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Maps, plates, charts, etc.. may be filmed at different reduction ratioa. Those too large to be entirely included in one exposura ara fllmad beginning in the upper left hand comer, left to right and top to bottom, aa many frames aa required. The following diagrama illustrate the method: Lea cartas, planches, tableaux, etc.. pauvent Atre filmAs A des taux da rAduction diffArents. Lorsque ie document est trop grand pour Atre raproduit en un ssul clichA. il est fiimA A psrtir do i'angia supArieur geuche. do gauche A droite, et do haut en bee, an pranant ie nombre d'images nAcsssaire. Lea diagrammas suivants illustrant la mAthoda. 1 2 3 1 2 3 4 S 6 Li CAS] S"„rf i ^84^3 IV THE 4^(i>h LAWS OF INSURANCE: FIRE, LIFE, ACCIDENT, AND GUARANTEE. GMBODTINO CASES IN THE ENGLISH, SCOTCH, IRISH, AMERICAN, AND CANADIAN COURTS. BY JAMES BIGGS PORTER, .or THE INMGB TKMPLB AMD SOUTH-EABTEIIN CIBCUIT, nAKBISTBR-AT-L/LW; ROLDBB or THE riBR rRISB (1873) IN RQVITT AND BRAL PBOPBRTV. AS8ISTC.D BT WILLIAM FEILDEN CRAIES, M. A., VF THR INNRB TR1IPI.B AND WRSTRRN CIBCVIT, BABBlSTRB-AT-LAW. FROM THE SECOND {1887) EDITION, WITH NOTES AJiTD AMERICAN CASES BT HENRY DARRACH, Esq., or THR PRtLADBLPRU BAB. PHILADELPHIA: THE BLACKSTONE PUBLISHING COMPANY. 1889. Entered according to the Act of Congress, in the year 1889, by the Bi^CK- BTONE PuBiasHiNO CoMPANT, iu the office of the Librarian of Congress, at Washington, D. C. « 00 TO THE HONOVKABLK SIR WILLIAM GRANTHAM, Knight, VNKorTHBjunaiMor hrr UMwan^ hiqh covbt or jubticb. C- TUI8 KDITIOK or A MAKVAL OV Jut^ tS87. THE LAWS OF INSURANCE 18, WITH PERMISSION, H^eiKpertftiUs) ^tAitmitA BX THE AUTHOR. (Hi) ' Judg our f xroTE. We «ugge«t to bur patrons that, to facilitate the labor of the Judges and Reporters, they cite the TOP PAGING of books of our SERIES, and add £TBXT BOOK BBBJEa.^—Ediior. to >£rS^^< In noi ha> del su< du bo wl th< tal pa thi ici th W PREFACE TO THE SECOND EDITION. In my Preface to the First Edition, I mentioned that, none of the English writers on the Law of Insurance having treated in one volume of Life, Fire, and Acci- dent Insurance, and important piinciples of the Law — such as Subrogation and Indemnity—having been much elucidated by recent decisions, it seemed to me that a book of moderate size, containing in one volume the whole Law of Insurance (excepting Marine )— viz., Lift, Fire, Accident, and Guarantee Insurance^mi^ht be for the convenience of the profession. This anticipation was not, it is hoped, entirily mis- taken, for the First Edition was taken up sooner than was expected. Notwithstanding, however, the com- paratively short tinae that has elapsed since the book was published, numerous fresh cases have occurred in this country, Scotland, Ireland, the Colonies, and Amer- ica ; and those which I considered the most useful of them, numbering over 160, have been referred to in this (vii) 1 s * 'I YiJi PREFACE. Edition, bringing up the list of cases to upwards of 1560. As the American and Colonial' Reports are numerous, and their abbreviations are not always familiar to the English reader, a list of such abbreviations has been gi^en; and the statutes alluded to will be found in the Index. J. B. P. Ikner Tkmple, Jtdy 1887. CONTENTS. [The paging refers to the [*] pages.] CBhV. FAOM. I. NATURE OF THE CONTRACT OP INSURANCE . . . 1 — 20 THE CONTRACT OF INSURANCE 20 — 34 II. INSURABLE INTEREST 35 — ^73 •III. THE PREMIUM 74—98 IV. THE RISK , 99—136 V. GENERAL INQUIRIES MADE BY INSURERS .... 137 — 143 VI. WARRANTY 144 — 151 VII. MISREPRESENTATION AND CONCEALMENT . . . 152 — 164 VIII. CONDITIONS IN POLICIES 165—208 IX. ARBITRATION ° 209 — 220 X. INDEMNITY 221—245 XI. CONDITIONS AS TO AVERAGE 246 — 250 XII. REINSTATEMENT 251 — 258 XIII. RE-INSURANCE . 259—266 XIV. OBLIGATION OF TENANTS TO INSURE 267 — 280 XV. MORTGAGE 281—296 XVI. FIRE POLICIES AND ASSIGNMENT 297 — 305 XVII. DISPOSITIONS OF LIFE POLICIES 306 — 350 XVIII. LIEN 3.51—357 XIX. CONFLICTING CLAIMS . . 338 — 359 XX. COMPANIES 360 — 386 (ix) t ■ II CONTENTS. [The paging refers to the [ • ] ragi«>8-l PAOBS. XXI. RIGHTS OF PULICY-HOLDEBS • 387—401 XXII. NOVATION AND AMALGAMATION 402-413 414 — 421 XXIII. FOREIGN COMPANY .... 422—444 XXIV. AGENTS 445 464 XXV. ACaDENT 4fi5 471 XXVI. GUARANTEE INSURANCE wo—^iJ. 472—477 XXVII. BANKRUPTCY . . ti^ XXVIII. THELLUSSON AND SUCCESSION DUTY ACTS .... 478—480 . .*. 481 INDEX i 5 h i i. I LIST OF CASES. [The paging refers Abbot v. Howard, 142 Abrahams r. Agricultural Mutual Co., 172, 194 Accidental Death Co., Re, 892, 897, 400 Accident Insurance Co. v. Accident, Disease and General Insurance Cor- poration, 867 Acey V. Fernie, 79, 95 Adam's Policy Trusts, 880, 834 Agar V. Athenaeum Co. 872, 878, 428 Agriculturist Cattle Co. Re, 897 Aitchison v. Lohre, 2, 12, in, 126, 228 Albert Life Assurance Co., Re, 478 Albert v. Bank of London, 405 Albert v. Medical, 405 Albion Life Co., Re 889 Albion Co. v. Mills, 22, 419, 437, 440 Alchorne v. Savile, 244 Aldebert v. Leaf, 888. 891, 897 Alexander v. Campbell, 216 Allan V. Markland, 62, 274 Allen's case, 412 Alleyne v. Darcy, 859 AUeyne v. Quebec Co., 257 AUkma v. Jupe, 85, 230 American Basket Co. v. Farm villa In- surance Co., 64 Ames V. Richardson, 293 Amicable Co. v. BoUand, 180, 183 Amiss V. Witt, 807 Anchor Insurance Co., Re, Ex parte, Badenoch, 410 Anderson v. Commercial Union, 204, 260, 267 Anderson v. Edie, 69, 70 Anderson v. Fitzgerald, 80, 89, 146, 816, 468 Anderson v. Morice, 47, 55, 66 Andersen v. Pacific Co., 146 Anderson t>. Thornton, 76, 88 Andree v. Fletcher, 86 Andrew v. Ellison, 895 Andrew's Case, 418 Andrews' and Alexander's Case, Re, London Marine Insurance Co, 807 to the [*] paging.] Andrews, Ex parte, 67, 842, 846 Andrews r. Bonsfield, 314 Anglo- Australian Co. v. British Provi-- dent Co., 405, 406 Anglo-Australian Co , Ex parte. Smith, 406 Appleby v. Mvers, 63 Appleton r. Phoenix, 76 Archambault v. Lamere, 286 Armitage v. Winterbottom, 62, 58, 67 Armstrong and Byrne, Re, 812 Armstrong v. Mutual Life, 40, 131 Armstrong v Turquand, 77, 166, 206 Arthur Average Association, Re. See Corry and Hawksley's Case Arthur Average, &c., No. 2, 397 Arthur ». Wynne, 822 Ashford v. Victorial Mutual Co., 434 Ashley ». Ashley, 40, 306, 819 Ashworth r. Munns, 368, 380, 381 Athenaeum Co., Re, Ex parte Prince of Wales Co^ 260. 391, 896, 306, 422 Athenaeum Co., Re, Ex parte Eagle Co., 869, 391, 898 Athenaeum Co. v. Pooley, 90, 372, 878, 376, 425 Atkins V. Arcedeckne, 345 Atkinson v. Newcastle, 116 Att.-Gen. v. Abdy, 323 Att.-Oen. V. Continental Life, 92 Att.-Oen. r. Rowsell, 822 Atwell r. Western Co., 176, 170 Austin V. Drewe, 112, 116 Australian Agricultural Co. v. Saunders, 176 Aylwin v. Witty, 852 Babbaor v. Coulbum, 211 Babcock v. Montgomery Fire Co., IIS, 120 Badenoch, Ex parte, Re Anchor A«< surance Co., 410 Baile v, St. Joseph Fire Co., 178 (xi) I xu LIST OF CASES. F. ( I •< [The paging refers Bailey r. American Insurance Co., 288 Bailey v. Gould, 67 Baker r.Holzapfel, 279 Baker v. Langhorn, 423 Baker e.L.S. W. B., 429 Bai.!wtn V. Billinffiby, 314 Baldwin v. New York Life, 207 Baiestracci r. Fireman's Insurance Co., 10 Balfour v. Ernest, 368 Ball V. Storie, 24 ^ , Bank of N. S. W. See New South Wales Br tk Bank of Toronto t> European Assur- ance, 465 Banting v. Niagara District Fire Co , 190 Barclay v. Cousins, 41 Bargate v. Shortridge, 872 Barker v. Janson, 8 Barker v. Walters, 87 Barnes v. Hartford Co., 241 Barr's Trusts, 310 Barret v. Jermy, 172 Barron v. Fitzgerald, 73 Barry. Ex parte, 472 Barsalon v. Royal Insurance Co., 161 BartlettV^ Case, 411 Barton v. Gainer, 308, 325 Basch V. Humboldt Mutual 76 Bashford v. Cann, 340, 842, 847 Bassil V. Lister, 478 Bateman, Ex parte, 280 Bateman v. Service, 414, 419 Bates V. Hewitt, 99, 108, 162, 164 Bath's case, 389 Baxendale r. Harding, 109 Baxter r Hartford Co., 60, 179 Bayton Insurance Co. v. Kelly, 73 Beacon Fire Co. v. Oibb, 115, 169, 206 Beala r. Home Insurance Co., 257 Bean v, Stupart, 145, 160 Beck's case, 409 Beebee v Hartford Fire Co., 117 i. Lancashire Co., 102 Caldwell, Ex parte, 816 Caldwell v. Dawson, 845 Calhoun v. Union Mutual Co., 482 Camden r. Anderson, 63 Cameron v. Monarch Co., 194 Cameron v. Times and Deacon Co., 198 Ovnpbell v. French, 192 to the [*] paging.] Campbell r. Liverpool, Ac , Co., 170 Campbell v. National Co., 80, 424, 488 Campbell v. Victoria Mutual Co., 118 Canada Insurance Co. r. Northern Co>, 264, 265, 266 Canada Insurance Co. r. Western Co., 430 Canada Agricnltnral t. Canada Mutual Fire Co., 168, 178, 176, 190 Canada Landed Credit r. Canada Agri- cultural, 166, 183 Cann r. Imperial Fire, 190 Canning v. Farquhar, 28, 75, 101, 165 Carrington r. Commercial Fire, 260. 261 Carpenter v. American Co., 442 Carpenter v. Providence Washington Co., 68, 176 Carpenter v. Qaeen's Proctor, 471 Carrigan r. Lycoming, 84 Carruthers r. Shedden, 46, 66 Carter v. Boehm, 9, 89, 117, 152, 162 Carter v. Niagara Dist. Co., 188 Case V. Hartford Co., 116, 128 Casey v. Goldsmid, 162 Cashua v. N. W. National Co. 188, 260, 263 Cashman r. London and Liverpool, 108, 167 Cassel V. Lancashire and Yorkshire, 460 Castellain r. Preston, 2, 4-6, 60, 51, 58, 55, 65, 181, 221, 222, 230, 234, 280, 252, 264, 268, 280, 282, 288, 292, 803, 803, 867 Castling v. Aubert, 366 Cathcart'fl Trustees v. Heneage's Trua< tees, 478, 479 Cathie's Case, 378 Cattlin V. Sprin^fieid Co.^ 108 Cazenove v. British Equitable Co., 139, 160 Central National Bank v. Hume, 886 Chalmer's v. Mutual Fire Co., 176, 484 Chambers v. Atlas Insurance Co., 189 Champlin v. Railway Passengers Co., 445. 459 Chanaler v. Worcester Co., 10 Chapin v. Fellows, 807, 320 Chapman v. Besnard, 868 Chapman v. Chapman,865 Chapman v. Eraser, 87 Chapman v. Lancashire Co., 178, 186, Chapman v. Pole, 200, 201 Charles v. Altin, 276 Charlestown, &c., Co , v. Fitchburg, ^., Co., 100 Chariton v. Driver, 276 1 xiy Co., Charter Oak Co., e. Brant, 829 Chattock V. Shaw. 140, 149 Chesterfield v. Bolton, 271 Chisholmv- Provincial Insurance 119 Chown r. Baylis, 325 Christie v. North British Co., 22, 487 Cinq Mars v. Euqitable Co. 187, 190 City Bank v. Sovereign Life Co , 137, 184 City Fire Co., v. Corlies, 116, 121 Citizens' Insurance Co., v. Parsons, 174 Claflin r. Commonwealth, 201 Claperede v. Commercial Union, 63 Clack V. Holland, 837, 852 Clark u.Bly thing, 177,229 Clark V. Scottish Imperial, 49, 71 Clark V. Western Co., 02 Clark's Exors.' Case, 876 Clark V. Dixon, 34 Clay V. Harrison, 65, 71 Clegg's Case, 411 Clement v. British Americcn Co., 48, 194, 195 Clia r. Schwabe, 132 Clought). L. N.W. R., 228 Cobb V.N. E. M. Marine, 216 Cobbe's Policy, 858 Cocker's Case, 409 LIST OP CASES. [The paging refers to the [•] paging.] Coggs V. Bereard, 66 Coghlan's Case, :, 895, 402 Collett V. Morrison, 22, 24, 66, 86, 327 Colli ngridge v. Royal Exchange, 64, 65, 280, 802 Collins V. Locke, 209, 211 Colmorc v. North, 471 Colonial, &c., Co. v. Adelaide Marine Co., 62, 259 Colonial Mutual Co., Be, 382 Columbia Fire Co. v. Lawrence, 64, 116, 271 Comey v. Harvey, 74, 76 Commercial Union v. Canada Mining Union v. Lister, 5, 233, Mutual V. Union Mutual, Co., 178 Commercial 233, 294 Commercial 20 Gompagnic d' Assurance ». Grammon, 77 ' Connecticut Co. v Burrouehs, 820, 384. 885 B » » , Connecticut Co. ». Moore, 139, 140. 141. 448 » » » Connecticut Mutual v. Lucks, 60 Connett v. Phoenix Co., 189 Conquest's Case, 410 Conway v. Gray, CS Conway v. Britannia, 809, 856 Cook V. Black, 186 Cook V. Field, 48 Cooke V. Cooke, 210 , Cooper V. Massachusetts Co , 132 Cooper V. Pacipc Mutual Co., 100 Cope V. Rowlands, 85 Copp V. Lynch, 442 Cornell v. Liverpool, London, &c., Co., 186 Corrinay v. Gray, 52 Cory and Hawksley's Case, 367, 370, 372 Cotton States Life Co. v. Lester, 91 County Life, Re, 869 Courtenay v. Ferrers, 328 Courtenay t>. Wright, 340, 848 Cowley V. National, &c., Co., 467 Cox V. Hickman, 886 Cray» Hartford Fire Co., 185 Critchett v. American Insurance Co., 431 Croft V. Lindsay, 67 Crofts V. Marshall, 31 Crockatt t». Ford, 25, 359 Cromwell v. Royal Canadian Insurance Co., 416 Crossley v. City of Glasgow Co., 316 Crowley v. Agricultural Mutual Co., 191 Crowley v. Cohen, 39, 46, 56, 100, 101, 102, 246, 265, 805 Crozier v. Phoenix Co., 47, 108 Culbertson v. Cox, 181, 304 CuUen V. Thomson's Trustees, 436 Cunard v. Hyde, 44 Currier v. Continental Co., 35, 40 Currjjrt). Commonwealth, 117 Curtius V. Caledonian Co., 316 Cusack V. Mutual Co., 66 Dafoe ». Johnstown District Co , 177 Daintree's Claim, 208 Dalby v. India and London Life Co., 14, 17. 18, 806 Dale's Case, 413 Dalgleish v. Buchanan, 02, 440 Dalgleish v. Jarvie, 162 Dalzel V. Mair, 74 Daniels v. Emiitable, 101, 103 Darcy r. Croft, 827, 864 Darneirs Case, 378 Darrell v. Tibbitts, 4, 230, 284, 373, 279,203,294 Davies v Home Insurance Co., 09 Davies v. Trustees of Madras Fund, 861 1 LIST OF CASES. zv » Co., 370. If ! Co., irance (16 Co., , 101, 177 I Co., 279, Fund, [The paging refers Dawson v. Fitz^rald, 211, 212 Day V. Connecticut Co., 97 Day, JEx parte, 841 Dayton Insurance Co. v. Kelly, 76 Dear v. Western Insurance Co., 184 Dearie v. Hall, 856 De Costa r. Scandret, 87, 88 De Forest v. Fulton Fire Co., 40, 58 De Garminde o. Pigou, 76 Delaney v. Stoddart, 298 De Launay r. Northern, 68 Delaware County Co. r. Quaker City Co., 282 Denham v. United Guarantee, 147 Denman r. Scottish Widows, 840 Deposit and General Life Co. v. Ays- cough, 879 Desborough v. Harris, 375 Devaux v. I' Anson, 41 Dever, Expaiie, 835 Devlin v. Queen Insurance Co., 10 De Winton's Case, 90 Dickson v. Jardine, 227, 288 Dickson v- Provincial Insurance Co., 175 Digby V. Atkinson, 271, 272 Din V. Quebec Assurance Co., 190 Dillard v. Manhattan Life Co., 207 Dixon V. Stansfield, 866 Dobson V. Land, 288, 290 Dobson V. Sotheby, 104, 116, 161, 138, 267 Doe V. Gladwin, 278, 277 Doe V. Peck, 276 Doe V. Rowe. 277 Doe r. Shewin, 274 Doe V. Sutton, 265 Doe V. Ulph, 276 Doeld Pitt r. Laming, 110, 168 Donaldson r. Manchester Co., 60 Dorien «. Positive, 92 Dormay r. Borrodaile, 186, 816, 821, 848 Dornink's Case, 407, 411 Douglas V. Murphy, 278, 275 Dowker v. Canada Life Co., 86, 89 Downes e. Green, 48 Dowse' 8 Case, 409, 418 Doyle V. City of Glasgow Co., 447, 462 Drinkwater v. London Assurance, 121, 177 Drysdale v. Pigott, 840, 842, 848, 847 » Duckett V. Williams, 88, 89, 150, 169 Dudgeon v. Pembroke, ?6, 44, 106 Dufaur v. Profewional Life Co., 181, 188, 324 to the [*] paging.] Duff V. Fleming. 52, 270 Duffell V. Wilson, 89 'Dufourcet v. Bishop, 224, 231, 288 I Dumas V. Wylie, 428 Dunnage v. White, 166 Dupre's Exors., Case, 411 Durham's Case, 896, 897 Durrani v Friend, 804 Duval ». Northern Co., 414 D wight V. Germania Co., 151 Dwyer v. Edie, 46, 69, 71 Dyson v. Morris, 847 Eagle, Ex parte, Re, Athenaeum Life, 856, 808, 380 Eastern Counties Railway v. Hawkes, 874 Eastwood V. Kenyon, 466 Easum's Case, 877 Ebsworth v. Alliance Marine Co., 49, 53, 282 Edge V. Duke, 77 Edmed, Re, 328 Edwards v. Aberayron Mutual, 210, 211 Edwards v. Barrow, 142 Edwards v. Insurance Co., 188 Edwards v. Martin, 426 Edwards r. Travellers' Ins. Co, 187 Edwards v. Warden, 361 Edwards v. West. 68, 264 Elkhart Mutual Aid v. Houghton, 41 Elliott V. Royal Exchange Co., 211 Ellis V. Kreutzinger, 366 Ely V. Positive Co., 878 Emmett, Re, 848 England v. Ld. Tredegar, 26, 859 England v. Franklin Fire Co., 106, 128 English and Irish Church, kc, Co., 888, 892, 398 Equitable Co. v. Perrault, 410, 417, 420 Equitable Co. t;. Quinn, 198 Era Co., Re, 404. 487 Ernest v. NichoUs, 868, 869, 870 404 Etna V. France, 140 Etna Life v. Green, 428 Etna V. Tyler, 68 Etty V. Bridges, 810 European Co , Re, 412 ' Evans v. Bignold, 28, 72 Evans v. Coventry, 898, 897 Elvnns v. Hooper, 806 Evan's claim, 412 Everett v. Desborough, 141, 166, 168L 208 XVI LIST OF CASES. s t \i i !i 1 and Co., [The p*ging refers Everett V. London Assurance, 114, 115 Eyre P. Glover, 41 Fairbrother v. Woodhouse, 857 Fairohild v. Liverpool and London, 1^7, 243, 245 Fairlie v. Christie, 24 . Falcke r. Scottish Impenal, 92, satf, 861, 867 „ ^^„ Family Endowment Co., Be, 403 Fanning V. London Guarantee Co., 40tf Farebrother v. Woodhoure, 844 Fawcett v. London, Liverpool, Globe, 188 Feise v. Parkinson, 88 Fenn v. Craig. 160 Feiguson v. Massachusetts, Ac, 34,70 Fernie v. Maguire, 869 Ferris v. Mullins, 866 Filliteru. Phippard, 270, 271 Fire Association v. Canada Co., 268 Fisher ». Liverpool, Ac, Co., 21 Fisher V.Smith, 856 Fisk V. Masterman. 82 Fitchburg Railroad v Charlestown Mu- tual Insurance Co., 97 Fitton V. Accidental Death Co., 80, 457, 468 Fitzherbert v. Mather, 158, 442 Fitzwilliam v. Price, 849 Fleming's Case, 897, 407, 408, 412 Fletcher v. Commonwealth Co., 116 Flint V. Fleming, 41 Flint V. Ohio Co , 75 Forbes & Co., Ifx parte, 88, 149, 158, 484 Forbes v. Border Counties Co , 271 Forbes v. Edinburgh Life, 142, 448 Ford V. Ryan, 859 Forgie o. Uoyal Insurance Co., 181, 188 Fortescue v. Barnett, 818, 826, 386 Forward v. Pittard. 56 Forwood V. N. Wales Mutual. 125 Foster v. Life Assurance or Scotland, 186 Foster v. Mentor Life, 262 Foster v. Roberts, 820. 476 Fowkea v. Manchester Co., 141, 162, 158 Fowler V. Scottish Equitable, 24, 26, 88, 91, 106. 871 Fox V. Railway Passengers, &c., Co., 216. 220 Foy V. Etna Co., 178 Fragano v. Long, 68 to the [♦! paging.] Franklin v. S. E. R. 446 Frazer ». Gore District Co., 85 Frame v. Brade, 842, 848 French v. Backhouse, 428 French V. Patton, 24 French v. Rosal Exchange, 869 Frere's Case, 897, 407, m FViedlander v. London Assurance, 104, 162, 168 Frost V. Liverpool, &c., Co., 434 Fry ». Fry, 67 Fryer v. Moreland, 17, 18, 479, 480 Furiing V. Carroll, 271 Furta*) V. Rodgers, 82 Galb ». Lewis, 177. 811, 428, 426, 482 Gamble r. Accident Insurance Co., 460 Garcelon v. Hampden Insurance, 148 Garden v. Ingram, 188, 278, 287 Gardner v. Cazenova, 68 Garner r. Moore, 70, 349 Gaskin v. Phoenix Co., 283 Gatayes v. Flather, 820 Gauche v. London and Lancashire Co., 198 Geach v. Ineall, 141. 160, 156 Geiseck v. Crescent Mutual Co., 121 General Land Credit Co., Re, 421 German Life Co.'s case, 412 Gibson, Ex parte, Be Smith, Knifjht & Co., 410 Gibson v. Overbury, 855 Gibson V. Small, 2o, 116, 146, J4K Giffard v. Queen Insurance Co., :il, >-, 97, 438 Gilchrist r. Gore District Co., 170 Gill V. Downing, 852 Gillespie v. Miller 802 Gillev V. Burley 328 Girdfestoneo. North British and Mer* cantile, 161 Glen V. Lewis, 171, 172 Glover v. Black, 281 Godfrey v. Wilson, 886 Godin V. London Assurance, 82 Godsal V. Boldero, 14, 17, 69 Godsal V. Webb, 819 Goitt). National Protection' Co., 76 Goldstone v. Osborne, 211 Gooderham v. Marlett, 68, 442 Goodman v. Harvey, 12 Goodwin v Lancashire Fire Co., 117, 188, 194, 208 Gordon v, Ingram, 266 LIST OF CASES. XVll 104, 426, Co.. 148 B Co., 21 ii;ht & I Mer* re ,117, [The paging refers Gordon » Reramington, 120 Gordon v. Sea, Fire and Life Co., 369 Gore District Co. v. Samo, 163, 164, 167 Goreley, Ex parte, 203, 253, 283, 284, 288 Gorman p. Hand-in-Hand, 105, 107, 117, 118, 128,216 Gosa V Withers, 2, 221 Gottlieb V. Cranch, 340, 842, 844, 347 Gould V. British America Co, 198, 19!) Goulston V. Royal, 42, 52, 201 Gove ». Farmers' Co., 12, 119 Grace r American Ins. Co., 102 Grain's Case, 360 Grandin v. Rochester Co., 62, 169 Grant ». Easton, 419. 421 Grant «. Etna. 106, 109, 147, 429 Grant v. Parkinson, 63 Grant v. Reliance Insurance Co., 26 Grantley v. Garthwaite, 846 ' Gray v- Sims, 86 Great Britain Mutual Cos., Re, 889 Greaves v. Niagara District Co., 190 Green v. Ingham, 855 Greet w Citizens' Co., 118, 177 Gregg V. Coates, 272 Greiner v. Monarch Co., 199 Grey v. Ellison, 849 Grieve v. Northern Co., 184 Griffey v. New York Central, 188, 810 Griffith's Case, 407 Grogan r. London and Manchester In- dustrial Co., 143, 159 Gurnell v. Gardner, J310 Guardians Mansfield Union v. Wright, 4CS Haokdorn tv Oliverson, 54, 480 Halford v. Close, 478 Halford v. Kvmer, 85. 40 • Halhoad v. Young, 107 Hall V, Railroad Co., 282 Hull ». Wright, 256 Hallett V. Dowdall, 897 Hambro v. Hull and London Fire Co,, Hamilton's (T^ord Claud) Case, 879 Hamilton's (Duke of ) Trustees v. Flem- ing, 271 Hamilton v. Mendcs, 284, 270 Hancox v. Fishing Insurance Co., 71 Hansen v American Insurance Co., 189 Hunson v. Fishing Co., 69 2 POUTER ON INSURANCE. to the [•] paging.] Hare ». Barstow, 148 Hargrave r. Parsons, 465 Hargrove r. Smee, 30 Hargrave, Re, 366 Harman's (Pratt) Case, 412 Harris v. London and Lancashire, 124, 200 Harris v. Venables, 163 Harrison v. Douglas, 215, 216 Harrison v. Ellis, 107 Harrison v. London and Lancashire Fire Co., 120, 193. 195 Hartigan v. International Life Co., 206 Hartmann v. Keystone State Co., 142 Harvey » Beckwith, 211 Hastie v. de Peyster, 268 Hastings Mutual Fire Co. r. Shannon, 423 Hatch V. Mutual Life Co.. 130 Hathaway v. State Insurance Co., 181 Hatton V. Beacon Co., 176 Hatton ». Provincial Co., 194 Havens v. Middleton, 276 Hawkins v. Coulthurst, 350 Hawkins v. Woodgate, 842, 345 Hawthorn's Case, 426, 482 Hawtrey's Case, 41 *i Haycock's Policy, 319, 358 Hebden v. West, 10, 43, 44, 69 Heckman v, Isaac, 66 Hendrickson r. Queen Insurance Co., 432 Henkle v. Royal Exchange, 24, 82 Hennessy, Ex parte, 311, 432 Henry v. Agricultural Mutual Co., 481 Henry Rifle Barrel Co. v. Employers' Liability Corporation, 43, 263, 464 Henson v. Blackwell, 70, 343 Hentig v. Staiiiforth, 86 Herbert ». Mercantile Fire Co., 118 Hercules Co v. Hunter, 119, 166, 222, 228 Herman t; Jeuchner, 85 Hermann v. Niagara Fire Co., 444 Hey V. Wyche. 270 V Newport Railway, 20, Hicks 446 HilU Hill V. Hartford Fire, 446 Patten, 24 Hill t'. Secreton, 54, 68, 71 Hill V. Trenery, 827, 828 Hillard v. Thurston, 271 Hillier v. Alleghany Co., 121, 122 Hinckley v. Germania Fire Co i B4 Hirsch v. Im Thurn, 215 Hobdoy t>. Peters, 827 Hodge V. Security Co., 444 • •• ZVlll LIST OF CASES. ■!lt hi 23. 72, 86, Co Hodgson r. Glover, 41 Hodgson V. Marine, 76 Hodson V. Observer Co., 326 ^ , Hodson t'. Railway Passengers 217 Holditch's Case, 411 Holland v. Smith, 67, 842, 843 Holmes v. Blogg, 86 Holfs Case, 879 Holt, Re. 218, 219 Holt p. Everall, 86, 326 830, 381 Holtzmann ». Franklin Fire, 121, IM Holzapfel v. Baker, 279 Home Insurance Co. ». Baltimore Water Co., 68, 59, 242, 440 Home Insurance Co. v. Garfield, 256 Home Insurance Co. v. Myer, 189 Home Insurance Co. v. Thompson, 2o6 Hone V. Mutual Safety Co., 265 Hooper v. Accidental Death Co., 460 Hopkins ». Hawkeye Co., 77 Hopkins v. Prescott, 163 Horden v. Commercial Union, 106 Home I'. Anglo- Australian Co., 130, 131, 133, 136 Hort's Ccse, 409 Horton v. Sayer, 209 Hough t). Head, 221, 223 Houghton, Ex parte, 03 Howard v. Refuge Friendly Society, 45 Howard's Case, 103 How's Exors ' Case, 411 Howell V Knickerbocker Co., 104 Howell's Case, 412 Howes r. Dominion Fire Co., 51, 119 Howes p. Prudential, 308, 825 Huch r. Globe Insurance Co., 252 Hucking v. People's Insurance Co., 12 Huckman v. Fernie, 141, 166, 208 Hugff V. Augusta Insurance Co., 249 Hughes V, Searle, 828 Huguenin v. Rayley, 143, 159 Hummeirs Case, 888, 389, 400 Humphrey v. Arabin, 842, 347 Humphrey ». Hartford Fire Co , 282 Hunt^s Case, 809 Hutcheson v. National Co., 150 Hutchinson v. Wright, 892 Hutton V. Waterioo, 143 Ibbgtson, Ex parte, 298, 808, 814, 472, 476 Illinois Central Co. r. Woolf, 77 Imperial Marine Co. v. Fire Insurance Corporation, 19, 259, 261 Indemnity Case, 404, 406, 400, 408 [The paging refers to the [*1 paging.! „ j.o India and London Co., Jie, 413 Inglis p. Stock, 62, 62, 63 Insurance Co. v. C D., 227 Insurance Co. Insurance Co. Insurance Co. Insurance Co. Insurance Co. Insurance Co V. Eggleston, 91 V. Fogarty, 253 V. Hope, 256 V. Insurance Co., 201, 263 V. Norton, 204 ^„„ p. Thompson, 42 Insurance Co. ». Transportation Co., 115 Insurance C)- v. Up de Graff, 06 Insurance Co. v. Wilkinson, 139, 140, 423 International Life Co., Re, 396 International )-.ife Co. v. Hercules, Co., 412 lonides p. Pacific Co., 25 lonides v. Pender, 4, 90, 112, 200 Irving V. Manning, 223, 250 Isaacs V. Royal Insurance Co. 99, 108 Izon V. Gorton, 279 Jaoksox v. Boylston Mutual Co., 222, V27 231 Jackson r. Forster, 134, im, 175, 177, 181, 807. 824 Jacobs V. Equitable Co.. 432 Jacques v. Golightly, 44 Jacques p. Harrison, 296 Jeffries v. Union Mutual, 137 Jeffrey's Policy, 857 Jersey City Co. r. Nicholls, 200 Jeston r. Key, 826 Johnson r. Ball, 328 Johnson v. New Zealand Co., 49, 51 Johnson v. North British and Mercan* tile, 176, 245. 282 Johnson ». Swire, 827 Johnson v. Union Mutual, 34 Johnston p. Western Co , 191 Johnston p. West of Scotland Co., 222 Jones p. Carey, 101 Jones V. Consolidated Co., 324 Jones V. Festiniog Railway, 43 Jones V. Gibbons, 311 Jones p. Mechanics' Fire Co-, 201 Jones p. Provincial Co , 22, 142 Jones V. Scottish Accident, 414 Joyce p. Kennard, 100, 250, 805 Joyce V. Realm Co., 261, 262, 268 Joyce t). Swann, 46 48 Kains p. Knightly, 4, 20 Kaltenbach p. M'^Kenzie, 224, 22S LIST OP CASES. XIX 115 423 Co., 08 222, 177, 61 srcan- Co., [The paging refera Eanady v. Gore District, 188 Kekewich v. Manning, 816, 326 Keily V- Hochelaga, 117 Kelly V. Home, 84 Kelly V. Liverpool, &c., 176 Kelly r. London and Staffordshire, 75, 414, 410, 420 Kelly ». Phoenix, 68 Kelly V. Solan, 97 Kelsall V. Taylor, 217 Kendall r. Stevens &, Co., 65 Kensington, Ex parte, 865 Kent Mutual, Be, 400 Ker V. Hasting Mutual Co , 183 Kerr v. British American Assurance Co., 191, 192 Kerwin ». Howard, 329 Kidston v. Empire Marine Co., 124 Kill V. Hollister, 209 King, Ex parte, 474 King V- Accumulative Life Co., 897, 470 King V. Glover, 42 King V. Lucas, 837 King V. Prince Edward, &c., Co., 249 King V. State Mutual Co , 283, 292 Kingdon v. Castleman, 827 Kingsford v. Swineford, 347 Kirby's Case, 376 Kirkpatrick v. South Australian Co., 96 Klein v. New York Life Co., 91 Knickerbocker ». Pendleton, 77, 191 Knox's Case, 412 Knox r. Turner, 840, 842, 347 Knox V. Wood, 42, 53 Koster v. Eason, 423 Kunzze v. American Exchange Co., 120 Lackgrstein v. Lackerstein, 328 Lafarge v. London, Liverpool, and Globe, 190 Laidlaw v. Liverpool and London Co., 198 Lambkin v. Ontario Marine, 119, 198 Lambkin v. Western Co., 186, 186, 191 Lancaster, Ex parte 840, 842, 847 Lancashire Co. v. Chapman, 194 Lancey'a Case, 877, 408 400 Langdale v. Lason, 179 Langel v. Mutual Insurance Co., 198 Langhorn v. Cologan, 24, 87 Langston. Ex parte, 856 Lanf^eviile ». Western Co., 128 Lapierre v. London and Lancashire, 87 Larocque v. Royal, 214 Last r. London Assurance, 899 to the [»1 paging.] Law V. Londo' Indisputable Co., h , 44, 70, 806, 891 Lawder v. Lawder, 467 Lawrence v. Accidental Death Co., 456 Lazarus v. Commonwealth, 42 Lea r. Hinton, 840, 842, 848 Learmonth. Be, 820, 476 Lee V. Abdy, 811, 416 Lee's Case, 877 Leeds v. Cheetham. 254, 273, 287 Lees V. Whiteley, 254, 284, 815 Lefeuvre v. Sullivan, 867 Lefevre v. Boyle, 317 Lenders v. Anderson, 420 Leonard v. Clinton, 835 Leslie v. French. 351, 853, 476 Lethbridge v. Adams, 897 Levy V. Baillie, 122, 124, 200 Levy V. Merchants Co., 237 Lewine's Case, 425 Lewis V. King, 341,842 Lewis «■ Uucker, 221,250 Lewis V. Springfield Co., 116 Life Association of Scotland v. Foster, 30, 139, 142, 148, 150 Limerick Co v. O'Ferrall, 356 Lindenau v. Desborough, 69, 71, 117, 142, 162. 158, 160 Lingley v. Queen's Insurance Co., 46, 67 Linford r. Provincial Horse, &c., Co., 97, 423, 431 Lion Mutual Marine v. Tucker, 74 Lishman v. Northern Marine, 21 and London v. Gunther, London, and Globe v. Wyld, Pelletier, Liverpool 170 Liverpool, 24 Liverpool Plate Glass Co. 446 Lloyd's Case, 878 Lloyd r. Union Co., 84 Loader v. Kemp, 271 Lockhart v Cooper, 46, 68 Lockyer v. Offley. 103. 461 Loflft V. Dennis, 278, 279 Logan V. Commercial Union, 191 London and Lancashire Co. v. Graves, 129 London and Lancashire Co. v. Honey, 158, 178, 214 London Life Co. ». Wright, 871 London and N. W. R. v. Glyn, 68. 60, 62 Lonaon and N. W. R. o. Whinray, 466 London and Provincial v. Ashton, 866 London and Provincial v. Seymour, 88 28, 84, 56, 57, XX i mi London Assurance r. Mansell, 8, ^• 88, 145, 152, 153, 164, 168, 160, 208 . . «», London Assurance r. Sainsbury, J2i, 229,230,283 ^ , ,_ London Guarantee Co. r. Feamley, 187, 191, 461. 468 _ „„ London Life Co. r. Wright, 23, 86, 871 London, Liverpool, Ac, v. Wyld, 168 London Marine Co., Be, 397 Long p Beeber, 170 Longueville r. Western Insurance Co., 124 Loraine v. Thomlinson, 84 Lord V. Dall, 41 Lord Advocate v. Earl of Rfe, 480 Lotinga r. Commercial Union, 134 Louisiana Fire Co. r. New Orleans Co , 266 Lowell Co r. Safeguard Fire, 246 Lowry r. Bourdieu, 83, 86, 89 Lucena v. Crawford, 87, 41, 42, 68, 66, 68, 72, 438 Lycoming Fire v. Schwenk, 180 Lycoming Fire v. Ward, 407 Lyde v. Barnard, 314 Lynch V DalzeU, 87, 42, 84, 110, 181, 298,800 Lynch r. Dnn^ord, 90, 442 Lynch v. Hamilton, 90 Lynford ». Provincial, 418. Lyons r. Providence Washington Ca, 128 MAfcCARTHT r Traveller's Co., 467 MacClure v. Gerard Fire Co., 128 MacClure'ft Claim, 425 MacClure 9. Lancashire Ca, 105, IOC, 127 MacCuaig v. Quaker City Co., 196 ■MacCnllagh r. Yorkshire Insurance Co., 416, 4-20 MacCulloch ». Gore District Co., 247 MacDonald r. Irvine, 807 MacDonald v. Law Union, 150, 162 Macdonell t?. Beacon, 173 MacEwan v. Outheridge, 115 Macfarlane v. Andes Insurance Co., 22 MacGibbon r. Queen Insurance Co., 122, 124 Macgregor r. Horsfall, 227 Maclver's Claim, 883 Mack V. Lancashire Co., 195 MacKean ». Commercial Union, 187 Mackenzie's Exors.' Case, 876 LIST OF CASES. (The puglng refers to the [•] paging ] Mackenzie v. Mackenzie, 885 Mackenzie v. Coulson, 24 Mackenzie v. Van Sickles, 109 Mackenzie v. Whitworth, 4, 269, 203, 266 Mackie r. Enropean, Co., 28, 20, 101 419. 427, 480, 486 Mackie r. Phoenix, 97 MacLaws v. United Kingdom Temper- ance Co., 150 Macklin v. Waterhouod, 56 Maclachlan v. Etna Co., 442 Maclean's Trusts, 322, 823 Maclean v. Equitable, 189 Macleod r. Citizens' Co., 192 Macmanus v. Etna, 189 Macmillan e. Gore District Co., 200, 201 Macqueen v. Phoenix Co , 26 Macrobbie r. Accident Co.. 166 MacRossie v- Provincial Insurance Co., 191, 192 MacSwinney v. Royal Exchange Co., 41 Mo^wley's Trust 326 Mair 9. Railway Passengers, &c., 157 Malcher v. King William's Town. 69 Mallory v. Travellers Co , 138, 466 Manbv v. Gresham Life Co., 91, 191, 462 Manchester Fire Co. v. Wykes, 183 Mangles v. Dixon, 316, 817 Manhattan Co. v. Brougbton, 181. 188 Mann v. Western, 193 Manners v. Furze, 471 March v. Att.-Gen., 881, 894 Marine r. Protector, 266 Marine v Martin, 266 Marks v. Hamilton, 42, 46, 67 Marriage v. Royal Exchange, 288 Marriott v. Kinnersley, 327 Marsden v. City and County Fire, 116 Marshall v. Emperor, 149 Marshall v Schoiield, 62 Martin's Claim, 899 Martin v. Home, 162 Martin v. International, 484 Martin v. Sitwell, 81 Martin v. Travellers, 466 Martineau v. Kitchen, 56, 62 Marts V. Cumberland Co., 68 Marvin v. Universal Life. 424 Mason v. Agricultural Mutual, 198 Mason v. Andes, 176 Mason v. Hartford, 177, 488 Mason v. Harvey, 190, 191, 201 Mason v. Sainsbury, 179, 224, 281 Mass6 V. Hochelagn Co , 76 Master v. Miller, 24 Masters r. Hamilton, 42 Matthew r. Northern. 819, 895, 896. MatthewBon v. Royal, 62 I i B LIST OF CASES. xzi !r<3, 101 )er- ■i 201 Co., .,41 57 9 ,4.62 183 116 «. [The paging referH Matthewson v. Western Co., 284, 285. Maugham v. Kidlev, 855 May r. Standard Rre Co., 182 Mayall v. Mitford, 109. 147 Maynard v. Rhode, 141, 152, 154, 166, 208 448 Mayor of New York o. Brooklyn Blre, 46 Mead v. Davison, 21. 436. 437 Meagher v. Londfon and Lancashire Fire Co., 195, 200, 201 Meats V. Humboldt, 168 Mechanics' Building Society p. Gore District Co., 176 Mellor's Policv Trusts, Re, 86 Mercantile Mutual Marine Co., Re, 378 Merchants' Co. r. Firemen's Insurance Co., 12 Menzies v. North British Co., 222 Merrick v. Germania, 129, 245, 246. Merrick t5. Provincial, 169 Mexborough v. Bower, 217 Meyer v. Isaac, 80 Miall 0. Western Co., 299, 800 Midland Counties Co. v. Smith, 116, *117,119, :/67. Mildmay v. Folgham, 804 Mildred V. Maspons. 23 Milland(>n v. Atlantic, 214 Miller's Case, 412 Miller, Re, Exparte, Wardley, 459 Miller v. Life Insurance Co. 76 Miller r. Warre, 72 Milligan v Kquitable Co., 48, 64 Mills V. Griffiths, 296 Milrov V. Lord, 326 Manine v. Railway Passengers' Co., 214, 215. Mitchell V. Edie, 226 Moadinger v. Mechanics' Fire, 82 Moens v. Hay worth, 163 Mobile Railway v. Jurey, 229 Moffat V. Reliance Co., 424 Mollison V. Victoria Co.. 66 Moloney v. Tullock, 420 Money v. Gibbs, 356 Montreal Insurance Co. v. M'Gillivray, 79, 371, 872, 422, 424, 426, 428 Moore v. Connecticut Co., 187 Moore ». Halfey, 78 Moore ». Protection Co., 198 Moore v. Woolsey, 188, 184, 824 Morel V. Irving Insurance Co., 241, 257 Morel V. Mississippi Life Co., 455 Morgan v. Lonaon General Omnibus Co., 464 Morland v. Isaac, 843 to the (•] paging.] Morocco Land Co. r. Fiy, 21 Marrison r. Muspratt, 139, 152 Moses 0. Pratt, 83 Moss o. Lejnl and General Life, 28 Motteux r. London Assurance, 22 Muir 0. I*le>aing, 356 Mulvey r. Gore District Co., 188 Murray v. New York Co., 180 Murrav v. Wells, 836 Mutual Life Co. 0. Allen, 40, 298, 311, 416 Mutual Life Co. r. Lawrence, 458 Mutual Safety v. Home, 259, 268, 264 Myer 0. London, Liverpool, and Globe, 416 Myers 0. Perigall, 368, 880 Natioxal Bolivian Navigation Co., 9. Wilson, 426 National Marine 0. Halfey, 269 National Marine 0. Protector, 263 National Provident Life Co., Be, 419, 418 Naughter 0. Ottawa Co., 172, IM Neall 0. Read, 53 Neill 0. Union Mutual, 79, 165, 424 Newcastle Fire Co.. 0. MacMorran, 104, 144, 147, 163 New England Fire Co. 0. Wetmore, 9m New South Wales Bank 0. North British and Mercantile (No. 1), 65, 85, 181, 183, 291, 801 New South Wales Bank 0. Commercial Union, 82, 297 New South Wales Bank 0. Royal Insur- ance, 256, 258 Newman 0. Belsten, 20, 22, 101, 386, 887 Newman 0. Newman, 818 Newton 0. Gore District Co., 191 New York Bowery Co. 0. New York Fire, 89, 118, 259, 265, 266 New York Central Co. 0. Protection Co , 268 New York Express 0. Traders' Insur- ance Co., 115 New York Life 0. Flach, 189 New York Life 0. Fletcher, 88, 4JS New York Life 0. Hendren, 207 New York Life 0. Statham, 207 New York, Mayor of, 0. Brooklyn Fir« Co., 46 New York State Co. 0. Protector Co., 268, 264 ZZll HI m 1 1 r 1 l[: ! Niagara Fire Co. r. De Graff, 84 NibTo V. North American InsuraDce Co., 254 Nicholl's Case, 877 Nicholson v. Nicholson, 398 Nicholson v. Phcenix Mutual, 170 Nicol V. Brftun, 441 Noad ». Provincial Co., 126, 177 Norris r. Caledonian, 354. 857, 476 North American Fire v. Throop, 117 North American Life v. Burroughs, 454, 457 ^ _, North British and Mercantile r. London, Liverpool, and Globe, 'il, 57, 288, 239, 240, 292 North British and Mercantile v. Moffat, 81, 66, 68, 61, 246 North British Insurance Co. v. Hallet, 426, 483 North British Insurance Co. ». Lloyd, 466 North-Eastern Insurance Co. r. Arm- strong, 287 North of England Pure Oil-Cake v. Archangel Marine, 299, 801 Northrup V. Railway Passengers' Co., 450. Norton V. Royal Cc, 202 Notman v. Anchor Co., 80, 207 Norwood, Ex parte, 262, 266 Noyes r. North-Westem Co , 105, 128, 129 Nunneley. Ex parte, Be Times Life Co., 412 Oaklet v. Portsmouth Railway, 66 Ocean Wave, The, 283 O'Connor ». Imperial, 69 Ogden V. Montreal Co., 282, 488 O-Hara's Tontine, 808 Oldfield V. Price, 202 Oldman v. Bewicke, 150, 181, 191 Omnium Co. v. Canada Ins. Co., 286 Oom V. Bruce, 86 Otterbein v Iowa State Insurance Co . 26 Oxford Building Society r. Waterloo Mutual Fire Co., 184 Orr-Ewing v. Orr-Ewing, 417 Pacaud v. Monarch Co., 174 Pacific Mutual Co v. Butters, 429 Packard v. Connecticut Life, 886 Packer ». Gibbins, 279 LIST OF CABBB. [The paging refern to the [•] paging] Padstow Total Loss Association JKfl^ 860, 866 Page V. Fry, 50, 52 Paine v. Meller, 64, 290 Palethorpe, lie, 474 Pallas V. Neptune Co., 286, 299 Palmer v. Hawes, 143 Palmer v. Merrill, 816 Palyart ». Leckie, 86 Pare r. Scottish Imperial Co., 437 Paris V Gilham, 253, 255 Parken v. Royal Exchange Co., 418, 417, 419 Parker r. Eagle Co., 2 J6 Parker v. Equitable, 68 Parker v. Marquis of Anglesey, 847 Parkes v. Bott, b20, 828 Pariby's Case, 400 Parry ». Ashley, 181, 304 Persons v. Bignold, 24, 43, 434 Parsons v. Queen Insurance Co., 281 Parsons v. Standard Insurance Co., 173, 174 Partridge r. Albert Insurance Co., 879, 436 Paterson v. Powell, 44, 86 Patterson v. Royal Insurance Co., 37, 487 Patrick V. Eames, 72 Patrick Co (St.) v Breamner, 419 Patton 17. Employers' Liability Corpora- tion, 188, 460 Pawson V. Watson, 153, 154 Pearson v. Amicable, 836 Pearson v. Commercial Union, 20, 31, 84, 100, 105, 106, 128, 129 Peck ». Phoenix Co., 170 Pedder v. Moseley, 328 Peddie v. Quebec Fire, 108 Pellast?. Neptune, 298, 311 Pelley v. Wilson, 307 Pelly V. Royal Exchange, 29 Pelly V. Wathen, 356 Pender v. Ainsley. 279 Pendlebury v. Walker, 238 Penfold V. Universal Life Co., 468 Penley v. Beacon Co., 23, 97, 185, 39!^. 432 » > . , Pennell v. Millar, 364 Penniall r. Harborne, 273, 276, 289 Pennsylvania Mutual, &c., v. Wiler, 151 Peppitt V. North British and Mercantile. 482 Perrins v. Marine, &c., Co., 148, lOO. 453 . t . , Per-y v. Newcastle District Co., 86, 371 ^ erry ». Provident Life Co., 461, 463 QUEE LIST OF CASES. XXIU Pettigrew's Case, 66 PHeger v. Brown, 380, 842 Phillip's Insurance, 822 Phillips V. FoxttU, 466, 468 Phillips V Grand River Co , 163, 166 Phoenix Co., Be, Burgess and Stock's Case, 90, 98 Phoenix Co. v. Sheridan, 91. 101 Phoenix Co. r. Erie and Western, 56, 116, 230, 231 Pim V. Reid, 110, 117, 152, 167, 170, 171, 206. Pinchin v. Realm Fire Insurance Co., 436 Planters' Insurance Co. v. Meyers, 430. Piatt V. Kerry, 271 Pocock's Policy, 828 Pollock V. U. S. Mutual, 458 _ . Pomares e. Provincial Co., 185 Poole V. Adams, 64, 801 Poole V. National Provincial Life, 425 Post V. Hampshire Mutual Co , 288 Potomac, The, 229, 282, 287, 295 Potter V. Rankin, 4, 22 Pott's Case, 418 Power's 'Case, 411 Powles r. Innes, 299 Pownall's Case, 377 Preston v. Neale, 840 Price, Ex parte, 400 Price V. Worwood, 277 Priest V. Citizens' Mutual Co., 198 Prince of Wales Co. , Ex parte. See Re ] Athenaeum, 262, ; 91 i Prince of Wales Co. v. Athenaeum Co., 422 Prince of Wales Co. v Harding, 364, 369, 371, 372, 873 Prince of Wales Co. v. Palmer, 33, 88, 181 Princess of Reuss v. Bos. See Reuss, Princess of Pritchard v. Merchants, &c., Co., 79, 95, 131 Professional Life Co., Be, 397 Propeller Monticello v. MoIIison, 227 Providence Co. v. Martin, 460 Provincial Co. v. Etna Co., 186, 266 Provincial Co. v. Roy, 426 Prudential Co. ». Etna Co., 266 Prudential v. Thomas, 858 Pugh V. Duke of Leeds, 108 Purdue v. Jackson, 817 Putnam v. Commonwealth Insurance Co., 168 Pym V. Blackburn, 271 Quebec Insurance Co. v. St. Louis, 232 [The p*ging refern to the [*^ paging.] Queen Insurance Co. v Devinney, 166 Queen Insurance Co. v. Parsons, 26, 26 Queen of Spain v. Parr, 442 Quilter v Mdpleson, 276, 277 Quia V. National Insurance Co., l&l 96, Racine r. Equitable. 192 Ramsay's Case, 866 Ramsay Cloth Co. v. Gore District In- surance Co., 176 Ramshire v. Bolton, 314 Ra idal v. Cochran, 229, 280 Randall v. Lithgow, 188 Rankine v. Potter, 224, 225, 226 Ratcliffe v. Ocean, Ac, Co., 43 Rawbone's Will, 307 Rawls V. American Insurance Co , 70 Rayner v. Preston, 64, 181, 237, 254, 267, 296, 298, 300, 801, 802, 304 Redpath v. Sun Mutual, 416 Reed's Case, 878 Reed v. Cole, 876 Reed v. Lancaster Fire Co , 106 Reed v. Royal Exchange, 35 Reed ». WiUiamsberg City Fire Co., 47 Rees River Co. v. Smith, 193 Reesor ». Provincial Co., 232, 235, 236 Reg. r. Boynes, 198 Reg. V. Flanagan, 16 Reg. ». Whitmarsh, 865 Reid V. Gore District Co., 172 Reid V. Lancaster Fire Co., 103 Reid V. M'Crum, 288 Reis r. Scottish Eqiiitable, 203 Relief Fire Co. ». Shaw, 22 Reuss, Princess of, v Bos, 420 Reynard v. Arnold, 278, 279, 286 Reynolds v. Accidental, &c., Co., 456 Rhodes v. Union Insurance Co., 119 Riach V. Niagara District Co., 2C9 Rice V. Provincial Co., 194, 198 Richards v. Easto, 270 Richards v Platel, 366 Richland County v. Sampson, 68 Ridley v. Plymouth Co., 365 Riggs, t;. Commercial Union, 48 Riley v. Home, 56 Rintoul ». New York Central Railway, 231 Ripley ». Insurance Co.j 466 Riit V. Washington Marine, 429 Rivaz's Case, 412 Robins v. Fireman's Fund Insurance Co., 242 Roberts v. Lloyd, 814 Robertson's Case, 361 XXIV TABLE OF CASE8. il: u\ m HI [The paging refers Robertson v. French, 29 Robertson v. Hamilton, 53 Robertson v. Marjoribanka, 32 Robertson v. Metropohtan Lite, Mi Robinson v. Bland, 417 Robinson i'. George Insurance to., Robinson v International Life, 434 Robson V. M'Creight, 392 Roebuck v. Humerton, 44, 45 Rogprs V. Gra7.ebrook, 289 Rohrbaeh v. Germania Co., 69. 480 Rokcs V. Amazon Insurance Co , 1J4, 448 Rolfe ». Harris, 276 Holland v. North British and Mercan- tile, 105 10(i Romback v. Piedmont Co., 41 Rsperi). Lendon, '90, 211 Rose V. Medical, &c., Co., 19 Ross V. Bradshaw, 148, 149, 153, 386, 443 ,^, Rosa V. Commercial Union, 191, 19 « BoL^siter v. Trafalgar Life Co., 22, 419, 427, 434, 436 Routhr. Thompson, 81, 82, 488. 489 Routledge r. Burrell, 145. 160, 191 Roux V. Salvador, 226, 253 Row V. Dawson, 810 Royal Bank of India's Case, 875 Royal British Bank v Turquand, 422 Rummens v. Hare, 307, 808, 325, 855 Ruse V. Mutual Benefit Co., 87, 416 RusBV. Mutual Co., 163 Russell, Re, 812 Russell V. Canada Co , 145, 151 Russell V. Russell, 215 Ryder v. Commonwealth Co., 267 Sadler's Case, 878 Sadler's Co. v. Badcock, 18, 37, 42, 84, 181, 256, 298, 300 Saint Patrick Insurance Co. v. Brebner, 406 Salvin v. James, 94, 462 Suumson v. Security Insurance Co., 106 tiantferson v. Aston, 466, Sanderson v. Simonds, 24 Siirgent's Trusts, 859 Saunders, Exparte, 818 Saunders v. Best, 476 Saunders v. Bunman, 889 357 Sawtelle v. Railway Passengers' Co.,460 Scanlon v. Sceales, 142 Schmidt «. New York Union Co., 119 Schneider v. Provident Life, 4)9 to the [*] paging.] Scholefield v. Lockwood, 290 Schonder v. Wace, 179, 320, 325 Schultze V. Schultze, 435 Schultze V. Insurance Co., 130 Schuster v. Dutchess Co.. 164 Schumann v Scottish Widows' Fund Society. 338 Scott V Avery, 209, 210, 2 1, 213 Scott V Eagle Co., 390, 391 Scott V. Home Insurance Co., 120 Scott V Liverpool Corporation, 211 Scott V. Niagara District Co , 190 Scott V. Phcenix, 190, 192 Scott V Rose, 40 Scottish Amicable v. Northern, 204, 240, 256, V92 Scottish Equitable c. Buist, 7, 33, 78, 143. 318 Scottish Widows' Fund ». Buist. 19, 31('., 817 Scripture v. Lowell Co , 113 SeamansCo. v. N. W. Insurance Co., 91 Sea Insurance Co. v. Hadden, 221, 229 Sears v. Agricultural, 90 , Seqhetti i . Queen In.. Pratt, 47, 04 Sutherland v. Sun Fire, 201, 202, 266 Swan V. Watertown Insurance Co., 430 Swann v Phillips, 814 Swayno r. Swayne, 810 Sweeney v. Franklin Fire, 46 Swete V. Fairlio, 1 6(» Swich V. Home Life Co., 143 Syers v. Bridge, 31 Talamox v. Home and Citizens Co., 128 'i alb»)t t). Frere, 360 Tallmonu. Mutual Fire Co., 189 Tarleton v Stainfortli, 93 Tato V. Hyslop, 281, 233 Taunton v. Royal Insurance Co., 114, 871, 874 Taylor v. Caldwell, 279 Taylor Ex parte, 86 Taylor v. Chester, 87 Taylor v. Dunbar. 104 Tebbetts v. Uamilton Mutual Co., 88 XXVI TABLE OF CASES. [The paging refers to the [*] paging.] 1 I! f' ; [I I i :i 435, !';• Tebbits r. Dearborn, 78 Teiiues v. N. W. Mutual, 336 Theobald v. Railway Passengers' Co., 106, 222, 445, 449 Thomas ». Times and Beacon Co., IS* Thomp.son v. Charnock, 209 Thompson v Grant, 281 Thompson v- Insurance Co-, 91, 92 Thompson ». Montreal Insurance Co., 11, 108, 123, 124, 125, 129 Thompson v. Spiers, 432, 472 Thompson v. Taylor, 41 Thompson's Trustees v. Thompson, 329 Thomson v. Weems, 89, 140, 143, 144, 146, 150, 157 Thurburn v. Steward, 417 Thurtell v. Beaumont, 116, 119, 201 Tibbitts r. Hamiltou Mutual, 33 Tidswell v- Angerstein, 65, 67 Times Fire Co v. Hawke, 251, 254 Times Life Co , lie. See Ex parte, Nunneley, 412 Titus V. Glenfall's Co., 204 Todd V. London, Liverpool, Ac, Co., 01 Todd V. Morehouse, 327, 352 Tolman v. Marmfacturers' Co., 258 Tooley v. Hail way Passengers Co., 459 Towle V. National Guardian Co., 43, 469 Traill r. Baring, 159, 266 Transatlantic l^irc Co. v. Dorsey, 114 Trask v. insurance Co., 188 Travellers' Co. v. Seavers, 130 Tredwen v. Holman, 211 Trew V. Railway Passengers' Co , 455 Tristou V. Hardy, 389 Troop V. Anchor, 78 Tuck V. Hartford Co., 239 Tucker «. Provincial Co., 428 Turbervillo v. Stamp, 270, 271 Tyrie v. Fletcher, 7, 81, 83, 84, 101 Undeiihill v. Agawam Co., 198 Underwood's Case. 861 Union Marino v Martin, 261, 264 Unitarian Congregation v. Western Assurance Co , 246 United Kingdom Life Co , lie, 868 United Kingdom Life Co. v. Dixon, 808 Universal Life Co. v. Buchus. 415 Universal Non-Tariff Co., lie Forbes' Claim, 90, 155, 166, 160 Uzielli V. Boston Insurance Co< 261 Vance r. Foster, 194, 223, 257 Van Zandt v. Mutual Benefit Life, 133 Vaughan v. Menlove, 271 Vernon v. Smith, 253, 273 Vezina v. New York Life Co., 40, 46, 306 Vibbon ». Marsouin, 335 Von Lindenau v. Desborough, 67 Von Wein v. Scottish, 76, 444 Vyse ». Wakefield, 131, 321 Wainwbioht v. Bland, 39, 86, 131, 152 Walden t;. Louisiana Insurance Co., 117 Maitland, 6 Provincial Insurance Co., 428 Walker v. Walker v. Walker v. Wallace v Western Insurance Co , 196 259, Insurance Co., 3, 27, 253 Waller v. Northern, Ac, Co., 467 Wallis V. Hirsch, 213 Wanti;. Blunt, 79, 80, 93, 104, 166 Ward V. Audlaud, 316 Ward V. Beck, 68 Ward V. Day, 204 Ward V. Ward, 316 Wardley, Ex parte, 459 Waring v. Indemnity Fire Co., 46 Warnock «. Davis, 2, 10, 111 Warwicker v. Bretnall, 267 Wastropp V. Bruce, 135 Watchurn v. Langford, 33 Waterloo Insurance Co., Be, 306 Waters «. Merchants' Co., 114 Waters v. Monarch, 56, 58, 60, 63, 242 Watkinst). Reymill, 24 Watson V. Muinwaring, 137, 141 Wattt). Union Insurance Co., 117, 118 WauKh's Trusts, 854, 355 Waydell v. Provincial, 183, 191 Webo's Policy, 858 Webb V. Protection Co., 124 Webster ». British Kmpire Co., 315, 816 Webster ». De Tastet. 44 Weems v. Standard Life 146, 160, 167 Weigall V. Waters, 278 Weirw. Bell, 436 Weir V. Northern Counties Co. Welles t). Boston Co., 11 Welsh V. Reynolds, 420 Wernick's CW, 418 West V. Reid, 820, 478 Western Insurance Co. v. Attwell, 178 Western Insurance Co. v. Provincial Insurance Co., 485, 480 West of England Bank v. Batcholor. 856 Co., 143, 144, 100 LIST OF CASES. xxvil [The paging refers J Weston V. Richardson, 308 i Westport Union v. Omalley, 467 4 Westropp V. Bruce, 140 I Wheelton v. Hardisty, 8, 441, 443 3 White V British Empire Co., 187, 324 I White V. Lancashire Fire Co., 428 White V. Republic Insurance Co., 115, f 123 Whitehaven Bank Case, 411 Whitehead v. Price, 109, 147 Whiting V. Massachusetts Co., 92 Whittingham v. Thornbrugh, 87, 88, 386 Whyte V. Home Insurance Co-, 63 Whyie V. Western Insurance Co., 193 Wienholt v. Roberts, 428 , Wiggins V. Queen Insurance Co f 189 Wight V. Brown, 85 Wilkinsv- Germania, 148 Wilkinson v. Coverdale, 441 Willesford v. Watson, 211, 212, 216 Williams v. Atkins, 342, 844, 347 Williams v. Hartford Fire Co , 262 Williams v. North China Insurance Co., 4, 27, 54, 438 Williams v. Thorpe, 314, 472 Williamson v. Commercial Union, 167 ,1 Williamson v. Gore District Co., 248 I Willis V. Pole, 149 1 Wilson V. Citizens, 62 '•V Wilson V. Genesee Co., 424 Wilson V, Glasgow Tramway, 464 Wilson V Jones, 89, 41, 46 Wilson V. Uoydj 403 Wilson V. Rankin, 44 Wilson V. State Insurance, 184 Wilson V. Wilson, 276 Windus V. Tredegar, 92 Wing V. Harvey, 76, 78, 161, 165, 184, 204, 430, 432 Winspear v. Accidental Co., 456 Winston's Case, 889 to the [•] paging.] Winthrop v. Murray, 322 Winter v. Easum 336 Witherell v. Maine Insurance Co , 11, 115 Witt V. Amis, 807, 308 Wood'sCase406, 407, 411 Wood's Claim, 90 Woodward v. Republic Fiie Co., 84 Woolf ». Horncastle, 63, 71, 438 Wordley, Ex parte, 473 Worrall v. Johnson, 367 Worseley v. Wood, 145, 146, 150, 187, 191, 192 Worth ington v. Curtis, 40, 73 Wright V. London, &c.. Co., 393 Wright V. Pole, 215, 222 Wright V. Sun Mutual Co., 86, 371 Wright. Ward, ail Wyatt's Case, 899 Wylie V- Times, 22 Wyman v. Wvman, 304 Wynkoop v. Niaara Co., 251, 263 Wynne's Case, 408 Xenos v. Wickham, 22, 441 Yai.lop, Ex parte, 6f! Yates V. Dunster, 276 Yates V. White, 227, 229 Yeaton v. Fry, 172 Yonker's Fire Co. v. Hoflfman Fire Co., 259 Young V. Mutual Life, 75 Young «. Union Co., 66 Young, Ex parte, 866 I 111. Iowa LIST OF ABBREVIATIONS BY WHICH AMERICAN AND COLONIAL REPORTS, Ac, ARE RE- FERRED TO IN THIS WORK. Ala. = All (New Brans.) Amp. Rep. Aiigell Insur. Barb. N. Y. Bissell, U. S. C. Ct Bliss Life Ins. Hlatchford, U. S. Bush, Ky. Cape (East Distr.) Rep. Can. S. C Caines, N. Y. Conn. Cranch, U. S. Da. Sup Ct. U. S. Dill. C Ct. U. S. Fed. Rep. (U. S.) Grant, U. C. Oratt, Va. Hall, N. Y. Hand, N. Y. Han New Brans. Holmes, U. S. C. Ct. Howard, U. S, Hughes, U. S. C. Rep. Hun, N. Y. HI. Iowa Johnson, N. Y. Kent. Coir" Louis, or La. Louis. Ann- Lansing, N. Y. Lr. Can. Jur. Lr. Can. Rep. Alabama Reports. Allen's New Brunswick Reports. American Rep... ^ Angell on Insurance. Barbour's Reports, Supreme Court New York. Bissell's Rejports, United States Circuit Court. Bliss on Lite Insurance. Blatchford's Circuit Court Reports, United States. Bush's Reports, Kentucky. Cape of Good Hope Eastern District Reports. Ci Connecticut Reports, Canada Supreme Court Reports. ~ ■ • ~ " " rk. Davis Reports, Supreme Court United States Dillon's Reports, Circuit Court United States. Caine's Reports, New YorS Connecticut Reports. Cranch's Reports, United States. spc Re Federal Reports, United States. Grant's Chancery and Appeal Reports, Upper Canada. Grattan's Reports, Virginia. Hall's Reports, New York. Hand's Reports, New York. Hannay's Reports, New Brunswick. Holmes' Reports, United States Circuit Court. Howard's Reports, Supreme Court United States. Hughe's Reports, United States Circuit Court. Hun's Reports, New York. Illinois Reports. ' Iowa Reports. Johnson's Reports, New York. Kent's Commentaries. Louisiana Reports. Louisiana Annual- Lansing's Reports, New York- Lower Canada Jurist. Lower Canada Reports. ^ (xzix) XXX LIST OF ABBREVIATIONS. Maine •= May In& Missouri Maryland Mass. Cush. Mass. Met. Mass. Pickering Mass. Gray Mass. Allen McCrary(U.S.Cir.a) Mich. Minnesota N. H. N. S. W. Law N. Y. Comst. N. Y. Sup. Ct. Stanford N. Z. Sup. Ct. Ontario App. Paige, N. Y. Ch Pen. Peters, U. S. Phil. P. & B., New Bruns. Robinson La. Rus. & Oel Russ. & Ch. Nov. Sco. Stanford, N. Y. Ch. Sawyer U. S. C. Ct. Sickell N. Y. Story Agency Story Reports Sum. Rep. Sana or Sansum Stevens Quebec Dig Stuart Lr. Can. T^ C. Q. B. r. C. C. P. V vj. tilr. & App. i Otto .u Law Wall. Wash. Watts & Sen. Penn. Wend. N. Y. Wis. Maine Reports. May on Insurance. Missouri Reports. Maryland Reports. Cushing's Massachusetts Reports. Metcalfe's Massachusetts Reports. Pickering's Massachusetts Reports. Gray's Massachusetts Reports. Allen's Massachusetts Reports. McCrary United States Circuit Court Reports. Michigan Reports. Minnesota Reports. New Hampshire Reports. New South Wales Law Reports. Comstock's New York Reports. Sandford's Reports, New York Supreme Court. New Zealand Supreme Court Reports. Ontario Appeals. Paige's Chancery Reports, New York. Pennsylvania Reports. Peters' Reports United States. Phillips on Insurance. Pugsley & Burbridge New Brunswick Reports. Robinson Louisiana Annual. Russell & Oelder Nova Scotia Reports. Russell & Chesley, Nova Scotia Reports. Sandford's Chancery Reports New York. Sawyer's United States Circuit Court Reports. Sickell's New York Reports- Story on Agency. Story's Reports. Summer's Reports. Sansum's Digest. Stevens' Quebec Digest. Stuart's Reports Lower Canada. Upper Canada Queen's Bench Reports. Upper Canada Common Pleas Reports. Upper Canada Error and Appeal. Otto's Reports Supreme Court, United States. Victoria Law Reports. Wallace's Report, United States. Washington's Reports United States. Watts k Seijeant, Pennsylvania. Wendell's Reports, New York. Wiscousia Reports. f! THE LAWS OF INSURANCE. CHAPTER I. NATURE OF THE CONTRACT OF INSURANCE. Purpose of insurance. — The aim of all insurance is to make pro- vision against the dangers which bedet human life and dealings. Those who seek it endeavour to avert disaster from themselves by shifting possible losses on to the shoulders of others who are willing, for pecuniary consideration, to take the risk thereof; and in the case of life insurance, they endeavour to assure to those dependent on them a certain proyi&ion in case of their death (a), or to provide a fund out of which their creditors can be satisfied. Those who grant insurance imdertake such risks at a price and upon calculations which, if well adjusted, will leave them, after providing against all contingencies, a fair profit on the capital which they adventure. In insurance business there is a tendency, as in all others, to reduce such profit to the lowest margin, and most insurers^ in effect grant by way of bonus a rebate on the pre- miums originally demanded, whereby they correct errors in ttieir own favour made in estimating the premiums charged for the risks taken, or make the business of insurance mutual rather than com- mercial. Principle of insurance is idemnity. — The controlling principle in insurance law is idemnity, and by reference to that principle most difficulties %risin^ on insurance contracts must be ["^ 2 ] settled (6^. Except in insurance on life and against acci- dent, which will oe presently discussed, the insurer contracts to idemnify the assurea for what he actually loses by the happen- ning of the events upon which the insurer's liability is to arise ; (a) 1 Bell Comm. 646 (7th edition). \b\ Caatellain v. iVwtow, 11 Q. B. D. 880 at 886, per Brett, L. J. ^ This refers strictly to mutual insurance- The principle which lies at the foundation is mutuality, in other weds, each member has a voice in the man- aeement of the affairs of the company, and participates in the profits and lossei of the business. May on insurance, 2d chap., 25. Smith v. Hunterdon County Mutual F. Ins* Co., 41 N. J., eq. 478. 81 3 THE LAWS OF INSURAXCE. i| i' 1 ' » ',1 , If and under no circumstances is the assured in theory entitled to "wLefhb L't^M^^^^^^^^^ to the contract would not have a common interest in the preservation of the thing insured ^nd the contract would create a^esire for the happening of the event Zred against (d). And where in fe^V^r^t^fiorto CTo of profit, there and there only can arise the temptation to fraud, or such carelessness as will bring about the destruction of the thing ^^^Indemnitv not always cmnplete.— The contract is not, however, necessarily one of perfect indemnity (e). No insurer now takes the risk of the destruction of what he insures by all perils whatso- ever. As a man of business, he must take a nsk which he can estimate, for the two reasons that his capital is not unlimited, and that the reward he receives for his liability must be calculated with some reference to the prospect of bis actually incurring the liability. And the insurer not only does not insure against all risks, but will not insure to an unlimited amount. The amount ofinsurance is controlled — 1. By the value of the thing insured. If, however, the assured is respectable, his valuation of his goods is usually taken; and in- surers, if the risk is not great, do not object to over-insure m order to earn a higher premium, since they know that they will only be liable for the actual loss. [* 3 ] *2. By the general consideration of the insurer's business. Most insurers will not insure above a certain amount on any property or life, and either decline the surplus, or, if they accept it, reinsure their liability thereon with some other insurer, bo as to divide the liability thusinsured. Further, the insurer will not insure every form of i)roperty nor every interest therein. Insurable value. — The contract is in its in- ception mercantile, and the only value insurable is the commercial value of the thing insured. An insurer will not pay a man's losses at his own price or compensate him for his feelings at the burning of an heirloom, but only for his loss so far as it is estimable in money on ordinary business principles. And there are many kinds of property, such as documents of title and negotiable instruments, which, while of great value in a certain sense, are so only as evi- dences of title, and as such are not proper subject-matter of insur- ance, or not insurable on the same calculations as other property. Extent of inmrer^s liability, — The insurer, by limiting the amount up to which he insures, does not, except in a valued policy, bind himself absolutely to pay the whole amount if the thing insured is destroyed, and he is not estopped from demanding proof of the (c) Same case. Vide also 52 L. J. Q. B. 806, 49 L. T. N. S. 20, 81 W. R. 657. (d) Wamock v. Davis, 104 U. S. (14 Otto) 775. («) Aitchison v Lohre, 4 Ann. Cas. 755, 49 L. J. Q. B. 128, 41 L. T. N, S 828. 28W. R 1. 82 £ NATURE OF CONTKACT. ♦6 Si* •I actual loss caused bv the perils insured against His undertaking is only to indemnity for loss actually suffered not exceeding the amount named in the policy. Valued policy. — In valued policies* (which, though not unlawful, are rare in the case of land insurances on property) (/) the value is agreed, and such value is conclusive for all purposes against the insurer, unless he impugns the good faith of tne assured in making the valuation (gr), or shows over-valuation to bo *so [ *4 ] great that knowledge thereof would have affected the insur- ers willingness to take the' risk (A) And even where for convenience the value is agreed, proof of loss total or partial must be made to entitle the assured to recover on the contract- Thus it is said in a very early case, that where a policy is granted on the goods of "A." without account, ho must prove that his goods were shipped and lost, but not the particu- mrs(i). Results of principle of indemnity. — The consequences of tho prin- ciple of indemnity are briefly as follow : — 1. Only what has been actually lost need be made good, whether by payment or reinstatement, i. e., restoration of the thing dam- aged to its original condition, or construction of a new thing simi- lar to it. No more than the amount of loss can be lawfully re- covered, and if more is recovered the insurer can get it back again if he paid unawares {k). 2. If tho thing insured is not totally destroyed, but remains wholly or in part in a deteriorated or damaged condition, the in- sured can only claim the value of tho injury actually done, unless all that remains of the thing insured be surrendered to the insurer. If the assured does not agree to treat tho thing as wholly lost to him, he cannot ask to h.ave it wholly mado good to him (I). This rule, commonly called the doctrine of abandonment, is chiefly applied in marine insurance, but is equally a{)plioable to all insurances on property (m.) *The only questions arising [* 6 ] under it in land insurance are as to what degree of damage will entitle the assured to abandon the property to the insurer, to make what he can of it, and when the insurer can insist on tho as- (/) 3 Kent Comm. 375, note d. 2 Phillips, a. 1211 et seq. Wallcute v. Insur- ance Co , 4 Louisiana 0. S. 280. (g) Baker v. Janaon, 16 W. R. 300, L. R. 8 C. P. 303, 87 L. J. C. P. 105. (A) lonides v. Pender, L. R. 9 Q. B. 531, 43 L. J. Q. B. 2:27, 30 L. T. N. 8. 647 22 W, R, 884. (t ) Wiliiams v. North China Insurance Co>, 1 C. P. D. 757, 7G5, 05 L. T. N. 8. 884. Kaina v. Knightli/, Skinner 64. (k) See Darrcll v. Tibbits, 5 Q. B. D. 600, m\ 60 L. J. Q. B. 33, 42 L. T. N. B.797,29W.R, 66. (I) Pbtter V. Rankin, 6 H. L. C. 118. (m) Castellain v. Preston. 11 Q. B. D. 880, 52 L. J. Q. B. 800, 49 L. T. N. S. 39, 81 W. R. 567. M'Kmae v. }VhitmHh, 1 Ex. D. 36, 45 L. J. Ex. 238. 83 L T. N. S. 655, 24 W. R. 287. ■See Wood ou Insurance, Vol 1, )>. 06 to 107 ina 3 PORTBB ON ZN8URANCB. tt ♦6 THE LAWS OP INSURANCE. Ill 11 Bured keeping the damaged property and receiving the amount of the damage. The solution of these questions depends on wheth i- the identity of the property has been lost by the happening of the peril (n). , x i.- x • 3. If the assured has any ways and means open to him W) repair his loss otherwise than at his own expense or at the cost of his in- surer, he must either cede such ways and means to the insurer on being paid in full the amount of his loss, or he must exercise such ways and means for the benefit of the insurer (o). He may not take with both hands. Any surplus recovered by him in excess of his actual loss he holds in trust for an insurer who has gaid him. And while, if the insurance does not fully compensate im, lie is entitled to control any action brought against other per- sons primarily responsible for the loss (/>), he cannot even in such a caFO exonerate such other persons from liability (q). An unin- sured man can release a right of action arising out of his loss, but a man who is insured may not release such claim in such a way as to prejudice his insurers. Either such release will be ineflfectual, and tho insurer will bo able to sue in the insured's name, the re- lease notwithstanding (r), or the assured will bo liable (as for a breccli of trust) for granting such release contrary to his duty aris- ing out of (ho contract of insurance («). Subrogation. — This right of tho insurer, which is termed [ 6 *] subrogation, *does not, however, apply in cases where insured property is injured by acts for which the Assured would have been in law responsible if the property had not been his own. Thus, where two ships, owned hy the same man, collide by the fault of one, the insurers of the ship not in fault have been held not to bo entitled to make any claim on the owner for the act of the other ship, though the insurers of tho cargo would have such claim against the shipowner (t). Tho reason for this apparent variation from the rule already stated is twofold — 1. That insurers take tho risk of the assured's negligence as part of the risk against which they insure (u). 2. That tho assured in the case cited could have no action against himself for the injury done by his one ship to his other, and that there is in such a case no right to which the insurer could on payment succeed. Position inter se of insurers of the same property.— Insmcra of the same interest in tho same property all rank together for purposes of mooting a loss. (n) Castdlain v. Freaton, 11 Q. D. D. 880, 397, per Bowen, L. J. "^ io) Ibid. ' (p) Commercial Union v. LUter, 9 Ch. App. 488, 4a-), 43 L. J Ch. iq) Smidmore v. Australian Gas-light Co., 2 N. S. W. Law 219. jr) Ibid. ,») Commercial Union v. Lister, supra, por Jcssel. M. R. t) btmmion v. Thompson, 8 App Cas. 279, 284, 88 L. T. N. S. 1. (u) Walker v. Maitland, 6 B. & Aid. 171. * i- o- 1. 84 601. NATURE OF CONTRACT. *8 Their position is analogous to that of co-sureties (x), and they are enlitled to insist upon contribution inter ae proportionably to the amount each has at stake. More than the whole loss, as has been seen, may not be paid, and their several contracts are taken together as parts of one contract of indemnity, each paying accord- ingly. *AleaUmj contract. Difference between contract of insurance [* 7 ] and wager. — Insurance is at times an aleatory contract. So far as this means a contract involving risk or speculation, the term is well applied, since it is certainly a contract of mutual risk (y\ wherein the premium is risked against the chance of loss. But if aleatory be taken to mean gaming or wagering, the term is mis* applied to insurance, for, although risk is of the essence of the contract (2), the assured is moved to eflTect insurance by the risk of loss, and does not create the risk of loss by tho contract itself, as is the case in a pure wnger ; for in a pure wager the interest of tho contracting parties in the event wagered on is created by tho the fact that they have contracted to pay each other certain sums in a certain event, but that neither sum is duo until the event has been decided one way or other : whereas in insurance the motive for the contract springs from the existence of something which may bo lost, and the danger of loss thereby to the pert^on who seeks insurance. And such person pays, and not merely risks money, in order to obtain Fccurity against the ])ossible loss. In fact, unless the property insured is for a timo subjected to tho lUk insured against, tho contract of insurance, even if m;ide, never operates, and tho premium, though paid, is repayable; wiiich illustrates yet further the ]>rinci]>lo that the person seeking insur- ance must, for tho contract to be effectual, have had some prospect of needing indemnity against losing tho thing insured wiihin the period of insurance. From this it may be seen, that effecting a contract of insurance does not oblige tho insured to run the risk named in the contract; for the contract being, as already said, contingent on tlio actual attaching of the risk, is nr>t enforceable by eitlier paity till tho risk is run; and premium paid before risk begun U paid subject to such contingency («). IVhen policy attaches. — While a policy does *notattnch till [•'' 8 J the risk begins, it can equally not attach after tho ri-k is de- termined one way or other, except in those special int-urnnces when both parties, bdng equally ignorant of tlio i)Osition of tho thing insured, contract to insure it lost or not lost. Insurance and suretyship compared. — Tho similarities between in- surance and suretyship go far to prove further, if lu -'he r ]>roof were needed, that insurance is not a wagering contract. In both (.t) Castellam v. Prenton, 11 Q. D. D. 080, at CS7, C'J, L. J. Q. B. CCO. 49 L. T. N. S. 2!), 81 W. R. 587. » . . s, , u, iy) Scottish F.quitable v. liuist, 4 Court Scss. Cas. (4tli scries) 107G. t) Tyrie v. Fletcher, 2 Cowner, C08. a) Rid. GGU. 35 »♦ THE LAWS OF INSURANCE. contracts there is no chance of loss and an undertaking to indem- nify: but no one has ever yet termed suretyship a wagering con- tract. The aim under each contract is not to get favourable odds, but a sound security, and the contracts aim at shiilmg the danger of loss, and not at creating an opportunity of gain. And it may be observed that from the earliest times in this country, a? may be seen by the treatise of Malyns (1622) and the Statute ol Assur- ances (43 Eliz. c. 12), insurance has been regarded as a means ot distributing the rislc of loss and dividing adventures (i. e., risky mercantile enterprises) among a number of persons. And when, in 1861, the City of London attempted to establish a fire office, the aim of the Corporation was not to profit by wager- ing contracts, but to provide a security (the City lands) to meet losses by fire at such a charge as would indemnify them for their liabilities. The contract is vherrimoe Jidei.— From the fact that insurance is a contract to shilt risk flows the second great principle of insurance law, viz., that the contract is vherrimoe fiaeif one requiring the utmost good faith on both sides (b). This rule applies to every form of insurances, fire, life, or marine (c), though not quite to its fullest *extent to guar- f * 9 ] antee insurance, which comes within the rules of suretyship. Asmre(V8 duty to disclose Jacta touching risks. — Under this rule com- plete disclosure must be made to the insurer of every fact going to establish the character of the risk to be shifted by the contract which is within the knowledge of the insurer, and which is not matter of common knowledge or speculation or rrero opinion (d). If the assured keeps back information which goes ta r-^tablish the risk, or which would affect the willingness of the insuier to take it (except perhaps information as to his the assuredV own personal character, as he cannot be expected to speak ill of himscu ) (e), lie will take nothing by the contract, but, in the absence of fraud or some stipulation to the contrary, will be entitled to have his pre- mium, it paid, returned to him. An insurer aware of invalidity of contract when he enters into it is es- topped. — And where the insurer grants a policy, knowing that ho will never run any risk thereunder, whether because facts invali- date it or the risk is already determined in his own favour, he will be equally subject to the rule of good faith, and will cither bo es- topped from impugning the contract or held to have waived any breach of warranty or misrepresentation therein, or be liable to repay the premium received. The rule applies not only in the procuring or granting of the (b) 1 Arnoul(i6(5thed.). (cj London Assurance v. ManaeLU CJi. D 868, 867, 48 L. J. Ch 831 27 W. R. 444, and cases there cited But see Whedton v. llardistu. 8 E. & B 232 285, 27, L. J. Q. B . 241, 81 L. T. S03, 6 W. R 539. *^' ''^'^^' ^^^^ id) Carter v. Boehm. 