In the ab- sence of a general usage or custom a promise by a factor to write to his principal to get insurance effected does not bind the latter to insure. 91 Whether an agent is obligated to ex- tend his efforts to execute an order outside a particular place or vicinity must, to some extent, depend upon the nature and character of his orders, in relation to the terms and the risk, upon usage, the course of business, and the facilities of com- munication outside. Thus, in England it is held that if the usage of a particular place is not to go outside for insurance, no obligation rests upon the broker to do so. 92 But in the United States, where the agents were directed to procure an insurance to a large amount on a cargo, and the agents were unable to effect an insurance in the place, which was Boston, and directed their correspondents in New York to insure, but limited the premium, in consequence of which only a partial insurance was effected, and the agents were sued for the full loss for which the underwriters would have been liable bad a policy been effected, the defendants were held not liable, on the ground that the agent's duty did not require them to extend their ef- forts beyond Boston, and that their further acts were voluntary, Johns. (N. Y.) 84; Shoenfield v. Fleisher, 73 111. 404; Beardsley v. Davis, 52 Barb. (N. Y.) 159; Gray v. Murray, 3 Johns. Oh. (N. Y.) 169; Morris v. Summerl, 2 Wash. (C. C.) 203; Fed. Cas. 9, 837. " Thorne v. Deas, 4 Johns. (N. Y.) 84. 88 Pelaney v. Stoddart, 1 Term Rep. 22; Tickel v. Short, 2 Ves. Sr. 239; Ela v. French, 11 N. H. 357; Story on Agency, 2d ed., sec. 190. 89 Ela v. French, 11 N. H. 357. "> 2 Phillips on Insurance, 3d ed., 553, sec. 1898. n Randolph v. Ware, 3 Cranch (U. S.), 503. n Smith v. Cologan, 2 Term Rep. 188, n. 823 A3ENTS — DUTIES AND LIABILITIES. § G70 and that they were not responsible, unless a positive loss had been occasioned by such efforts. 93 § 670. Agent's Duty — More Advantageous Terms. — The fact that an agent, acting under general orders, could have pro- cured more advantageous terms by placing the insurance with a private underwriter than with the corporation where the policy was effected, both insurers being in the same place, and no special directions as to the party with whom the insurance should be placed had been given, is held in an English case not to have rendered the agent liable. 94 This case is, however, de- nied as an authority by Duer, on the ground that good faith and reasonable diligence necessitates that the agent should make the insurance on the best terms he is able to obtain, and that it is gross negligence on the part of the agent not to know what the different companies where he resides propose by their printed policies to do; that when it is known to the agent that the terms of one office are much more beneficial than those of another, and that both are of equal credit and standing, the agent has no discretion to elect between the underwriters, but must select the one which offers the most favorable terms. 95 If it be assumed that the agent is fully acquainted with the terms of all the offices in the place where the insurance is ef- fected, then there is force to Duei-'s objections, but only good faith and reasonable diligence are exacted of the agent who effects insurance, and the rule applies equally to cases of this character as in others. To exact more, is to go into the possi- bilities, and a possibility that the agent could have effected the insurance on more favorable terms does not render him liable, nor show any want of good faith. 96 But an agent act- 98 Sanchez v. Davenport, 6 Mass. 258; 1 Arnould on Marine Insur- ance, Perkins' ed., 15, side p. 153; 2 Phillips on Insurance, 3d ed., 550, sec. 1890; 2 Duer on Insurance, ed. 1846, 240, et seq., see. 40, et seq. 84 Moore v. Morgue, 2 Cowp. 479. 83 2 Duer on Marine Insurance, ed. 1846. 230, et seq. But see Ooom- ber v. Anderson, 1 Camp. 523 (although it seems 1n this case that the principal had adopted the policy), per Lord EUenborough: 2 Tbillipa on Insurance, 3d ed., 553, sec. 1895. et seq. M See Story on Agency, 2d ed., sec. 191. § 67 L AGENTS— DUTIES AND LIABILITIES. 824 ing under general orders is not liable because better terms could liave been obtained in another place. 97 § 671. Where Agent Departs From Usage or Usual Form of the Policy. — An agent is bound to have knowledge of existing usages of the place where he does business, and must conform thereto. 08 It is also incumbent upon the broker that he should, in executing an order, insert in the policy, with- out directions therefor, all such clauses and risks as are ordinar- ily and customarily inserted in like policies and upon like prop- erty, and which are usual and proper for the protection of the property on the intended voyage, and if he departs from usage, or inserts unusual clauses, or omits to insert the usual clause or clauses which it has been the invariable practice to insert, whereby a loss arises to his principal, he is liable." And where the risks and terms are not specified in the order to insure, the agent is presumed to effect insurance in the customary way at the place it is to made, dependent upon the property and voyage. 100 So if an agent, acting in good faith and without negligence or breach of orders, effects an insurance which con- tains the usual clause "free from average, unless general," he is not liable where the policy does not cover the loss, although the insurance might have been effected without that excep- tion. 101 And a broker is liable who, being instructed to effect an insurance "at and from," neglected to insert a modify- ing clause which it was the invariable usage to insert in all like policies, where by this neglect a recovery was defeated. 102 So where the effect of a clause as to the terminus a quo is well set- tled in law, an insurance broker is bound to be acquainted with its meaning, and if he neglects, contrary to his instructions, to have such clause properly changed so as to cover the risk, he 97 Smith v. Cologan. 2 Term Rep. 188, n. M Mallough v. Barber, 4 Camp. 150. m Thompson v. Read. 12 Serg. & R. (Pa.) 440; Mallough v. Barber. 4 Camp. 150; Story on Agency, see. 191; Park v. Hammond. Holt N. P. SO; 4 Camp. 144; 6 Taunt. 295; 1 Arnould on Marine Insurance, Per- kins' erl.. 156, *155; 1 Id.. Maclaehlan's ed. 1887, 176, 177. 100 Chapman v. Walton, 10 Bins. 57. 101 Moore v. Morgue, Cowp. 479; Comber v. Anderson, 1 Camp. 523. 192 Mallough v. Barber, 4 Camp. 150. 825 AGENTS — DUTIES AND LIABILITIES. §§ 672, 673 is liable for negligence. 103 And if an agent, acting under gen- eral orders, departs from the usual form of the policy, and in- serts words of limitation, which operate to discharge the under- writers, he cannot recover his premium from the principal. 104 § f>72. Duty as to Premium. — If an agent accepts and acts under orders to effect an insurance without restriction as to the premium, and limits himself or the broker to too small a premium, and so prevents or is unable to obtain the insurance, he is liable for the consequent loss to his principal. 105 Excep- tions, however, to this rule would exist in cases where the agent is not obligated to execute the order, or is excused therefrom. So, also, where he has no funds in his hands or not sufficient funds, and no duty rests upon him to advance the premium. 100 But where a duty devolves upon him so to do, an agent's neg- ligence in paying premium, whereby the risk does not attach, renders him liable. 107 § 673. Duty as to Subagent. — An agent must give the subagent proper instructions relative to the business intrusted to his care. los And if an insurance broker is requested to em- ploy another broker to obtain insurance, and neglects to con- vey material information to the second broker, by reason of which the insurance is invalidated, the first broker is liable. 100 It is also held that it is the duty of a subagent, who is subject to the authority of a superior agent acting for the company, to obey such orders as the latter may give him relative to the busi- ness of the company, and the risks taken by him. So where a state agent of a foreign company, with authority therefor, di- 103 Park v Hammond, Holt N. P. SO; 4 Camp. 144; 6 Taunt. 205; 2 Duer on Insurance, ed. 1846, 208, sec. IT; 210, sec. 19; 1 A mould on Marine Insurance, Perkins' ed. 1S50, 157, *150; 1 Id., Maclachlan's ed. 1S87, 176, et seq. 104 Thompson v. Reed, 12 Serg. & It. (Pa.) 440. 105 Wallace v. Telfair. 2 Term Rep. 188, n.; Delaney v. Stoddart, 1 Term Rep. 22; 1 Arnould on Marine Insurance, Perkins' ed. 1850, 154, *153; 1 Id., Maclachlan's ed. 1SS7. 173. loa o Duer en Marine Insurance, ed. 1S46, 234. 107 Perkins v. Washington Ins. Co., 4 Cow. (N. T.) 645. los r 0!Bter v. Preston. 8 Cow. (N. Y.) 198. 108 Seller v. Work, 1 Marshall on Insurance, 299. § 674 AGENTS — DUTIES AND LIABILITIES. 826 rects a local agent to cancel a risk taken by him, and he neglects to comply with the order, the company may recover from him a loss which it is compelled to pay by reason of the policy not being canceled. 110 § 674. Degree of Skill Required from Agents. — The de- gree of skill required of an agent must depend greatly upon the character of his business or his situation, upon whether he is a skilled agent or not, and also upon the degree of skill which he assumes to possess. Whether an agent to effect insurance is liable to his principal for want of requisite skill is a question dependent largely upon whether his business is within or out- side the line of his employment as agent. If he holds him- self out to the world as possessing certain skill, or if his busi- ness is such as to carry with it an implication that he possesses particular skill in effecting insurances, as in case of an insur- ance broker, his principal is justified in relying upon the knowl- edge which he professes to possess, and he is bound to exercise the skill and to use the knowledge which the business requires and which persons of average capacity engaged therein pos- sess. But if the agent has no experience or skill in the busi- ness, and he is known not to possess it, his employment neces- sitates only the exercise of good faith and diligence, and he is bound to a reasonable exercise only of such skill as he pos- sesses. 111 An insurance broker does not, however, contract that he will exercise an extraordinary degree of skill, but only a reasonable and ordinary proportion of skill. 112 But a mer- cantile agent or insurance broker acting as such in effecting 113 Phoenix Ins. Co. v. Pratt, 36 Minn. 409; 31 N. W. Rep. 454. 111 See as to general rule, 2 Phillips on Insurance, 3d ed\, 547, sec. 1884; Edwards on Bailments, sec. 77, et seq.; Howards v. Grover. 28 Me. 97; 48 Am. Dec. 47S; Story on Bailments, 3d ed.. sees. 12-15, 435; Glaser v. Cowie, 1 Maule & S. 52; ©well's Bvans on Agency, 327, 332; Cheriot v. Brooks, 1 Johns. (N. Y.) 364; Beardslee v. Richardson, 11 Wend. (N. Y.) 25; 25 Am. Dec. 59G; Madison v. Townsley, 12 Mart. (Lea) 365; Shields v. Blackburne. 1 H. Black. 158; Chandler v. Hoyle, P.8 Til. 46; Story on Agency, sec. 183; 1 Arnould on Marine Insurance, Pork ins' ed. 1850, 149-63; 1 Id., Maclachlan's ed. 1887, 166, et seq.; Angell on Carriers, sees. 10, 17, 20; Stevens v. Walker, 55 111. 151; Robinson v. Illinois etc. Co., 30 Iowa, 401 m Chapman v. Walton, 10 Bing. 57. 