AUTOMOBILE LOSSES rublished by Pacific Underwriter 7 Montgomery Street, San Francisco, California Wkisx. AUTOMOBILE LOSSES By T. H. WILLIAMS The object of this article is to deal with automobile sses and not to prescribe the proper method or form contract to be used. The present policy form is rtainly poorly worded and some of its clauses subject many interpretations, which will in time, no doubt, changed. Automobile insurance is really in its infancy and mpanies writing this class of insurance are passing rough the same experience as that of the fire insur- ce companies during their early history. The automobile contract, while practically a marine reement is, however, so changed that former court cisions are of little value. Automobile insurance is very different from any other class of insurance that evious experience with other classes confuses, rather an helps, the adjuster. If all automobile losses were^ afined to fire, little difficulty would be experienced, * a straight fire contract would then be used. The ?ft feature, which is covered under the present form policy, has produced many perplexing problems, and will probably be years before some of the grave mts now in question will be settled, or passed upon, the courts. Another question which has given trouble is that ! property insured is not confined to any one locality : is covered by the policy wherever it is. (“Within limits of the United States, exclusive of Alaska, Hawaiian Islands and Porto Rico and Canada, luding while in building, on road, on railroad car or er conveyance, ferry or inland steamer, or on coast- e steamer between ports within said limits.”) Misrepresentation as to any material fact made by insured, his agent or broker, such as ownership, ke and model of car, the year built, whether it is d for pleasure, business or hire, have greater effect >n the desirability of the risk than in fire insurance, smuch as the amount of insurance and rate of mium charged are based upon these facts. These therefore questions which must be answered truth- y, or the policy is absolutely VOID. It has been held by several courts, as you will see from the is referred to in this p^iper. P 39538 — 2 — The constant reduction in the selling price of cars makes a serious moral hazard, which the companies have no way of meeting. For instance, during the first half of the year 1915 the Packard car sold for $5000.00 and during the last half of the year the 1916 Packard sold for $2750.00. Undoubtedly every 1915 Packard was overinsured. Each year brings improve- ments in all cars. It is only natural that people should want the latest model. The unknown quantity “ MORAL HAZARD” in fire insurance is certainly bad and perplexing enough, but in automobile insurance it is even worse. To dis- courage the crook as much as possible, the companies should avail themselves of every protection afforded by the policy contract. The purpose of this article is to call the companies attention to the rights they have and the interpretation of the courts upon the policy conditions. If companies would insist upon their agents in- specting every car before insuring it, and that the applications be signed by the Insured and not by the agent, there would be fewer losses and less misunder- standings. ASCERTAINMENT OF LOSS When a car is sold by a dealer and the policy is written in the names of the dealer and the party pur- chasing, the interests of both parties are fully covered, the purchaser for the amount paid on the contract, and the dealer for the balance of the purchase price. ADJUSTERS should determine first that the appli- cation and policy agree, and then ascertain that the year and the model of car agree with the policy. The loss to the car can then be agreed upon, and the liability of the company determined. As stated before, damage by fire to a car is easily fixed, but the adjuster must bear in mind that the companies are entitled to “dealers” prices with all cash discounts deducted. LOSS by THEFT is the most serious problem with which we have to contend and every effort must be made to determine whether or not it is a theft. TJie policy reads, lines 1 to 6: “Against direct loss or damage to the auto- mobile hereby insured caused by fire arising from any cause whatsoever, including explosion, self- ignition, and lightning; also while being trans- ported in any conveyance by land or water, against — 3 — loss or damage caused by stranding, sinking, collision, burning or derailment of such convey- ance; also against general average and salvage charges for which the insured is legally liable ; and ALSO AGAINST LOSS AND DAMAGE IF AMOUNTING TO $25.00 OR MORE ON ANY 4 SINGLE OCCASION BY THEFT, ROBBERY OR PILFERAGE BY ANY PERSON OR PER- SONS OTHER THAN THOSE IN THE EMPLOY- MENT, SERVICE OR HOUSEHOLD OF THE • INSURED.” The code of California defines a theft as follows, and the code of practically all other states is the same ; Penal Code — Section 484. — “LARCENY is the felonious stealing, taking, carrying, leading or driving away the personal property of another.” Penal Code — Section 503. — ^‘EMBEZZLE- MENT is the fraudulent appropriation of prop- erty by a person to whom it has been entrusted.” " Penal Code — Section 532. — “OBTAINING MONEY, PROPERTY OR LABOR BY FALSE PRETENSES. Every person who, knowingly and designedly, by false or fraudulent representation or pretense, defrauds any other person of money, labor or property, whether real or personal, or who causes or procures others to report falsely of his wealth or mercantile character, and, by thus im- posing upon any person, obtains credit, and there- by fraudulently gets possession of money or prop- erty, or obtains the labor or service of another, is punishable in the same manner and to the same extent as for larceny of the money or property so obtained.” The distinction between these offenses is clearly stated by our Supreme Court in People vs. Tomlinson, 102 Cal. 19, in the following language: “On the facts, there must be a very narrow margin between cases of larceny, obtaining money by false pretenses, and embezzlement, because the character of the crime depends upon the secret in- tention of the parties, which is often difficult to ascertain; but, so far as the law is concerned, the principles upon which the question of guilt or in- nocence is to be determined are plain and too well settled to justify a review of authorities. Where one honestly receives the possession of goods upon • a trust and, after receiving them, fraudulently con- verts them to his own use, it is a case of embezzle- ment. If the possession has been obtained by fraud, trick or device, and the owner of it intends • to part with his title when he gives up possession, the offense, if any, is obtaining money by false pre- tenses. But, where the possesion has been obtained through trick or device, with the intent, at