8 Burr. 1910. (e) Sun Mutual Co. v. Ocean Insurance Co., 107 U. S. (17 Otto) 486 36 ii) A {Jc) i NATURE OP CONTRACT. ♦11 contract, but also while it lasts and after the risk has hap- pened. Assured^a duty to avert the happening of the risk. — If the assured ac- celerates the happening of the risk, or if, when it occurs, he refrains from doing what he ought to lesson the damage consequent thereon, he hazards his chf .nces of recovering on the contract. The *true view on this subject is extremely well laid down in a [*10] recent Canadian case (/) as follows : — Duties of assured in ca^e of fire. — "An agreement to indemnify an- other from a named contingency carries with it the provision that the person to be protected shall neither wilfully cause a loss nor purposely increase or inflame it by wilfully refraining from such obvious, easy, and ordinary exertion as may be always reasonably expected from a person willing to act honestly towards him to whom he looks for indemnity (g). If the assured wilfully prevents the interference of others to save the goods which would otherwise be destroyed, or the working of the fire engines, &c., to extinguish the fire, preferring to see them destroyed, in reliance on his insur- ance, he thereby commits a fraud on the insurers, which releases them from their contract" (h). "Where he wilfully refrains from and neglects to save the insured property, having no reasonable excuse therefor, and having ample means at his disposal so to do, I think alike rule should apply. If a man have an insurance on valuable jewellery kept in a small box of light weight and readily portable, if he see the house in which he and they are, on fire, and he willfully and intentionally leaves the box to be consumed when he could readily remove it, prefer- ring to rely on his insurance, the mind naturally revolts from such conduct, as evidencing a dishonest mind and a fraudulent disre- gard of the rights of others " (i). The Court in this case was care- ful to say that any act of the assured preventing his goods, &c., being saved, to disentitle him from his remedy under the policy, must be done with the frauflulent intention and purpose of throw- ing the loss on the insurers (fc). ^Assured will not bear whole expense of saving propertxj. — [^ll") This rule, of course, has its other side, that,' if a man is bound to do his best for the insurer in case of a fire, he is not bound to do so at his own cost, the risk insured against having accrued. This result is well stated in an American case, WllhereU v. Marine Insurance Company, 49 Maine, 200, 206. Saving property. — If duty requires the occupants of a house which is in danger of being destroyed by fire to carry their prop- erty out of the door, or even to throw it from the windows rather than permit it to become a prey to the flames, they ought not to (/) Devlin v. Queen I.tsurance Co., 46 U. C. (Q. B.) 611, 621. ig) See also Chandler v. Worcester Insurance Co., 57 Mass. (3 Cush.) 328. n) Devlin v. Queen Insurance Co , 46 U. C (Q. B. ) Oil, 022, per Hagarty, C. J. i) Ibid. 46 U. C. (Q. B.) 611, 023. {,k) Baleatracci v. Firemen'a Insurance Co., 34 Louisiana Annual 844 37 ♦ 12 THE LAWS OF INSURANCE. be the losers by fulfilling the obligation thus imposed upon them; nr,r'tn Tm/ke any nfatter wheW the injury anses rom ho fracture of a mirror or other piece of furniture by the Ull, or ino KractioL by a thief of a bile of goods when ^J reaches t^^^^^^^^^^ ment If the dancer is imminent, even though the event shows Sa? the goods would not have suffered at all if left alone, the in- Burers are still liable. . , ^ v •* i K,r tu^ i-nioa «f The rule is, however, to a certam extent limited by the rules of general average contribution, and the insurers will not in every caac bo bound to meet the whole of such cost. Trms— Cost of attempt toproUd nelghbouriruj h'Mse— In nn American case (0, blankets wire put on a building by the assured to protect it from combustion through a neighbouring fire. The insurers approved of the act, and the building was thereby saved. Ihe blankets, however, were spoilt, and an action was brought by the assured against the insurer for the cost of them. It was held that the loss was not covered by the policy, but that it was a subject of general average, to which the insurer and the insured should ( on- tribute in proportion to the amount which they respectively had at risk in the store and its contents. It was also held that [*121 buildings in the neighbourhood, *which would have been endangered if the store had takti. fire, and upon some of which the defendants had made insurance, were too remotely affected to be liable to contribution. Whether fire policy on ship liable for average.— There is no ques- tion, of course, as to the application of ihe principle in marine in- surance. American and English (m) Courts have, however, dif- fered as to whether a fire policy on a ship was a marine policy so as to be liable for average. But in England it is very common to insert an average condition in a mercantile fire policy which avoids all question as to the law which might otherwise be doubt- ful, nverapo not being in its inception a part of insurance law (n). Fire po. < • — land or sea. Contribution from neighbours. — In any case it woi^d seem possible to take a valid distinction between policies against risk of fire to part of a common adventure and rifik of firj to property on land whose owners have no interest in common. It was on this principle that, in Welles v. Boston Insur- ance Company, 23 Mas?. 182, the Court declared that a man who saved Jtis house from fire at cost to himself, and thereby prevented the spread of a fire to other parts of the city, could not seek con- tribution from adjoining owners, saying that it " would not do to take so wide a range in the application of the principle of contri- (l) Welleit V. Boston Co., 23 Mass (0 Pickering) 182. But see Thompson v. Montreal Co., U. C Q, B. «1». (»i) Imperial Marine Co, v. Fire Insurance Corporation, 4 C. P D. 160, 48 L. J. C. P. 424. 40 L. T. N. 8 lfl« 27 W. R. 080 1 contra, Merchants', .frc. Co V. Associated Fireman's Co., 80 Am. Rep 428. (n) Atchison v Ijohre, 4 App. Cos. 756, 760, 4U L. J. Q. B. 128. 41 L. T N. 8. 828 28 W. R. 1. 88 i NATURE OF CONTRACT. ♦ 14 bution. All the buildings in the city may remotely have been protected, and it would be impossible to draw the line." Fniutlulent int'^nt may be inferred from gross negligence (o), or from forbearance to use reasonable exertions and means at hand to put out a fire (p). *h the contract of life insurance a contract of indemnity — Life [*13] insurn nco has been already mentioned as perhaps an exception to the general principle that insurance implies indemnity. It would eeemlofollow from the wordsof theGambhng Act (14 Geo. III. c. 48), that no insurance may lawfully be made which is not in the nature of an indemnity for the loss of an interest. No man may insure against the loss of anything or the death of any person in which or in whom he has not an interest (g), nor for more than the value of that interest (r), nor recover on such insurance more than the interest which he hns (s). Although the words of the statute seem intended to restrict insurance to indemnity, it has been decided that life insurance is not a contract of indemnity. Insurance on life falln into two divisions — insurance on own life, and insurance on other's life. The two classes would seem, in theory at least, to be governed by different principles. To take, first, in- surance on another's life: Creditors^ policies. — A creditor insures his debtor's life as a means of securing himself against the chance of the debtor's dying without paying liim, i. «., as a collateral security for the debt (<), like a mortgagee's fire policy. In other words, he obtains a contract of indemnitv against the loss of his debt by the death of the debtor before it has been paid. In such a case the debt is not a mere excuse for the policv ; but the securing of the debt or indemnification against its possible loss is the reason for the insurance being effected. livSitrahle interest in life. — Before the Gambling Act, Lord Hard- wicke (u) held the law to be that only an interest at the time of insurance and of the happening of the event insured against would bufllicc, i. e., that the assured must have had something to lose when the risk was insured against and have lost some- thing by its occurrence. And to an *ordinary reader of the [*14] A( t this )>rinciiile would seem to be there affirmed. Li le policies do not usually state the reasons for which they were efTt cteu, nor the exact nature of the interest on which they ar«> based. Nor do insurers usually raise the question of interest, un- less they have soniu other grounds for disputing liability, and, in the absence of any FUspicion of fraud, they are glad to insure a good life. But the practice of insurers is no more a criterion as to the policy or requirements of the law, than is the practice of pay- i; (o) Goodman v. JIarvej/, 4 A . & E, 870. 870. \p) (iove V. Farmern^ Co,. 48 New lianipshiro 48. IIitckinH v. PeopWa In- ntranvc Co., 31 N. H 288, 248. (g) 8. 1. (r) S. 1. («) 8. 8. (f) Stavkpok V. Simornis, 2 Park Ins. 032 (8th rd.). (u) Haddkra Co. v. Badcock, 2 Atk 654, 1 Wilsou 10. ♦ 16 THE LAWS OP INSURANCE. i \i. ing debts of honour a proof that such debts could be sued on Similar reasons guide in both cases. The law cannot stop people from paying whf t they are under no liabi it-y to pay, but a court of law would be entitled to demand proof of mterest m an msurance policy, notwithstanding waiver by the insurers of such proot. I8 'life imurame indemnity f—H contemporama exposUwweie^ ap- plied to the Gambling Act, there is little or no doubt that the views bf Lords Mansfield and Eilenborough, two of our greatest. mercan- tile lawyers, who understood fully the state of law, custom, and circumstances to meet which it was framed, would prevail on tins subject. They both undoubtedly considered that insurance aur autre vie was a contract of indemnity; and in accordance with this view it was decided, in Godsal v. Boldero, 9 east 72, that a creditor of Mr. Pitt, who had been paid by his executors, could not recover on his insurance on Mr. Pitt's life. , This view was long held correct, but was overruled in two cases which now control the law as to life insurance— Z)o% v. 7he India and London Lijfe C&mpany (x) and Law v. London Indisputable Com- pany (y). [* 15 ] WcUby V. India and Londm Life Co. discussed.— The first of these decisions is based (1) on a misinterpretation of the Gambling Act, by the 3d section of which (z) it is provided that no greater sum shall he recovered or received from the insurer than the amount or value of the interest of the assured in the life or event. In fire insurance, which is under the same statute, a man must have interest nt the time of insurance and of loss. But in life insurance the words are construed in a different sense alto- gether. But it would seem to be clear thatthe same words in the same statute are not capable of two contrary constructions. (2) On a confusion between a man's interest in his own and another's life. Admitting that a man cannot bo indemnified for the loss of his own life, a creditor certainly can be so for the death of his debtor insolvent, and that is what he insures for. Unless he was owed the debt he could not insure the debtor, and usually insurance of the debtor is the last method a man would adopt for recovering his debt. (3) On a mistaken view as to the nature of a premium. It is what a man will pay to protect himself from a probably greater loss. A man has no insurable interest in his premiums, and by law cannot insure them. He has no more interest in them than in his lust year's butcher's bill. He has had in each case the equivalent, for by payment of the premium he bus bought immu- nitv from the risk he wishes to co.ver for the period for which he seeks insurance. (4) On a petitio principii. Both cases consider that ilfe insur- («) 24 L. J. C. P. 2, 15 C. B. 866, 18 Jur 1024, 24 L. T. 182, a W H. 11«. {}i) 24 L. J. Ch. 196, 1 K. & J. 228, 1 Jur N. S. 170, 8 W. K. 165 L. T. 208 («) Puat, p. 87 40 24 NATURE OP CONTRACT. *17 ance cannot be a contract of indemnity, because the sum is cer- tain, and all will be payable ; but the very point to be decided is, Should the whole insurance money be payable at all events, or only so much thereof as compensates for the loss. *Oreditora' policies. — In fire insurance the amount stated in [* 16] the policy limits the liability of the insurer, but does not bind him to pay the whole sum on the happening of a fire, without any rights over the property insured ; but if the view taken in the two cases under consideration be right, a man who is owed a debt may make thereof an excuse for a speculation in the life of his debtor (a), for if the ordinary rules of insurance do not api)ly there seems no reason why he should not " make an excuse ot the statute " and take out a dozen policies each for the amount of his debt, and claim that, all being several contracts, no evidence can be adduced to show in any one case that he has over-insured his interest, since contribution is out of place unless the contract be one of indemnity. But the courts nave shrunk from this conse- quence of these two decisions (6). The Liverpool poisoning case is a striking commentary on the possible abuse of the system of issuing creditors' policies. A woman having lent small sums of money, then insured the lives of her debtors for an amount ex- ceeding the loans, and afterwards poisoned them to obtain the in- surance-money (c). Where such policies are kept up at the debtor's expense, they are a security given by him, and as such not open to objection ; but where the creditor at his own expense insures the debtor, it is more economical for the creditor tnat the debtor should die quickly, since it enables him to get his debt paid at less cost. It is, indeed, clear that insurance by a creditor is open to very serious objections as it now stands, for, instead of having something to lose by the death of his debtor, he may actually find himself in Socket thereby. Unlike a mortgagee, he has no security for is debt, and indeed insures to make up *for the want of[*17] such security, not to find a means of preserving the security which ho has ; and insurance enables him either to get both his debt and his insurance money, or to let off' his debtor at the ex- pense of hiij insurers. Provision of Canadian Civil Code as to creditors^ policies. — In the Canadian Civil Code of Lower Canada,' which as to insurance al- most wholly corresponds witli English law, and is a good summary thereof, the objections to creditors and similar policies are met by article 2692, which is as follows : " The measure of the interest in- sured in a life policy is the sum fixed in the policy, except in the oases of insurance by creditors, or in other like cases, in which the (o) Soo Warnock v. Davia, 104 U. S. (14 Otto) 775, and cases thoru citod. lb) Jlehdcav. Went. 'A B. * " ' -^ ^ W. R 42iJ, .Tur. N. 8. 747. (6j JMdm V. Went, a B. A S, 570, 32 L. J. Q. B. 85, 7 L. T. N. 8. 454, 11 (c) Heg. V. Flannagan, 15 Cox Cr. Ca 411. 41 ♦18 THE LAWS OF INSURANCE. I! In these inte^e8^ is susceptible of exact pecuniary measurement, case^ llie sum fixed is reduced to the actual mterest. ^ Own life policies and indemnity.— X9 to policies on a man s own life, different considerations arise, for no man can be indemnihed for the loss of his own life. Such policies are usually eflFected as a provision for relatives or creditors. Although an insurance by a man on his own life was at tirst {d) held to be a contract of indemnity, it has since been settled not to be so («), but to be a contract by the insurer to pay a certain sum on the happening of a given event— usually the death of the as- sured, or his attaining a certain age— and the sum will not vary with reference to the greatness or smallness of the loss to the family of the assured. Life policy.— By a policy of life assurance, the assurer agrees to pay the assured a certain sum of money on the death of a person therein named, and in consideration thereof the assured pays the assurer a certain smaller sum immediately on effecting the [*18] insurance, or agrees to pay *the assurer a premium or an- nual sum until such death occurs; orlf the whole period of life be not insured, then until the expiration of the term during which the insurance is to continue. In the case of DaWy v. India and London Life Assurance Go. (e), a life assurance is thus defined: — "The contract commonly called life assurance is, when properly considered, 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 calculated, in the first instance, according to the probable duration of his life, and when once fixed it is con- stant and invariable. The stipulated amount of the annuity is to be uniformly paid on one side, and the sum to be paid in the event of death is always (except where bonuses have been given by pros- perous offices) the same on the other." Definition oj life insurance per Jesself M. R. — The definition given by Sir Geo. Jessel of the contract of life assurance is " a purchase of a revisionary sum in consideration of a present payment of money, or, as U generally the case, on the payment of an annuity during the life of the per- son insuring " Q ). Life insurance converse of an annuity. — A policy of Jifo insurance is not an insurance from y6ar to year, but the premiums consti- tute an annuity, the whole of which is the consideration for the entire assurance for life. A life policy is the converse of an an- nuity. A man elects to pay the insurers an annuity on their guhran- teeing his representatives a lumj) sum on his death. In the other case a lump sum is paid by him, he to receive an annuity for his life. Oothal V. Boldero, 9 East 72 id) G (e) DcUbjf V. India and London Life Co., supra, p Ch. D. 675. 086. 46 L J. Ch. 817. J'S L. T. N. 8. 458, 26 W/iv^i! 676, 086. 46 L J. Ch. 817, ?6 L «) 15 C. B. 887. 24 L. J. C. P. 2, 24 L ) Dryer v. JItoreland, 8 Ch D. 686. 42 in. Fruer v. Moreland, T. 182, 8 W.'R. 110,i8Jur. See lut page. lOM Fund (h) <*)- 404, 2! (k) NATURE OF CONTRACT. *20 In either case there is no relation between the annual premium and the risk of assurance lor the year in wliich it is paid. ♦Indeed, the premium for single-year insurance is lower [*19] than the year's premium on a whole life policy, there being no certainty of death within the' period and no optit;n t( to con- no certauity tinuo (g). Insurance against a/iddent and indemnity. — An agrtenient to com- pensate a man for injuries by accident might seem to bo ii contract of indemnity, but it must be remembered that in this case, as in that of an insurance on a man's own life, the value of tho peril in- sured against cannot be appraised in money, and therefore the in- sured cannot really be indemnified; for although the evil lesults of bodily injury can often be alleviated by what money will pro- cure, mere money cannot allay or remove the suffering, and there- fore cannot really constitute an indemnity. Moreover, the i)ayment contracted by the insurers to be made in case of accident is, under present i)ructice, a certain fixed, invariable sum. No gradual gcale of compensation for different accidents could bo satisfactorily framed, for the reason already mentioned, that bodily pain and suffering do not admit of a preci^^o valuation. Where tliere is in- demnity by the insurer, there is subrogation of him to the rights of the assured: but by tho Railway Passengers' Assuriincc Com- pany's second Act, tho right of subrogation in case of accident in- surance is negatived (h). Insurance not pleadahle in action for negligence, — A tortfe-isor, who may have caused an accident, not resulting in death, cannot plead an insurance against accident in mitigation of damages Ci), the re- sult of which is that a man may sometimes make a considerable profit out of an accident by judicious insurance, since he is not accountable to his insurers for any surplus over and above full compensation. Except where death ensues. — But where an insured man is killed by an accident, *the tortfeasors get tho benefit of tho [*20] insurance; for in an action under Lorcf Campbell's Acts the damages payable in respect of a death caused by a tortious act are reduced by reference to the {)rudence of the deceased in insuring his life, and the tortfeasor is allowed to plead such insurance in mitigation of damages (Jc). But if the man had lost all his limbs and senses, and retained his life, the tortfeasor could not have pleaded an accident uolicjr in such mitigation ; since tho injury to the man himself ana the injury to his family or representatives is different in kind. [g) Rose v. Medical, ' ^^ L.¥ R 'So'i; nT R^os?! °""' ^^' ^'^ ^^- ^'^'''' "' ^"''''^''«" ^" ' 21 ii) k""J\"^ Welnsuranre Co. v. Wnght, 6 Canada (S. C ) 466. ttif 81 VV' Ta87.^ • ^^ ^' ^ ^' "^' ^'^ ^- ^' Q- ^- ^'^' ^8 L. T. N. S. 46 THE CONTRACT. *25 the assured without the consent of the insurer will he treated as a fraud, and avoid the contract (e). Policy not according to agreement. — When on a proposal and agreement for nn insurance policy is drawn up by the insurance office in a form differing from the terms of the agreement, and va- ries the right of the assured, the Court will look at the agreement and not at the policy (f). Where the mistake cannot bo rectified, it seems that the contract will be rescinded and a return of pre- miums ordered (g). When a mistake loill not be rectified. — Where a policy is not in ac- cordance with the real terms of the agreement, but such terms though agreed on with the agent by the person seeking insurance have not been by him, or at all, communicated to the insurer, or if communicated not adopted, rectification will not be ordered, but (he policv will bo declared not binding on the insurers, and they will have to *repay the premiums paid, as money [* 25 ] paid to them under a mistake (^). Subject to tho power of proving that the policy does not embody the real terms agreed upon, no material terms may be imported into a written contract of insurance which the parties have not thought fit to insert (»'). Loss of policy. Company indemnified by judgment. — If a policy of assurance be lost or destroyed, an siction will nevertheless lie to re- cover the insurance money, and tho order or judgment of the Court directing the office to pay will be a sufficient indemnity against subsequent claims (A;). Premium — preliminary payment. — Payment of a premium de- manded on application for u policy does not give the applicnnt an absolute title to a policy. But if the risk is rejected, or a higher premium demanded and refused, the insurer muHt offer to return the premium. Still, the mere fact that tho agent retains tho pre- mium by arrangement with tho applicant, pending an effort to get the insurers to reconsider their decision, will not amount to a fail- ure to repay (/). Interim notes. — The interim protection notes given by fire insur- (e) Liverpool. London and Globe v, Wyhl, 21 Grant (U. C, ) 458, 2:1 Grant 442, 1 Canado d04. Hill v. Patten, 8 East ;f73. French v. Patten, 1 Camp 72, 180. Farlie v. Christie, 7 Taunt 416. Langhorn v. Cologan, 4 Taunt 330 Saiuhrson v S/jmonds, 1 B & B. 426. Matiter v. Miller, 4 T. R 320. if) Collett V. Moi-rison, 9 Hare 1C2. 21 L. J Ch. 878 Henkcl v. Rnyal Ex- change, 1 Ves. Sr. 317. Parsons v. Bigmld, 16 L. J Ch. 879, 13 Sim. 518, 7 Jur. 501 . Ball v. Storie, 1 S. & S. 210. But Bee JUKenzie v. Coulaon, 8 Eq. 868 (ff) Fovcler v. Scottish Equitable, 28 L. J. Ch. 225, 82 L. T. 119, 4 Jur. N.S. 1169. 7 W R. 5 (h) Fowler V. Scottish Equitable, supra. (t) Dudgeon v. Pembroke, 2 App. Cas ?84, 298, 40 L. J. Q. B 409, 80 L T. N. S. 882, 25 W. R. 499. Gibson v. Small, 4 II. L C. 853. {k) Crovkatt v Ford, 26 L. J. Ch 652, 2 Jur. N. S 480, 4 W. R. 426. J^no^ land V. Tredegar, L. R 1 Eq. 844, 86 L. J. Ch. 886, 85 Beav. 256. {I) Ottcrbein v. Iowa State Ituuranee Co,, 67 Iowa 274. 47 *27 THE LAWS OF INSURANCE. ance companies bear an analogy to the slips commonly used in cases of marine insurances preliminary to the issuing of i)olicie8 (m). The slip contains the heads of the contract, and is itselt a contract of insurance, but not a policy, and, in virtue of certain en- actments, not enforcable at law or in equity, but available in evi- dence where material. [*26] ^IrUerim notes.— The interim note contains a proposal to effect an insurance on the com panics' usual terms and condi- tions, and the interim insurance is made subject to those terms and conditions, and they ought to be read into the interim note so far as they are lawful; and the note forms a contract of insurance during the interval between the proposal and the final acceptance or re- fusal of the insurers (n). Interim receipts. — Interim receipts for the whole or part of the premium, and insuring the applicant for a month or until notice of rejection, are common in England, but have rarely been subjects of action (o). An insurance company are clearly entitled to make the insur- ance under an interim receipt subject to the conditions in the usual policy (p). Reference thereto in the reci ipt will affect the appli- cant with notice thereof (9), provided that he is permitted an opportunity of learning what the conditions are. If the interim receipt be for bo many days, and the policy con- tain a condition that the insurance may be terminated at any time within the period originally contracted for on ten days' notice, and the repayment of a rateable proportion of the premium for the un- expired term, ten days' notice must be given to terminate the interim insurance and tender of the unearned part of the premium made (r). So if a fire happens within a period of interim insur- ancoj but after notice that a regular insurance will not be issued, the insurance company are bound for ten days after the notice given («). [* 27] *But if the insurers give no notice of rejection, and do ^ not issue a policy, it would seem that they will be taken to have elected to accept the proposal, and they will be liable thereon, unless, of course, it is stated that silence amounts to refusal to go on with the contract. Where an interim receipt was given on a form declaring that a policy would be issued in sixty days if approved, and the agent giving the receipt did not report the transaction, the A^^^m^x^^L^^'^'^'^!^^ ^1- "• ^'•«on», 7 App Cas. 96, 126, 51. L 45 L.T. N. 8. 721. lonidesv. Pacific, L. R. ' - ' - 26 L. T. N. 8. 788, 21 W. R, 22. J P.C. H Q B 100. ■^W^ift V. Piaciftc, L. H."7 Q. B. 517, 4rL.' J. 45^?T^"N.'s'^72r"'*^* ^"' "^ ^''"""' ^ ^PP" ^"' ®®' ^^^' '"'^ ^" •^- ^*- ^- 11» (0) Mackie v. EurppeanVo. 21 L T.N. S. 102, 17 W. R. 987. h) AT Queen v Phoenix, 29 U. C (C. P.) 611. y} S^?**^ ^' ^'i*<*nce Jiuiml Fire Co., 44 U. C. (Q B.) M (*) iota. ' 48 (0 (u) (X) THE CONTKACT. 28 insurers are held liable for his neglect and the absence of the policy — the receipt constituting a valid insurance (t). Transaction amounting to re-insurance. Policy dated after fire. Rer insurance. ^^ Burnt or not bumt.^' — It is rare for a case to arise of a policy against fire on land, lost or not lost. But in Giffard v. Queen Insurance Company (w), the plaintiff insured in the London and Liverpool Company from 2nd October 1865 to 2nd October 1866. Before the term expired he received a notice from their sub agent that the insurers would renew, and accordingly ho paid the pre- mium to him on their account. The general agent of the company declined to renew the policy, and paid the premium to the Quet-n Insurance Company (the firo on 13th October, before the policy was issued ; but the plaintiff did not know that he was in- sured by the defendants until he received the policy from the sub- agent, who also acted for the defendants. It was held that the transaction amounted to a re-insurance, and that the defendants in effect insured the property, " lost or not lost," in other words, "burnt or not burnt," from 2nd Oct. 1866 to 2nd Oct. 1867. Open policy. — In certain busines->jes in this country it seems to be the practice to take out an open policy against all risks by t'ca and lanc^ and to provide that the assured may declare thereon BO soon as he learns that property at *hi3 risk of the class [*28 ] insured is in transit to him, and whether such property is at the time lost or not. Firms which have to transmit valuable property or securities through the p^ost thus insure them ; and even when simultaneously advised of transmission and loss, they can still, under such a policy, declare their loss, provided only that they observe good faith in tne transaction. Floating policy. — Another class of policv is that termed a floating policy. The amount of goods covered by such a policy is ascer- tainable at the moment of loss only, and to protect the insurers," such a policy provides that the liability of the insurers 'shall bo only rateable. Thus if it be on a fluctuating amount of goods in a warehouse, and the amount there at the date of a Are exceed the amount of insurance, the owner will bo his own insurer jwo roAa^ and will not receive the whole of the insurance money. This kind of policy U adopted to prevent the assured from making his policy cover in effect a liurger amount of goods than are fairly insurable at the pre- mium paid (x). (t) Patterson v. Royal Insurance Co., 14 Grant (U. C.) 169. (u) 1 Hannay (New Bruus.) 432. («) Vido i)08t, cap. xi. A. PORTER ON INSURANCE. 49 •89 THE LAWS OF INSURANCE. CONSTRUCTION OP POLICY. Pdici/asarule cmstrwd like other instruments.— '' Tho aame rule of construction which applies to all other instruments, applies equally to a policy of insurance, viz., that it is to be construed ac- cording to its sense and meaning us collected, in the first plac^ from the terms usedinit, which termaare themselves to be understood in their plain, ordinary, and popular sense, unless they have gen- erally in respect to theBub]ect-matter,as by theknownusagoof trade or the like, acquired a peculiar sense distinct from tho popular sense ot the same words, or unless the context evidently {;*29] points out that they must in the particular instance, *and in order to effectuate the immediate intention of the parties to that contract, bo under-tood in some other special and peculiar sense. Difference between policies and other instruments.-—^'' Tho only differ- ence between policies as assurance and other instruments in this respect is, that the greater part of the })rinted language of them, being invariable and uniform, has acquired from use and practice a known and definate meaning, and that tho words superadded in writing (subject, indeed, always to be governed in point of con- struction by the language and terms with which they are accom- panipd) are entitled, nevertheless, if there should bo any reasonable doubt upon the sense and meaning of the whole, to have n greater effect attributed to them than to the printed words, inasmuch as tho written words are the immediate language and terms selected by the parties themselves for tho expression of their meaning, and the printed words are a general formula adapted equally to their case and that of all other contracting parties upon similar occasions and subjects " (y). Stridumjus not rule of construction.^-Lord Mansfield's view of the construction of policies was that" It is certain that in the construc- tion of policies the strictum. jus or apex juris is not to bo laid hold of; but they are to be construed largely for the benefit of trade and for the insured " (z). Construction of policies.— In the mercantile contract of insurance it is always the custom to express the mutual bargain in short and conventional terms. The assured is not meant to bo bound to carry out his adventure in exact conformity with tho words rigidly con- strued and confined to what is absolutely necessary, but tho gen- eral words of the policy are intended to bo construed so as to con- form turo ( to tho usual and ordinary method of pursuing the adven- a).» iy) ^"bertson v. French, 4 East l-SO, 135, per Lord Ellenboroii.»h. U) Felly V. Jioyal Exchange, 1 Burr. 841, 848. (a) Pearson v. Commercial Union, 1 App. Cas. 507, per Lord Penzance. • J ohc/ on a hotel, italurniture, Ac, excepted, "goods held on storage." Held, Itat furniture stored to be used in the business of tho hotel was not within the •soeption. Conttnenicil Ins. Co. v. Fruitt, 65 Texas 125. 50 (6) S. 205 S. 12: L.J. id) Mofi I CONSTRUCTION OP POLICY. *31 ^LiheralUy of construction not indiffereMX. — But liberality of [*30] construction can never justify indifference to the real pur- pose of a policy, or warrant the recognition of an obligation which was not directly or by reasonable implication imposed oy its terms, when those terms are fairly interpreted acording to their natural and ordinary meaning (6). Policy construed againd company. — ^The terms of a policy of life assurance, being the language of the company, must be taken most strongly against them (c). This view is in accord with Anderson X. Fitzgerald, A H. L. C. 484, where Lord St. Leonards says — "It [the policy] is of course prepared by the company, and if, there- fore, there should be any ambiguity in it, it must, according to law, be taken more strongly against the person who prepared it." Thteimeaning of a contract. — And in another recent Scotch case the same view is thus expressed — ^that is the true meaning of my contract which I desire the other contracting party to put upon it, lot that which in my own favour I wrap up in general phrase (d). In Birdl v. Dryer (e), however, it was held that whether the un- derwriters are to be considered the *' proferentes " (within the mean- ing of the mpxim " Verba fortius accipiuntur contra proferentem") with regard to a condition in a policy of insurance depends upon the character and substance of the condition. This is the same rule of construction as is applied to guarantees (/), and generally to all instruments prepared by one party and tendered to the other (g). ''^Courts look more to the policy than custom. — The tendency of [*31 ] judicial decisions is to pay more regard to the policy and less to evidence of custom. The reason of this is that policies, especially fire and life, are drawn with more care and skill than formerly, and have been corrected in accordance with decisions, and made more distinct and fjjecise with the growth of actuarial ex- perience (A). Fire and lil'e policies are drawn as legal and not mercantile documents, and there are not many cases in which they can be construed with reference to mercantile custom except in floating policies by wharfingers and others. In America the tendency is the same (t). Custom may control ambiguous meaning. — When the interpretation (&) Ibid., 1 App. Cas. 510, 45 L. J. 761, 35 L. T. N. S. 445, 24 W. R. 9ol. (c) Kotman v. Anchor Co., 4 C. B. N. S 470, 27 L. J. C. P 275, 81 L. T, 0. S. 202, W. R. 688, 4 Jur. N. S. 712. IHtton v. Accidental Death, 17 C. B. N. S. 122, 34 L. J. C. P. 28. Smith v. Accidental «fcc., Co., 22 L, T. N. S. 861, 89 L. J. Ex. 211, L. R 6 Ex. 803 (d) Life Assocn. Scotland v. Foster, 11 C S. C. (3rd series) 361, 371. (e) 9 App. Cas 345, 51 L. T. ISO, 21 Sc. L. R. 590. (/) Hargrove v. Smee, G Bing. 244, per Tindul, C J. (a) Meyer v. Isaac, 6 M. & W. 005, 012, per Alderson, B. (ft) See Pearson v. Commardal Union, 1 App Cas. 510, per Lord O'Haran. (i) North British and Mercantile v. Liverpool, London and Globe, 40 L. J. Ch. 537 6 Ch. D. 569, 86 L. 'J'. N. S. 629. North British and Mercantile v. Mofat, L. R. 7 C. P. 26, 41 L. J. C. P. 1, 25 L. T N. S 062, 20 W. B. 114. 61 f '32 THE LAWS OF INSURANCE. .»* of words or the construction of a clause in the pohcy, that may be underPtood in a sense more or less extensive, has not been fixed by judicial decisions, parol evidence may be admitted to show whether they have obtained by use and practice between the assurers and the assured any, and what, known and definite im- port (it). The usage if proved will govern the construction (O- Wards construed in p^ar sense —When any doubt arises as to the meaning of a word the Courts will usually construe it m its popular and not in its philosophical sense, on the principal that the parties expressed themselves in the ordmsLTy language of men of business and owners of property, who have insured or who are about to insure (m). For instance, fire will not be held to include explosion, even where the explosion is due to ignition, nor gas held to include all that chemists would include under the word. [* 32 ] *Ci'>itom cannot cmUradict lanffuage of policy.— Frimary stress must be laid on the language of the policy. If that be clear, no custom can be admitted to contrad^'ct it, and ho custom which is not a general custom of trade will be adniitted (w). This applies to all contracts of insurance, as to other mercantile contracts. Even if the latter are in short terms, unless there is dubiety or ambiguity in the contract, evidence of custom will not be received (o). Explanation of policy by custom. — Parol evidence may be adduced to explain, but not to contradict, n written document, and in a commercial contract, mercantile custom will be the dictionary whence to draw explanations (p). But Lord Hatherly, in the same case, said in efiect that only the ver^ strongest evidence of custom could impose a non-natural meaning on a contract whose terms have a plain natural sense and meaning. Policy on hard- ware does not include gunpowder. — ^Thus a policy on a general stock of hardware will not cover gunpowder, and if there be a condition against storage of gunpowder, parol evidence will not l>o admissi- ble that the parties understood hardware to include gunpowder in canisters (q). What covered by word lirwn.—I{ a person who is not a linendraper insures against a fire his " stock-in-trade, household furniture, linen, wearing apparel ahd jjlate," the policy will not include and protect linendrapery goods subsequently purchased on speculation; the (k) Sclera v. Bridge, 2 Doug. 527. /) CroflK V. Marshall, 7 C. & P. 697. (m) Sianhyj.Wtstem Insurance, per Kelly, C. B., 87 L. J. Ex. 73, I.. R. 8 Ex. 71, 17 L. T. N. 8 518, 10 W. R. 801). /, ^?^ /i»bertson v. Marjonbanks, 2 Stark 670, lilackett v. lioffal Exchange, 2 C. &. J. 244, per Lyndhurst, C. B. (249). Knl^l/^^a* Xi '?'""i' ^ -^''P- ^'"'' '^^ *^"» l'^"" ^^"'■'J Gordon ; 40 L. J. Q. B. Ool, 80 J i. 1. N. r. 857. (p) IIowcH V. Shand, 2 App. Cas. 408, per Lord Cairns, 25 W. R. 730. „^llJ^<^'>l] ;i tiffiford firt, 87 U. C. (Q. B.) 487. See lilackett v. linyal Jbxvnange, 2 C. &. J. 244. 52 ir) is) 827.. (0 17 \V. 27 W. («) 1070 U\ (*) ance v. supra, (.y) 29, J.. J. C r («) {a) Jur. N CONSTRUCTION OF POLICY. ♦34 -word linen in the policy will be confined to household linen, or linen used as apparel (r). Baker*8 stock. — ^The stock-in-trade of a baker does not mean hia bre.ad only (s). * Fraud in obtaining policy. Acquiescence. Acceptance of [*33] premium after discovering fraud. — ^A policy obtained by fraud, or by a breach of the high degreee of good faith required as be- tween insurer and as6ured,beingonly voidable, the party defrauded, whether insurer or assured, must take steps to avoid the contract (t), or he will be held, by his quiescence, to have assented to the contract and elected to treat it as valid. If the insurer discovers that he has been induced by fraud to grant the policy, and after such discovery exicepts premiums and treats the policy as good,'it t"ould seem .l._; he would thereafter be estopped from denying its \ .idity, more especially if he allows the policy to be assigned to a bona fide holder for value (u). . Courses open to insurer from whom polisy obtained by fraud. — There are three courses open to the insurer on discovering that lie ha^ been induced to grant the policy through fraud of the assured — 1. To refuse to receive further premiums, and repudiate the con- tract after discovering the fraud. 2. To seek cancellation of the policy, offering at the same time to return all premiums paid (x). 3. If the policy has matured, by defending any action ^ot recovery of the insurance money (y). Fraud of insurer where by terms of policy no action maintainable. — Fraud iu inducing a person to accept a policy n'ill not render the insurers liable thereon, if by the terms of the policy the action is not maintainable (z). To hold otherwise would . be to permit recovery on a contract other than that made (a). The only remedy *is to repudiate the contract and seek rescission ana [*34] return of premium. (r) Watchorn v. Longford, 8 Camp. 428. (s) Moadinger v. Mechanics' Fire, &c , 2 Hall (N. Y.) 490, 2 N. Y. (Sup. Ct.) 537.. (<) British EquUable v. G. W. R , 88 L. J. Ch. 132, 314, 20 L. T. N. S. 422, 17 w. 11. 501. London Assurance v. Manad, 11 Ch. D. 863, 48 L. J. Ch. 831, 27 W. II. 444. {u) Sec per Inglis, L. P., in Scottish Equitable v. Buist^ 4 C. S. C. (4th Reries) 1070 to 1082. (x) Prince of Wales Assurance Co. v. Palmer, 25 Beav. 005. London Assur- ance v. Mansel, 11 Ch. D. 303, 372, supra. British Equitable v. G. IV. R., eide supra, note ((). (y) London and Provincial Marine v. Seymour^ 17 Eq 85, 43 L. J. Ch. 120, 20, L. T. N. 8. 041, 22, W. II. 201. Sennwur v London and JVovindal, 42 L. J. C P. Ill note, 27 L.T. N. S 417 («) Tebbeits v. Hamilton Mutual Fire, 86 Mass. (3 Allen) 509. (a) FowUr v Scottish Equitabie. 28 L. J. Ch. 525, 32 L. T. 110, 7 W. R. 5, 4 Jur. N. S. 1160. 08 r 84* THE LAWS OF INSURANCE. If the insured had a right to rescind, and acted on the contract, he canaot subsequently rescind (h). Imurera 7wt stopped from pleading vmnt of insurable interest by reason of failure informer action to cancel policy for fraUd.~U the insurers have sought to cancel a policy on the grounds of fraud in the ap- plication, not going to the interest of the assured, and have failed, they will not be stopped by the former judgment from pleading to an action on the policy that the assured had no interest in the life on which the pohcy was granted (c). Illegalinsurance.—lmnra,ncejpn an illegal undertaking is void. This is well understood in marine insurance (d). Few c ises could be suggested of land insurance on buildings used for an illegal pur- pose in this country. But in Americr cases are common. Thus insurance on spirits, and casks containing them, in a State where an anti-liquor law was in force, has been held void (e), and also one on an unlicensed billiard and drinking saloon (/). But where the policy was on the stock of a chemist who had liquor unknown to the insurers for illegal sale, the Court held tliat there was nothing to show the insurers that the object of the contract was illegal (g). Test whether Uleaality avoids policy. — Tlie test question there is, whether the violation of law is the direct purpose of the contract or purely collateral to and independent of it (A). But it would seem more in accordance with the policy of the law to hold that no one should be allowed to receive indemnity in respect of property used for an unlawful purpose, if that use continues down to the date of the loss. (6) Uoud V. Union Ins. Co.. 2 Pugsley (New Brans.) 498. See Clarke y. Dickson, E B. & E. 148, 83 L. T. 136, 7 W. R. 448. (c) JFirguson v. Maasachitaetts M. /de^ 2 E. & E. 1, 20 L. J. Q. B. 6. (ci Jacques V. Golighthj (1776), 2 Wm. Bl. 1073. id) Roebuck v. Ilamerton, 2 Cowp. 737. (e) Webster v. de Taatot, 7 T. R. 157, 8 Kent Comm. 209. 61 46* THE LAWS OP INSURANCE. fi 1*1 9 iMl. according to that rate, for any greater or less sum, several per- sons. eA for themselves, severally agreed to pay the several sums set opposite their names in case Brazilian mining shares should on or before a certain day be done at or above a certain sum, the contract was held to amount to a policy of insurance and to be illegal (/). . ' » • -i. .Lavrfidand unlawful interests m sam ^jottcy.— American writers raise the question whether, if lawful and unlawful interests are in- sured together, the whole or only part of the policy is vitiated. This depends on whether the contract is separable ornot, lustas the question whether premiums are in part returnable depends on whether they can consistently with the nature of the risk be ap- portioned {g). , , , , ^ . . Ume.y won at play.— The holder of a note given for money f*45 ] won at play *has not an insurable interest in the life of the maker of the note (A). t • / t in Difference between policy and wager.— Mr. Justice (now Lord) Blackburn said, " I apprehend that the distinction between a policy and a wnger is this: a policy is, properly speaking, a contract to indemnify the insured in respect of some interest which he has against the perils which ho contemplates it will be liable to " (i). Wager policy. — A wager in the form of a policy upon the sex of a person is a wagering policy within 14 Geo. III. c. 48, for a contract in the form of a policy does not cease to be a policy because the subject-matter of the insurance is not exposed to peril (k). Wager policy premiums not recoverable. — And where a son insured the life of his mher, ii^ which ho had no insurable interest, and paid the premiums for some years, and the father, who at first had no knowledge of the insurance, became aware oi it, and gave no- tice to the company that he object'^J to its continuance, it was held that the policy was a wagering policy, and therefore the son could not recover the premiums (I). Ibntine. — A life policy upon the tontine principle is not void as a gaming contract (m). Policy assigned to third person who pays premiums not a wager policy. — A man applied to the local agent of an insurance company for insurance on his own life. His proposal was accepted, and the policy was prepared and sent to the agent. The applicant did not (/) Paterito7i v. Powell, 2 L. J. N. S. C. P. 18, 9 Bing. 820, 620, 2 Mo. & Sc. 899, 773. (g) Muy Lis. 81. . (h) Dwycr v. Edk, 2 Park Ins. (8th ed.) 914. (f) Wilson V. Jones. L. R. 2 Ex. 150, per Blackburn, J., 30 L. J. Ex. 78. 13 L. T. N. S. 6(59, 15 \V. R. 435. ' ' {k) Roebuck v. Hamerton, 2 Gowp. 707. {I) Howard v. R^uge Friendly Society, 54 L. T. 644. (m) Simons v. New York Life, 88 Hun. (N. Y.) 817. 62 < INSURABLE INTEREST. *47 Say for it, 80 a third j)erson paid the premium and had his name lied into a hlank assignment which had been left with the agent by the original applicant, and the majority of the *Su- [* 46 ] premc Court of Canada held that this vtM not a wager policy (n). Different kinds of interest need not be specified. — A person who has different kinds of interest in property may cover them all by one insurance without stating in tne policy the number or nature of the interests (o]). But the subject-matter of the insurance must be correctly described (p). Special or qualified interest sufficient. — An insurable interest in mercantile language does not necessarily import an absolute right of property in the thing insured. A special or qualified interest is equally the subject of insurance (g). Possession of property mil suffice. — Property without possession will constitute insurable interest (r), and a person in possessien as the apparent or presumptive owner has such an interest (s). lortious disseizor, — In America a tortious disseizor has beeu held to have an insurable interest (t). Goods sold but not delivered. — Even where a policy is " on goods sold but not delivered," cases may arise in wliich the assured is not entitled to recover : for if the legal title has vested in the ven- dee, the goods are in law delivered even if not removed (w) ; but if the words " not removed " are in the policy, the insureris are liable (x). Property in goods purchased remaining in vendor. — ^A person who bargains for, and tikes into his possession, an article of per- sonal property on a hiring *agreement, one of the terms of [*47 ] which agreement is that the property shall remain with the seller until the purchase money be paid, has an insurable interest in the property, though the money is not fully paid (y). Building on another's land. — A man insuring a house in his pos- session built on the wrong land owing to an unskilful survey can recover on his policy, if he has insured bond fide (2). Afier'acquired goods. — It has been decided in Canada that policies cover after-acquired goods which have been substituted for those (n) Vezina v. New York Life, 6 Canada (S. C.) 30. (0) Carruthers v. Sheddoii, 6 Taunt. 14. (p ) Crowley v. Cohen, 8 B. & Ad 478, 1 L. J. N. S. K. B. 158. (q) De Forest v Fulton Fire, 1 Hall ( N, Y. Sup. Ct.) 94, 115, which exam- ines the cases very fully, and states their effect well. (>•) Joj/ce V. Swann, 17 C. B.^N S. 84, 104. (s) Marks v. Hamilton, 7 Ex. 823, 21 L J. Ex. 109, 18 L. T. 260,10 Jur. 152. Lingleuv. Queen Ins- Co., 1 Han. (New Bruns.) 280. (0 Mayor of New York v. Brooklyn tHre, Jkc , Co. 41 Barb. (N. Y. ) 231. Sweeney v. Franklin Co , 20 Penn 837. (u) Lockhart v. Cooper, 42 Am. Rep. 514. Ix) Waring v. Indemnity Fire Insurance Co , 45 N. Y. 60fi, Am. Rep. 146. fy) Reed v. Williamsburg City Fire Insurance Co., 74 Maine 537. (») Stevenson v. London and Lancashire Assurance Co., 26 U. C. (Q. B.) 148. 63 *48 THK LAWS OF INSURANCE. w ' i 'Ml liM originally insured (a). Cmtimity of interest tw«€cmary.— And the interest on the pubject-matters insured need not be continuous, since absence of continuity only means absence of risk (6), Lost or not lost.—li is no answer to a claim on a policy on goods (lost or not lost) that the interest in them was not acquired until after Risk without property will suffice. So mil probability of loss. — Al- though risk and property generally go together (d), they are not necessarily associated; and the risk alone will suffice to sustain the insurance. The peril must be such that its happening might bring upon the assured a pecuniary loss, but it is sufficient that it might bring a loss, and by no means necessary that it should certainly have that consequence were it to happen («).. Interest must be valuable.— Aa before meniioned, an insurable in- terest must be something more than mere anxiety regarding the safety of the thing insured, or hope of profit or advantage in [*48] relation thereto; it need not amount to property in the *thing insured, for if through special circumstances the property has not passed to the assured, yet if he has any beneficial right which is of a pecuniary value in the subject-matter of the insur- ance, or if it be at his risk, he has an interest which he may validly insure (/). Stockholders no insurable interest in corporate property. — Nevertheless, the stockholders in a corporation have no insurable interest in the property of the corporation (g). General partner may recover whole insurance. — But if property belonging to a limited part- nership, in which there are a general and a special partner, is in- sured in the name of the general partner, which is the name used by the partnership, such general partner is entitled to recover the fUll amount of the loss, and not merely the value of his interest in the property (h). Expectancy — In the case of an agreement to sell an expectancy under a will for so much money, and to repay the purchase-money if the expectation was not realized, the insured would have no more interest in the life or death of the person from whom the expecta- tion arose than was created by the agreement to pell; but it has been held that he would have an insurable interest (i). Perfect legal interest not n£cessary. — An insurable interest does not mean a perfect legal interest. If it did, there are some buildings la) Buttery. Standard, 4 U. C. (App.) 891. (b) Crazier v. Phoenix, 2 Han. (New Bruna ) 200. (c) Sutherland v. Pratt, 11 M. & W. 296, 811. (d) Anderson v. Morire, L. R. 10 C. P. at 019, ner Blackburn, J., 44 L. J. C. P. 10, 341, 81 L. T. N. S COS, 83 do. 855, 23 W. R. 180, 24 do. 80. Q ^^L»hJ ^PP' ^as. 740, r?r Lord O'Hagan, 40 L. J. C. P. 11, 05 L. T. N. o. 660, ^ \V. n 14. (/) Joi/ce V. Swann, 17 C B. N. S. 84. iff) Riggsv Commercial Union Co, 51 N. Y. (Sup. Ct.) 467. (A) Clement v. British American Co., 141 Maes. 298. (0 Cook V. Field, 15 Q. B. 460, 19 L. J. Q. B. 441, 16 L. T. 0. S. 3, 14 Jnr. VOX* ^ 64 ILJ!_ INSURABLE INTEREST. *60 on which it would bo difficult for any one as owner lo effect a valid insurance. In the case below cited (k) plaintiff had contracted to purchase the property insured, and Jiad failed in makine his pay- ment punctually, but was proceeding in equity to compel perform- ance by the vendor, and it was held that he had an insurable in- terest. There must be a valid subsisting contract capable of bein^ enforced between the parties themselves in order to constitute an insurable interest or right of action against the insurer. ^Interest in respect of advances under parol agreement conferring [ * 49 ] equitable lien. — The contract, however, need not be such as to pass the property in the thing insured, nor need there be such a transmutation of possession as to create a lien in the legal technical sense of that word. It is sufficient if the relationship between the parties is such as to constitute an actual equitable interest in the thing insured, and such an equitable interest will constitute an in- surable interest. In a case decided in the Supreme Court of Canada (0, C. made advances to B. upon a vessel then in course of con- struction, upon the faith of a verbal agreement with B. that after the vessel should be launched she should be placed in his hands for sale, and that out of the'proceeds the advances so made should be paid. When the vessel was well advanced, C. disclosed the fads and nature of his interest to the agent of the insurance company, and the companv issued a policy of insurance against loss by fire to C. The vessel was still unfinished and in B.'s possession when she was burned. It was held on these acts that C.'s interest was an equitable interest, which was insurable, and therefore C. woj9 en- titled to recover (m). Chambre, J. (whose views were ultimately adopted by the House of Lo'-ds ), said, in Lucena v. Crawford, 3 B. & P. p. 104 : ** I am not disposed to question the authorities in penftral ; on the contrary, there appears to me to have been great pr(i| i ty in establishing the contract of insurance whenever the in- terest declared upon was, in the common understanding of mankind, a real ivf-'-eM in or arising out of the thing insured, or so connected with it as 1 Jepend on the safety of the thing insured, and the risk in- sured against, without much regard to technical distinctions re- specting property, still, however, execluding mere speculation or expectation, and interests created not otherwise than by gam- ing" (w). *The spirit of 19 Geo. H. c. 37, only requires that the [* 50] policy shall not be a gaming policy (o). Quantum ofinteresL — The question upon which the validity of the contract depends is not the exact quantum of the interest of the assured at the time the contract was nter^d into, but did the defendants mean to game ? (A,) Milligan v. Equitable dkc, Co , 10 U. C. (Q. B.) 314. (I) Clarke V. Scottish Imperial, 4 Canada (S. C.) 192, and Johnson v. Netf Zealand Co , 10 Victoria L. R. 154. (m) Ibid. (n) Ebsworthv. Alliance Marine Insurance Co., L. R. 8 C- P. 690, 019, 29 L. T. N. S.479. (o) Page v. Fry, 2 B. & P. at p. 248, per Charabre, J. 5 PORTEU ON INSURANCE. 65 61* THE LAWS OF INSURANCE. ! \m\ or was there not a loss against which they might indemnify them- selvea by a policy of insurance— not a certain, but a possible loss ? The case below cited was one in which the Court of Admiralty might have decreed the assured to pay damages and costs, and that was held sufficient to give an insurable interest {p). Whoever has an interest which the law wi'l recognize in the pre- servation of a thing, or the continuance of a life, may msure that thing or that lif? (9). . ^, . n u Any (meinteresud in buildings may inmre.— The insurance ot build- ings may be effected by any one interested therein, and he can re- cover to the extent of the inj ury to his interest. Fee simple. YeaHy, &c., tenante.— The o^ner of the fee simple may of course insure, posse3sing as he does the largest possible in- terest. So may a life, a yearly, or even a weekly tenant insure in virtue of his jnterest in the property, and recover the value of such interest. Ti. . /. l Assured can retain only value of own tntered. — If in any of these cases of limited ownership an insurance were eflFected under which the limited owner recovered the full value of the property, he could not, it seems, i«tain such value for his own use, because the con- tract of fire insurance, like that of marine insurance, is one of indemnity. In Castellain v. Preston (r), Bowen, L. J., said, " It is an illusion to suppose that the assnrird can in any [*6:! ] case recover more than his loss. We must* look at the ordinary business rules. It is well known, of course, that a person with a limited interest may insure, and recover the whole value of the thing insured, but then his policy must be a^t for the purpose, and he must have intended to so insure '.'). A^ain, a per- son may insure for himself, or for himself and adhere, as in the case of carriers and wharfingers, or to take the case of a mort|;agee, he is entitled to insure for other parties ; but if he only insures his own interest, he can only hold the damage to his own interest That principle applies here. It was contended that a tenant from year to year may always recover the full value of the premises insured ; but, although that contention would appear to be supported by the language of Lord Justice James in Rayner v. Preston^ I cannot assent to it. It may be that the insurance companies do not as a rule take the trouble to ascertain the exact interest of the assured because in most cases the insurance is for the benefit of all concerned ; but if a case were to occur in which a yearly or a wee^cly tenant were to insure, meaning only to cover his own interest, he could not recover and hold the whole value of the house It is true that in most cases the claim of the tenant from year to year, or for years, cannot foe answered by handing over to him what may be the marketable (p) Boekm V. PeZ/, 8 T. R. 162, per Lawrence, J. 'q) DbIIoz. 1868, pt. 1, 888. Hranfoni v. Saunders, 2S W. R. 660 i (r) 11 Q. 6. D. 880, R'i L. J. Q. B.'866, 40 L. T. N.^:20, sf, wru. m. (f) Joknaon v New Zealand, t«e(l ;* and although the ille- gality of the policy under 14 Geo. III. c. 48, on the ground of absence of insurable interest would have constituted a good defence to an action against the insurance company at the suit of the person ef* fectinethe insurance, yet, the money having been paid to him, such illegality would affect his right to retain it; for the statute is a de- fence for the insurance company only if they choose to avail them • selves of it (n). (t) Hodson V. 0b8erv«r, ctr., Co , 8 E. & B. 40, 8 Jur. N. 8. 11^5, 20 L. J. Q, B 308, 29 L. T. 278, 5 W. R. 71 2 (it) Emm V Jiiijnold. 20 I. T. N S. C5!), L. R. 4 Q. B G22, 08 L. J. N. S. Q. li. 2113. 10 B. ti 8. 021, 17 W. R. 882. (l) Tebbittsv. Dearborn, 74 Maiho 8(»2 (1888). (in) Miller v. Ware, 1 C & P. 23B, per Park, J. Patrick v. Eanes, 3 Camp. 442, per Kllenborough, C. J («) Worthinqtnn v. Oirtin, 1 Ch. D. 410 46 L J N R Ch. 250. .13 L T. N. 8 828, 24 VV. li 228 Seo also Trot^p v. Anchor Co , 8 Russ. t 0«1. (Nov Sco ) 2U. *If A, who is neither B's relative nor creditor, inmircH B'« lifo, and to reitn- burso himself fur oiiiIhvs to be made under a oontriict tu Nnpport I) for life, he can only recover from {nsurjincu monry enough to cover expenses. The rest h%" longs to B's estate. Seigrixtv ^VAmo^te, ilii Pa. St 826 6 PORTER ON INSURANCE. 8) *73 THE LAWS OP INSURANCE. . Agent mmt pursue hie authority. — Where the defendant authorized two of his creditors to effect a policy of insurance on his life for a certain time in their own names as a security for their debt, the policy to be assigned to him when the demand was discharged, and they effected the insurance in their own names and that of & third person who subsequently became their partner, it was held that the authority given by defendant was not pursued, and that an action for the recovery of the premiums could not be maintained (o). (o) Baron v. Fitzgerald, 9 L. J. N. S. C. P. 158, 6 Bing. N. C 201. Ill # THE PREMIUM. ♦76 ♦CHAPTER III. [*74] THE PREMIUM. Premium, nature of. — The premium * is the price for which the in- surer undertakt . his liabilities. It may be a consideration other than money payment; e. g., in a mutual insurance it may consist of a liability to contribute to the losses of other members of the mutual society («). The members in such a socif^ty being both in- sured av'i int^nrers, ofiFer as a premium their liability aforesaid, and as insui ;rs receive as premium the right to have their own loss paid whenever it happens. Must be agreed. — In Lucena v. Cm jford (6) the premium is de- fined by Lawrence J., as "a price paid adt (j^uate to the riBk," but the adequacy of the premium is purely the insurer's concern. He cannot dispute the validity of the contract merely because the pre- mium is inadequate; for as it is the price for which he upon his own calculations agrees to take the risk, his own agreement is con- clusive against him. The insurer's satisfaction %7ith the premium is a condition precedent to the formation of the contract (Malyns 112). In the old policies the words "I am content with this assur- ance" were inserted as an acknowledgment that tie insurer was satisfied with and would not later dispute the sufficiency of the premium. The only point which the assured need consider with regard to the sufl[iciency of the premium, is whether it is suffi- ciently proportionate to the risks intended to be run to enable the insurer to meet the average losses of his business. But such a consideration *in any cape is merely secondary, as his [*75] ..ction is most likely to be guided by his knowledge or belief as to (he general solvency of his insurer rather than the special risk undertaken. Premium need not be prepaid. — Prepayment of the premium is not in law a condition precedent to the making of a comi:)lete contract of insurance (c). But it is the almost universal practice of insur- ers other than marine to stipulate that the contract shall not begin Tucker, I'J Q. B. 1). 176, 1S7, 41) L. T. N. 8. {(t) Lifon Mutual Marine v. 764 (b) 2 N. R aoi. 1 Tiiunt, 3^5. (<•) Dai/ton Jaimranre Co v. A'«%, U4 '"Jhio St. 845 18 Am. Rep. 612. v./, LinidiiH and Sta^p'o ' Tlio wonJ pnTTiiuii rdshire, 1 Ottbabt' & Kllis 47. Kelly premium comes cither from the word pnvmium, sigiiityin" Dricp, or from the word pri:n<), becuuae formerly tli«> |iremiiim wns paid before u.l, uiid at the time of fiigiiiiif; the policy. Hence it is culled ^vrmewr, prrmie, amst, or agio d^ assurance, Em.:rigon, ■^'jap. 3, sec- 1. *76 THE LAWS OF INSURANCE. i . ■ •! I iiiiif^" to take effect until the premium has been paid, and the Courts in presence of such a stipulation will not (unless the premium has i)een paid) give effect to the contract where a loss has happened after an agreement to issue and accept a policy, but before the policy has been issued, or even when it has been delivered as an escrow (d). , Nonpayment. Waiver.— But when it is a qpndition m the policy that the policy shall not be binding until the premium is paid the Court will readily infer a waiver of such condition (e).* Forfeiture.— Since the Courts will not favour a forfeiture (and this applies as much to forfeitures under conditions in policies as to those under covenants in leases), it has been held in America that a forfeiture under a life policy for non-payment of premium must be claimed before the death of the assured, at which date the lia- bility accrues, and can no longer be denied (/).* It does not, however, seem necessary in that case to go so far. The doctrine of estoppel rather than waiver applies to cases ['•'76] where the insurer discovers a forfeiture, *and lies by until the happening of the loss. But insurers by their acts may estop themselves from setting up forfeiture (g). If a policy containing a conaition that it shall not be binding until the premium is paid, -and also an acknowledgment of the receipt of the premium is delivered to the assured before payment of the premium, this raises a presumption of waiver of such con- dition, and of an intention to give credit for the premium, the con- dition notwithstanding (A). Policy not binding till premium paid. Waiver of the condition. — A policy stipulated that it should not be binding until the actual pay- ment of the premium, and the Court held that it was competent for insurers to waive the condition, and that such waiver might be es- tablished by evidence of an express agreement to that effect or by (d) Flmt \POhio, Ac, Co., 8 Ohio 501. Bodine v. Home Co., 51 N. Y. 117. See Canning v. Farquhar, 10 Q B. 1). 727, 55 1.. J. Q. B. 225, !)4 W. R. 428. (e) Supple V Cann, 9 Ir. C. L. 1, Sunsum 010 t7 .•nq. if) See Young v. Mutual Life Co., 2Snwyor (C. Ct. IJ. S.) 325. ig) Sec ScoUiaJi Equitable v. liuinf, 4 C. S. C. (4tli senes) 1070. Winq v. Harvey, 5 Do G. M. & (J. 205, 23 1.. J. Ch. 511, n L T. 120, 18 Jur. 3!)4, 2 W. R. 870. Apphton v. rhcenix, 47 Am. R*i» 2",>0. (A) Masse \. Hoehelaga Co., *i2 Lr. Cuii .Fur. 124. Jiasrh v. Humboldt Mu- tual, 85 New Jersey 429, 3 Kent Conim 200. Andvrson v. Thornton, 8 Ex. 426. Von Wein v. Saitthh, Ac , Co., 52 N. Y. (Sup. Ci ) 490. ' A condition in a policy exempt imcompunv from liiibility. until actnul piiytnent of oremium, mny bo waived. Universal F. Ins. Co. v Jilork, 109 Pa Stut. 535. Elkensv. Susquehanna Mutual F. Ins. Co., 118 Pu. St. 380. Alabama Oold Life Ins. Co. v. Garmauji, 74 Ga, 51. 'Life policy in mutual company is not to bo deemed forfeited for non-piiymont of interest or premium notes, where contract docH not so provide, wliero there would be no forfeiture for non-payment of the principal, and v liero company ban iuiidh of asBured sufficient for the intercHt. Northwestern Mui. Life Ins. 6o. v. Fort, 82 Ky. 269. THE PREMIUM. *77 circumstanct s,* and that delivering a policy confessing the pay- Uieut of premium was evidence of the waiver (r). Credit for premium. — In any case where credit is intended to be given for premiums, and is actuaHy given, non-payment ther^ of will not avoid the policy;* and is no defence to an action on the policy, but merely matter of set-off {k). Even though the assured has b*en enjoined in Chancery to pay the premiums, and h.^p not done so, it is no defence to the insurer (0- Receipt in policy. — Where the policy admitted payment, pirol evidence that payment had not actually been made was hela in- admissible (m). *In the United States of America, where a note at sixty [* 77] days was accepted for the premium, payment of which was admitted in the policy, the policy did not become void on non-pay- ment of the note, altliough the policy contained a condition that wliere a note was taken for the premium it should be considered a cash payment, provided it was paid when due (m). Credit for premiums. — When a premium is paid by bill of ex- change or promissory note, the liability of the insurer lasts until the maturity of the note and even thereafter, unless it be stipulated that it shall terminate if the note is dishonoured (n). For the ac- ceptance of a note is a form of giving credit. And the Supreme Court of the United States has held that, to insure a forfeiture, the bill must be protested and proceeded on (o). Waiver by acceptance of premium.. — Acceptance of premiums falling due after breach of condition or discovery thereof, evinces an elec- tion to continue the policy as valid, if the existence of the breach bo known (p). So it the premium be accepted by an agent, and remitted with information of the breach, the insurers must return it at once or they will, it seems, be liable (q)' (i) Goit V. National Protection, ^5 Barb. (N. Y.) 189. (k) Millar v. Life, Ac, Co., 12 Wal. (U. S.) 285, 801. (/) Hodgson v. Marine, 6 Craiich (IT. S.) 100. (w) Anderson v. Thornton, H Ex. 425. Dalzell v. Mair, 1 Camp. 532. De Garmindc v. IHnou, 4 I'aiint 240. {m) Illinois ventral, dec , Co. v. Woolf, 37 Illinois 854. See also Compagnie d' Assurance v. Grammon, 24 Lr. Can. Jur. 82. (n) Hopkins v. Hawkeye Insurance Co , 57 Iowa 203. Kelly v. London and StagonMire Co., 1 Cab & Ellis 47. (o) Knickerbocker Co. v. Pendleton, 112 U. S. 09(1 (Davis Rep). (p) Armstrong v. Ttirquand, 9 Ir C L. 8?, 66. Iq) Iti'ilish Industry Co. v. Ward, 17 C. \\. (t46-049. ' liifi) inHiiranco conipnny isHiu'd p:iniphlet containing statoment that thirty days ffrace allowed on payment of pren aims. Held, that, notwithstanding condition, the policy could not bo forfeited wiien premium tendered was overdue, the state- ment in pamphlet being relied upon. Fowler y. MctrovHtan L. Ins. Co., 41 Hun. (N. Y.)357. " A custom to give short credits for premiums due may be construed as a wniwr of the right to insist on a forfeiture. Lelmnon. Mut Ins Co. \. Hoover, lllM'a. St. 591. Veunantv. Traveller's Ins. Co , 81 Fed Rpp. 822. " Acceptance of premium, after default, operates as a waiver of the condition timith vs. iSt. Paul F. Jtc Jm. Co., 8 Dak. 80. *79 THE LAWS OF INSURANCE. > m ,1 Waiver of farfdture by non-payment.