827 AGENTS— DUTIES AND LIABILITIES. § 675 insurances is bound to possess knowledge as to the proper mode of framing a policy and the settled legal effect and construc- * tion of well-known clauses. He is bound to be informed as to existent and well-known usages, is conclusively presumed to be familiar with the formal and ordinary details necessary to effect the insurance and make the policy valid, and must exer- cise such reasonable and ordinary care, skill, and diligence as the principal being a person of common prudence and busi- ness knowledge would have reasonably exercised under an ef- fort to execute the order. The measure of diligence required is not determined by that which the agent would employ in his own affairs, but by that which is ordinarily possessed and em- ployed by persons engaged in like business. He is also respon- sible for want of good faith and for errors of ignorance or neg- ligence. 113 But a broker is not liable for damages consequen- tial upon his mistake as to the law where acting bona fide he makes a reasonable mistake upon a doubtful point of law. 114 Where an agent with instructions from a foreign correspond- ent to insure was informed that the goods were to be laden at a port other than that where the risk was to commence and he neglected to have the printed form "at and from," etc., modi- fied, in consequence of which the underwriter was discharged, the agent was held responsible, the court declaring that an agent undertaking to insure for those abroad was bound to be acquainted with the proper mode of effecting it. 115 675. Duty to Effect Other Insurance in Case of In- surer's Insolvency. — Emerigon declares that in case of 113 Chapman v. Walton, 10 Bing. 63, per Tindall, C. J.; Mallough v. Barber, 4 Camp. 150; Park v. Hammond, 4 Camp. 344; Turpin v. Bi!- ton, 5 Man. & G. 455; Thompson v. Reed, 12 Serg. & R. (Pa.) 440. See Mechanics' Bank v. Merchants' Bank, G Met. (Mass.) 13, per Shaw, C. J.; 1 Arnould on Marine Insurance, Perkins' ed. 1850, 153. 154; 1 Id., Maclachlan's ed. 1887, 173, et seq.; 2 Duer on Marine Insurance, ed. 1846, 184, et seq. 111 Park v. Hammond. 1 Holt, 80; 4 Camp. 344; 6 Taunt. 29.~>; Me- chanics' Bank v. Baltimore & Merchants' Bank, 6 Met. (Mass.) 13; Pitt v. Falden, 4 Burr. 2060. us p ar k v. Hammond, 4 Camp. 314. In the report of this case in 6 Taunt. 495, the clau.se "at and from" is modified to accord with the instructions; probably an error. As to the degree of diligence in case of voluntary agents, see sec. 679 herein. § 675 AGENTS — DUTIES AND LIABILITIES. 828 the failure of the insurer that Valin is of the opinion that the agent must wait for new orders to effect insurance anew, but that new orders are not necessary to effect reinsurance at the expense of the insolvent himself, and sets forth the form of proceeding by virtue of which the reinsurance was effected and the first insurance kept alive in France. 116 Parsons says if it is the agent's "duty to effect insurance, and he does this, and the insurers become notoriously insolvent, it would seem both on reason and on authority that it is his duty to effect other insurance." m Exactly how far this rule would apply in the United States is difficult to determine. Parsons cites no au- thorities here, but refers to Duer's discussion of the question. This last-named author says substantially that it is clear that in the United States, where the policies provide against other or prior insurance, an agent would not be authorized to perform an act which would invalidate per se the first policy, for that is in force until annulled by the consent of the parties, and in case the insurance is effected by an agent, the insolvency of the insurers could not warrant the agent, for the above reason, in procuring another insurance should the contract have been dissolved or rescinded, and the agency still continues, and by virtue of the nature and scope of his authority, or by reason of the terms of his instructions, he has power to reinsure; then there may be reason in a rule which would require him' to do so. He cites no cases, however, in this country. 118 In cases where the agency is merely to procure insurance, and deter- mines by the very act of effecting the policy, no duty could reasonably be held to rest upon the agent to procure other in- surance in case of insolvency of the assured, and if he should do so, it would be a mere voluntary act. Where, however, the agency is a continuing one, the question is more difficult. Insurance is intended as an indemnity, and the question arises "" Emerigon on Insurance, Meredith's ed. 1850, c. v, sec. 7. p. 11$; c. viii, sec. 16, p. 207. He says: "Our merchants acting as agents are too attentive to the interests of their principals ever to neglect this proceeding, Which requires the greatest celerity": Id. 118. 117 2 Parsons on Marine Insurance, ed. ISfiS, 428. 118 See 2 Duer on Insurance, ed. 1816, 193, sec. 8. Examine Id. 188-9S. 829 AGENTS — DUTIES AND LIABILITIES. § 676 whether an agent has performed his entire duty in relation to that particular insurance by effecting that policy. Does the fact that it results by the insurer's insolvency in only being a partial indemnity, or perhaps none at all, affect the issue? The condition as to other or prior insurance could be no serious ob- jection as to the second insurance, and even if the first policy could not be rescinded, would not the agent be obligated to act in the interests of his principal, and secure by a new con- tract an indemnity which shall protect his principal, although at a loss of such partial indemnity as the first policy might af- ford? Surely, an ordinarily prudent man would do so, and would not good faith require, in such case, the same degree of reasonable diligence and ordinary prudence on the part of the agent? It would seem so, especially if the insurer was noto- riously insolvent. The nature of the agent's instructions must also have some bearing upon the case. "We would suggest, therefore, that if the agent's authority be a continuing one, he is bound, in case the insurer is notoriously insolvent, to use reasonable diligence to procure other insurance, provided that in the exercise of good faith and a sound and honest discretion, such as business men would ordinarily be expected to use, it would appear to be for his principal's interests to do so. § 676. Duty of Agent to Settle Loss. — The loss is a debt due the principal and not to the broker, but where the broker is intrusted with the policy to obtain 'an ad- justment of the loss, he is bound to the use of reasonable diligence in effecting a speedy adjustment and collection of the amount due therefor, and must without delay pay the amount collected over to the assured. 110 Where the policy expressly provides for the payment of the loss to the agent, he may adjust the loss, 120 and the agent who is the nominal assured may adjust a loss where he has the pol- icy in his possession. 121 So an agent who retains the policy with his principal's consent thereby has his agency continued, 1,9 Bonsfield v. Gresswell, 2 Camp. 544, per Lord Ellonuorough; Run- die v. Moore. 3 Johns. Gas. (N. Y.) 36. "° Reynolds v. Ocean Ins. Co., 22 Tick. (Maps.) 191. 1,1 Reed v. Pacific Ins. Co., 1 Met. (Mass.) 1GG. § 677 AGENTS — DUTIES AND LIABILITIES. 830 and is substituted for him, and it is then incumbent upon him, acting generally upon the principal's advice, to do and perform such acts as the protection of the rights and interests of his principal demand, in all matters pertaining to the contract, and he should demand payment of the underwriter. 122 And if such agent after the loss neglects to make demand with neces- sary diligence for the payment of the loss, he is liable. 123 So if the agent, through negligence, mistakes his instructions, and, contrary thereto, effects an adjustment and settlement of the loss, he is liable; 124 and where an agent employed to settle a total loss, through mistake or negligence settled for an aver- age loss of twenty per cent, he was held liable for the whole amount. 125 So a broker may be liable for not promptly col- lecting losses under the policy. 126 But a principal who looks to the subagent for recovery of the loss, where the same has been paid into such subagent's hands by the underwriter, can- not thereafter recover from the agent who employed the sub- agent. 127 § 677. Duty and Liability as to Payment of Loss — Agent. — In England an adjustment and settlement by the broker makes him, and not the underwriter, liable to the as- sured for the loss, especially where the latter has erased the underwriter's name from the policy in conformity with. a usage so to do, and the assured knows of such usage. 128 In regard to the payment of the loss, many questions have arisen in Eng- land, owing to the system of credits existing there between the broker, the assured, and the underwriter, which could not well m See Chesapeake Ins. Co. v. Stark, 6 Cranch (U. S.), 268; Bons- field v. Cress-well, 2 Camp. 545; Goodson v. Brooke, 4 Camp. 163: Todd v. Reed, 4 Barn. & Aid. 210; Power v. Butcher, 10 Barn. & C. 328; 5 Man. & R. 327. 123 Emerigon on Insurance, Meredith's ed. 1850, c. v, sec. 7, p. 118. 1:4 Bundle v. Moore, 3 Johns. Cas. (N. Y.) 36. m Run die v. Moore. 3 Johns. Cas. (N. Y.) 36. 128 Bonsfield v. Creswell, 2 Camp. 544. 127 Smith v. Cologan, 2 Term Rep. 1S8, n, per Buller, J. 128 See Andrew v. Rohinson, 3 Camp. 544; Todd v. Re1d, 4 Barn. & Aid. 211; Bartlett v. Pentland. 10 Barn. & C. 769; Scott v. Irving, 1 Barn. & Aid. 605; Russell v. Bangley, 4 Barn. & Aid. 401; Bowne v. Neilson, 1 Caines (N. Y.), 4S9. 831 AGENTS — DUTIES AND LIABILITIES. § 677 arise here. The following cases are, however, important: Where the agent who effected the insurance is in possession of the policy, he may receive payment of the loss and discharge the assurer. 129 And payment to the agent who has the policy in his possession is payment to the principal, where it is actual- ly paid in cash, and is specific; that is, intended to cover the particular claim due under the policy, for the underwriters cannot set off a debt of the agents due him against the amount due from him to his principal under the policy. 130 But an agent to receive payment of the loss must receive actual cash ; credit of the amount does not discharge the underwriter. 131 But where the payment to the broker is partly cash and partly credit, the payment is good to the extent of the cash re- ceived. 132 An agent to collect a loss cannot dispute the title of his principal, for whom he effected the insurance, to the money received from the underwriter, nor may he set up the illegality of the contract. 133 So if the insurance be effected in violation of a statute, or if a policy be effected which is illegal and void, and the underwriters, with full knowledge of the illegality, pay over the moneys due on a loss to the broker, the latter is estopped to set up the illegality as to the assured. 134 The broker, with possession of the policy, has no authority to accept a setoff in payment, except with the consent of the as- sured, and, if he does, the underwriter is nevertheless liable; 135 nor has a broker any authority to pay a loss to the assured due m Erick v. Johnson, 6 Mass. 193; Wilkinson v. Clay, 6 Taunt. 110; 4 Camp. 171. 130 Russell v. Bangley, 4 Barn. & Aid. 395; Erick v. Johnson. 6 Mass. 193; Scott v. Irving, 1 Barn. & Adol. 605; Jell v. Pratt. 2 Stark. €9. But see Stewart v. Aberdeen, 4 Mees. & W. 228, per Lord Abin- ger, C. B. 131 Russell v. Bangley, 4 Barn. & Aid. 395; Tcdd v. Reid. 4 Barn. & Aid. 210; Ovington v. Bell, 3 Camp. 237; Scott v. Irving. 1 Barn. & Adol. 605; Jell- v. Pratt, 2 Stark. N. P. C. 67; Bartlett v. Pentland. 10 Barn. & C. 760. 131 Scott v. Irving, 1 Barn. & Adol. 605. 133 Roberts v. Ogilby, 9 Price, 2G9; Dixon v. Hammond, 2 Barn. & Aid. 310; Tenant v. Elliott, 1 Bos. & P. 3. 134 Tenant v. Elliott, 1 Bos. & P. 3; Farmer v. Russell, 1 Bos. & P. 298; Booth v. Hodgson. 