the time — 4 — the party receives it, to convert the same to his own use, and the owner of the property parts mere- ly with the possession, and not with the title, the offense is larceny.” Yon will note that LARCENY is felonious stealing without the permission or knowledge of the owner while EMBEZZLEMENT is the fraudulent appropri- ation of property or funds by a person to whom it has been intrusted. It is contended by some attorneys that the terms “Larceny” and “Embezzlement” are synony- mous. The law, however, is so clear that I cannot find any justification for such conclusion. THEFT-LARCENY. The intention of the clause is that the car must be stolen by a third person not a party to, nor entitled to the benefit of the contract of insurance, in order for the claim to come under the theft clause in the policy. The courts are most lenient where a minor is con- cerned and especially if it can be shown that an in- surance company is the only one injured by the offense. This has been proven many times during the last year when boys have taken cars either for the purpose of a “joy ride” or with the intent to steal them. In the case of the Hartford Fire Insurance Com- pany vs. Wimbish (Ga.C.A.) 78 S.E. (June 14, 1913) 265 ; the court held that THEFT is synonymous with LARCENY and the intent to steal is necessary to the offense. The car in question was taken for a “joy ride” and returned to the owner but there never was any intention of stealing the car. State vs. Boyce 44 S. W. 1043 ; People vs. Donohue 84 N. Y. 438; Matthews vs. State 36 Texas 674; State vs. Stewart 67 Atl. Rep. 786; If a car is taken and returned, but in a damaged condition, has a theft been committed, and is the com- pany liable for the damage? NO, not unless it can be shown that there was an “intent to steal.” If there was no intent to steal the car it was not a theft. If the car is not returned then the presumption is that theft was intended. Mich. Com. Ins. Co. vs. Wills 45 Ins. L. J. 24 Y) In the case of People vs. Campbell, 59 Pac. Rep. 593, the Supreme Court of California held that there can only be LARCENY or THEFT if the possession of the article in question is originally secured with the fraudulent purpose of running off with it. — 5 — It is incumbent upon the Insured to show that the car was taken with felonious intent to deprive him of it and by some person other than those “in the employ- ment, service or household of the insured.’ ’ Kansas City Regal Auto Co. vs. Old Colony 45 • Ins. L. J. 778; 174 Southwestern Rep. (April 7, 1915) 153; Rush vs. Boston Ins. Co. 150 N. Y. Supp. (Jan. 14, 1915) 457; The Supreme Court of Montana hit the nail square- ly on the head in the case of the Valley Mercantile Co. vs. St. Paul Fire and Marine Ins. Co. 44 Insurance Law Journal 715, and ruled, “That, to constitute the crime of Larceny, the intent which accompanies the act of taking must be the criminal intent to permanently de- prive the owner of his property and without which the taking would be a bare trespass or criminal injury.” The above case was a claim made for theft and the evidence showed that the employees of a painter, at whose shop the automobile had been left for repainting, after working hours unlocked the front door and took the car for a “Joy ride” intending to bring it back to the shop and did bring it back after it had been dam- aged. The court held that the taking, though wrong- ful, was not larceny within the terms of the policy. In the case of the Federal Insurance Company vs. Hiter 176 S. W. (Ky.) 210, the court held, that a theft had been committed where a person borrowed an auto- mobile to go to a certain place and never returned it to the owner, but abandoned it in a remote section of a distant State in a badly damaged condition without notifying the owner where it might be found. Un- doubtedly the intent to steal was clearly shown and proven. An owner of an automobile, who placed it in a garage of a third person under an agreement that the third person should pay him a specified sum therefor, payment to be made after the third person had sold the car, parted with the automobile with the expectancy of receiving the specified sum from the third person, with- in Sales Act (Consol. Laws, c. 41) 100, as added by taws 1911, c. 571, providing that, when goods are delivered to the buyer on sale or return, the property passes to the buyer on delivery, and the act of the third person in disposing of the automobile on the same day for a less sum and converting the proceeds to his own use is not a “THEFT, ROBBERY, or PILFERAGE,” within a policy insuring the automobile against loss by theft, robbery, or pilferage. Siegel vs. Union Assur. Society, City Court of New York. (May, 1915,) N. Y. Supp. 662; The above case shows clearly that in order for a THEFT to be committed, the property must be taken without the consent of the owner, otherwise it would be embezzlement. EMBEZZLEMENT. It has happened that the purchaser, after making a payment, has run away with the car and the dealer has made a claim for the balance of the purchase price under the theft clause in the policy. The question which naturally arises is, can a man steal that which was turned over to him peacefully and in which he has an insurable interest. The law says that he must take the property without the knowledge or consent of the owner and the intent to steal must also be apparent. It cannot be said the purchaser ob- tained the car without the consent of the dealer for he was given full possession of it. It would therefore seem that the purchaser could not commit theft within the meaning of the code. He has, however, committed a “ breach of trust” for he promised to either pay the balance due on the car or forfeit his possession of it, and the offense would be EMBEZZLEMENT, the tak- ing of property voluntarily intrusted to him for which he agreed to do certain things. EMBEZZLEMENT is not covered under the policy and it never was intended that it should be or it would have been incorporated in the contract. A policy is not a guarantee that a certain debt will be paid nor is an insurance company a collection agency. If theft and embezzlement could be considered synonymous terms then a claim for theft would be valid; but, the definition in the code is so clear that it cannot be mis- understood. In the case of People vs. O’Brien 8 Cal. App. 641, it was held that the essential elements of embezzlement are the fiduciary relations arising w T here one intrusts property to another and the fraudulent appropriation of the property by the latter. One of the most essen- tial elements in the offense of embezzlement is the in- tent to embezzle, and it must be shown that the prop* erty was taken with that intent. People vs. Hemple 4 Cal. App. 120; If a company wishes to write this sort of protec- tion for a dealer then it should be done under a