— An insurance company granted a loan upon a bond with sureties, and a policy on tlie life of the borrower as collateral security. The premiums not being paid within the days of grace, the insurers demande(' icin, and com- menced actions for them against the sureties (/•). rhia would have amounted to a wavier of the forfeiture, but as the sureties refused to pay the premiums, V.-C. Shadwell held that they thereby neu- tralized the effect of this waiver. [ * 78] * Waiver of right to forfeit policy. — If the insurer receive notice from whatever source that the risks insured against have been misrepresented, concealed or incompletely disclosed, or in- creased or varied, and accepts further premiums on the same policy at the rate originally agreed, in such case his right to avoid the con- tract is waived, and he cannot subsequently have it avoided even on tender of such premiums (s). Company bound by agenfs receipt of premium. Agent received pre- mium knowing assured was abroad and policy not forfeited. — Where a life policy was subject to a condition avoi(hng it if the assured went out of Europe without licence, and an assignee of the policy paid the premiums to a local agent of the company and informed nim that the assure'' was in Canada, the agent stated that this would not avoid the policy, and received the premiums until the death of the assured; and the Court held that the company were thus pre- cluded from treating the policy as forfeited (t). Payment to agent after forfeiture. — Where a man i.s the agent of an insurance company to receive premiums on subsisting policies, re- ceipt by him of premiums on policies as to wliich there had been breach of condition, such payments being made in belief that the policies were good and subsisting, will, it seems, bind the com- pany (u). A fortiori., if the directors receive tlie premiums through such agent, or indeed any agent, with knowledge or notice of the breach, they are estopped from saying that they received the premiums otherwise than for the purpose and in the faith for which, and in which, they were paid (x). But if an agent iias no authority to contract for the company, re- ceipt by him of an overdue premium will not be war\'er by [* 7y] the company pf a forfeiture. Nor will *the debiting of tfie premium by the company to the agent amount to such wavier (i/). If the agent fails to return the policy as lapsed within the time directed by his instructions, it is doubtful whether thiw (r) Edge v. Duke, 18 L. J. Ch 183 (.f) Scottish Equitable v. Jiuiiit, 4 C. S. C. (4tli HfTi.>s) 1070. X. iZ\J, it \V , Iv. o70, (m) Sumo cnKo (x) 7&/d. KeKarding renewal roccipt with (•ondilion hh to receipt from houd otfice, mde Moore\. Hnlfpi/, \) Victoria I,. II 4(H). (y) Acej/ V. Fernie, 7 M. & W. 151, 10 L. J. Ex. 9. 86 THE PREMIUM. *80 would help the assured, unless the power to give credit for pre- miums is within the scope of the agent's mandate. Condition — waiver — agent. — It is of course a mere question of fact whether or not the agent has such authority ; and if the authority is denied, the plaintiff must prove it, or set up facts from which it may fully be inferred (2). Overdue premiums, when acceptance no waiver. — Payment of over- due premiums after the death of the assured will not save the policy, whether payment be made by the assessors of the assured (a) or tlie beneficial owner of the policy ; and acceptance by the company in ignorance of the death, which ignorance is shared oy the person offering payment, will not save the policy (6). Fur overdue premium cheque given. Payment not got before death. — An extreme case has lately arisen in C^inada. The assured could not pay a premium, but pave his cheque on the understanding that it should not be presented till there were funds to meet it. It was several times presented and dishonoured, but at last funds Fufficient were lodged in t'le bank, and notice thereof given to the insurer shortly before the bank's hour for closing. The insurer's agent waited till next morning, and the assured was killed during the evening. The Court of Queen's Bench held by a majority that payment was not made in time(c) — (1) Because the cheque did not operate as payment, but only as a means thereto; (2) That by the death before actual payment mutuality *between the [* 80] parties became impossible, and the health certificate could not be given. Renewal premium. Condition as to good health. — The stipulation contained in mo-t life policies that overdue premiums will only be received if the assured is in good health at the time of tendering them, is merely to guard against frauds being committed upon the insurer, not to prevent him from dealing with the insured in full knowledge of tne facts as to his health which he and his fiuends possessed. So where the assured had received what turned out to be his death- wound, but at the time neither he nor his doctor had any apprehension that it would be' fatal, and paid an overdue pre- mium, the payment in Canada was held good and the forfeiture completely waived (d). If no risk, premium returnable. — In Tyrie v. Fletcher (e) Lord Mans- field said : " Where the risk has not been run, whether its not hav- ing been run was owing to the fault, pleasure, or will of the insured •(2) UrUish Indmtry Co v. Ward, 17 C. B. 644, 649. But ace Montreal v. M'GilUmm, UJ Mx)()re P. C. 8!). («) Simpson V. Acridentat. Death, 2 C B. N. S. 257, 26 L. J. C. P. 280, 80 L. T. 31, :i .lur. N S 1()7», 5 W. U. 307. Wanty. lilunt, 12 East 183. (b) rriU-hnrd v. Merchaiitn\ .fv , Co , 8 C. B. N. S. 022, 27 L. J. C. P. 100, 30 L. T. 31 H, (1 W. It 840, 4 .Tur. N. 8. 807. {<■) Xrill V. Viiion Mutual Life, 45 V. C. (g. IJ.) 503. Affd. 7 Ontario (Am.) HI. id) Ciimphell\. National Tumiranre Co.. 24 I'. C. (C. P.) 133. («) 2 row]). 008, 089. Want v. Blunt, 1 J East 183. 87 82 THE LAWS OF INSURANCE. or to any other cause, the premium shall be returned. The under- writer receives a ]>rtmium for running theriskof mdemnifying the insured, and whatever cause it be owing to, if he does not lun the risk the consideration for which the premium or money was put into his hands fails, and therefore he ought to return it. IJ nsk begin8,premium not returnable.— Another rule is, that it the risk has once commenced there ehall be no apportionment or return ot pre- mium afterwards There has been an instance put of a policy where the measure is by time, which seems to me to be very strong, and that is an insurance upon a man's life for twelve months. There can be no doubt but the risk there is constituted by the measure of time, and depends entirely upon it. For the under- writer would demand double the premium for two years that he would take to insure the same life for one year only. In such policies there is a general exception against suicide. If the [* 81] person puts *an end to his own life the next day, or month afterwards, or at any other period within the twelve months, there never was any idea in any man's breast that part of the pre- mium should be returned." And in the same case, Aston, J., thui expressed himself: "The sum payable and the time were both lumped" No risk no premium. — The premium, if paid before the risk begine, can be recovered if the risk insured against is not run, whether tho cause of its not being run is the fault, will, or pleasure of the in- sured (/ ). For \ he risk is the consideration for wh' oh the premium is to bo paid. If it is not run consideration fails, and it is inequit- able that the insurer should receive and retain the price of running a risk when in fact he runs none ig). The same principle is also expressed when it is said that pay- ment of premium oefore risk run is payment sub eonditione, or deposit or money with the insurer to answer a certain event, and that the money paid may be recovered back (if the condition is not satisfied or the event does not happen) as money received to the use of the assured (h). Where the interest insured turns out to be less than the amount insured, there shall be a return of the overplus premium. This is a custom co-eval with the contract of insurance itself, but applies only where the over-insurance is made in good faith. Return of premium where several policies. — Where several policies have been'enected in good faith before the risk begins on the same subject-matter, and their total amount exceeds the value of the in- terest of the assured in the whole subject-matter, there must Ix; a return of premium rateably on all the policies, calculated in [* 82] such a way as to reduce the *premium on each policy to that, if) Stevenson v. Snow, 8 Burr. 1237, 1 Wra. Bl. 815. Ti/iie v. Fletcher, 8 Cowp 668. Ronihv. 2'A«mp«ort, 11 East 426, l3 Kast 428. Jiermoit, v Wood- bridM,2 Doug. 781. Stune v. Marine Co. 1 Ex. D. Hi, 4:) L. J. Kx. «61, 34 L. T. N. S 490, 24 AV. R. 554. ■ ■ 2Purk768{8th('d.). Martin v. iiitweU, 1 Shuwur U>1, Himuud v. JiojfUell, 1 Doug. 2U8. 66 THE PREMIUM. *83 proper io the amount actually in the result insured by or payable under that policy (i). Tills is a furtlier cons»quence of the principle that if the property insured never comes within the terms of the written contract, the insurer never has any risk (A). It does not matter whether the insurance was made in expecta- tion of an interest or in over-estimation of the value thereof. The ap]:)lication of the contract is limited to the amount really at risk, and if the premium U paid upon any greater amount, or any other risk, it is not paid fur what is within the contract. Insurers of the samo interest in the property, moreover, all rank together, since they all contract to indemnify in respect of the'same interest in the assured ; and, as they are bound to contribute propor- tionally in case of loss, they ouglit also to return the premiums proportionally where no risk attaches, or a less risk than that con- templated (0. Where the insurance is in expectation of interest, and it turns out that the assured in the end had no interest at all, the policy never attached, ancf the premium is repayable (m). No interest return of premium. — When the policy is void ab initio^ without any fault in the assured, and has never attached, the pre- mium is returnable, since the insurer has never been under any liability (n). These questions arise rarely in fire ami life insurance, *since, [* 83] as a rule, the interest in sucn cases is certainly known to the ' assured, and if he over-insures there is suspicion of bad faith. But a house may be insured in the mistaken belief that it is standing, when in fact it has already been burnt down, and a life ma^ ho insured in belief that the cestui que vie is still living when he IS in fact dead (o) — in both of which cases the premium must be returned. If risk run, premium can't be recovered. — As a general rule the right to the premium is indefeasible when the policy attaches (p). And when the risk insured against has once begun, the premium can- not be recovered back by the assured (g). The risk may attach only in part or only to some separable part of the subject-matter. In such cases the risk is divisible and the whole risk is not run. That portion of the premium whicli is ap- portionable to that part of the subject-matter to which no risk has (i) Fi^k V. Mastennan, 8 M. & W. 105. (k) Henkle v. Jioi/al Exchange, 1 A'cs Son . a09. {I) Goiiia V. London Asuumnce, 1 liiur. 490. Sou also Fisk v. Manlerman, 8 M. & W. 105. (m) liouthv. Thompnon, 11 Ka.st 428. (m) Furtailo v. Jtogerx, 3 B. & P 191 (o) Stone V Marine, dr., Co., 1 Kx. D. 490, 24 W. It. CM. Seo per Araphlet* B. (p) Mosen v. Pratt, 4 Cuinp 297. {q\ Lowrif V. BovriUeu, 2 Doug. 468. Tjfrie v. Fletcher, Cowp. 008. S/one v. Marim, Jkc., Co , uhi mpra, 8Q Oom V. nniee. 12 Eust 220. 81, 15 L. J. Ex. 801, 34 L. T. N. S. *85 THE LAWS OF INSUnANCE. If II i attached is recoverable (r). But if the whole contract is one and entire, and the risk has once commenced, there will be no return of ^ As regards life insurance, it was eariy laid down that where a policy was granted containing the common exceptions of suicide and cleath by the hands of justice, if the party commits suicide, or is executed within twenty-four hours of the granting of the policy, t.iere shall be no return of premium, on the principle that, although the death was caused by an excepted risk, the policy was operative so far as regarded the risks covered by it (0- [*84] *Insurer8 not infrequently stipulate for a powei t ) termi- minate the risk at any time'during its currency, upon notice and repayment of a proportion of the premium. This option is probablv taken to enable them to write off risks wh< n the course of their' business during a particular year renders it prudent to do so, or to enable them to get rid of a liability where, after insurance, they find grounds for suspicion. In time policies no apportionment of premium or risk is usually allowed (x). This rule would apply crnisimUi cam to insurance other than murine ; but such contingencies, though conceivable, are rare. Divisible risk and 'premium. — Insurances against fire are usually mude for an entire antl connected portion of time which cannot be severed, and the premium paid as a j»rice f -r taking the risk as a whole. The doctrine, therefore, as to divisible contracts rarely if at all applies to fire insurance iy). But vovAge policies c in be made agaiiistfirefor land journevf, and insurancts made against firo within a certain locality on special goods (z). And if fire ))y a cause not insured against occurrt d on the day after the policy oegan to run, the at^sured could neither rec«»ver his premium nor a proportionate part thereof (a). And if goods or house insured against fire are assigned, the premium for the period of unexpired risk cannot be recovered, nor tlio benefit of the policy passed (6). The fire offices, however, usually do equity by recognizing the as.-i<:nce by [*85] indorsement on the policy or entry in the insurers' *book8. But they cannot be compelled to do so by agreement be- tween the parties (c). The risk on life is divisible to a certain extent. The risk in cer- (r) Stevenson v. Smm, 3 Burr. 1238, 1 Wm. Bl. 315. is) BermoH v. Woodbridge, 2 Doug. 781. (0 Ibid. 788. (x) Loraine v. Thomliwon, 2 Doug. 685. (y) Ellis Ins 24. Woodward v. Itepublic Fire Co., 32 Hun. 365. (z) Pearson v. Commercial, 1 App. Cas. 498, 45 L. J. C. P. 761, 88 L. T. N. 8. 445, 24 W. R. 951. (a) Tyrie v. Fletther, 3 Cowp. '666. (6 Sadlers v. Badcock, 2 Atkyns 554, 1 Wilson 10. Lynch v. Dahell, 4 Bro. p. C.431. (c) Bank of New South Wales v. North British and Mercantile, 8 N. S. W. iLaw 60. 90 {d) J Cope V. («) L 68, 1) B Q. B. I (./■) %{ i) I k) I 1)1 V. Sun THE PREMIUM. 86 tain Isititudes varies from that in others for certain races and con- stitutions. If a policy is made with licence to go into a region of greater risk with a premium proportioned to the greater risk, if the man does not go he can get back his extra premium, and he is not in the least obliged to go by getting the licence. Whether insurance yearly or quarterly. — If premiums are payable ytarly, the insurance is from year to year; if they are paid halt- yeurly or quarterly, the insurance is from half-year to half-year or quarter to quarter. Illegal insurance. Recovery of premium. — If an illegal insurance be effected, the parties being in pari delicto, t*»o asisured cannot in the event of loss recover the insurance money, nor can he recover back the premiums he has paid {d). If the risk has been run and no loss occurred, the assured cannot recover back his premiums (e). In b< (th these cases the contract of insurance would be execute.ii^< IMAGE EVALUATION TEST TARGET (MT-3) . never attaches. [*87] *Recov^v J premiums by creailor over-insuring. -r-ln Lower Canada a'c..\ ''tor, who in good faith over-insured his debtor's life, was h/.a eiilitled to a return of premiums as to the excess, there having beta no intention to defraud, but only a mis- take as to law (r). Effect ojfraitd on return of premiums— FremmmB paid on an as- Buraijce oidaiiied by actual fraud on the part of the assured or his agent cannot be recovered back. Tiie insurer thus gains one or more premiums by an unsuccessful attempt to defraud him, and the apsured is to that extent fined for his fraud ; but to let the in- sured recover his premium would allow him to allege his own wrong as a ground of relief («). Altering the policy by adding words which would materi ally change its effect will amount to fraud and have the same result (t). Equity, however, will only decree the delivery up ot a fraudu eiit and therefore void policy, when the insurer, si eking relief, oflfera either to repay the premiums paid, or to submit to an| terms which the Court may think fit to impose in granting such relief, which will include the repayment of premiums. To hold otherwise would be to let the insurer affirm and deny the contract in one breath {u). And this rule is applied even in cases of gross fraud or crime on the part of the assured ; thus in Prince of Wales v. Palmer the assured effected a policy in his brother's name and on his brother's life, and was de- clared by a coroner's jury to have poisoned his brother. Under these cirt umntances the policy wan, at the suit of thfe insurers. [*88] of couiSH declared void ; but the insurers were *not allowed to retain the premiums, which were ordered to be applied iu (m) Londm Life Co. v. Wright, ft Cumula (S. C.) 407. n) HoUsoH V. Olmrver, 8 E. & B. 40, 2« L. J. Q. li. 808, 20 L. T. 278, 3 Jur N. S. 1125, 6W. 11, 712. (o) Vollctt V. Morrison, 9 Huie M12, 21 L. J. Ch. 87!!. {p) JJowker v. Canada Life, 24 U C. (Q 11 ) G!H. (q) Wainwiiaht v. Jiland, 1 M. &. R 481, 1 M. & W. ;12, 5 L. J. N. S. Kx. 147. (»•) Lapierrey, hmdonand Lanroiihin; Life Co. (1877), 2 StuvoiiH Quebec Dig. m). (x) Chapman v. tVam', Piirk 4M\. Taylor v. Cheater, L. H. 4 Q. l\. 'M). (t) Langhom v. Cologun 4 Tuuiit !J150. (m) l)e Costa v. Seandret, 2 P. Wm». 170, per Miicclesfield, C. (l«8it}. Whit- tinyham v. Thornborough, 2 \vn\, 206, Prec. Ch. 20. Barker v. Waltern, 8 Boav. U2, 00, per Lord Luiigdule. 92 THE PREMIUM. *89 payment of the costs of all parties, and the residue paid into Court >vitli liberty to anply (x). Poiiq^ cancelled. Return of premium. — On the pamo principle, in the case of a policy of life insurance which had bern obtained by liaud, the first underwriter being simply a decoy duck to induce other persons to sign, the policy was set aside at the suit of the in- surer, with costs, and the premium received on tlie policy was di- reted to go in part payment of the costs (y); and where a merchant, iiaving heard that his ship was in danger, insured her without dis- closing to the insurers what intelligence he had received. Lord Macclesfield held that the concealing of this intelligence was a iraud, and decreed the policy to be delivered up with costs, but the premium to be paid back, and allowed out of the costs (2). Return of premium where misrepresentation. — Where a policy is avoided by concealment or by misrepresentation not fraud ulent, the assured is entitled to a return of the pn mium. The policy is itself conclusive evidence that the insurers have received the pre- mium (a). Form of order. — The form of an order setting aside a void con- tract of insurance, the insurers returninjj^ the premiums, is as fol- lows : — " The i)laintiffs (the company) being willing, and hereby oif- ftring to return the premiums, declare that the acceptance by the plaintifi's of the defendant's life was void and of no effect, that they were not bound to deliver the policy, and that the contract be de- livered up to be cancelled " (6). ^Fraud of insurer. Return of premium. — A premium paid on [* 89] an insurance obtained by fraud on the part of the insurer may be recovered by the assured (c). In Carter v. Boehm, Lord Mansfield well observes that the principle on which this rule rests governs all contracts and dealings. " G ood faith forbids either part y , l-y concealing what he privately knows, to draw the other mto a bargain from his ignorance of that fact, and his believing the con- trary." Parties not in pari delicto. — So also the premium is rccover.ible when the contract is illegal and the insurer is nioru in the wrong than the assured, the parties not being in pari delicto (d). Premiums forfeited where so agreed.— iho insurers may and usually do stipulate as one of the terms on which they will insure, that in certain events («. g., in case of any untrue statement by the assured) (a;^ Prince of Wales Co. v. Palmer, 25 iVeiiv. f.05. /) (y) Whittmqham v. Thornbnrminh, 2 Veru. 20(1, Prec. Ch. 20. («) De Cmt'a v. Srandret 2 P. Wiuh. !(»!). Soe Duckett v. Williams, 2 Cr. & M. 848, »L. J N. 8 Ex 141. (a) AiiilersoH v. Thornton, 8 Ex. 425. Feiae v. J'arkinson, 4 Tuuiit. 040. New York Life v Fletcher, 10i)uviH (Sun. Ct. U S.) filH. (b) Luudoii Asmrance v. Afansell, 11 Ch. D. 372, 48 L. J. Ch. uai, 27 W. K. 444 (c) Carter y Jioehm, 8 Burr. 1909. Duffellw. Wilson, 1 Camp. 401. (a) Tjovry v. liourdieu, 2 Doug. 472, nor Lord Mauafield. iJowkcrv. Canada Life, 24 U. C. (Q B) 091. 03 m l''h ^hl m *91 THE LAWS OF INSURANCE. I 111 I ' !: i!' the premiums paid shall he forfeited. When the parties have thue contMcted atnl the prescribed events happen, the premiums which the assured has paid cannot be recovered back by him even though the untrue st itement shall have been made quite innocently (e). Such stipulation is made by way of condition in the policy. The events usually stipulated for are "avoidance of the policv by any untrue or incorrect statement ia the declaration, or breach of warranty, or condiiion." ,,. . , . „r. Assured canH compel insurer to accept additional premiums. — Where the rislc has been insufficiently disclosed, or misrepresented, or materially altered or varied during the contract, the insured has no right, either legal or equitable, in the absence of any special stipu- lation in the policy, to compel the insurer either to take an [* 90] enhancedpremiumor to return any portion of the *premium paid. Nor can he in case of a loss recover the policy -moneys on the tender of the premium usually charged by the insurer on the actual risk run. Such conduct or events entitle the insurer to en- force a forfeiture or to waive it at his own option (/). Amx)unt of premium, evidence of materiality. — When questions arise ns to the materiality of facts not disclosed, the amount of premium which would have been charged on a risk, including these facts, is evidence to show that knowledge of the facts would have been ma- terial or immaterial to the insurer (^). It seems that if a premium be paid to the agent of an insurer in respect of a contract known, or which ought to be known, to be outside the scope of his agency, it is not recoverable from the in- surer (h). Excess of authority by agent return of premium. — It may be observed that if the insurer receives the premium from his agent with knowledge of the nature of the insurance effected, he ratifles such contract, except in certain cases, in which the insurers are corpora- tions with limited powers, and such ratification is idtra vires. But even there profit by an ultra vires act is unconscientious, and the assured can maintain an action for the premiums, and if the insur- ance company is in liquidation may prove tor the same (t). If a policy be issued in fraud of the insurance company, the company would be bound to account to the assured for any benefit derived from the premiums (k). [* 91] *Return ofpremiumbyagreement—Agreementsmay be made (e) Anderson v. Fitzgerald, 4 H. L. C. 484. 17 Jur. 003. Thomson v. Weems, App. Cas. 671, 082. Durkett v. WUliams.Z L. J. N. S. Ex. 141, 2 Cr, &. M. ;J4«. If) Sean v. Agricultural, H2 U. C. (C. P.) 686. ih) Re Universal Non-Tariff Co., Forbes' claim. 10 Eq. 486, 44 L J. Cl». 7«1. ^^ yj^\.i^^' ■''""'^" " Pander, L R. Q B 631, 43 L. .1. N. 8. Q B. 227 1*^ ■' 1' ^\.%. "*'; i^ ^- ^' ^' ^if''^^' ''• Dun^ord, 14 East 404. Lynch v. JIamiltun, i) Tumit 37. ^ Ih) De Winton's Case. 84 L. T. 042. (»■) Burgess and Stock^s Case, 2 J. & H 441, 81 L. J. Ch. 740, 10 W. R 810. (A.) Athenasinn Life Insurance Co. v. Iholeu, 8 Do O. & J. 204. 28 L J. Ch. 878, W . R. 866. Brown's claim, 10 W. R. (M2. 94 THE PREMIUM. *92 for return of a part of the premium in certain events or on the doing by the assured of certain things. Such agreements when made are to be construed by the Court. By them, if the insurer is given a discretion to return the part, the Court will not interfere with the exercise of such discretion by the insurer or his agents if reasonably exercised {t). In the absence of such a discretionary power reserved by the contract, the insurer will be bound to return the premium on the occurrence of the events or doing of the things specified. Policy at variance mthpropoacUa. Return of premium. — Where the policy does not accord with the proposals, there is no contract, and consequently the pi'emium if paid must be repaid (m), unless the variance is the result of mutual mistake, in which case the policy may be rectified. Premiums mmt be paid punctually. — Where it is stipulated that premiums shall be paid by a certain date, they must bo so paid or the policy is voidable' at the election of the insurers (n), who may, however, waive the forfeiture, but are under no equitable obliga- tion to do so, upon tender of the premiums due (o). If an agent is designated as receiver and is changed, delay due to such change not notified to the assured will not create a forfeit- ure (p). So also if a foreign company gives up its office in *the [* 92] domicile of the assured, and has no legally constituted agent there (9). Who to pay premiums. — Payment of premiums must be made by the assured or by his authorized agent. Payment by the volunteer is not performance of the condition in a policy (r). Whether demand requisite. — The insurer need not demand the pre- miums, and if the insured does not receive the usual notice' that a (l) Manhy v. Oresham Life Co., Beav. 439, 81 L. J. Ch. 94, 4 L. T. N. S. 847, 9 W. R. 547, 7 Jur. N. 8. 883, (m) Fowler V. Scottish Equitable Co., 4 Jur. N. S. 1169, 28 L. J. Ch. 226, 7 W. R 5, 82 LT. 119. (») See KleinW. New York Life, 104 U S (14 Otto) 88 (Sup. Ct. U S.), and Thompson y. Insurance Co., 104 U, S. (14 Otto) 252. Phaamx v. Sheridan, 8 H. L.,0. 745, 81 L. J. Q. B 91, 7 Jur. N. S. 174, 8 L. T. N S. f>04. (0) Cotton States V. Lester, 85 Am. Rep. 122, and cases in notes thereto. Thompson v. Insurance Co., 14 Otto (104 U. S. 258 (p) Insurance Co v. EgglesUm, 96 U. S (0 Otto) 572. Seaman^s Co. v JV. W. Ins. Co., 1 McOrajr (U S. Circ. Ct ) 608. (q) Dorian v. Positive, 28 Lr. Can. Jur. 261. (r) IVMting v. Massachusetts Cc 129 Mass. 240 See also Falcke v. Scottish Imperial Co., 84 Ch. D. 884. ^he fact that one, when his life insurance premitim becnmn due, was so sick and delifious until he died that he could do nothing; about it. Held, not a case of impossibility cause bv act of Ood, such us to prevent a forfeiture. Carpenter v. Centennial Mut L^e Asso., 68 Iowa 458. 'If uniform practice of life insurance company has been to notify insured of amount due on his prenium notes, it cannot enforce forfeiture stipuliited for in policy in case of his failure to pay promptly, where it fails to give him thu usual notice. Manhattan Life Ins. Co, v. Smith, ii Ohio St. ISO. Alexander v. Continental Im Co., 67 Wii. 423. 06 /I ' ''(ti mm 93 THE LAWS OF INSURANCE. "■' ' n 1 premium U dm:, and confequently oralis to pay within the days of grace, lio li w no equity to recover on a policy whicU lias lapsed or or b»en forfeited by the default, though such omission as aforesaid has i)een purely accidental and in no sense intentional («). But u company cannot set up the failure of Ihe deceased to pay premiums as a defence to an action upon the policy, where fronx the course of dealing between the parties the assured had aright to believe that notice would be given to him of the amount due when the compauy required it to oe paid, and that a receipt therefor would be sent to the bank (0- Days of grace.— When an insurance extends over a period of time during which more than one premium will become payable, a cer- tain number of days — called days of grace — thenumbe*' of which is usually fifteen,areallowed beyond thedueday for ther /mentofthe premiums. If a loss happen during these days of grace and whilst the premium is unpaid, the assured will have no right of action (except by express stipulation) for the amount of the policy.* The legal effect of the days of grace is not 1o entitle the assured to re- cover for a loss during those days whilst the premium is un- [* 93] paid, but to enable the insur mce to be *renevved and save tlie expense of a new policy and fresh stamps (u). tiffed of days of grace is to give time to renew policy. Insurer may terminate insurance at end of year notwithstanding days of grace. — In giving judgment for the defendants in Tarleton v. Slaniforthy Lord Kenyon said : "No policy is to have existence until the premium is paid by one party and accepted by the other. In this case the loss unfortunatelv happened in that interval of time when it was in suspense whether or not the policy would be renewed ; for tit that moment the plaintiff had not offered to nay, and of course the trustees had not accepted, the premium for the next half-year. I am therefore clearly of opinion that the defendants are not liable*' This decision was pronounced on the 4th July 1794, and in con- sequence of it the Sun Fire Office on the 10th of the same month puhlished in the public newnpapers an advertisement stating that "all persons insured in this office by ]»olicies taken out for one year or for a longer term are and always have been considered by the managers as insured for fifteen days beyond the time of tlie expira- tion of their policies." Afterthis advertisement one Salvin effected a p.ilicy and paid the premium, but before the expiration of the (it) Windm v. Tredegar, 15 L. T. N. S. 108 (H. L.). Thompnon v. Insuranct Co., 104 U 8. (14 Otto) 252. (/) Attorney-General \, Continental Lij\ 80 Hun (N. Y. 138 (11) Tarleton v. Stani/orth, 5 T. R. 005. Want v. Bttint, 12 Eust 188. («) Tarleton v. Stanifnrth, 5 T R. 00.1. "Where a policy does not ntipulate that failure to nay noto when duo ahull nvoid policy, mid where extension huH been granted, and death occurw before expiration of tune us extended, policy is itot uvoidod. KamM I'roteotiot Union v. WhiUt 80 Kan. 760. 96 THE PREMIUM. *9S year the office gave him notice that unless he agreed to pay an in- creased premium they would not continue the insurance. To this the assured refused to accede, and his premises were destroyed by accidental fire after the expiration of the current year, but within the fifteen days. The policy had been effected subject to the fol- lowing article : — " On bespeaking policies all persona are to make a depv sit for the policy stamp-duty, and shall pay the premium to the next quarter-day and from thence for one year more at least ; and shall, as long as the managers agree to accept the same, make all future payments annually at the *said office within [*94] fifteen days after the day limited by their respective policies, upon forfeiture of the benefit thereof; and no insurance is to take place until the premium is actually paid by the insured, his, her, or their agent or agents." When the lo's happened, the plaintiff had not paid or tendered the premium for another year, and the office resisted his claim. Lord Ellenborough, in giving judgment against the plaintiff, said : " The effect of the article and advertise- ment is to give the parties an option for fifteen days to continue the contract or not, with this advantage on the part of the assured, that if a loss should happen during the fifteen days, though he have not paid his premium, the office shall not after such loss determine the contract, out that it shall be considered as if it had been renewed; but this does not deprive them of the power oF determining the contract at the end of the term, by making their option within a ' reasonable tinie before the end of the period for whVsh the insur- ance was made. Where the premium is received the effect of it is to give the assured an assurance for another year, to be computed from the expiration of the first policy, and not from the expiration of the following fifteen days. The office cannot determine the policy after the year during fifteen days of the following year in case a loss should happen during that period. But the office has the power at any time during the year of saying to the assured, 'We will not contract with you again, wa will not receive from you the premium for another year;' and by such declaration the object would cease for which the fifteen days were allowed, and as no pre- mium would be in such case to be received, no indemnity could be claimed in respect of it. The consideration for the indemnity dur- ing the fifteen days is the premium which must be paid during that period, but when that cannot be any longer looked to or expected, the right to the indemnity determines also'' (y). ^Payment of overdue premium, insurer and inmred being igno- [* 95] rant that life hm dropped. — Payment of premium after it is overdue, and after the death of the life, of which both the insurer and the insured were unaware, will not rehabilitate the insurance 80 as to entitle the insured to the policy money (z). (y) Salvin v. Jatnea, East 671. («) Prikharda v Merchants', A'c, Co . 3 C. B. N. 8. 622, 27 L J. C, P. 189, 80 L. T. 818, 2 Jiir. N. S. 807, W. R. 840. 7 PORTER ON IMBURANCfi. 97 *96 THE LAWS OF INSURANCE. i£ Acceptance by agent of premium after days of grace.— TYie local agent of an insurance company has no authority to bind the company by the acceptance of the premium after the days of grace have expired. . , , DebUing agent with 'premium— yi&ee Aehiimg the agent with the premium by the company is not equivalent to a payment to the company by the assured (a). Acceptance of premium by agent after days of grace. — Acceptance of the premium bv the agent after the fifteen days, and debiting the game to him in the company's books, will not amount to evidence of a new agreement between the company and the assured (6). Promise by agent to pay premium. — A promise by the treasurer of an insurance company to see the premium paid does not bind the company, for he cannot pay them out of their own funds, and if he agrees to pay out of his own pocket the remedy of the assured would be against him and not against the company if he failed to do 80 (c). What amaunis to payment of premiums. Cross accounts. — Where two insurance companies had cross accounts, or insurances mutually granted, and, by their course of dealing, premiums due on policies effected by one company with the other were not paid in cash, but a receipt was given for each premium as if so paid within the time limitea for the payment, and the premiums were entered as paid in the accounts, the accounts were settled from time to time, the balance struck, and payment m i de of the balance. A recei pt [* 96] was thus *given for a premium on a f>olioy effeced by plain- tiffs with defendants within the time for payment, and the amount was enterel in account as paid by the plaintiffs. After the time for payment had elapsed, but before the next settlement of the current account, the life died. It was held that there had been a payment of the premium sufficient to keep the policy alive (d). And where the agents of an insurance company remitted to the company £100 "for premiums," such sum being in excess of the amount due, and the company had been urging the agents to renew certain lapsed policies, the contracts regardmg which had been ar- ranged, it was neld that although the company did not, in their books, specifically appropriate anv part of the £100 to the renewal of the lapsed policies, they must oe taken to have received the ex- cess part of such sum in respect of them («). Last premium due before death not paid. Policy-money paid by mis- take.— Mr. Solari effected a policy of insurance on his life with the (a) Frazer v. Oore District Co., 2 Ontario Rep. 416. (6) Atey v. Fernie, 7 M. & W. 151, 10 L. J. Ex. 9. Busteed v. Went of Eng- tenrf, 6 Ir. Ch. 558. '' ^ (c) litiffum V. Lafayette Mutual Fin, 85 Mass. (3 All.) 8eO. (rf) Prince of Waleit Asmrauce Co v. Harding, 1 E, B & E. 183 27 L J. Q. B. N. 8. 297, i Jur. N. S. 851. Busteed v. West of England Co, 5 Ir. Ch. 518. (e) Kirkpatrick v. South Australian Insurance Co., 1 1 App. Cos. 177. •ft THE PREMIUM. *98 Argus Insurance Company, and died without having paid the last premium. The actuary of the company informed two of the di-' rectors that the policy had lapsed by reason of the non-payment of the premium, and one of such directors wrote on the policy in pencil the word "lapsed." Subsequently, however the insurance- money was paid to the executor of Mr. Solari, the directors who drew the cheque having forgotten the lapse of the policy. Lord Ab'nger, in giving judgment, said: "If the party taakes the pay- ment with full knowledge of the facts, although under ignorance of the law, there being no fraud on the other side, he (tannot recover it back again. There may be also cases in which, although he might by investigation *iearn the state of facts more ac- [* 97] curately, he declines to do so, and chooses to pay the money notwithstanding. In that case, there can be no doubt, he is equally bound. Then there is a third case, where the party had once a full knowledge of the facts, but has since forgotten them. I think the knowledge of the facts which disentitles the party from recovering must mean a knowledge existing in the mind at the time of pay- ment" (g). Insunince " lost or not loaV No return of premium. — When the risk is undertaken in any event, whether the thing to be insured is lost or not lost, burnt or not burnt, living or dead, the risk is based on the uncertainty in the minds of assurer and assured, and no re- turn of premium can be had, except for fraud of the insurer, since Ihe policy attaches (when made) irrespectively of the condition of the subject-matter, such a policy being* grounded on ignorance of both parties as to the state of the thing insured, instead of on, knowledge of its safety and soundness {h). Premiums not apportinnnble. — Premiums are especially excepted from the operation of the Apportionment Act, 1870 (t), wnich enacts that "nothing in this Act contained shall render apportion- able any annual sums payable in policies of assurance of any de^ script ion." Refusal to receive premiums. Remedy. — Refusal to receive pre- miums after the risk has been accepted is ground for action for damages ik), and it would seem that an action will lie for specific performance of a contract to insure or grant a policy (I) or for a declaration that there is a valid and subsisting insurance. * Where policy ultra vires premium must be returned. — Where [* 98] (g) KeVy v. Solari, 9 M. & W. 64, (A) Giffard \. Quern Insurance Co , 1 Han. (New Bruns.) 482, 489, per Ritchie, C J., HOW C. J. ot Supreme Court of Canada. (f ) aa & 34 Vict. c. 35, 8. 0. (k) M'Kie V. Phfxnix, 28 Missouri 383, Dai/ v. Connectiait Co., 45 Conn. 480, (I) Ijinf,ml V. Provincial Hor.se and Cattle, he hands of the (a) Sibbald v. HiU, 2 Dow (H. L) 268. (b) Firfc per Shee, J., in Bates v. Hetoitt, L. R. 2 Q. B. 595, 810, 30 L. J. Q. B. 282. 15 W. R. 1172. See art. 2485, Civil Code of Lc. Cau., which accords with English Law. (<■) Isaacs V. Royal, L. R. 5 Ex. 296, 89 L. J. Ex. 189, 22 L. T. N. S. 081, 18 W. R. 982. (dj Crowley v. Cohen, 8 B. A Ad. 478. 1 L. .T. N 8. K. B. 158. Joyce v. Ken- aard, L. R. 7 Q. B. 78, 41 L. J. Q. B. 17, 25 L. T. N S. 932, 20 W. R. 288. (e) Boehm v. Combe, 2 M & S. 17:/. 101 ♦101 THE LAWS OF INSURANCE. consignee or other specified determination of the transit, but it will not continue during a deviation '(/}. In some cases the carrier makes himself the insurer. Thus railway companies will grant in- surances on goods carried by them for the safe carriage of which they are not liable under the Carriers Acts. No questions as to days of grace or the like can arise on voyage policies, since ander the contract the liability lasts for the whole journey. The real ques- tion is, what constitutes arrival? A common case of voyage poli- cies on land risks is that of railway insurance tickets for a particu- lar journey. Undoubtedly these would not cover an intentional deviation from the route for which they were issued, but would cover risk of an accident caused by the points going wrong, and diverting the train from the direct route to a branch line. Before delivery oj policy. — The commencement of the risk in the absence of special stipulation is not conditional on the de- [* 101] livery to *the assured of the policy, provided that the first premium is paid, and that the contract is in all other re- spects complete, and in such a case even death before complete de- livery of the policy is no bar to recovery unless so stipulated (9). And where a fire occurred after the deposit was paid to an agent, but before the policy was issued, the company was held liable (h). Risk entire.— -The risk taken is entire. If it has once attached no apportionment of premium can take place, even if the policy sub- sequently becomes forfeit (i). Questions occasionally arise as to whether the risk is taken from year to year or from quarter to quar- ter (k) ; and in a case where, the annual premium ouing payable by quarterlv installments, with a proviso tnat, if the assured should die before the whole of the quarterly payments become payable, the company should retain from the sum assured sufficient to pay the whole of the premiums for that year, the party died within the first twelve months after the third quarterly installment was due but before it was paid, it was held that the assured could not recover, as the installment had not been punctually paid (/). Poliq/ — covers several losses up to amount insured.— A policy for a vear covers all losses within the year up to the amount named. If nalf-a-dozen small fires happen, the insurer must pay the damage on each. And it would s'em that if a fire to the full amount hap- (/) Pearson v. Commerciai Union, 1 App. Cas. 498, 45 L. J. C. P. 7(51, 35 L T. N. S. 445, 24 W. R. 95 1. But see Charleston Railroad Co.. v. Fitchlmrg Mutual Fire, TA Mass. 64, where carriages in use on a railway .were held to bo insured on a branch not owned by the assured. {g) Cooper v. Paeific Mutual, 8 Am. Rep. 706. Newman v. Belsten, 7G L. T. 228, affd. in C. A. Feb. 14, 1884. Canning v. Farquhar, 16 Q. B. I>. 72,7. 55 L. J. Q. B. 225, 34 W. R. 423. .> i ^ (A) Mackie v. European Assurance Co., 21 L. T. N. S. 102, 17 W. U <)87. (f ) T^ne V. Fletcher, 2 Cowp 668, 83 & 84 Vict. c. 85. {k) Want V. Blunt, 12 East 183. (t) Phmtix Life Assurance Co. v. Sheridan, 8 H. L. C. 745, 81 L. J. Q. B. 01. 8 L. T. N. 8. 664, 7 Jur. N. S. 174. vj . wi, 102 THE RISK. *103 pened for which the assured was indemnified from other sources, his policy would still be alive for the rest of his year and in case of another tire (m). ♦This view must,iti88ubmilted,becorrect,foritwouldseem [* 102] absurd to contend that if a pair of curtains had been burnt and paid for, the whole liability of the insurer waa thereby extinguished for the year (n). The only mode of extinguishing liability during thp year is actually paying damage to the full amount insured. On the other hand, as soon as the maxium sum insured is paid in re- spect of a loss, the insurer's liability is exhausted, although the year has not expired. Termination of fire risk. — In fire policies the insurers frequently reserve the right to terminate the insurance either at the ^ud of a year or period for which a premium is paid, or at any time on re- paying the unearned proportion of premium. If they elect to terminate before, but do not repay the premium till after u fire, it would seem their election is still valid (o), as the notice may operate from its delivery, and need not name a future day for termination (p). Notice to the assured's agent for procuring the insurance will usually be insufficient. Under ordinary circumstances the notice should be given to the assured himself (y). Duration of risk. — The duration of a life risk is purely a matter of contract, and it depends on the terms of the policy under which each insurance is made whether the insurer can, or cannot, termi- nate the insurance and refuse further premiums. Word ^^from." — The dates between which the policy is expressed to endure may be exclusive or inclusive, according to the form of expression used, and the context and subject matter. In old poli- cies the words "for one year from the date" are found, and that raised a doubt *whether the first day was exclusive [* 103] or inclusive (r). At present all well-drawn policies name the days when insurance will begin and end, and whether such days are exclusive or inclusive, and even the hour of the day at which the insurer's liability ceases. If the hour were not specific d, the insurance would continue to the last minute of the day, for ambiguous and doubtful phrases would be construed against the company. " Verba fortius accipiuntur contra proferentem." mrrd ''^unW — The word "until" in a policy of insurance in- (m) Smith v. Colonial Mutual, 6 Victoria L. R. 200. See Crawley v. CoheiL 3 B. & AU. 478, 1 L. J. N. S. K. B. 158. (h) Soo Crawley v. Colien, 8 B. & Adf 478, 1 L. J. K. B. 1G8 (1832), deciding against a cuiitcntion that the policy was exhausted when goods to the amount named therein had been carried in the plaintitTs canal barges. («) Cain V. Lancashire^ 9.1 U. C. (Q. B.) 217. (p) Ibid., 453. ((/) Grace v. American Insurance Co., 109 U. S. (!i Davis) 278. • (r) Piigh V Duke of Leeds, 2 Cowp. 714, Lou' Holt's view in Howard' h Case^ 2 ball*. yal Exchange, L. R. 5 Ex. 290, 39 L. J. Ex. 189, 22 L. T. N. S. G81, 18 W. R. 982. 103 11 M M *104 THE LAWS OF INSURANCE. i i' ■|' cludts and extends the insurance over the last daj; of the period for which it is eflfected. Thus certain goods were insured against fire by a policy in which the insurance was expressed to be "from the 14th Feb. 1868 until the 14th Aug. 1868, and for so long after as the assured should pay the sum of 225 dollars at the time above mentioned." The goods were burnt in the night of 14th August 1868, the insurance not having been renewed, and it was held that the insurance continued during the 14th August, and the loss was therefore covered by it («). Life polides. Duraiim, of risk. — If a man receives a mortal wound or contracts a niortal disease within the period for which the insur- ance is expressed to continue, death must ensue within such period to enable the policy-money to be recovered. Death must occur dvr'mg insurance. — If it occurs ever so short time afterwards, the liability of the insurer is extinct (O- Life policies being in most cases for whole life, the question arising id usually not whether the death is within the time, bat whether it is within the terms of the policy. But the other case occasionally [* 104] ariet 8. Men have ^sometimes been too ill to think about business when the time for paying their premiums come (m), and if they die of the illness without the premium having been first paid, their representatives are at the mercy of the insurers. The Court will construe the policy according to its express terms, and will not hold it sufficient that the conditions therein contained had been complied with as nearly as may be. Cy prhs doctrine in- applicable.— In Want v. Blunt (x) the stipulation was that the as- sured should pay the premiums on a certain day with fifteen days' grace. He died within the days of grace, and nis executors paid the premiums within them. But the Court of Queen's Bench in- terpreted the policy as meaning that the assured must be alive to pay the premium, and that the policy had expired in the ordinary course on the day when the new premium fell due (v). Elements of the risk. — All facts and circumstances diminishing or increasing the likelihood that the event insured against will happen sooner or later are elements (z) constituting the risk to be under- taken by the insurer. Perils ab intra, — In insurance against fire an exact (a) description is) Imacs V. Royal In/turaiice Co., L. II. 5 Ex. 2tM5, 30 L. J. N. S. Ex. 189. 22 L.T. N. 8. 081, 18W. 11. 1)82. (<) Lockyer v. Ottley, 1 T. R. 254. In uccideut policicH it is otherwiso by ex- press stipulHtion. (u) TTaHn'. ^f«M/, 12 East 183 (1810). (x 12 East 187. (y) III America a case occurred where a man on his way to pay his premium was i)ariilysed and died. Howell v. Knickerbocker, 4 Am. Rep. 676, 44. N. Y. 270. The Court, not unanimously, imheld the policy. (z) See Boi/d v. Jhihoh, 8 Camp. 133. Tat/lor v. Dunbar, h. R. 4 C. P. 2O0. 88 L. J. C. r. 178, 17 W. 11 382. (a) Freedlander v. London Assurance, 1 M. & Rob. 171. Dobaon v. Sothebv, M. & M. 90. '^' 104 THE RISK. *106 of property to be insured is most material in determining the risk (6). A wooden house in a town is for more likely to be burned down than a brick or stone building. A house in a street which has a party-wall running right up to the roof is not in the same danger from fires in adjacent buildings as one not so divided off. A *detached house is only subject to risks of fire from within. [* 105] And some articles, such as gunpowder and petroleum, are only insurable at very high rates if insurable at all, while iron and stone in an ironmaster's or stonemason's yard will rarely need in- surance at all. Insurers will not usually msure against the inher- ent vices of anything, such as liability to spontaneous explosion or combustion (c) ; so if a horse is to be insured his vices are elements in the risk, as would be the state of a haystack. Elements of risk. — When a house is insured, not only its character and construction are elements in the risk, but also its locality ; for an insurance against fire necessarily has regard to the locality of the subject-matter of the policy, the risk being probably different according to the place where the subject of insurance happens to be (d). This has been held of a fire policy for three months on a ship in wet dock with liberty to go into dry dock, and the assured failed to recover because the vessel got outside the permitted limits, and was there burnt («). Any special fact as to neighbouring buildings which would in- crease the risk must also be disclosed ; e. g.y that a fire has just hap- pened next door (/). If the thing insured is personal property, the removal of it usually ends the insurance (e). Locality had regard to. — There are many cases of land insurance on movable things, such as railway stock, carriages, agricultural implements, and goods in transit. In such cases the position of the thing is not so essential to *the risk as in insurance [* 106] on houses and furniture. But even they are insured within certain limits, and if burnt or lost outside these limits, there would be small chance of recovery {g). Thus if a Cheshire Salt Com- pany's waggon insured between Nantwich and London had, by mistake of the London and North-Western Railway, been carried m (6) Newcastle Five Co. v. M^Morran, 3 Dow. (H. L.) 235. Quia v. National Insurance Co , Jones jc Curey 310 (Ir). Stokes v. Cox, 1 II. & N. 320, 26 L. J. Ex. 113, 28 L. T. 161, 3 Jur. N. S. 45, 5 W. 11. 89. Sillem v. Thornton, 3 E. & B. 808, a W. R. 524, 23 L. J. Q B. 302, 23 L. T. 187, 18 Jur. 748. (r) Dudgeon v. Pembroke, 2 App. Cas. 296, 40 L. J. Q. B. 409, 80 L. T. N. S. 882, 25 W. 11. 499 (1. ItoUand\. North liritish and Mercantile, 14 Lr. Can. Jur. 09. M^Clnre v. Lancashire, !r. Jur N S 03, 72. (e) Gorman V. Uand-in-hand, Ir. L. R. 11 C L 2^*4; and as to the American views on tho subject see English v. Franklin Co , 54 Am. Rep. 377, and Notaa V. North- Western Co., 64 Am. Rep. 631. (/) Jhife V. Turner, 6 Taunt. 838. ((/) Pearson v. Commercial Union, uhi supra. Grant v. Etna, 8 Jur. N. S. 705, 16 Moore P. C. 510, 10 W. R. 772, L. T. N. S. 735. 105 4l *107 THE LAWS OF INSURANCE. I ■('■! I i r ! Ivf I! .:• Ri ;i off on to the North Wales line by the goods train which occasioned the Abergele accident, it would probably be open to the insurers of that waggon to contend that buch deviation relieved them, and that the London and North- Western Railway, only, if any one, would be liable. Life policy foca/.— And in the case of a life policy expressed to in- sure against ribk in a certain latitude, if the assured go to a more insalubrious latitude and there die, his representatives cannot re- cover on the policy (h). Locality. What within risk.— Tohaxico was insured as in Nos. 189, 191, of a street. It never was in either, but in 187. The Court de- clined to rectify the uolicy on the ground of mutual mistake, and would not alter it on the ground that the agents would have, with equal readiness, taken the risk in 187. Tlie ground of decision was that locality is important, and that if it is specified the risk cannot be extended. even to an adjoining building (i). Only those goods are within the risk M'hicli are in the place speci- fied. The policy does not cover them if removed, except by assent of the insurers attested by indorsement on the policy (k). [* 107] ^Insurance local. — In Rollnnd v. North British and Mercan- tile (0 (a Canadian case), Mackay, J., said, " The place in which things are is always a motif determinant of the contract. It is of the essence thereof that the things and their ])Osition should be known by both parties. When goods are insured in a building, all information should be communicated to the insurer to enable him io appreciate the risk; e. g., of what materials the building is, its situation, distance from other buildings, whether connected with others, and so forth. Full information necessary. — There must be perfect understanding as to the thing insured, otherwise there is no convention." And in mercantile fire policies, no risk id taken of goods loading or unloading unless specially bargained for. A fire risk does not incluae the risk of household furniture dur- ing removal, and it is consequently necessary either to insure (if desired) during removal, if it be to a great distance, or to make the carrier take the risk of fire. Goods covered ascertainable at date of fire. — Whether a policy covers goods in a place at the time of a fire, or only th»se which were there at the time when the policy was made and continue to be (A) Sco Reed v Lancaster Fire Co., 90 N. Y, 302. Fowler v. ScoULih Kntti- table, 28 L. J. Cli. 225, 4 Jur. N. S. HGO, 7 AV. 11. 5, .12 L. T. 11». (i) Severances Continental I n.sHratice Co , C Bissull (U. 8. Cir. Ct.) 15(1. See Pearson v. Commercial Union, 1 Apn. Cns, 428, supra. Jlordcn v. Cowmercial Union, 5 N. S. W. Law 809, nffil. in P. C. 18H7. Jtolland v. North JMtish and Mercantile, 14 Lr. Can. Jur. (19. Sampson v. Secunty Insurance Co., 188 Muss. 49. ^ ./ , (k) Theoltald v. Railway Passengers' Co., 10 Ex. 45, 18 Jur. 580, P8 L. J. Ex. 249, 23 L. T. 228, 2 W. U 528. M'Clure v. Lancashire Fire, lr. Jur. N. S. 68. RoHand v. North British and Mercantile, 14 Lr. Cun. Jur. (i!). (0 l4Lr. Can. Jur. 09. 106 THE BISK. 109 there at the time of the fire, depends on the wording of the jiolicy or whether the goods are generally described or specifically indi- cated (m). Following this rule, tho Irish Exchequer decided that new hay put on a rick which had been specifically insured, in substitution for hay which was thereon at tinae of insurance, was not within the policy (n). Jf goods not specifiedj fire policy covers all to amount named. — Where no specific description is given it would seem that a fire policy will cover goods in the place named ''to the amount, [" 108] regardless of the bringing in or taking out of particular (o) articles, and taking account only of the quantity on the j^remises at time of the fire and the interest of tho assured therein. But an ordinary fire policy is not like a merchant's floating policy in the mode in whicn the damage is calculated (p). The method indi- cated in Orowley v. Cohen (q) only applies to policies where tho risk is in several vehicles of transport. Nor will an ordinary household fire policy include tho property of visitors or servants. The risk varies as the mode of user, and insurers classify fire risks in buildings very much according to the use to which they are put. User of subject of insurance. — It is sufiicient to state the use. The assured need not communicate facts relating to the general course of the particular trade for which tho premises insured, or contain- ing the things insured, are used, as all these things are supposed to be within the knowledge of tho insurer (r). Insurance on vacant buildings. — That a house is empty also in- creases tho risk. But this would be rather because the house while vacant would be unguarded, than because such occupany comes under the head of user. In America leaving a house vacant is not deemed a sufiicient ground for avoiding a policy, except where special stipulations are made to that effect (s) ; ana even where the policy contains stipu- lations as to occupation, mere temporary absence is not deemed fatal to tho claim of tho assured (t). Where a statement of intention to use the thing insured in a particular manner*did [* 109] (»m) Hnlhead v. Vnuiiff, G E. it Bl 312, 3 Jur. N. S. 970, 25 L. J. Q. B. 2!)0, 27 L. T. 100, 4 \V. U. 530 Havrimn v. EllU, 7 K. & Bl. 4(55, 3 Jur. N. S. 908, 20 L. J. Q. B. 239, 29 I. T 7(1, 5 W. R. 494. (h) Gorman v. lland-iu-Uund, I. 11. 11 C. L. 224 (1877). lirUkh American Inmrance v. Joseph, 9 l^r. Can lien. 448. (o) Butler V. Standard Fire, 4 U. C (App.) 391, Jintinh Amen'ma Inmr- ance Co. V. Joseph, 9 l..r. Can. Rep. 448. Vrozier v. Phasnix Co., 2 Hun. (New BruiLs ) 200. (v) Thompson v. Montreal (1850), U. C, (Q. B.) 819, per Robiimoii, C. J. Peddic V. Qnettec. C«.,St»iurt (Lr. Cuii ) 174 (1824). iq) 3 B. k Ad 478, I L. J. O. S. K. B. l.")8. (r) IVr Shoo, J , in Dates v. Hewitt, 1.. R. 2 Q. B. 598, at 010, 28 L. .1. (J B. 282 15 W. It, 1172. is) Catilin V. Sprinafield Ins. Co., 1 Smniior (IT. S.) 434, per Story, J. (<) Shacklclun v. Sun Fire CJflcc, 54 Am. Rep. 870. 107 ^t^V no THE LAWS OF INSURANCE. not amount to a warranty that it should only be so used, the assured could recover although there had not been such user Steam-engine, user of. — The presence of a steajn-engine on premises must be stated, but when it is known to be there, it nee(^ not be confined to one specific use unless so stipulated; and a mere in- crease of danger in a new method of using a machine will not vitiate the insurance unless there be a condition to that effect (v). In Baxendale v. Harding a steam-engine was specified in a policy, but subsequently it was attached to a horizontal shaft which was carried through a floor and connected with other machines erected after the insurance was efiected. The insurers were unaware of the erection of these machines, but on the premises being burnt the as sured recovered from the company («?). Alterations. — Where alterations or new erections are made and as- sented to with or without extra premium, damage by fire origina- ting in the new buildings will be within the policy (x). And under an ordinary policy the insurers will be liable for a house altered during its currency if such alterations do not increase the risk. But there may be no liability for a fire occurring during the pro- gress of the work, as what is called *' builder's risk" is materially greater than that of an ordinary dwelling-house. Exceptional use of premises for purposes other than specified in policy, even thoxigh risk increased, does not prevent assured recovering. — In the absence of fraud a policy is not avoided by the circumstances that subsequently to the effecting of the policy a more hazardous trade has without notice to the company been carried on upon the prem- ises. Thus, where premises were insured against fire by the [*110] ^description of a granary and "a kiln for drying com in use"communicatmg therewith, the policy was to be for- feited unless the buildings were accurately described and the trades carried on therein specified ; and if any alteration were made in the building or the risk of fire mcreased, the alteration or in- creased risk was to be notified and allowed by indorsement on the policy, otherwise the insurance to be void. The assured carried on no trade in the kiln except drying corn, but on one occasion, with- out giving any notice to the insurers, he allowed the owner of some bark which had been wetted to dry it gratuitously in the kiln, and this occasioned a fire by which the premises were destroyed. Dry- ing bark was a distinct trade from drying corn, and more hazard- ous, and insurers charged a higher premium for bark-kilns than t\ xJ-^l ?J?"«V -^'««/»««''«»cc Co., 15 Mooro P. C. Alfl, H Jur. X. S. 70r., 10 W. K. 772, L. T. N. S. 735. p ir« ??ir"n^l^ ^- ^^^- ^««««''«'« V. Ilardinff, 4 H. & N. 445, 28 L. J. XiX' z ^^^ J" Angell on Insurance it is said : " Fire produced by the friction of a wheel in its axle, which consumes the wheel, is a loss of the wheel by fire. The burning of a barrel or other vessel containing quicklime which is accidentally submitted to the action of water, is a loss by fire as to the vessel, but the spoiling of the lime is not such a loss. So the spoiling or consuming of any two chemical fluids by process of combustion is not a loss by fire as to either of the substances, but as to any third body it is such loss. Similarly, heat or fire pro- duced by vegetable fermentation, as when a hayrick takes fire by its own heat, is not a loss by fire as to the vegetable collection, but as to surrounding bodies it is " (Angell 155). Explosion. — Insurance against fire does not include damage l-y mere heat and smoke from the ordinary fireplaces if there has not been natural ignition (g) ; nor will it include damage by ex- plosion, unless specially stipulated, *or there has been act- [*** 114] ually a fire within the building. On this ground the Courts refused to grant damages for injury to property by the explosion of the Erith Powder Mills in 1864 (A), holdingthat damage by atmos- pheric concussion by explosion caused by fire was too remote. Bramwell, B., explained fire as meaning either ignition of the article itself or a part of the premises where it is. Under this rule, damage by explosion within the house is not within the risk, even when it occurs in the course of a fire in tho house, nor is the damage by such explosion part of the damage caused by the fire (i). But it is usual to insure specifically against explosion of gas in domestic use, and by the word "gas" coal-^as for lighting purposes is meant, though, scientifically speaking, in- numerable other instances are of a gaseous nature (k). Explosion — In America, where an insured building was blown down and the wind was alleged to have blown fire into contact with escaping gasrs, the insurer was held not liable, as tho policy con- tained a condition against explosion unless fire ensued (/). Gunpowder — In America gunpowder is held a fire risk (?)»,), but (a) Avutin v. Drew, Taunt. C P. 436 (1816), 4 Camp. 360, Holt N. P. 126, 2 Marsh C. P. 130 ; and see Scripture v. Lowell, 74 Mass. 86G. (h) Everett v. London Asmranre, 10 C B N. S 120, 11 Jur N. S. 54G, «4 L. J. C. P. 2nn, 13 W. R. 802, N. 11. 234. In Tamiton v. The Royal, 8 11 &. M. 136, 83 L J. Ch. 400, 10 L T N. S. 150, 12 W. R. 549, it was held that a com- pany could as a matter of business pay for loss by explosion not covered by policy if it seemed in interest of company. (t) Stanly v. Western, L R. 3 Ex. 71, 87 L. J. Ex. 73, 17 L. T. N. S. 513, 16 W. R. 309. (A) Stanlei/ v. Western Insurance Co., ubi sup. [1) Triinmtlantk Fire v Dorset/, 40 Am. Rep. 403. (m) Waters v. Merchants, 11 Petew (U. S.) 218. Ill *116 THE LAWS OF IN8UBANCE. t ■\, I in this country risk of explosion by gunpowder is expressly ex- cluded in ordinary policies on house or furniture, and most it not all policies of insurance contain a condition that the policy is to be void if at any time there is more than a certain amount therein stated of gunpowder kept on the premises, unless special provision be made therein for the storing of a larger quantity. [* 115] *Such a condition is not unreasonable, and breach there- of avoids the policy, and the condition is not discharged by specification in the policy of the stock-in-trade as including hazardous goods (n). Though gunpowder was described in one condition indorsed on the policy ad of the class hazardous, this condition could not be held to control the express limitation in another condition of the amount of gunpowder which the insurer would allow under the policy; and where a form of policy intended for houses and goods was granted to a vessel plying on the Canadian lakes and rivers, without striking out the conditions inapplicable to the vessel, but adding that the provisoes, &c., should take effect so far as applicable, the Privy Council held that the gunpowder condition applied and had been broken (o). Loss. Proximate cause.— It must be shown, if required, that the loss was proximately and immediately (not remotely) caused by one of the perils insured against (p). Usually this is a question of inference from the facts proved at the trial, or interpretation of terms used in the policy (q). Excessive applicakon of heat in manufaduring. — Where the insur- ance is against fire, damage by excessive heat applied to manufactur- ing purposes, but without ignition, is not within the policy (r). Nor is damage by hot water a fire loss within a marine policy {s). Lightning. — Even the danger of lightning is excluded [* 116] from the fire *ri8k, unless it actually ignites the insured property or part thereof. Electricity is not fire in the popu- lar sense, nor is damage caused by it necessarily damage by ignition. Policies usually give the assured notice that the insurers will not take the risk of damage by lightning unless it fires the subject-mat- ter (0 ; and this not to contract themselves out of a Common Law (n) M'Ewan v. Guthridge, 13 Moore P. C. 304, 8 W. R. 2C5. (o) Beacon v. Gibb, 1 Moore P. C. N. S. 78, 9 Jur. N. 8. 185, 77 L. T. N. S. 674, 11 W. R. 194. (p) Marnden v. dti/ and County Aeaurance, L. R. 1 C. P. 232, 86 L. J. C. P. 60, 14 W. R. 106 Everett v. London Assurance, 19 C. B. N. S. 126. 84 L. J. C P. 299, 13 W. R 862, 11 Jur. N. 8. 546, N. R. 234. (q) New York Express Co. v. JS'adeTs' Insurance Co, 132 Mass. 337. /M.v«r- ance Co. v. Ti'anapoitation Co, 12 Wallace (U. 8.) 194. Ir) Atkinson v. Newcastle Co., L. R. Ex. 404, 2 Ex. D. 441. (*) Siordet y. Hall, 4 Blin^ 607 See While v. Republic Co., 61 Maine 01. Imis V. Springrfleld Co., 76 Mass. (10 Gray) 189. City Insurance Co. v. Corliea, 21 Wend. (N. Y.) 867. Casey. Hartford Co., 18 Illinois 070. Witherelly. Maine Insurance Co., -19 Maine 200. (0 Everett v London Assttrance, 10 C. B. N. S. 126, 04 L. J C. P. 299, 18 W. B. 862, llJur. N. 8. 646. 112 THE RISK. *117 liability (u) but simply to protect themselves against unfounded claims. In this, as in many cases, the policies merely bring to the notice of the assured the ordinary rules of insurance law. The practice, however, of insurance companies seems to be changing, and many companies now announce that they will take lightning risks, which, however, are found in practice to be infinitesimal.' Negligenee. — A fire risk covers on the negligence of the assured, his servants, and strangers (x). An insurance on goods carried by land will usually cover negligence of the carrier, his servants ana agents; and risk of miscarriage generally (y). No wilful act of the insured is covered (z). But -^rson by a wife will not disentitle the husband from recovering if no crime be shown to have been com- mitted by him (a). Gross neglect has in America been held guaei ex male-fido, and in- consistent with good faith (6\ *Risk from incendiary shauld be diacloaed. — Since fire poll- [*117] cies usually (c), but not always (d), cover risk of incendia- rism, the existence of any circumstances making an applicant liable to have his propertjr burnt may be material to be known by the insurer. If a man has from his unpopularity, or from any other cause, good reason to fear that fire will be set to his premises, and he in- sures without mentioning the fact, his policy will be void for breach of good faith; for it is clear that an attempt or threat to set fire to property on which insurance is sought is a fact of great importance lor the insurer's consideration, and presumptively always material to the risk (e). So also d fortiori attempts made to bum the property must be disclosed (/) if recent enough to be in any way material. (tt) Babcockv. Montgomery^ Ac, Co., « Barb. (N. Y.) G37 (1849), fully dis- cusses the question as to lightnmgj and decides that destruction by lightning is not within a fire risk, unless there be ignition. (x) Busk V. Roijal Exchange. 