6 Term Rep. 405; Thompson v. Thomson, 7 Ves. Jr. 473. But see Edgar v. Fowler, 3 East, 333. 136 Bartlett v. Tentland, 10 Barn. & C. 760. § 677 AGENTS — DUTIES AND LIABILITIES. 832 from the underwriter employing him. 136 A part owner effect- ing insurance for the other part owners may receive the pay- ment of the loss from the broker, and the latter is not liable to the others, notwithstanding a notice not to pay to the part owner insuring from such other part owners. 137 But if the broker receives the amount of a loss, and the policy may by description cover an interest in the goods other than that of the principals, the agent is not liable to pay over the amount to the principal. 138 Again, where the broker settles with the underwriter by credits, and the assured draws a bill payable on the broker, which he accepts, but becomes bankrupt before it becomes due, the underwriter is nevertheless responsible to the assured, since the drawing such bill is not a consent to the settlement on credits. 139 If an agent having authority to ad- just and receive payment of the loss settles with the under- writer only by an adjustment of accounts between them, the principal may look to the agent for the amount of the loss, al- though the latter receives no cash and is estopped to deny on this ground liability to the assured. 140 So where a broker re- ceives payment of the loss on his principal's goods under a policy, he is liable to him for the amount, notwithstanding the goods were described as the property of the agent. 141 In case a del credere agent pays the loss where the insurer is insolvent, he has an action against him, and may sue in name of assured where the policy is payable to the latter, or, where the policy is in his own name, for his own benefit, he may sue in his own name. 142 It is held in England that a payment by the broker to the agent of the loss releases the former, where the agent has represented himself as the principal, and this rule has even been carried to the extent that the broker is not liable where part of the money is paid over after knowledge by the broker "• Boll v. Auldjo, 4 Dong. 48; 4 Dow, 48. 187 Roberts v. Ogilby, 9 Price, 209. 138 Armitage v. Winterbottom, 1 Man. & G. 130. 139 Russell v. Bangley, 4 Barn. & Aid. 395. 140 Andrew v. Robinson, 3 Camp. 189; Wilkinson v. Clay, 4 Camp. 171. 141 Lidaway t. Todd, 2 Stark. N. P. C. 400. See Briggs v. Call, 5 Met. (Mass.) 514. 142 2 Phillips on Insurance, 3d ed., 557, sec. 1905. 833 AGENTS — DUTIES AND LIABILITIES. § 678 of his employer's agency. 143 And where an agent authorizes a broker, in time of war, to procure insurance on property aa neutral, this is evidence to the broker that he acted as agent, though the policy was in the agent's own name. 144 § 678. Liability of Agent — Generally. — If an agent neglects to procure insurance when obligated so to do, or does not follow instructions; or if the policy obtained is void, through the agent's fault, or if it is materially defective for the same reason; or if the principal suffers damage by reason of any mistake or act of omission or commission of the agent. which would constitute a breach of his duty to his principal, he is liable to the latter for any loss he may have sustained thereby. 145 So where an agent was directed to insure, but neglected to do so, he was held liable for the loss in an action on the principal's name, although his interest had ceased by sale prior to the loss. 146 A consignee, who accepts a consign- ment with orders to insure, is liable if he neglects to execute the order. He cannot accept part and reject the rest; he is bound to insure or give notice of his dissent. 147 And if one merchant is accustomed to insure for another, he is liable if he neglects to do so on receiving orders to insure, and this is so if he departs from the orders in effecting insurance. 148 Since the policy, once effected, is the property of the assured, if the 145 Bell v. Jutting, 1 J. B. Moore, 155. We think this questionable as to the payment after information of the agency and nonliability thereafter. 144 Maanss v. Henderson, 1 East. 335. 145 "The agent is responsible for his errors in omittendo as well as those in committendo. If he has omitted to effect the prescribed insurance, he is responsible for the loss not in the light of an insurer, but as a mandatory who has failed in his duty": Emerigon on Insur- ance, Meredith's ed. 1850, c. v, sec. 8, p. 119: Webster v. De Tastet, 7 Term Bep. 157; Panson v. Watson, Cowp. 785; Delaney y. Stoddart, 1 Term Bep. 22; Ela v. French, 11 N. H. 350; Miner v. Tagert, 3 Binn. (Pa.) 204; Strong v. Heigh, 2 Bob. (La.) 103; De Tastet v. Crousillat, 2 Wash. (C. C.) 132; Story on Agency, sec. 217. 148 Delaney v. Stoddart. 1 Term Bep. 22. 147 Smith v. Lascelles, 2 Term Bep. 187; Wallace v. Telfair, 2 Term Bep. 188, n. 148 De Tastet v. Crousillat, 2 Wash. (C. C.) 132; Morris v. Summerl, 2 Wash. (C. C.) 203. Joyce, Vol. I,— 53 § 678 AGENTS — DUTIES AND LIABILITIES. 834 broker induces the belief, on the part of the assured, that his orders have been carried out, when in fact they have not, trover lies, and the broker is estopped to deny the existence of the policy, and is liable for the loss, and he is also liable where the policy is void through his fault. 149 And where an agent acts for a principal, which is an incorporated company with no legal status or responsibility, the presumption attaches that the agent contracted on his own responsibility, and that he is bound as insurer. 100 So if an insurance broker, holding policies which he was employed to obtain by a third party for whom "it may concern," payable to a third party, without notice of any other interest subsequently, and after express notice of the plaintiff's title, surrenders the policy to the insurer upon a compromise, the plaintiff may sue the broker for the policy without any de- mand, and recover the entire amount from him, irrespective of the compromise. 151 An adjusting agent who procures, by fraud or misrepresentation, the settlement of a loss for less than would otherwise be recovered, is liable for the consequent damage, or the company may be sued. 152 So an action will lie against the company's agent where he misrepresents that certain prohibited articles may be kept, notwithstanding the provisions of the policy. 153 So where an agent employed to procure a life insurance effected a policy as instructed, but thereafter procured its cancellation on the ground of mistake, and the execution of another policy for a much less amount, it was held that he was liable as insurer for the amount of the original insurance, less the premium. 154 So the adjusting 149 Harding v. Carter, citefl in 1 Marshall on Insurance, ed. 1810, 303; 1 Arnould on Marine Insurance, Perkins' ed., 139, sec. 70; 2 Phillips on Insurai ce, 3d ed., 551, sec. 1892. Lord Mansfield said that the defendants must be considered it he actual insurers, and liable for the loss: De'aney v. Stoddart, 1 Term Rep. 22, per Buller, J.; Ela v. French, 11 N. H. 356; Maydew v. Forrester, 4 Taunt. 615; Strong v. Heigh. 2 Rob. (La.) 103; Tnrpin v. Bilton, 5 Man. & G. 455; Webster v. De Tastet, 7 Term Rep. 157. 150 Booth v. Wonderly, 36 N. J. 250. See Furnwall v. Cooinlus, 5 Man. & G. 736. UH Sharp v. Whipple, 1 Bnsw. (N. Y.) 557. "» Home Ins. Co. v. Howard, 111 Ind. 544; 13 N. E. Rep. 103. "» Kroeger v. Pitcairn, 101 Pa. St. 311; 47 Am. Rep. 718. -* Gray v. Murray, 3 Johns. Ch. (N. Y.) 167. 835 AGENTS — DUTIES AND LIABILITIES. £ 6 t 6 agent is liable where his draft on the company in payment of the loss is not honored. 155 If a broker neglects to insure with- in a reasonable time, in consequence of which the insurance cannot be effected by the principal, he is liable, 156 and if an agent impliedly accepts the order, as by failing to promptly give notice of his refusal, he is liable for his neglect to insure. 157 So an agent in charge of a vessel, who insures it and neglects to renew, may be held liable therefor. 108 But an agent is only liable for failure to exercise diligence to procure a policy by the time agreed upon where he undertakes that the property should be insured from a certain time. lu9 So where an agent neglects to follow instructions and to obtain insurance, he is not liable if the policy would have been void had the instruc- tions been followed. 160 Xor is he liable where the principal sustains no actual loss in consequence of the agent's failure in his duty, or, as Emerigon says: "But if there has been no dis- aster, the case is one of wrong, without damage"; and no action lies, nor can the agent claim the premium. But in case the principal is entitled to sue, the measure of damages is the amount which could have been recovered against the under- writer had the express or implied directions to insure been followed; 161 and such damage must be established by proof. 162 And in case of a consignee, the evidence which renders him liable for failure to insure goods in his possession must be clear and conclusive. 163 If the agent of the insurer issues a pol- icy upon a forbidden risk, and the company, when notified that such a risk has been assumed, informs the agent that he 165 Collins v. Insurance Co., 15 Ohio St. 215. "• Turpin v. Bilton. 5 Man. & G. 455. m Smith v. Lascelles, 2 Term. Rep. 18S, n., per Aslihnrst, J.; Emeri- gon on Insurance, Meredith's ed. 1850, c. v, see. 8, p. 119. 15S Strong v. Heigh, 2 Rob. (La.) 103. 159 Arrott v. Walker. 118 Pa. St. 249; 12 Atl. Rep. 280. 160 Alsop v. Colt. 12 Mass. 40; Miner v. Tagert, 3 Binn. (Pa.) 204: Webster v. De Tastet, 7 Term Rep. 157. 1,1 Emerigon on Insurance, Meredith's ed. 1850, c. v. sec. 8, p. 119; Fornin v. Oswell, 3 Camp. 357; Glaser v. Cowie. 1 Maule & S. 52; Delaney v. Stewart, 1 Term. Rep. 22; Pe Tastet v. Crousillat, 2 Wnsh. (C. C.) 132; Wallace v. Telfair, 1 Esp. 76. ie * Fornin v. Oswell. 3 Camp. 357; Bell v. Janson, 1 Maule & S. 201. 163 Tonge v. Kennett, 10 La. Ann. 800. §§ 679, 680 AGENTS — DUTIES AND LIABILITIES. 836 must cancel the policy, and he either refuses or fails to cancel such policy, he will be liable to the insurer for the amount paid by the company for any loss subsequently occurring. 104 679. Neglect to Effect a Valid Insurance Policy. — An agent to procure a policy is liable where he places a risk in a company which is not solvent, when the use of proper diligence would have discovered that fact before the insurance was pro- cured. 100 And where the consignees made advances and in- sured the goods for more than their full value, but neglected to have the necessary survey made, and thereby recovery was defeated by the insurers, the consignees were held liable to the consignors for the whole sum, less the advances. 166 § 680. Liability of Voluntary or Gratuitous Ag-ent. — If a person voluntarily, without consideration, and without ex- pectation of remuneration or reward, agrees to procure an in- surance, and actually takes any steps in the matter, he is re- sponsible for misfeasance, and if he proceeds to effect a policy, and is so negligent or unskillful that no benefit is derived there- from, he is liable, although he was not bound to undertake the performance. 167 And the agent, acting gratuitously for a for- eign correspondent, may be bound to comply with orders to procure insurance, and by a failure so to do, without notice to his correspondent, render himself liable for consequent losses, as where he has received such order, and has given the 164 Sun Fire Ins. Office v. Ermentrout, 11 Pa. Co. Ct. 21; 21 Ins. L. J. 1055. loo Hurrell v. Ballard, 3 Fost. & F. 445; Smith v. Price, 2 Fost. & F. 748. See sec. 679, herein. 