sep- arate rider clearly setting forth that in the event that the car is stolen by the purchaser the company will be liable for the balance of the purchase price; provided, fliat the dealer will swear to a warrant for the arrest of the purchaser, and further that the car is not recov- ered. If recovered, then liable only for the damage to the car. TWENTY FIVE DOLLARS DEDUCTIBLE. Lines 4, 5 and 6. The policy conditions, lines 4, 5 and 6, recite that the company will be liable for losses by theft, robbery or pilferage if amounting to Twenty five Dollars or more. This is a just provision and prevents the com- pany being called upon to pay for articles which have been lost and not stolen. If the clause were not in the policy we would be paying small losses which occur to most cars every month. The clause does not mean that Twenty five Dollars will be deducted from the loss, but, that the loss must aggregate, after all discounts have been made, more than Twenty five Dollars. For the payment of an extra premium, companies will give full coverage. TRANSPORTATION. Lines 1 to 3. A transportation certificate of insurance, in the margin of the certificate, contained the following words: “This insurance is only against loss or dam- age by fire, collision or derailment on land, and marine perils while on ferries and transfers.” In the body of the certificate it was provided: “Shipped by auto- mobile truck * * * to destination * * * cov- ering only while in transit by land.” While the prop- erty was in the course of tranportation by automobile truck the wheels of the truck skidded into the gutter, causing the truck to capsize and damage the property insured. Held, That the skidding of the hind wheels of the truck into the gutter could not be considered a “derailment,” as such word is defined, as the “act of going off, or state of being off the rails of a railroad.” Graham vs. Ins. Co. of North America (Mass. S. J. C.) ; — 8 — MEASURE OF DAMAGE. Lines 9 to 17. “This Company shall not be liable beyond the actual cash value of the property at the time any loss or damage occurs, and the loss or damage shall be ascertained or estimated according to such ac- tual cash value, with proper deduction for depre- ciation however caused, and shall in no event ex- ceed what it would then cost the insured to repaid or replace the same with material of like kind and quality; such ascertainment or estimate shall be made by the insured and this Company, or, if they differ then by Appraisers as hereinafter provided. It shall be optional with this Company to take all, or any part, of the property at such ascertained of appraised value, and also to repair, rebuild, or re- place the property lost or damaged with other of like kind and quality within a reasonable time, on giving notice, within thirty (30) days after the receipt of sworn statement of loss herein required, of its intention so to do ; but there can be no aban- donment to this Company of the property de- scribed.” The Policy states clearly that the Company will not be liable beyond the ACTUAL CASH VALUE of the property at the time any loss or damage occurs, and the loss or damage shall be ascertained or estimated ac- cording to such actual cash value with proper deduc- tion for DEPRECIATION however caused. It is the same clause as found in Fire Insurance policies and has been ruled upon by all courts and held to be a valid and fair stipulation. The insured is not entitled to more than the actual cash value at the time of the loss. Jones vs. Orient Ins. Co. 45 Ins. L. J. 200 ; Where the damage is small and it would be dan- gerous to replace with any but new parts, no deprecia- tion can be deducted. This rule, however, does not apply to tires, bodies or any material part of the car which has been used and upon which a natural depre- ciation can be shown. The Company must be allowed to have the repairs made if it so elects. It is better in all cases to agre& upon the loss and damage and allow the insured to have the repairs made where he sees fit. If the car is a total loss and over insured, the Company has the righ* to replace the car. If it is necessary to go into an ap- praisement, the Company has the right to take the car at its appraised value. — 9 — Under no circumstances can the car be abandoned to the Company unless it wishes to take it. SALVAGE. It is seldom that there is not some value remain- tug in a burned car. An Adjuster should see that the best price is obtained when the wreck belongs to the company. The railroads charge the same freight rate for a wreck as for a new car so the wreck should be disposed of at the place where the loss occurred if that is possible. LIABILITY REDUCED. The policy conditions, lines 33 to 35, read, “In the event of loss or damage to said Automobile, whether such loss or damage is covered by this policy or not, the liability of this Company under this Policy shall be reduced by the amount of such loss or damage until repairs have been completed, but shall then attach for the full amount as originally written, without addi- tional premium. ’ ’ This clause is not found in any ‘ ‘ Fire Insurance Policy” of the present day. When a com- pany pays a partial loss, the policy is reduced that much and it does not attach again. With an Automobile policy it is reduced during the time the repairs are being made but as soon as they are completed, the policy again attaches for the amount originally written. RECOVERING, SAVING and PRESERVING. Lines 36 to 38. “Any act of the insured or this company, or its agents, in recovering, saving or preserving the property described herein in case of disaster, shall be considered as done for the benefit of all con- cerned and without prejudice to the rights of either party, and all reasonable expenses thus incurred shall constitute a claim under this policy.” This clause makes it necessary for the Insured to protect the Automobile from further damage and any expense incurred will be paid by the company. It means that the Insured cannot abandon the automobile on the road side, but that he must protect it from theft ^or any other damage which might occur to it. MISREPRESENTATION. • Lines 18 to 20. “This entire Policy shall be void, if the in- sured or his agent has concealed or misrepresent- ed, in writing or otherwise, any material fact or — 10 — circumstance concerning this insurance or the sub- ject thereof; or if the insured or his agent shall make any attempt to defraud this Company either before or after a loss.” YEAR of MODEL. The year of the model is a very important matter to the Company in determining the desirability of the risk. After a car is four years old, very few Companies" will accept the insurance. The rate of premium and the amount of insurance allowable is determined by the age of the car and therefore any misrepresentation as to this most important warranty will VOID