2 B. & Aid. 73 Gibson v. Small, 4 H. L. C. 8r)3. Shaw V. liobberds, 1 N. & P. 279, 287, 6 Ad. & E. 76, 6 L. J N. S. K. B. 106 Dobson v. Sotheby, 1 Mood. & Mai. 90. Attatin v. Drew, 6 Taunt. 436, 1 Holt N. P. 126, 4 Camp 860, 2 Marsh C. P. 130. iy) Boehm v. Combe, 2 M. & 8. 172. Columbia Co. v. Lawrence, 10 Peters (U. 8.^507. Phoenix Insurance Co. V. Erie and Western, &c., Co., 10 Davis (Sup. Ct. U. S.) 812. («) Thurtell v. Beaumont, 1 Bling. 339, 8 Moore C. P. 612, 2 L J. C P. 4. (a) Midland Insurance Co. v. Smith, G Q. B. D. 661, 60 L. J. Q. B. 329, 46 L. T.N. 8. 411, 29 W. R. 850. (6) Fletcher v. Commonwealth, 86 Mass. (8 Pickering) 421. Cf. Dalloz Jurisp. gen., 1668, p. 29. (c) Midland Insurance Co. v. Smith, Q. B. D. 661, 60 L. J. Q. B. 829, 46 L. T. N.S.4U,29W. R.860. (d) Gorman v. Iland-in-Hand, 1 R. 11 C. L. 224. (e) Watt V. Union Ins. Co., 6 N. S. W. Law 48. North American Fire v. Throop. 23 Mich. 167, 7 Am- Rep. 638. Walden v. Louisiana, dtc., Co., 12 Louis. O. S. 184. (/) Beebee v. Hartford County Insurance Co , 26 Conn. 51. Haws vs. Philada. Fire Asao , 114 Pa. St. 431. Boright v Sprinafteld F. S •H 2i M. Ins. Co., 84 Minn. 352. 8 PORTER ON INSURANCE. 113 *118 THE LAWS OF INSURANCE. i! '' ' b ■■ :!!■ Neighbour's danger material.— So also if a neighbour of the as- sured is threatened with en incendiary fire, and the adjacency of the tenements makes risk to him risk to the applicant (g). This would appear to follow from the general rule that material facts must be disclosed unasked (A). ^ ., , ^, ^, , ^reat during jpopular excitement— But if the threat be merely one made in time of^popular excitement, which haa subsided some time before application for insurance, there will no need to mention it(i). Questicm as to threats.— ^Vhere the insurer asks in the ap- r* 118] plication form *whether the applicant has any reason to fear an incendiary fire, the question must be truly answered or the policy will be void. If threats have been made, he must disclose them under such a question, which goes to facts rather than his impressions. Reasmahle fear. — What a man has reason to fear must be deter- mined by considering what a reasonably prudent man, not an ex- tremely timid or suspicious man, would consider gave him some reason for believing in the existence of danger. He may not be bound to mention every idle rumour (k), but the smallest measure of duty imposed upon him is to disclose what would seem to a reasonably prudent man to imply some risk. Care by assured not alter duty to disclose. — The duty to answer such questions by stating threats made is not altered by their having induced the applicant to take additional care (/). And to the question, *' Is any incendiary danger apprehended or threatened?" a negative answer would in the same circumstances be untrue (m). Evidence of fear. — ^Where a man to such a question answers "No," while he is at the very moment showing his direct dread of an in- cendiary fire by watching against it and seeking insurance, such acts are strong evidence that he had reason to fear such fire (n). Onus of proof on insurer. — Even where incendiary fires are ex- cepted from a risk, the onus of proof that the fire was deliberately caused lies on the insurers ; ana if the evidence leaves it doubtful whether the fire was caused by accident of design, the judge is right in refusing to direct a verdict for the insurers (o). ig) Ch. Bufe v. Turner, 6 Taunt. 838. (A) Lindenauy. Desborough, 8 B. & C. 586. Carter v. Boehm, 3 Burr. 1905. (»') Ketty V. Hochelaga Co , 24 Lr. Can. Jur. 298. Goodvoin v. Lancashire Fire Co , 18 Lr. Can. Jur. 1. See Pirn v. Eeid, 6 M. & O. 10, 12 L. J. C. P 299. Curry v. Commonwealth^ 27 Mass. (10 Pickering) 536. (k) New York Bowery Co. v. New Ym-k Fire, 17 Wend. (N. Y.) 369, 381 (/) Per Moss, C. J., in Greet v. Citizens'' Insurance Co., 5 U. C. (App.) 696, 601. (m) Herbert v. Mercantile Fire Co., 43 U. C. (Q. B.) 884. Greet v. Citizens' Insurance Co., 5 U. C (App ) 590. (n) Campbell v. Victoria Mutual Fire Ins. Co., 45 U. C. (Q. B ) 412. (o) Gorman v. Handtn-Hand, I R. 11 C. L. 224. Watt v. Union Ins. Co., » N. S. W. Law 106. . . 114 THE RISK. *120 * Assignment ofpdicy. Arson by assignor. — If a man takes [* 119] an assignment of a policy, he does to subject to all the rights, &c., operative against the assignor (o) ; and if the assignor bums the place down, the assignee cannot recov^^r. This has been decided in Canada as to a mortgage by assignment. The consent of the insurers to the assignment will not help the assignee, as it does not create a new contract {p). Of course a mortgagee's policy, effected by him at his own cost on his mortgage interest only, would not be affected by arson of the mortgagor. Arson by wife or relative of assured no defence to insurer — Where a fire is caused on insured premises by the wilful act of a third per- son, to which the insured is in no way privy, however near the re- lationship of the offender to the insured, the insurer is liable (q). Even if the premises insured are set on fire by the wife of the as- sured, the insurer has no defence. The doctrine of agency as be- tween husband and wife does not extend to crimes (r). Arson mtist be proved as upon an indictment. — If the assured himself fired the premises, or the hre b© by his procurement, of course he cannot recover; but if the defence of arson be raised, such evi- dence must be adduced in support thereof as would be required to convict the assured upon an indictment for arson, and the jury must be as fully satisfied that the crime charged is made out as would warrant their finding him guilty on such an indictment. This is the rule in Great Britain, followed in Canada (s). The ♦American Courts incline to hold that evidence not strong [* 120] enough to support a conviction for arson would be strong enough to defeat the claim of the assured (0- Fire risky what included in. Fire occasianed by an act done in duty to the Slate. — It was said by Lord Ellenborough in an insurance case, " If the ship is destroyed by fire, it is of no consequence whether this is occasioned by a common accident or by lightning, or by an act done in duty to the State " (w) ; and it has been held that if a ship is burnt without any fault in the master, from an ap- prehension that she has the plague on board, and to prevent the (o) Rhodes V Union Ins. Co., 2 N. Z. (Sup. Ct) 106. (p) Chisholm v. Procincial insurance Co., 20 U. C. (C. P.) 11. For a mode of avoiding tliis danger to mortagees, see Howes v. Dominion Fire Co., 8 On- tario (App ) 044. (g) Midland Insurance Co. v. Smith, G Q. B. D. 561, 50 L. J. Q. B. 329, 46 L. T. N S 411, 29 W. R. 850, Schmidt v. Neto York Union Mutual, 07 Mass. (1 Gray) f/29. (r) Midland Insurance Co. v. Smith, supra. Gove v. Farmers^ Mutual Fire Insurance, 48 N. H. 41. (s) Thurtell v. Beaumont, 8 Moore C P. G12, 1 Bine. 339, 2 L J. C P. 4. Britton v. Royal, 15 L. T. N. S. 73, 4 F. & F. 905. llcrcnks v. Hunter, 15 C. S. C. (Ist series) 800. Lambkin v. Ontario Mutual Fire, 12 U. C. (Q. B.) 578 (1855). (t) Scott V. Home, 1 Dillon (C. Ct. U. S) 105, and sec May 889 (2nd ed) and Sansum Ins. Dig. pp. 148-150. (u) Gordon v. Bemmington, 1 Camp. 123. Pothier, par Dupin, vol. 4, p. 457 ■.68. 115 < '. ♦121 THE LAWS OF INSURANCE., rj'! mi 11 my infection from spreading, the assured is entitled to recover (x), and this doctrine applies equally to fire risks upon land. Damage whilst e^inguishin^ fire.— Where a fire has actually oc- curred, it must be the proximate cause of the loss or damage to bring it within the policy, but damage resulting from an apparently necessary and bmO. fide effort to put out a fire, whether by spoiling goods with water or throwing furniture out of window, or blow- ing up a neighbouring house to arrest the course of the fire, or any loss oirectly resulting from the fire, will be treated as within the risk (y). Damage hy fire brigade.— Within the Metropolitan distnct any damage done by the fire brigade, in due execution of its duties, is to be treated as damage by fire within the meaning of any policy against fire (2). So that where an officer of the brigade finds it necessary to oc- cupy or destroy a neighbouring house so as to sto^ the [* 121] spread of a fire, and furniture is damaged by the *brigade removing it for such purposes, the insurer is liable. Damage by water to others than tnmred. — When one part of a house occupied by one tenant catches fire, damage done to the property of another tenant by water in the effort to put out the fire is with- in fire policy on the goods of the second (a). Destruction of property by municipal authorities. — Where municipal authorities blow up honses to stay the progress of a fire, the insurers will, it seems, be liable for the damage caused, quite irrespective of provisions in local Acts. 1. If the authorities act illegally, it is not a case of "usurped power" (6), but a mere excessive exercise of jurisdiction. 2. If they act legally, the question of usurped power cannot arise, and even if by their act they render the corporation or authorities liable in dan>ages, this will be no defence to the insurers to a claim on the policy. 3. Where the loss is due to fire, it does not seem to matter whether it be the result of accident or design the act of u magistrate or an incendiary (c). There is no public statute on the subject of the destruction of buildings by municipal authorities applicable to oth( r places than the metropolis, and reference n.ust therefore be made to local Im- provement Acts in such cases. Damage by removal when vrithin the policy. — It seems that bare ap- (x) Emerigon, torn. 1, p. 434. (.y) Stanley v. Western, 37 L. J. Q. B. at 76, per Kelly, C. B., L. R. 3 Ex. 71, 17 L. T. N. S. 513, 16 AV. R. 869. Babcock v. Montgomery, 6 Barb. (N. Y.) 637. (z) 28 & 29 Vict. c. 90, s. 12. (a) Geiseck v. Crescent Mutual, 19 Louis. Ann. 297 (1867). (6) Defined in Drinkwaier v. London Assurance, ? W ilson 363, ner BathuraL J. (1767). (c) 1836, City Fire Insurance Co. v. Corlies, '21 Wend. (N. Y.) 3G7. IIG THE RISK. *123 prehension that a fire (d) will spread to his house will not justify («) the assured in moving his goods and claiming the damage caused by *bo doing from the insurer. But if the [* 122] danger is immediate, he would be iustiiied (/), and by damage occurring in the process would fall on the insurers ; and in this case Kelly, C. B„ said : "Any loss resulting from an apparently necessary and bond fide eflPort to put out a fire, whether it be by spoiling the goods by water or throwing the articles of furniture out ofthe window, or even the destroying^ of a neighboring house by an explosion for the purpose of checking the progress of the flames — in a word, every loss thatclearly and proximately results, whether directly or indirectly, from the fire, is within the policy." Fire, what within risk. Removal of goods when not covered — Insurers being only answerable for direct and immediate, not for consequen- tial and remote, losses from the perils insured against, when that is fire, the instrument of destruction must be fire, and therefore in an American case (flf), where the goods insured and the house which contained them were not touched by the fire, but the goods were damaged in the removal of them under an apprehension that they would be reached by the flames which had caught one of the houses ofthe same block, it was held that the injury sustained by the as- sured in the removal of his goods was not a loss which was covered by his policy against the peril of fire. The assured insured not against apprehensions of fire, and the injury sustained originated not from necessity to save him from impendmg fire, but from an anticipa- tion of damage from it (h). Assured must try to save property. — When his house takes fire, the assured must use reasonable eflbrts to save his goods (i). He is not entitled to look on and let them burn because he is in- sured. His *loss would in such a case be to such an extent [* 123] the direct consequences of his own act. Sometimes a fire policy contains a provision that the insured shall use all diligence to preserve the property in case of fire; but, irrespective of its presence or absence, it seems to be certain that the assured is entitled to be reimbursed rateably, if not wholly, for the cost of an eflfort to save the property {^k) from the risk insured against, and the act of removal in such a case is not an alteration of the risk, but an attempt to avoid it (J). t Hillier v. Alle- id) 28 & 29 Vict. c. 90, s. 12 {«) Holtzman v. Franklin Fire, 4 Cranch (C. Ct U. S.) 295. ghentf County, 3 Penn. 470. if) Stanley v. Western, L. R. 8 Ex. 74, 37 L. J. Ex. 73, 17 L. T. N. S 613, leW.R. 369, per Kelly, CB. (ff) Hillier v. Alleghany Ins. Co., 8 Penn. 470. Oi) M' Gibbon v. Queen Ins. Co., 10 Lr. Can. Jur. 227. (i) Levi/ V. BaiUie, 7 Bline. 349, seems the only English case on loss by re- moval, but there fraud was afleged. (A:) Thompson v. Montreal, 6 U. C. (Q. B.) 319. Talamon v. Home and Citi- zens, 10 Louis. Ann. 426, and per Kelly, C. B , in Stanley v. Western, L. R. 3 Ex. 74, /mpra. (0 White V. Republic Co., bl Maine 91. Case v. Hartford, 13 Illinois 676. 117 /f •■I ■%.m ♦ 124 THE LAWS OF INSURANCE. ; i n I m :■'. w\ Removal. Damage. Criterion of inmrer^s liaMity. Rule in America. —If the danger is such that a prudent uninsured man would not let his goods remain in the building threatened, and if the assured uses the same care as would be exercised by a prudent uninsured man in the removal of the goods, he will be entitled to recover from the insurer all damage done in removing them (m). Injuries to goods by wet or in any manner from the exposure during the confusion, &c.,of a fire, and during removal, before they can be got to a place of safety, and goods lost or stolen during the confusion of a fire, are within the policy (n). Thefi during fire.— In Canada tlio loss of goods by theft during a fire is held witliin the risk, and the grounds for holding the insur- ers liable are well stated as follows :— If insurers arc to bo consid- ered clear the instant the efiects insured are beyond the reach of the flames, whether afterwards unavoidably lost to the assured or not, then the latter might be disposed to s ly : " Whilst my effects remain in my house they are at the risk of tho insurers, [* 124] whereas if I put them into the street they will *be at my risk ; I therefore will prevent their removal until at any rate I can have due precautions taken for their preservation out of doors." Moreover, when a house is found to be on fire, strangers arc let in to assist in extinguishing the flames and in saving the goods. It is for the interest of the insurers that this should be one, and losses resulting from a proceeding adopted mainly for their benefit ought not to fall on the assured (o). Their liability for goods stolen during a fire does not seem to have been questioned by insurers in this country. In Levy/ v. Baillee (p). where a claim of £1000 for goods stolen was made, it was resisted only on tho ground of fraud. The rule of marine insurance seems to be followed. Marine n/le in case of theft.— •M.a.r'me policies expressly except against the risk of loss by tnieves : but when a ship is run ashore owing to a fire and goods landed therefrom are subsequently plun- dered or destroyed b^ landsmen, and never come again to the hands of the owners, it is a loss by the perils of the sea (q). In the same way it would srem that losses of this character conse- quent on a fire follow from tho happening of the peril insured against. Insurers can, of course, and sometimes do, exclude all liability for loss by theft during a fire (r). (w) Holtzmnn v. Franklin Fire, 4 Craiich (C Ct. U. S.) 205. in) 1850, Thompson v. Montreal, U. C (Q. B.) 810, per Uohinson, C. o. (o) M^ Gibbon v. Queen, 10 I^r. Can. Jur. 227. Harris v. London and Lanca- shire, 10 Lr. Con. Jur. 260 [p) 7Bing. 849. M^ Gibbon \. Queen Inmrance cares already cited. (q) Bondrett v. Hentigg, Holt N. P. 149, per Gibbs, C. J (r) Webb v. Protection Co.^ 14 Misaouri 8. 118 10 Lr. Can. Jur. '22'' and Pothior, torn. 5, THE risk:. *126 Sue and labour clauac-^The sue and labour clause (a) in marine policies is occ^ionally introduced into fire policies (0. It has *nothing to do with salvage in the ordinary sense of the [* 126] word, since salvors have a lien on things saved and no other claim whatever (tt), and the sue and labour clause would justify claim for money paid and work and labour done to save the in- sured goods, even if nothing were saved. Oost of an effort to save, on whom itfaUa. — The aim of the clause is to induce the assured to do all he can to save the insured property by promising to recoup him for expense reasonably incurred for the preservation of the thing insured from loss in consequence of the efiorts of the insured and his agents (x). In what share cod borne. — ^The condition in Thompson v. Montreal Company (y) was that in case of removal to escape conflagration the insurer would contribute rateably with the assured and other in- surers to the logd and expenses "attending the act of salvage." Of this clause. Robinson, C. J., there said : ^' That clause was surely not intended to deprive the assured of any portion of his claim un- der the general terms of his policy, but is a condition wholly for his advantage, and intended to afford him a remedy for something in addition to the compensation for his goods destroyed, injured, or lost in consequence of the fire. The object of it is no doubt to en- courage the assured to make every exertion to save his goods by holding him out the advantage of being proportionably reimbursed for the expenses which he may incur. Thus if he is insured for £2000 in one office, and for £iO0Oin another on goods worth £5000, and to avoid damage of an imminent fire he removes all his goods, as it turns out, in safety, the two 'usurers would between them con- tribute three-fifths of the cost of removal {z). *Tho law laid down in this case as to a fire insurance [* 126] Seems quite in accordance with the view of Lord Blackburn in Aitcneson v. Lohre (a) as to the effect of the sue and labour clause. Hence it could never be contended by an insurer that if nothing was saved by such removal he would not be liable for the cost of an (effort to save it in addition to the amount of the policy, when a clause such as that above mentioned was inserted in tho policy as an inducement to salvage. When removal no risk. — But these rules do not of course apply to 4 Hi (s) Kiihton V. Empire Imurance Co., L. R. 1 C. P. 535, 35 L. J. C. P. 250, 15 L. T. N. 8. 12. (<) Thompson v. Montreal, U. C. (Q. B.) 819. («) Aitchison v. Jjohre, 4 Ann. Cas. ut 740, j)cr Lord Slackburn. Reported also 49 L. J. Q. U. 123, 41 L. T. N. S. 823, 28 W. R. 1. Seo Forwood v. North Wales Mutual, 6 Q. B. D. 67, in caao of partial loss, 49 L. J. C. P. 593, 42 L. T. N.S.837. (x) Aitchison v. Lohre, 4 Ai))). Cas 705. Thompson v. Montreal, U. (Q. B)8I9. (y) OU.C.(Q. B.)819. («) Thompson v. Montreal, U. C (Q. B.) 819 (1850). (a) 4 App. Cas. 704. 110 'I %t M27 THE LAWS OF INSURANCE. removal when the assured is changing his home or his place of business. Consent of insurer to removal necessary. — In such cases the consent of the insurer is always necessary, since the risk is presumably altered, and must be testified in the manner stipulated for in the policy or prescribed by the charter or other instrument or by the statute constituting the insurance corporation. It need not be in writing, unless so stipulated or prescribed. The usual condition is that the insurers' assent shall bo evidenced only by written endorse- ment on the policy. They are not under any obligation to assent, and, if a fire happens before their assent is endorsed, there is no means of making them pay for it (b). Goods not protected in transitu. — Even where consent has been ob- tained, the risk is not transferred till the goods are removed, and they are not covered in the process of removal, being then neither in the old nor in the new place (c) ; for the assent does not turn the policy 'pro tempore into a vovage policy, and the risk of removal is on the assured or his carrier according to the terms of the con- tract of carriage. No protection until complete removal. — Only one risk is [* 127] contemplated, except by special "stipulation. So assent to transfer will not amount to a contract to covtr goods in both places until goods to the full amount insured have been re- moved (d). On this it may bo observed — M'Clure v. Lancashire discussed. — 1. That if the removal is not completed and the risk is of the same character in both places, the insurers, by their assent to the transfer, relievo themselves I'rom liability as to either the part transferred or that which is untrans- ferred, though it would seem that the very object of their assent was to continue their liability in such an event. 2. That though to hold otherwise would be to make the insurers liable to a risk in two places, the risk would be of the same char- acter in each place, and the policy would only bo divided into two smaller policies at the same rate on like risks ; and if the liability were held to exist in both places it would work no unfairness, since it would cover goods on their arrival at the new place, and until goods to the value within the policy had there arrived would con- tinue on goods in the old place to an amount equal to the balance not at risk in the new place. 3. That it was enougn in WClure's Gase^ for the purpose of the decision, to say that goods to the full value covered by the policy /had been transferred. Sometimes policies are issued covering property not only in ?) Noady. Promndal, 681. 121 ) 'i t 1 1 ^ ; B' I *130 THE LAWS OP INSURANCE. Ij 1.1^ h hi Fl I ■'? i; i-j i ! & ■, ! •'- ■ I To what extent the risk is taken.— The liability of the insurer is limited to the amount for which the premium is paid, but the ob- ligation incurred is not to pajrthe whole sum, but only the damage done by the peril insured against, not exceeding the sum insured. The insurer, if property is under-insured, cannot, independently of special agreement, insist on paying only a sum bearing the same ratio to the damage as the amount insured bears to the full value of the property insured (m). This would be penalizing a man for under-insurance. Proportion payable where under-inmrance. — Where, however, by a fire policy £500 was insured on twelve months' rent of buildings, such insurance to cover the rent of the buildings from the time of fire until reinstatement, and in the proportion which tlie period of untenuntableness should bear to the term of rent insured not ex- ceeding twelve months' rent, and the buildings were damaged by fire and remained untenantable for some months, it was held by the Court of Session in Scotland (dubitante Lord Rutherford Clarke) that the insured could only recover an amount bearing the same proportion to £500 as the period of untenantableness bore to twelve months (n). • Voluntary self-destruction, and deaih as the result of crime. — The in- surer may take a risk of death by any cause other than by sentence of law, self-destruction in a sane mind, or the consequences of some criminal violation of law. If death ensue from any of these [ *130] *cause8, the insurer is not liable, since it is contrary to the policy of the law, in such case, to allow the insurance money to be' recovered (o). Thus, it has been held that where death resulted from an operation unlawfully performed to procure abortion the insurers were not liable (p). And the same has been held in America where the assured was accidentally killed in a TO^/de caused bv his assaulting another person (a)? There must be some relation between the violation of law ana the death to make good the insurer's defence, i. e., the death must be directly con- nected with the criminal act (r). Under this principle will fall the cases just mentioned, and aJso death by duelling (s), in a prize fight (0) or any unlawful sport (u). (m) Thompson v. Montreal, ) Horn V. Anglo- Australian, J^O L. J. Ch. 511 4 h T. N. S. 143, 1) W. R. 859, 7 Jur. N. 8. 8 referring only to indisposition of a somewhat severe or serious chaiicter (i). Afflicted vnthfits. — Afilicted with fits means constitutionally liable to them, e. g., epileptic (j), but even if the words "epileptic or other fits" be used, fainting fits are not included (k). American cases distinguish from this the question, ''Have you ever had fits?" (0- Afflicted with gout. — A man may honestly say "No" to the ques- tion whether he had gout, though to a doctor it would be [* 141] *clear, from symptoms not felt, or if felt not understood, by the life that the gout was flying about his system (m). Spitting ofbhod. — Only what is the result of the diseases called spitting of blood need be specified, i. e., bringing blood from throat (/) Life Assurance of Scotland y. Foster, 11 C. S. C. (3rd series) 351. Iq) Cazennve v. British Equitable, supra. (h) A Califomian case, 42 Cal. 523 ; but see Ins. Co. v. Wilkinson, 13 "Wall. (U. S.) 222. (i) Connecticut Mutual, r>t of the substituted policy (e). The liability is shifted or re inei ot lessened or altered. The insurers are not p. » from setting up breach of war- ranty in proposals by the lact that they have doubted their truth and have sought and received from their agent a further and at one time satisfactory report (/). {d) Marshall v. Emperor Life, L. R. 1 Q. B. 36, 35 L. J. Q B. 89, 13 L. T. N, S. 281, 12 Jur. N. S. 293. Girdlestone v. North British and Mercantile, 11 Eq. 197, 40 L. J. Ch. 2W, 23 L. T. N. S. 392 ; followed iu America, Vwight v. Germania, 22 Hun. (N. Y.) 167. (e) Cahen v; Continental Life, 69 N. Y. 300. {/) Busaell v. Canada Co, 8 Ontario (App.) 716. i 188 MISBEPREBENTATION AND CONCEALMKNT. *153 ♦CHAPTER VII. [* 152] MISREPRESENTATION AND CONCEALMENT. Uberrima fides required in contracts of insurance. — The utmost de- gree of good, faith is required from an assured in effecting a policy of assurance. He must not only state all matters within his knowledge which he believes to be material to the question of the insurance, but all which in point of fact are so. If he conceals anything that he knows to be material, it is a fraud ; but besides that, if he conceals or fails to disclose anything that may influence the rate of premium which the insurers may require, although he does not know that it would have that eflfect, such concealment en- tirely vitiates the policy (a). Materiality question for jury. -rlt is a question for the mry whether any particular fact is or is not material when its truth is not war- ranted or made a condition precedent (b). All material facts to be disclosed. — Policies of insurance are made upon an implied contract between the parties that everything ma- terial known to the assured should be disclosed. That is the basis on which the contract proceeds, and it is material to see that it is not obtained by means of untrue representation or conceal- ment in any respect (c) that *means in any material respect [* 153] (d), any respect which a reasonable man would think ma- terial (e). * Mr. Justice Bay ley said: "It does not matter whether the in- surance is on ships, houses, or lives, the insurer should be informed of every material circumstance within the knowledge of the as- sured ; and the proper question is whether any particular circum- stance was in fact material, and not whether the party believed it to beBo"(/). (a) Per Rolfe, B. Dalglish v. Jarvie,2 M'N. & G. 281, 248. See also Lon- don Assurance v. Mansel, L. R. 11 Ch. D. 868. 48 L. J. Ch. 831, 27 W. R. 444. Maynard v. Rhode, 1 Car. & P. 860, 5 Dowl. k 11. 266. M'Donald v. Law Union, dc, L. R. 9 Q. B. 828, 48 L. J. N. S. Q. B. 131, 80 L. T. N. 8. 545, 22 W. R. 530. Duckett v. Williams, 8 L. J. N. S. Ex. 141, 2 Cr. & M. 848. Moens V. Heyworth, 10 M. k W. 147, per Parke, B. 157. Wainwright v. Bland, 5 L. J. N. 8. Ex. 147, 1 M. & W. 82, 1 Mo. k R. 481. Fowkes v. London and Manchester, 8 L. T. N. 8. 809. 82 L. J. Q. B 163, 8 B. & 8. 917, 11 W. R. 622. (6) Lindenau v. Desboroughi 8B, k C 586. Morrison v. Muspratt, 4 Bing. 60. ic) Moens v. Heyworth, 10 M. & W. 157. la) London Assurance v. Manselj 11 Ch. C. 868, per Jcssel, M. R. (e) Lindenau v. Desborough, ubt sup , per Lord Tenterdeii. (/) Benham v. United Guarantee Co., 7 Ex. 744, vl L. J. Ex. 317, 16 Jur. 691 Lindenau v. Desborough, ubi sup , per Bayley, J. Newcastle Fire Co, v. M'Morran, 8 Dow, H. L. 266. 139 *154 THE LAWS OF INSURANCE. i I II !'j"t: P :^'1>J Mr. Justice Littledale said : " It is the duty of the assured in all cases to disclose all material facts within their knowledge. The non-answering of a specific question would amount to concealment if the man knew the fact and was able to answer it " (g). Insurance without any representation by assured. — When a man ef- fects an insurance upon a life generally without any representation of the state of the life insured, the insurer takes all the risk, unless there was some fraud in the person insuring, either by his suppress- ing some circumstances which he knew or by alleging what was false. If the person insuring knew no more than the insurer, the latter takes the risk (h). Mere " belief" of assured that life in good health. — If the person ef- fecting the insurance only says " he believes " the person whose life is insured "to be in good health," knowing nothing about it nor having any reason to believe the contrary, then, though the person is not in good health, it would not avoid the policy, because the in- surer takes the risk upon himself (/). [* 154] * What is concealment. — If a man purposely avoids answer- ing a question, and thereby does not sate a fact which it is his duty to communicate, that is concealment. Concealment, prop- erly 60 called, means non-disclosure of a fact which it is a man's duty to disclose (^).*' Condition Misdescription. — The condition in a fire policy as to misdescription of the premises applies only to the concfition of the premises when the policy begins to run. If the description is not correct, the policy does not begin to run at all, or only as to parts unaflfected by the breach of condition. If it is fully performed, nothing which happens afterwards, nor even a change of business, could ( ffect the policy as to that condition (I). If there is fraud in a representation, it avoids the policy as a fraud, but not as a part of the agreement (m). Effect of misrepresentation where part of policy. — If representations are made part of the policy, they become warranties; and if they are untrue, the policv will be avoided, even if the loss has not arisen from the f ict concealed or misrepresented (n). (8tl (g) London Assurance v ) Per Ijord Mansfield. bh ed). Manael, 11 Ch. D Jiossv. Bradshaw, 309, per Jessel, M. R. •*° Bl. ai2, 2 Park Ins. 934 M. R., 48 L. J (/) Pawaon v. Watson, 2 Cowp. 787. (k) London Asmrance v. Maiisel, 11 Ch. D. 870, per Jessel. Ch. 831, 27 W. R. 444; and vide supra, p. 151, per Littledale, J. (I) Pint V. lieid, M. & G. I (24), 12 L. J. C. P. *'99. Hhaw v. Rohberds, 1 N. & P. 279, 6 A. & E 75, L. J. N. S. K. B 100. (m) Per Lord Mansfield. Pawson v. Watson, 2 Cowp. 787. (n) Maynardv. Rhode, 1 Car. & P. 800, 5 Dowl. & Ry. 200. 'Where questions in application, for life insurance, appears to be not answered, or to bd imperfectly answered, issue of policy is waiver of imperfection. Phcenix Mut. Life Ins. Co. v. Paddin, 120 U. 8 183. 'In aosence of fraud applicant will not bo heard to say that certain questions in the application where in fact not asked. Cuthbertson v. North Carolina Hume Ins. Co., 96 N. C 480. 140 MISREPRESENTATION AND OONCEAIMENT. *156 Mmepresentntion by insurer. — The policy would equally be void if the insurer misrepresented or concealed a material fact; as, for ex- ample, if he insured a ship on her voyage which he privately knew to be arrived ; and an action would lie again'st him to recover the premium. ** The govering principle," said Lord Mansfield, "is ap- plicable to all contracts and dealinofs. Good faith forbids either party, by concealing what he privately knows, to draw the other into a bargain from his ignorance of that fact and his believing the contrary " (o). ^Statements mtist be true at time contract of insurance a/:tuaUy [* 155] made. — Statements made by a person in a proposal for life assurance must be true at the time at which the contract of assur- ance is actually made. Therefore where statements regarding the proposer's health were to be taken as the basis of the contract, and the proposal containing them was accepted upon the terms that no msurance should take place until the first premium was paid, the company were held justified in refusing to accept the premium, a material alteration having occurred in tlie proposer's health be- tween the date of the proposal and the tender of the premium (p). Agent of assured must disclose fully. — Any person acting by the di- rection of the insured, and who is instrumental in procuring the insurance, is bound to disclose all he knows to the insurers before the policy is effected, and where any misr^preeentation arises from his fraud or negligence the policy is void (g). Even if insurance effected by another agent. — The insurance is also vitiated if there be misrepresentation or concealment by any agent employed by the assured to obtain the policy, and whose duty it was not to have so misrepresented or concealed, even though the policy be actually effected oy another agent unaware of such mis- representation or concealment, but subsequently to the receipt of the information concealed (r). Statements by life assured. — If before a policy of life insurance is effected the life insured is applied to by the office for and gives in- formation, he is regarded as tne agent of the assured, who is bound by his statements even though the assured is a stranger to and acquainted with him ; and if such statements are false, the assured will not be able to recover from the insurance office. And this is so although the assured should le ive it to the *agent [* J56] of the insurance office to obtain the information («). Answers given by the life insured must be true. — An insurance was effected by a creditor on the life of his debter, who gave untrue m 'f .m ■"^MSi 0) Carter v. Boehm, 3 Burr. 1910. [p) Canning v. Farquhar, 16 Q. B. D. (C. A.) 727, 55 L. J. Q. B. 225, 54 L. T. 350, 34 W. R. 423. iq) Fitzherbert v. Mather, 1 T. R. 12. Re Universal Non-Tariff Fire Co., Forbes' claim L. R. 19 Eq. 48.'), 44 L. J. Ch., 761, 2iJ W. R. 464. (r) Blackburn Low ds Co. v. Vigors, 17 Q. B. D. ( C A.) 568, 66 L. J. Q. B. 847, 54 L. T. 852. («) Everett v. Desborough, 5 Bing. 603. . 141 ti *157 THE LAWS OF INSURANCE. tr 1 f.'.! I ;:4 answers to the questions, " Who is your medical attendant? Have you ever had a serious illness ? " The creditor was ignorant of the misrepresentation, and the debtor did not die of the disease he was then afflicted with ; but it was held that the misrepresentation avoided the policy, for being part of the policy, the bargain was only conditional, and it was equally a condition let it be made by whomsoever it may (0- , , ^ xi. xu • j . Mmq)resentation through agent of Company. — It the misdescrip- tion is in fact due to the act of an agent of the company, even if material, it will not affect the policy (m). " Spitting blood " untrue statement regarding. — One of the terms of a policy of life assurance was that it should be void if anything stated by the assured was untrue. The assured stated that he had not had any spitting of blood, and the Court held that as one sin- gle act of spitting of blood would be suflacient to put the insurers on inquiry as to the cause of it, the fact should be stated (a;). Temperate hahits. — Where a policy of life assurance is effected, and a declaration made by the assured that the person whose life is insured is of sober and temperate habits, upon a question being raised after his death as to his sobriety, the jury have to say, not whether the deceased was intemperate to such a degree as to injure his health, but whether he was of sober and temperate habits at the time of the insurance. There is nothing to prevent an [* 157] office from stipulating that even though a man's health *be not impaired, every person whose life is insured at their office shall be a person of temperate habits (v). Proof of iniemperance. — Where the insured has warranted him- self temperate m his habits and that he has always strictly been so, the insurers must (says Lord Blackburn), to successfully resist payment, *' prove drinking carried on, before the date of the war- ranty, to such an extent as to amount to intemperance, and so often and continuously as to amount to habits oi intemperance. They are not obliged to prove anvthing more." In the construc- tion of such a warranty the same learned lord held that " we must take into account the normal habits of people in the class and in the locality where the person insured lives ' (z). Meaning of " under influence of liquor.-^The expression " under the influence of liquor " in an accident policy means " that a man's conduct is banefully influenced by the liquor he has drunk " (a), or that he is " under such influence of intoxicating liquor as dis- I'ltt l! i li,;* (t) Maynard v. Rhode, 1 Car. & P. 360, 5 Dowl & R. 266. («) Re Universal Non-Tariff Fire Co., Ex parte Forbes' claim, supra. SotH' ers V. Athenceum, &c , Co , 9 Lr. Can. Rep. 61, 3 Lr. Can. Jur. 67. (x) Geach v. Ingall, 14 M. & W. 95, 16 L. J. Ex. 37, 9 Jur. 691. (y) Southcomb v. Merriman, Car. & Mar. 286. («:).Per Lurd Blackburn, Thomson v. Weem^s, 9 App. Cas. 684. TTccww v. Standard. 1% >:m *160 THE LAWS OF INSURANCE. ■;r ■'II' :v^M ■ 1 ti ; the policy was effected, such an' omission to refer to the proper per- son would vacate the policy (i). r* 159] * Place of residence. Assured in goal. — The assured being in goal at Fisherton Auger, but who had previously lived in her own house at the same place, employed an agent to effect a policy of insurance on her life. One condition of the insurance was that a declaration should be made of the state of the health of the life insured, and the agent stated that he had proposed on behalf of Elizabeth Swayne (the assured) of Fisherton Auger, and that she wds then resident there. It was stipulated that the policy was to be valid only if the statement were free from all misrepresentation or reservation, and it was held to be a question for the jury whether the imprisonment was a material fact, for, if so, the keping it back would be fatal to the recovery of the money from the insurance company (k). Meaning 0/ "rm'denc^."— The term ** residence " in the proposal for an insurance means the place where the proposer is living or residing at tlie lime of making the proposal, and not where he has been residing before or where he is going to reside afterwards; therefore, where, in a proposal to an insurance office for a life policy, the proposer gave of ilis residence the address where he was then and was going to be at for the next tliree months, although he usu- ally resided in Ireland, and returned there three months afterwards, it was held tiiat tlie place of residence was not untruly stated (/). Concealment of fire to adjacevit premises. — The plaintiff having one of several warehouses next but one to a boat-builder's shop, which took fire on the same evening after that fire was apparently extin- guished, insured that warehouse without apprising the insurers of the neighboring fire. Though the terms of the insurance did not expressly require the communication, it was held that the conceal- ment of this fact avoided the policy (m). [*160] ^Statement partially true. — A statement true as far as it goes, but not the whole truth, and not a complete answer to the question which it proposes to answer, is untrue within the meaning of a condition that " any untrue statement shall avoid the policy (n). But where, in answer to a question as to the name and resi- dence and profession or occupation, the proposal stated " A. B. of S. Hall, Esquire," the person being an ironmonger though resident at S. Hall, and being also an e-quire, the statement was held not to be untrue, though it was imperlect (0). What must be stated under the general question. — Under the general (i) Everett v. Desborough, 5 Bing. 514, per Tindal, C J. Ik) Huguenin v. Raglei/, 6 Taunt 18fi. * (l) Grogan v. London and Manchester Industrial Co., 58 L. T. 761. (tn) Bufe V. Turner, 6 Taunt. 388. (n) Cazenove v. Britinh Equitable, C B. N. S. 437, 20 L. J. C P. 100, 1 L. T. N. S. 484, 5 Jur. N S. 1309, 8 W R. 243. (o) Perrins v. Marine and General Travellers, 2 E. & E. 317, 29 L. J. Q. B. 17, 24V, 2 L. T. N. S. 688, 8 W. R. 565, Jur. N. S. 69. 627. 144 IM MISREPRESENTATION AND CONCEALMENT. *161 question put by an insurance office, " Is there any other circum- stiuice wiihin your knowledge which the directors ought to be ac- quainte(l with ?"' it is the duty of a party effecting an insurance to communicate to the office information of every f ".t which any reasomiltlc man would think material, and it is a question tor the jury whether any particular fact was or was not material {p). Description mbstantially correct. — If the description of the property be suhstantially correct, and a more accurate statement would not have varied the premium, the error is not material; hence where buildings were described as built of brick and slated, but it turned out that one of the buildings was not roofed with slate but with tarred felt, and no higher premium would have been charged if the fact had been disclosed, it was held that the misdescription was im- material and not sufficient to vitiate the policy (g). But conceul- raen* " the fact that a wooden building behind a warehouse ' as a kitchen has in Canada been *held fatal (r). [* 161] was A hy^. jent that no fire is kepttand ho hazardous goods de- posited refers to natural use of fire and deposit of goods (s). Effect of concealment as against purchaser without notice. — Suppres- sion of a fact material to the insurance company to know, discovered between the acceptance by the office and payment of the first pre- mium, will avoid the policy even as against a purchaser for value without notice (0- Misrepresentation by one company to another on re-insurance. — And where one insurance company induced another insurance company to grant a policy by way of re-assurance on the representation that they, the former company, intended to retain part of the risk, which, however, they subsequently got rid of by a further re-assurance, the policy was declared void (u). Effect of innocent misrepresentation, where stipulation that untrue state- ment should forfeit all money paid. — Where it was stipulated that in case of an untrue statement all moneys paid on account of the in- surance should be forfeited and the insurance itself should be null and void, both the policy-money and the premiums were forfeited by a staternent as to the health of the life insured, untrue in point o^fact, though not within the knowledge of the party making the statement (a;). Disclosure of concealed fact before payment by insurer. — If although a tnateriul fact were misrepresented or suppressed at the time the (p) Lindenau v. Desborovgh, 8 Q. & C 586. London Assurance v. Mansel, L R II Ch D. a69, 48 1.. J. Ch. 831, 87 W. R 444. (g) Re Universal Non- Tariff Fire Insurance, Forbes^ claim, L. R. 19 Eq. 485, 44 L. J. Ch. 761, 23 W. R 465. (r) liar.). Change of business. — A change in the nature of the business car- ried on in the assured's premises, whereby the risk is increased, and without proper notice, avoids the policy (q), ('), even where the increased rislc is caused by a tenant without his land- *lord\ knowledge (r). But it has been held in Canada [* 170] that notice of the change of business to the insurer's agent, without sending in the policy for indorsement, will suffice if there be no condition to the contrary (s). Selling liquor. — Selling liquor by retail has been held in Canada not to bo an increase of risk where a policy has been taken out on groceries and patent medicines. But in England spirit-selling is a hazardous trade, and a grocer could not become a liceneed or un- licensed retailer of spirits without risking his insurance (t). (m) Grandin v. Rochester Co., J 07 Penns. 26. (n) neacon Life and Fire C<>. v. Gibb, 1 Mooro P. C. N. S. 73, 7 L. T. N. S. 74, 11 W. II 1!)4, Jur N. S. 185. (o) Merrick v. Provincial Insurance Co., 14 U. C. (Q. B.) 439. (j)) Samo case. (q) Shaw V. Robberds, 1 N. &. P. 270, 6 A. & E. 75, G L. J. N. S. K. B. 100. (r) Long v. Jiecber, 51 Am. Rep. 532. Liverpool and London, die., Co. v. Gttnther, Davis (Sup. Ct. U. 8.) 113. (.1) Peck V. Phoenix Mutual limirame Co., 45 U. C. (Q. B.) C20. (t) N/cholson V. Phmnix Mutual, 45 U..C. (Q. B ) TOO. * Policy on a hotel, its furniture, &o , excepted "goods held on storage." Held (hat furniture ntored to be used in tlie business of the hotel was not within the exception. Continental Insurance Co, v. Pitiitt, 05 Texas 125. ' Where insurer knows that premises may bo used for storing cotton, and the policy Btipulates that " when building is u.sed ns a warehouse the rate will bo changed''; the storing of cotton will not avoid policy. Steers v. Home Ina. Co., 86 La. An. 052. m *171 THE LAWS OF INSURANCE. Tavern. — Change of occupation from a private house to a tavern without consent of the insurance company would avoid the policy under the condition against increasing the risk : but a coffee-liouse tavern after a change to Fome other equally hazardous business is not a tavern within this rule (w) ; and if the change be to a which the company have allowed, the policy will, it seems, hold Conditions as to user of thing insured. Shaw v. Robherds. — One of the conditions (3rd) of a policy was that unless the trades carried on be accurately described, and if a kiln or any process of fire-heat be used and not noticed in the policy, the policy was to be void ; and another condition (6th) stated that if the risk should be by any means increased, notice was to be given to the ofl&ce, otherwise the insurance to be void (y). The assured lent his kiln, which was used only for drying corn, to another person on one occasion to dry bark, which was more dangerous. Change of use with increase of risk. — No notice was given to the insurers, and the kiln was de- stroyed. It was held that the 3rd condition related to the time of insuring, and that nothing which occurred afterwards [* 171] *could bring the case within that condition, which was fully performed when the risk first attached ; that the 6th condi- tion pointed to an alteration of business, permanent and habitual; and if the plaintiff had either dropped his business of corn-drying and taken up that of bark-drying, or added the latter to the former, the case would have been within that condition. But the single act of kindness was no breach of the 6th condition, and the plain- tiff was allowed to recover (2). Glen v. Letois. Use by way of experiment contrary to condition. — In Olen V. Lewis (a) the question Avas whether the placing a small steam-engine on the premises and using it in a heated state to turn a lathe simply for the purpose of ascertaining by the experiment whether it was worth tne plaintiff's while to buy it, avoided the policy, having regard to its conditions, one of which was that in case of any alteration in a building insured, or of any steam-engine, &c., or any other description of fire-heat being introduced, or of any trade, business, process, or operation being carried on ... . notice must be given, and every alteration be allowed, tfec, other- wise no benefit should arise to the assured in case of loss. Parke, B., in giving judgment, said: "The clause implied that the simple introduction of a steam-engine without fire will nft affect the policy, but it will if fire is put to it. It makes no difference whether it is used on trial or as an approved means of carrying on the parties' business, nor does it make any difference that it is used for a longer t'l ! 1 I h) Doe d. Pitt v. Lamina, 4 Camp. 78. x) Campbell v. Liverpool and London Fire. 13 Lr. Can. Jur. 801). (;/) Sco also Jhbson v. Sothchji. 1 M. k M. 90. Pirn v. Reid, 6 M. & 0. 1, 12 L. J. C. P. 2{)», Scott N. U. mi. (2) Shaw V. Ilobberds, 1 N. & P. 270. A. & E. 7fi, L J. N. S. K. B. 100. (a) 8 Ex. C07, 22 L. J. Ex. 228, 21 L. T. 115, 17 Jur. 842. 152 CONDITIONS IN POLICILS. * 173 or a shorter time. And referring to Shaw v. Robberds, the learned Baron said : " That case is the only one which approaches the present, and we cannot help feeling that the construction of the policy in that case may have been somewhat influenced by the ap- parent hardship of avoiding it by reason of the accidental and charitable use of the kiln, the subject of the assurance. If *in that case the condition has been, inter alia^ that no bark [-1* 172] should be dried in the kiln without notice to the company, which would have resembled this case, we should have been far from thinking that the Court would have held that the drying which took place did not avoid the policy, by reason of its being an ex- traordinary occurrence or an act of charity. We are therefore of opinion that the defendant [tlie insurance company] is entitled to judgment." Oven. — Building an oven on premises insured, if it be safely built and there is no evidence to show that it increases the risk, will not prevent the assured from recovering the insurance-money (6). Erection of engine. — Where the insured put up an engine in a brick house, and the insurer's agent gave notice that increased premium would be required, and assured applied to his insurers and else- where for insurance thereon at enhanced premium and was refused, ho was nonsuited, on the ground that the policy was known by him to be void (c). Non-occupation increasing risk. — Leaving the premises unoccupied may increase the risk, and if it does will be within this condition. Whether non-occupation lessens or increases the risk depends on circumstances. The whole question, which does not seem to have arisen here, is very fully considered in a Canadian case (rf), where the American cases are cited and discussed. ' Ceasing to occupy without fraudulent intent has been held in New Brunswick not to come within a condition avoiding the policy in case of increase of *risk through change ot occupa- [* 173] lion, unless proof were given that under the circumstances nnd position of the building it was more liable to destruction when unoccupied (e). Empty home. — Notice of vacancy if required by a condition must (6) Nmtghter v. Ottawa Agriultural Insurance Co., 4n U C. (Q. B.) 131. Hil- km V. Thornton, 3 E. cV B. 808, 23 L. T. 187, 18 Jur. 748, '2 W. U 5»4, 2:) L. J. Q. n. 302. Barett v. Jermi/, 3 Ex. 535, 18 L. J. Ex. 215. Glen v. Lewis, 23 L J. Ex 228, 17 Jur. 842, 8 Ex. C07, 21 L T. 115. Stokes v. Cox, 1 H. & N. 63:?, 2(5 L. J. Ex 118, 28 L. T. 101, 8 Jur. N. S 45, 3 W. R. 89. (r) Iteidv. Gore District Mutual, 11 U C. (Q. B.) 345. [d) Abrahams v. Agricultural Insurance Co., 40 U. C. (Q. B.) 175. And see Bennett v. Agrindtural Co., CO Conn. 420. (e) Fo^ V. Etna, itc, Co , 8 Allen (New Bruna, 29. (/) Canada Agricultural Credit Co. v. Canada Mutual Fire Co., 17 Grant (U. C.) 418. * Where i)oHcy provides tliat company shall not be liable while "premiums" are unoccupied, if loss occurs while house was unoccupied, except by a few uten- silsj no recovery can be had, even Ihoujrh (ho land particularly described in the >'t1 aki policy was occupied. Sexton v. Uawkeye Ins. Co., 09 Iowa 09. 153 ':= 174 THE LAWS OF INSURANCE. I i be given in reasonable time. Three days will not be too long (/), change of occupancy.— Description of the building insured as a farm-house, the column for the name of the occupants being left blank and the premises being at the time, and remaining until the loss, unoccupied, is no breach of a condition to give notice of a change of occupancy ig). , , , Condiium as to disclosing other insurance must be observed. — The im- portance of being informed of the names of the offices- which are jointly interested in a risk is obvious to all who have any ac- quaintance with the law and practice of insurance, and nothing, therefore, can be more reasonable than that the persons assuring should stipulate for information being given as to the offices in which other insurances are existing or are subsequently taken out; and it is competent for them to stipulate that if any erroneous or untrue representation be made on this point the policy shall be void, and, if they do so, the Courts cannot hold any part of the representation immaterial (A). But if they want the information they must stipulate for it (i); and failure to disclose it is not fraud (k). Breacn of a condition that other insurance shall be notified to the grantor of a particular policy, and notice thereof in- [* 174] dorsed on the policy or otherwise recognized *by the grantor, is, unless waived, absolutely fatal to any claim on the policy. Tlie condition can be, of course, broken only by the failure to disclose insurance in companies other than that by which the pol- icy containing it is granted (I), and by policies actually on a por- " tion of the same risks (m). Policy accidentally over lapping. — A mere possibility that some portion of the risk covered by both policies might accidentally coincide would not, it seems, constitute such a double insurance as is meant by this condition (n). The existence of a marine policy (0) Loudon and Lancashire Co. v. Honey, 2 Victoria Law 7. (k) Parsonn v. Standard Co , 4 U. C. (App.) '< 26. Western Assurance Co. v. Attwell, 2 Lr. Can Jur. 181. (i) M-Doiiell V. Beacon Fire and Life, 7 U. C. (C P ) 308. (k) Similar conditions are found in some English policies, but have not been litigated. (1) Citizens^ Company of Canada v. Parsom, 7 App. Cas. 00, 118. (m) Australian Agricultural Co. v. Saunders, L. R. 10 C. P. 668, 44 L. J. C. P. 391, 33 L. T. N. S. 447. (h) Per Bramwell, B., in case last cited, L. R. 10 C. P. 674. ' Tenant moved on Tuesday and owner toolc pos.sessjon on Wednesday, and until Friday evening was engaged in preparing it for occupation, intending to move into it on Saturday. Friday night house burned. Hetd, that policy was not avoided on the ground of it being vacant or unoccupied. Eddy v. Hawkeye Ins. Co., 70 Iowa 472. " Policy insuring hog house, conditioned to bo void if premises become va- cated by removal of owner or occupant, is not avoided by tho fact that use of hog bouse as such is discontinued. Kimball v. Monarch Ins. Co., 70 Iowa 618. 154 CONDITIONS IN POLICIES. *175 on goods which are landed and warehoused for a special purpose will not vitiate a fire policy made on them by breach of this con- dition, as the underwriters would not be liable while the goods were so warehoused (o). Condition oa to suhsegiient insurance. — An insurance effected subse- quently to the policy sued upon in another company in substitu- tion for a lapsed policy to the like amount in a third company does not avoid the policy sued upon under a condition as to giving notice of a subsequent insurance, if the grantors thereof have had notice of the lapsed policy if existing when their policy was granted or have recognized it if granted after their own (p). • Subsequent— further. — Subsequant insurance may be treated as meaning subsequent and further, an addition which seems in ac- cordance with common sense ( p ). But if the assured takes out a policy in a bad company, in sub- stitution for one lapsed in a good company, some increase of a liability to contribute might arise to other companies. ^Condition against double insurance. — It has been held in [* 175] Canada that where two insurances were made on the same property with one person, agent of two companies, the companies would not be estopped from setting up the condition vitiating their policies in the case of other insurance, on the ground that the knowledge of the agent could not here be deemed knowledge of the principal ( p ). But if the doctrine laid down in Blackburn v. Vigtyrs ( ^ ) is to apply alike to insurer and assured, this Canadian view seems wrong. Other insurance. — An omission to give the names of other offices in which the applicant is insured will avoid any policy granted on the application where there is a condition to that effect (r). Where it is stipulated that such other insurances must be allowed by indorsement, no action will lie on the policy containing such term till the indorsement has been made, whatever be the equita- ble remedy, since the indorsement is agreed evidence of the in- surer's assent to other insurances (?), (*). Notice of other insurance. — Verbal notice to the insurer's agent will not bind the insurer, and the assured is not entitled to insist upon a reform of the policy by an indorsement of the insurance of (o) Ibid. (p) Parsons v. Standard Insurance Co., 4 U. C. (App.) 826. Pacaud v. Monarch Insurance Co., 1 Lr, Can. Jur 284. in ) Shannon v. Gore District Mutual, 2 U. G. (App.) 806. q) 17 Q B D. 553. r) Citizens'' Insurance Co. v. Parsons, 7 App. Cos. 118. Parsons v. Standard Co., 4 U.C. (App.) 826. («) Noad V iTovindnl Insurance Co, 18 U. C. (Q. B.) 584. Chapman v. Lancashire Co , 13 Lr. Can. Jur. 30, 2 Stevens Quebec Digest 407 (P. C). ' Where a condition requires tbat additional insurance must be consented to in writing, if a waiver is relied upon it must clearly appear that notice was given and indefinite conversation is not sufficient to constitute waiver New Oneana Ins. Assn v. Griffin. 66 Tex. 232. Ooldvoater v. Liverpool, and London, and OMe Ins. Co , 80 Huq. N. Y. 176. 155 1 m *176 THE LAWS OF INSURANCE. |i '■ which he has given merely verbal notice, as this would be compel- ling their assent, which was ex hypothesi in their discretion (0, (•). A consent signed by the secretary has been held ^ to bind the company (m), but this must depend upon the authority, actual or constructive, given to the secretary. [* 176] ^Waiver. — If the company has been informed by the agent of the other insurance, and knowing of it issues a policy, they will be taken to have waived the condition {x). The condition will not be deemed waived if the i usurers, on get- ting notice after the fire, reserve the objection till action brought (2/). Mortgagee of mutual policy. — In a mutual insurance company when a policy is assigned, with consent of the insurer, to a mort- gagee, thougn he becomes a member, further insurance by the mortgagor, which the mortgagee did not know of and could stop, will not affect his policy under the condition relating to double in- surance (z). . Foreign company. — If further insurance be effected in a foreign company, it is still such an insurance as to avoid a policy contain- ing a condition against double insurance, being an insurance in fact(o),(*). - Mortgagee. — Insurance made by a mortgagee without the knowl- edge of the mortgagor will not avoid a policy taken out by the lat- ter and containing such a condition, for the further assurance must be by same person or in the same interest (h). Interim receipt — Insurance by interim receipt may fall within the provision, as, the duration of the interim insurance being limited, the question has been raised whether after expiry of the time lim- ited the assured was entitled to have a policy or not, since if he was it would be a case of other insurance (c). {t) Billington v. Provincial Insurance Co. 2 U. C. (App.) 158, 3 Canada 182. (m) Attwell V. Western, 2 Lr. Can. Jur. 181. Soupras v. Mutual Insurance Co , 1 Lr. Can. Jur. 197, a case of notice given after fire. Chalmers v. Mutual lire Co., 3 Lr Can. Jur. 2. {x) Billington v. Provincial, 2 U. C. (App.) 158, 178, 3 Canada 182. {y) Attwell V. Western Insurance Co., 2 Lr. Can. Jur. 181. Iz) Mechanics' Ben^t Society v. Gore District Insurance Co., 40 U. C. (Q. B.) 220, 236-8. (a) Ramsay Cloth Co. v. Mutual, &c., Co., 11 U. C. (Q. B.) 516. (ft) Gilchrist v. Gore District, Ac, Co., 34 U. C. (Q. B.) 15. Carpenter v. Prondence Washington Co , 16 Peters (U. S.) 501. Kelly v. JAverpool, London and Globe, 2 Han. (New Bruns.) 266. Johnson v. North British and Mercan- tile, 1 Holmes (C. Ct. U. S.) 117. {c) Ilatton V. Beacon, 16 U. C. (Q. B.) 817. Bruce v. Gore District Mutual Co., 20 U, C. (C. P.) 207. Mason v. Andes Co. 23 U. C. (C. P.) 87. * An applicant told agent that he meant to obtain further insurance in other comnanies and asked him to so notifv the company. Agent replied that it would be needless until such insurance was obtained. Held, that the company was estop- ped from denying liability, on the ground that its policies forbade additional insur- ance without Its consent. Kitchen v. Hartford Fire Ins: Co., 57 Michigan 135. ' There is no double insurance where lessor obtains insurance on a building, and lessee on machinery. Flantera^ Hut. Ins. Co. v. Rowland, 66 Md. 286. 156 CONDITIONS IN POLICIES. *178 ♦That the assured so thought is evidence as to the bona [* 177] Mes of the assured in his dealings (rf). Other insurance on part of property. — If the assured take the benefit of another policy on part of the same premises but not effected by him he will avoid the first policy where notice has not been given (e). Cmditum against other insurance without notice. Assignee in bank- fy,ptaj. — A condition in a i)olicy avoiding it if the assured or his as- signee should effect other insurance and not, with reasonable dili- gence, give notice and have it endorsed on the policy, binds the as- signee in bankruptcy of the assured. Bankruptcy. — By the bank- ruptcy he becomes owner of the whole insurance effected by the bankrupt for the benefit of the estate. His 8ul>sequent insurance in his own name with another company would, if recoverable, enure to precisely the same interests; and the bankrupt's resulting interest in any surplus of his estates after all debts, &c., are paid would be precisely the same under both i)olicies (/). Who may waive. — Such condition cannot be waived by an ordi- nary agent where the consent is to be written on the nolicy (gr). An inspedtor, whose duties are to examine into the circumstances, ad- just the loss, and settle and report, is not an agent who can give such consent (Ji). He might waive a condition as to a written statement of the loss, that being within the scope of his duties. Prior to subsequent policy. — Provisions avoiding a policy for not disclosing other insurance apply to other insurance prior or subse- quent to that in the policy containing the stipulation. A man may therefore avoid two policies by not giving *notice [* 178] to the grantors of each as to the existence of the other. But in America it has been held that if the assured could never have recov- ered on the policy of later date the prior policy is not avoided (i). Policies promised but not actually issued. — When a man seeks fur- ther insurance and notifies the previous insurance, and his applica- tion is accepted and his premium paid, but the policy not issued before a loss occurs, the second* insurers cannot object that the policy if issued would have contained a condition against further msurance unless indorsed (k), ("). What things covered by policy. — An ordinary fire policy only covers property in which the assured has a beneficial interest, and by its condition excludes property held on trust or commission unless ex- (d) Greet v. Citizens, 5 U C. (App.) 596. (e) (/) P.) 55 D^oe V. Johnstown Mutual District Insurance Co., 7 U. C. (C. Jackson v. Forster, 2 E. & E. 463, 29 L J. Q. B. 8, 33 L. T. 290, 7 W. R. 578. Schondler v Wace, 1 Camp. 487. Dickson v. Provincial Instirance Co., 24U. C. (C. P.) 157, 168. ((/) Gale V. Lewis, 9 Q. B. 730, 16 L J. Q. B 119. (h) Mason v. Hartford Fire, 87 U. C (Q. B ) 437. (i) Stacey v. Franklin Fire, 2 Watts & Serg. (Penn.) 506. Uc) Bailev. St. Joseph Fire Co.^ 73 Missouri 871. '"Provision in policyrendaring it voifl in case of other insurance does not ap- ply when the other insurance previously effected was void, because of a violatioa of a condition. Stevens v. Citizens^ Ins. Co , 69 Iowa 668. 167 ;■!:*■!, Vi c * J79 THE LAWS OF INSURANCE. pressly described as such (0- Sundry articles of household furni- ture are frequently excluded from insurance, either from their fra- gility of the difficulty of valuing them, and insurers will not take on any terms risk of destruction of deeds, bonds, bills of exchange, promissory notes, money securities, or books of account. Many persons effecting insurances have not the slightest consciousness that their most valuable household effects, such as pictures, piano, prints, jewels, clocks, and watches, are wholly uncovered, unless specially mentioned, and that the policy does not cover the clothes, &c., of their guests or servants, unless special stipulation be made that to effect ("). [* 179] '"^Spontaneotis cffmbmtion. — The risk of damage to property occasioned by its own spontaneous fermentation or combus- tion is also excluded by provision. But this condition only affects the particular property in which the spontaneous action arises, and does not remove liability for other goods ignited thereby. Condition as to interest insured. — Some cases which at first sight seem bailments on trust are by their particular circumstances Teally transfers for value on special terms as to the mode of setllifig the accounts between the parties. Where this is so the policy will not be void for not disclosing the nature of the title of th© hssured, as the property is not held on trust or commission within the mean- ing of the condition requiring property so held to be specifically insured or described (wi). Such is the case with millers receiving wheat from different farmers, which wheat, by the consent of the farmers, was mixed with other wheat and became part of the miller's current stock to grind or to sell, subject to a right in the farmer's at any time (n). So also with commission merchants who receive and store grain in elevators and give receipts, but are not bound to do more than de- liver a liko quiintity and quality of wheat (o). Riot. Invasion. Rebellion. — Risk by riot, civilcommotion, inva- {l) "This policy does not cover property held on trust or on commission, unless expressly described as such ; nor china, glass, looking-glasses, jewels, clocks, watches, trinkets, medals, curiosities, government stamps, prints, pain tings,, draw- ings, sculptures, musical, mathematical, or philosophical instruments, patterns, models, or moulds, unless specially mentioned in the policy, nor deeds, bonds, billa of exchange, promissory notes, securities for money or books of account, nor gunjiowder, nor loss or daiUHge by fire to property occasioned by its own sponta- neous fermentation or heating, or by or through invasion, foreign enemy, riot, civil commotion, or military or usurped power, nor loss or damage by explosion, except loss or damage by explosion of gas in the premises referred to in this policy, not forming part of any gas-works. (m) South Australian Insurance Co. v. Randall, L. R. 3 P. C. 101, 6 Moore P. C. N. S i!41, 22 L. T. N S 843. (n) Same case. (o) Baxter v. Hartford Fire Co., 11 Bissell (U. S Circ. Ct.) 808. ** Policy insuring brick store, excepted "fences and other yard fixtures, side- walks, store furniture and fixtures " held to cover wooden shea or awning in front of building, supported on pillars sunk in ground, with rafters extending into brick wall ; but shelving in house, and an office enclosed with railing, are "store fix* tares" within the exception. Commerddl lire Jns, Co. v. AUcUf 80 Ala. 671. 