166 Urquhart v. Australian Co., 5 Scot. Jur. 348. »« Thorne v. Deas, 4 Johns. (N. Y.) 84, per Kent, C. J.; Wallace v. Telfair, 2 Term Rep. 188, n., per Buller, J.; French v. Read, Binn. (Pa.) 308; Coggs v. Barnard, 2 Ld. Raym. 909; Wilkinson v. Cover- dale, 1 Esp. 74. See Beardsley v. Richardson, 11 Wend. (N. Y.) 2r>; Park v. Hammond, 4 Camp. 344; Ewell's Evans on Agency, ed. 1879. 332-37. "1. An agent, whether remunerated or unremunerated, may be liable for negligence in performing an undertaking; 2. Actionable negligence in the case of an unremunerated agent consists in a fail- ure to exercise that skill which is imputable to his situation or em- ployment, or which he holds himself out to the world as possessing": Id. 332. 837 AGENTS — DUTIES AND LIABILITIES. § 680 correspondent reasonable cause to believe such orders will be complied with. 108 So where one undertakes, voluntarily and without compensation, to perform an act requiring the trust and confidence of another, his acceptance of the trust creates a sufficient legal consideration to make it a duty to faithfully perform the same. So where a policy on the life of B. was made payable to M., who held it for the benefit of a creditor of B., though without such creditor's knowledge, it was held that B. having died, the creditor could maintain an action against M. 109 But a voluntary or gratuitous agent is not lia- ble for a mere promise to obtain an insurance where he makes no effort or takes no steps whatever in the matter. 170 This case is criticised by Parsons, 171 in that it makes a distinction between a misfeasance and nonfeasance, and places the respon- sibility of such agent upon the same ground as that of a man- datory, who is only responsible when he attempts to do the act in question and does it amiss. He also declares that one undertaking to act, in regard to insurance transactions, at the request of another, has acquired a right to a compensation; 172 his duties and liabilities would be much the same as those of a paid agent. We cannot see that the question, whether the agent is entitled to claim a compensation, can affect the case. The point is, Did he then intend to ask or receive a compensa- tion? The rule premises an acting without consideration or expectation or hope of reward, and to this extent Parsons ad- mits that the case was decided aright. Duer says that "it can- not be denied that the distinction adopted by the court .... is fully established by prior authorities." 173 Parsons also says that it was not a case of mandate, except perhaps in a limited 18S Smith v. Laseelles, 2 Terra. Eep. 187; De Tastet v. Crousillat, 2 Wash. (€. C.) 132; Morris v. Summed, 2 Wash. (C. C.) 203. 169 Hulchings v. Miner, 46 N. Y. 456; 7 Am. Rep. 369. 170 Thorne v. Deas, 4 Johns. (N. Y.) 84. See Delaney v. Stoddart, 1 Term Rep. 22. 171 2 Parsons on Marine Insurance, ed. 1868, 437, and note, et seq. 172 Duer says the principal "is not bound to compensate him [the voluntary agent] for his trouble and labor. The personal services of the agent, like those of the mandatory, are deemed to be gratu- itous": 2 Duer on Marine Insurance, ed. IStfi. 138, 139. 173 2 Duer on Insurance, ed. 1846, 129. See. also, 2 Kent's Com- mentaries, 570. § 6S1 AGENTS DUTIES AND LIABILITIES. 838 sense, and was certainly not a case of bailment. 174 While such voluntary and gratuitous agent is so bound to conduct himself as not to be guilty of gross negligence, a distinction should be made, even in this respect, between an unpaid unprofessional agent and an unpaid agent, whose situation is such as to imply skill in the business he undertakes, for in the latter case the failure to exercise such skill as his profession implies is gross negligence. 175 § 681. Liability of Agent for the Premium. — The usage in England requiring the underwriter to look to the broker for the premium does not exist here, and on this usage rests the rule estopping the underwriter from suing the assured where the policy acknowledges receipt of the premium. 176 An agent may, in this country, render himself liable for the pre- mium, as where he gives his note therefor in his own name with a surety, and the principal is unknown to the underwriter, even though the latter knew of the agency. 177 And where a party "* 2 Parsons on Marine Insurance, ed. 1868, 439. But see 2 Kent's Commentaries, 569, 570, et seq.; Story on Bailments, see. 165, et seq.; 1 Smith's Lead. Cas. 82; Edwards on Bailments, sec. 77, et seq. 175 1 Arnonld on Marine Insurance, Perkins' ed., 150; 1 Id., Mac- lachlan's ed. 1887, 168, et seq., citing in 1850 edition, 2 Kent's Com- mentaries, 5th ed., 570; French v. Reid, 6 Binn. (Pa.) 308; Smedes v. Bank of Utica, 20 Johns. (N. Y.) 372; 3 Cow. (N. Y.) 662; Thome v. Deas, 4 Johns. (N. Y.) 84; Boorman v. Browne, 3 Ad. & E., N. S. 511; Angell on Carriers, sees. 17, 20, et seq. See the rule as to mandatory, 2 Parsons on Contracts, 7th ed., 104, et seq. For discus- sion as to the different degrees of negligence, see Cooley on Torts, 2d ed., 751-53, et seq., *630, *631, et seq. "' 1 Marshall on Insurance, ed. 1810, 292, et seq.; 1 Phillips on Insurance, 3d ed., sec. 507; 1 Arnould on Insurance, Perkins' ed. 1850, 108-12, 122, sees. 60-62; 1 Id., Maclachlan's ed. 1887, 197, et seq.; Houston v. Robertson, 6 Taunt. 448; Power v. Butcher. 10 Barn. & C. 340, per Bayley, J.; Foy v. Bell, 3 Taunt. 492; Edgar v. Bumpstead, 1 Camp. 411; Minett v. Forester, 4 Taunt. 541, n., per Mansfield, C. J.; 1 Maule & S. 494; Edgar v. Fowler, 3 East, 222; Parker v. Smith, 16 East, 382; Dalzell v. Muir, 1 Camp. 532; 2 Duer on Marine Insurance, ed. 1846, 297, 298, 300; 1 Greenleaf's Evidence, sec. 26, note: Millick v. Peterson. 2 Wash. (C. C.) 31; Parker v. Beas>ley. 2 Maule & S. 423. See Clapp v. Tirell, 20 Pick. (Mass.) 247; Belden v. Seymour, 8 Conn. 304. m Patapsco In?. Co. v. Smith, 6 Har. & J. (Md.) 166; Taylor v. Lowell, 3 Mass. 352, per Sewall, J. 839 AGEiNTS — DUTIES AND LIABILITIES. § 681 insuring has paid the premium down to the agent of the com- pany, and before the agent has paid over the same, or assumed any liability on account of it, the company becomes insolvent, and such party notifies the agent that he claims the money, and does not rely upon the policy issued to him, which is worth- less, he may recover back the premium in a suit against the agent, even though he does not surrender the policy until after suit brought. 178 Where the plaintiff paid to an insurance agent a premium, it being understood that he was to have a policy, and he received no policy, and sued the agent for the amount paid him, it was held that it was no defense that there was an oral agreement for insurance under which, in case of a loss, plaintiff could have recovered from the company, al- though no policy had issued. 179 So the assurer may look to the agent for the premium where the insurance is for the latter and others, the principal not being known, or, if no note is given, the party to whom the underwriter gives credit may be held for the premium. 180 But where the liability of the broker to the underwriter for premiums exists, it extends only to legal in- surances. 181 And a broker representing an illegal partnership existing contrary to a statute, is not liable for premiums on policies subscribed in behalf of the illegal partnership. 182 So if a broker receives notice from the assured not to pay the premium, the insurance being illegal, the underwriter cannot recover it from the broker, though the latter had credited the underwriter therewith. 183 But although by usage the broker may have been solely liable for the premiums, yet the rule does not apply in case of fraud or collusion of the broker, and the assured, for in such case the assured is liable. 184 An agent may be liable to the insurers for the premium if his principal would have been liable in case of no agency existing. 180 m Smith v. Binder, 75 111. 492. 179 Collier v. Bedell, 39 Hun (N. Y.), 238. 180 Stackpoole v. Arnold, 11 Mass. 27; Patapseo Ins. Co. v. Smith. 6 Har. & J. (Md.) 166. 181 Edgar v. Fowler, 3 East. 222. 182 Booth v. Hodgson, 6 Term Rep. 405. 188 Edsar r. Fowler, 3 East, 222. 184 Foy v. Bell, 9 Taunt. 493: Mavor v. Simeon, 3 Taunt. 497. 188 Shee v. Clarkson, 12 East, 507. §§ 682, 683 AGENTS — DUTIES AND LIABILITIES. 840 § 682. .Liability for Concealment — Agent. — A broker or agent of the assured will be liable to him for misrepresenta- tions made to the underwriter, or for a concealment of material facts, whereby the policy is avoided, even though he be an unpaid agent. 186 So where a mercantile firm had consigned, by order, certain goods to the purchaser, and in their letter of advice to the consignee they misled the latter as to the day of shipment, and made a mistake in naming the vessel on which the goods were shipped, it was declared that the consignors were liable for the loss to the principal occasioned by the mis- representations, and could not recover from the consignee, he having attempted to insure and failed. 187 But where the ma- teriality of the fact is doubtful in point of law, or one upon which men in like business and conversant therewith differ, the broker might not be liable for his ignorance thereon, and con- sequent failure to communicate it to the underwriter. 188 Duer illustrates, as an exception to the rule, the case of a master who, by the breaking up of a voyage in consequence of a dis- aster, becomes agent for all concerned. He is of the opinion that if such agent is without experience or skill in insurance matters, and acts in good faith and diligence in employing an agent, he is not liable for failure to communicate all material facts to the agent, even though the policy be voided thereby. 189 § 683. Liability of Officers of Company. — The presi- dent of an insurance company may be held liable for money paid on policies upon the misrepresentations and fraud of the company's agent, with his collusion, as in case of a statement that the company had complied with the requirements of the statute authorizing it to transact business. 190 Where the president of an insolvent insurance company, during the pendency of a suit against the com- M * Maydew v. Forrester, 5 Taunt. C15; Sellnr v. Nork, 1 Marshall on Marine Insurance, ed. 1S10, 299; Pawson v. Watson, Doug. 785; Wake v. Atty, 4 Taunt. 393. 187 Arnot v. 'Stewart, 5 Dow. 274. 1M Campbell v. Rickards, 5 Barn. & Adol. 844, per Lord Denman. See Rickards v. Murdoek. 10 Barn. & C. 527. 189 2 Duer on Insurance, ed. lS4fi, 205. "• Belding v. Floyd, 17 Hun (N. Y.), 208. 841 AGENTS — DUTIES AND LIABILITIES. g ti^3 pan j, purchased the claim at a discount, and then let judg- ment go against the company for the full amount, and the holder of an unsatisfied judgment, under the Missouri statute authorizing such proceedings, moved for judgment against the president as stockholder, it was held that he could not offset the face of the judgment on the claim purchased by him, but only the sum actually paid by him for it. 191 "While officers of an insurance company are not bound to know its absolute sol- vent condition, they should nevertheless use diligence in keeping themselves informed as to its ability to pay its risks. Therefore, it is only in cases of negligence in this respect that they should be held guilty of fraud in issuing policies and tak- ing notes in payment of premiums. 192 And the. officers of a mutual company cannot release a policy-holder from liability for losses and expenses, incurred during the life of the policy, and actually existing at the time of cancellation, by voluntarily canceling the policy and releasing the assured, in view, of the company's insolvency. 