THE. POLICY. Statements as to the age of cars are held to be war- ranties by the courts and the insured is held strictly accountable therefor. Harris vs. St. Paul Ins. Co. (N. Y. S. C. App.) 126 N. Y. Supp. 118 ; Miller vs. Com. Union Assur. Co. (Wash. S. C.) 125 Pac. Rep. 782; In the recent case of Smith vs. American Automo- bile Ins. Co. 45 Insurance Law Journal 726 (175 S. W. Rep. 113), the court said the Company had a right to prohibit the writing of cars over four years old. “If the fact that the machine is five years old instead of two is not material to the risk, we cannot well see what would be, and if it was represented to the Company to be only two when it was five years old, and the Com- pany had no means or opportunity of knowing any dif- ferent, then there was no contract of insurance entered into by the Company with reference to the car. Hence we think the representation as to the age of the car was material to the risk as a matter of law. The principle involved is more than the question whether the fire was attributable to the age of the car. If that was the question, then, of course, it would be for the jury to say whether the misrepresentation was material to the risk. But the materiality depends upon whether, had the true fact been known, the Company would have insured it at all.” Boggs vs. American Ins. Co. 30 Mo. 63; The court also held in this case, that the insurance 4 having been placed with the agent of the company by a broker, that any misrepresentation made by the broker were representations of the insured. — li- lt was also proven in this case, that it is quite im- possible to determine the age of a car by looking at it. In the case of Farber vs. American Automobile Co. 177 S. W. Rep. 675 (April 6th, 1915), it was held, That a representation that an automobile insured against fire m the amount of $1750 cost the insured $2000.00 is material to the risk insured against, and is a warranty in a policy stipulating that insured warrants statements ere true. INSURABLE INTEREST. Lines 20 and 21. Lines 20 and 21 of the policy read, “If the inter- est of the insured in the property be other than un- conditional and sole ownership, this entire policy shall be void.” It is clear that the insured must have an absolute title to the car or the policy is void unless the policy is properly endorsed showing the correct title. The title to cars purchased on the installment plan re- mains in the name of the seller until the last payment is made ; then a bill of sale is given for the car and the title passes to the purchaser. • Adjusters should insist upon seeing the bill of sale or the contract IN EVERY INSTANCE to be able to state to the company just what is the title of the in- sured, and of all others in the car. If the loss is total, and there is any salvage to be made out of the wreck, the bill of sale should be assigned to the company. If the car is insured in the names of the seller and purchaser, then if a total loss is paid, the seller should give the company a bill of sale if there is any value left in the wreck. CHATTEL MORTGAGE. Line 21. The policy especially provides that if the car in- sured be or becomes encumbered by any lien or mort- gage that the entire policy shall be void. All courts have ruled on this clause in a fire policy, and have held that a chattel mortgage increases the hazard of the risk, and that the policy is absolutely void. I believe that they will hold the same law to apply to the clause in the automobile policy. It is therefore necessary that * if a chattel mortgage exists, or if there is a balance due on the purchase price, a notation of same must be en- dorsed on the policy. Oatman vs. Ins. Co. 42 Ins. L. J. 1535 ; Baley vs. Ins. Co. 80 N. Y. 21, 36 Am. Rep. 570; Hamilton vs. Ins. Co. (C. C. A. Texas) 177 S. W. 173, (May, 1915). — 12 — ASSIGNMENT OF POLICY. Lines 22 to 25. 4 ‘ It is a condition of this Policy that neither it nor any part thereof shall be assigned, unless by consent of this Company endorsed hereon, and in case of transfer or termination of any interest of the Insured other than by the death of an Insured, or any change in the nature of the insurable inter- est of the Insured in the property described herein, _ either by sale or otherwise, without such consent endorsed hereon, this Policy SHALL FORTH- WITH CEASE AND TERMINATE.” The above condition makes it necessary that any transfer of title or interest must be endorsed in writ- • ing upon the policy. This refers to transfers before a loss and not to an assignment of claim which is made after a loss occurs and to which the company’s consent is not necessary. This condition is found in all policies and it has been ruled upon by all courts and held to be a just and valid requirement and one which must be followed or the policy is void. Alkan vs. Ins. Co. 53 Wis. 136, 11 Ins. L. J. 126 ; Carter vs. Ins. Co. 12 Iowa 287 ; Greene vs. Ins. Co. 84 N. Y. 572; Wilson vs. Hill 3 Mete (Mass.) 66; Bergson vs. Ins. Co. 38 Cal. 541 ; Davis vs. Ins. Co. Iowa 134 N. W. 860. 41 Ins. L. J. 969; Kamm vs. Ins. Co. Mich. 134 N. W. 999. 41 Ins. L. J. 970; An endorsement on the policy making the loss pay- able to another than the insured is not a transfer, it merely makes him an appointee to receive the money due the insured named in the policy, in case of loss. Minturn vs. Ins. Co. 10 Gray (Mass.) 501; Williamson vs. Ins. Co. 86 Wis. 393, 57 N. W. 46; Gilliat vs. Ins. Co. 8 R. I. 282, 91 Am. Dec. 299 ; OTHER INSURANCE. Lines 26 to 28. 4 ‘If at the time a loss occurs there be any * other insurance covering against the risks as- sumed by this policy which would attach if this insurance had not been effected, and if such other insurance has been effected without the special con- sent of this Company endorsed hereon, then, in that event, this insurance SHALL BE NULL AND VOID.” — 13 — It is necessary that written consent for other in- surance be endorsed on the policy, or the policy is void. This clause is very clear and the courts will uphold it. The clause refers to any insurance which may be in force at the time of the loss, but, to be OTHER IN- SURANCE it must be for the same party, on the same interest, in the same property. A policy covering the interest of the purchaser and another covering the interest of the seller would not be other insurance as they would cover different interests. The policies should contribute with each other in the payment of a loss, but there is no clause in the policy compelling contribution. OTHER INSURANCE without consent,. POLICY VOID. First Nat. Bk. vs. Ins. Co. (N. Dak.) 41 Ins. L. J. 899 ; Baker vs. Ins. Co. 12 Gray Mass. 265 ; Wensel vs. Ins. Co. Iowa 35 Ins. L. J. 115; Cleaver vs. Ins. Co. 65 Mich. 527, 71, 414; Sheldon vs. Ins. Co. 22 Conn. 235 ; Fowler vs. Ins. Co. 116 N. Y. 389 ; CARRYING PASSENGERS. Lines 29 to 32. “It is a condition of this policy