158 CONDITIONS IN POLICIE& *181 sion, foreign enemy, military or usurped power is expressly ex- cepted in most if not all fire policies. Civil commotion is defined by Lord Mansfield as an insurrection of the people for general pur- poses of mischief not amounting to a rebellion, since no power is usurped (p). Where a party of men came to a coal-mine, fired *shot8 [* 180] and drove away the watchman, and set fire to premises, this loss was in Pennsylvania held within the exception against riot (q). The recent Riot (Damages) Act, 1886 (r), gives compensation out of the police rates where a house, ship, or building, in any po- lice district, has been injured or destroyed, or the property therein has been injured, stolen, or destroyed, by rioters, and provides (s. 2) that where any person, having sustained such loss, has re- ceived, by way of insurance or otherwise, any sum to recoup him in whole or iii part for such loss, the compensation payable to him shall, if exceeding such sum, be reduced by the amount thereof, and in an^' other case shall not be paid to him, and the pa}' er of such sum shall be entitled to compensation as if he had sustained the loss. Actus Dei. — Earthquakes, hurricanes, forest fires, and fires occa- sioned to insured property by or during the existence of such con- tingencies have been in some cases excepted from the risk (s). Condition as to change of title of property. — Policies on house or goods are conditioned to cease to be in force as to any property thereby insured which shall pass from the insured to any person otherwise than by will or operation of law unless notice thereof bd given to the insurers ("; and the subsistence of the insurancd in fa- vour of such other person be declared by a memorandum indorsed thereon l>y or op behalf of the insurers. The v.'l condition is as follows: *' This policy ceases to be in ' «5e as to any property hereby insured which shall pass from the insured to any other person otherwise than by will or operation of law, unless lotice thereof be given to the company, and the sub- sistence of the insurance in favour of such person be ♦doclored by a memorandum indorsed hereon by or on [* 181] bfciialf of the company."" Independently of the condition, insurances against fire have {p) Drinkwater V. London Assurance, 2 Wils. 363. Langdale v. Mason, 2 Parle Ins. 965 (8th ed. ). Mason v. Sainsoury, 3 Doug. 61. Clarke v. Blytking^ 2 B. & C. 254. (g) Lycoming Fire v. Schwenk, 40 Am. Rep. 629, 95 Penn St. 89. r) 49 & 50 Vict. c. 8P (s) Commercial Unioii •■■ Canada Mining, reach, where a mortgage is effected, and if necessary assented to by the company ; though the mortgagee may bo able to recover his mort- gage-money, he cannot recover any surplus for the mortgagor if the latter has broken a condition (w). This is analogus to the rule in life assurance where the assured mortgages and eubi^quently commits suicide («). Limitaticm, of time to me. — Insurers may lawfully (o), and do in- variably, limit the time in within which an action may be brought to a period less than that allowed by the Statute of Limitation. It is obvious that to have Ltale claims made upon them might involve them in considerable diflficulties as to the proofs and evi- [* 185] dence adduced in support *thereof which would not arise if prompt action were insisted on.*' Ground thereof. — ^The true ground on which the clause limiting the time of claim rests and is maintainable is that, by the contnct of the parties, the right to indemnity in case of loss and the liabil- ity of tne company therefor do not become absolute unless the rem- edy is sought within the year. The stipulation goes to the right as well as the remedy The clause contempleites a loss about which a contest arises or may arise between the nasured *and the company, and in respect to which the rit^ht to indemnity may be denied. The object was not to foreclose it and prevent a resort to the proper tribunal, but to compel a speedy resort and n termina- tion of the controversy while the facts were fresh in the recollection of the parties, and witnesses and the proofs accessible (p). (l) Wing V. Harveif, 28 L. J. Ch. 511, 5 Do G L. T. 120, 2 W. R. 870 (m) Oxford Buildinff Society v. Waterloo Mutual U. C. (Q. B ) 181. (n) Solicitorff, Jbc, Co. v. Lamb, 2 De fl. J. & S. 2riO. affirming sumo case 1 H. & M. 710, aa L. J. Ch. 426, 10 L. N. T. S. 702, 10 Jiir. N. 8. 7.'J9, V2 W. 11. 941, followed in City Hank v. Soverdffn C^., 82 W. R. 657. (o) Grieves. Northern Axmranre Co., 6 Victoria L. H. 44:5. Tho Courts of ■omo Atnericati States liavo held otherwiHc, do nisu in Lower (>anada, WHann v. State Fire, 7 Lr Can. Jiir. 223. (p) Crayx. Hartford Fire, 1 Blatch. (U. vS.) 280. Steen v. Niaijara Fin Co., 42 Am. Rep. 297. '♦Wheroajreiit of company induces aHHitred to forlwar brineing Ruit williin tho time limited by |X)liey, the company waives the limitation, livth v. Ifawkei/e Inn. Co., GO Iowa, 184. ^ Also where compnnjr ofToni to pay Kot'cific Bum, less than that claimed, It waivos right to require nreliminarv i»r(M)fH of loss a» ii nre-requisito to right to sue in leus tban six days. Commercial Fire Int. Co. v. Alien, 80 Ala. 671. 162 M. & O. 266, 18 Jitr 894, 23 Fire Inxurance Co , 42 CON JITIONS IN POLICIES. *186 Time varies. — The time limited by the condition varies. It is reckoned by days or months (i. « , calendar months) (g), but usually does not exceed twelve months from the date of the loss or refusal and rejection of a claim made under the policy. To make the con- dition effectual against the assured, it must be pleaded as a defence like the Statute of Limitations itself (r), and it has a like effect. Decree for payment of insurance-money without grant of policy. — If the policy ought to have been, but has not been, issued, and a de- cree is made ibr payment by the insurer on the footing of the pol- icy having been actually issued, the insurer cannot avail himself of the condition as to limitation of the time for suing, the action to compel grant of a policy not Iteirig an action on tho policy (s). Effect of limiting condition. — Where the covenant by the insurers is to pay a certain lime after the loss, the real period within which *the assured could sue may, by the limiting condi- [* 186] tion, be virtually reduced to the interval between the day at which payment ought to be made and the last day of the period within which action must by the condition be brought (t), since the time for bringing the action in the absence of special terms will run from the happening of the event insured against, but the insured will not know until after the time given to the company to pay whether they intend to settle the claim or make it necessary for him to sue them. And where proofs of loss are received within a reasonable time, before the expiration of the period fixed by tiie policy for suing, the company cannot cut off the right to sue by withholding its decision upon the- proofs until that period has ex- pired, even though the time allowed for examinmg the proofs would have consumed it (w). The il^sured is in a somewhat oetter position where, as in some policies, his time runs alternativ* iy from the loss or refusal of the comp my to pay. The same rule holds in the case of re-insurance, for the loss or damage is the injury, not the payment of the loss, and an action brought within twelve months of payment, but more than twelve months from the loss against a re-insurer, has on this ground been held too late (x). Notice of loss to be given to company. — Fire policies also contain a further proviso, running as follows: — "On the happening of any loss or damage by fire to any of the property hereby insured, the insured is forthwith to give notice in writing thereof to the com- pany ("), and within fiftee-. days at latest to deliver to the com- iq) Pomares V Prnvinrinl Ituviranve Co., Steven's Diffcst (New Bruns.) 237 (1873). Cornell v. Liveipo;■ •■1 t r I I, , t i »'i ' ' 1 . * 1 M H 1' I Lil^dfu^ii^^^ ]i' ' .. if I: *188 THE LAWS OF INSURANCE. pany a claim for any loss or damage, containing as particular ar, account as may be reasonably practicable of the several articles or matters damaged or destroyed by fire, with the estimated [* 187] value of each * of them respectively, having regard to their several values at the time of the fire, and in support thereof to give all such vouchers (y), proofs and explanations as may be reasonably required, together with, if required, a statutory declara- tion of the truth of the account; and in default thereof no claim in respect of such loss or damage shall be payable until such notice, accounts, proofs and explanations respectively shall have been given and produced, and such statutory declaration, if required, shall have been made." Preliminary proofs, tfcc— The legality of this condition is well established. " It has long been the practice of companies insuring against fire, for the purpose of their own security, to incorporate in their policies by reference to their proposals various stipulations for matters to be done by the assured making a claim before the company is to pay him, and (as the remedy by action for not com- plying with this stipulation could not afford them any protection) to make the fulfilment of those conditions a condition precedent to pay. There was much controversy on the subject about a cen- tury ago, but since the case of Worsley v. Wood (2) it has been set- tled law that this mode of protecting themselves is effectual " (a). Preliminary proofs are required for the benefit solely of the in- surer, in order that he may ascertain the nature, extent and char- acter of the loss, and, the condition in the policy in respect thereof being inserted for his benefit, there is no reason why he may not waive or extend the time in which the proofs are to be furnished, nor is it necessary to prove an express agreement to waive (6), ("). [* 188] ^Condition as to notice of loss. — The insured must immedi- ' ately upon a loss give notice to insurers thereof ("). In London the same duty devolves by statute on the fire brigade when they have knowledge of a fire. But the condition applies irrespect- ive of place or the magnitude of the fire or damage aone, and many minor fires only doing slight damage, and to extinguish which the (y) anq Mars v. Eauitable, 15 U. C (Q. B.) 143, 246. (2) Womlei/ V. Wood, T. 11. 710. See also Brown v. London Assurance 40 Hun. (N. Y.) 101. (a) London Guarantee Co. v. Veartdey, 5 App. Cas. 911, 015, 43 L. T. N. 8. 800, 28 W. II. 893. (6) 800 Edwards v. Travellers' Ins. Co., 23 Blatch. (U. S. Circ. Ct ) 228, uh to the view which the Courts take these coiiuition.s n.^ to proofs, notices, &o. '" An agent, havina authority to ac^just loss, teils assured, after an examiiia* tion, that nothing furtlicr is required, there is a waiver of further preliminary proofs of loss, although clause of policy states that agent has no power to waive condition. Indiana Ins. Co. v. Capehart, lOH Ind. 270. " Provision of policy, requiring notice of a loss, may bo waived by an agent who has authority to amust losses, even though policy jirovides that it shall not bo bound by the acta of its agents. Stevens v. CUixens Ins. Co , 60 lowu 058. 164 CONDITIONS IN POLICIES. [189 fire engit es are not needed, come within the condition. The duty of the fire brigade does not affect the contract between the parties. Time for giving notice. — "Immediately" or "forthwith" means within a reasonable time and without any unjustifiable delay (a), and reasonable time has been held in New* York to be a matter for the Court (6). Due diligence will be required in the notification even when the insurance is on interim receipt. Notices given eleven (c), or eighteen (ri), days after the fire have been held too late, but one given five days after the fire, one of such days being Sunday, has been held in time by American Courts (e). To whom to be given. — But notice to a local agent, it seems, will not do, unless lie is specially named as the proper person to receive it ; and if the particular number of days is named, the notice must be given within that time (/). Notice of loss. Presumption of delivery. — Where a policy requires notice of loss to be given forthwith by the assured to the assurer and is silent as to the mode of service, the insurer will be presumed to have received the notice, if it be proved to have been properly addressed and por^ted, since the post is the natural and obvious mode of communication in matters of business, especially when assured and assurer reside in different places (a). And in America the *presumption has been held to be based on [* 189] the governmental organization and conduct of the public mail service rendered efficient through sworn officers, and on com- mon experience as to the due transmission and delivery of matter entrusted to the post (/). The same rule applies to proofs (/). It has been held in Canada that the insurer must object at once to defects or lateness of notice (g), but in some American States a dif- ferent view obtains {h). If, however, the silence of the insurer misleads the assured and prejudices his claim, the insurer will in such case bo held to have waived his right to notice or proof, or will be estopped from disputing that they were delivered in due time. Preliminary notice. Agenfs adjustment. — Unless the insurer can show fraud, he will be precluded by his agent's adjustment of a loss from denying that ho had proper notice thereof (i). But if (a) liokcn V. Amazon Tnxurauce Co., 51 Maryland 612. Cashati v. North- western National Insurance Co., 5 Bisaell (C. (/t. U. S ) 47G. (b) Brown v. London As. , , .. *190 THE LAWS OP INSUBANCe;. |JJ4 i '.I W'<- )■ i).; ''1 [: 'l lii: the insurer's agent by fraud obtains a settlement, the assured can get it set aside (j). Limitation operates though assured in prison at time of fire. — The contractual limitation will not be extended on the ground that the assured was in prison at the time of the loss, and so continued until his death, and that his creditors began the action within a reiasonable tiqae thereafter (k). Proof. — Of the elaborateness of some conditions na to proofs, no better example can be given than that in the Canadian oase of Smith V. Commercial Union (I), characterized in the judgment as of wonderful structure and scope, and as calculated to give the assured twelve months' hard work — three months being the limit allowed him to make out his proofs (m), ("), ("). [* 190] ^Particulars of loss. When to be delivered. — The account of loss is usually conditioned to be delivered within fifteen days at latest, and such condition is reasonable in substance. Otherwise the assured might lie by and spring a stale claim on the insurers at a time when they could not investigate it. Sometimes three months are given for the account (n). Construction of condi- titm. — The condition will not be strictl}^ construed (o). It means that the assured is within a convenient time after the loss to pro- duce to insurers something which enable them to judge whether be has sustained a loss or no, and, if from any cause it is impossi- ble to give the preliminary proof within the time, it would seem (and it certainly is just) that reasonable time should be allowed (p). The assured, of course, cannot be expected to give notice till he knows himself, and if he is away at the time of fire no objec- tion can be taken on the ground of any delay caused by such absence (q). Delay in notice suspends claim. — And the condition is here usually BO drawn as not to forfeit the insurance for delay beyond the fifteen days, but only to suspend all claim under the policy " until the re- quired notices, accounts, proofs, and explanations are given in." \ii I ) McLean v. Equitable, SO Am. Ren. 779. [) Tallman v. Mutual Fire Co., 27 U. C (Q. B.) 100. (/) 33 U. C. (Q. B ) 09, 89. (»i) See also in Bowes v. National, 4 P. '& B. (New Brans ) 437. (n) lioper v. Letidon, 1 E. & E 825, 5 Jur. N. 8 491, 28 L. J. Q. B. 2G0, 7 W. R. 441. (o) Mason v. Harvey, 8 Ex. 810, 22 L. J. Ex. 336, 21 L. T. 158. Dill v. Quebec Assurance Co, 1 Revuo legale (Lr. Can ) 118, Lr. Can. Civil Code, 2478. • (») l^cott V. Phoenix, Stiiurt ( Lr. Can. ) 354 ( P, C). See Bowes \. National, 4 P. & B. ( New Bruns. ) 437. Dill v. Quebec Assurance Co , above cited, 1 Re^ue It'i^le (Lr. Can.) 118, Lr. Can. Code, 2490-2509. (q) Smith v. Queen Insurance Co., 1 Han. (New Brims.) 811. * • Provision in a policjr that in case of loss copies of all policies must bo fur- nished requires a substantial and reasonalile, and not a literal compliance. Mil- ler V. Hartford Fire Ins. Co., 70 Iowa 704 '" If proofs of loss are reasonably certain it is enough. The precision in pleading is not necessary. Erwin v. Springjield F. d: M. Ins. Co., 24 Mo. App. 146. 166 CONDITIONS IN POLICIES. *192 If these words are in the policy the condition is still precedent (r), but these words enlarge tlie time beyond the fifteen days. State- merit of loss. — Consequently till the statement is made and the stat- utory declaration, if required, made also, the money is under the condition not payable, and the time of payment not come. So that though the right of action *may not be lost, it will be [* 191] suspended till the condition is complied with («). Meaning of ^^fuUpartictdars." — ' Full particulars " means*' the best particulars which the assured can reasonably give," and the latter phrase is in some policies substituted for the former. If the pro- viso were more strictly construed, inadvertent omissions of losses or insertions of things not lost would defeat the claim of the assured (t). Condition as to verification of loss. False statement as to title not within it. — When a condition only requires verification of the statement of loss, false statements as to title and incumbrances cannot be relied on as avoiding the policy under this condition (u). Certificate of magistrate. — The conditions still found in American and colonial policies (x) requiring the certificate of a magistrate seem to have long since fallen out of use in this country (^), and only come before English lawyers in colonial appeals. Where they are used, no claim for indemnity can be made until a proper cer- tificate has been furnished (z). Old form of condition. — The purpose of the old condition as to the certificate of magistrate, clergyman, churchwardens, and other rep- utable inhabitants was that persons holding public positions in the neighbourhood, and who were therefore to be deemed responsible and substantial, might give the ofiice their opinion on the charac- ter of the fire and loss, and thereby afiiord the office some protection from fraud (a). ^'•Refusal of certificate. — Refusal of such certificate will not [* 192] affect the insurers. The assured cannot compel the grant of Euch certificate (6), he cannot substitute other persons for those stipulated (c), and, having undertaken for the act of a stranger can not succeed unless that act is done (d). But there may be cases in > H u>r ■Aim w n t-; ■;!,?,!! (r) Weir v. Northern, 4 L. R. Ir. 689. Ijofargey. Liverpool, London and Globe, 17 Lr. Can. Jur. 287. (s) Oldman v. Beicicke, 1 H. Bl. 677 note (1780). Worslei/ v. Wood, T. R. 710 (1790). Mason v. Harvey, 8 Ex. 819, 22 L. J. 836, 21 L T. 158. It) Ma^on V. Harvey, 8 Ex. 819, 820, 22 L. J. Ex. 8a0, 21 L. T. 158. lu) Ross V. Commercial Union, 26 U. C (Q. B.)C52. far) Supra. And deo Logan v. Commercial Union, R. & G. (Nov. Sco) 809. (tf) This disposea of cases like lioutled,ge v. Burrell, 1 H. Bl. 255, and Otdman V. Bewicke, 3 H. Bl. 577 note. (2) Worsley v. Wood, 6 T. R. 7i0. M^Ilosie v. Provincial Insurance Co., 84 U. C. (Q. B.j 55. Kerr v. Britlth American Assurance Co , 83 U. C. (Q. B.) 569. Daniels v. Equitable Co,, CO Conn. 561. (a) Worshy v. Wood, 6 T. R. 710, per Lawrence, J. ib) Worsley v. Wood, T. R. 722, per Lawrence, J. c) P. 721, per Grose, J. Campbell v. French, T. R. 200. d) P. 720, per Grose, J. Racine v Equitable, 6 Lr. Can. Jur. 89. 1(57 193 THE LAWS OP INSURANCE. 'mi i I which the Courts will hold the condition substantially complied with, provided, of course, that the right persons certify. Contents of certificate.— The certificate must state— (1) That the magistrate is not interested. (2) That ho has examined the circumstances attending the fire, &c. (3) That he knows the character of the assured. (4) That he believes the fire to have happened without fraud or evil practice on the part of the assured. (5) That the claimant under the policy, if difierent from the as- sured, has sustained damage in (e) respect of matters covered by the policy. (6) The amount of loss which is believed to have taken place (/). Person certifying must be disinterested. — The magistrate must not have suffered by the fire, nor have any interest in the property damaged, nor be interested in the insurance company (gr), nor be a creditor or relation of the assured (A). A coroner has in Canada been held to be a magistrate within the condition (i). [* 193] * Affidavit of loss. — In the older policies an affidavit used to be required. But now the policy merely binds the as- sured to make a statutory declaration if required, vouching the truth of his statements as to loss, value, &o. The affidavit must be in proper form (j) or as stipulated (k). This must be bond fide de- manded for any defence to be rested on its not being supplied {I). Preliminary proofs. — Such stipulations as to proof do not touch the substance of the contract, but relate only to the form or mode of ascertaining and proving the liability of the insurer ; and the proofs may be submitted to the officers of the insurance company, who must give an opinion on their sufficiency in the ordinary scope of their employment (m), (*•). Omission to make the formal preliminary proof of loss required by a policy may be waived by the officers of an insurance company. Such waiver may be express or implied, and will be implied from (c) Kerr v. British American Assurame Co., 82 U. C. (Q. B.) 509. (/) Scott V. Phoenix Co., Stuart (Lr. Can.) 152, 854 (P. C). [g) M'liosie v. Provincial Insurance Co., 34 U. C (Q. B ) 55, where the mag- istrate was landlord. (A) Daniels V. Equitable Co., 50 Conn. 551. (t) Kerr v. British American Co., ^2 U. C. (Q. B.) 5G9. (j) Shaw V. St. Lawrence County Mutual Fire Insurance Co., 11 U. C. (Q. B.) 78. (k) Langel v. Mutual Insurance Co., 17 U. C. (Q. B.) 524. Mann v. Western, 17 U. C. (Q. B.) 190. (I) Cameron v. IHmes and Beacon, 7 U. C. (C. P.) 234. (m) Priest V. Citizens^ Mutual, 85 Masa. (3 Allen) 003. *" It ia the duty of insurance company, upon finditig proofs of loss objectiona> ble, to return the same informing assured of the particular defects. A general reply that they do not correspond with printed instructions, and refu.sal to receive them, will not avail the company. Universal Fire Ins. Co. v. Black, 109 Pa. St. 585.. 168 CONDITIONS IN POLICIES. *194 omission to state their "objection to the preliminary proofs and re- fusing to pay on other grounds (n). Proofs iMist he sent in wiJlhin prescribed time. — Where a condition of a fire policy requires the makin>{ and furnishing of proofs of loss within a specified time, and declares that until ihey are furnished the loss shall not be payable, the time is a material part of the con- dition, and consequently, in the absence of waiver, the assured cannot recover unless he sends in the proper proofs within the pre- scribed time (o), ("). * Waiver of condition as to proofs. — Mere silence as to proofs [* 194] sent in after the time limited by the conditions does not amount to a waiver of the condition, nor does a declaration then made that the company does not consider itself liable amount to a waiver (jj). Proof may be given of loss besides that in account delivered to company. Where a detailed account of loss sustained by the fire is delivered in compliance with a stipulation in the policy, the plaintiff is not precluded from giving evidence of the loss of property not specified m the account (g), (,"). Time for payment runs from completion of proofs. — The time allow- ed by the condition for payment of the insurance-money by the company runs from the time the insured puts in the proofs on which he relies (r). Waiver. — Waiver may be inferred from the acts and conduct of the insurer inconsistent with any intention to insist on the strict performance of the condition (s), (**). Where proofs unnecessary. — Where an insurance company repudi- (n) Pimv. lidd, G M. & G. 1, 12 L. J. C. P. 299, 6 Scott N. R. 983, Under- hill V. Agawam Insurance Co., GO Mass. (G Cush.) 440. Pii&st v. Citizens^ Mutual Fire, 85 Mass. (3 Allen) 002. Lambkin v. Ontario Marine and Fire, 12 U. C. (Q B.) 578. Whyte v. Western Insurance Co., 22 Lr. Can. Jur. 215 (P. C). Knickerbocker, &C; Co. v. Pendleton, 6 Davis (Sup. Ct. U. S.) G96, 709. Gauche v. London and Lancashire Co , 4 Woods (U. S. Circ- Ct.) 102. («) Whyte V. Western Co., 22 Lr. Can. Jur. 215 (P. C). (p) Whyte V. Western Co. (in Privy Council, reported 22 Lr. Can Jur. 215. Abrahams v. Agrimdtural Mutual Fire Co., 40 If. C ( Q. B ) 175, 180. See Lancashire Co. v. Chapman, (P. C, reported in 7 Revue legale (Lr. Can.) 47. (q) Vautc. V. Forster, lr. Circ. Rep. 47. (r) See Rice v. Provincial, 7 U. C (C. P.) 548. Hatton v. Provincial, 7 U. C. (C. P.) 556. Cameron v. Monarch, 7 U. C. (C. P.) 212. (s) Pokes V. Amazon Insurance Co , 51 Maryland 512, and cases there cited. *' Where no lime is required in which to furnish proofs of los.s. they may be furnished within a reasonable time, according to circumstances. Miller v. Hart- ford Fire Ins. Co., 70 Iowa 704. ^ " If company refused to act upon proofs of loss and repudiated liability, in- sured is not estopped, hy the proofs, from recovering a larger amount. Sibley v. Prescott Ins. Co., 57 Mich. 14. ^' Where insurance company received praofs of loss without making objection. Held, that insurer waived defects. Fliot Five Cents Saving Hank v. Commer- cial Union Assurance Co., 142 Mass. 142. Susquehanna Muf "^ire. Ins Co. v. Cusick^ 109 Pa. St. 157. Parks v. Pha>nix Ins. Co., 26 Mo. .' ^jp 537. Erwin V. Springfield F. & M. Ins. Co., 24 Mo. Apt). 145. 169. :UfK *195 THE LAWS OF INSURANCE. m ates an insurance and has not signed a policy, preliminary proofs are needless (<), ('*), (")• , , . . Edimate of amount. — The assured may have to give in a valua- tion of what he has l»st under the condition as to particulars. Whether so stipulated or not, he cannot recover for more than the worth at the time of the fire, and it is usually stipulated that he shall so value (u). Price. — In the case of furniture cost price might assist in [ *195] arriving at, but would not be, the proper estimate. *In the case of stock-in-trade, the market price (v), and not the cost price or intrinsic value would seem to be the proper value. But the cost of manufacturing goods may be given in evidence to aid the jury in determining the fair market-value (w). Naturally goods long in stock would not be estimated at cost but at sale price, and it would only seem fair to take the same test for goods recently ac- quired and in full condition and favour with the public. The rule cuts both ways when prices are depressed (a;). Mistake in proofs as to cause of fire. — Error as to the cause of fire (made without fraud) in the preliminary proofs may be corrected and the insurer made liable by proof of the true cause (y). Inno- cent misstatement is not within the condition (z). Acceptance of. — If the insurers admit a policy and agree to try the cause and manner of the loss, they cannot take any objection on the policy as to the propriety of the notices and proof (a). Estimate must be detailed. — The damage must not be lumped, but given in detail. Even if not so stipulated, the assured would be liable to deliver particulars giving a detailed account of the several items making the sum total of his loss. A fraudulent overcharge will of course avoid the policy. The condition relating thereto is no mere threat (6). Vouchers. — Vouchers, proofs, and explanations are required as much by good faith as by the conditions, and a man who would (<) Goodwin v. Lancashire Fire, 18 Lr. Can. Jur 1. (m) As to evidence admissible in proof of value, see Clement v. British Atner- ican Ins. Co., 141 Mass. 298. (u) Equitable Co. v Quinn, 11 Lr. Can. Rep. 170. (w) Clement v. British American Co., 141 Mass. at p. 301. Mack v. Lan- cashire Co., 2 McCrary (U. S. Circ. Ct.) 211 (x) M'Cuaig v. Quaker City Co., 18 U. C. (Q B.) 130. {y) Smiley v. Citizens' Fire 14 West Virginia 33. Meagher v. London and Lancashire Fire, 7 Victoria L. R. 39^ («) Titus V. Glen Falls Co., 81 N. Y. 412, 421. (a) Walker v. Western, 18 U. C (Q. B.) 19. (6) Thomas v. Times and Beacon, 3 Lr Can. Jur. 1G2. ** Proof of loss or objection to form df proof is waived when company basis its refusal to pay on other grounds Grange Mill Co. v. Western Assurance Co., 118 111. 896. Continental Life Lis. Co. v. Roger.i, 119 111. 474 " An unqualified refusal to pay loss is a waiver of proof of loss even though statute and contract require such proof Boyd v. Cedar Rapids Ins. Co., 70 Iowa 325. 170 . . C»NDrnONS IN POLICIES. *197 not show his accounts would have as little chance of recovering under tlie Common Law as under an ordinary policy. ♦Where the assured refused to produce invoices demanded [* 196] by the insurers under a condition as to vouchers, &c., it was held that he must be nonsuited (c). Vouchers of course will in- clude books of account if any are kept. And where the assured has insured a certain sum on stock-in-trade and has been trading for some months, the insurers are reasonably justified within this condition in calling for such proof as the assured can furnish, that after deducting the goods saved and the goods sold he still had in stock such further aqnount of goods as would make his loss amount to the full sum insured (d) or claimed under the policy. IVoof of loss. What may be required. — A builder's certificate as to the value of the house at the time of fire may reasonably be re- quired under this condition, and must be supplied, if required, be- fore action brought (e). Omission to verify if so required by books of account or other proper vouchers is fatal unless the conditions are literally or sub- stantially complied with (/) in those cases where the man has such means of verification. If the books, &c., are burnt, the assured must supply a particu- lar account, if any means of so doing still remain (g). A mere affidavit of value with accounts of goods sold to the as- sured, and having only charges of goods per invoice without par- ticulars, will not suffice (h). *Fal8e statement. AgenCs knowledge of facts. — A false state- [* 197] ment made by the insured cannot be excused by knowledge of the truth possessed by a local agent receiving the application, whether such false statement be made in the application or the proofs of loss. In the latter case, the liability havmg accrued, the question of waiver would not arise (t). Ascertainment, &c., loss. Condition precedent. — Ascertainment and proof or adjustment of the loss may be made a condition precedent to the right to sue for the loss, audit is a good defence to an action that the loss has not been ascertained and proved (k). The mode of proof, tfec, need not be pleaded, being matter of evidence only. ^'■Satisfactory.''' — Proof satisfactory to the company means proof fc) Cinq Mars v. Equitable Insurance Co., 16 U. C (Q. B.) 143, 246. (rf) JWa., 246, per Robinson, C. J. (e) Fawcett v. Liverpool, London, and Globe, 27 U. C (Q. B) 225. (/) Greaves v. Niagara District Mutual Fire Insurance Co., 25 U. C (Q. B.) 127. Scott V. Niagara Distnct, 25 U. C (Q B.) 123. Banting v. Niagara Distnct Mutual Fire Insurance Co., 25 U. C. (Q. B) 431. (g) Carters V. Same, 19 U. C. (C. P-) 143 (h) Mulvey v. Gore District Mutual Fire Insurance Co , 2.") U. C. (Q. B. ) 424. (i) Hansen v. American Insurance Co., 57 Iowa 741 [k) Elliot V. Rotfal Exchange, L. R. 2 Ex. 237, 86 L. J. Ex. 129. 16 L T. N. S. 899. 16 W R. 907. See also M'Manus v. Etna Co., 6 Allen (New Bruns) 814. Johnston \. Western, 4 U C. (App.) 281. Lambkin v. Western, 13 U. C. (Q B ) 237. Waifdell v. Provincial, 21 U. C. (Q. B.) 012. London and Lan- cashire V. Honey f 2 Victoria L. B. 7. 171 '■:'i^'^;3'tl ♦199 THE LAWS OF INSURANCE. 1 i m'^^ A-m 'I i; ■|;t I '■■' which ought to be or in the opinion of a court of justice is satis- factory (/). Valuation. Fraud. Excesaive valuation. — If the assured does not rea- sonably and actually believe in the valuation put on his goods in his proof, he will forfeit all claim under the condition as to fraud (m). And if a jury find a verdict for an amount very much less than the claim, the judgment will either be entered for the insurers (n) on the ground that the assured has been guilty of fraud in his valua- tion, and so avoided the policy within the condition, or a new trial will be ordered (o). It does not seem clear how much less the find- ing must be than the valuation for the policy to be avoided on the ground of fraud, and no decision seems to have been given [* 198] on that *point in England encept Levy v. Baillie, where the claim was £1085 and the verdict for £500 (p). In Novia Scotia, in a case where the verdict was for 83000 but many witnesses valued the property at $500, the verdict was set aside (g). But in another, where 6840 was claimed and $600 awarded, the verdict was upheld because the effect of the finding of the jury was to negative fraud (r). Over-value. — So also in Ontario, where it was said that it not appearing that an over-valuation was made mala fide, but by error ofjudgment, the CJourt will not set aside a verdict, the ques- tion of fraud being for the lury («). Over-v(duali(mnotjraudulemt. — Over- valuation in an application, if not fraudulent, will not avoid a policy (0- Conditim as to fraud in claim, or criminal procurement of fire. — The condition as to fraud in the claim runs as follows : — " If the claim be in any respect fraudulent, or if any statement or statutory dec- laration made in support thereof be false, or if the fire was caused by or through the wilful act, procurement, or connivance of the in- sured or any claimant, all benefit under this policy is forfeited." This condition imposes no duty as to diligence in saving the goods endangered by a fire, but deals only with arson or procure- ment thereof. In London the rescue of property is generally un- dertaken by the salvage corps, and the goods are at insurer's risk from the outbreak ot the fire. In America and the colonies [* 199] efforts are made by many if not all insurers to make *the (?) London Guarantee Co. v. Fearnley, 5 App. Cas. 911, 43 L. T. N. S. 390, 28 W. R 893. Manby v. Greshnm Life, 29 Beav. 439, • 1 L. J. Ch. 94, 4 L. T. N. S. 347, 9 W. R. 547, 7 Jur. N. S. 388 (m) Newton v. Gore District Mutual Fire Insurance Co., 33 U. C. (Q. B.) 92. (n) Riach v. Niagara Co., 21 U. C. {C. P.) 464. (o) Levy v. Baillie, 7 Bing. 369. ( p ) See also Britton v. Koyal Insurance Co., 4 F. & F. 905 and notes, 15 L. T. N. S. 72. I q ) M^Leodv. Citizens^ Insurance Co., 3 Russ & Ch. (Novia Scotia) 160. (r) Cann v. Imperial Fire Insurance Co., 1 Russ. & Ch. (Novia Scotia) 240. (s) Rice V. Provincial Insurance Co., 7 U. C (C. P.) 548. Moore v. I^otection Insurance Co., 29 Maine 97 {t) Canada Landed Credit Co. v. Canada Agricultural Insurance Co., 17 Grant (U. C.) 418. Laidlawv. Liverpooland London Co , 13 Grant (U. C) 377. 172 CONDITIONS IN POLICIES. *200 insured do his best to save his goods notwithstanding that he is insured (u). What the condition includes. — But the condition covers — (i.) Fraud after the right of action has accrued, such as (a) any attempt to cheat the insurer in respect of the amount of claim or otherwise (x) • (b) any statements or allegations which are intentionally false an(i relevant to the account of loss whether intended or not to cheat the insurer. Condition as to fraud in claim and arson. — (ii.) Arson of the in- sured or any claimant under the policy, including any person who would in any event be entitled to the value of houses or goods such as a mortgagee or bill of sale holder or other person to whose order the policy-moneys were made payable. The crimes in question are all included under the general head of arson (y). False statement in claim. — False in the condition means wilfully and intentionally false (z). If the plaintiff prefers a claim which he knows to be false and unjust he can recover nothing. The false statement must have reference to the claim and not to any immaterial or collateral object (a), since the condition is to be construed with reference to its interest and object, viz., the account of the loss and value of the property insured (6), ("). As to fraud in the claim. — Fraud in the claim is quite dis- tinct from fraud in *the proposals and negotiations for the [* 200] policy (c). While excessive valuation may be material be- fore the taking of a risk (ci), and make the policy void ah initio, excess in the claim only operates by destroying the remedy and putting the claimant out of court (p). Excessive claim not conclusive of fraud. — The mere fact of excess is not conclusive of fraud (/). . Valuation is to a large degree matter of opinion, but over-valuation may be so great as to be incompati- («) See eases under removal, p 121 ct seq. (x) Grciner v. Monarch Co., Lr. Can. Jur. 100. Seghetti v. Queen Insurance Co.f 10 Lr. Can. Jur. 243. Harris v. Lancashire Co., 10 Lr. Can Jur. 268 [y) This is dealt with more fully m the chapter on " Risk." [z) Jiritton V. Eoi/al Insurance, 4 F. & F. 905, 15 L T. N. S. 72. Levy v. Baillie, 7 Bing. 849. Sleeves v. Sovereign Fire, 4 Pug. & Burb. ( New Bruns. ) 394. lieg v. Soi/nes, 1 C. & K. 65. Mason v. Agricultural Mutual Fire Insur- ance Co., 18 U. C (C. P.) 19, and see Chapman v. Pole, 22 L. T. N. S. 306. (a) Crowley v. Agricultural Mutual Fire Insurance Co., 21 U. C (C. P.) 507' (6) Ross V. Commercial Union Assurance Co., 26 U. C. (Q. B.) 552. (c) See Briiton v. Royal Insurance Co., 4 F. & F 905 notes, 15 L. T. N. S. Ii. (d) lonides v. Pender, L R 9 Q. B., 531, 43 L. J. Q. B. 227, 30 L. T. N. S. 547, 21 W R 884. (e) Meagher v. London an " Lancashire, 7 Victoria L. R. 390. (Jf) Ibid. Levy V. liailL^, 7 Bing 8iQ. " " The company, when sued for loss, must show fraud or intended false swear- ing as to a material matter. Oahkosh Packing and Provision Co. v. Mercantile Int. Co., 81 Fed. Rep. 200. 173 i' 51 ■ ..\:\% *201 THE LAWS OF INSUnANJS. h 'i ,'M Jii if 'li^iii;' ,M 'll m: \il: ble with good faith, or may be dishonestly made (g). Consecuently the proper direction for the jury in such a case, it seems, would be to find for the plaintiff, unless on the evidence they thought the claim and declaration were fraudulently untrue. In Levy v. Baillie {h) a new triiil was ordered instead of entry of judgment for the defendants, which was asked for. This supports the view that the jury must expressly find fraud, and that it cannot be inferred from tho discrepancy between the amount claimed and their verdict (i). But jurors are apt to be exceedingly charitable in their construc- tion of a plaintiflf's motives whenever the defendants are an insur- ance company (k). Said a learned judge in Canada, " He may be sanguine enough to expect that another jury may be found to deal with hia capp in as large a spirit of charity as to his estimate of loss and the good faith of his affidavits as the jury which has [* 201] ^recently upheld his honesty of purpose in swearing that his "actual loss was twelve times larger than they them- Pdlves found it to be " (0- Mere misstatement will not invalidate claim. — Mere mistakes in the statement, &c., will not forfeit the claim (m). To ask that they should do so would be a breach of good faith on the part of the in- surers. Mere overclaim will not prove nor even raise a presump- tion of fraud. Error or some degree of exaggeration or over-esti- mate does not amount to fraud, and in such cases the insured will be entitled to recover according to the real value and amount of loss actually sustained (n). But false swearing intended to de- ceive, not insurers, but other persons, may invalidate a claim (o). Reckless statement. — If a claimant recklessly values his property, not knowing nor taking the trouble to ascertain the accuracy of his valuation, he can hardly complain if his claim be treated as fraudulent (])) within the principle laid down in Reese River Co. v. Smithy L. R. 4 H. L. 79, 39 \». J. Ch. 855, especially as reckless under-stateraent is more than unlikely. Defence of arson. — Arson is discouraged as a defence to an action on a policy, since criminal matters are thereby m; ied up with Riach V. Niagara Dhtrict Mutual Jersey Ciiii Co v. Nirhols, 35 Now (g) Chapman v. Pole, 22 L. T N. S 5106 Fire Imurance Co., 21 U. C(C. P.j 4(54. Jersey Eq. 291. (A) 7 Bing 349 ; sec McMillan v. Gore District Mutual Fire Insurance Co., 21 U. C. (C P.) 123, and 6'om/, Soo Meagher Mason V. llarrey. CONDITIONS IN POLICIES. *203 civil proceedings (g), and the crime must, if imputed, be so fully proved as to justify the jury in finding the plaintiff guilty on in- dictment (r). And the Court will be very unwilling to grant a new trial where such a defence has been raised (s). *Proof of his loss is, of course, upon the assured. He [* 202] must show, if required, that the goods were on the prem- ises at the date of the fire, and were lost, damaged, or stolen (0. Oonditiati that company may enter premises. — A further conditions in fire policies is as follows: — "On the happening of any loss or damage by fire to any property in respect of which a claim is or may be made under this policy, the company, without being deemed a wrongdoer, may, by its authorized officer and servants, enter into the buildings or place in which such loss or damage has happened, and for a reasonable time remain in possession thereof, and of any property hereby insured which is container therein, for all reasonable purposes relating thereto or in connection with the insurance hereby efiected thereon, and this policy shall be evidence of leave and license for that purpose." Insurers not to remain on premises unreasonable time. — This condi- tion is inserted in order to enable the Insurers to see lor themselves the nature of the damage and tlie causes thereof, and of testing the accuracy of the proposcls and bona fides of the insured. The^ are thereby given leave and licei e to enter before any claim is made on getting notice of the fire. They will be liable to an action for damages if they retain possession unreasonably long (m), and they are not entitled to prevent the assured seeing the salvage. i'urpose of condition as to entry. — What the insurers want the license to enter for is to enable them to ascertain — 1. The exact description of the building injured, ^■y see if it tal- lies substantially with the desciption thereof give,^ at the obtain- ing of the policy and of the risk. 2. The nature of the trade carried on at the time of the fire, to Bee whether it is in accordance with the conditions. *3. The cause of, and place where, the fire began, with a [=** 203 view to detecting any attempt at arson. 4. The amount of damage done thereby, and that they may be able to protect the salvage. The insured is bound to give nil his knowledge on these subjects. Condition as to reinstatement. — Fire policies also invariably contain a condition as to reinstatement, which usually is to the following Gnulstone v. (q) IMHon V. Royal, 4 F. & F. 006, 008, 15 L. T. N. S. 72. Royal, 1 F. & F. 270. (r) rhurtell v. Beaumont, 1 Bing. 889, 8 Moore C. P. 612, 2 L. J. C. P. 4. The American Courts hold less strict proot necessary. (,v) (Soidd V. liritiah America Asmranre Co., 27 U. C. ( Q. B.) 47!}. But see M'MiUan v. Gore IHstrid. 21 U. C (C P) 128. (/) Ilari'li V. London and Lancashire Fire, 10 L.'. Cun. Jur. 208. (n) Olifield V. Price, 2 F. & h\ bO. Norton v. Royal Co., Times, S May and 18 Aug. 1886. 175 pr?, 52 m r ii^|;iiiii*' ! in::;!?' ' ''■ ," ii;| *204 THE LAWS OF INSURANCE. II f fk effect : — The company may, if it think fit, reinstate or replace prop, erty (x) damaged or destroyed instead of paying the amount of the loss or damage, and may join with any other company or insurers in so doing in cases where the property is also insuied elsewhere (»•). This condition as regards policies on English realty or chattels affixed to the freehold is in the main only declaratory to the law as enacted by s. 83 of 14 Geo. III. c. 78. That Act does not apply to Scotland {y) or Ireland (z), nor to personalty in England (a). Con- dition gives larger powers than statute. — As to those countries and property of that kind, the condition enlarges the powers of the in- surers, and the time for reinstatement is also usually enlarged (6) by the terms of the condition. Moreover, the condition enables the insurers to reinstate without reason given and where there is no suspicion (c-), so that they can reinstate in cases of dispute as to the amount of damage, or where they think reinstatement will '^e cheapest for them. They are under statutory obligations to reinstate in suspicious cases. [* 204] '^Damage may be repaired. — The right to reinstate under the condition arises whether the destruction is total or partial (d). Whether company must abide by election to reinstate. — If the com- pany elect to reinstate, they must do so, and cannot fall back on payment (e), unless by failure of the assured's title to the locus in quo the insurers cannot lawfully enter to reinstate (/). The con- verse is equally true. The power to combine with other insurers in reinstating is important in cases where there are several interests in the property insured, as in case of mortgages (g). Condition as to forfeiture of premiums. — The last condition in a iire policy is to the following effect: — In all cases where the policy is void or has ceased to be in force under any of the foregoing condi- tions, all moneys paid to the insurers in respect thereof will be for- feited. Being a condition as to forfeiture, it may be waived. And it does not seem to apply to cases where the policy does not attach at all. Waiver of the forfeiture. — It may be asserted broadly that if, in {x) Reinstatement is " Replacement in forma specifica," Sutherland v. Sun Fire, 14 C. S. ('. (2nd series) 775. . (.v) liimil V. Jtnj/al Exchange, 1 C. S. C (Istseries) 174. (z) Being prior to the Union. (a) Ex parto Gorele!/, 4 De G. J. & S. 477, 34 L. J. Bkcy. 1, 11 L. T. N. S. 819, 10 Jur. N. 8. 1085, 13W.R. 60. (h) Siitlierland v. Sun Fire, supra. (c) Jiissett V. Jioi/al Exchange, 1 C. S. C. (Ist series) 174. {({) Sutheiland v. Sun Fire. 14 C. S. C. (2nd scries) 775. (e) Ibid, 779. lirown v. Jfnj/al, 1 E. & E 86;J, 28 L. J. Q. 11. 27B, 31 L. T. n;, 7 W. R, 479, 5 Jur. N. S lv56. (/) Anderson v. Commercial Union, 55 L. J. Q. B. 140, 84, W. R. 189. ig) Scnttink Amicable Aii.rriation v. No7'them Assurance Co., 21 Sc Ti. U. 189.11 C. S. C. (4tli series) 287. (2<3a) Sec chiip. 12 on Reinstatemeut. 176 'if CONDITIONS IN POLICTES. *205 any negotiations or transactions with the insured after knowledge of the forfeiture, the insurer recognizes the continued validity of the policy, or does acts based thereon, or requires the assured by virtue thereof to do some act or incur some tiouble or expense, the forfeit- ure is waived (h). Conditions of life insurance different from those of other insurance. — The conditions of life insurance differ widely from those in other insurance. There can be no conditions as to proof of damage in a life policy, the contract apart from questions of bonus being to p!«v a liquidated sum on a given event. Proof of age (") and death (") is all that is needed, and often the former is admitted at the out- set. ^Kinds of conditions. — The other conditions of life insur- [* 205] ance may be classified as follows : — (a) Limiting the region wherein the insurance operates. (b) Limiting the occupations in the exercise of which the ad.^t ;kI is protected. (^v I Specifying certain modes of death, on the happening of which the sum insured will not be payable, e. g.. suicide, hands of justice, or duel, or i»ct violating the law. (d) Requiring timely payment of premiums, but providing a means of reviving lapsed policies where the risk has not been ma- terially changed in the interval. (e) Making the undertaking of the risk conditional on the truth of all statements or answers made on the application to insure, whether the insurance be on own or another s life, and whether the statements be made by the assured or his agents. Conditions may m^ke contract void or voidable. Waiver of breach. — It will be seen that under the Inst class of conditions only can the policy be void ab initio, a, b, c, are conditions which amount to exceptions from the risk taken. It seems, however, that in ttie case as well of a condition making the policy void as of one mak- ing it voidable, the non-fulfilment of the condition may be waived by the insurers, if they do any act amounting to an affirmance of the contract nfter knowledge of the breach of the condition (t). Leave and license by the insurer to break the condition, will also save the rights of the insured (j). (h) Titus V. Olen Falls Co 81 N. Y. 410, 419. See Robertson v. Metropol- itan Life Jnsiirance (>>., 88 N. Y. C41, and Insurance Co. v. Norton, G Ottc (96 U. 8.) '2'M, wl\icli goes into English ouhcs. Ward v. Da}/, 4 Best & Sm. 387. (?) Armstronrf v Turqiiand, 9 fr. C. L. R. 82. Wing v. Ilarvei/, B Do O. M. & (}. 2(ir> 28 L.'J. Ch. 511, 18 Jur. 894, 23 L. T. 120, it W. R. 870. Supple v. Cann, 9 Ir. C. L. R. 1. ( i) IMs V. Srotiish Equitable, 9 II. & N. 19, 26 L. .1. Ex. V79, 29 L. T. 11«, r, W.'R. 592, 8Jiir N. S. 417. '* F\»lHeTenrcsent4ition as to ,i(i(( rnndoreti ft contract invalid. Sweet v. (Hti- tens' Mtihud Relief Society, 78 Me. 641. ^'' Dc'iiiil of linbility is a wiiivor of right to require proof ct death. Kanatu Protective Union v. Whitt, 86 Kan 700. ±2 PORIKR ON INSURANCB. 177 ■m *207 THE LAWS OF INSURAXCE. ["'206] *Non-disclomre of medical attendant. Of di sense. —\i (he assured fails to disclose the names of medical men cm- j)loyemkes no difference that the assured had simply told the insurer's agent to make inquiries of the person on whom the policy was to be made. But if the assured has made most of the representations, and only refers to the life on certain spr cific points, the knowledge of the life outside that particular maiter is not knowledge of the as- sured (a;). Concealment of refusal by forftier company to accept insurance. — An applicant for insurance who conceals from the agent to whom he applies that he has already applied to and been refused by an agent of the same company, conceals a material fact. Knowledge of the applicants previous dealings with other insurers is at leist ns ma- (p) Notham v. Anchor Co., 4 C. B. N. S. 476, 27 L. J. C. P. 275, 4 Jur. N. 8. 712, 6W. R. 688, 81 L. T. 202. (q) Bell's Principles 2''1. (r) New York Life v. Hendren, 24 Gratt. (Vt 1 ()40. (i) Dillard v. JIfanhattan Life, 9 Am. Rep. ifi7. (t) Maynard v. Rhode, 1 C & P. 860, 808, per Bayley, J., 5 Dowl A R. 266. («) Everett v. Desborough, 5 Bing. 608. (x) Huchman v. Femie, 8 M. & W. 606, 7 L. J. N. 8. Ex. 1(13, 2 Jur. 144. 179 ■ i ! t; * 208 THE LAWS OP INSURANCE. t terial in fire as in life. Indeed, the onljr thing most fire insurera want to know is the character of the insured, and the questions asked hy them are mainly directed to his dealing with other insur- ance omces (y). (y) Goodwin v. Lancashire Fire, 16 Lr. Cai. Jur. 298, 18 do. 1. London As- surance V. ManaeU, 11 Ch. D. 868, 48 L. J. Cb. 831, 27 W. R. 444. Daintree't claim, 18 W. B. 896. I'i ilVt ''^ f] 1 :|M n 1 ' 1' I'M 1 i i mi 180 ARBITRATION. 210 ♦CHAPTER IX. ARBITRATION. [*209 Earlier view of agreements to refer. Juriadiction of Courts not to be ousted. — An unqualified agreement to refer to arbitration and pre- cluding the contracting parties from suing in tiie Queen's Courts is invalid, for the Courts will not allow their jurisdiction thus to be ousted. And where a policy of insurance contained a clause that in case of loss or dispute it should be referred to arbitration, it was held that, if there had been a reference depending or made and de- termined, it might have been a bar, but tne agreement of the par- ties could not oust the Court ; and as no reference had been nor was any depending, the action was well brought, and the plaintiff must have judgment (a). In Horton v. Sayer, Pollock, C. B., said : " In this case the deed discloses nothing more than an agreement generally to refer all disputes to arbitration, and that does not prevent the plaintiff from maintaining this action " (6). Rule as to ouster. — Regarding the rule that the jurisdiction of the Court should nc t be ousted, Coleridge, J., said : " I certainly am not disposed to extend the operation of a rule which appears to have been founded on very narrow grounds, directly contrary to the spirit of later times, which leaves parties at full libertv to refer their disputes at pleasure to public or private tribunals " (c). *Scottv. Avery. Oldrtikqualified.-^AndinScotty.Averyityv&B [* 210] decided that where parties have entered into a contractfor in- demnity, they may, if they choose, agree that in the event of any loss occurring such loss shall be ascertained by an arbitrator they may select, and they may ajgree to pay such loss when it has been ascer- tained, and not otherwise (d). This case has been the subject of much comment and many explanations. Staiement of law, per Brett, M. R. — In Edwards v. Aberayron Company, Brett, M. R.. said («) : " The true limitation of Scott v. Avery seems to me to be that if par- ties to a contract agree to a stipulation in it, which imposes as a con- dition precedent to the maintenance of a suit or an action for breach of it the settling by arbitration of the amount of damage or the time of paying it, or any matters of that kind, which do not go to the roo of the action, i. e., which do not prevent any action at all (a) Kill V. IIolMter, 1 Wils. 129. Thompson v. Charnock, 8 T. R. 189. (6) Horton v. Sayer, 4 H. & N. 643, 29 L. J. Ex. 28. (c) Srott V. Avery, 5 H L. C. 811, 848, 25 L. J. Ex 808, 2 Jur. N. S. 81S, 4 W. R. 746. id) Scott V. Avery, 5 H. L •?. 811, 25 L. J. Ex. 808, 2 Jur. N. S. 815, 4 W. R. 746. Broirnv. Overhury, 11 Ex.715. («) 1 Q. B. D. 56«, 596, 84 L. T. N- 8. 467. 181 [t, ', :1 t: f \i J'V •)> I") *211 THE LAWS OF INSURANCE. ■.I from being maintained, such stipulation prevents any action being maintained until the particular facts nave been settled by arbitration ; but a stipulation in a contract which in terms would submit every dispute arising on the contract to arbitration, and so preclude the suffering or complaining party from maintaining any suit or action at all in respect of any breach of the contract, doea not prevent an action from being maintained ; it gives at most a right of action for not submitting to arbitration, and for damages probably nominal. And this rule is founded on public policy. It m no way prevents parties from referring to arbitration disputes which have arisen ; but it does prevent them from establishing, as it were, before they dispute, a private tribunal which may from ig. norance do what tlie invented tribunal here did, namely, act and persist in acting in contravention of the most elementary princi- ples of the administration of justice." * [* 211] ^Statement of law, per Bramwell, B. — The effect of Scott v. Avery is also well stated in Elliot v. Rvyal Exchange (/), by Bramwell, B. : " If two persons, whether in the same or in a diti'erent deed from that which creates the liability, agree to refex the matter upon which the liability arises to arbitration, that agreement does not take away the right of action. But if the original agreement is not simply to pay a sum of money, but that a sura of money shall be paid if something else happens, and that somei:;hing else is that a third person shall settle the amount, then no cavise of action arises until the third person has so ascertained the sum, for to say the contrary would be to give the i)arty a different measure or rate of compensation from that for which he has bargained. This is plain common-sense, and is what I understand the House of Lords to have decided in Scott v. Avery'^ (g). StateTtierd of law, per Jessel, M. R. — There are onlv two cases where agreement to refer can be successfully pleaded — nrst, where the ac- tion can only be brought for the sum named by the arbitrator; secondly, where it is agreed that no action shall be brought till there has been an arbitration, or that arbitration shall be a condi- tion precedent to the right of action (h). In all other cases, where (/) L. R. 2 Ex. 237, 245, 30 L. J. Ex. 129, 16 L. T. N. S. 399, 16 W. R. 907, and see Dawson v. Fitzgerald, infra. (g) See Tredwen v. Holman, 1 H. & C 73, 79, 7 L. T. N. S 127, 10 W. R. 652. 3t L. J. Ex. 898, 8 Jur. N. S. 1080. WHght v. Ward, 20 W. R. 21, 24 L. T. N. S. 439. Harvey v. Beckwith, 2 H. & M. 429, 10 L T. N. S. 632. Babbage V. Coulburn, 9 Q. B. D. 286, 52 L. J. Q. B. 50. Willesford v. Watsm, 8 Ch. Apn. 473, 42 L. J. Ch. 447, 28 L T. N. S. 428, 21 W. R. 850. (h) Per Jessel M. R., in Dawson v. Fitzgerald, 1 Ex. D. 267 at 260, 45 L. J. Ex. 894, 24 W. R. 778. Edwards v. Aberayron Mutual Ship. Co., 1 Q. B. D. 663, 34 L. T. N. S. 467. Rnper v. Lendon, 28 L. J. Q. B. 250, 1 E. & E. 825, 7 W- R- 441, 6 Jur. N. S. 491. Scott v. Liverpool Corporation, 28 L. J. Ch. 230, 8 De G. & J. 334, 82 L T. 266, 7 W. R. 158, 6 Jur. N. S. 106. Wright v. Ward, 24 L. T. N. S. 489, 20 W. R. 21. * Refusal of insurer to pay any sum whatever precludes him from relying, when sued, on clause providingtor arbitration before suit. Western if. ds C Ina. Co. 7. Putnam, 20 Neb. 881. 182 ARBITRATION. *213 there is first a covenant to pay, and secondly a covenant to refer, the covenants are distinct and collateral (i), and the plain - tiflf may sue on the first, leaving the defendant *to pursue [* 212] one of two courses — either to bring an action for not refer- ring, or to apply, under s. 11 of the Common Law Procedure Act, 1854, to stay the action until there has been an arbitration, in which case a judge has power to prevent the case going to a jury if the arbitration can be fairly enforced (k). Qmmm Law Procedure Act, 185^, 8. 11. — By the Common Law Procedure Act, 1854, s. 11, it is enacted that whenever the parties to any writing shall agree that any difference between them shall be referred to arbitration, and shall nevertheless commence any action in respect of the matters so agreed to be referred, it shall be lawful for the Court before which the action is brought, upon being satisfied that no sufficient reasons exists why such matters should not to be referred to arbitration, and that the defendant was at the time of the bringing of such action and still is ready and willing to concur in all acts necessary and proper for causing such matters so to be decided by arbitration, to make a rule or order staying all proceedings in sucli action upon such terms as to such Court or judge may seem fit, provided that any such rule or order may at any time afterwards be discharged or varied as justice may re- quire (/). It is not a condition precedent to the right of the Court to refer to arbitration that all the parties must before action have been willing to go to arbitration (m). Award not a condition precedent to action. — A clause stipulating that all matters in difference which should arise touching the agreement should be submitted to arbitration, and prohibiting any action be- ing brought in respect of the matters actually submitted to arbitration, is a collateral and independent agreement;** and [* 213] an award thereunder is not a condition precedent to such action, except as regards such sums as under the agreement are not payable until the amount thereof has been ascertained by such award (n). Ascertainment of amount condition precedent to action. — In Braun- 8tein v. Accidental Death Company (o) the covenant was to pay such sum as should appear iust and reasonable, and in proportion to the injury received, such sum to be ascertained in case of differ- (i) Collins V. Locke, 4 App. Cas. C74, 48 L. J. P. C. 68, 41 L. T. N. S. 292, 28 W. It. 189. (k) Per Jessel, M. R., Dawnon v. Fitzgerald, 1 Ex. D. 260, 45 L. J. Ex. 894, 24 W. R, 773. See also j)er Page Wood, V. C . in Cooke v. Cooke, 4 En. 77, 30 L. J. Ch. 480, 16 L. T. N. S. 81», 15 W. R. 981. (1) 17 4:18 Vict, c 126, s. 11. (m) WiUesford v. Wataon, 8 Ch. App. 478, 42 L. J. Ch. 447, 28 L. T. N. S. 428, 21 W. R. 350. (m) Collins V. Locke, 4 App. Cas. 674, 48 L. J. P. C. 68, 41 L. T. N. S. 292, 28 W. R. 189 (o) 1 B. & S. 782, 81 L. J. Q. B 17 (1861), 5 L. T. N. S. 550, 8 Jur. N. S. 506. 183 :.i ''i'ii^ i ■ ]■•■ m *214 THE LAWS OF INSURANCE. ence in manner provided by tlie stipulations an(^ conditions in- dorsed on the policy. Tne Court held i)erformance of the stipula- tion to be a condition precedent to the right to sue. View that where insurers dispute any liability, action lies — A policy of insurance against fir6 stated that, if any difference should arise over any claim, it should be immediately submitted to arbitration, and such arbitration should be made by one or two persons to be indifferently chosen by the assured or his legal representative, and by the office or by such third person as the other arbitrators should ippoint, and no compensation should be payable until after an siward determining the amount thereof should be duly made. In an action on the policy, it was held that the assured might main- tain an action on such policy, notwithstanding the condition, where it appeared that the insurers denied the general right of the assured to recover anything, and did not merely question the amount of damage (p), but see Scoii v. Avery. Where an adjustment by arbitration was made a condition pre- cedent, and the insurers alleged that the policy was void by reason of concealment, it was held in Victoria that the assured [* 214] could not sue till after *such adjustment (g). This does hot seem consistent with the last case ; and in a case in Lower Canada where a reference was made to valuers without waiver of the conditions of the policy, it was held that the insurer had not lost his right to use the conditions of the policy as to for- ff iture if such were proved (r). Construdion of condition to refer. — Gorman v. Hand-in-Hand {^s) was the case of a policv containing a covenant (subject to the con- ditions indorsed on tne policy) to pay or make good all loss or damage not exceeding the amount insured, and a condition to refer diflferences, " which condition is to be deemed and taken to be an agreement to refer." The Court held that this meant that the remedy for the breach of that condition was action or application under the Irish Common Law Procedure Act, 1856, s. 16, which remedy was wholly inapplicable to any provision qualifying the covenant to pay, and postponing the cause of action thereon until ascertainment by arbitration, since application under the statutes presupposes an existing cause of action, while the essence of the provision qualifying the covenant is that the cause of action is not complete. A policy of insurance against accident contained (t) a condition that all disputes should, if the assured or his legal personal repre- sentative or the company required it, be referred to arbitration in the manner specified in the company's private Act (u), which em- (p) Goldstone v. Osborne, 2 C. & P. 650. {q) London and Lancashire v. Honey, 2 Victoria L. R. 7. (»•) La Rocque v. Royal, 23 Lr. Can. Jur. 217. Is) I. R. 11 C. L. 224. h) Minifie v. Railway Passengers' Jic., 44 L. T. N. S. 662. (tt) 27 k 28 Vict. c. cxxt. s. 88. 184 ARBITRATION. *216 powered the Court or a Judge to stay proceedings contrary to the Act (a;). Action stayed, fraud not charged. — ^The Court ordered a stay of proceedings in an action, as no issue of fi:aud was raised, and no reason appeared why the matter in ^question [* 215] could not or ought not to be referred to arbitration. Right to sue where fraud in question.— Some discussion has ariHen on the question whether if fraud were charged this would entitle the plaintiflF to a jury. Pollock, B., in Minifie v. Railway Passengers', &c., says, " Where fraud is imputed to the claimant, whether he be the assured or his personal representative, it would be difficult to say that the plaintiflF ought not to have the oi)portunity of clearing himself from so grave a personal imputation in open court" (y). And this view has been taken in Wallis v. Hirsch (2), approved in Hirsch v. Im Thum (a). Jessel, M. R., in Russell v. Russell (6), ex- pressed himself by no means satisfied that the mere desire of the person charging the fraud was a sufficient reason for the Court re- fusing to send the case to arbitration, although if the person charg- ing the fraud did not desire a reference the Court ought to investi- gate the circumstances, and might, on a 'primQ. facie case of fraud being shown, in the exercise of its discretion refuse the order. Where, however, the person charged with the fraud desires an in- vestigation before a public tribunal, the Court ought, said his lord- ship, as a rule, to exercise its discretion, and to refuse to refer the matter in dispute to arbitration. Seaworthiness not to he referred. — On this principle it would seem that Lord D nman held, in Harrism, v. Douglas, 3 A. & E. 396, that an issue as to the seaworthiness of a vessel was for a jury and not matter of reference within an arbitration clause. *And in Scotland it has been held that after a claim has [* 216] been submitted to arbitration and awarded on in favour of the insured, the insurers could still raise the question of fraud (c). Issue amounting to fraud. — An agreement making settlement of the loss in a certain way a condition precedent to the bringing of an action does not compel the party to submit to arbitration the question whether or not the policy is void by reason of misrepre- sentation as to the condition of the property insured (d). Poiril of law not to be referred. — Bacon, V. C., has decided that the assured is not bound to submit a legal point to arbitration before suing (e). ' (x) Identical with s. 11 of the Common Law Procedure Act, 1854. (y) Minifie v. Railway Passengers^ Assurance Co., 44 L T. N. S. at 554. (2) 1 C. B. N. S. 316. (a) 4 C. B N. S. 569. See also Willesford v. Watson, 8 Ch. App. 478, 42 L. J. Ch. 447, 28 L. T. N. S. 428, 21 W. R. 850. (6) 14 Ch. D. 471 (1880), at p. 477, 49 L. J. Ch. 268. (c) Hercules Ins. Co. v. Hunter, 16 C. S. C (Ist series) 800. Id) Alexander v. Campbell, 41 L. J. Ch. 478, 27 L. T. N. S. 26. (e) Ibid. 185 \i\ ■^^ :v ^■t . - , -If ^. 3 ■ ii; ^;S; i T'l t. '. IMAGE EVALUATION TEST TARGET (MT-3) '/, ^ 1.0 1.1 ItilM 12.9 ■^ 122 |2.2 2.0 111 lU u ■ 40 I M i^ i^ < 6" ^ Hiotographic ^Sdences Corporation 19 WMT MAIN ITMIT WIMTM,N.Y. I4SM (7U)I79«4S03 ^%^ W\^ ^ V ,. B. 48, 68 L. T. 800, MW.B IW. 189 ''.!^; ^ »l! ■II Hi \\ *223 THE LAWS OF INSURANCE. cannot be recovered under a policy on a tavern (/), nor for want of occupancy, or wages paid to servants thrown out of work by the destruction of the property (g), nor under an accident policy for anything but the expenses, &c., attendant thereon (h). Damage in the removal of furniture or by fall of a wall injured by the fire, or by water used in putting it out, has been held direct (i). Indemnity— market value. — The amount of the indemnity is de- termined, not by the cost, but by the value at the date of the loss of that which is insured. By value is meant thS intrinsic or mar- ket value on the dav of the fire or other mishap insured against (j). But as regards houses full indemnity to a tenant or person having a limited occupying interest therein seems to include, not the mere market value of such interest, but the pecuniary value Slus the value of the beneficial enjoyment (k). In such case in- emnity is best attained by reinstatement. The assure' more- over, cannot under a policy on the house, recover any da. ages for loss of occupation, or the rent of a house which he is [♦ 223] obliged to take in *consequence of the fire. Those risks must be covered by a special insurance on rent (/). A policy is not a contract of perfect indemnity (m), but a con- tract of indemnity against losses which arise out of a specified class of accidents. Particular losses may be selected, and the assured be guaranteed against them only (n). Deduction. New for old. — The indemnity offered is also limited in amount, and also by certain other qualifications; such as, for instance, the marine rule, one-third new for old, which was sprung up by the custom of trade, and operates in some cases to give more and in others to give less than complete indemnity (o). This principle has in Ireland been applied to fire insurance ; but it was said by Pennefather, B., that no settled rule of deduction, one- third or one-fourth, or of any other sum, existed in the case of old premises or property, but that the jury might, as a criterion of the actual damage, see what would be the expense of placing new ma- chinery, such as was in the premises before the fire, and deduct if) Waiahtv. Pole, Ik &E. 621. ig) Memics v. North British, 9 C 8. C. (2nd series) 694, following Wright v. Pole. (h) Theobald v. Railvoay Passengers' Assurance Co., 10 Ex. 46, 23 L. J. Ex. 249, 18 Jur. 68a, 28 L. T. 222, 2 W. R. 528. (t) Johnstone v. West of Scotland Co, 7 C S. C (Ist series) 58, 66 n. ( /) Hcrcu'ts Co. V. Hunter, 14 C S. C (Ist series) 1187, 15 C 8. 