193 Directors are responsible, as princi- pals or partners, for all contracts entered into by a company in its preliminary stages of formation before the act of incor- poration is passed, where the acts of the directors are within the scope of the business. 194 Directors are also personally lia- ble to an assured who, by reason of the insolvency of the com- pany, has been unable to recover upon his policy where they have fraudulently made and published false representations as to the financial condition of the company, whereby the plain- tiff was induced to insure therein; and it is no defense that they were acting officially, or that there was no privity of con- tract between them and the plaintiff. 190 So the directors and corporators of a mutual assessment company are personally lia- ble to the assured for a loss where they misappropriate more than sufficient to satisfy his claim out of the company's funds arising from dues and advance assessments, in consequence of 181 Lingle v. National Ins. Co., 45 Mo. 109. 1M Brown v. Donnell. 49 Me. 421; 77 Am. Dec. 286. 193 Dcane v. Milville Mut. M. & P. Ins. Co., 43 N. J. Eq. (16 Stew.) 522: 11 Atl. Ren. 739. 154 Booth v. Wonderly, 36 N. J. T>. 250. 103 Salmon v. Richardson, 30 Conn. 3(iO; 79 Am. Dec. 255. § GS4 AGENTS — DUTIES AND LIABILITIES. 842 which the company becomes insolvent. 196 And a policy may be enforced against the directors personally where they fraudulent- ly consent to the issue of a policy in a certain city, wherein they have no right to transact business, by reason of the com- 2>any's charter locating it in another city. 197 So if a com- pany's reinsurance of its risks operates under a statute as a transfer, in view of insolvency, the directors are personally lia- ble, even though they acted in good faith to policy holders not secured by such reinsurances. 198 But where the directors have closed up a certain class of business, and canceled the policies, they cannot be held personally liable for neglect to make an as- sessment upon subsequent policy holders to meet a judgment on a note given for a loss under a policy in that class. 199 And where the statute provides only for a liability under policies in a stock company for losses equal to the capital stock, the amount of the loss sustained by a policy holder must be first fixed by a judgment against the company before the directors can be held liable. 200 Nor can a claimant under a policy hold the directors personally liable after he receives from the com- pany a note in settlement of his claim, and either releases the claim or obtains judgment on the note alone. 201 § 684. Liability of Company for Agent's Frauds, etc. 202 An insurance company may be held liable to a third person for the frauds, deceits, and misrepresentations, injurious state- ments, and acts of its agent, when the acts so committed are apparently within the general scope of his authority, although he exceeded his actual authority, and such acts were not au- thorized, either in detail or by his general instructions and "• Stewart v. Lee Mut. F. Ins. Assn., 64 Miss. 499; 1 S. Rep. 743. 197 Booth v. Wonderly, 36 N. J. L. 250. 198 Casserly v. Manners, 48 Ho-w. Pr. (N. Y.) 219. 189 Upton v. Pratt, 103 Mass. 551. under Mass. Gen. Stat., e. 58, see. 48, as to "property belonging to the period assessed, the proceeds of which can be applied." 200 Kinsley v. Rice, 10 Gray (Mass.), 325; Mass. Rev. Stat., c. 37, sec. 18. 201 Raber v. Jones, 40 Ind. 436. 202 See as to liability of principals generally for agent's frauds, note 52 Am. Dec. 57, 58; as to liability of principal generally for omission of duty by agent, note 54 Am. Rep. 233-35. 843 AGENTS — DUTIES AND LIABILITIES. § 6S4 powers. 203 So the principal is liable for the acts and neglect of agents expressly appointed, as in case of factors or consign- ees, for the reason that they represent the principal in the business in which they are engaged or employed, 20 " 1 and also because the insured must suffer for the fraudulent or negligent acts of his agent, for he has put it within his power to commit the wrong. 200 AVhere a policy is forfeited for neglect to noti- fy the company of an encumbrance, and although the agent was informed of the encumbrance no inquiry was made of him as to what was necessary to keep the policy alive, nor was the agent requested to, nor did he undertake to, do anything to effect that purpose, the cause does not render a mutual fire insurance company liable, under the Vermont statute, for the acts and neglects of their agents while in the performance of their duties as such. 206 And the fact that a loan agent is the agent of the company to procure insurance does not make him their agent, in respect to loans obtained by him from the com- pany, and so render them liable for usury for commissions de- ducted by him. 207 But a general agent of an insurance com- pany for a district embracing several states has such authority in one of them, though his office is in another, as will make the company liable for malicious prosecution instituted in the com- pany's name by his connivance in either state. 208 503 New York L. Ins. Co. v. McGowan, 18 Kan. 300. See Carpenter v. American Ins. Co., 1 Story (C. C), 57; Draper v. Charter Oak Ins. Co., 2 Allen (Mass.), 569. 104 Ludlow v. Columbian Ins. Co., 1 Johns. (N. Y.I 335. ■" Micoll v. American Ins. Co., 3 Wood & M. (C.C.) 529; Smith v. Empire Ins. Co., 25 Barb. (N. Y.) 497. ** Tarbell v. Vermont Mut. F. Ins. Co., 63 Yt. 53; 22 Atl. Rep. 533, under Rev. Laws Vt., sec. 3617. *" Cox v. Insurance Co.. 11" 111. 382; Massachusetts Mut. L. Ins. Co. v. Boggs, 121 111. 119; 13 N. E. Rep. 550. 103 Turner v. Phoenix Ins. Co., 55 Mich. 236. CHAPTER XXIV. AGENTS — RIGHTS AND REMEDIES — TERMINATION OF AGENOY. i 690. Agent's and broker's lien, when it attaches and what it covers. § 691. Agent's lien: Assignment of policy by assured. § 692. Lien of sub-agent or broker. § 693. How agent's lien may be lost or waived. § 694. Revival of agent's lien. § 695. Agent's right to commissions. § 696. Sub-agent's right to commissions. § 697. When agent not entitled to commissions. § 698. Rights of agent as to the premium. § 699. Set-off: Agent. § 700. Same subject: English authorities. § 701. Same subject: English and American authorities. § 702. Agency: Attorney of foreign company. § 703. Service of papers or process: Agents of foreign company. § 704. Recovery back of loss paid by company— Agent. § 705. Action against receiver by agent. § 706. Action against company by average adjusters. § 707. Indictment of agent for larceny. § 70S. Action on agent's bond. § 709. Same subject: Laches of principal— Notification of sureties. § 710. Action on agent's bond: Prior defaults. § 711. Action on local agent's bond. § 712. Action on agent's bond: Defenses. § 713. Actions against agents of foreign companies acting without license: Statutes. § 714 When agent's right may not be abridged, though acting for unlicensed company. § 715. Indictment of agent for paying rebate — Statute. § 716. Reformation of policy for agent's mistakes. § 717. Agent's defenses. § 718. Proof of agent's authority. § 719. Termination of agency: War. § 720. Termination of agency as to assured. § 721. Termination of agency as to assurer: Revocation. § 690. Agent's and Broker's Lien — When it Attaches and "What it Covers. — The policy when effected is the property of the assured, whether it be in his agent's or broker's (814) 845 AGENTS RIGHTS AND REMEDTES. § 690 hands; 1 but if an insurance broker or other agent is expressly or impliedly authorized by the assured to procure an insurance, he has a lien against his principal upon the policy in his pos- session. Such lien covers all sums due him for commissions, disbursements, advances, and services in and about that busi- ness, and such agent may retain the policy until the amount so due him is paid or the lien otherwise discharged. But the lien does not embrace items, accounts, or a general balance wholly disconnected with, or liabilities outside of, the business of the agency. The agent must also have done the act which gives a right to the lien in that particular character to which the right attaches. The lien does, however, embrace all outstand- ing liabilities of the principal arising out of the business of the agency, and in cases of mercantile agents effecting insurances for a correspondent, the lien may cover a balance due on mer- cantile transactions arising out of that agency. 2 The agent's right, however, to retain the policy must rest upon either the consent of the principal or upon his demands for advances and commissions, on account of the policy, or upon the fact that he is a general mercantile agent, or upon some express or implied agreement, or upon a general usage or particular usage known 1 See 1 Marshall on Marine Insurance, ed. 1S10, 301 b. * "Insurance brokers have now by general usage a lien upon policies of insurance in their hands, procured by them for their principals, and also upon the moneys received by them upon such polioses," per Tenney, J., in McKenzie v. Nevins, 22 Me. 13S. Where the broker claimed a lien upon the policy on the ground of premiums advanced, it was said by the court: "If this fact of the payment of the premium had been made out, the court would have been disposed to award Mr. Lindsay payment out of the piroc-eeds of the policy; for although he had once parted with it, yet coming to his hands again to be put in suit, his lien for the premium would revive, and be protected, unlese the manner of his parting with it had manifested an intention in him altogether to abandon such lien." per Livingston, J., in Spring v. South Carolina Ins. Co., 8 Wheat. (U. S.) 208, 285. See, also, Jarvis v. Rogers, 15 Mass. 396, peir Wilde, J.; Muir v. Fleming, Dow. ..V- Ry„ pt. 1, N. P. C. 29; Godin v. London Assur. Co., 1 Burr. 493; Olive v. Smith, 5 Taunt. 56; Mann v. Sniff ner, 2 Bast, 523; Foughton v. Mat- thews. 3 Bos. & P. 4So; Dixon v. Stansfield. 10 Com. B. 398; Walker v. Birch. 6 Term Rep. 258, per Lawrence, J.; Foster v. Hoyt, 2 Johns. Cas. (N. Y.) 327; Levy v. Barnard, 8 Taunt. 154; 2 Duer on Marine Insurance, ed. 1S46, 285, et seq.; 1 Arnould on Marine Insurance, Perkins' ed., 139, et seq. See Hunter v. Leathley, 10 Barn & C. 85S. § 690 AGENTS — RIGHTS AND REMEDIES. 846 to tlie assured, or upon the course of business between Him and the principal. 3 But in certain cases the agent may have a lien on the policy for advances made in relation to matters out- side of the insurance business, a credit being given on the im- plied security of the policy. 4 It is held, however, that the agent must produce the policy in evidence, if necessary, to his principals, notwithstanding his lien thereon, and upon his lien being satisfied, must deliver it to his principal on demand. 5 And a broker who, by a course of dealing sanctioned by the underwriter, has an implied authority to adjust and satisfy losses, acquires a lien on the policy for his reimbursement. 6 If the broker has paid the premiums on two insurances, ef- fected by liim, and he retains the policies, he has a lien against the assured for both premiums on the amount of loss paid him under one of the policies. 7 And where, in case of the bank- ruptcy of the underwriter, the broker retains the policies and abandonments in his hands, he has a lien for losses paid by him on money paid for the benefit of all parties interested. 8 Although the lien of an agent, strictly speaking, is on the pol- icy, yet it is regarded as attaching on all moneys derived there- under, with a right to apply the same to a liquidation of the claim. 