that the auto- mobile hereby insured shall not be used for carry- ing passengers for compensation, nor rented, nor leased, nor operated in any race or speed contest during the term of this policy, unless assented to by this company in writing. In the event of viola- tion of any of these conditions, this policy shall forthwith cease and terminate.” The question is always asked of the applicant for automobile insurance, whether the c&r is used for pleas- ure, business or hire, as the desirability and acceptance of the risk is governed by this information. It is one of the policy conditions and is therefore a warranty by the insured. Certainly when a company insures a car with the understanding that it is not to be used for carrying passengers, it should be protected by the ^courts, and the representation made by the Insured should be held to be a warranty. Unfortunately the few cases that have been decided have not been favorable to the company. In the case of the Commercial Union Insurance Company vs. Hill (Texas C. C. A.) 167 S. W. Rep. (July 22, 1914) 1095; where the policy contained the follow- 14 — ing clause: ‘‘It is warranted by the insured that the automobile hereby insured during the term of this policy shall not be used for carrying passengers for compensation, and that it shall not be rented nor leased.” The evidence in this case showed that on two or three afternoons the Insured’s son used the car, without his knowledge, for carrying passengers for hire, and yet the court held that the warranty was not breached by the use of the car. What was intended by the clause was that the automobile should not be con- tinuously used for this purpose for any length of time. In the case of Elder vs. Federal Insurance Com- pany, 42 Insurance Law Journal 524, the court took a different view on account of knowledge of the insured. * It was proven in this case, that the car was taken with the knowledge and consent of the insured, and it was held that the policy was void, and that the warranty, that the car should not be used for carrying passen- gers, had been violated. In another case the policy provided that the auto thereby insured “will not be rented or used for pas- senger service of any kind for hire.” The court held, That by this clause something of a more permanent na- ture than a single act of renting or hiring was con- templated ; hence the single rental of the car to convey some hunters into the country, where such service has been completed, would not avoid recovery. The object of a policy being to afford indemnity against loss, it should be so construed as to effectuate that purpose rather than in a way which will defeat it. Crowell vs. Maryland Motor Car Ins. Co. (N. C. S. C.) 85 Southeastern Reporter (May 22, 1915) 37; SUBROGATION. Lines 45 to 48. “If this Company shall claim that the loss or damage was caused by the act or neglect of any person or corporation, private or municipal, this Company shall, on payment of the loss, be subro- gated to the extent of such payment to all right of recovery by the insured for the loss resulting there- from, and such right shall be assigned to this Com- * pany by the insured on receiving such payment.” Where the insured recovered damages for personal injuries from a Railroad Company as a result of a col- lision, it was held that the recovery in the personal in- jury action would not bar an action by the Insurance — 15 — Company as Subrogee to recover the damage due to the Automobile. Underwriters at Lloyds Ins. Co. vs. Vickburg Traction Co. 63 So. Rep. (Dec. 27th, 1913) 455; Maryland Motor Car Co. vs. Haggard (Tex. C. C. A.) 168 S. W. Rep. (August 19, 1914) 1011 ; INVASION. It is a condition of this policy that this company shall not be liable for loss or damage which may be caused directly or indirectly by invasion, insurrection, riot, civil war, or commotion, or military or usurped power. This could not be more plainly worded and the courts will uphold it. Hocking vs. British America (Wash.) 40 Ins. L. J. 799, 113 Pac. 259 ; Conner vs. Manchester Ins. Co., 130 Fed. 743; Civil Code Cal. 2606. CANCELLATION. Lines 52 to 56. “This Policy shall be cancelled at any time at the request of the insured; or by the Company by giving ten (10) days’ notice of such cancellation. If this Policy shall be cancelled as hereinbefore provided, or become void or cease, the premium having been actually paid, the unearned portion shall be returned on surrender of this Policy or last Renewal, this Company retaining the customary short rate ; except that when this Policy is can- celled by this Company by giving notice it shall retain only the pro rata premium.” This policy condition differs from the one in the California Standard policy as a written notice is not required. It is also silent as to the interest of a payee or mortgagee. The condition is the same as that in the New York Standard form. It is necessary to serve the insured with notice of cancellation, but it may be either verbal or written. If verbal it is necessary to have a witness. The unearned portion of the premium * MUST BE RETURNED with the notice of cancella- tion as the courts hold that “The return premium is the essential part of the conditions to be performed. It is pre-requisite to the right of terminating the risk.” Notice without a tender or return of the premium would amount to nothing. — 16 — If the policy is payable to a third party notice must also be given to such payee, but it is not necessary to tender the return premium to the third party unless the premium was paid by such party. Notice to an agent is not sufficient notice to cancel. It must be to the insured and payee. S. Corn & Son vs. Pelican 17 Ins. L. J. 477 ; Niagara F. Ins. Co. vs. Raden 19 Ins. L. J. 1015 ; Watertown F. Ins. Co. vs. Rust 21 Ins. L. J. 1053; Wis. Cent. Ry. Co. vs. Phoenix 34 Ins. L. J. 405 ; INSUREDS’ DUTY AFTER LOSS. Lines 59 to 67. “In the event of loss or damage the insured shall forthwith give notice thereof in writing to this Company or the authorized agent who issued this policy and protect the property from further loss or damage; and within sixty (60) days there- after, unless such time is extended in writing by this Company, shall render a statement to this Company, signed and sworn to by said insured, stating the knowledge and belief of the insured as to the time and cause of the loss or damage; the interest of the insured and of all others in the property; and the insured, as often as required, shall exhibit to any person designated by this Com- pany all that remains of any property herein de- scribed, and submit to examinations under oath by any person named by this Company, and subscribe the same ; and, as often as required shall produce for examination all books of account, bills, invoices, and other vouchers, or certified copies thereof if originals be lost, at such reasonable place