800. («) Castdlainv. Preston, 11 Q B. D. 400, per Bowen, L. J. See note (ft) stqtra, (I) Buchanan v. Liverpool, London, and Olobe, 11 C 8. C. (4th series) 1033, 21 So L. R. 696. (m) Irving v. Manning, 1 H. L C 287, 807, 2 C B. 784. (n) Per Bowen, L J., in Hough v. Head, 65 L. J. Q. I}. 48, 53, L T. 809, 84 (o) Aitchism v. LoAre, 4 App. Cm. 766, 762, 49 L. J. Q. B. 128, 41 L. T. N. 8. 828, 20W. R 1. 190 INDEMNITY. *225 therefrom the difference in value between the new and the old (p), Hince the cost of repairing is an element in the damage sufifered by the assured in such a case. Goods and furni* ure, especially the for- mer, can of course be replaced without other appreciable 'expense than their cost, but macninery and the like required fixing; and getting in position, and sometimes such work is costly and like re- building. Vance v. c^oster (p) was a decision on circuit, and no case seems to have come before the full courts. It is clear that the cus- tom to fix the ratio at one-third new *for old is not estab- 1* 224] lished as to fire losses on land, but that similar computation is necessary to prevent over-compensation. Doctrine of abandonment applicable to fire insurance. — The doctrine of abandonment intended to assist the principle of indemnity seems applicable not only to marine but to fire insurance, for Brett, L. J., 8aid(j)): "I concur in what has been said by Lord Blackburn (g), that abandonment i& not peculiar to policies of marine insur- ance ; abandonment is part of every contract of indemnity. When- ever, therefore, there is a contract of indemnity and a claim under it for an absolute indemnity ^ there must bean abandonment on the part of the person claiming mdeoinity of all his right in respect of that for which he receives indemnity." Principle of abandonment. — Mr. Marshall thus states the principle upon which the right of abondoning rests (r) : *' The assured may abandon in every case where, by the hai)pening of any of the mis- fortunes or perils insured against, the thing insured is so damaged and spoiled, or the charges for its salvage are so high, that the costs of repairing, restoring, or recovering it would exceed its marketable value after they had heen assured, or where the assured is deprived of the free disposal of it under circumstances which render its resti- tution uncertain." Why doctrine of abandonm£nt rardy applied, — Probably one reason why the doctrine of abandonment is not more frequently applied in those cases whero furniture or goods are insured is to be found in the nature of such articles. A body of the size and complex structure of a ship may be so injured as to be useless for its special practical purposes without becoming of no saleable value; and in such a case it ""is obviously fair that such value [* 225] should be surrendered to the insurer when he pays as for a total loss. But such things as goods or furniture are, when con- sidered singly, of a much simpler, smaller, and less costly character, and many of them are usually covered by one policy. Where, therefore, a part is injured or destroyed, the damaged articles are (p) Fence V Foslery Ir. Circ Rep. 47 (1841). Herculeav. Hunter, 14 C. S. C. (Ist Denes) 1187, 15 do. 80C. (p) Kaitenbach v. M'Kemie, 8 C. P. D. 467, 470, 88 L. T. N. 8. 948, 20 W. R. 844 (a) Rankin v. Potter, L. R. 6 H. L. 88. 118. 42, L. J. C. P. 169, 39 L. T. K. S. f42. 22 W R. 1. See also Maaon v. Saintburtfj 8 Doug. 68. (r) Manhall od Iniuranoe, 4th ed. 463. 191 1 I h ^n 1 1 > * ?f Mr i| M t'Mt'i I ' Hi I ^ ' WW, i" I ■ 1 tm *226 THE LAWS OF INSURANCE. •'li usually paid for by the insurer. The value of the injured part be- ing separate and distinct from, and not, as in the case of a siiip, in- separably connected with the injured part, a full and fair deduction in respect of it can be naade from the amount of the policy ; and the assured is in no degree injured by having to retain the uninjured part of the subject-matter of the insurance. Usually the damaged property is treated as salv^e, and sold for -what it will fetch, the sale price being accounted for between the parties. Principle on which abandonment rests applies to insurance of chattels. — Whatever may be the difficulties arising in this branch of insur- ance law,' it is clear that the principle upon which abandonment rests, viz., indemnity, does apply, as the insurer is entitled on pay- ment to all ways and means of lessening the loss (s), though the rule as to notice of abandonment in claims for a constructive total loss is marine only. Insurer reinstating, entitled to old material. — ^Where an insurer elects to reinstate, he is entitled to the old materials left hy the fire, and in any case he will seek to reduce the amount of his indemnity by deducting their value. Right 0/ insurer in subject of insurance claim by after assured. — When the person idemnified [the assured] has a right to idemnity, and has elected to enforce his claim, the chance of any benefit from an improvement of the value of what is in existence, and the riik of any loss from its deterioration, are transferred from the [* 226] *person indemnified to those who indemnify ; and therefore, if the state of things is such that steps may be taken to improve the value of what remains, or to preservd it from further deterioration, such steps from the moment of election concern the party idemnifying, who ought, therefore, to be informed promptly of the election to come upon him, in order that he may, if he pleases, take steps for his own protection " ((). In fire insurance this is effected by requiring immediate notice of a fire, and obtaining licence by a condition in the policy to enter the premises insured or wherein the things insured are. Assured's election to claim for partial Um irrevocable. — On general principles of law (not confined to marine insurance) an election once aetermined is determined forever, and such a determination is made by any act that shows it to be made. And therefore any- thing which indicates that the person indemnified has determined to take to himself the chance of benefit from an increased value in the part saved, and only claim for the partial loss, will determine his election to do so (u). (») Rankin v. Potter, L. R. 6 H. L. 88 at 118, 42 L. J. C. P. 109, 29 L. T. N. S 142, 22 W. B. 1. Kaltenbach v. JPl^msU, 8 C P. D. 467, 88 L. T. N. S. 943, 26W.R.844. it) Per Blackburn, J^ Rankin t. Potter, L. R. 6 H. L. 88, 119. (u) Ibid. And see Clouah v. London and North- Western Railway, L. B. 7 Ex. 26, 84, 4t L. J. Ex. 17, 26 L. T. N. S. 708, 20 W. R. 189. MitcheU v. Edie, 1 T. B. 606, explained la Roux v. Sahador, 8 Biog N. C. 266. 192 INDEMNITY. *228 Valued poliqf mdemnity to amount of valwiiixm, — A valued policy is a Ciintract of indemnity to the owner, to the amount at which the property is valued in the policy. The assured, if he has re- ceived on other, policies, can only ask for such a sum as, with that already leceived, will give him the amount which the insurers by the policy sued on have bargained to give him. The amount al- ready received is to be treated as salvage received by the owner niter constructive total loss. He and the insurer are both e8tt>pped from denying the value stated in the policy (x). *Iimirer can't require party primarUy liable to be sued first. [* 227] —The insurer, having contrajcted to indemnify, could not insist on others being sued first who were primaiily liable (t^), or on consolidation of his action with others by the same asiiured against other insurers in respect of the same loss (s). And it is no defence to an action by the assured against the party causing the damage, that the assured has been paid by his insurers (a). SubrogaUon, what it ie. — Subrogation, according to the older and narrower view, is (he treating of an insurer, who has paid a loss, for which some other person is primarilv liable, to the nssured, as standing in the place of the assured so fur vn r^ards his rights of action against such persons. This view of the subject is well ex- pressed in a recent American case by the following definition : — "Subrogation is the substitution of one person in place of another, whether as a creditor or as the possessor of any other rightful claim, so that he who is substituted succeeds to the rights of the other in relation to the claim, its rightc, remedies, or securities " (6). Sub- rogation, (IS constituting part of the law of indemnity, includes more than the mere transference to the insurer of existing rights of action against third parties vested in the assured in respect of the loss. Per Lord Edher. — Probably the best and most mclusive us well as the most recent definition of subrogation has l)een given by the present Master of the Rolls, Lord Esher, in OaMeUain v. PreeUjn (c), asfoUows:— " As between the insurer and the nssured, the insurer is entitled to the advantage of every right of the assured, whether such right consists in contract fulfilled or unfulfilled, or in remedy for tort capable of being insisted upon, or ^already [* 228] insisted on, or in any other right, whether by way of con- dition or otherwise, which can bo or has been oxercisetl or has ac- crued ; and whether such ripht could or could not be enforced by the insurer in the name of the nssured, by the < xercise or acquir- ing of which right or condition the ]oss ngainvt which the nssured (x) Jirur.9 V, Jonea, 82 L. J. Ex. 133, 7 L. T. N. S. 748, Jur. N. S. 628, 11 W.R. 871. (y) Dicket^H v. JardiMy 10 W. R. 1109, 18 L. T. N. S. 717, L. R. 8 C. P. 639. («) M'Ortgor v. Ilor^faU, 8 M. & W. 820 (a) Pi'opeUor JltoiUieMo v. HoUiam, 17 Ilowurd (U. S) 152. rain v. Whik, 4Bmg. N C.372. (b) J(tckson V. Bojfhton Co . 130, Maiw. filO. (c) 11 Q. B. D. 881, 886, OJ L. J. Q. B. 86a. 40 L. T. N. S. 29, 81 W. R. 887. 13 PORTBR ON INSUIUMCB. 198 1 ■ 'f ( r '.mm ■■\A *229 THE LAWS OF INSURANCE. is insured can be or has been diminishe*!. That seems to put this ought to have been stated " (eO« As to anything not within the definition, the general law of in- demnity must be looked at(g), and this definition is consonant with the view of Lord Blackburn (/), who states the principle 8t)mewhat more briefly and generally ; and substantially the same view has been expressed by the Supreme Court of the United States (g). The right of the insurer, however, to the advantage of every right of the assured must, it seems, be understood with this limitation, viz., that the right must be incident or attached to the owner-hip of the thing insured ; e. g., freight to be earned under a charter- party is not an incident to the ownership of the vessel, and there- fore, although an underwriter of a policy of insurance upon a ves- sel becomes, by abandonment to him upon a constructive total loss happening through the fault of another vessel, entitled, after pay- ment of the sum secured by the policy, to everv benefit accruing from the ownership of the insured vessel, he cannot claim [* 229] any part of the damages recovered from the *owner8 of the wrongdoing vessel on account of loss of freight in- tended to be earned by the insured vessel (g). Payment of loss by insurer no defence in action by assured against person causing has. Subrogated insurer's right to damages recoverable by assured.— The mere payment of a loss bv the insurer does not afibrd an^ defence to a person whose fault has been the cause of the loss m an action brought against the latter by the assured. But the insurer acquires by such payment a corresponding right in any damages recoverable by the assured against the wrongdoer or other party responsible for the loss (h). If the insurer has in fact paid, the tortfeasor cannot object that he ptiid without liability (t), nor can the wrongdoer limit the amour. u payable by him to that for which the assured has settled with the insurer (j). This right rests upon the ground that the insurer's contract is in the na- i: (d) Same case, 886. (e) Same case, 404, per Bowen, L. J. (/) Bumand v. Rodocanchi, 7 App. Cas. {(88, 839, 31 W. R. 65, 61 L. J. Q. B,548, 47L T. N. S. 277. (g) Phoenix Co. v. Erie Co., 117 U. S. (10 Davia) 820. (g) The Sea Insurance Co. v. Hadden, 13 Q. B. D. 706, 58 L.J. Q. B. 252, 50 L. T. 657, 82 W. R. 841. (h) Randall v. Cochran, 1 Ves. Sen. 98. Maaon v. Sainsbury, 3 Doug. Cl. London Assurance v. Sainsbury, 8 Doug. 246. Clark y. Blything, 2 B a. C. 254. Bradbum v. Grtat Western Railway, Lr 10 Ex. 1, 44 L J. Ex. 0, 81 L. T N. S. 464, 28 W. R. 48. Yates v. White, 4 Bing. N. C. 288. The Potomac, 103 U. S (15 Otto) 680, per Gray, J. Smidmore v. Australian Gaslight Co., 2 N. S. W. Law 210. (») Sun Mutual Co v. Mississippi Co., 6 McCrary (U. S. Circ Ct.) 477. Ini. Co. V. C. D. Junr.. 1 Woods ( U. S. Circ. Ct) 72 ij) Mobile Railwan/ Co. v. Jurey, 111 U. S. (4 DaviB) 584. 194 INDEMNIIT. *230 tare of a contract of indemnity, and that he is therefore entitled, upon paying a sum for which others nre primarily liable to the assured, to be proportionably subrogated to the right of action of the assured against them. Jf insurers assign their mbrogated right to perwti causing loss, it may be defence in assured' s actum against him. — The amount which, by the eflect of the contract of insurance, and of the payment of a loss under it, the insurers would have a right to recover to their own use from the person whose fault was the cause of the loss, the insurers would have the right to release and assign to such person, who would then have a claim to a deduction on this account from the damages to be recovered a^rainst him by the assured. This claim to a deduction does not arise out of any right inherent in such person, but out of the right so derived from the insurers (k). *Policy vxithmt ben^ of salvage iUegal. — The law is so [* 230] stringent as to the principle of indemnity, that policies with- out benefit of salvage are in express terms made illegal {k). As the doctrine of abandonment is seldom applied to any but marine risks, questions of salvage do not ariseao often in fire policies. But the amount of salvage is always an element in the computation of damages by fire, except where the insurers elect to take the salvage and pay in full, reimbursing themselves so far as they can by selling the salvage for what it will fetch. Position, of insurer as to salvage and dmnage. — Generally speaking, as to salvage the insurer stands in the place of the assured, and can claim all that is saved ; and as to damage, the insurer is en- titled to use and exercise the ways and means open to the assured for diminishing the loss and obtaining compensation (/). Defences against assured good against subrogated insurer, — An in- surer suing the party through whose fault the loss occurred can only assert the right of the assured, and will be subject to any de- fences or equities which would be good against him (m). The in- surer stimds in no relation of contract or privity with such a party. His title arises out of the contract of msurance, and is derived from the assured alone, and can only be enforced in right of the latter (n). Thus where damage occurred through contributory negligence, that defence would be an answer to the action of the subrogated insurer. Again, if two ships of the same owner col- lided by the fault of one to the destruction of the other, the insur- ers could not puc the owner, since they claim under him (o). Insurer entitled to subrogation against carrier, — As between carrier and insurer the liability to the owner of the goods carried and in- sured is primarily on the carrier, and the insurers, when they have {k) The Potomac, vhi xvpra. (A) AUkina v. Jupe, '2V. P. D. 875, 46 L. J. C P. 824, 80 L. T. N. S 851. (/) Handall v. Curkran, 1 Vcs. Sen. 98. London Assurance v. Hainabury, 8 Doug 245, 268. Castellaia v. Preston, ubi mpra. (m) Phnanix Co. v. Erie Co., 117 U. S. (10 Davis) 312. in) Ibid, 821. (o) ISimpson v. Thompson, 8 App. Cas. 279, 88 L. T. N. S. 1. 196 III i'M4 ml mm, ■ ■■ ■ ■-. !'.'l?f m *232 THE LAWS OF INSURANCE. [* 231] *indemnified the assured, are equitably entitled to succeed to the right which he had against the carrier. The owner, however, may make the contract of carriage to suit his own inter- est, and may release the carrier from all liability, but such release or the intention to grant it, must be disclosed to the insurer if it be a material fact which the assured knew, or should have kncmn, would aflFect the premium or the willingness of the insurers to take the risk (n). It has been held in America that a bargain by the carrier to have the benefit of any insurance on goods entrusted to him will not avoid a policy eflPected without disclosing such bar- gain (o), and in one case the insurers were held to have notice of a bill of lading containing a proviso to the above eflFect (p). But these cases do not seem correctly to apply the rule indicated above and laid down in Tate v. Hyalop. It goods are insured during transport, it must be material to the insurer to know the nature of the contract of carriage, and whether it contains any variation from the ordinary liabilities imposed by law on carriers, or in fact undertaken by them ; and f irther, even if a carrier can contract himself out of any liability for loss of goods entrusted to him, this is a diflferent thing from bargaining to have the benefit of any in- surance effected by the owner. The latter bargain does not amount to a contract by the owner to insure, but an undertaking that if he does so he will release his rights against the carrier. And such a bargain would, in an ordinary case, be a fraud on the insurer, unless it can be said that he has notice of the contract of carriage, since it is directly aimed at defeating the insurer's subro- gation (q). [* 232] '^Re-insurer. — Re-insurers in America, on payment of their proportion of a loss, have been allowed to sue in Admiralty against the carrier of the goods injured. The question in any case seems to be merely one of procedure, as a re-insurer is clearly sub- rogated to the insurer's nghts, and so to those of the assured (7) and any salvage or benefit thereof (r). Partial insurance and third person primarily liable. — A person par- tially insured can also sue any party primurilv liable tor the loss. Such party may not profit by the insurance. But the assured will recover (as to the balance in excess of indemnity) as trustee for the insurer (»). (n) Tate v. Hyslop, 15 Q. B. D. 868 at 877, 54 L. J. Q. B. 55)2, 53 L. T. 581. (0) Phcenix Co. v. Erie Co , 117 U. S. (10 Dbtis) 812. Jackson Co. v. Boylston Co., 52 Am. Rep. 728, 139 Mass. 608. ip) British and Foreign Marine Co. v. (hdf Railway/Co.. 51 Am. Rep. 6fil. And see Rintoul v. New York Central Railway Co., 21 Blatcn. (U. 8. Circ. Ct.) 448. (g) Defoureet v. Biahop, 18 Q. B. D. at 378-879. • Iq) The Ocean Wave, 5 Bissell (C Ct. U. 8.) 878. (r) Delaware Co. v. Quaker City Co., 8 Orant (Penn.) 71. (s) See IFally. Railroad Co., 13 Wall (U. S ) 867, and casea there collected. Commercial Union v. Lister, ii^fra, note (y). 190 INDEMNITY. *233 Negligence of servants, or municipal authorities. Collision. — If a fire is caused by the negligence of servants of a railway or steamer («), the insurers are entitled to subrogation. So also in case of negli- gence by municipal authorities (u). So also for damage by col- lision between river steamers (x). Where insurance is less tfian damage, assured is dominus litis against vfrmg doer. — Where the amount insured and paid is less than the the value of the subject-matter of the insurance or the damage done thereto, in an action against the person responsible for the damage the assured would be the dominus litis, and not obliged to lend his name to the insurers for the purpose of proceedin;.:a by them. Assured must not prejudccc inswrer^s rights. — In such a case the assured should sue for the whole damage, and not release the action coUusively or compromise it in any way injuriously to the insurers, and he will be accountable for the proceeds of such action so far as they with the insurance exceed *complete indem- [* 233] nity, and he will be liable for anything done in violation of his equitable duty to the insurers (y). Assured cannot d^eai the insiirer^s right to subrogation or to use cw- gured'sname. — In tlie Australian case oiSmidmore v. Australian Gas- light Company, the insured property was injured bv an explosion of gas due to the defendant's negligence. The assured , in consideration of compensation for such of the damage as was not covered by insur- ance, gave to the defendants an absolute release from all claims of him (the assured) on the defendants, and covenanted not to let any one use his name in bringing any action against the defendants in respect of the said damage. It was held that the insurer, having paid, could sue in the assured's name, whether he liked it or not, and that the release applied only to the uninsured part of the loss, that alone being mentioned in the recitals (z). This view seems to be in accordance with the English law (a) and with principle, for to make such a bargain after loss is to make away with the salvage in derogation of the duty of " utmost good faith." Though it may not be necessary to disclose matters likely to affect the amount of salvage before loss (b), yet, after loss, the assured must not inter- fere with the salvage in manner prejudicial to the insurer. No defence to insurers that other parties first liable. — Tlie insurers can (0 Quebec Fire v. St. Louis, 7 Moore P. C. 286, 1 Lr. Can. Rep. 223. (u) Iteesor v. Provincial Insurance Co., 33 U C ( Q B ) 357 Commercial Union v. Lister, 9 Ch. App. 483, 43 L. J Ch. «0I. Darrell v. Tibbits, 5 Q. B. D. 500, 50 L. J. Q. B. 83 42 L. T. N. S. 797, 29 VV. 11. 6«. (x) The Potomac, 105 U S. (16 Otto) 630. (y) London Assurance v. Sainsburt/, 3 Dong. 245, per Wiles, J. Smidmore V. Amtralian Gaslight Co , 2 N. S. W. Iiaw 219. Commercial Union v. Lister, 9 Ch. App. 483, 4a L. J. Ch. 601. Simpson v. Thompson, 3 App. Cas. 279, 293, 88 L. T. N S. 1. (z) Smidmore v. Australian Gaslight Co , 2 N. S. W. Law '9. (o) Dvfourcet v. Bishop, 18 Q. B. D. 878. (b) Tatt V. Hyalop, 16 Q. B. D. 868, 64 L. J. Q. B. 592, 68 L. T 681. 197 'W I'd ^m *235 THE LAWS OF INSURANCE. H not plead as a defence to an action against them that (/her parties not insurers, are first liable and should be first sued (c). In this respect they are like sureties, and, having une recovered, and that of that half only two-thirds could be set off under the assignment ((/) [* 238] ^Extent of insurers' claim by subrogation where policy valued and where not. — Insurers are only entitled to dnmuges for an injury for which they have paid, and to such proportion only of those damages as the amount insured bears to tne valuation in the policies (r); if they be valued policies, in which case the insured is estopped from setting up any other standard of valuation agnintit (n) Burton v. Gore District Mntnnl, 12 Grant (IJ C.) 16fi. Casielhn'n v. Pi'eston, 11 Q. B. D. 3F0, H2 L. J. Q. B 800, 41) L. T. N. 8. 2!>, «1 W. U, 557. (o) New England Fire, Ac , Co. v. Wetmore, 82 Ulinois 2C1. ( ») 8oc per James, L. J. in Rayner v. Preston, 18 Ch. D. 1, 50 L. J. Ch. 472, 44 L. T. N. 8. 787, 29 W. 11. 647. (q) The Potomac, 105 U. S. (15 Otto) 080. , (r) The Ihtomac, supra. 200 INDEMNITY. 239 the insurers («) ; or if they be not valued, which is a similar case, only to the extent of the indemnity paid by them. if the assured only gets half his damage as in collision, the in- surer, who has insured two-thirds of the whole valuo, will only get one-third of the damage awarded, as by his contract he was liable for two thirds of the whole,nottwothirdsof half the damage (<). CorUribviion occurs when same interest insured by different insurers.^ Contribution takes place where different insurers insure the same interest in respect of the same property and the same perils (u). The conditions in a fire policy aim at increasing the occasions for contribution. And insurers often stipulate that the assured shall furnish the names of other offices witn which he has policies, in order that they may have the proposals the same as those other companies, so that policies may be in similar terms and contribution facilitated (x). Insurers' liability Joint and several — The assured may, but is not bound to, sue all his insurers together. Or he may recover the whole amount of his damage from one, and let that one seek ♦contribution to reimburse himself, just as a guaranteed [* 239] creditor has a choice of remedies, and may at his option proceed against the principal or his sureties (y). The total of various policies mmt exceed loss. — Contribution only can take place where double insurance exists, i. e., where one or more policies have been taken out, the total amount whereof exceeds the total value of the subject-matter injured.* Tlie assured, being entitled only to indemnity, can only recover the amount of his loss. And he is entitled to sue his insurers sep- arately or successively until he has been recouped in full. To such action or actions it is a good defence that the assured has been al- ready indemnified wholly or in part by other iuvsurers. The insurer, on the other hand, is only entitled to contribution when he has paid. But he can cither call in the other insurers as third parties in theassured's action against him, or pay and sue the other insurers for contribution in a separate action. Same property must be insured. — There is one other condition pre- cedent to the right to contribution, that the same property or inttr- est, or some part thereof, shall have been insured with the several («) North-Eaatern Insurance Co. v. Armstrong, L. R. 5 Q. B. 244, 80 L J. Q. B. 81, 21 h. T. N. S 822, 18 W. R 620, doubted in BtirHandy. limhcanachi, 7 App. Cas. 833, 61 L J. Q. B. 648, 47 L. T. N. S. 277, 81 W. R. 65. (<) So ill America, The Potomac, supra. (m) North British and Mercantile v. London. Liver/iool. and Globe, 5 Ch. D. 581, per JamcH, L J., 45 L. J. Ch. 548, 4« do 5:)7. VS h. T. N. S. 021) (X) Pendlebur}/ v. Walker, 4 Y. & C Kx. 424, 441. (y) Stacetf v. Franklin Fire, 2 WnttH & Seij? (Peiin.) 600. ' OwnerH shipped goods by a carrier and insured it Carrier had policies cov- ering carffoeM of its stpamer, containing clause limiting insurance to interest of in- sured. Held, not to be do\iblo insurance, and the shipper's insurers could not make the carrier's insurers contribute to their loss. Royster v. Roanoke Steam* boat Co., id Fed Rep. 492. 201 V.U 'i", h:m m \4 'lit '*',;■ I i! li *241 THE LAWS OF INSURANCE. insurers (z), who claim contribution inter ae; and the usual condi- tion as to contribution only means that there is to be a limit to the liability of the several offices where the respective offices are legally liable to contribute to the same loss in respect of the same fire (o). Difference between contribution and subrogation. — Contribution is distinct and diflferent from subrogation (6), and resembles [* 240] the remedies between *co-suretie8, whereby the liability of each may be equalized or made proportionate. For subroga- tion to arise the assured must have concurrent remedies against the person causing the loss and against the insurer. Thus he may have a claim against the baileee of his goods by law, custom, or contract, and also a claim against his insurers by contract. There the bailee cannot claim against the insurer, but the insurer can in satisfaction of the loss claim against the bailee, who is primarily liable, and stands in a position analogous to that of a principal debtor whose debtor is guaranteed. In contribution no one insurer is more liable than any other, no more than the whole loss can be recovered, and the aim of contri- bution is to distribute the loss amongthe different persons liable, so as to give each and uU a diminution of their individual loss ; whereas in subrogation the aim is to shift the loss on to those who would have been liable if there had been no insurance. If the bailee insures his liability and the bailor insures his inter- est in the goods, the bailor's insurer is entitled to recover from tlie bailee or his insurer the whole damage, not a proportionate part, since each only represents his assured, and the right of the bailor against the bailee is not to contribution merely, but to complete in- demnity for the loss of his goods (c). Scottish Amicable v. Nortfiem Assurance. — In a recent Scotch case (<£), premises on which there were several mortgages were insured un- der four policies in the name of the first mortgagees primo loco, and of the mortgagors in revfersion. Each policy contained a contribu- tion clause identical with that in North British and Mercantile v. London, Liverpool, and Globe, already cited. The premises [* 241] were also injured in favour of *Bub8equent mortgagees in the first place, and the mortgagors in reversion by policiis containing a similar clituse. The mor^agors paid for all the poli- cies, and oft a fire occurring the first mortgagees sued on their jjoli- cies. The insurance companies objected that the other three com- panies were not called on for contribution The Court overruled the objection on the grounds — («) Tuck V. Harford, BO New Hatnp. 820. whore two pnlicieR wen, taken out by mortgagor, one by mortgagee on own interest. Contribution on value of the equity of redemption. (a) North liritish and Merrantile v. Jjondon, Lmrponl and Globe, 5 Ch. D. 509. 582, per James, L. J., 80 L T N. 8 209, 40 L. J. Ch. 687. (b) Same case, 588, per MelliHh. L. J. (f) North British and Mercantile v. London, Liverpool and Globe, ubi mpra. (d) Scottish Amicable v. Northern, 11 C. S. C. (4th series) 287, 12 Sc. L. R. 189. iiU8 INDEMNITY. *242 (1) That the pltiintiflfs had no right of action against the insurers on the last three policies, but only on the first four. (2) That the words "same property" in the contribution clause meant the same proprietary interest," the particular security, es- tate, or interest, which the insurance was to protect, and no other." (3) That the first mortgagees had insured their own interest, nnd that no subsequent insurance by other mortgagees could diminish that interest. Per Lord WLaren. Insurers of first mortgagees cannot claim contri- bution from insurers of second mortgagees, if the policies cover several in- terests if the different mortgages. — The opinion of the Lord Ordinary, which was approved by the Court of Session, was as follows (e): — "The clause of contribution can have no other object or purpose than in the case supposed to reduce the liability of the subscribing companies to that of underwriters, that is, a liability under which the assured should be entitled to r* cover the full amount of his claim in payments from the several contributories, but should not be entitled in case of partial loss to throw the loss on one or more contributories to the exclusion of the others. My interpretation of the clause carries out this object. Under the defenders contention the pursuers would not recover the full amount of their claim, be- c luso their view involves the division of the loss into seven shares, of which the pursuers would only recover four. The division to be applied to the sum assured by the Northern Company, if the contract *is a fair one, must be the ratio of the ng- [* 242] pregate liability of the contributories to the actual loss. The defender's proposal is to increase the division by adding to it the liability of persons who are not contributories. It is, I think, a good reason for rejecting their contribution, that it would enable insurance companies to evade fulfillment of their obligations. An- other reason for rejecting it is that under it the right of the assured would be liable to be diminished by subsequent acts of parties not under their control. In the present case, for example, it is said that a second bondholder [mortjjragee], by effecting his insurance, has diminished the claim ot the first bondholder to a proportionate extent. A third reason against the defenders' contention is that in the case of a total loss it leads to the result that tfie indemnity is to be shared between the first and second bondholders in propor- tion to the amount of their insurance, though in equity the first bondholder, if covered by insurance, ought to recover to the extent of his bond, and the second bondholder ought only to recover the difference between that sum and the worth of the property, that diffi'rence evidently being the limit of his insurable interest.'' And the obligation of the later companies is to indemnify the deferred creditor should hesufier from the consequences of a fire; and if this creditor does not suffer ]o«s, there cannot be brought against them any claim for indemnification (e). They are to make up loss (e) 11 C. S C. (4th Beries) 290. (e) Same case, 294, per Lord Craighill. 208 ■I? '^'i.ii ♦ 244 THE LAWS OF INSURANCE. to the party whom they have assured; they are under no obliga- tion to idemnify or to enter into arrangements for indemnifying a preferred creditor. The plaintiffs were suing for what was theirs, and not in the re- versioners' interest. Scottish Amicable v. Northern Assurance discussed. — The case turns on what was meant to be insured — the i)roperty itself or the mort- gagee's interest in each caee. If the former, which is sup- [* 243] ported by the fact *that the mortgagor paid the premiums, contribution would seem proper. But, on the other hand, this would enable the mortgagor to diminish the first mortgagee's security under the first policies ; and the only way to keep up his title is to let him recover on the policies, which are his security, or else to reinstate, or thirdly, to give the insurers paying him subro- gation ngjiinst the mortgagor. In this case the unhappy mortgagor, by providing a security for his mortgagee, would be simply giving the insurers a right of recourse against himself. But reinstate- ment would be the true solution, since thereby— The first and puisne incumbrancers would have their security preserved. The debtors would not be liable to subrogation. The insurers could contribute rateably to reinstatement without possibility of claim (/). In the case under discussion, if, after satisfying the claims of the mortgagees on their several policies, there still remained a bal- ance of loss, that would be damage to the mortgagors' interest, and quoad that all the companies would contribute, that being, if the Court were right, the only interest common to all the policies. The Scotch Courts hold that the assured cannot select his debtor, but that insurers of the same interest may make their right to rateable contribution available in a question with the common creditor (g). In England the assured can sue which insurer he chooses, but contribution may be obtained bv means of Ord. xvi. r. 48 of the Rules of the Supreme Court, 1883. Contribution contrasted with subrogation. — Contribution differs from subrogation in several respects. In the first place, it im- [* 244] plies, as before ^mentioned, more than one contract of assurance each of which undertukes a similar, if not iden- tical, liability in respect of the same subject-matter and the same interest therein. Secondly, the amount of tlie insurances must ex- ceed the value of the property or the damage done to it. When these circumstances exist, the insurers by contribution distribute the actual loss in such a way that each bears his proper share. The one thing which contribution has in common with subroga- (/) See Lord Young'H opinion, ibid., 295, in which he takes the same view of inmirance on buildincs as did Jumos, L. J., in Rayner v. l^reston, 18 Ch. D. 1, 50 I.. J. Ch. 47a, 44 L T. 787, iO W. R. 547 (g) lies. C. (4th series), at p. 808, per Lord Justico-Clerlt Monoreiff. 204 INDEMNITY. 245 tion is to reduce the indemnification of the assured within the bounds of real indemnity. For subrogation there need not be more than one policy, nor need that offer com^)lete indemnity. All that is necespary is that there should be, besides the insurer, another person liable to the assured, or some other means of indemnity open to the assured other than and besides recourse to his insurer. In such a case the principle of subrogation will apply, and will entitle the insurer, not, as in contribution, merely to a rateable reduction of the in- demnity paid by him, but to the enforcement of the assured's rights against others to the full extent of that indemnity. Consignor and congignee. — If the consignee takes out policies on goods held by him in trust (in the mercantile sense), and the con- signors effect policies, each on his own goods (^), or if the con- signee effect policies also in their name, this will be a case for con- tribution if the consignor's policy is so drawn as to cover the mer- chandise and not merely the consignor's interest therein (i). Policy may be shown not to be a contributing one. — But though a poUcy on the face of it is a contributing policy, the course of deal- ing may be given in evidence to show that it was not so in- tended when the * policy in question is not a contract be- [* 245] tween the parties to the action (k). In some cases a floating )oIicy has Deen held not liable to contribute rateably with specific )olicies covering the whole amount (0, and in others it has been leld liable (m). Condition as to contribviion. — The condition as to contribution usually provides that the insured shall not be entitled to recover from the company any greater proportion of the loss or damage than the amount insured bears to tne whole sum insured on the Property, whether such insurance be by ppecific or by general or oating policies and without reference to the solvency or the liabil- ity of other insurers (n). The insurers are liable in the same ratio ■Mi their risks bear to the total risk (o). J t is doubtful whether in case of an insurance against fire on goods, with a clause stipulating for the payment of only a rateable pro- portion in case of another insurance, if the assured procures another insurance on the same risk, and the loss is less than the whole amount insured, he can recover the whole loss from the first in- surer, or only a pro rata payment from each (/)). [h) Waters v. Monarch, 5 E. & B 870, 25 L. J. Q. B. 102, 26 L. T. 217, 4 W. R. 245, 2 Jur. N. S. 375. Home Insurance Co. v. Baltimore Water Co., 05J U. S. (3 Otto) 527, C41. (t) Robhina v. Fireman^ s Fund Insurance Co., 10 Blatch. (C. Ct. U. S.) 122. (ifc) Lowell Co. V. Safeguard Fire, 88 N. Y. 501 (1882). (I) Fairchild v. Liverpool and London, CI N. Y. 65. Im) Merrick v. Germania^ B4 Penn. 277. (rt) Johnson V. North British and Mercantile, 1 Holmes (C. Ct. U. S.) 117. (o) Barnes v. Hartford Co , 8 McCrary (U. S. Circ. Ct.) 226. (p) atacey v. Franklin Fire, 2 Watta & Serg. (Penn.) 506, 548. 205 *«! ! ♦ 247 THE LAWS OF INSUBAKCE. i' [*246] *CHAPTER XI. CONDITIONS AS TO AVERAGE. Two kinds. — Conditions on this subject are obscure and little un- derstood. They take two forms — (1) A condition declaring the property insured to be subject to the conditions of average. (2) A condition declaring that if any other subsisting insurance or insurances effected by the insured or any other person, cover- ing any property by the policy in question insured, either exclu- sively or together with any other property in and subject to the same risk, should be subject to the conditions of average, the insur- ance on such property under the policy should be subject to the conditions of average in like manner (a). Qmditum. Average. — The aim of those conditions is to prevent under-insurance, just as conditions relating to contribution seek to obtain the benefit for each insurer of another insurance. Each par- ticular assured being bound by the condition of his particular policy, it results that where several insurances have been made, indirect compulsion can be put upon persons not bound to a particular in- surer through the insurer with whom they have contracted, in the interests of the general body of contributing insurers. Proportion payable. — The conditions of average are as follows :— If property is declared subject to average, and the property covered at the time of fire exceed the sum insured at the time of the [* 247] fire, the assured will receive on his *insurance, not the whole amount of the loss or damage, but only such portion thereof as ascertained by a rule-of-three sum, in the following form : Value of property covered : insured amount : : damage done; damage payable. The consequence of this rule is to make the assured his own in- surer as to a rateable portion of the loss, determined by the ratio between the value of the goods at risk at the date of the fire and the amount insured thereon. The aim of the condition is to pro- vide full insurance. Policy subject to average and specific policy. — If the property in- cluded in a policy subject to average U covered by other and more specific insurance, which applies at the time of fire only to part of the property insured by the first policy and to no other property, then the policy subject to average only insures the propertv ns to an excess above the specific policies, and that excess will bo, if need l)e, subject to average. (a) North British and Mercantile v. London, Liverpool, and Globe, 6 Ch. D. 569, 45 L, J. Ch. 848, 46 do. 587, 89 L. T. N. S. 629. CONDITIONS AS TO AVERAGE. *249 Specific insurance. — By specific insurance is meant a policy or policies whereby tiie amount imured is payable irrespecli^-e of the value of the projjerty within the risk at the time (b). If the specific insurances cover the whole property, the insurer, by a floating policy, will not have to contribute, nor will the average stipulations bring him under any liability (c). BuUdings and furniture separately insured in same policy. — In an insurance on buildingn for £2,000, and furniture for £2.000, sepa- rately valued, but in the same policy, it was stipulated that, in case of any other insurance thereon, the assured should not recover on this policy any greater proportion of the loss than the amount assured by the insurer should bep • to the whole amount assured thereon. A second insurance was taken out on building and furniture generally for *£2,000, and in this case the [* 248] first insurers were held bound to pay two-thirds of the loss caused by a fire, and not permitted to contend that the second in-, purance, being on buildinvis and furniture equally, must operate to its full extent on both or either (d). Two-thirds clause. — ^While the conditions of average are inserted to ensure full insurance on fluctuating amounts of goods, and to prevent policy-holders from covering bjr their policies goods in ex- cess of the amount insured thereby, a similar condition is inserted in some, especially mutual marine policies, and in Canada and the United States in policies on houses, &c.,in the shape of a two-thirds clause, which works like the average condition, as will presently be seen, and under which the amount of indemnity, whatever the ac- tual amount insured, is restricted to two-thirds of the value of the subject-matter at the time of the fire. In such a case the value of house or goods may fluctuate, and the amount recoverable will never be the actual damage done, but only a sum not exceeding two-thirds the cash value of the premises, and in any event not exceeding the amount on which premium is paid. Thus if a building were insured for £1,500, and it was totally destroyed by fire, being at the time worth £1,800, the as-ured would under such a policy recover, not £1,500, but £1,200 only (e). Application of two-thirds clause where separate insurance of separate properties. — Where a separate insurance is effected on separate properties, and the two-thirds value clause applies, the insured can recover only the two-thirds o( the damage done to the particular property injured, and not two-thirds of the whole insurance upon it. Thus if a house and furniture were insured for £1,500, the house at £1,000 and furniture at £500, and tho*former [* 249] were wholly destroyed, the amount recoverable would not (b) Bunyon Fire Ins. 2 and 144 et sea. (c) Fairchild v. Licerpool and London, 51 N. Y. 65. Per contiu), Merrick v. Germania, 64 Penn. 277. (d) Unitarian Congregation v Western Assurance Co., 26 U- C (Q. B ) 175. (e) Williamson v. Gore Dittrid Mutual, 2<\ U. C. (Q. B.) 145. See Post v. Hampshire Mutual, &8 Mass (12 Metcalfe) 656- 207 '^'-mm '■■•'■ iM mm *250 THE LAWS OF INSURANCE. be £1000, two-thirda of £1500, but two-thirds of the £1000, that being the limit of indemnity for the hou-e (/). Different subjects insured at separate amounts in same policy.— Where different subjects are insured at separate amounts specified under one policy, containing a clause that the company shall be liable to pay to the assured two thirds of all such loss or damage by fire as shall happen, not exceeding the aggregation of the amounts insured^ and amounting to no more on any one of the diflFerent properties than two-thirds of the value of each at the time of loss, and not exceeding on each the sum it is insure 1 for, the policy is to be treated as a separate insurance upon each sub- ject of insurance, and the company is liable only for two-thirds of the loss on each subject, notwithstanding that the loss on some subjects is less than the amount insured thereon, and the whole loss less than the whole amount insured (g). Difference of average in marine and fire. — Average in fire policies is quite a different thing from average in marine policies. In the latter it means a rateable contribution to the damage caused to part of the adventure by a common peril, t. e., the whole adven- ture is dealt with in solido, and any loss is treated as lost by all, to be apportioned among the co-adventurers or their insurers, if any; whereas the conditions of average in fire assurance aim at lessen- ing the indemnity payable to the assured. Average clause in fire policy. — The average clause in a fire policy works in the same way as the rule for estimating the amount of the insurer's liability on a valued sea policy. In the la«ter, if an adventure be valued, the insured is estopped in case of loss from saying that the value exceeds the amount in the policy. [* 250] *And if he has a partial loss, he will only receive an in- demnity for such loss calculated by the following propor- tion. As the actual value is to the actual loss, so is the insured value to the sum recoverable. Thus, if a ship worth £15,000 be valued at £10,000, and suffer £5000 worth of damage, not that sum, but £3333 6«. 8rt. will be re- covered (h). So if a nre policy subject to average the policy be for £10,000 on goods, and £15,000 worth of goods oe within the risk at the time of the fire, the assured will only get two-thirds of the amount of his loss. Goods in lighters. — A marine average loss on a valued policy would be adjusted in just the same way. And the same principle is applied to policies on goods afloat in Tighter canal boats, &c. (i). The amount at risk on the day of loss in all the owner's boats con- (/) M*CuUoch V. Oore DiatHet Jifutual Fire Inmrance Co., 83 U. C. (Q. B.) 610. 7) King v. Prince Edward C\'m tt. ^H^ll ■ 1 '' i'liil it. I 1 :-, >, U PORTER ON INSURANCB. 209 ♦ 262 THE LAWS OF INSUHANGE. [* 251] ♦CHAPTER XII. REINSTATEMENT. Option to reinstate. I^ect of. — The position of insurers under a contract of insurance containing an option to reinstate has been well laid down as follows : — The insurers, in case of liability arising against them on their contract, had an option as to the manner in which they would dis- charge their liability. One mode looked to the compensation of the insured by the payment of damages for his loss, the other to the restoration of the subject of insurance to its former condition. It could not have been contemplated bv the parties that both meth- ods of performance were to be pursued. The selection by the in- surers of one of those alternatives necessarily constituted an aban- donment of the other (a). The election of the privilege of restora- tion involves the rejection, not only of the right to discharge its liability by the payment of damages to the insured, but also those provisions of the contract having reference to that method of per- formance. From the time of such election the contract between the parties becomes an undertaking on the part of the defendant to build or repair the subject insured, and to restore it to its former condition, and the measure of damages for a breach of the substi- tuted contract does not necessarily depend on the amount of dam- age inflicted by the peril insured against (6). [* 252] If, therefore, the insurers elect to reinstate and their *re- instatement is not satisfactory, they cannot, it seems, plead refusal by the assured to arbitrate as an answer to a claim for dam- ages in respect of improper reinstatement (c). Reinstatement. 14. Geo. III. c. 78, a. 83. — By the old Metropolitan Building Act {d) it is provided that insurers may, " upon the re- quest of any person or persons interested in or entitled unto any house or houses, or other buildings, which may thereafter be burnt down, demolished, or damaged by fire, or upon any grounds of sus- picion that the owner or owners, occupier or occupiers, or other person or persons who shall have insured such house or houses or other buildings, have been guilt^f of fraud, or of wilfully setting their house or houses or other buildings on fire, to cause the insur- cited. Times Co. v. Hawke, 1 F. & F. 406, 28 L. J. Ex. 817. Wj/nkoop V. Niagara Fire, 43 Am. Rep. 686, 91 N. Y. 478, and cases there Morell V. Irving Fire, 88 N. Y. 429. Wynkoop v. Niagara Fire, mpra. 14 Geo. III. 0. 78. 210 REINSTATEMENT. *258 ance-money to be laid oat and expended, as far ns the same will go towards rebuilding, reinstating, or repairing such house or houses, or other buildings so burnt down, demolished, or damaged by fire, unless the party or parties claiming such insurance-money shall with in sixty days'next after his, her, or their claim is adjusted, give a sufficient security to the insurers that the insurance-money shall be laid out and expended as aforesaid, or unless the said in- surance-money shall in that time be settled and disposed of to and amongst all the contending parties, to the satisfaction and appro- bation of the insurers." Building insured in specie. — ^A building is insured as a building. It is not merely the material that is insured, but the beneficial in- terest of the assured therein (e), and therefore, to prove a total loss, absolute destruction of the material need not be proved. It is enough to show that the building has lost its identity and specific character (/). *This is in accordance with the rule laid [* 253] down by the Courts as to marine insurance (g). Scope of 8. 83. — It was for long thought that this section applied only to property within the bills of mortality, but in 1864 the Lord Chancellor, Westbury (A), held that it was of general and merely of local application. It was at the same time decided that the power of reinstatement under the Act applied only to houses and build- ings, and such fixtures as would pass by the conveyance, and there- fore not to trade fixtures removable by the tenant. The right of re- instatement in any case only exists by statute or special contract, and in no way forms part of the common law of insurance (i). The whole of the Metropolitan Building Act, except ss. 83, 86, is re- pealed by subsequent statutes (K). Under the statute the insurer is authorized and required to rein- state in all cases of suspicion that the assured has been guilty of fraud. Inmrer's obligation f-o reinstate. — Further on the application of any person interested (I) in the property, the insurer must reinstate, unless the parties interested come to terms. Any one having any right or interest to or in the premises (m) can thus, if he has notice of an insurance, stop the proceeds thereof, and insist on their being applied to the restoration of the premises in respect of which they have been received. It was probably intended oy this Act to pre- (e) Castellain v. Preston, 11 Q. B. D. 380 at 397, per Bowen, L. J., 52 L. J, Q. B. 366, 49 L. T. N. S. 29, 81 W. R. 557. (/) Hiick V. Globe Irisurance Co., 127 Mass. 806, 34 Am. Rep. 376. Williams V. Hartford Co., 85 Am. Rep. 77. (gf) Insurance Co. v. Fogarty, 19 Wall. (U. S.) 644. Hugg v. Augusta Insur' ance Co., 7 How. (U. S.) 566 ; and see Roux v. Salvador, 8 Bing. N. C 266. 'h) Ex parte Gordey, 4 De O. J. & S 477, 84 L. J. Bkcy. 1, 13 W. R. 60, 11 L. T. N. S. 319, 6 N. R 22, 10 Jur. N. S. 108(j, (t) See Wallace v. Insurance Co., 4 Louis. 0. S. 289. Ik) 7 & 8 Vict. c. 84 : 18 & 19 Vict. c. 122. (l). Paris V. Gilham (1813),. Cooper 66, per Grantj M. R. (m) See Ex parte Gorley, supra. Vernon v. Smtth, 6B.& Aid. 1. 211 >? ELinilll mmn m 255 THE LAWS OF INSURANCE. vont landlords who had insured from receiving the whole proceeds of the property and then insisting on their rent, or tenants [* 254] from insuring'*the freehold value and by receipt thpreof ex- ercising a kind of power of sale of premises in which tliey had but a limited interest (n). In Rnyner v Preston (o) James, L. J., expressed his opinion that the effect of this Act was to make the insurance on the propirty on behalf of all interested; and he said that he had never known any question raised as to the interest of the tenant. But in Cmtd- lain v. Preston (p) Bowen, L. J., emphatically dissents from this view. Notice to reinstate. — If the notice to reinstate is not given to the in- surance company before the money is paid over, it comes too hite, and the money cannot be followed by the person giving such notice (q), unless he is a mortgagee (r), nor can he make any claim on the insurers in such a case. If the insurers are given notice and will not reinstate, the remedy is by mandamus (s). The remedy is open, not only to the landlord as in the case below, but to every person interested. Reinstatement without notice. — The insurers can reinstate on their own account independently of quarrels between persons interested in the property. And our Courts would probably, as in Scotland (t), refuse an injunction to restrain the insurers from reinstating in such a case; for "the duty of the insurance company to [* 255] see the money so laid out *i8 twofold — first, in the interest of the public to prevent fraud ; and secondly, in their own interest, because no more ought to be laid out than was sufficient to erect buildings of the former character and description (<). Interpleader by insurer. — It was held that the insurance company could interplead in a case where the landlord brought an action against them on the policy, and the tenant required them to re-in- state (tt). Insurer not bound to pay landlord who reinstates. — A landlord can not, urfder 14 Geo. III. c. 78, s. 83, rebuild his houses and then re- (?i) See Castellmn v. Preston, 11 Q. B. D. 580, 53 L. .1. Q. B. 360. 49 I.. T. N. S 20, 81 W. R. 557, and iVt6/o v. North America Insurance, 1 Sandford (N. Y. Ch ) 551. ((>) Rayner v. Preston, 18 Ch. D. 15, 50 L J. Ch 472, 44 L. T. N. S. 37, 29 W. 11. 547. (p) 11 Q. B. D. 309. (7) Edwards v. West, 7 Ch. D. 858, 47 L. .1. Ch. 463, 20 W. R 507. Leeds V. Vhevtham, 1 Sim. 146. Lees v. Whiteley, 2 Eq. 143, 85 L. J. Ch. 413, 14 L. T. N. S. 472. (r) Con vevancinff Act, 1881. (.?) Simpson v. Scottish Union, 8 L„ T. N. S. 112, S2 L. J. Ch. 82.1, 1 H. k M. 618, 11 W. R. 469, 9 Jur. N. 8. 711, 1 N. R 537. Reynard v. Arnold, Ch. App 380. {t\ Hissettv. Royal Kxchnnne. 1 C. S. C. (Ist series) 175. it) Simpson v Scottish Union, 1 H. & M. 018, 82 L. J. Ch. 820, 8 L. T. N. S. 112. 11 W. R 460. ' (u) Paris v. Gilham, Cooper Ch. Ca. (1818) 60. 2U REIN'STATEMENT. * 256 quire the insurance company to pay for Hum. Nor can a tenant who has covenanted to insure, and has mortgaged his inten st, re- build and then cla;.m the policy-moneys in reduction of the cost of rebuilding as against such mortgagee (x). Condition in policy as to reimtatiag. — Notwithstanding the A' t, fire policies usually, if not invariably, contain a condition as to re- instiitement, giving the insurers an option to reinstate if they fo think lit. This condition, as usually drawn, is not, we think, merely declaratory of the power possessed by the insurers, undtr 8. 83, to reinstate under circumstances of suspicion, but enlarges their power, and enables them to reinstate when in their discretion they think proper. The Fc servation of this option is as old as the case of Sadlers Company v. Badcock (y). W/ien and how insurers must reinstate. — If the insurers do not re- build within a reasonable time after signifying their election to re- instate, they may be sued on the policy (z). If the insurer undertakes to reinstate, he must either make the new buildings as gaod as the old, or *expend all [* 256] the policy-moneys in a proper manner on the rebuilding ("). If he fails in this, he is liable to an action by the assured for the defective quality of the work, and must compensate him for it, but not to an injunction restraining him from rebuilding im- properly (6). Reinstatement where total or partial loss, and where things cannot be replaced in statu quo. — Where a fire policy contains a clause that the company may reinstate damaged or restored property, the company may, if the property is destrojred, replace the things bv others which are as good. If the goods insured are not destroyed, but only damaged, the company may -^store them to the place and condition they were in before the fire, and if the clause says noth- ing about locality, and the things insured cannot be put back where thej^ were before the fire, the assured may require the com- pany to reinstate within a reasonable distance of the former lo- cality (c). In Alchom v. Savile (d), a case in which the provisions of the Building Act made it impossible to rebuild the house as it was be- fore the fire («), it was held that the company might be sued for (x) Simpson v. Scottish Union, ubi supra. Gordon v. Ingram, 23 L. J. Ch. 4/8. (y) 2 Atkyng 554. (2) Home Mutual v. Garfield, 14 Am. Rep. 27, 00 Illinois 124. (tf) Parker \. Eanle, 75 Mass. (9 Gray ) 152. Cf. Insinance Co. v. Hope, 58 Illinois 75, 11 ^ni. llcp. 48, and ( in Scotland ) Sutherland v. Sun Fire, 24 Scot. Jur. 440, 14 C. S. C. (2nd scries) T75. (b) Home Innuranre v. Thompson, 1 U. C. (Err. & App ) 247. (c) Anderson v. Commercial Union Assurance. 56 L J. Q. B. 140, 84 W. R. 189. M ,S'. W. Hank v Roy . " amount of the dividend on the particular insurance avail- i ; . . the assets of the re-insured. The condition only means ih , , insurer shall only pay at and in the same time and man- p! 1 :'>r "--Insured shall pay or be bound to pay, and that the re- ^ ':' * have all the advantages of the time and manner of payment in the first policy (u). iq) Imperial Marine v. Fire Insurance Corporation. 4 C. P. D. IGO, 48 L. J. C. P. 434, 40 I. T. N. S. 160, U W. R. 680. (>•) Union Marine Co. v. Martin, 86 L. J. C. P. 181. (s) Joyce V. licalm Co., L. R. 7 Q. B. 080. (0 Ex parte Norwood, 8 Bissell (C Ct. U. S.) 504, 518. (m) Canhau v. North- Western Insurance Co., 5 Bisscl (C. Ct. U. S.) 470. 'In- surance Co. V. Insurance Co., 43 Am. Rep. 418. 218 RE-INSURANCE. *264 'In- The practice as to re-insurance seems to be to insert *a [* 263] clause in the policy of the re-insurance, that if the re- insured pays, his BO doing shall be evidence sufl&cient to enable him to recover from his re-insurer (a;). Payment by insurer enables him to recover from re-insurer. French rule. — And it would seem that French re-insurers inserted a clause allowing the original insurers to make bond fide a voluntary settlement and adjustment to be binding on the reinsurers (y). Re-insurer* position in action by assured. — The re-insured will, it seems, be entitled to recover from the re-insurer his costs of defend- ing any action brought by the assured under the original policy, if the re-insurer does not on notice appear and defend such suit He may either wait until judgment or proceed at once against the re-insurer; and pajrment is not in America a condition prece- dent to his right of action (a). But where the reinsured gave the re-insurer notice that he meant to pay, to which the re-insurer gave no response, it was held that the reinsurer could still raise all the defences open to the original insurer in action against him by the assured (b). Proofs. Conditions. — The reinsured must of course in some way prove the character and extent of his loss (c), and must fulfill all the conditions of his re-insurance (d). But it has been held in Canada that he may to some extent waive the conditions contained in the original policy without defeating his recourse to his re- insurer (e). Reinsxired entitled to his reasonable and necessary costs. — The re-assured is entitled, besides the a,mount paid *by him for [* 2G4] the loss sustained by his assured, to be indemnified by his re-insurer for all costs and expenses reasonably and necessarily in- curred by him to protect himself and entitle him to recover over (x) So stated in National Marine v. Protector Co., 5 Victoria L. R. 226, 229. (y) Pothier, cited in New York State Co., 1 Story Rep. (U. S.) 458. (2) Hastie v. De Peyster, 3 Cains (N. Y. ) 190. Henry Rifle Barrel Co. v. Employers' Liability Co. ( 1884 ), Q. B. D. New York Central v. l*rotection Co., 20 Barb. (N. Y.) 468. (a) Hone v. Mutual Safety Co., 8 N. Y. Sup. Ct. (1 Sandford) 137. (b) National Marine v. Halfey, 5 Victoria L. R. 226. New York State v. Protector Insurance Co., 1 Story Rep. (U. S.) 458. See M'Kemie v. }Vhitworth, 1 Ex. 1). 86, 83 L. T. N. S. 655, 24 W. R. 287, 45 L. J. Ex. 233. Joyce v. Bealm Co , L. R. 7 Q. B. 580. (c) Yonkers Fire Co. v. Hoffman Fire Co., 6 Robertson (Louis) 316. (d) New York Central v. National Protection, 20 Barb. (N. Y.) 468. (e) Fire Association v. Canada Co., 2 Ontario 48t. * The A. company re-insured in the B. company. The A. company was sued, and the two companies Berimed that the case should be fought, the A. company to control the defence. Without the consent of B., case was compromised. Hold lha,t B. was not liable to A. for any part of money paid by way of comproiniso. Commercial Union Assurance Co. v. American Central Ins. Co., 68 Cal. 480. 21U ,)'i;' y..:.-\X% hVMpi' Ml V-lk 265 THE LAWS OF INSURANCE. against the re-insurer. But if in a clear case of loss he defends without reason, he will not get his costs (/). Meaning of contribution clause in re-insurance policy. — If a contract of re-insurance contains a contribution clause, such clause will, in the absence of specific words, be taken to refer to a case of double re-insurance only, and a custom for reinsurers to pay only such proportion of the loss as the amount re-insured bears to the origi- nal policy will not be admitted. The custom suggested in the case below cited (g) was that, if partial re-insurance were effected, the insurer should only pay in full in case of a total loss, and in a par- tial loss should only pay proportionately in the way in which in- surers pay under an average clause. If the contention in the par- ticular case had succeeded, the re-insurer would have made what was a contribution clause work as an average clause, and have penalized the re-assured for not shifting the whole of his liability. Condition that reinsured should retain other insurances. — A condi- tion that the re-insured should retain a certain sum equal to the amount re-insured on other parts of the same property only means that they are to forbear from re-insuring so as to reduce their own risk below the stipulated amount, not that they must guarantee the continuance of existing insurances. So if the insured refuse to renew a policy of which the re-insured knows nothing till after the fire, the condition is not violated. To construe it otherwise would be to make the re-insured go on insuring against the will of the assured (h). Where reinsurance part of original risk, that retained cannot drop without re-insurance dropping. — Where the re-insurance is on [* 265] part of the original risk, *the amount retained cannot drop without the re-insurance dropping too. So that the original insurers must retain the part stipulated if they wish to keep up the re-insurance. But where the amount to be retained is a separate risk, though involved in the same peril, the word retain will not be construed as a guarantee that the assured will keep up all his existing poli- cies {i). Equal good faith required from re-insurer as from insured — The re- insured must show as good faith as if he were seeking insurance, and not merely re-insurance (k), as the latter is not a contract of suretyship, but a form of the ordinary contract of insurance whereby a person who has guaranteed the safety of another's goods mav have his own liability under the first guarantee covered by a second. Concealment. — Consequently, if information possessed by the re- insured and material to the risk be not communicated to the re-in- (/) Kew York State Co. v. Protector Co , 1 Story Rep. (U. S ) 458, where Story, J., cites the jurists. (g) Mutual Safeti/ Co. v. Hone, 2 N. Y. (Comstock) 235. See Union Marine V. Martin, 85 L. J. C. P. 181. ih) Canada Insur. Co. v. Northern Insur. Co., 2 U. C (App ) 878. (t) Canada Insurance Co. v. Northern Insurance Co., 2 U. C. (App.) 878. Ik) New York liowery v, Neva York Fire, 17 Wend. (N. Y.) 869. 220 RE-IXSURAXCE. *266 surer the policy of re-insurance will be void. Re insured must state to re-insurer what he knows of a^sured^s character. — In some cases, therefore, a heavier obligation to disclose may fall upon the person seeking reassurance than on his assured. Besides the information given by the latter, the former may at the time when granting the original policy, or subsequently, learn material facts as to the risk, and these he must disclose on seeking re-insurance. Thus, though the original assured would not be bound to give himself a bad character to his insurer's, such insurer's would, if seeking re -insur- ance, be bound to disclose what they knew of him (I), whether learnt before or after they granted the original policy. Whether policy should be stated to be a re-insurance. — When re-in- surance is made it is not necessary to disclose the fact that the policy is by way of re-insurance unless such fact is ma- terial (to). It seems to be *usual to declare that re-insur- [* 266] ance is sought if such be the fact, but there is no custom in marine insurance to that effect; for marine re-insurance was illegal, with certain exceptions, till 1864 (rt). Misrepresentation by re insured as to risk retained by him. — Misrep- resentation by the re-insured will avoid the policy. Thus where one company re-insured part of its risk on a life, stating that an- other portion would be retained, but parted with the rest before the first re-insurance was completed, the contract was avoided (o). But representations as to the nature of the risk will not help a re- insurer who has formed his own judgment of the nature of the risk (p). Notice to be given by re-insured of other insurances. — The re-insured must also give notice, if required, of other insurance on the prop- erty if he knows of it (^). In the case below cited the insurance was effected on an ordinary policy with re-insure substituted for insure. Condition that reinsured may recover within specified time after loss. — It would seem that if the re-insurer's policy stipulates that the re- assured may recover thereon within a certain time after the loss, such time will run from the injury to the property, and not from payment under the original policy by the reinsured (r). Condition as furnishing proof satisfied by transmitting proofs received from assured. — If the insurance policy contains a condition that the (1) Ibid. Sun Mutual v. Ocean Co , 107 U. S. (17 Otto) 455. (m) M'Kenzie v. Whitworth, 2 Ex. D 36, 46 L. J. Ex. 233, 33 L. T. 655, 24 W. R 287 (n) 19 Geo II. c. 87,8. 4. (()) Foster v. Mentor Life, 3 E. & B, 48, 23 L. J. Q B. 145, 22 L. T. 305. Traill v.