9 So the broker of the underwriter who, by a course of dealing between the underwriter and himself, is accustomed to pay losses and retain policies, has a lien upon salvage for his general balance against the underwriter. 10 And a mercantile agent acting in the capacity of a general agent for a foreign house, and directed to effect an insurance on a particular voy- age, cannot have a lien on the loss paid under that policy for * See 2 Phillips on Insurance, 3d ed., 560, sec. 1912, citing Green v. Farmer. 4 Burr. 2214. * Olive v. Smith, 5 Taunt. 56. * Hunter v. Leathley, 10 Barn. & C. S5S. See criticism of this case In 2 Duer on Marine Insurance, ed. 1846, 293, et seq. • Moody v. Webster, 3 Tick. (Mass.) 424. T Leeds v. Mercantile Ins. Co., 6 Wheat. (U. S.) 565. • Moody v. Webster, 3 Pick. (Mass.) 424. • 2 Duer on Insurance, ed. 1845, 2S8, citing Story on Agency, sec. 379. 10 See Spring v. Soutli Carolina Ins.. Co., 8 Wheat. (U. S.) 268; Olive v. Smith, 5 Taunt. 56; Moody v. Webster, 3 Pick. (Mass.) 424; Foster v. Hoyt, 2 Johns. Cas. (N. Y.) 327. S47 AGENTS — RIGHTS AND REMEDIES. § 690 a general balance due him as a factor; 11 nor does a lien on the policy extend to money previously lent to principal outside of the insurance agency. 12 So one who procures insurance in his own name for another person, not as a broker or general agent, but in pursuance of a specific order, has no lien on the policy, and although a ship's husband he has no lien for the balance of his account. 13 And the fact that a policy is left in the agent's hands for custody only, gives him no lien for money advanced outside that particular agency. 14 And, in this country, the fact that the policy in the agent's possession acknowledges pay- ment of the premium is not sufficient evidence of actual pay- ment to warrant a lien. 15 In cases also of voluntary and gra- tuitous agents, Duer says that a lien can only exist where the principal chooses to grant it, because there is no established usage to warrant such a lien. 16 But a broker effecting insur- ance on goods to be shipped has a lien on the loss paid for a general balance against the shipper, although the consignment was conditioned that the proceeds of the policy be paid to a third person. 17 In cases of illegal insurances, as no right ex- ists to recover the premium, though actually paid, it necessa- rily follows that no lien would exist in such cases. It would be proper to state here that the system of credits between the broker and the assured and assurer, evidenced by the English cases, gives a right to a lien in many cases which are not ap- plicable here. But if by the usual course of business between the parties such a system arises, or there be a usage established, then such English cases may be resorted to for an exposition of the law having the force of authorities, so far as they do not conflict with established rules of law or of decisions here. 18 u Dixon v. Stansfield, 10 Com. B. 398. a James v. Rogers, 15 Mees. & W. 1375. 15 Reed v. Pac-'fie Ins. Co., 1 Met. (Mass.) 166. u Muir v. Fleming, Dow. & Ry. N. P. C. 29. 15 Milliek v. Peterson, 2 Wash. fO. C.) 31. " 2 Duer, on Marine Insurance, ed. 1846, 285, 286. 1T Man v. Shiffner, 2 East, 523. 18 Insurance Co. v. Smith, 3 Whart. (Pa.) 521. See Taylor v. LoS. 434. this case is cited as an authority under the proposition. "But if he. the broker, did not know that he was a subngent. and supposed that he was effecting insurance for his employer, who was the actual insured, Joyce, Vol. I.— 54 § 693 AGENTS — RIGHTS AND REMEDIES. 850 § 693. How Agent's Lien may be Lost or Waived. — An insurance broker or other agent loses his lien by voluntarily giving up the possession of the policy to his principal ; 2y and a lien being strictly personal to the agent, it cannot be trans- ferred to avail a third party as against the principal. 30 So an agent .may lose his lien by an act which amounts impliedly to a credit to his principal, as in case of receiving a note from his principal, payable in future, or generally where he accepts other security for the debt, or holds the policy for another's benefit, 31 and an agent releases his lien on the policy by pledg- ing it as his own. 32 So the lien is lost where the agent deliv- ers the policy to his principal and he assigns it to a bona fide purchaser without notice. 33 And if a broker employs another to effect insurances, and the latter executes orders and pays premiums, and delivers part of the policies into the first brok- er's hands, his lien on the policies retained does not cover premiums for those delivered. 34 But an agent does not release his lien on the policy by handing it to another than the prin- it might be otherwise," viz., that he might have a lien against the agent in such case, although he adds, "but this exception does not appear to us to be unquestionable." But in Westwood v. Bell, 4 Camp. 349, 1 Holt, 122, Gibbs, iC. J., declares that "in Lanyon v. Blanchard, likewise the defendant must be taken to have had notice that the person who employed him was not the principal." This is also the construction given by this case in 1 Arnould on Marine Insurance, Perkins' ed., 141. The authority of Bell v. Jutting. 1 Moore, 155, and Roberts v. Ogilby, 9 Price, 269, so far as they seem to conflict with Mann v. Forrester, 4 Camp. 60, is denied in 2 Duer on Insurance, ed. 1846, 361, note 2. 29 Cranston v. Philadelphia Ins. Co., 5 Binn. (Pa.) 53S; Hewison v. Guthrie, 2 Bing. N. C. 755, 759; Spring v. South Carolina Ins. Co., 8 Wheat. (U. S.) 287. See as to the general rule, Jordan v. James, 5 Ohio, 89, 98; McFarland v. Wheeler, 26 Wend. (N. Y.) 467; Danforth v. Pratt, 42 Me. 50; King v. Indian Orchard Canal Co., 11 Cush. Roper v. Sangamon Lodge, 91 111. 518; 33 Am. Rep. 60. 150 Hough v. yEtna Ins. Co., 57 111. 318; 11 Am. Rep. 18. m Thorne v. Travelers' Ins. Co., 80 Pa. St. 15; 21 Am. Rep. 89. ■" Scottish 'Commercial Ins. Co. v. Plummer, 70 Me. 540, under Me. 1?ev. Stat., c. 49, sec. 49. 155 Manhattan Ins. Co. v. Ellis, 32 Ohio St. 3S8, under Ohio Stat, 222, sec. 21. 873 AGENTS — RIGHTS AND REMEDIES. § 713 cate from tlie proper official, and such agent may, in such case, be indicted therefor. 154 And where a broker solicits and places insurances on behalf of a number of companies, and the pre- mium is paid, the policies delivered, and the broker's commis- sions paid, but the assured did not select any of the companies, it was held that such acts of the agent not having been author- ized under the statute, the agent was liable as for separate of- fenses, he being the agent of the several companies for whom he had solicited. 135 An information for acting as agent of a company, which has not complied with the laws of the state, is insufficient if it does not allege that such corporation was an insurance company. 156 If no unincorporated company can pro- cure from the insurance commissioner a license for the transac- tion of business in a certain state under its statutes, a voluntary association of guarantee and accident Lloyds cannot be licensed to transact business, but the penalty prescribed is not applicable to such association, and a person assisting it as its agent in transacting business is guilty of no offense. 157 In an action for penalties brought against an agent for a foreign insurance com- pany, the term "agent" being made by the statute to include any person aiding in "transacting the insurance business of a foreign corporation," it is error to direct a verdict for the de- fendant because the evidence does not show an agency in the 1U See State v. Johnson, 43 Minn. 350; 45 N. W. Rep. 711. Indict- ment under Minn. Gen. Stat. 187S, sec. 292, c. 34; amended, c. 54, holding that it is immaterial, as to the agent, whether the company had or had not complied with the statute: See Morton v. Hart (Tenn.), 12 S. W. Rep. 1026; 19 Ins. L. J. 347; State v. Hover, 58 Vt. 496; State v. Turney, 81 Ind. 559; Moses v. State, 65 Miss. 56; Ithaca etc. v. Beecher, 99 N. Y. 429. The statutes of certain states impose a personal liability upon agents, in favor of assured, where the foreign company is not authorized to transact business in the state: See Ala. Code, 1893, sees. 20, 23; Conn. Pub. Acts, 18S9, c. 107; Pa. Act, May 1, 1S76; Pub. Laws, 53 Tenn. Act, Feb. 27, 1891; Tex. Acts, 1879. c. 36; Vt. Gen. Laws, 1S93, see. 14. And see as to requirements and liabili- ties of agents in New York, Hamilton's Stat. Rev. of Ins. Laws, 1894, sees. 50, 54, 91, 111, 134, 137. As to Pa. Act, see MeBride v. Rinard, 15 Pa. Co. Ct. 422. 158 State v. Farmer, 49 Wis. 459. ,M Brown v. State, 26 Tex. App. 540; 10 S. W. Rep. 112. "' Fort v. State, 92 Ga. S; IS S. E. Rep. 14. § 713 AGENTS — RIGHTS AND REMEDIES. 874 ordinary sense of that term. 158 But where the defendant, in a similar case, filled out a blank application, assuming to act for a certain insurance company, and a policy was issued thereon by the company, it was held that such evidence fairly tended to establish an agency. 159 Where the statute includes any per- son "who inspects any risks" for an unlicensed foreign corpo- ration, this will not apply to the act of inspecting a risk pre- viously taken, so as to enable an action to be maintained for penalties. 160 And if a foreign corporation has been prohibited from doing business therein, the resident agent, and not the company, is liable for issuing policies thereafter. 161 It has been held in Louisiana that an insurance agent is liable for the li- cense exacted by statute from a firm or person doing an insur- ance business in that state, and that such agent stands between the insured and the company. 162 In a later case, however, in the same state, it was held that under its statute it was not within the power of the legislature to compel an agent to pay the license required of a foreign corporation. 163 It is compe- tent for the legislature to enact such statutes. 164 And it is declared in Michigan that agents of mutual companies are equally as liable as those of stock companies, where he has not obtained the proper authority to solicit for the foreign com- pany; 165 so also in Wisconsin. 166 And the word "state," under a statute 167 prohibiting agents of companies incoirporated in 15S People v. People's Ins. Exch., 126 111. 466; 18 N. E. Rep. 774, under Act 111., March 11, 1869, p. 22. See People v. Fesler, 145 111. 150; 34 N. E. Rep. 146. 169 People v. Howard, 50 Mich. 239, under Mich. Acts, 1881, No. 148. '■ 80 Ex parte Robinson, 86 Ala. 622; 5 S. Rep. 827, under Code Ala., sees. 1205, 3897. See Noble v. Mitchell (Ala. 1894), 14 S. Rep. 581. 161 State v. Charter Oak L. Ins. Co., 9 Mo. App. 364. See State ex rel. v. New York L. Ins. Co., 81 Mo. 89; 10 Mo. App. 5S0. 162 State v. Woods, 40 La. Ann. 175: 3 S. Rep. 543. ii3 State v. Williams, 46 La. Ann. 922; 15 S. Rep. 290; 23 Ins. L. J. 508. 164 Pierce v. People, 106 111. 11; 46 Am. Rep. 683. 1M People v. Howard, 50 Mich. 239. ™ Ze-11 v. Hermann Farmers' Murt. Ins. 'Co., 75 Wis. 521; 44 N. W. Ron. 828. 167 ReT. Stat. Ind. 1S81, p. 240, suibd. 7, sees. 3765, 3771. 875 AGENTS — RIGHTS AND REMEDIES. §§ 714-716 other states from transacting business in Indiana without a li- cense, includes the District of Columbia and the territories. 108 § 714. When Agent's Right May not he Abridged though Acting for Unlicensed Company. — A professional ad- juster, open to employment by any and all companies who may need him, has such a legal business and profession as gives him a right, guaranteed by the constitution of the United States, to follow it in any state, without abridgment or re- striction by a state law imposing a penalty upon agents of for- eign companies unlicensed in the state. 