as may be designated by this company or its representa- tive, and shall permit extracts and copies thereof to be made.” These conditions are practically the same as in all fire insurance policies, except that no reference is made to other insurance, and they must be complied with be- fore a suit can be commenced unless waived by the Company or its Adjuster. PROOFS OF LOSS MUST BE MADE BY INSURED. Bruce vs. Ins. Co. 24 Ore. 486, 34 Pac. Rep. 16 ; Shapiro vs. Ins. Co. 51 Minn. 239, 22 Ins. L. J. 310; McDermott vs. Ins. Co. 44 N. Y. 696; McCormick vs. Ins. Co. 78 Cal. 468, 21 Pac. Rep. 14; Horwitz vs. Ins. Co. 45 Ins. L. J. 189 ; — 17 — STATEMENT MUST BE FURNISHED WITHIN 60 DAYS or there can be no recovery. Blossom vs. Ins. Co. 64 N. Y. 162 ; White vs. Home Ins. Co. 128 Cal. 131, 60 Pac. Rep. 666 ; ► PROOFS where served. Under this policy proof of loss may be served upon the Agent or the Company, but under all other forms, ► it must be served upon the company. The courts hold that proof may be served on either the agent or the company. A DENIAL OF LIABILITY WAIVES PROOF OF LOSS. Flaherty vs. Ins. Co. 46 N. Y. Supp. 934 ; Sproul vs. Ins. Co. 33 Ore. 98, 54 Pac. 180; Bank of Anderson vs. Ins. Co. Cal. Ill Pac. 507; Farnum vs. Ins. Co. 83 Cal. 261, 23 Pac. 180 ; STATEMENT. Rendering a statement setting forth the value of the property insured, the interest of the insured therein, etc., as required by the Policy, is a con- dition precedent to the right to recover for a loss. Bennett vs. Ins. Co. Mass 39 Ins. L. J. 822 ; Davis vs. Ins. Co. Wash. 38 Ins. L. J. 143; APPRAISEMENT. Lines 71 to 77. “In the event of disagreement as to the amount of loss or damage the same must be determined by competent and disinterested appraisers before recovery can be had hereunder. The insured and this Company shall each select one, and the two so chosen shall then select a competent and dis- interested umpire. Thereafter the appraisers to- gether shall estimate and appraise the loss or dam- age, stating separately sound value and damage, and, failing to agree, shall submit their differences to the umpire; and the award in writing of any two shall determine the amount of such loss or damage ; the parties thereto shall pay the appraiser respectively selected by them and shall bear equally the expenses of the appraisal and umpire. ” This appraisal agreement is different from that in the California Standard policy as either party may de- mand an appraisement while under the California form, € only the company may make the demand. The courts are a unit in holding that an appraisal, when properly made, is binding upon all parties and that the award is final as to the loss or damage. An appraisal does not, — 18 — however, determine the liability of the Company and a company does not admit liability by entering into one provided it did not know that the conditions of the policy had been violated. If a company knows that its policy is void through information obtained from the insured, the courts will hold that they waived the void- ance by putting the insured to trouble and expense. A company cannot waive what it has no knowledge of, but the courts rightly hold that the amount of loss or * damage is of no interest to the company if they do not intend to pay. THE AWARD OF ANY TWO SHALL BE BINDING. Stemmer vs. Ins. Co. 33 Ore. 65, 53 Pac. Rep. 498; Strome vs. Ins. Co. 47 N. Y. Supp. 481 and 162 N. Y. 627; Morley vs. Ins. Co. 85 Mich. 210 ; Stockton vs. Ins. Co. 98 Cal. 557, 33 Pac. Rep. 633; Mosness vs. Ins. Co. 50 Minn. 341, 52 N. W. 932; Nincent vs. Ins. Co. 120 Iowa 272, 94 N. W. 458; APPRAISERS DETERMINE LOSS AND DAMAGE, NOT LIABILITY OF COMPANY. Wood vs. Humphrey 114 Mass. 185; White vs. Railroad Co. 135 Mass. 216 ; Fisher vs. Ins. Co. 95 Me. 486, 50 Atl. 428 ; COMPANY MAY TAKE ANY OR ALL AT ITS AP- PRAISED VALUE. Hamilton vs. Ins. Co. 136 U. S. 242 ; Hamilton vs. Home Ins. Co. 137 U. S. 370; WAIVER. Lines 78-79. “This Company shall not be held to have waived any provision or condition of this policy or any forfeiture thereof by any requirement, act or proceeding on its part relating to the appraisal or to any examination herein provided for.” -• This is a “Non-waiver agreement” and it is as good as any separate agreement. It will hold provided ^ the company did not know of the voidance of the policy. If it did know and thereafter put the insured to any trouble or expense, it will not hold. — 19 — WHEN SUIT MAY BE COMMENCED. Lines 83 to 87. “No suit or action on this Policy, for the re- covery of any claim, shall be sustainable in any court of law or equity unless the insured shall have fully complied with all the foregoing require- ments, nor unless commenced within twelve (12) months next after the happening of the loss, pro- ♦ vided that where such limitation of time is pro- hibited by the laws of the State wherein this Policy is issued, then in that event no suit or action under this Policy shall be sustainable unless commenced within the shortest limitation permitted under the laws of such State. ” The law of the State of California allows fifteen (15) months after the date of the fire and therefore that period would apply to an Automobile contract. Idaho and Montana allow four (4) years. Washington twelve (12) months. This policy condition has been held valid by all courts and it must be complied with before suit can be maintained. Garretson vs. Ins. Co. 114 Iowa 17, 86 N. W. 32 ; Roach vs. Ins. Co. 30 N. Y. 546; Fullam vs. Ins. Co. 7 Gray (Mass.) 51; DENIAL OF LIABILITY. If Company denies lia- bility suit may be commenced at once. COLLISION. Automobiles are insured against damage by or from collision by attaching a rider to the regular policy. The clause reads as follows: “By being in collision during the period in- sured with any other automobile, vehicle or object, excluding (1) damage or loss to tires (unless the total damage caused by the collision to the automo- bile herein described exceeds the sum of $200, (2) damage caused by striking any portion of the roadbed or by striking the rails or ties of street, steam or electric railroad, (3) loss or damage while the automobile insured is being operated in any race or speed contest, or while being operated t by any person under the age of sixteen years or under the age limit fixed by law.” “COLLISION” according to the courts means the * act of colliding and imparts striking together, violent contact ; but both bodies need not be in motion. In the case of Harris vs. American Casualty Co. (N. J. C. C. A.) 85 Atl. Rep. (Jan. 2, 1915) 194; it was — 20 — held that water and land are objects and an automobile which runs into either or both, collides with an object or objects and therefore the damage is covered under the clause. A very interesting case was that of Hardinfburg vs. Employers Liability Corp. (N. Y. City Ct.) 138 N. Y. Supp. (Jan. 6, 1913) 