^Iiarinff, 33 L. J Ch. 521, 4 Giff. 486, 10 L. T. N S. 215, 12 W. R. 678. Louisiana Mutual Fire Co. v. New Orleans Co., 13 Louis Ann. 240. But see Prudential Co. v. Etna Co , 28 Blatch. (U. S. Circ Ct.) 228. (p) Canada Ins. Co. V. Northern, 2 \J C (App.)373. (q) Neuj York Bowery v. New York Fire, 17 Wend. (N. Y.) 359. (r) Provindal Co. v. Etna Co., 16 U. C. (Q. B.) 145. m . X ! ls.:;i *266 THE LAWS OP INSURANCE. parties assured shall furnish certain specific proofs as to their char acter, circumstances, and loss, such condition is complied with iu contemplation of law, if the party originally insured furnishes such proof to his immediate insurers, and they transmit the same to their re-insurers («). (s) New York Bowery v. Neio York Fire. 17 Wend. (N. Y.) 359. Ex nnria Norwood, 3 BisseU (C. Ct. U. S.) 604. *^ "* OBUGATION OF TENANTS TO INSURE. *268 ♦CHAPTER XIV. OBLIGATION OF TENANTS TO INSURE. [* 267J Tenant jor life or in tail need not insure. — A tenant for life or a tenant in tail, if the settlement contains no provision or obligation as to the repair or insurance of buildings on the settled estates, is not bound to insure or to reinstate in case of fire (a). When entitled to 'policy-money. — And if such a person insures, pay- ing the premiums out of his own pocket, he has been held entitled to the policy-moneys as against the remainderman (6). Tenant in tail. Remainderman. Proceeds of policy. — This was first decided in the case of Seymour v. Vernon, the facts of which were that some stables were burnt down, and it was thought needless and inex- pedient to rebuild them. The Court had previously ordered the insurances to be kej)t up by a receiver for the benefit of all parties who, in the result of the decision of the Court in the administration suit, should be found entitled. And Kindersley, V. C, held that, inasmuch as the premiums had been paid out of the income of the infant tenant in tail, the policy-moneys were his. This case was followed and approved by Chitty, J., in Warwicker v. Bretnall (c), where a mill comprised within a strict settlement under a will had been insured on account of an infant tenant in tail out of the rents of the estate, and had been burnt down. The proceeds of the policy were insufficient for rebuilding, and it was not thought for the benefit of any one interested in the *settled [*268] estates that the mill should be rebuilt. The learned judge held that the policy-moneys belonged to the infant tenant in tail as part of his personal estate, and were not to be treated as part of the real property comprised in the settlement. Warwicker v. Bretnall discussed. — With the greatest respect and deference for those learned judges, it seems that, if their decisions are correct, a limited owner may insure settled property for its full value, and in case of fire appropriate to his own use, not only so much of the insurance-money as is equivalent to the value of his own limited interest, but also the balance which represents the value of the interests in remainder. This appears to be opposed to the view expressed by Lord Justice Bowen (d), who says : "A p^^rson (a) Rayner v. Preston, 18 Ch. D. 1, 60 L. J. Ch. 472, 44 L. T. N. S. 487, 29 W. R. 547. 6 Anne, c. 58 (81 RuflP.) ; 14 Geo. III. c. 78, s. 83. (6) Sevmour v. Vernon, 21 L. J. Ch. 488, 16 Jur. 189. (c) 23 Ch. D. 188 ; see also 81 W. R. 520. (d) CasteUain v. Preston, 11 Q. B. D. 880, 62 L. J. Q. B. 376, 49 L. T. N. S. 29, 81 W. B. 667. 228 I I r. 'r \ 270 THE LAWS OF INSURAN'CE. with a limited interest may insure either for himself, to cover his own interest only, or, if he so mean at the time, he may insure so as to cover not only his own limited interest, but the interest of all others who are interested in the property. It is a question of fact what is his intention when he makes the policy. But he can only hold for so much as he intended to insure There is the case of a mortgagee : if he has not the le^al ownership, hb is entitled to insure for the whole, but even if he is not entitled to the legal ownership, he is entitled to insure primd facie for all. If he intends to cover only his own mortgage, and is only insuring his interest, he can only retain the amount in which he has been indemnified. If he has intended to cover other persons besides himself, he can hold the surplus for those whom he has intended to cover. But if he intended to cover himself alone, and if his interest is limited, he cannot hold anything beyond the amount of the loss caused to his own particular mterest." If the decisions in Seymour v. [* 269] Vernon and Warwicker v. Bretnall are *good law, it is submit- ted that one class of limited owners — viz., the tenant in tail, must be excepted from what the Lord Justice says; and a tenant in tail, insuring all person interested, may receive and retain, not only so much of the insurance-money as represents the value of his own interest, but also the surplus which represents, and is really recov- ered in respect of, the interest of other parties. Even if the great authority of the learned Lord Justice did not seem to shake the de- cisions in Seymour v. Vernon and Warwick v. Bretnall, the considera- tions we have mentioned would make these decisions appear to us far from convincing or conclusive. There may be difficulty in es- timating the proportion of the insurance-money payable to the ten- ant in tail ; but why should the whole insuraiice-mor-ay be treated as realty and come under the settlement in lieu of the property de- stroyed? This would avoid all the difficulty of apportioning, and protect the rights of all parties. Opinion of Mr. Davidson. — Mr. Davidson (e) says " that, in the absence of special contract or obligation, the tenant for life is not bound to repair or rebuild in case of fire, and by parity of reason- ing is not bound to insure, yet it seems that if he is not insured he would be bound to lay out the money in rebuilding." Tenants for years not bound to inmre. — Tenants for years are not at Common Law bound to insure. Their legal duty, in the absence of special agreement, is merely to use the demised premises in a proper and tenantable manner, and includes no obligation to reinstate in case of fire (/). It is true that the statute of Gloucester seems to have been construed so as to make them liable in case of a fire [* 270] if accidental, *as for permissive waste if negligently caused, or for voluntary waste {g). (e) Precedents Conv. vol. 8, pt. 1 (8rd ed.), p. 290 note (c). (/) Ibid. vol. 5, pt. 1 (3rd ed.), 542 note (a). Sugden Handy Book 194 (8th ed.). \g) 6 Ed. I. (a. d. 1278), see Davidson, I. c Hamilton v. Mendes, 2 Buir. 1211 (1761), per. Lord Mansfield. TurbervU v. Stamp, 1 Salk. 18. 224 OBUGATION OP TENANTS TO INSURE. *271 J^anU not liable fur accidental fire. — But by 14 Geo. III. c. 78, s. 86 (A), in the absence of any contract or agreement with the land- lord they are exempted from all liability for accidental fires " oc- curring in their houses, chambers, stables, bams, or estates," " any law, usage, or custom to the contrary notwithstanding." The statute is mainly loial, but this and some other sections are general (i). The history of the section well illustrates the method of legislation in this country. The exemption was first granted as to houses and chambers only in 1708, by 6 Anne, c. 58 (6, 7, 8) (Riifthead, c. 31), for a limited period, but reyived and made per- petuid in 1710 by 10 Anne, c. 24, s. 1 (k). Hiatory of 8. 83. — In 1772 it was repealed and re-enacted in the 12 Geo. III. c. 73, s. 46, a Metropolitan Building Act. In 1774 it was repealed and re-enacted in its present form (^l), except the pro- vision as to treble costs, which has been repealed by the Statute Law Revision Act, 1861, while the rest of Geo. III. c. 78, was re- pealed by 28 & 29 Vict. c. 90, s. 34 (a Metropolitan Fire Brigade Act), which s. 34 was in its turn repealed by the Statute Law Re- vision Act of 1785 (38 & 39 Vict. c. 66). Such repeal does not, how- ever, revive the repealed portions of 14 Geo. III. c. 78 (m). Tenant' 8 liability for fire through his negligence. — Though now clearly not liable. ex:cept by contract, for accidental fire, a tenant for years is liable ex delicto at Common Law for damage done by a fire caused by *his own negligence, or that of his servants, to [* 271] the property of his neighbors or his landlord (n), and such liability is in no way affected, lessened, or varied by s. 86 of 14 Geo. III. c. 78. May insure against fire through negligence. — In virtue of this liabil- ity for negligence he has an insurable interest in the premises oc- cupied by him, and he may lawfully insJire against his own negli- gence (o). Protection of ordinary policy. — Indeed, an ordinary fire policy pro- tects against own or servant's negligence (except perhaps the very grossest), or accident?, or arson by others, wherein assured has no complicity (p). Tenant's liability as insurer, how created. — Landlord and tenant may liichards (A) This Act is wholly repealed, except this section and s. 83. (t) FHliterw Phippard (1847), 11 Q. B. 347, per Denman, C. J. T. Easio, 15 M. & W. 244. {k) C. 14 (Ruff head). [1) Piatt on Covenants 188. (»0 Seel3&14 Vict, c 21,8. 5. [n] See FiUiter v. Phippard, 11 Q. B. 847. See Vanghan v. Menlore, B Bing. N C. 468. Turbervil v. f^tavip. 1 Salk. 13. These and other cases bearing on this subject are ably and exhanstively discussed iri^ Furlong \. Carroll, 7 Ontario (App.) 145, and in UilUard v. Thurston, 8 Ontario ( App ) 614. (o) Dobson V. Sotheb//, 1 Moo & Mai 00. 1)3, per Tenterden, C. J. iv) Midland Inmrance.Co. v. Smith, 6 Q. B. D. 561, 50 L. J. Q B. 32<). 46> L T. N.S. 411,29 W. R. 850. 15 PORTER ON INSURANCE. 225 *272 THE LAWS OP INSURANCE. contract that the latter shall be liable to the former in case the de- mised property shall be destroyed by fire (q). Tenant under covenant to repair bound to reinstate. — A tenant who covenants or agrees to repair generally makes himself an insurer, and, if the demised premises are burnt down within his term, will be bound to reinstate, and is liable in damnges if he does not do so. I*; does not matter whether the fire originated in or spread to the demised premises, nor how it was caused (r). Insurance. Landlord and tenant. — A covenant by the tenant to pay any extra premiums exacted in consequence of work done or business carried on by him, seems to apply to the ordinary trade of the tenant, and not to special acts increasing the risk, such as netting up steam-engines, &c. (s), [* 272] 'WeoiseeJoT life when an insurer. Liability to rebuild of lim- ited owner.— A. devisee for life, with a condition against com- mitting waste, and for keeping the premises in good and tenanta- ble repair, is under the same liability as a tenant, bound by an absolute repairing covenant, and the remainderman can make him rebuild. He cannot do so, however, unless such liability is imposed on him by the settlement under which he holds (t). Tenant when an insurer. Trustee in bankruptcy. — The trustee iu bankruptcy of a tenant is in the same position as the- tenant ?ave for his power of disclaiming a burdensome tenancy (?t)- Insurable interest of tenant under covenant to repair. — The tenant who has covenanted " to repair and keep in repair" has an insura- ble interest in the premises sufficient to support a policy in his own name for the full value thereof. Such insurance is in effect a re- insurance of his own liability. Positi n of insurers where landlord and tenant insure separately. — Consequently if the landlord insured too, the insurers would not be entitled to demand contribution in- ter se; but the insurer of the landlord would be entitled either to gubrogation to the landlord's rights on his covenant against the tenant, or to return of the policy money if the landlord had en- forced these rights («). Effect of 'tenant to repair and to insure fixed sum. — The covenant to repair nii.kes the t«nant an insurer to the full value of the prem- ises even if he also covenants to insure for a fixed sum. The latter covenant h a collateral security to the landlord, lessening but not (q) 14 Geo. III. c. 78, s. 86. ()•) Ihillock V. Domitt (17!t6), 6 T. R fi50. Pi/in v. lilarklmrn, n Vcs.Jun. 'M. Chestfr/icM v Bolton. 2 Com. 027. iJigby v. AtHumii, 4 Camp. 27."). Ltuvln y. Kemp, 2 C & P. 376. (,s) J)iihc of Hamilton's Truatecu v. Flcminff. !) C S. C (iJrd series) a2!), iiml also Forhcs v. Border Counties, 11 C. 8. C. (Sni RcrioH) 278. Piatt v. Knri/. 7 Lr. Can. .lur. 80. (t) He Skbifflcf/. 3 M'N & O. 221, per Tniro, C. Greg>f v. Co(it V' Milliijan^ 28 Bcuv. 41tt. (A) Doe V. Sheinii, 8 Camp. 134. (i) Mftyne on DtimaguR 241 (3rd ed.). (*) Doufflaa v. Murphy, 10 U. C (Q U.) 113. Yattn y. Ihnutrr, 11 Kx. If.. 228 * OBLIGATION OP TENANTS TO INSURE. =K 277 Buch a case, if a loss occurs, the measure of damage for the breach will be merely the amount of premiums bo i)aid (J). Where no loss has occurred, the measure of damages is what it would cost the landlord to put himself into the position in which he would have been but for the ^omission of the de- ['^ 270] fendant (m), i. e., the premium paid to keep up an existing policy, or obtain a fvtAx one, or take out one if none has been ef- fected (n). Relief for breach of covenant to insure. — The Courts of Equity used to hold that breach of a covenant to insure was wilful, and one for which compensation could not be calculated (o), and therefore would not relieve from forfeiture so incurred. Hence it became needful to pass 22 & 23 Vict. c. 35, ss. 4, 9. No forfeiturt', of course, was worlieu thereby, unless so stipulated ; and without a forfeiture clause the remedy for the breacli was merely an action for damages. What breach works forfeiture. — The breach must be substantial to work a forfeiture. Thus an insurance in the lessor's name is not a substantial breach of a covenant to insure in name of lessor and lessee (p). But to insure in joint names when the covenant is to insure in the lessor's would be a substantial breach (7), eincethe lessee cou'd in such a case give a good receipt for the policy-moneys. To leave the premises uninsured for ever so short a time is a breach (r). Forfeiture not cured by ante-dating receipt. — Where a breach has been committed, the insurers cjinnot cure the forfeiture, if any, in- curred thereby, by dating back the receipt (s) for the premium. Breach of covenant to insure, when not enforceable. Estoppel of Ics- smr. — If any conduct of the lessor induces the lessee to l)e- lieve he is doing all that is necessary under the ^covenant, [* 277] no forfeiture will result (0> since an estoppel is worked by the lessor's acts. Waiver by lessor. — The lessor waives the forfeiture if ho accept rent falling due after the breach ; but the breach is a continuing breach, and the waiver operates only as to the ])ortion of time prior to such waiver (u). 22 x, 23 Vict. c. 35, the statute governing relief (/) Dou(fla3 V. Murphy, 10 U. C (Q. B) 110. (m) Muyue Damagos 242 (Mrd ed). Charles v. Altin, 15 C IJ. 46-05, 2i{ \.. .1. C. P. 1SJ7, 204. (h) Charlton v.J>rwei% 2 H. & 11. 845. Quiltcr v. Mapleson, 9 Q. IJ. 1). CT-J, 62 L. J. Q. B. 44, 47 L. T. N. S. 501, 81 W. tt. 75. (0) Jio]fe V. itarris, 2 Prico 200 iiDte. Piatt ('i)veiiuiit.s 102. ip) Havem v. Middleton, 10 Ha. 041, 17 Jur 2T\, 1 W. U 260. Doe v. P,>rk; IB. A: Ad. 428. (7) Pcnniallx. Harbnrne, 12 Jur 159, 12 Q. B. a08, 17 I.. .1. Q. B. 04. (»•) //ry V. Wych, 2 (Jiilc & 1) 501), 12 L. J. Q. B. h:J, O.lur 550. Doe v. I'lph, lU.ltir. 270, 18 li. J Q B 10ft. (n) Wilson \. Wilson, H ('. B ()l(i, l«.hir. 58', 2:} L .1 (' P. ia7. it) Doe V. Howe, \ By. & M. )I43. Ihe v. Sutton, ('. k P. 70(». (h) Doe V. (lltidwin, Q. B 058, Piice v. Woncood, 5 Jur. N. S. 472, 38 1^. T. 140, 7 W. U. bOO. Bridges v. Longman, 24 Beav. 27. 229 i'fer . ■■■& i- III *278 THE LAWS OF INSURANCE. ; asrainst breach of covenant to insure, has been repealed by 44 & 45 Vict. c. 41.- Relief under C. A. 1881. — Under the present law these cases are only important to show what amounts to a forfeiture, for the High Court has now power to relieve against such forfeiture when proved on such terms as seem just. And no stipulation or provision in a lease can in any way exclude this jurisdiction (x). Tiie Court may relieve upon terms such as an injunction against a future breach or restitutio in integrum, or damages estimated in manner already indicated. It may be further observed that a landlord cannot now bring his action for a breach of covenant to insure,, if he seeks a forfeiture in such action, unless he has served a notice on the lessee requiring him to remedy the breach and to pay a money compens.ition for the breach ; and unless the lessee fails within a reasonable time thereafter to remedy the breach to the landlord's satisfaction, if it is capable of being remedied. Forfeiture therefore for breach of covenant to insure is now virtually impossible (y). Repeal of 22 & 28 Vict c. 35, ss. 4-9. Effects— By the repeal by the Conveyancing Act, 1881, of 22 & 23 Vict. c. 3o, ss. 4-0, [* 278] the protection (no longer *really needed) of an assiiinee of a lease, to whom the last receipt for rent has been produced, is withdrawn. On the other hand, the landlord no longer lias tlie benefit of an informal insurance by the tenani, given by s. 7 of that Act. Title to proceeds. Covenant to insure in landlord's name. — Where the tenant covenants to insure in the landlord's name, he is not entitled to receive the j)olicy-money8 in case of a tire, or to employ them in reinstatement, or to reinstate and then demand the policy- moneys (z). It may even be doubted whether if he allows the landlord to receive the money he can insist on its being employed in reinstate- ment (a). But he is clearly entitled to serve a notice to reinstate upon the insurer, and by that method to obtain the benefit of the policy (6). And the landlord has the same right respecting any msurnnce effected by the tenant on his own account (c). Separate insurance by landlord and tmant, effects of. — Where Ihe lessee is under covenant to insure, and the laridlord insures also on his own account the same interest, the landlord would seem to be covered in both cases, and the insurers would be entitled to contri- bution inter ae, where the insurance exceeded the whole value of the premises, or the fire was only partial. But in such a case the (a;) 44 & 45 Vict. c. 41. h. 14 (2). Qidlter v. Mapkson Q. B. D. (573. 52 L J. Q B. 44, 47 L. T. N S. 5«1, ai W. K. 76. Woodfull, (524, (526 (12tli od.). (.V) 44 & 46 Vict c. 41, h. 14 (1). (2) Garden v. Ingram, 2< Ij. J. Ch. 478, per Lord St. Leonnrdfl. («) See, however, Itrf/nard v. Arnold, 10 Ch. Ai)p. 38(5, 2:5 W. II. 804 (h) Under 8. 88 of 14 Geo. III. c. 78. (c) Reynard v, Arnold, 10 Ch. App. 38C, uUirming S. C. 10 Eq. 218, 28 W. 11. 804. 280 OBLIGATION OP TENANTS TO INSURE. *280 landlord will not be allowed to increase the liability of the tenant or to diminish the benefit of his policy, and will be obliged to bring into account what he has received on his policy (c). Double insur- ance.— ^ot instance, if both insured for £500 on a house worth £700, in case of total loss £350 would be paid on each })olicy, and the landlord would be obliged to account to the tenant for £150, the *amount whereby the benefit of the latter'n policy [=*• 279] effected under a covenent in his lease would be diminished. If damage were done, say to £100, each would receive £50. But thtf landlord would have to hand over the £50 which he received, or spend it in reinstatement. Where a tenant being under a covenant to repair, &c., but not to insure, does insure, such policy is not an insurance of the landlord's interest, but of the tenant's liability, and in such a case no contri- bution would take place between the insurers if the landlord in- sured, and the tenant would not be harmed by such an insur- ance (d)- Option to purchase by tenant bound to insure. — When a tenant bound to insure has an option to purchase, he can insist on the proceeds of a policy effected by him being taken in satisfaction of part of the purchase-money (e). A covenant to pay rent continues in force even after the destruc- tion of the property in respect wiiereof it is payable (/). Tenant's insurable interest in rent. — The liability gives the tenant who incurs it an insurable interest in his rent which most offices are willing to cover. Where the covenant to pay rent is so qualified as to ex- clude this liability, the rent will, in case of a partial loss, be appor- tioned (p). But even a covenant excluding the liability to repair in case of casualties by fire will not remove the liability for rent (h). It is therefore prudent, ir all cases where liability to pay rent in case of fire is not clearly excluded, for the lessee to insure hig rent. Where a tenant is in no way resjjonsible in case of *fire, [* 280] he may still be entitled to insure, to secure himself against lops of the benefit of his term by the happening of a fire, or loss of premises for which he is liable to pay rent for a term. But the value of his tenant's interest not being commensurate with the value of the fee-simple, he could not, on an insurance on his own interest, (c) Reynard v. Arnold, 10 Ch. App. 88G, affirming S. C. 10 Eq. 218, 2:i W. R. 804. ■ (d) Darrell v. Tibbits, 5 Q. B. D GOO, 50 L. J. Q B. 33, 29 W 11. 0(5, 43 L. T. N. S. 707. (e) }fn/nu,d v. Arnold, 10 Ch. App. 386, 23 VV. R. 804. ( /■) Jiulzupf'el V. Jittk r, 18 Ves. 115. Baker v. Jlolzapfel, 4 Tuuiit. 45 (1811). Lop V. Denli, 28 T.J. Q B. 171. Packer v. Gibbias, 1 Q B. 421. Izon v. Cor- /OH, f) Bliiig. N. C. 501 (1839). {q) Taylor v. Caldwell, H B. & S. 820, 32 L. J. Q. B 104, 11 W. R. 7:% 8 L. T. U. S 3r,(i. (A) Iie{fourv. Weston, IT. II. 310 (1786), and i^m/'-rv /lin-v/c/y, (1767), there- b cited. 2111 S ,< :H iVf k 1.1 *280 THE LAWS OP INSURANCE. recover the fee-simple value (i) except by way of reinstatement. T(» hold otherwise would be to enable him, by adequate insurance in case of fire to put himself into the freeholaer's shoes. Covenant to insure loss. Bankruptcy of covenantor. — Where a con- tract is made to insure the property of another, and that is burnt and the contractor becomes bankrupt, the owner of the property may prove in the bankruptcy for the value of the property lost. Tt does not seem to matter whether the contract is to effect an insur- ance or one to be liable for damage by fire. But the claim of tlio owner must arise from f^p - re suffered before the bankruptcy. It might at first seem?' i o'aim for unliquidated damages, bui the Court in the case ci ' r held that the quantity and quality of the timber was settled before the bankruptcy, and that the value was regulated by the mirket price, and that a proof for its value at that price was admissibie (/c . (i) Castellain v Preston, 11 Q. B. D. 380, per Bowen, L. J.: reported also 52 L. J. Q. B. 3G6, 49 L. T. N. S. 29. 31 W. R. 567. (A;) Ex parte Bateman, 25 L. J. Bkcy. 19, 2 Jur. N. S. 365. l!;:! 232 MORTGAGE. *282 *CHAPTER XV. MORTGAGE. [* 281] ' «.' Mortgagor'a insurable interest. — The mortgagor has an insurable interest in so much of the property mortgaged by him as is of an insurable nature. Whatever the number of mortgages he is equit- able owner still, and his right to insure remains co-extensive with the value of the property (a;. In case of loss the mortgagor has a perfect right to look to his indemnity from the insurers as a means of discharging the incumbrances in the place of the property itself. The incumbrances do not cease with the loss, and the whole loss is the mortgagor's, and he remains personally liable for the mortgage debt; for "every mortgage implies a loan, and every loan implies a debt, for which the property of the borrower is liable, though he have neither entered into a bond nor covenant for payment ofit" (6). Mortgagor' 8 interest ceaaea on foreclosure. — The mortgagor's insurable interest in the mortgaged properties does not cease until foreclosure absolute, and the extinction of all equities in his favour (c) ; and in Canada until the mortgage debt has been paid, though foreclosure has taken place, on the ground that the mortgagor is still liable (ji). In a recent American case the mortgagor was held to have an in- terest though the mortgagee had sold, as the sale was set aside. Mortgagee's insurable interest — A mortgagee as such has only a partial interest in any insurable property comprised in his security. His *mortgage interest is limited to the amount [* 282] of his mortgage debt by the terms of 14 Geo. III. c. 48 (e). Any fire policy effected, in virtue of his mortgage interest is merely a collateral security for his debt, for " the contract of insurance contained in a marme or fire policy is a contract of indemnity and indemnity only, and the insured, in case of a loss against which the policy has been made, shall be fully indemnified, but shall never be more than fully indemnified " (/). Such mortgage in- terest has in New Brunswick been decided to end on foreclosure absolute, and if a fire happen thereafter the mortgagee cannot re- fa) Glover v. Black, 1 Wra Bl. 890, 8 Burr. 1394. ih) Fisher Mortgages, vol. 2, p 679. (c) Thompnon v. Grant, 4 MaUd. 438. See Angell Ins. p. 100, for American luses hereon. Stephens v. lUitum, 4H III. 327. ((/) Parsons v. Queen Insurance, 20 U. C. (C. P.) 188, 211 This case came to the Privy Cotmcil on another point, 7 App. (.'as 90. {e] See per Bowen, L. J., in VasfeHain v. Preston, 11 Q. B. D. 380, 02 L. J. Q B. 300 at 870, 49 L. T. N. 8 29, 31 W. R 567. t /■) Castellain v. l^eaton 11 Q. B. D. 880, per Brett. L J. 233 i ^=283 THE LAWS OF INSUHANCE. cover on the policy effected by him as mortgagee (g)-, and he can- not, ill case of a fire, recover more than the amount due at the time of the fire upon his security, because that is tlie measure of hig loss, and the contract is only one of indemnity. The same is also the rule in Canada (A). Such a policy will not, according to some American authorities, cover further advances, unless it be specially so stipulated (i), so that, though the mortgage deed may contem- plate further advances, only the unpaid balance of the amount due at the time when the policy was effected can be recovered. This would, however, seem to beat variance with English law; for "a person who has a limited interest may insure nevertheless on the total value of the subject-matter of the insurance, and he may re- cover the whole value subject to these two provisions. First of all, the form of his policy must be such as to enable him to recover the total value, because the assured may so limit himself [* 283] by the way in which *he insures as not really to insure the whole value of the subject matter; and secondly, he must intend to insure the whole value at the time " (k). It therefore seems that if the policy is such as to cover the full value of the Eroperty insured, the mortgagee might recover to the full extent of is interest therein, whether such interest were created by oiiginal advance or further advance. The mortgagor has no interest in a mortgagee's policy effected with the mortgagee's own moneys, and not in pursuance of any agreement between them (f)- Mortgagor^9 interest in mortgagee's policy. — But by the operation of 8. 83 of the old Metropolitan Building Act (m) (left unrepealed by the Metropolitan Building Act, 7 & 8- Vict. c. 84), the mortga^dr may insist on the proceeds of a mortgagee's policy being applied towards reinstatement, and thus the policy might enure for the ben- efit of the estate (n). Mr. Davidson therefore thinks (o) that in such a case the mortgagee would have a right to recover the prem- iums independently of Lord Cranworth's or the Conveyancing Acts, probably as money paid to the mortgagor's use. This, however, has not been expressly decided. (g) Oaskin v. Phoenix, 6 Allen (New Bruns ) 429. See also Smith v. Colum- bian, 17 Peiin. 2r)3. Seeing that he haa only insured a special interest. an•) See, however, r. 24. Wiliiamfl, Real Proporty, 464, conHiders the Actio apply only to deeds executed after its commencemoiit, and ho does Bunyan, Fin; Ins. (Ist ed.) 195, in spite of this section. (s) S. 10 (2). (0 Per Gibson, J., Smith v. Columbia, 17 Pent;, at 201, and sec C\t»teHa!n v Predion, 81 W. R. fi67. 11 Q, B. I). 880. 52 h .1. Q B. 8(m, 4!) L. T. N. S. l»!l King v. Utate Mutual, 01 Mass (7 Cush.) 1. holds the insn'-er'N right to bo only equiiable, if any, and only to arise when inortgago recovers But this decision goes on narrower grounds than the others cited. A claim for assignment of se- curities was made in Scotisb Amicable Assurance r. Nnrthcrn, 21 8u L R. 189, 11 G. S. C (4th ser'tis) 287. 240 MORTGAGE. 293 gareTB would not be entitled to contribution inter se (w), and the mortgager's insurer would have to pay in full to his assured. But if the mortgagor's insurer reinstated, the mortgagee's claim on his policy would be gone. Wnen mortgage debt to be paid out of mortgagor's policy. Subroga- tim of mortgagee's insurer as against mortgagor's insurance. — It may be that as under s. 23 (4) of the Conveyancing Act, 1881, the mort- gagee is entitled to make the mortgagor, out of the proceeds of any insurance effected h}r him for which no other destination is pro- vided by law or special contract,''pay off the mortgage debt, so also the mortgagee's insurer would, under Castellaln v. Preston, be en- abled to press his claim to the mortgagor's policy, even if not ef fected in pursuance of a covenant to do so. Mortgagor not entitled to mortgagee's insurance. — Where a mortgagee insures his own mor'_ ^e interest in the property comprised in his secu--^., tending only to cover himself, the mortgagor is not en- titled lu benefit by such a policy. Mortgagee's insurer subrogated to rights under mortgage deed. — The mortgagee's insurer would, if the property were destroyed, be bound to pay the money to the mortgagee, and would probably, by anal- ago to the principle of underwriters being entitled to the vendee's lien, as *suggestive by Bowen, L. J., in Castellain [* 293] V. Preston (x), be entitled to the benefit of the mortgagee's security; or, if the view of that learned judged go too far, would certainly be entitled, if the mortgagee subsequently enforced his mortgage security, to repayment of the surplus realized thereby in excess of the mortgage debt. Effect of insurance by mortgagor and mortgagee in separate offices. — Where the mortgagor has insured in pursuance of his covenant to insure, and the mortgagee has also insured the same estate in a different office, the two offices would apportion the amount of the insurance, and thus the mortgagor would sustain a loss equal to the difference between the amount for which he insured and the ap- Sortioned sum received by him. By the principle, however, laid own in Reynard v. Arnold (y), the mortgagor would be entitled to recover from the mortgagee such difference. Conversely, if the mortgagor, by effecting insuranca in addition to the amount cov- enantea for in the mortgage deed, and by the effect of contribution between the two insurers the amount receivable on the mortgagee's policy is made less than the actual damage done, the mortgagor must account to the mortgagee pro tanto as to the benefit gained l>y him on the other policy (z). (w) North British, die, Co. v. London, Liverpool, and Olohe, 6 Gh. D. 09, 86 L. T. N. S. 6'>9, 46 L. J. Ch. 587. (x) 11 Q. B. D. at 405, 52 L. J. Q. B. 866, 49 L. T. N. 8. 29, 81 W. R. 687 j Me also per Tliesiffer, L. J., in Darrdl v. Tibbita, 6 Q. B. D. 668, 60 L. J. Q. B. 88, 42 L. T. N. 8. 797, 2ft W. R. 66. (y) 10 Ch. Ann 386, 2 J W. R 804 (i) Amea v. Rtchardaon, 29 Minnesota 2t>. 16 PORTER ON IN8URANCB. 241 j'-l' i, [ ■m Ml y :n7pi m I ;(5i ^iili *295 THE LAWS OF INSURANCE. Receiver apjmnted by mortgagee may effect insurance. — The mortgagee has, as an incident of his power to appoint a receiver of the rents and profits of mortgaged property, a right to direct such receiver to effect insurance on the said property, and the premiums on such insurances are payable out of the income of the mortgaged prop- erty after the rents, taxes, and outgoing'^, and the interest on mort- gages prior to that under which he is receiver (a). When mortgagee bound' to account to mortgagor for policy- [* 294] money. — A mortgagee who receives the proceeds of an *in- surance effected bjr himself not under the provisions of the Act or the mortgage deed is not liable to account to the mortgagor for such proceeds; nor can the mortgagor plead receipt of such proceeds as eatififaction of the mortgage debt to an action upon the mortgagor's covenant in the deed, ior the latter is in the position of a tenant under a repairing covenant, whose house is destroyed, and who has not insured, though the landlord has done so (ft). Mortgagee may recover on his policy and also from mortgagor, but only to the amount of the mortgage debt. — But though the mortgagee by recovery from the insurer on his own policy is not disentitled to an action against the mortgagor, any sum recovered by him from the latter, which, together with the sum received from the insurer, exceeds the whole amount of the mortgage debt, will belong to the insurer, and the mortgagee would be trustee for the insurer of such surplus (c). Doctrine of subrogation generally. — "The doctrine is well established, that where something is insured against loss, either in a marine or in a fire policy, after the assured has been paid by the insurers for the loss, the insurers are put into the place of the assured with regard to every right given him by the law respecting the subject-matter insured, and with regard to every contract which touches the subject-matter insured, and which contract is affected by the loss or the safety of the subject-matter insured by reason of the peril insured against" (d). The effect of this principle is that the msurers on payment would step into the shoes of the mortga- gee and have all his rights against the residue of the mortgaged property and the mortgagor. It seems, by parity of reasoning, that subrogation would arise where an action for negligence lay for negligent destruction or damage of the mortgaged premises {e). [* 296] ""In practice there isTittle doubt that the mortgagee would give the mortgagor the benefit of the policy on his consent- ing to include the premiums as part of the mortgage debt, but this consent would not oind the insurers. No case has yet occurred in this country of an insurer proceed- (a) 1881, 8. 24. (ft) Darrelt v. Tibhita, 6 Q. B. I). 502, 50 L. J. Q. B. 83, 42 L. T. N. S. 71)7, 29 W. R. 00. ((•) Per Jessel, M. R., Commercial Union v. Lister, 48 L. J. Ch. 002, Ch. App 483. (rf) Per Brett, L. J., in Darrell v. TibUia, 5 Q. B. D. at 508. (c) Commercial Union v. Lister, Ch. App. 488, 48 L. J. Ch. 601. 242 MORTGAGEE. 296 ing against a mortgagor under the above circumstancos in exercise of his subrogated rights. And it is unlikely that the insurers would make any claim against the mortgagor, since such claim would not conduce to their prosperity in business, though they might on the principle of Castdlain v. Preston (/), make the mortgagee hand over any amount received by liim in excess of hia mortgage debt, or prevent his recovering such amount by assigning to the mortgagor their rights of subrogation to the mortgagee's claims under the mortgage deed. It would seem that, if such an assignment were given, it might be made available as defence to an action on the covenant by the mortgagee (g). Contribution where separate insurances by mortgagor andjnortgagee. — Where both mortgagee and mortgagor have insured separately, as may still happen in equitable mortgages, the insurers usually in- sist on coiitributlon. This is not strictly correct, as the interests insured are different ; but it is clear that, if both are allowed to re- cover, one must profit by the fire if the sum of the policies exceed the value of the property. Strictly speaking, the proper course would be for the mortgagee's insurer to pay in full, and proceed against the mortgagor for the amount paid. The mortgagor would be entitled to retain any balance on the proceeds of his own policy as the value of liis equity of redemption. But the offices prefer to treat each other as co-insurera in such a case. And the Convey- ancing Act has made, as between mortgagor and mortgagee, insurance practically run *with the land, as has been [* 29(j] held by James, L. J., phould be the case (g). Mortgagee of leaseholds coidd not be heard against forfeiture before Cmveyancing Act, 1881 ; it is otherwise since the Act. — The mortgagee of a leasehold interest who is not in possession could not before the Conveyancing Act, 1881, be heard on an application for relief against forfeiture under 23 & 24 Vict. c. 126, s. 2, on the breach of the les- see's covenant to insure (h) in the lessor's action against the lessee, and could not be made a party to the action of ejectment under Ord. xvi. r. 13, J. A. 1875 ; and it was said by Lush, J., that if the mortgagee had any equity he nmst pursue it as a suitor. But in s. 14 of the Conveyancing Act, 1881, the word " lessee " includes his assignee, and tnerefore a mortgagee by assignment of leaseholds could in the landlord's action or one brought by himself apply for relief against such a forfeiture, and the Judicature Act and Rules enable him to come for relief even after judgment (i). In mortgage deeds to be made under the present law, a covenant to insure against fire is scarcely needed {k). (/) Reported 11 Q. B. D. 867. I, 52 L. J. Q. B. 360, 49 L. T. N. S. 29, 81 W. R. (g) The Potomac, 105 U. S. (15 Otto) 680. (a) Raymer v. Preston, 18 Ch. D. 1, 50 L. J. Ch. 472, 44 L. T. N. S. 787, 29 W. U. 647. (A) Milh V. Gh-mths, 45 L J. Q. B. 771. m Jncquea v. Harrison, 18 Q. B. D. 166. (k) Davidson Prec Conv. 19S. 243 1"! V §. m .1' ! *298 THE LAWS OF INSURANCE. 11 I I [*297] ♦CHAPTER XIII. FraE POLICIES AND ASSIGNMENT. Rights of assignor and assignee to policy after assignment of property.— If the assignment of property insured against fire be total, the as- gignor cannrine policies do not. give the light to assign, but prescribe the mode of assignment 244 FIBE POLICIES AND ASSIGNMENT. *299 held that fire policies are personal contracts (e), and that the con- gent of the insurers is necessary to the assignment thereof; while marine policies have always been assignable with their subject-mat- ter, and life policies have been treated as reversionary interests, and allowed to be assigned, charged, or otherwise dealt with (/). The Judicature Act, 1873, makes no change in this respect, merely pro- viding a mode by whicii the assign, if any, of a chose in action, may perfect his legal title to sue thereon, instead of trusting to his equitable interest under the legal title of his assignor (gr). Asdgriment of fire policies. — Insurers seem from the earliest times of fire insurance to have been careful to prevent fire policies from *being assigned without license. But for special re- [* 289] strictions on assignment in the policy itself (upon which the old cases of Lynch v. DcUzell (h) and ScuUers (Jo. v. Badcock (t) seem to go), there is no apparent reason why a fire policy should not be assignable with the subject-matter thereof as readily as a marine policy has always been, except that in land-risks, where the sub- ject-matter is usually within the control of the assured, his personal character is of more importance than in sea-risks, where the goods, v. AUen, 52 Am. Rep. 247| 188 Mass. 24. (g) S. 25, sub-B. 6. (A) 4 Bro. P. C. 481. (t) 2 Atk. 654. See Miall v. Western Insurance Co., 19 U. C. (C'P.) 270. (k) Pbtoles V. Innes, 11 M. & W. 10, 12, L. J. Ex. 108. (0 North of England Oilcake Co. v. Archangle, Jtc, Co, L. R. 10 Q. B. 255. per Quain, J., 44 L. J. Q. B. 121, 24 W. B. 162, 82 L. T. N. S. 501. 246 '. i\ in ! } :!.■ *301 THE LAWS OF INSURANCE. made or take place before the property has actually passed from the vendor to the vendee ; for an assignment made after the [* 300] interest of the vendor in the subject-matter of the ♦insur- ance has ceased, cannot operate to give the assignee an in- terest in the policy (m). In the two old leading cases on this subject (n), the original as- sured had parted with his interest in the property insured before the happening of the fire, and had subsequently to the fire at- tempted to give his assigns the benefit of his policy. Assured's consent necessary to transfer of policy. — The policy, if as- signed at all before the loss, must be assigned with the property which it covers. Such assignment will operate only by consent of the insurers, and the insurers will not assent without proof of the assent of the original assured. This is required for two reasons— (1) That it is common for the companies to permit transfer of a policy to other goods, if the goods first covered are assigned during Its currency, and that, if they permitted the first policy to enure lo the benefit of the assignee, they would make themselves liable *^ double claim (o). (2) That they may have clear proof that the assignment is in the bargain as to the goods, and that the assignee is not simply helping himself to the policy as a mere accessory, and without any assent thereto on the part of the assignor. Fire policies, when assignable. Insurer's acquiescence in assignment is optional. — Although in certain circumstances Equity will recognize the assignment of a fire policy (p), such right is subject to the special stipulation of the particular contract, and no right to assign before loss so as to bind the insurer can arise under a policy against fire in the ordinary form by which the insurers bind themselves to pay the insured, his executors and administrators, and con- [* 301] tains a condition that no assignment will be valid ^unless accepted (such acceptance being testified in a prescribed way) by the insurer. The insurer cannot be made to accept any assign Iq). It is pure matter of favour for him to continue the in- surance, and the contract is a new contract. Does fire policy run with landf — The view that afire policy runs with the land has not yet found favour with the Courts. But it is fully and very forcibly put forward by James, L. J., in Rayner v. Preston (r). In a dissenting judgc^Mii, his lordship considered that (to) North of England Oilcake Co. v. A'nhangel, d'c, Co., uhi sup. (n) Sadlers Co. v. Badcock, 2 Atk. 644, i Wils. 10. Lynch v. Dalzell, i Bro. P. C 431. (o) Miallv. Western Insurance Co., 19 U. C. (C. P.) 270 (») Rayner v. Preston, 18 Ch. D.. per Brett, L. J,, 10, 50 L. J. Ch. 472, 44 L. T. N. 8. 787, 29 W. R. 547. (q) N. S. Wales Bank v. North Brit. Mercantile Co., 3 N. S. W. Law 60. In America he may not refuse hia assent without reasonable grounds. (r) 18Ch. D. 12. 246 FIBE POLICIES AND ASSIGNMENT. *302 a contract of fire insurance should be held to run with the land, and enure to the benefit of the person from time to time interested therein. It runs with the interest insured provided that the owner of the interest is acceptable to the insurers. Loss of fire falls on purchaser where vendor lets insurance expire. — If after the contract of purchase, and before the conveyance, the prop- erty is destroyed by fire, the loss will fall upon the purchaser, although the houi?e8 were insured at the time of the agreement for sale, and the vendor permitted the insurance to expire without giv- ing notice to the purchaser. If, however, the vendor, has before the fire broken his contract, e. g., to repair or alter the property, the subsequent loss will not fall on the purchaser («). The first business of a purchaser is therefore either to insure as from the date of his contract or to take an agreement to insure from the vendor. As the law now stands, the bt^nefit of a fire policy does not pass to a purchaser without an express contract to that effect (t). It is not an accessory of the original property passing by an assignment, but a right of recourse to the insurer on loss or damage to the *property insured ; and while the vendor cannot profit [* 302] by the policy after a conveyance of the property, or recover uponitso as to get paid twice over (m), intheopinion of Lord Justices Brett and Cotton (v), no eq^uity subsists between the vendor and purchaser, in the absence ot contract between them, entitling the purchaser to the benefit of a fire policy effected by the vendor; and it may be added, that if the purchaser of the property had the ben- efit, he would get for nothing a protection, which had been pur- chased by the vendor for valuable consideration, in the shape of premium. French law. — The French law is otherwise, and holds the policy to be accessory and to pass with the property (a;). Rayner v. Preston. — The law on this point is by no means satis- factory. In Rayner v. Preston the vendor of property, burnt before completion, recovered the insurance-money and declined to give the benefit of tne policy. But if the purchaser had applied to the in- surance ofiice under s. 83 of the old Metropolitan Building Act (14 Geo. III. c. 78), he could, as a person interested in the property, havecom- («) Sugden V. & P. (14th ed.) 291. (<) Poole V. Adams, 12 W. R. 683, 10 L. T. N. S. 287. North of England Pure Oilcake Co. v. Archangel Maritime, L. R. 10 Q. B. 249, 44 L. J. Q. B. 181, 32 L. T. N. S. 561, 24 W. R 16?. Itajfuer v. Preston, 18 Ch. D. 1, 50 L. J. Ch. 472, 44 L. T. N. S. 787, 29 W. R. 647. {u) Castellain v. Preston, 11 Q. B D. 880, 49 L. T. N. S. 29, 62 L. J. Q. B. 866, 31 W. R. 557. See also Collingridge v. Royal Exchange, 8 Q. B. D. 173, 47 L. J. Q. B. 82, 37 L. T. N. 8. 526, 26 W. R. 1 12. (») Rayner v. Preston, 18 Ch. D. 1, 60 L. J. Ch. 472. 44 L. T. N. S. 787, 29 W. R. 547. (x) See Stanton t. Home Ins. Co., 24 Lr. Can. Jur. 88. Canada Civil Codet arts, 2488, 2676. m 'Hi S04 THE LAWS OF INSURANCE. pelled reinstatement. (It was upon this ground that James, L. J. considered that a contract of fire insurance should he held to ruil with the land and come to the benefit of the firm from time to time interested therein). Rights of vendor and purchaser on sale of property insured— So in fact the vendor has a good title against the insurer lo recover under the policy ; and by Paine v. Meller (y) he has a j:ood title against the purchaser to recover the contract price in re- ppect of the thing destroyed ; but if he receives the purchase-money he will have sustained no loss by the fire, and may be com- [* 303] pelled to refund to the insurers the amount *which they paid him as an indemnity against his lo^ (z). Opinion of Cotton, L. J., — In Rnyner v. Preston,^ above cited, Cot- ton, L. J., said: "The contract [of sale] passes all things b.lon<». ing to the vendor appurtenant to or necessarily connected with tfe use and enjoyment of the property mentioned in the contract, but not, in my opinion, collateral contracts, and such at least indepen- dently of the Act 14 Geo. III. c. 78, the policy of insurance is. It is not a contract limiting or affecting the interest of the vendors in the property sold, or afiecting their right to enforce the contract for sale ; for it is conceded that if there were no insurance, and the buildings sold were burnt, the contract for sale would be enforced. It is not even a contract in the event of a fire to repair the build- ings, but a contract in that event to pay the vendors a sum of money which, if received by them, they may apply in any wa^ they think fit. It is a contract not to repair tfhe damage to the building, but to pay a sum not exceeding the sum insured, or the money value of the injury. In my opinion, the contract of insurance is not of such a nature as to pass without apt words under a contract for sale of the thing insured. .... An unpaid vendor is a trustee in a qualified sense only, and is so not only because he has made a con- tract which a Court of Equity will give eflect toby transferring the property sold to the purchaser, and so far as he is a trustee he is so onl^ in respect of the property contracted to be sold. Of this the policy is not a part." Mortgage of insured property. — Where the property insured against fire is conveyed by way of charge only, the interest of the insured is not defeated (a). It is provided by the Conveyancing [* 304] Act *of 1881 (6) that the holder of such charge can, in addi- tion to his other rights, require the proceeds of any insurance effected on the property by the mortgagor, where no express agree- ment has been made to the contrary, to be applied in or towards the discharge of the money due under the mortgage. (y) 6 Ves. 849. And see Gillespie v. Miller, 1 C. S. C. (4th series) 423, (a) Castellain v. Preston, 11 Q. B. D. 880, 52 L. J. Q. B. 866, 49 L. T. N. S. 29, 81 W. R. 567. (a) Burton v. Gore District Mutual, 12 Grant (U. C) 166, where the assured mortgaged and assigned his policy with the insurer's consent, and thereafter ef. fected tresh insurance. (6) 44 & 45 Vict, c- 41, a. 23 (4). 248 FIRE POLICIES AND ASSIGNMENT. *305 Bight to policy-moneys passing with beneficial interest.— 1( legatees or devisees under a will, or the widow or heir-at-law or next-of-kin under an intestacy, have a vested interest in real or personal estate which has been insured, it would seem, though it has not been ex- pressly decided, that the proceeds of any policy thereon, in case of a fire after the testator's or intestate's death, will be held by the ex- ecutor or administrator for the benefit of the person or persons bene- ficially entitled (c). The money clearly represents the goods or land, and, if payable at all, should be payable to the beneficial owner at the time of the fire. If, in the case of chattels, the chat- tels perish in the life of the testator, or the testator and chattels perish together, it would seem that the legatees thereof will not be entitled to the insurance-money. The right of action may be only in the representative, but the proceeds recovered by him represent the subject of the insurance, and are held by him on trust for those beneficially interested in the estate (d). .... Mercantile policies assignable. Rule for calculating loss on mercantile policies. — Mercantile policies on goods, &c., usually called floating policies, are assignable hy permission of the insurers in the same way as ordinary fire policies, from which they do not in reality difier except in the mode in which damage is estimated, and in the interests wnich they cover. In the case of policy on goods with liberty *to charge the cargoes, the mode of calculating [* 305] the amount payable in case of loss is usually as follows, viz. :— The whole value of goods afloat, and covered by the policy, must be taken, and the assured will recover such a proportion of their loss as the full amount insured bears to the value of all the property afloat a4) the time of the accident, if that value exceed the full amount insured ; if not, the assured will be entitled to the whole amount lost (e). (c) Culbertson v. Cox, 43 Am Rep. 204. Wyman v. Wyman, 26 N. Y. 263. Parnj v. Ashley, 3 Sim. 97. Durrani v. Friend, 5 De G. & S. 343, 21 L. J. Ch. 853, 19 L. T. 152, 16 Jur. 709, commented on in Rayner v. Preston, 18 Ch. D. 1, 60 L. J. Ch. 472, 44 L. T. N. S. 787, 29 W. R. 547. (d) Parry v. Ashley, 8 Sim. 97. Mildmay v. Folgham, 3 Ves. Jun. 472, but see comments thereon in Culbertson v. Cox, 43 Am. Rep. at p. 209. (e) Crowley v. Cohen, 8 B. & Ad. 478, 1 L. J. K. B. 158, per Tenterden, C. J. Joyce V. Kennard, L. B. 7 Q. B. 78, 41 L. J. Q. B. 17, 25 T. L. N. S. 932, 20 R.233. 'is? ifi! ' . ? 249 ♦ 307 THS LAWS OF INSURANCE. 1*306] ♦CHAPTER XVII. DISPOSITION OP LIFE POLICIES. Life policies securities for money. — Policies of life assurance are treated as securities for money (a) payable at a date uncertain but calculable. The sum insured (apart from bonuses) is certain; the premium or consideration for its payment is also certain ; and the time when the money is payable is certain to accrue : " Nihil certius morte, nihil incertius hora mortis." Surrender. — Their present value then is computable, and assur- ance offices will accept a surrender of the policy at that sum which is called a surrender value, A man possessed of a policy can also sell it to a third person, or borrow on its security. Assignability of life policies. Nature of contract. Insurable interest, when must exist. — Life policies are now construed as contracts, not to indemnify, but to pay a certain sum in a certain event depend- ing on the duration of human life. If at the time when such con- tracts are made the assured has an insurable interest in the life on which the contract is made, the contract is valid (6), and will not be affected by the determination of such interest before the hap- pening of the event insured against (c). It follows from this that an assignment of a life policy [* 307] would be valid and piss to the assignee the *right to the insurance-money, even though the assignor's interest in the life had ceased before the date of the assignment. A creditor may insure his debtor's life, and the very next day sell the policy to a third person, who is a debtor of the life assured, and therefore would have had no assurable interest in the life enabling him to have effected the policy. Married woman may insure husband's life. — Under the Married Women's Property Act, 1882 (d), a wife may insure her own or her husband's life for her separate use, and the same and all benefit thereof will enure accordingly. In America also a married woman may insure her husband's liie and dispose of the policy, for "if she (a) Stokoe v. Cowan, 80 L. J. Ch. 882, 7 Jur. N. S. 901, 4 L. T. N. S. 696, 9 W. R. 801, 29 Beav. 687 (1861), per Romilly, M. R., and case there cited. (6) AsMey V. Ashley, 8 Sim. 149, per Shadwell, V. C. (1829). (c) Dalby v. India and London, 15 C. B. 366, 24 L J. C. P. 2, 18 Jur. 1024, 24 L. T. 0. S. 182, 8 W. R. 116. Law v London Indisputable, 1 K. & J. 223, 24 L. J. Ch. 196, 1 Jur. N. S. 179, 3 W. R. 156, 24 L. T. 208. But see Vezina v. New York Life, 6 Canada 80. (d) 46 & 46 Vict. c. 76, s. 11. m DISPOSITION OF LIFE POLICIES. *308 pays the premium out of lier own pocket, it is hard to see why she should not be pblo to assign the policy " (e). Interest in policy on own life. — A policy on a man's own life, ex- pressed to be payable to his executors or administrators, is a re- versionary interest (/), certain to fall in on the aesured's own death or attainment of the stipulated age. It forms part of the estate of the assured, being money due and owing to him at his death (g), and may be dealt with at his absolute discretion — sold, charged, settled (h), given away (i), bequeathed (A), or made subject of a donatio miortis causa (l), and passes to his trustee in bankruptcy (m). Policy assignable before payable. — The fact that the money secured by the policy has not become due does not affect the right to assign or the possibility of an absolute assignment («). *A policy, though a chose in action (o), is not within the [* 308] order and disposition clause of the Bankruptcy Acts, 1869 and 1883 (o), nor a negotiable instrument (p). The legal title to a policy of life assurance can be obtained by assignment in accord- ance with the Policies of Life Assurance A a, or s. 25, sub-s. G, of the Judicature Act, 1873. An assignment upon trust may be an absolute assignment within the latter Act, and the assignee under such an assignment can give a good discharge for the policy- moneys (q). Donatio mortis causd. Inter vivos. — A life policy has been held a proper subject of donatio mortis cattsa (r) on account of its analogy to a bond. And it would seem that trover cannot be maintained for it by the executor or administrator of the assured (r), if the latter has given it away without writing during his* lifetime (s) ; but, on the other hand, a person to whom it has simply been banded without writing by the assured in his lifetime cannot re- (e) Chapin v. Fellows, 36 Conn. 132, 4 Am. Rep. 49. (/) But see Rawhone's Will, 3 K. &. J. 800, 476, 3 W. R. 796, 26 L. J. Ch. 509, 29 L. T. 155. {g) Felly v. Wilson, 17 W. R. 778, 4 Ch. App. 674. (A) Sewell v. King, 14 Ch. D. 179, 28 W. R. 344. » \i) Rummens v. Hare, 1 Ex. D. 169, 34 L. T. N. S. 407, 24 W. R. 385. (Jt) M'Donald v. Irvine, 8 Ch. D. 101, 47 L. J. Ch. 494, 38 L. T. N. S. 155, 26 W. R. 381. (I) Amis V. Witt, 33 Beav. 619. Witt v. Amis, 1 B. & S. 109, 30 L. J. Q. B. 318, 9 W. R. 691, 7 Jur. N. S. 499, 4 L. T. N. S. 283. ivi) Jackson v. Forster, 1 E. & E. 463, 29 L. J. Q. B. 8, 33 L. T. 290, 7 W. R. 678. (m) Brice v. Bannister, 3 Q. B. D. 569, 38 L. T. N. S. 739, 26 W. R. 670. (o) Ex parte Ibbetson, 8 Ch. D. 519, 39 L. T. N. S. 1 26 W. R. 843. (p) Strachan v. M^DougU (1835). 13 C S. C (Ist series) 964. United King- dom Life V. Dixon (1838), 16 C. S. C. (Ist series) 1277. (q) Burlinson v. Hall, 12 Q B. D. 347. (r) Witt V. Amis, ubi sup note (/). (s) Rummens v. Hare, 1 Ex. D. (C. A.) 169, 34 L. T. N. S. 407, 24 W. R. 885. Barton v. Oainer, 8 H. & N. 887, 27 L. J. Ex. 890, 6 W. R. 6si4. 251 *310 THE LAWS OF INSURANCE. I ', he did not choose to take the assignment, but was content to rely on the deposit " (a). The Court, however, considering that sufficient proof nad been given that the money was really due to the mortgagee, dispensed with the executors of the mortgagor (bv 16 & 16 Vict. c. 86,b.44) (y). But it was doubted by the Court of Appeal whether this course was admissible (z). Ex parte Ibbetson, 8 Ch. D. 519, 80 L. T. N. S. 1, 20 W. &. 843. 80 & 81 Vict. c. 144,8.7. Spencer v. Clarke, 9 Ch. D. 187, 47 L. J. Ch. 692, 27 W. R. 183. See Palmer v Merrill, 60 Mass. (6 Cush.) 932. But see Blisa Life Insiir- _ p, 511, note 1. (m) Kekewichy. Manning,! De O. M. k 0. 176, 21 L. J. Ch. 577. Ward v. Audland, 8 Sim. S71, C P. Cooper, 446, 8 Beav. 201. (x) CroaaUf/ v. CtVy of Olaagow Life, 4 Ch. D. 421, per Jessel, M. R. (1870), 46 L. J. Ch. 66, 86 L. T. N. S 286, 25 W. R. 264. (if) Ibid. {t) See per Cotton and James, L. JJm in Wehtter v. Britiah Empire Mutual, 16 Ch. D. 169, 40 L. J. Ch. 760. 48 L. T. N. S. 220, 28 W. R. 818. But nee also Ourtiua V. Catedonian, 10 Ch. D. 684, 61 L. J. Ch. 80, 80 W. R. 126, 46 L. T. N. S. 662. 266 DISPOSITION OF LI T. POLICTES. *317 ■^. !! Equitable assignment. — A covenant to effect a policy by way of se- curity id not enough of itself to vest tlie policy in the cove- nantee (a) ; it does not seem to operate as an ^equitable as [* 316] eignment thereof, or to give him a lien thereon. But in Ward v. Ward (a), a covenant by a defaulting trustee to effect a policy on his own life was held to entitle the cestuis que trustent to the proceeds against his creditors. Bare deposit of policy. — Mere deposit of a policy with a creditor as security, notice whereof was given to the insurers afterthe death of the assured, is not sufficient to entitle the creditor to demand pay- ment from the insurance company without the concurrence of the debtor's legal personal representative. Inierest on sum assured. — And if the creditor makes good his claim, the insurers will not be liable to pay interest from the due date v.bere the delay is owing to the creditor's neglect to clothe himself with the legal title to the money (6). Position of assignee no better than that of his assignor. — The assignee of a policy will not be in any better position than the person who effected and assigned it to him (c). Thus B., at the instance of the agent of the British Equitable Insurance Company, proposed to in- sure liis life, answered the questions as to his health satisfactorily, and mentioned D. as Ills last medical attendant, and, the medical officer of the company reporting favourably, the proposal was ac- cepted, and a letter written giving notice that the office would not be liable for any risk in consequence of a variation in health be- tween the acceptance of the proposal and the actual receipt of the first premium. B., becoming suddenly stout, was alarmed, and consulted W., a physician, *who told him he was in [* 317] danger, and wrote to D. to that effect. P. taking a more fav- orable view, B. then paid the first premiii »/> , and never communicated to the office his constiltation witn W. ; and with the receipt for such premium was a letter exprepsing that if any alteration in health had occurred the policy would be void. B. assigned the policy as security for a debt to the V. of N. Railway Co., represented subse- quently by the York Co., and died suddenly of disease of the heart, and a jury returned that verdict. An action was brought on the policy in the name of the widow: and it was held that the non-com- munication by B. to the office of the fact of his consulting W., al- tiiough he was not bound to say what W. told him, vitiated the (a) Lees v. Whitelu. 2 Eq. 143, 86 L. J. Ch. 412, 14 L. T. N, S.472, 14 W. R. C34. See, however, Ex parte, Caldwell, 20 W. R. 863, 13 Eq. 188. (a) 18 Jur. fi39. (b) Webster v. lintish Empire Mutual, 15 Ch. D. 169, C A. (1880), ubi supra, ' {c) Dormay v. liorrodaile, 10 Beav. 335, 16 L. J. Ch. 337. British Equitable V. Great Western JtailtPa;/, 20 L. T. N. S. 422, 88 L. J. Ch. 314, 17 VV. R. 43, 5> r. Anderson v Fitzr/erald, 4 H. L C. 484, 17 Jur. 095, and Scottish Widows^ Fund V. Buist, 8 C. S. C. (4th series) 1078, 5 Ao 04 (H. L. ) Policies of As,' r- ance Act, 1867, s. 2. Mangles v. Dixon, 3 H. L. C. 702 (1862). l*urdew v. Jack- $on, 1 Rubs. 1 17 PORTER ON INSURANCE. 257 *318 THE LAWS OF INSURANCE. policy, and that the defendants were in no better position than B. (c/j. The assignee is liable to all the defences which the insurers would be ( ntitled to raise against the assignor; for if the policy be affected by any vice in regard to the assignor, it is also similarly affected as regards the assignee. Policy effected by fraud, insurer can recover monev paid. — So if the assignor have affected the policy by fraud practiced against the insurer, and subsequently assigned, and the assiirnee be at the time ignorant of the fraud, and the insurer pays the assignee both being in equal ignorance of the fraud, the insurer may recover from the assignee the money paid under such mistake (e). Duty of insurer knowing assignee is deceived. — But if the notice of as- signment given to the insurer discloses on the face of it that which induces the belief that the assignee has been deceived in accepting the assignment, the insurer is bound to inform the as^signee of the real circumstances; and, if he does not, he will be estopped from taking advantage of the equities existing as between the assignor and himself (/). [* 318] ^Aggravation of illness between acceptance of life and payment of premium. Bond fide purchaser. — When the health of the life grew worse between the acceptance of the risk and payment of the premium, but the aggravation of the illness was not disclosed to the msurers, the policy was held vitiated, and bond fide purchasers for value (/) without notice were held to have no title to recover thereon (enefits attached to the pohcies, such as bonuses, &c. (7), without further words. Bankniptcy of assured. Payiiient of premiums by assignee. — A policy effected on own life at an annual pn-raium, on bankruptcy of the assured passes to his trustee, Jiowever small be its appnrent value jit such date, and even if there are considerable arrears of prennom due thereon. If he disclaim, the grantee can do what he likes about it (r). If the assured, instead of delivering up the poliw as part of his effects, secretly assign it to another person, who pavs the arrears of premium, and upon the death of the bankrupt re- ceives the sum insured, this sum, less the amount of arrears so paid, may be recovered by the trustees in bankruptcy as money had and rtceived to their use (s). So also if the bankrupt surrender the policy and procure renewal to one creditor in consideration of his accepting the compensation offered (0- • . . Covenant to keep policy on foot. — If a policy be assigned with other property, that the latter assignment should be avoided will not affect the assignee's right to the policy (u). An assignment of a policy of assurance by the cestui qiie vie ought to contain an express covenant by him that he will not do anything to vitiate the policy or prevent the assignee from receiving [* 321] the money. A *covenant simply to do all things necessary to keep the policy on foot is not broken by his suicide, al- though the assignee will theroby lose the benefit of the policy (x). Covenant to keep policy on foot whether broken by going abroad — " Such a covenant may practically prevent the cestui me vie from proceeding to any British colony, or even from leaving Europe ; for most of the insurance offices make residence or travelling out of Europe vitiate a policy, and a Court of Equil v will restrain a man from committing a breach of his own covenant. Permission to re- side or travel abroad in healthy latitudes may, however, usually be obtained from the office on payment of an increased premium ; and a covenant to pay an increased premium, which may become payable in the event of the assignee allowing the cestui que vie to go abroad, should be inserted in the assignment. Breach of condi- tions of policy by covenantor. Covenantor to keep up policy. — Of course {q) Courtney v. Ferrarx^ 1 Sim. 137, 5 L. J. N. S. Ch. 107. Parkas v, J5o«, Sim. 888. (r) Ro Learmonth.H W. R. 628. (s) Sthondler v. Waee, 1 Camp. 486. See We.it v. Seid, 2 Hare 256, and Pennell v. Millar, 23 Beav. 172, 5 W. R. 216, 29 L. T. 05, where assignor had covenanted to keep np policies and assign had paid the premiums. See also Burridgc v. Row, 1 Y. & C. Ch C 18', 583, 13 L. J. Ch. 173, 8 Jur. 299. Cou- nedictd Mutual Life v. Jiurroughs, 84 Conn. SO.!. (t) Pfleger v. Browne, 28 Beav. 891, per Romilly, M. R. (m) Poker v. Roberts, 7 Jur. N. S. 400, 9 W. R. 605. See Pennell v. Millar, supra. Bromlei/ v. Smith, 26 Beav. 644. («) Borrodaile v Hunter, 6 M. k O. 639, 12 L. J C. P. 226, 6 Scott N. R. 418, 7 Jur. 443. Dorviay v. BorrodaiUf 10 Beav. 836, 16 L. J. Ch. 337. 260 DISPOSITION OF LIKE POLICIES. ;_i22 the assignor of a policy has notice of all its conditions, and will, if h avoid the policy by breaking any of its conditions, be re- sponsible under the ordinary covenant not to vitiate the policy ; but where one covenanted that he would appear at any insurance office within the bills of mortality, and enable the covenantee to insure liis life, and in pursuance of his covenant appeared at an of- fice which subsequently granted to the covenantee a policy contain- ing a condition that the covenantor should not go beyond the lim- its of Europe, it was held that the covenantee ought to have given the covenantor notice that the insurance had been eflfected on those terms; and that, not having done so, he could not recover damages for theavoidance of the policy by the covenantor quitting Europe (y). But if the covenant be explicit and the covenantor have notice of the terms of the policy, the covenant will be construed strictly, and the covenantee may enter up a judgment and issue execu- tion against the covenantor *«for neglecting to keep the pol- [* 322] icy on fool, notwithstanding he may himself have obtained its renewal " (z)- An action will lie for breach of covenant to effect and settle a policy, and the damage caused by the breach may be proved for (a). Non-assignable life insurances. — Insurances under the Customs An- nuity and Benevolent Fund (56 Geo. III. c Ixxiii., 34<&35 Vict. c. 103 and Rules of 1872 thereunder) are not part of the assured's es- tate. He has only a limited power of appointment over the funds secured thereby. On making certain payments during his life he acquires a right to appoint a surii of money on his death either for the benefit of his widow, if any, or, if not, of his relatives and nom- inees if accepted by the directors (6). The appointment being limited, no legacy duty is payable thereon (c), but succession duty is payable (d). If no nomination is approved and registered during life, but the assured makes a bequest of such policy, the legatee cannot take, and the assured's children, if any (his wife being dead), are en- titled (6). But irrevocable assignment of a certain portion of the sum in«- Bured is permitted under certain restrictions by the said Rules (/). The effect of mortgage of such permitted portion would be a dis- position j7ro tanto; and his mortgagee's interest, if any, would be (y) Vf/se V. Wak^ld, 6 M. k W. 442. (2) Winfhorp v. Murray, 8 Ha. 214 (1852). Davidson's Precedents, 4th ed. vol. 2, p. 656. [a) Arthur v. Wynne, 14 Ch. D. 603, 49 L. J. Ch. 557, 43 L. T. N. S. 46, 28 W. R. 972. \h) Attorney-General v. Abdy,\ H. & C 206, 82 L. J. Ex. 9. (r) Attorney-General v. Jioiiael, Tilsley on Stamps 685 (2iid ed.). (d) Attorney- General v. Abdy, supra. Succession Duty Act (10 & 17 Vict, c. 61), 8. 17. (e) Tr. PhiUips' Insurance, 23 Ch. D. 285, 52 L. J. Ch. 44, 48 L. T. N. S. 81, 81W. R. All (/) McLean's Trusts, 19 Eq. 274, per Jessel M. B. (1874). 