169 § 715. Indictment of Agent for Paying Rehate — Statute. — Where an agent was indicted under the New York statute 170 for paying a rebate as an inducement to a person to take a life policy, it was held immaterial whether the corpora- tion was a domestic or foreign company, and that it appearing that the company was doing business in New York, it suffi- ciently supported an allegation that it was organized under the laws of another state. The statute, however, only prohib- ited discriminations in rates by "life insurance companies do- ing business in this state." 171 § 716. Reformation of Policy for Agent's Mistakes, etc. —Where an agent is authorized to act in the prem- ises, and through his mistake or fraud the policy fails to ex- press the real contract between the parties, or if by inadvert- ence or mistake of the agent provisions other than those in- tended are inserted, or stipulated provisions are omitted, there is no doubt as to the power of a court of equity to grant relief by a reformation of the contract. When, however, a mistake is relied on, it must be mutual to warrant such intervention, or ,M State v. Briggs, 116 Ind. 55: 18 N. E. Rep. 395. »» French v. People (Colo. 1S95), 24 las. L. J. 678; 40 Pae. Rep. 463. But see Hooper v. People State Cal. (TJ. S. S. C. 1895), 15 Supr. Ct. Rep. 207; 40 Cent. L. J. 228. Three justices dissented in this last case. I7n N. Y. Laws. 1SS9, c. 2S2. sec. 100; Amended Laws, 1890, c. 401. 171 People v. Formosa. 131 N. Y. 47S; 43 N. Y. St. Rep. 654. Exam- ine People v. McCann, 67 N. Y. 500. § 716 AGENTS — RIGHTS AND REMEDIES. 876 there must be mistake of one party and fraud of the other. 172 There are also other exceptions to the rule that the mistake must be mutual. 1 ' 3 And a contract may also be reformed for a mutual mistake as to the law, and such mistake may even be corrected by the beneficiary after the death of the insured. 174 And where the company's agent agrees to insure for the benefit and protection of the owner, and the consideration is paid, but the policy, as written by the agent, does not conform to the agreement, the policy will be reformed to express the real con- tract. 175 And where through the fault of the company's agent in giving wrong information the policy was issued in the name of the mortgagor, instead of the mortgagee, relief will be granted in equity. 176 And the policy will be reformed where, by mistake as to the manner of properly filling in the papers, the agents of the company, with full knowledge of the facts, made the policy in the wrong name, so that it failed to cover the insured's interest as mortgagee. 177 So where it appears that the agreement was for a policy for one year, and the agent by mistake drew it up for a term of sixty days, and the insured paid the premium usually paid for a policy for one year on that class of risks, equity will reform the contract. 178 And so where a policy clerk made a similar mistake as to the duration of the policy, it was reformed, and a suit at law which had been brought upon it, was enjoined. 179 So where the agent fails, through fraud or mistake, to rightly state the facts when he 1TJ Abraham v. North German Ins. Co., 40 Fed. Rep. 717; Kent v. Manchester, 29 Barb. (N. Y.) 595; Oooper v. Farmers' Ins. Co., 50 Fa. St. 299; Cone v. Niagara Ins. Co., 60 N. Y. 019; Malleable Iron Works v. Phoenix Ins. Co., 25 Conn. 465; Bailey v. American Cent. Ins. Co., 13 Fed. Rep. 250; Phoenix Ins. Co. v. Hoffheimer, 46 Miss. C45; Ledyard v. Hartford F. Ins. Co., 24 Wis. 496; Bidwell v. Astor Mut. Ins. Co.. 16 N. Y. 263; Maher v. Hibernia ins. Co., 67 N. Y. 2S3, National Traders' Bank v. Ocean Ins. Co., 62 Me. 519; Devereux v. Sun Fire Office, 51 Hun (N. Y.), 147. 173 National Traders' Bank v. Ocean Ins. Co.. 62 Me. 519, 523. "* Welch v. Welch (Ky. Sup. Ct. 1892), 13 Ky. I.. Rep. 639. m Abraham v. North German Ins. Co. (Iowa), 40 Fed. Rep. 717. 176 Sias v. Roger Williams Ins. Co., 8 Fed. Rep. 1S3. m Woodbury Savings Bank y. Charter Oak Ins. Co.. 31 Conn. 517. ! " Devereux v. Sun Fire Office, 4 N. Y. Supp. 655; 51 Hun (N. Y.), 147. "' North American Ins. Co. v. Whipple, 2 Biss. (C. C.) 418. 877 AGENTS — -RIGHTS AND REMEDIES. § 716 fills up the application, the policy will be reformed in equity; 180 and if the company's officers have knowledge of and intend to cover the entire interest in the property as agreed, the policy will be reformed to conform with the intent of the parties. 181 And equity may reform the contract where the facts, as stated to the agent, are wrongly written in by him, in case there is no fraud or collusion between the agent and the assured. 182 So where the agent of the assured, having insured goods in his own name as agent, and the policy having expired a new one was written, making by the mistake the policy in the agent's own name, but not as agent, the policy will be reformed by inserting the word "agent." 183 And where the plaintiff applied to an agent for insurance to cover the interest of her- self and son in the property, and the agent omitted all reference to the son's interest in writing the application, and she, being illiterate and relying upon the agent, signed the same, it was held that equity would reform the policy to cover both interests as intended. 184 And where the agent was to select the com- panies, and the policies were to allow additional insurance, and the agent wrote a policy forbidding additional insurance, it was held that it would be reformed, and this even though the as- sured had accepted the policy without reading it. 185 So if the local agent's attention is called by the insured to an error in describing the premises after the policy is issued, and the agent tells him that it makes no difference, and thereafter the gen-' eral agent and secretary of the company, with knowledge of the facts, inspects the premises and declares the risk good, the policy may be reformed. 186 And upon trial of an action on the policy the insured, without any plea of mistake or fraud, may have corrected a statement in the proofs of loss, by show- ing fraud or mistake on the agent's part in transcribing the 180 Ben Franklin Ins. Co. v. Gillett, 54 Md. 212. 181 Keith v. Globe Ins. Co., 52 111. 518. 181 Franklin F. Ins. Co. v. Martin, 40 N. J. L. 568. 183 Phoenix etc. Ins. Co. v. Hoffheimer, 46 Miss. 645. 194 Jemison v. State Ins. Co., 85 Iowa, 229; 52 N. W. Rep. 1S5. lts Karnes v. Hekla F. Ins. Co., 75 Iowa, 11; 39 N. W. Rep. 122 (an- notated ease). m Maher v. Hihernia Ins. Co., 67 N. Y. 290 § 716 AGENTS — RIGHTS AND REMEDIES. 878 same. 187 So a policy may be reformed, even after loss, where the company's agent who drafted the application made a mis- take in describing the buildings, and so notwithstanding the company had, at the time the policy was taken out, insured other buildings in the same block to the full amount allowed by the rules to be taken thereon. 188 So equity will reform the contract where the insured is induced by the agent of the com- pany to take out a policy on firm property in his own name, un- der the belief that it would protect the partnership interest. 189 In another case it appeared that plaintiff was the assignee of a certain mortgage, and also claimed possession of the property as a purchaser under the execution sale of the premises. One M. was also in possession of the property, claiming ownership, and the title was in litigation. The company's agent knew of the pendency of said suit, and suggested to the plaintiff, when ef- fecting insurance, to take the policy in the name of M., payable to the mortgagee, which was done. Plaintiff obtained a judg- ment in her favor, and a loss having occurred, the company re- fused payment of the loss, claiming that M. was not the owner when the insurance was made. It was held that equity would grant relief by inserting plaintiff's name in the place of M.'s in the policy, and would compel payment to her. 190 And in case the policy as issued does not conform to the agreement as made with the agent, in regard to the date of sailing, and the agent, before delivery, alters said date of sailing, it will be re- formed. 191 So where a mortgagee states his interest as such to the agent, but the latter wrongly draws up the application in the mortgagor's name payable to the mortgagee, so as to cover the property, it will be reformed. 192 And where, by mistake of the insurance broker, a policy was effected in his name on ls " Zielke v. London Assur. Corn.. 64 Wis. 442. ,ss Home Ins. Co. v. Lewis. 48 Tex. 622. " 9 Snell v. Insurance Co., 98 U. S. 85. 100 Balen v. Hanover F. Ins. Co., 67 Mich. 179; 34 N. W. Rep. 654 (annotaled case). m Unnten v. Orient Mut. Ins. Co., 41 N. Y. (2 Keyes) 667; 8 Bosw. (N. Y.) 448; 1 Abb. App. Dec. (N. Y.) 257. 191 AY oodbury Savings Bank v. Charter Oak etc. Ins. Co., 31 Conn. 517. 879 AGENTS — RIGHTS AND REMEDIES.. § 717 account of the wrong person, the policy may be reformed so as to cover the interest of the person actually owning the prop- erty, and who directed the broker to procure the policy. 193 But where an agreement made with the agent is not one which he has authority to make, and its terms are not communicated to or adopted by the principal, and is not a binding contract upon the parties, there can be no reformation of the policy. 194 And the policy will not be reformed so as to permit other insurance, notwithstanding an agreement w T ith the insurer's agent that the policy should so do, unless it is clearly proven that the in- tention was mutual between the parties. 190 It is also held that if the policy provides that the survey shall be part of the policy and a warranty, then the agent's mistake in transcribing the answers of the assured will not warrant a reformation of the policy, unless it is shown that the risk was not accepted on the faith of the warranty. 196 Nor is the fact that the agent was mistaken sufficient ground for relief where the mistake is not mutual, and the agent was not authorized to make the contract for the insurer. 197 But the proof must be clear, for if a doubt exists as to what statements the applicant actually made, or as to the intent of the parties, or if the evidence be materially conflicting, a reformation will not be granted. 198 § 717. Agent's Defenses. — In an action against the agent or broker for negligence or unskillfulness, the plaintiff is entitled to recover the same amount as he might have re- 1M Oliver v. Mutual Commercial M. Ins. 'Co., 2 Curt. (C. C.) 277; citing Motteux v. London Assur. Co., 1 Ark. 545; Collett v. Morrison, 8 Hare. 162; Phoenix F. Ins. Co. v. Gurnee, 1 Paige (N. Y.), 27S. 1M Fowler v. Scottish Equitable L. Assur. Co., 4 Jur. (N. S.) 11G9; 28 L. J. Ch. 225. 195 Fellows v. Madison Ins. Co., 2 Disn. (Ohio) 12S. 1W! Cox v. JEtna Ins. Co., 29 Ind. 5S6. 167 Cooper v. Farmers'Mut. F. Ins. Co., 50 Ta. St. 299. 188 Cooper v. Farmers' Mut. F. Ins. Co., 50 Ta. St 299: Farmville Ins. etc. Co. v. Butter, 55 Md. 23,3; Snell v. Atlantic F. Ins. Co.. 98 U. S. 85; McHugh v. Imperial F. Ins. Co., 48 How. Pr (N. Y.) 230; Mead v. Westchester F. Ins. Co., 04 X. Y. 453; Parsons v. Bignold, 15 L. J. Ch. 379; 13 Sim. 518; Tnsson v. Atlantic Mut. Ins. Co., 40 Mo. 33; Balen v. Hanover F. Ins. Co.. C>7 Mich. 179: Hearne v. Marine Ins. Co., 20 Wall. (U. S.) 4SS; St. Faul F. Ins. Co. v. Shaver, 76 Iowa, 282. § 718 AGENTS — RIGHTS AND REMEDIES. 880 covered against the underwriters had the policy been properly effected, and in such case the agent may avail himself of every defense, such as fraud, noncompliance with the warranty, etc., which the underwriters themselves might have set up in an ac- tion on the policy. 