662; It appears from the evidence that the insured on meeting a team on the public high- way was compelled to steer his automobile into the grass. In endeavoring to return to the roadbed the automobile struck the shoulder of the roadbed and overturned. The court held, there was not a collision within the meaning of the policy. In the case of Stix vs. Travelers 157 S. W. Rep. (July 16, 1913) 870; the court held that a gutter on the side of a roadbed, for the purpose of carrying off water, was not part of the roadbed and therefore the skidding of a car into the gutter, which resulted in damage to the car, was covered under the policy. In the case of Wettengel vs. U. S. Lloyds 44 Ins. L. J. 197, it was shown that the automobile insured left the main road on which it was being driven and ran down a bank of three or four feet into the river. Held, That the accident was not covered by the policy. In order to bring the case within the policy there must have been first, a collision; second, the collision must have been with another automobile, vehicle or some similar object; and, third, it must not have been with any portion of the roadbed. An automobile driven into a hole six inches deep and eighteen inches wide, between car tracks, is not a collision with an object as is contemplated by the par- ties to an insurance contract containing a collision clause. Dougherty vs. Ins. of N. A. 38 Penn. Co. Court Refs. (Jan. 1911) 119; CONCLUSION. In conclusion let me urge upon agents and com- panies the necessity of insisting that applications be signed by the Insured and with every question answered fully. The principal reason being that the automobile may never be seen again after the insurance is written. The amount allowed, the rate and desirability of the risk depend entirely upon the answers given by the applicant. Misrepresentation voids the policy, so it is essential that only true statements be made. The ad- — 21 — juster must take the contract as he finds it, and, if the policy is void he must stand upon it. Agents cannot expect that companies will waive misrepresentation, for their acceptance of the risk was based solely upon the statements of the Insured. The automobile policy is * a unilateral contract and therefore the courts will not permit it to be voided if there is any way of construing the wording in favor of the Insured. Nearly all matters which arise are ‘‘questions of fact” and these must be submitted to a jury, if one be impanelled. If questions are not asked the Insured when the application is taken, the company is pre- sumed to have waived its objections. Where the automobile is mortgaged before the policy is written, and no questions are asked the Insured regarding such matters, the company is con- sidered to have waived the condition in the policy re- lating to encumbrances, therefore make one invariable rule — never write an automobile policy unless the car is seen and the Insured asked every question on the appli- cation and his signature obtained to it. If this course is followed it will save the company many bad losses, and the agent much uneasiness and loss of clients, for one claim not paid may result in the loss of considerable business. The details justifying the Company’s non- payment of an unjust claim are seldom given the pub- licity which would neutralize the misstatements of an unreasonable client. T. H. WILLIAMS. \ INDEX TO AUTOMOBILE FIRE AND THEFT POLICY Line of Page A policy 8 — ABANDONMENT of property to company not per- mitted 16 ACCEPTANCE of policy, subject to its conditions. . . ......... Page two 16— ACCOUNT BOOKS to be produced 65 19 — ACTION to be brought within 15 months 83 8— ACTUAL CASH VALUE is limit of liability 9 AGENT must have written authority 57 AGENTS power to waive conditions Page two 12— AGREEMENTS, others may be added 2-22 16 — AMOUNT CLAIMED, details in Inventory and proof 59 17— APPOINTMENT of APPRAISERS 71 17— APPRAISAL . 71 8 — APPRAISED VALUE, company may take property at 13 17— APPRAISEMENT, expenses of 71 18— APPRAISEMENT, not a waiver 78 17— APPRAISEMENT of the loss, when 71 17 — APPRAISERS, how chosen 71 17 — do duty of 71 17 — do to be competent and disinterested. . . 71 17 — do to select Umpire 71 8— ASCERTAINMENT of amount of loss 59 18 — ASSENTING to amount of loss is not a waiver 78 14 — ASSIGNMENT to company of insured’s rights 45 12 — do of policy before loss voids, unless... 22 9 — AVOIDING POLICY by concealment or fraud 18 17 — AWARD determines amount of loss, when 75 17 — AWARD must be in writing 75 13 — AUTOMOBILE, cannot rent unless permission granted 29 13 — AUTOMOBILE, cannot lease unless permission granted 29 13 — AUTOMOBILE, cannot enter races unless permission granted 29 B 16 — BELIEF as to origin of fire to be stated 62 16 — BOOKS of account to be produced 66 16 — BILLS to be produced for examination 66 7 — BURNING while being transported, covered 3 C 15 — CANCELLATION when and how effected 52 13— CARRYING PASSENGERS not allowed 29 8— CASH VALUE how estimated * 9 8 — CASH VALUE is limit of liability .9 16 — CERTIFIED COPIES of records to be produced 66 12 — CHANGE in interest, title, etc., voids policy, unless. . 21 17 — CHARGES of umpire, payment of 76 11 — CHATTEL mortgage voids policy 21 9 — CIRCUMSTANCES, misrepresentation of, voids policy 18 15 — CIVIL authority no loss by 50 15 — CIVIL war or commotion, not liable for loss by 50 7 — COLLISION, liable for during transportation by carrier 3 19 — COLLISION covered under rider 23 — COMMON CARRIER not covered by policy 49 17 — COMPETENT appraisers to be chosen 71 19 — COMPLIANCE with conditions necessary before suit 83 9 — CONCEALMENT by insured voids 18 — 24 — Line of Page policy CONDITIONS are part of the contract Page two 18 — do not waived by appraisal, etc Page two CONDITIONS waived only by endorsement ,. Page two 13 — CONDITIONS specially referred to 31 16 — COPIES of books of account, etc., may be made. ... 65 8 — COST of repair is limit of liability 9 COUNTERSIGNATURE of policy by agent neces- sary Page two D 17 — DAMAGE and sound value to be stated by appraisers 71 7 — DAMAGE by fire and theft is insured against 1 9 — DAMAGE — further — to be prevented 36 15 — DAYS 10 for cancellation 52 19 — DAYS 60 when loss payable in 78 16 — DAYS 60 for making proofs of loss 59 12 — DEATH of insured 23 16 — DELAY, no unnecessary — in giving notice of loss .... 59 7 — DERAILMENT liable when being transported 3 8 — DEPRECIATION to be deducted 11 17 — DENIAL of liability waives proofs 17 — DIFFERENCES of appraisers to be submitted to umpire 74 17 — DISAGREEMENT as to loss, then appraisement.... 