109 § 718. Proof of Agent's Authority. — The burden of proof of the original authority of the agent, or the subsequent ratification of his contract, rests upon the party who relies upon his acts. 200 So the burden is upon the assured to show that the agent's acts were within the apparent scope of his author- ity. 201 So the burden of showing that the agent possessed the power to waive conditions is upon the assured. 202 In the case of officers of a corporation, there are certain acts which parties have a right to assume that they are authorized to do, and as to such acts, it would seem that it is not necessary to show affirmatively their authority. 203 An agent's authority may be proven by his written commission, 204 by producing his power of attorney, or by putting in evidence the resolution of the board of directors appointing him, 205 and the character of the agency may be shown by the document appointing him. 206 So ratification is proof of authority. 207 His authority may also be proven by showing a custom of the company to pay policies subscribed by him as agent, even though he has a power of at- 189 1 Marshall on Marine Insurance, ed. 1810, 301; Miner v. Tagert, 12 Mass. 40; Webster v. De Tastet, 7 Term Rep. 157; Alsop v. Colt, 12 Mass. 40; Wilkinson v. Coverdale, 1 Esp. 75, per Lord Kenyon; De- laney v. Stoddart, 1 Term Rep. 22. 200 Wolff v. Horncastle, 1 Bos. & P. 316; Fleming v. Hartford F. Ins. Co., 42 Wis. 616; Lamen v. Loring, 1 Mason (C. €.), 128; Russell v. Union Ins. Co., 4 Dall. (C. C.) 421; Sterling v. Vaugh, 11 East, 619; 2 Camp. 225; Foster v. United States Ins. Co., 11 Pick. (Masis.) 85. 201 Sohnes v. Insurance Co. of North America, 121 Mass. 438. 202 Mosselbach v. Sun Fire Office, 122 N. Y. 578; 26 N. E. Rep. 34. 203 Safford v. Wickoff, 4 Hill (N. Y.), 442, per Walworth, C. See Jellinphams v. New York Ins. Co., 6 Duer (N. Y.), 1. 201 Howard Ins. Co. v. Owen (Ky. Sup. Ct. 1S91), 13 Ky. L. Rep. 237. 203 Bennighoff v. Agricultural Ins. Co., 93 N. Y. 495. "• Martin v. Farmers' Ins. Co. etc.. 84 Iowa, 516; 51 N. W. Rep. 29. w Fayles v. National Ins. Co., 49 Mo. 380. 881 AGENTS — RIGHTS AND REMEDIES. § 719 torney. 208 So an agent's authority may be affected by usage. 209 So an agent's authority to act concerning the loss may be proven by the fact that he was authorized to aid in adjusting the loss. 210 So the practice of the company in allowing its agents to do certain acts is admissible on the question of their authority to waive conditions of the policy. 211 So the charter and by-laws are admissible on the question of the agent's au- thority to waive forfeiture, 212 and his authority may be proven by evidence of his acts in receiving and forwarding the applica- tion. 213 So the receiving by the company of the application through an agent, and issuing a policy thereon, establishes an agency. 214 Correspondence between insurance brokers and the company is admissible to show their relations with each other and methods of doing business. 215 An agent's authority cannot be proven by his declarations, 216 nor by general reputation, 217 and if an agent gives a note for the premium, evidence is inad- missible to show that he meant to bind his principal, and not himself; 218 and where an agent of the company was requested to look after the insured's risks in certain companies, and he reported lists to him showing the amount of his insurances, and gave receipts for advances for premiums, such papers were held inadmissible to show a recognition by the company of the pol- icies sued on. 219 § 719. Termination of Agency — War. — There are numer- ous cases which hold that the late Civil War did not revoke the ™ Haughton v. E-wbank, 4 -Camp. 88. ,c » Whitehouse v. Moore, 13 Abb. (N. Y.) 142. 110 Powers' Dry Goods Co. v. Imperial F. Ins. Co., 48 Minn. 380; 51 N. W. Rep. 123. 211 Knickerbocker L. Ins. Co. v. Norton, 96 U. S. 234, per Bradley, J. 212 Koelges v. Guardian etc. Irs. Co., 2 Lans. (N. Y.) 480. 213 Capital City Ins. Co. v. Caldwell, 95 Ala. 77; 10 S. Rep. 355. 2,4 Packard v. Dorchester Mut. F. Ins. Co., 77 Me. 144. Ms Sun Mut. Ins. Co. v. Saginaw Barrel Co., 114 111. 09; 29 N. E. Rep. 477. 210 James v. Stookey, 1 Wash. (C. C) 330. 517 Graves v. Horton, 38 Minn. G6; 35 N. W. Rep. 568. 215 Stackpole v. Arnold, 11 Mass. 29. "» Hartford F. Ins. Co. v. Reynolds, 36 Mich. 502. Joyce, Vol. I.— 56 § 720 AGENTS — RIGHTS AND REMEDIES. 882 authority of an agent, resident in the enemy's country, to re- ceive premiums in behalf of the company, 220 although other cases hold that the agency is suspended. 221 But the agency of a subject of a neutral power is not revoked by war, the agent being a resident in the enemy's country. 222 § 720. Termination of Agency as to Assured. — An agency for the assured may terminate by the performance of the act for the doing of which the agency was created, as in case of the employment of a broker to procure a particular in- surance, his agency ceases when that insurance is effected. 223 So an agent's authority to insure may be revoked at any time prior to the actual completion of the contract with the under- writers, and being so revoked, he acts on his own responsi- bility thereafter if he proceeds. 224 If an agent insures "for whom it may concern," and his authority is revoked, he can- not sue in his own name, unless he has some lien on or interest in the property. 220 So insolvency or bankruptcy of the princi- pal revokes the agent's authority.. 226 And under the English J20 Robinson v. International L. Assn., 42 N. Y. 547; 1 Am. Rep. 490; Manhattan L. Ins. Co. v. Warwick, 20 Gratt. (Va.) 614; 3 Am. Rep. 218; Sands v. New York L. Ins. Co. (N. Y. Sup. Ct. 1871), 4 Alb. L. J. 11; Statham v. New York etc. Ins. Co., 45 Miss. 581; Hancock v. New York L. Ins. Co., 11 Fed. Cas. 402; 2 Ins. L. J. 903; Ward v. Smith, 7 Wall. (U. S.) 447. But see Howell v. Gordon, 40 Ga. 302; Insurance Co. v. Davte, 5 Otto (95 U. S.), 425. Ml Cohen v. New York Mut. L. Ins. Co., 50 N. Y. 610. See Ward v. Smith, 7 Wall. (U. S.) 447. 222 Martine v. International L. Assur. Soc. of London, 62 Barb. (N. Y.) 181; Robinson v. International L. Assur. Co., 42 N. Y. 54; 1 Am. Rep. 590. *" Kohler v. New Orleans Ins. Co., 23 Fed. Rep. 709; Franklin Ins. Co. v. Sears, 21 Fed. Rep. 290. 224 Warwick v. Slade, 3 Camp. 127. See 2 Duer on Insurance, ed. 1846, 116, sec. 13, where this case is denied as an authority upon the point as to the right to revoke and prevent a recovery of premiums advanced after the underwriters had signed the slip or memorandum. The case, however, turned upon the point that the slip was un- stamped when signed. m Reed v. Pacific Ins. Co., 1 Met. (Mass.) 166. "■ Parker v. Smith, 16 East, 383. 8S3 AGENTS — RIGHTS AND REMEDIES. § 721 cases, "wliere the broker is by usage the agent of both parties, the bankruptcy or death of the underwriter revokes his author- ity as to the former. 227 Duer instances a case, under a given form of policy, where the direction to insure being once given, it is irrevocable in its nature, as where a custom exists of mer- chants to cover all their shipments by a general standing time policy on goods, the terms of which embrace all outward and homeward shipments on their own account, and all shipments to them "from foreign ports upon which they are directed to effect insurance. 228 § 721. Termination of Agency as to Assurer — Revo- cation. — The company may revoke its agent's authority, and such revocation binds third parties having knowledge, express or implied, thereof, and, in such case, they deal with him at their peril. 229 And no right is vested in an agent to hold an agency until the end of the year, by reason of the fact that he has taken out' an annual license. 230 ISTor does the fact that an agent has right to commissions on renewal policies render the agency an agency coupled with an interest, so as to prevent the termination of the agency by the company at its will. 231 So where an agent has ceased to do business for the company. he cannot, without special permission, and without any in- dorsement or consent on the policy, waive a condition as to other insurance, and if such agent procures other insurance in another company, the first policy is avoided. 232 And notice of other insurance is not sufficient when given to one whose agency has long ceased. 233 An agency may be terminated by the company ceasing to carry on business, 234 aoid where the !;r Farker v. Snrith, 16 East. 3S2; Houston v. Eobertson, 6 Taunt. 448. 2M 2 Duer on Insurance, ed. 1S45, 116-20, sec. 13. >" McNeilley v. Continental Ins. Co., 66 N. Y. 23. 280 Davis v. Niagara F. Ins. Co., 12 Fed. Rep. 2S1; 11 Biss. (C. C.) 592. 131 Stier v. Imperial L. Ins. Co., 5S Fed. Rep. 843. See Newcomb v. Imperial L. Ins. Co., 51 Fed. Rep. 751, which this case distinguishes. 232 Hess v. Washington F. & M. Ins. Co., 33 N. Y. St. Rep. 730; 11 N. Y. Supp. 299. * a Illinois Mut. F. Ins. Co. v. Malloy. 50 111. 419. "* Insurance Co. v. Williams, 91 N. C. 69. §721 AGENTS — RIGHTS AND REMEDIES. 834 agency of an insurance company was given to a firm, and they had authority to receive payment of premiums upon policies issued by the company, it was held that the death of one partner terminated the agency, and the insured having notice of such death, payment of premiums to the survivor were not valid as against the company; 235 for where the insured has been accus- tomed to pay the premiums due on his policy at a certain agency, and the agent has been removed or ceases to act, it is incumbent upon the insurance company to notify the insured of the fact. 236 And so far as the assured is concerned, the no- tice of revocation must be explicit, especially where he has been in the habit of dealing with such agent, as in case he has been paying premiums to him. 237 Unless the insured has no- tice of the termination of the agency, he may presume that the agent's authority still continues. 238 If the insured has no no- tice of the revocation of the agency, or that the agent has ceased to act, the company cannot insist upon a forfeiture for nonpayment on the day named, when such nonpayment is caused by the removal or termination of the agency, and there has been no notice to pay elsewhere, 239 and the insured has a reasonable time in which to make payment. 240 So notice of loss, when required to be given to some agent of the company, is sufficient when given to a local agent, although that branch of the company's business had been transferred. It appeared, however, that such agent reported such notice to the trans- feree. 241 A provision specifying certain grounds upon which 1SS Martine v. International etc. Assur. Soc, 5 Lans. (N. Y.) 535; 62 Barb. (N. Y.) 181. See Hartford Ins. Go. v. Wilcox, 57 111. 180. an Briggs v. National L. Ins. Co., 11 Fed. Rep. 458; Braswell v. American L. Ins. Co., 75 N. C. 8; Insurance Co. v. Bggleston, 96 U. S. 572. MT McNeilley v. Continental Ins. CO., 66 N. Y. 231, per Andrews, J. 538 Marshall v. Reading F. Ins. Co., 78 Hun (N. Y.), 83; 6a N. Y. St. Rep. 820; 29 N. Y. Supp. 334; Stumk v. Firemen's Ins. Co. of Chicago, 160 Pa. St. 345; 28 Atl. Rep. 779; 23 Ins. L. J. 477. "• Insurance Co. v. Eggleston, 96 U. S. 572; Braswell v. American L. Ins. Co., 75 N. C. 8. 140 Lamens v. Northwestern Mut. L. Ins. Co., 1 McCrary (C. C), 508; 3 Fed. Rep. 325. 241 Madison v. City etc. Ins. Co. L. R. 1 Com. P. 232; Bennett y. Maryland Ins. Co., 14 Blatchf. (C. C.) 422. 885 AGENTS — RIGHTS AND REMEDIES. § 721 the company may terminate the agency does not imply an agreement that the company cannot terminate the agency until some of the specified grounds exist. 242 •" Stier v. Imperial L. Ins. Co., 58 Fed. Rep. S43. LAW LIBRARY k> 9^ UC SOUTHERN REGIONAL LIBRARY FACILITY AA 000 742 919 4