71 8— DISCHARGE of liability by repair 9 17 — DISINTERESTED appraisers to be chosen 71 16 — DUTY of insured in case of loss 26-33-36-59 £ 6— EMBEZZLEMENT, not liable for 1 11 — ENCUMBRANCES, see chattel mortgage 21 12— ENTIRE POLICY shall be void 18-22-29 16 — EXAMINATION of books to be permitted 65 16 — do of insured under oath 64 18 — do or appraisal not a waiver 78 17 — EXPENSES of appraisal to be paid by company and insured 76 16 — EXTRACT and copies of books to be permitted 66 7 — EXPLOSION company liable for 1 EXTRA BODIES not covered, unless 7 9 — EXPENSE saving property covered by policy 36 F 17 — FAILURE of appraisers to agree, then umpire 74 17— do of insurer and insured to agree 71 9 — FALSE swearing, voids policy 18 19 — FIFTEEN months, action to be brought within 85 16 — FIRE, belief as to origin of — to be stated 62 14 — FIRE caused by neglect of third parties 45 7 — FIRE loss or damage is covered 1 9 — FRAUD voids policy 18 19 — FULL compliance with conditions before suit 83 G 7— GENERAL AVERAGE, liable for 3 I 11— INCUMBRANCES, see chattel mortgage 21 12— INSURANCE void when 18-22-26-29 16 — INSURED’S duty in case of loss 59 15— INSURRECTION, not liable for 50 8 — INTENTION to repair must be made within 30 days 14 16 — INTEREST of insured and others to be stated in proofs 59 9 — INTEREST of insured to be unconditional, unless. . . 18 15— INVASION not liable for loss for 50 — 23 — Line of Page policy 16 — INVOICES to be produced for examination 66 11— INSURABLE interest 20 K 16 — KNOWLEDGE of origin of fire to be stated 62 L * 4— LARCENY, liable for 1 13 — LEASED, car not allowed to be leased 29 9 — LIABILITY reduced until repairs made 33 9 — do limit of 3-7-9-33 % 12 — do none unless endorsement made. . .18-22-26-29 17 — LIABILITY, denial of waives proofs 1 7— LIGHTNING, liable for damage 1 8 — LIKE kind of material for repair 14 8— LIMIT of liability 9 17 — LOSS, appraisement of 71 8 — - do ascertainment of 9 15 — do by civil authority, not liable for 50 15 — do by civil war not liable for 50 15 — ■ do by commotion not liable for 50 15 — do by military power not liable for 50 7 — do by fire is covered 1 7 — do by theft when over $25 is covered 1 15 — do by invasion not liable for 50 15 — do by insurrection not liable for 50 15 — do riot, not liable for 50 do not liable for robes, extra bodies, unless 7 16 — do duty of insured in case of 59 17 — do failure to agree as to amount of 71 17 — do fixed by award 71 16 — do notice to be given, when 59 16 — do of original books, bills, etc 65 9 — do when not liable for 1-7-18-50 19 — do when payable in 60 days 80 M 8 — MACHINERY may be repaired, rebuilt or replaced. . 13 9 — MATERIAL fact, concealment of, voids 18 8 — MATERIAL for repair — like kind and quality 15 12— MATTERS avoiding policy 18-22-26-29 8 — MEASURE of damage 9 15 — MILITARY, not liable for loss caused by 50 9— MISREPRESENTATION by insured, agent or broker, voids 18 19 — MONTHS, 15 — within which to sue 83 N 14 — NEGLECT of third parties — subrogation 45 18 — NON-WAIVER by appraisal or examination 78 15 — NOTICE of cancellation 10 days 52 8 — do of intention to repair within 30 days 15 O 16 — OATH, examination under, as often as required 64 OFFICER has no power to waive condition, except Page two 8 — OPTIONS of company in case of loss, to repair, etc. . 13 16 — ORIGIN of fire to be stated in proof 62 I 12— OTHER INSURANCE voids policy 26 11 — OWNERSHIP must be sole and unconditional, unless 18 P v 17 — PAY of appraisers and umpire 76 19 — PAYMENT of loss when in 60 days 78 12 — POLICY void unless endorsement made 22 12 — POSSESSION, change of voids policy 22 12— POLICY VOID, when 18-22-26-29 — 26 — Line of Page policy 13 — PASSENGERS carried for pay not allowed 29 15 — PBEMIUM pro rata when to be refunded. 52 15 — ■ do short rate when to be returned 52 PERSONAL effects not liable for unless 7 7 — PILFERAGE liable for when it exceeds $25 5 16 — PRODUCTION of books of account 65 16 — PROOF of LOSS must be signed and sworn to 61 9 — POLICY will attach for full sum when 33 16 — PROOF of loss must be made within 60 days 59 16 — do of loss must contain what 59 16 — do of loss where to be sent 61 ^ 8 — PROPERTY, abandonment of not permitted 16 8 — do may be taken by company 13 * do not insured unless mentioned 7 8 — do of like kind and quality for repairs... 15 16 — do remains of to be exhibited 64 9 — PROTECTION of property by insured in case of loss 36 18 — PROVISIONS of policy not waived by appraisal... 78 Q 8 — QUALITY of material for repair 15 R 15 — RATES for cancellation. Pro rata and short rate. . . 52 15 — REFUND of premium in case of cancellation 52 16 — REMAINS of property to be exhibited 64 8 — REPAIR, cost of — is limit of liability 13 8 — do discharges liability 13 8 — do notice of intention to within 30 days 15 8 — do to be made within reasonable time 15 8— REPLACING discharges liability 15 9— RECOVERY of car 36 13 — RENTAL of car not allowed 29 19 — REQUIREMENTS, compliance with before suit 83 18 — RIGHTS of company not waived by appraisal, etc. . . 78 15 — RIOT, not liable for loss by 50 7 — ROBBERY liable for when loss over $25 5 ROBES not liable for, unless 7 S 8 — SATISFACTION of liability by repair, etc 9 9 — SAVING of property after a fire 36 2 — SALVAGE charges liable for when Insured liable. . . 4 9 — SALVAGE of burned car 15 — SHORT rate premium due when Insured cancels 52 16 — SIXTY days proofs must be filed within 60 2 — SINKING company liable for — transportation 3 11 — SOLE ownership, necessary unless endorsement 20 17 — SOUND value and damage stated separately by ap- praisers 74 16 — STATEMENT of loss to be in writing and sworn to . . 59 16 — STATEMENT of loss to contain what 59 STIPULATIONS are part of consideration and policy Page two 17— SUBMISSION of differences to umpire 74 14— SUBROGATION 45 16 — SUBSCRIBING to testimony under oath 64 19 — SUIT, when to be brought — 15 months 83 15 — SURRENDER of policy, refund of premium 52 2 — STRANDING company liable for — transportation... 3 T 15 — TENDER of unearned premium necessary for can- cellation 52 16 — TESTIMONY to be subscribed and sworn to 65 4 — THEFT, company liable for when exceeds $25 1 19 — TIME for payment of loss 78 — 27 — Line of Page policy 8 — TIME — reasonable — for making repairs 14 16 — TITLE, change of, to be stated in proof 59 12 — TITLE, change in voids policy 22 7— TRANSPORTATION 1 U 17 — UMPIRES charges, by whom paid 76 * 17 — UMPIRE to be competent and disinterested 73 17 — UMPIRE to pass on differences only 71 17 — UMPIRE, when and how chosen 71 * 11 — UNCONDITIONAL and sole ownership necessary... 18 > 16 — UNNECESSARY delay in giving notice of loss 59 15 — USURPED power, company not liable for damage from 50 V 12 — VALID or invalid insurance voids policy 26 12— VOID, when policy is 18-22-26-29 12 — VOID, when policy is unless otherwise agreed. .22-29-26 W 18 — WAIVER, none, by appraisal or examination 78 15 — WAR, not liable for loss caused by 50 12 — WRITTEN agreement for other insurance necessary 26 17 — WRITTEN award to be made 75 7 — WHILE being transported 1 WEARING apparel not liable for unless 7 * 9 4 4 - 9