261 : 'Uilal *324 THE LAWS OF INSURANCE. subject to the dispositions of the assured's will, or the rules [* 323] of the society. The ^assignees or mortgagees of such a pol- icy will not be liable to succession duty {g). The assured may settle his share of the benevolent, funfl to trus- tees, for the benefit of his daughter on her marriage. Such settle- ment is within the words of the rule, "for the benefit of the child or children." No admii^sion of the trustees or the husband as nomi- nees, nor any consent of the directors of fund, is necessary (h). Friendly societies — Insurances made under the Friendly Societies Acts (38 & 39 Vict. c. 60, 30 & 40 Vict. c. 32) are not assignable, and we believe are treated by the Registrar of Friendly Societies as non-assignable. The (assured) member may, however, by writing under his hand, delivered or sent to the society at its registered of- fice, nominate any person as the recipient, in case of his (the mem- ber's) death, of any sum from the society not exceeding £50. But such nomination is revocable in the same manner. It seems only to amount to a power of revocable appointment, and no contract not to revoke would bind the society. This power of nomination is confined to members who have at tained sixteen years of age (i). Insurances on children's lives under ten. — When assurances are made on the lives of children under the Friendly Societies Act, 1875, the only people who can receive money are the parents, or their per- sonal representatives, s. 28 (2). Insurances effected tluough the Post Office also are not assign- able, but a power of nomination is given. The same rule applies to the Customs Benevolent Fund, and, it would seem, to various Indian Civil Service Funds. [* 324] *Post Office insurances, — Assignments of Post Office insur- ances or annuities are subject to the provisions of 27 & 28 Vict. c. 43 B. 11, and the Rules made under the Act ( j ). Assignment of void policy. — The assignee cannot recover on a policy void for fraud of the assignor, or for misrepresentations in the pro- posals (Jc). In an ordinary life policy the assignee for value can recover by the terms thereof. Legal means lawful. — The words " legal " in a proviso which avoids the policy, "except it shall have been legally assigned," means law- ful, not legal, as opposed to equitable (I). Authority to hold amounts to assignment. — Authority to hold the policy for any bills or notes cashea for the grantee has also been (g) McLean's Trusts, supra 15 & IG Vict. c. 61 (Succession Duty Act), s. 17. (A) Pocock'a Policy, G Cli. App. 447, 25 L. T N. 8. 233, 19 W. R. 801. (/) 88 & 89 Vict, c. GO, s. 15 (3). ( i' ) 80 & 81 Vict. c. 144, b. 8. 16 & 17 Vict. c. 45 ; 27 & 28 Vict. c. 43. (k) British Equitable \. Great Western liailwa}/, 19 L. T. N. S.476, perMalins, V. C. (1869), affd. 20 L. T. N. S. 423, 17 W. R. 48, 88 L. J. Ch. 132, 814 (/) Dufaur v. Professional^ 25 Beav. 599, 4 Jur. N. S. 841, 27 L. J. Ch. 817, 83 L. T. '25 262 DISPOSITION OF LIFE POLICIES. 325 held to be an assignment witliin tlie terms of a policy containing the following words: ''unless it shall have been assigned for valu- able consideration pix months before death " (m). Insurers can't avoid policy and claim advawe. — The insurers, if they make advances on a policy, are third persons for that purpose, and cannot avoid the policy and claim the debt (n). Bankruptcy. — But if the policy pass by operation of law to a trustee in bankruptcy, this is not an assignment within the above exception. Void assignment as security for antecedent debt. — An assignment of a policy which is voluntary and void under 13 Eliz. c. 5, may nevertheless be allowed as a *charge on the policy to [* 325] iheextent of an antecedent debt, in consideration of which it was assigned (o). An assignment by way of charge with a trust as to the surplus in favour of a third person has been held void against creditors as to such trusts (^). So will be assignment by a bankrupt of an undisclosed policy (q). Assignment by felon. — But a felonious taking of property so far raises a debt as to support the assignment of a policy by the felon before conviction as security for the sum taken (r). Gift of policy. — Gift of a policy is not valid against creditors, if the settlor was at the time insolvent (s). But once completely made, it is not revocable by the donor {t). To constitute such a gift the policy may simply be delivered over with appropriate declarations (m), or be assigned in writing (x), or declared to be held by the donor in trust for the donee (y\ or di- rected to be held by a trustee (2), an insurer (a), or a bailee for a particular purpose. Expression of desire to settle policy may amount to assignment. — Where a man had made a settlement on his first marriage, and, being a widower and desiring to marry again, wrote to one of the trustees (m) Jones v. Consolidated, 26 Beav. 266, 5 Jur. N. S. 214. 28 L. J. Ch. 66, 32 L T. 307. Moore v. Woolsei/, 4 E. & B. 24a, 24 L. J. Q. B. 40, 1 Jur. N. S. 468, 24 L. T. 156, 3 W. R. 66, 3 C L. Rep. 207 White v. Bntish Empire, 7 Eq 394, 3S L. J. Ch. 53, 17 W. R 26, li) L. T. N. S. 306. (tt) Jackson v. Forster, 1 E. & E. 468, 5 Jur. N. S. 1247, 29 L. J. Q. B. 8, 33 L. T. 290, 7 W. R. 578. (0) Stokoe V. Cowan, 30 L. J. Ch. 882, 29 Beav. 037, 4 L. T. N. S. 695, 7 Jur. N. S. 901, 9 W. R 801. (p) Magawley's Trusts, 5 De G. & Sm. 1, 15 Jur. 1005. (q) SchoiuUer v. Ware, 1 Camp. 487. Re .Smith, 12 W. R. 534. (r) Chotcne v. Baylis, 31 Beav. 351, 11 W. R. 5, 6 L. T. N. S. 739, 31 L. J. Ch. 757, 8 Jur. N. S. 1028. {s) Magawley's Trust, 6 De G. & S. 1, 15 Jur. 1005. h) Rummens v. Hare, 1 Ex. D. 169, 34 L T. N. 8. 407, 24 W. R. 885. (m) Barton v. Gainer, 8 H. & N. 387, 27 L. J. Ex. 390. («) liotces V. Prudential Assurance, 49 L. T. N. S. 138. (y) Sewell v. King, 14 Ch. D. 179, 28 W. R 344 h) Magawley^s Irust, supra, per Parker, V. C (a) Such are policies uudier Married Women's Property Acts. 263 •' il I 327 THE LAWS OF INSURANCE. m it ^ tliereof saying that ho desired to make a settlement (of six policies oil hid own life) on the children by the first marriage, and handed three to one trustee, and told him that the others were in a [^' 326] bank as collateral security for a loan, but *that he would pay off the said loan, but made no legal assignment, and no notice was given to the insurers or the other trustee. Hall, V C ht'Ul:— ■ ■' (1) That the evidence showed a complete assignment. (2) That the person whose duty it was to give notice to the in- surers was the trustee, and not the settlor. (3) That such notice only gave a legal title to sue in the assign's own name, and nothing more (6). Policy setUement on same footing as other property. — Where the policy is f?o framed as to be part of his own estate, the grantee can settle it in the same way in which he could settle any other personal property, and subject to the same liability to havo his settlement set aside by creditors as attends on any voluntary settlement (c). Non-performance by the husband ot his covenant to eflfect and settle a policy will not debar him from insisting on performance by his wife's father of his covenant to settle property on similar trusts (d). Names of persons interested must appear m policy — both the names of trustee and c. 8 ; Pearson v. Amicable, 27 Beav. 229, 7 W. R. G2i) ; Kekewich v. Manning, 1 D. M. & G. 176, 21 L. J. Ch. 577. See Milroy v. Lord, 4 D. F. & J. 264. (c) See Holt v. Ecerall, 2 Ch. D. 266. 45 L. J. Ch. 433, 34 L. T. N. S. 599, 24 W. R. 471, as to mode of turning a policy on own life into one in favour of wife and children. {(i) Jeston v. Key, 6 Ch. App. 610. (e) Hodnon v. Observer Society, 8 El & Bl. 40, 26 L. J. Q. B. 803, 29 L. T. 278, 6 W. R. 712, 8 Jur. N. S. 1125. ShUling v. Accidental, 2 H. & N. 42, 1 F. & F. 116, 26 L J. Ex. 266, 27 do. 16, 6 W R. 567. (/) Collett V. Morrison, 9 Hare 162, 21 L. J. Ch. 878. (g) Kingdom v. Caatleman, 46 L. J. Ch. 448. 264 DISPOSITION OF LIFE POLICIES. 328 Tnuitees may sell where settler can't keep up policy. — Where a policy has been settled and the settlor is unable to perform his covenant to keep up the premiums, the Court will authorize the trustees to sell or surrender the policy (h). When trustee must keep policy up. — If an annuity or life policy is in settlement, it is the implied duty of the trustee to keep it up. It is otherwise, Jiowever, if he does not insure, but simply pays the premiums as an agent (t). If a trustee who insures does not keep the policy up, he is liable to his cestui que trust if he had funds in hand to pay the premiums (k), but it is otherwise if he had not funds and could not get any (I). If the trustee advance funds he has a lien on the policy for the amount of his advances (m). Trusts of a policy. — The trusts declared of a policy are similar in nature to those declared of other securities, and are construed in the same way. While they divest the settlor of his interest, a resulting trust or apt terms in the deed may bring it back. Thus a trust for A., but if he predeceased the settlor then for B., unless the settlor should *sell on A.'s decease, has been held to enable [* 328] the settlor to dispose of the policy as he liked on A.'s death by charge or sale (n). Again, trust of a policy cannot be declared by reference in the would-be settlor's will to a letter, though he could give the policy away on his death-bed (o). If there are no funds to keep up a trust policy, the Court will order it to be sold (p) or surrendered (q). Policy in names of trustees. — There is an advantage in taking a trust policy in the names of the trustees, as it diminishes the risk of forfeiture, and avoids the necessity of an assignment, and of giv- ing notice to the office. Assignment of principal money will pass bonus. — Trusts of a policy, whether efTctea in the names of the trustees or assigned to them, will in general comprise bonuses, as will as the original sum as- sured. Hence if it be desired^ with reference to the practice of the office, or the terms of the policy, that there should be an option of having a bonus applied in diminution of the premium, power for this purpose should be specially given (r). Where a husband (h) Hill V. Trenen/, 23 Beav. 16 Beresford v. Beresford, 23 Beav. 292. (i) Barmy v. Croft, 9 Ir. Ch. 19. , \k) Marriott v. Kinnersley, Tamlyn 470. (Ij Hobday v. Peters, 28 Beav, C03. (m) Clarli V. Holland, 19 Beav. 262, 273, 2 W. R. 402, 18 Jur. 1007. Johnson V. Sicire, 3 Giff. 194. Todd v. Moorhouse, L. R. 19 Eq. 69, 23 W. R. 155, 32 L. T N S 8 (n) Johnson v. Ball (1862), 16 Jur. 638. (o) Peddler v. Mozelet/,, 81 Beav. 159, 7 L. T. N. S. 205. ip) Hill V. Trenery, (1858), 23 Beav. 16. f (?) Beresford v. Beresford, 23 Beav. 292. (r) Purkes v. Bott, 9 Sim. 888. Lackersteen v. iMckersteen, 6 Jur. N. S. 1111, 80 L. J. Ch. 5. Courtney v. Ferrers, 1 Sim. 137, 5 L. J. S. Ch. 107. GilUy v. Burley, 22 Beav. 619. Davidson's Precedents, vol 8, 807. 265 ' K i il -I *330 THE LAWS OF INSURANCE. covennntod to effect and settle an insurance policy, and effected a participating policy, it was held that he was entitled, at his option to have bonuses paid to him, or applied in reduction of premiums (s). And on a bequest of a jjolicy on the life of a person other than the testator, the executors were held entitled to take the bo- nuses and apply them in reduction of premiums (0- Wife's consent to husband's assignment. — In" America it has been held that" a lite policy by a husband on his own life for the [* 329] benefit of his wife is ^assignable during his life, with her consent, as collateral security for his debts, where no statute directly prohibits it, and that she is debarred by such consent from recovering the proceeds of the policy («) ('). In England probably the same would be the case on such a pol- icy, since the wife being alone named would be sole and absolute beneficiary under the policy if she survived her husband (t). If a wife takes out a policy on her husband's life to her separate use, but if she die before the husband, then for her children, the husband cannot deal with the policy (u). In Scotland, under the law as to communio bonorum between spouses, it seems that a husband who effects a policy on his wife's life for her benefit can charge the policy during his lifetime (x). Married woman's 'power to insure. — By the Married Women's Property Act, 1870 (2/),it is provided that " A married woman may effect a policy of assurance upon her own life, or the life of her husband, for her separate use ; and the same and all benefit thereof, if expressed on the face of it to be so effected, shall enure accorci- ingly, and the contract in such policy shall be as valid as if made with an unmarried woman." Husband's policy for benefit of wife. — " A policy of assurance effected by any married man on his own life^ and expressed upon the face of it to be for the benefit of his wife, or of his wife and children, or any of them< shall enure and be deemed a trust for the benefit of his wife, for her separate use, and of his children, or any of them, according to the interest so expressed, and shall not, so long [* 330] as any object of *the trust remains, be subject to the con- trol of the husband or his creditors, or form part of his es- tate. When the sum secured by the policy becomes payable, or at any time previouslj^, a trustee thereof may be appointed by the Court of Chancery in England or Ireland, according as the policy (s) Hughes v. Searle, W. N. 1885, p. 79. (t) Re Edmed, W. N. 1885, p. 15?. is) Charter Oak Life v. Ih-ant, 4 Am. Rep. 323, 2 Story Eq. Jur. b. 1413. it) 83 & 84 Vict, c 93, s. 10 ; and see Kertcin v. Howard, 24 Wise 108. (m) Chapin v. Fellows, 36 Conn. 132, 4 Am. Rep. 49, (a?) Thomson's Trustees v. Thomson, 6 C. S. C. (4tb series) 1227. (y) 83 & 84 Vict, c 93, s. 10. * If a man insures his life for his wife's benefit, his surrender of the policy without her consent is inoperative as to her. Manhattan Life Ins. Co, v. Smith, 44 Ohio St. 166. DISPOSITION OF LIFE POLICIES. *331 of insurance was effected in England or in Ireland, or in England by the judge cf llie county court of the district, or in Ireland by the chairman of the civil bill court of the division of the county in which the insurance office is situated, and the receipt of such trus- tee shall be a good discharge to the office. Intent to defraud creditors. —If it shall be proved that the policy was effected and premiums paid by the husband with intent to defraud liis creditr .s, they shall be entitled to receive out of the sum secured an amount equal to the premiums so paid." Bankruptcy of husband. — This section con- trols s. 91 of the Bankruptcy Act, 1869, and preserves the policy to the wife, notwithstanding the bankruptcy of the husband (2). Married Women^s Property Act, 1882. — Although the Married Wo- men's Property Act, 1870, and the Married Women's Property Act (1870) Amendment Act, 1874, are repealed by the Married Women's Property Act, 1882, s. 22, this section provides that such repeal shall not effect any act done or right acquired wliile either of such Acts was in force, or any right or liability of any husband or wife married before the commencement of this Act to sue or to be sued under the provisions of the said repealed Acts, or either of them, for or in respect of any debt, contract, wrong, or other matter or thing whatever, for or in respect of which any such right or liabil- ity shall have accrued to or against such husband or wife before the commencement of this Act. Construction of s. 10 Married Women^s Property Act, 1870. — In Re Adam's Policy IHists (a) a husband effected a policy for the benefit of his wife and children under *the Married Women's [* 331] Property Act, 1870, and died insolvent. His wife and one child of the marriage predeceased him. Upon a petition by his surviving children under the 10th section of the Act for the ap- pointment of a trustee of the policy -money for a declaration as to the rights of the petitioners, the Court held that it had under the 10th section no jurisdiction to do more than make the order ap- pointing a trustee ; but since under the policy there was a trust either for his wife for life with remainder to the children, or in the alternative for the wife and children as joint-tenants, the order was directed to be prefaced with an expression of opinion by the Court that the wife took no interest, and that the surviving children took as joint tenants ; and it was held by Chitty, J., that a policy effected by a husband under s. 10 of the Married Women's Property Act, 1870, " for the benefit of his wife and children," should be read in conjunction with that section, and should by virtue of the words "separate use" in the section be construed as giving the wife a life interest only, with remainder to the children (a). Where there was a surrender of policy prior to Married Women^s (z) Holt V. Everall, 2 Ch. D. ^60, 45 L. J. Ch. 433, 34 L. T. N. S. 599, 24 V. R. 471. (0) 23 Ch. D. 5?5, 52 L. J. Ch. 642, 48 L. T. N. S. 727, 81 W. R. 810. (a) But see Seton v. Satterthwaite, post, p. 834. 267 *332 THE LAWS OF INSURANCE. Property Act for one subseqmnt to the Act, the insurance was held suh'i- quent. — In Holt v. Everall (6), a husband, who before tlie passing of the Married Women's Property Act, 1870, had insured liia life j.tid liad paid one premium on the insurance, after the passing of the Act gave up the policy and received instead a policy at the same premium for a sum payable to the separate use of his wife if she survived him, and to him if he survived her. He was at the time in embarrassed circumstances, and soon after came under liquida- tion by arrangement, and then died. His wife had separate estate subject to a restraint on anticipation, and the Court held that the insurance must be taken as having been effected after the passing of the Married Women's Property Act, and that, whether tlie sub- sequent premiums were paid by *,he husband out of his own [* 332] money or out of *the income of the wife's separate estate the money payable on the insurance did not go to tha trus- tee under the bankruptcy, but went to the widow by virtue of the Married Women's Property Act. It was further held on the evi- dence that the premiums were paid out of the wife's separate estate, and that therefore the trustee in bankruptcy would not receive out of the i isurance-money the amount of the premiums. Power of wife to insure under Married Womcn''s Property Act, 1882.— The Married Women's Prooerty Act, 1882 (45 & 46 Vict. c. 75) s. 11, provides that "a married woman may by virtue of the power of making contracts hereinbefore contained, eflFect a policy upon her own life or the life of her husband for her separate use, and the same and all benefit thereof shall enure accordingly. Policy by husband for wife and children. — A policy of insurance eflFected by any man on his own life, and expressed to be for the benefit of his wile or of his children, or of his wife and children or any of them, or by any woman on her own life, expressed to be for the benefit of her husband or of her <'.hildren, or of her husband or children or any of them, shall create a trust in favour of the objects therein named, and the moneys payable under any such policv shall not, so long as any object of the trusts remain unperformed, f «rm part of the estate of the insured or be subject to his or her debts. In- tent to defraud creditors. — Provided that if it shall be proved that the policy was effected and the premiums paid with intent to de- fraud the creditors of the assured, they shall be entitled to receive out of the moneys payable unler the policy a sum equal to the premiums so paid. Appointment of trustee of policy-ynoney. — The in- sured may by the policy or by any memorandum under hie or her hand appoint a trustee or trustees of the moneys payable under the policy, and from time to time appoint a new trustee or trustees thereof, and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy. If no trustee, moneys vest in executors, &c. — In default of any such appointment of a trustee. (6) Supra. 268 m\ mspcsrrioN op life policies. *334 such policy, immediately upon its being effected, shall vest in the ^insured and his or her legal personal representatives [* 333] in trust for the purposes aforesaid . Ncto trustee. — I fat the time of the death of the insured or at any time afterwards there shall be no truste'", or it shall be expedient to appoint a new trustee or new trust vies, a. trustee or trustees or a new trustee or new trustees may be appointed by any Court having jurisdiction under the provis- ions of the Trustee Act, 1850, and the Acts amending and extending the same. Receipt. — The receipt of a trustee or trustees duly ap- pointed, or in default of any such appointment, or in default of no- tice to the insurance office, the receipt of the legal personal repre- sentative of the insured shall be a discharge to- the office for the bum secured by the policy or for the value thereof in whole or in part." Surrender of policy. — Having regard to the words in s. 11 of the Married Women's Property Act, 1882, declaring that a policy ef- fected thereunder shall create a trust in favour of the objects therein named, and the moneys payable under any such policy shall not, 80 long aa any object of the trust remains unperformed, form part of the estate of the insured, it would seem that an insurance com- pany could not accept a surrender of such a policy so long as any object of the trust was unperformed. Effect of policy and Act. — The effect of the policy and the Act taken together is to constitute a decln Lion of an executed trust, and all the Court has to do is to exprcsa its view of the construc- tion of the two instruments taken together. Per Chitty, J., on Married Women's Property Act, 1882, s. 11. — In the 11th section of the Married Women's Property Act, 188!i?, the words ''separate use" are omitted, probably because the Act has previously made what the Legislature considered sufficie^:t provis- ions as to the property of a married woman being held .or her sep- arate use, and it was considered unnecessary to insert any further provisions in the Uth section. There is another difference between the words of that section and the corresponding part of the 10th section *of the Act of 1870. The new section speaks [* 334] of a policy effected by a man " for the benefit of his wife, or of his children, or of his wife and children or any of them." There it treats the interest of the wife and the mterest of the chil- dren as two distinct things. That is an indication, though a slight one, that the Legislature never intended the wife and children to take concurrently, but that they should take separate interests; ia other words, the wife and children do not take together, or the sur- vivors of them, but the wife is spoken of separately from the chil- dren. That, therefore, shows that there is a distinction between the wife and children as regards the interests they are to take (c). Considering that the Act of 1882 deals with the subject of policies for the benefit of the wife and children of the in^'ured in almost (r) Por Chitty, J., Ro Ailarns Policy Trusts 2'i Ch. 1). 529-30, supra, p. 880 ; diacuBsed iu Heton v. Satterthwaite, 84 Gh. D. 611, 86 W. B. 873. 269 *335 THE LAWS OF IXSUnANCE. the same terms as the Act of 1870, it would be very desirable for the offices of insurance companies to have a form of settlement for use under the new act of 1882; for this Act, through its being in almost the game terms as the Act of 1870, practically leaves mat- ters much in the same position as they were in under the Act of 1870. Wife and children joint, tenants. — In a more recent case (d) the wife and surviving children were held entitled to the policy- money as joint tenants. Interest of beneficiaries contingent. — In the Married Women's Prop- erty Acts, 1870, 1882, nothing is said as to the power of assignment of a policy by the beneficiaries before the death of a settlor. It would seem, however, that their interests are all contingent on survival, and that consequently no a-signraent in the settlor's life would give more than a contingent right to the proceeds of the tru-it policy (e). But it seems that such a policy could be surren- dered by the beneficiaries f .r its surrender value, or ox- [* 335] changed for a *paid up policy (d), and the Court might ap- point a trustee ior the purpose where necessary (e). The effect of an appointment by a settlor of policy-moneys to his executors and administrators is to make tho policies part of the es- tate of the settlor, subject to the other interests created by the set- tlement (/). Policy -moneys no part of husband's estate. — The moneys payable under a policy effected by a husband for his wife and children, in conformity with the Married Women's Property Act, 1882, do not belong to his estate, except in the event of the beneficiaries prede- ceasing him. The husband has, therefore, it seems, no disposable interest in such policy otlier than that arising out of the prospect of tho pre- decease of the beneficiaries. In America, to a suggestion that such a provision being voluntary was in the nature of a testamentary disposition and so revocable, the Court said it was no more revoca- ble than a promissory note ig). In Canada it has been held that a policy on the husband's life for the benefit of his wife cannot be claimed by the creditors of either spouse Qi). As to the wife, this would seem true so long as the interest was only contingent. Creditors entitled topremiurns after hmband'a insolvency. — If tho husband became insolvent after insur- ing for tho benefit of his wife, it seems that his creditors would bo entitled out of the policy-money to the amount of the premiums (d) Sdon V. SaUerthwaitc, supra. ': j Sco Connrrticut MufualLifc v. Burroughs, .14 Conn. aOfl, 014. Ro Adani' ..„,.. T. ►„. .... T w. „.« .„ . ^ ,. ^ 727, 81 W. U. 810. N. S. PoHcyri^ Ch. D. 525, 52 L. J. (Jh. C42, 48 L.^T. (d) Ex parte Dever, 18 Q. B. 1). 060. («) tichultze V. Slmltze, 56 L. J. Ch. P56. /) M'Kenzie v. M'Kemh; 21 L. J. Ch. 465, 15 Jur. 1091. \q) Cnnnedkut Mutual Jj(fe v. Jiurroucfhs, 84 Conn at 815. (ft) Vilhnnv. Marnouin, 18 Lr, Can. Jur. 249. See Levnardv. Clinton, 20 Hun. (N. Y.) 288, and Ex parte Dever, supra. 270 DISPOSITION OF I IFE POLICIES. *337 paid by him subsequent to his insolvency (i). Policy on husband for wife, like specific legacy. — This form of policy may be likened to a gpecific legacy made by the husband, conditioned on its being ap- propriated for the benefit of the wife for lier support. But in this country it is not a legacy, but a settlement, and U not liable to duty, not being i)art of the husband's estate. '^Pniicy not husband's whilst there is any object of trust. — The [* 336] jQ( \ s payable under a trust policy effected in virtue of tlio M:irried Women's Property Acts, 1870, 1882, cannot become part of the husband's estate while any of the objects of the trust continue. Even if thera be no trustee, and the husband's execu- tors or administrators are therefore the persons to give the discharge to insurers, buch executors or administrators will hold the moneys ad trust-moneys, and not as part of the assets of the deceased (k). The trust- moneys, of course, are not exempt from the debts of the beneficiaries named. To the extent of their interest they have the ;:imc } iterest as assigns would have in a sum of money payable on a coii' ittgency, and the money is not payable in such a manner as not to be answerablo for the debts of the beneficiaries (/). Policy for xoife'a benffit not to be surrendered by husband. — A man who effects a policy on his own life for his wife's benefit cannot sur- render that policy and obtain one on the same terms witli new bene- ficiHries, unless the wife expressly consents that hor interest shall be divested (m), (*) or unless the wife dies before iiim. A ten years' policy for the wife's sole use will not enure to her benefit if the husband survives the ten yeai i, and an ^alternative endowment is in that case payable (n). Assignment and charge by married woman of her trust policy. — If a married women be induced, without fraud, by her husband to as-i sign or incumber her interest in a policy on his life, she cannot set the transaction asido (o), as shecan deal with her interest if any (p). But settlement of policies on the husband's life to the *\vife's separate use does not create a trust for separate use [* 337] till his death, and the wife cannot charge such policies while her husband is living (q). Policy for wife 8 benefit not actually issued till death of husband be- longs to wife. — A husband, wlio hud already effected a policy in favour of his wife (under Married Women's Property Act, 1870). took steps to effect a second similar insurance with the same com- [i] Central National Bank v. Hume, 51 Am. Rep. 780. Married Women'H Property Act, 1882, s. 11. (if) Soo Newman v. Belsten, 70 L. T. Journ. 228. (I) Murraif v. WelU, 63 Iowa 256. Smedley v. Felt, 43 Iowa 607. (m) Packard v. Connertinit Mutual Life, 9 Missouri (App.) 469 U. S. Digest, 1881. p. 4ediior is a question which has arisen where the creditor has himself paid! the premium, and it seems that if the policy has been mortgaged by the debtor to the creditor, then, notwithstand- ing the premiums have been paid by the creditor, it will belong to Uie debtor ; but if the debtor has only an option of purchasing the policy from the creditor on the debt being paid, it will belong to the creditor ; and if the debtor die before his option is exercised, the creditor will be entitled to receive the insurance-money for his own use (h). Policy on arwther'a life generally belongs to grantee ofp^iicy. — In the absence of contract, express or implied, a ^policy ef- [* 342] fected on the life of another will belong to the person who effects it (i). Rule where grantee is debtor. — But if the policy be taken out in the name of a creditor, and the premiums are paid by the debtor, or he is charged with them in account, the onus lies on the creditor to prove that the policy is his (k) ; and if it is other- wise to be inferred that the insurance was intended as a security ^ma facie the policy will be the property of the debtor, after satis- fection of the debt (/). Grantee of annuity insuring grantor^s life. — If the grantee of an annuity, by way of security, or other mortgagee insures the grantor's life, or if a creditor insures his debtor's life, and pays the premiums out of his own pocket, the policy belongs to the grantee or creditor. The debtor cannot require the creditor to keep up the policy, and the receipt by the grantee or creditor of the insurance-money does not satisfy or discharge the debt (m). Charging debtor with premiums will not per se make policy his. — Charging the debtor with the premiums in his accounts by the creditor will not give the debtor a right to the policv in the absence of evidence that the debtor knew he was so charged!, or that he had agreed to pay such premiums (n). If, however, upon the insurance by the creditor, it be agreed or can be inferred that the debtor nhall be charged with the premiums, and that the policy is ef- fected as a security or indemnity, the policy or the balance of the (h) Lewis v. A7nj7, 44 L. J. Ch. 259, 31 L. T. N. S. 571. (i) Brown v. Frecmun, 4 De G. & Sm. 444. GottHeh v. Crnnch, 4 De G. M. k G. 440, 17 Jur. 704, 22 L J. Ch. 012. Freme v. Jirade, 2 De G. & J. 582, 6 W. R. 739. Banhford v. Cann, ;13 Hcav 109, 9 L. T. N. S. 4H, 11 W. R. 1037. Bruce v. Garden, 5 Ch. App. 3'2, 18 W. R. 384, 39 L. J. Cli. 334, 22 L. T. N. S 595. Knox \. '" L. T. N. S 227 I. A pp. h; , L, 11. 5 Ch. App. 515, 18 W. R. 873, 39 L. J.Ch. 750. '.'8 (k) Pflcqcr V. Browne, 28 Roav. 391. Holland v. Smith, Esp. 11. Norland V. Imac, 20 Beav. 889. Drysdalc v. PigoU, 8 Do G. M. & G. 546, 25 L. J. Ch. 878, 27 L T. 810, 4 W. R. 773. (/) Williams V. Atki/m. SJo k liiit (Ir )003. Hawkins v. Woodgate, 7 Beav. 565. fMt V. lliiiton, 5 De U. M. & (). 823, 24 L. T. 101. Ex parte Andreivs, 2 Rose 410, 1 Mtuld. 573. Lewi^^^ v. Kijig, supra. (m) Gottlieb v Cranch, supra. Williams v. Atkyns, siipra Humphreys v. Arabin, LI. & Goold (Plunkottl 318. K.v parto Lancaster, 4 De G. & Sm. 524. (n) Bruce v. Garden, L- it. 5 Ch. 82, tngtra, note (i). 275 *344 THE LAWS OF INSURANCE. [* 343] ^insurance money after discharge of the debt will be the debtor's, and it will be immaterial in such a case that the premiums were not actually paid by the debtor, if he has been charged with them in account by the creditor, and has not disputed his liability to pay them (o). Payment of premiums by mortgagee will not deprive mortgagor of poU icy. — As the mere non-payment by the mortgagor of a charge at- tributable to the mortgaged property cannot have the effect of fore- closure, the payment of the mortgagee of the premiums on the mortgagor's refusal will not divest the right of the latter to the pol- icy after repayment by him of the advances with interest (p). The circumstance that an allowance for insurance was included in the calculation of the consideration will not entitle the debtor to a pol- icy kept up by the creditor, if there were no stipulation by the deb- tor for an insurance. The matter is then at the option of the credi- tor, who, whether he effects an insurance, or by retaining the money becomes his own insurer, is equally entitled to the benefit of the arrangement (q). Where creditor placed in position oftntstee, he must account for policy money after deducting premiums, — If by the terms of the security it- self the creditor be placed in the position of a trustee, as if the se- curity be assigned to him upon trust, after payment of costs, to re- tain the debt and pay over the surplus, he must account for the in- surance-money after deducting the premiums, being within the principle which forbids dealing by a trustee with the trust estate for his own benefit (r). [* 344] *An agreement may be expressed or inferred, under which the debtor shall take the benefit of the insurance. What is evidence that policy should be re-assigned with principal security on re- demption. — Thus an agreement (s) that, if redemption shall take place after the premiums shall have been paid for the current year, the mortgagor shall repay to the mortgagee such proportion of that premium as shall belong to the then unexpired part of the current year, has been held to be sufficient evidence of an intention that the policy should be assigned with the principal security upon re- demption, even without regard to subsequent words importing yet more clearly a right in the mortgagor to require an assignment of (o) Holland \. Smith, Q'Esg. 11. Morlandv. Isaac, 20 Beav. 88!). Brown V. Freeman, 4 De G. & Sm. 444. Henson v. Blackwell, 4 Hare 484, 14 L. J. Ch. 829, 9 Jur. 390. Re Storie'a Trusts, 1 Giflf. 94, 6 Jur. N. S. 1153, 28 L. J. Ch. 888, 34 L. T. 20. Courtney v. Wright, 30 L. J. Ch. 131, 8 L T. N. S. 433, 2 Giff. 8:^7, 9 W. It 153. Lea v. Hinton, 24 L. T. 101, 6 De G. M. & G. 82:<. Freme - lirude, 2 De G. & J. 58?, W. R. 739, 4 Jur. N. S. 746, Fiaher on Mortgages 974 (4tU ed ) ( «) Drysdale v. Pigott, 8 De G. M. & G. 546, 22 Beav. 288, 25 L. J. Ch. 878, 5 W. R. 773, 22 L. T. 193. (q) Freme v. Brade, supra, (r) Ex parte Andrews, Re Emmett, 2 Rose 410, 1 Madd. 573, Fisher on Mort- gages 975 (4th ed. ). (») Williams v. Atkyna, 2 Jo. k Lat. (Ir.) 608. 27G DISPOSITION OF LIFE POLICIES. 345 the policy. But the passing of letters between the parties which refer to the necessity for the insurance, or a provision in the princi- pal eecurity for payment by the debtor of the additional premiunas which in certain events might become payable upon the policy, or a covenant by the cestui que vie of the annuity to do the necessity acts for the effecting of the insurance, are not sufficient (t) to give the mortgagor or grantor of th^ annuity a title to the policy, for these are only statements of or references to the terms upon which the transaction was afifected, and afford no evidence of a contract which will take the ca«e out of the general rule. Letters as evidence of right to policy. — It seems that letters which have passed between the parties may be looked at in order to ascertain whether there were any contract concerning the right to the policy, where there is no discrepancy between the letters and the securitv (m), though it would be otherwise if the effect* of the letters would be to vary the stipulations of the security (x). Contract that 'policy shall be re-assigned. — Where there is an express contract that the policy shall be re-assigned upon the se- curity being redeemed, *if the grantor shall elect to take it, p 345] the grantee may not, either before or after election, part with the policy for his own benefit (y). Position of creditor with surety for debt, insuring debtor^ s life. — Where a creditor whose debt is secured by sureties insures the life of the principal debtor, he is perfectly free to assign over such policies to the debtor or any one or more of the sureties paying the principal debt. Position of sureties inter se. — But as between the sureties no one of them can by paying the debt, and obtaining such assign- ment, appropriate the whole benefit of the policy, and claim con- tribution from his co-sureties as though such policy never existed. To give him such a right, the others must abandon or disclaim all benefit of the policy (z). Surety can deduct sums spent in keeping up policy. — But the surety who takes over the policy is entitled in an action for contribution to deduct from the amount received on the policy all sums spent by him in keeping it up, since, as the benefit is joint, the burden must be so also (a). Creditor within rule ttiat trustee may not make profit. — Where a con- tingent interest was assigned upon trust to secure a debt, and the creditor insured against the contingency and received the insur- ance, he was held to be within the principle which prohibits a trustee from making an advantage out of his trust; and, the debtor being bankrupt, the creditor was permitted to prove only for the (t) Gottlieb V. Cranch, 4 De G. M. & G. 440, 22 L. J. Ch. 912, 17 Jur. 704, Fisher on Mortgages 976 (4th ed.)- (m) Gottlieb v Cranch, impra. • (a;) Squire v. Campbell, 1 Myl. & C. 458, Fisher on Mortgages 977 (4th ed.). (y) Hawkins v. Woodgate, 7 Beav. 565, 8 Jur. 748. (z) Atkina v. Arcedeckne, 24 Ch. D. 709, 58 L. J. Ch. 64, 48 L. T. N. S. 725.. (a) Ibid. 277 «i ' M U\ m ! '1/ 5.i' ! f.i 34'; THE LAWS OF INSURANCE. balance of the debt (6). Life policy is ^'properly." — A mortgage of a life policy is a mortgage of "property" so as to require an ad vol. stamp (c). Succemon duty not payable. — A life policy does not create the relation of predi cessor and successor between the insur- ers and the assured, or any assignee of the assured, so as to attract succession duty (d). [* 346] '■^Policy as collateral security, mortgagor's interest being de- feasible. — In the second class of mortgages of life policies come tenants for their own or other lives, annuitants, or persons with a defeasible interest in mortgaged property. In sucli cases according to the tenure of the mortgagor, insurance is made either on his own life or on the life upon the duration of which his inter- est depends. And such insurance is a further security to the mort- gagee in case the tenant for life dies without paying the mortgage- money, or the tenant for life loses 'his estate by the death of the cestui que vie. The mortgagee may make such an insurance a condition prece- dent to lending, and there is no objection to such a policy being effected in the name of the mortgagor; but the mortgagee should be careful to ascertain that the mortgagor has an actual and insur- able interest in the life insured at the time the policy was effected. Court cannot compel insurance for the purpose of perfecting security. — But he is under no obligation independently of contract to effect such an insurance, and the High Court of Justice has no more power than had the Court of Chancery when directing money to be raised upon estates of the kind now in question to compel per- sons who have an insurable interest in the lives upon which such estates depend to effect policies on such lives as part of the security for the money directed to be raised (e), nor can a bankrupt be obliged to insure himself or be examined with a view to insur- ance (/). Mortgagee can add premiums to security. — In such mortgages it is usual, if not invariable, for the mortgagor to covenant to pay the premiums. If he fails to do so, the mortgagee can pay them, and add them to his security. If the policy be let drop, or none be ef- fected or stipulated for, the mortgagee clearly has an insurable in- terest in an event which may terminate his security such as to en- able him to insure the life of the tenant for life or cestui que [* 347] vie. If he does so, the ^insured is wholly his own, and the mortgagor has no claim on it (/). (6) Ex parte Andrews^ 2 Rose 410, 1 Madd. 573. (c) Caldwell, v. Dawson, 5 Ex. 1, 14 Jur. 316. (d) 16 & 17 Vict. c. 61. s. 17. («) Grantley v. Garthwaite, 6 Madd. 96 Fisher on Mortgages (4lh cd.) 13. (/) Ex parte Bullock, 16 Q. B. D 698. Re Betts, Times L. R. 598. (/) Gottlieb V. Cratich, 4 De O. M. & G. 440, 17 Jur. 704, 22 L. J. Ch. 912. Williams v. Atkyns, 2 Jo. & Lat. (Ir.) 603. Bashford v. Cann, 33 Beav. 109, 9 L. T. N. S. 43, 11 W. R. 1037. Humphrey v. Arabin, LI. & Goold {temp. Plunkett) 218. Ex parte Lancaster, 4 De G. & Sm. 634 See also Knox v. Turner, 5 Ch. App. 615, 39 L. J. Ch. 760, 23 L. T. N. S. 227, 18 W. R. 878. 8!li DISPOSITION OF LIFE POLICIES. *348 Pmer of sale on breach of covenant to insure. Power to appoint re' ceiva-.—By s. 19 of the Conveyancing Act, 1881, a power of sale ia made an incident of all statutory mortgages in the absence of any contrary, varying, or limiting stipulation. And by s. 20 (iii.) there- of such power of sale will arise on breach of a covenant to keep on foot a life policy or policies as a collateral security to the mortgagee of the life interest (g), and the power to appoint a receiver given by 8. 24, where the power of sale has arisen, enables a mortgagee to appoint such receiver and authorize him in writing, sub-s. 8 (iii.), to employ the moneys received by him, after satisfying certain prior outgoings, in paying the premiums upon life, fire, or other policies properly payable under the mortgage deed. How proceeds of policy applicable. — By s. 22 (2) the proceeds of a life policy, which is a security within tlie mortgage deed, are to be applied as money arising from a sale of mortgaged property (A). Policy is ^' property.'' — A life policy is property within the mean- ing of s. 19 (1), see s. 2 (1), and the power of sale consequently ap- plies to that also, as well as to any realty or chattels within a mort- gage deed. So that the mortgagee can sell and assign (i) a life pol- icy if the mortgagor does not comply with the terms of the mort- gage deed. He can also forclose {k). Mortgage upon trust: mortgagee cannot sell. — In Dyson v. Morris (J) it was held bjr Wigram, V. C., that although on a simple mortgage of a policy of *assurance the mortgagee, in default [* 348] of payment, is entitled to a sale under the decree of a Court of Equity, yet if the policy have been assigned to the mortgagee upon trust to receive the money to become payable, and thereout to pay the expenses and mortgage debt, and pay the residue to the mortgagor, the Court cannot direct a sale of the policy. The mort- gagee must wait until the death of the mortgagor before he can mal e his security available. Covenant to keep up policy. Breach. Damages. — Where a policy of life assurance is mortgaged, and the mortgagor covenants to keep up and restore the policy, and breaks his covenant, the mortgagee has an action for damages, and the measure of damage is : — (i.) The amount of premiums, if any, paid by the mortgagee to keep up the policy and interest thereon. (ii.) The amount necessary to renew the policy, if it has dropped in consequence of the mortgagor's default (m). 1M (g) WolRtenholme & Turner's Coiiv (h) See Boswell v. Coaks, 23 Ch. D Act (3rd ed.) p. 66. 302. (t) But see Drysdale v. Pigott, 8 De G. M. & G. 540, 22 Beav. 238, 25 L. J. Ch. 878, 27 L T. 310, 4 W. R. 773, 2 Jur. N. S. 1078. (fc) Parker v. Marquis of Anglesey, 20 W. R. 162, 25 L. T. N. S. 482. Kings- fwd V. Swinford, 7 W. R 663. (I) 1 Hare 413. (m) 2 Dav. Gonv. pt. 2, 68, and cases there cited. Fisher on Mortgages 461 (4th ed.) 279 i3 ^< >. o ».^. IMAGE EVALUATION TEST TARGET (MT-3) 1.0 I.I feS IM |2.5 140 11-25 i 1.4 M 1.6 HiotDgraphic .Sciences Carporation 23 WIST MAIN ITRIIT WIUTIR.N.Y. USSO (7I*)I72-4S03 4^ ^v k J. \ *349 THE LAWS OP INSURANCE. (iii.) In case of a loss, the amount of the loss (not exceeding the mortgage debt) (n). Where the covenantor commits suicide, the policy being on his own life and in trust, the trustees cannot recover damages from his general estate under such covenant (o). CovenarU to repay premiums. Damages for breach. — ^Where the mort- gage deed contains a covenant by the mortgagor to repay any pre- miums paid by the mortgagee, the latter has his remedy, either on that covenant for the amount so paid by him, or on the covenant to keep ur iho p.>licy, in which latter case the measure of damages wr- -i be just the same where no loss had happened. [ *349] ^(.hi :'.&rU to keep up policy and power to add premiums to de6«.---V,'here the mortgage contains a covenant by the mortgagor t(> '. eep up the policy, but no covenant by him to repay to the mortgagee any premiums spent by him, but a power to pay and add to the mortgage debt, only nominal damages will be given in an action for breach of the covenant (p), as the deed itself pro- vides a remedy for the breach by adding the sums paid to tLo mortgage debt. Mortgage to company, premiums ^^just allowances." — Where a policy has been mortgaged to the insurers, and the mortgagor has agreed but failed to pay the premiums, they^ will, on taking the accounts, be treated as just allowances to the insurers as mort- gagees (g), if they have kept alive the insurance," but not other- wise (r). If allowed, they will be added to and bear interest at the same rate as the principal debt. Mortgagee cannot add premiums unless express contract. Except un- der Conveyancing Act, 1881. — A mortgagee could not insure and add the premiums to the mortgage debt in the absence of an express contract authorizing him to do so (a). This, however, is varied by 44 & 45 Vict. c. 41, s. 19 (ii.), under which a mortgagee may insure against loss by fire, and the premiums will be a charge on the property. Execatw should keep up policy. — An executor who dropped a policy on the life of a debtor to the testator's estate without con- sulting those beneficallv interested has been held liable for the whole sum which would have been received if he had kept up the policy (0- Breach of covenant by going out of Europe. Damages. — Where a deed by which the defendant assigned to the policy on his own life contained a covenant that he would not do anything to in) Mayne on Damages 241 (8rd ed.) o) Dormay v. Borrodaile, 10 Beav. 885, per Lord Tjangdale. p) Brown v. FHce, 4 Jur. N. 8. 882, « W. R. 721, Fisher, p. Cq) Fit9 William v. Price, 4 Jur. N. 8. 889, 81 L. T. 880. Bro 851 (4th ed). room V. Price, 8upra> (r) Ghrav v. Ellison, 1 Giff. 488, Fisher, p. 861 (4th ed.) 3 Jur. N. 8. 511, L. J. Ch. 066, 4 W. R 497, 27 L. T. 166. lt{ Brooke v. Stone, 84 L. J. Ch. 26. 12 L. T. N. 8. 114, 18 W. R. 401. (t) Oamer v. Moore, 8 Drew, 277, 24 L. J. Ch. 687. 280 26 DISPOSITION OF LIFE POLICIES. *350 forfeit tbe policy, and a forfeiture accrued through the *de- [* 350] fendant's going beyond the limits of Europe without the license of the company, the damages were assessed upon the present value of the policy, to be calcubited by an actuary, taking into consideration that the der3ndant covenanted to pay and should pay premiums on the policy (m). What a mortgage of life policy should contain. — Where a policy of life assurance is mortgaged, the mortgage deed should contain : — (i.) A covenant to keep up the policy. rii.) A covenant to restore it if it lapses. (iii.) An authority to the mortgagee to keep up or restore the insurance, in case of default by the mortgagor, and to recover the money so expended, or to add premiums to the mortgage debt. Money advanced for keeping up a mortgaged policy or effecting a new policy in lieu thereof is exempted from the ad valorem stamp duty by the Stamp Act, 1870 (w), s. 107. i: u) Hawkins v. Coulthurat, 5 B. & S. 343, 83 L. J. Q. B. 192. 12 W. R. 825. p) 83 & 84 Vict c 97. 'MM ; ■ ( m it '^1 mm mm 281 "•OOli THE LAWS OF UiSUilAXCK. [*351] ♦CHAPTER XVIIL LIEN. Policies. Lien. Leslie v. French. — Besides rights to or in policies accruing to persons (other than the person taking out the same) by way of assignment or charge, numerous questions arise as to lien on policies. In a very recent case, Leslie v. French (a), the law as to one branch of this subject has been summed up and digested by Fry, L. J., who said as follows:— Lien, may arise by paying premiums. — "A lien may be created upon the moneys secured by a policy by payment of premiums in the following cases: — Contract toith owner. — "1. By contract with the beneficial owner of the policy (*). By virtue of trusteeship. — " 2. By reason of the right of the trus- tees to an indemnity out of the trust property for money expended by them in its preservation. By stihrogation. — "3. By subrogation to the rights of the trustees of some person who may have advanced money at their request for the preservation of the property. By right of incumbrancers to preserve security. — "4. By reason of the right vested in mortgagees or other persons having a charge upon the policy to add to that charge any moneys which have been paid by tnem to preserve the policy." Example of lien by contract. — An instance of the first class of cases, viz., the creation of a lien by contract with the beneficial [* 352] owner *i8 to be found in the case of Aylmn v. Witty (b). where Kindersley, V. C.,held "that where a mortgagor had contracted with the mortgagee to pay the premiums, and there were sureties for the performance of this contract by the mortgagor, and the sureties had oeen called upon and had paid the premiums, the^ were entitled as against the mortgagor to a lien upon the policy-i loneys. It is obvious that in this case the sureties were, by contract with the principal debtor, entitled to the benefit of all the securities which the mortgagee could have enforced, and (a) 28 Ch. D. 552, 52 L. J. Ch. 702, 48 L. T. N. S. 664, 81 W. R. 561, con- firmed by Falcke v. Hcottiah Imperial, 84 Ch. D. 284, 85 W. R. 143. (6) 9 W. R. 720, 80 L. J. Ch. 860. ' Premiums voluntarily paid on life of another cannot, in abfience of any understanding, be recovered of the beneficiary, and peraon no paying hoii no lion for Huch payments upon the proceeds of insurance collected by him as agent of auch beneficiary. Meier v. Meier, 88 Mo. 666. 282 LIEN. *353 amongst others to a charge for the premiums paid. Examples of lien by virtue of trusteeship and by subrogation. — The seconil nncT third classes of cases are well illustrated by Clack v Holland (c), in which it was held that trustees who paid moneys under circumstances which gave them no right to a charge could not create a charge in favour of a third person from whom they borrowed moneys. To the same class may be referred the case of Gill v. Downing (d), in which mortgages, whose title as such was good after, and only after, the death of the tenant for lifo, were held entitled to a lien during the subsistence of the tenancy for life. The mortgagees were put l3y subrogation in the place of the trustees. Again, in the case of Todd V. Morehouse (e) the right of trustees to create a lien by subro- gation of their rights was recognized, and it was determined that a person paying at the request of the trustees did not lose the right to the lien simply because the trustees might possibly have taken some other course to preserve the property." His lordship con- tinued: "Such appear to me to be the classes of cases in which a lien is created by payment of premiums. I am further of opinion that, except under the circumstances to which I have referred, no lien is created by the payment of the premiums by a mere stranger or by a part *owner. Payment of premiums by mere [* 353] stranger gives no Um. — I will first consider the case of pay- ments by a mere stranger. On principle it is difficult, if not im- possible, to see why such paymc^nts, which when made without contract or request are a mere impertinence, should create a lien upon the property. . It is evident that in themselves they would not even create a ground of personal action against the person eased by the payment of moneys by A. for B. gives no ground of action against "B., unless they are paid on his request. Further, the law relating to 'confusion' appears strongly to show that no' Buch right would exist. If I pour my gold into your heap, or put my silver into your melting-pot, or turn my corn into your, granary, I have no right to an account or any relief against you,, but, on the contrary, I have actuallv transferred the property in what was mine to the person with whose property I have mingled it. Again, the authorities seem to me to be very clear upon this point. In the case of Burridge v. Row (/), Knight Bruce, L J., used the following language : — ' Nothing that has been stated to nio has had the effect of persuading me that without contract for that Eurpose the mere fact of making payments of the premiums, owever necessary that might be for the preservation of the property, would give the party making those payments a title to the property. A mere stranger by paying the premiums on a policy cannot acquire a lien on it. He can only acquire a lien by (c) 19 Beav. 262, 2 W. R. 402, 18 Jur. 1007, 24 L. J. Ch. 18. U) 17 B^q. 810, 80 L. T. N. 8 157, 23 W. R. 800. («) I .. R. 19 Eq. 09, 23 W. R. 155, 82 L. T. N. S. 8. (/) Burndgt v. Bow, 1 Y. dc 0. Oh. 0. 188, 191, 688, 18 L. J. Gh. 178, 8 Jur. 299. 288 m. m ' it if 355 THE LAWS OF INSURANCE. some contract with the persons benefici.illy interested in it, or yith tlie trustee, where the trustee himself might have obtained a lien."'. Payment of premiums by part owner per se gives no lien. — The learned Lord Justice Fry further said in the same case (Leslie v. French) — "With regard to payments inade by a part owner, it appears to me that except by contract such payments give no title to the person making them against the other part-owners [* 354] of the *policy. Payments hy mortgagor. — That payments by a mortgagor who in equity is part owner with the mortgagee create no lien as against the mortagee was determined by Romilly, M.R. (flf). By tenant for Vfe. — And generally speaking, it is clear that money laid out by the tenant for life in improvements on the estate creates no lien against the remainWar-man (h). Under voidable assignment. — Again, in Pennell v. M^ ir (i), the Master of the Rolls had to deal with a case in which A., the owner of policies, had as a part of a transaction avoidable for fraud assigned them to B., and nad covenanted to keep them up. B., claiming under the assignment, had paid premiums. A. instituted a suit to set aside the transaction on the ground of fraud, and the Master of the Rolls decided the assignment was a valid security for the moneys actually advanced, and not for the premiums paid by B., which was a voluntary payment In this case it is evident that until the transaction was avoided, A. and B. both had interests in the policies, and yet the payment by one of the persons so interested was held to create no lien as against the other. Right of contribution gives no lien. — ^The law of contribution does not apply, for (1) it arises only between persons joined for a com- mon purpose, or who stand in the position of tenants in common or co-parceners. (2) The right to contribution is a personal right, and the remedy personal, and there is no lien for tne amount of the [* 356] moneys in respect of which the right *ariBe8. This was decided by Lord Eldon in ex parte Young {k), overruling Lord Hardwicke. No lien on policy where premiums paid by tenant for life. — Where the tenant for lite under a settlement of a residuary estate, which com- prised an annuity, and a policy on the life for which the annuity was held, paid premiums on the policy which the trustees had {)ower to retain in specie and keep up, she was decided to have no ien on the policy for such payments, since the policy was kept up ig) NorrU v. Caledonian Ins. Co., 8 Eq. 127, 132, 20 L. T. N. S. 989, 17 W. B. 954. (A) Tenants improving under the Settlf>d Lnnd Act, 1882, must insure for the benefit of the remainderman. See Waugh^a Trusts, 46 L. J . Ch 629, 26 W. R.556. (i) 23 Beav. 172, 6 W. R" 216, 29 L. T. 86. See Dare;/ v. Croft, 9 Ir. Ch. 19 (1858). {k) 2 V. & B. 242. 284 LIEN. *356 for the benefit of the estate (/). It should be observed that the trustees had power to retain enough out of the income to pay the premiums on the policy, and the Court considered that they might be taken to have done so, which would only have diminished the actual income of the tenant for life equally with the payments she herself made. Lien upon a policy may arise in other ways than by payment of premiums under the circumstances before stated. lAeii by deposit of policy. — Although mere deposit of a policy upon an advance of money, without notice to the insurance office of the deposit, will not suffice to constitute an equitable mortgage of the policy, it may create a lien thereupon, if such be the intention of the parties, even though not a word passed at the time the deposit was made (m). Farther advances covered. — ^And an equitable charge may be created by mere deposit, accompanied by notice to the office (n), and as the Couri would infer from that deposit that the money then advanced should be charged as if there was *a [* 356] written agreement, additional advances would also be so charged unless a contrary intention appeared (o). iMfii by persona commissioned to effect a policy. — Insurance brokers have a general lien on the marine policies effected by them, for the general balance due to them from their principals (p\ This rule applies to land policies when effected through such orokers, but depends on the custom of a particular calling. Even with them no lien can bo claimed if the policy has been deposited with them for a special purpose (g). If one broker is employed by an- other broker to effect a policy for that other's principal, the sub- agent has still a lien on the policy for premiums due from the broker who employed him (r). Solicitor's lien. — A solicitor may have a lien on a policy of insur- ance for his costs. Such lien is only a passive remedy, giving; no claim to the fund secured by the policy, but merely a right to em- barrass the person who claims the fund by the non-production of the documents of title. A solicitor is not bound to give the insur- ance office any notice of his lien, since owing to the nature thereof (I) Waugh's Trusts, 46 L. J. Ch. 629, 25 W. R. 556. Browne v. Browne, 8 W. R. 726. See also Money v. Gibhs, 1 Dr. k Wal. (Ir.) 394. (m) Gibson v. Overbury, 7 M & W. 655j 10 L. J. N. S. Ex. 219. Chapman V. Chapman, 18 Beav. 811, distinguished in Maughan v. Ridley. 6 L. T. N. S. 809. liummens v. Hare, 1 Ex D. 169, 84 L. T. N. S. 407, 24 W. R. 886, Green V. Ingham, L. R. 2 G P 525. See Conway v. Britannia, 8 Lr. Can. Jur. 162. (n) Ex parte Kensington, 2 V. & B. 83, per Eldou, G. (1873). Ferris v. MuUins, 2 Sm. & Giff. 878, 18 Jur. 718. (o) Ex parte Langstone, 17 Ves. 227,per Eldon, C. (1810). See Ellis v. Kreutzinger, 27 Missouri 811. Talbot v. Ft-ers, 9 Gh. D. 668, 872, 27 W. R. 148. (p) See Cross on Lien, and cases there cited, 277, 899. Castling v. Aubert, 2 East 825 (1802). (q) Muir V. Fleming, 1 Dowl. & Ry. N. P. 29. lr) Dixon v. Stansfield, 10 G. B. 898. Fisher v. Smith, 4 App. Gas. 1, 48 L. J. Q. B. 411, 89 L. T. N. S. 480, 27 W. R. 118. 285 •(■'ii *357 THE LAWS OF INSURANCE. he would not by such notice convert the insurers into trustees for him, and failure to give such notice is in no way such negligence as to deprive him of his lien (s). He cannot be made to part with the policy till he is paid, except upon terms (Z), such as [* 357] payment mto court of the policy moneys, or preservation *of the lien by the insurers. But it is doubtful whether such a lien could be enforced by suit at all (w). Right to stop in transitu gives no right to insurance. — Lien in vendor and right to stop in transitu do not entitle the vendor to the proceeds of policies effected by the purchaser on the goods sold (x). Vendor*s lien subrogated to insurers. — When an unpaid vendor who is insured recovers from the insurers, the insurers are entitled to his lien as against the purchaser, and if the vendor recover from the purchaser too, he must refund the insurance (y). LiM created by deposit by person out of jurisdiction with one within. — Where a policy granted to a person domiciled outside the jurisdiction is deposited with a person within the jurisdiction to answer a debt by a contract made within the jurisdiction, a lien thereon will be acquired by the depositee, and will not be affected by the bankruptcy in his own domicile of the depositor (z). Creditor having two debts secured by policy surety of one debt cannot claim the policy after payment. Lien drops with policy. — Where a creditor has his debt secured by a policy and guaranteed by a surety, and also has a lien on the policy for another debt, the surety is not entitled to the policy on paying the debt, but his rights are subject to the lien (a). When a policy drops, the lien drops with it (6). Iden by mo'tgagor paying premiums. — If a mortgagor after bank- ruptcy pays premiums to keep up a mortgaged policy, he is not entitled, in the absence of special agreement, to a hen on the policy for the amount so paid (c). («) West of England v Batchelor, 80 W. R. 864, 51 L. J. Ch. 199. 46 L. T. N. S. 132. Felly v. Wathen, 1 De G. M. & G. 16. Richards v. Platel, Craig & Ph. 79. Steadman v. Webb, 8 My. & Cr. 846 See Dearie v. Hall, 3 Rusb. 1, for rules as to priority in regard to choses in action. (t) Richards v. Platel, Cr. k Ph. 79 at 84, per Cottenham, C. Limerick Co. v. GTerrall, 1 Ir Jur. 98. (u) Stedman v. Webb, 4 My. & Cr. 846, per Cottenham, C (1889). («) Berndton v. Strang, i Ch. App. 688 16 W. R. ^026, per Cairns, C.(1868), distinguishing Worrall v. Johnson, 2 Jac- &, W. 214. (y) Castelhin v Preston, 11 Q. B. D. 880, 52, L. J Q. B. 866, 49 L. T. N. S. 29, 81 W. R. 557, per Bowen, L. J. (as) Le Fenvre v. Sulliean, 10 Moore P. C 1. (a) Fairbrother v. Woodhome'29 L. T. 94, 5 W. R. 12, 28 Beav. 18, 26 L. J. Ch. 81. duty's Policy, 20 W. R. 857. (6) Busteed v. Western England, 5 Ir. Ch. 558. Norria v. Caledonian Ins. Cb , 8 Eq. 182. 20 L. T. N. 8. 9 0, 17 W. R. 954. (r) Saunders v. Dunman, 7 Ch. D. 825, 47 L. J. Ch. 888, 88 L. T. N. S. 416, 26 W. R 897. Falcke v. Scottish Imperial, 84 Ch. D. 284. These cases explain Shearman v. British Empire Mutual, L. R. 14 Eq. 4, 41 L J. Ch. 406, 2(1 L. T. N. a 570, 20 W. R 620. 2S0 CONFLICTING CLAIMS, *359 ♦CHAPTER XIX. CONFLICTING CLAIMS. [*3581 i .';';■«'>' When company should interplead and not pay into court, under 10 & 11 Vict. c. 56.— When cor.flicting claims are made on an insurance company in respect of a policy, the proper procedure is to interplead Co), and not to pay into court under the Trustees' Relief Act (6), the insurers not being trustees or stakeholders, but debtors. The practice of paying into court under that Act had been often used (c), until Jessei, M.R., pointed out that unless the policy was a trust policy the Act did not apply. The insurers cannot interplead if they have any adverse claim in respect of the subject-matter (d). In Ireland it has been held that they cannot interplead if one claimant offers a sufficient indemnity, and that if he offers indemnity and they are not satis- fied, they should pay into court under the Trustees' Relief Act («). When an action is commenced by a claimant on a policy, if it is not so framed as to bring the other claimants before the Court, the insurers may interplead, and have the first action stayed (/). An offer should be made to pay interest on the policy moneys (gr), since a policy bears interest under *3 & 4 Wm. [ *359] IV. c. 42, s. 28 (Ji\ for it would seem that submission to pay the moneys to the persons found to be entitled will not remove the obligation to pay interest even if conflicting claims through no fault of the insurers delay such payment (t)i unless any arrangement has been come to that the money should not be invested or brought into court {k). Payment under decree indemnifies company. — If the insurance com- (o) See Prudential v. Thomas, 8 Ch. App. 74, 87 L. J. C. H. 202, 16 W. R 470. (6 Haycock's Policy, 1 Ch. D. 611, 45 L. J. Ch. 247, 24 W. R. 291, disap- proving the United Kingdom Life. 84 Beav. 493, 18 W. R. 645. (c) Chapman v. Barnard, 17 W. R. 859. Webb's Policy, 2 Eq. 456, 15 W. R. 529. Cobb's Policu, 15 W. R. 29. (d) Bignold v. Audland, 11 Sim. 28, 80 (1840), per ShadwelL V. C. (e) Chapman v. Besnard, 17 W. R. 859 (1869), per Lord O'Hagan. (/) Prudential Co. v. Thomas, sxipra. iff) Bignold v. Audland, mpra. A) Bushnan v. Morgan, 6 Sim. 686 (1838). i) French v. Royal Exchange Co , 6 Ir. Ch. 628 (k) Same case oa appeal, 7 Ir. Ch. 623 (1868). 287 uw. m-m t*!i-U *359 THE LAWS OF INSURANCE. any pay under decree moneys payable under a lost policy, such ecree is sufficient indemnity (I). Payment to trustees good. — The insurance can safely pay a trustee of a policy even if under the trust he has no express power to give receipts (m). Can policy be taken in execution f — ^Thc authorities conflict as to whether a policy can be taken in execution under a Ji. fa. In Ire- land it has been held that p policy of life insurance is not such a security for money as can be taken by the sheriff (n). In England the contrary has been held (.0) ; but the Irish case was not cited to the Court, and in the latest case in Ireland (p), the Court fully dis- cussed both authorities, and followed the previous Irish decision. Canadian policies usually provide that a fire insurance ehaJl cease on the property being taken in execution. (?) England v. Tredegar, 1 Eq 344, 85 Beav. 256, 35 L. J. Ch. 386, following Crokatt v. Ford, 25 L. J. Ch. 552, 4 W. R. 426, 2 Jur. N. S. 436, in preference to Bushnan v. Morgan^ supra. im) Fernie v. Maguire, 6 Ir. Eq. 137. Ford v. Eyan, 4 Ir. Ch. 842. n) Alleyne v. Darcey, 5 Ir. Ch. 56 (1855>. 0) Stokoe T. Covjan^ 29 Beav. 687, 80 L. J. Ch. 882, 4 L. T. N. S. 696, W. B. 801. (j>) Sargeant'a v. Trusts, 7 L. B. Ir. 66> COMPANIES. *361 ♦CHAPTER XX. [*360] COMPANIES. What depends on manner of company^s constitution. — The mode in which an insurance company is constituted determines the manner in which it shall sue and be sued, and the character of the liability of its members. But whenever be the means by which such com- pany is constituted, its powers and liabilities, and the method of Its management, are peculiar to itself, and are determined by the par- ticular provisions of the statute, charter, or other instruments under which tne company is created. These provisions are important to shareholders, policy-holders, and all other persons having dealings with the company ; because by the registration now necessary under the Companies Act, 1862, all persons are deemed to have notice of tiiem. Classification. — Insurance offices may be classified irrespectively of the manner or nature of their constitution as follows: — Proprietary. — 1. Proprietary offices which are joint-stock partner- ships, with a subscribed or guaranteed capital, tlie partners where- in absorb the whole profits of the undertaking. Mixed, in which policy-holders share profits. — 2. Offices set up for profit to the shareholders, but which also give the policy-holders certain advantages in the way of a share of the profits, usually culled a bonus or n periodical rebate in the amount of their pre- miums; but they do not admit the policy-holders as partners, nor render them liable has such. These mixed companies arethemostcommon; in fact the late Lord Justice James said : " Every life assurance ^society [* 361] is substantially and materially a mutual life assurance society. The method by which it is intended to provide for the pjiyment of the sums secured by the policies is by invjsting the premiums and accumulating the money so as to form n fund out of which the claims are ultimately to be satisfied. The capital of the shareholders and the sums which the shareholders undtrtakc and make themselves liable to pay, are in truth only a guarantee against the possible contingency of the accumulated insurance fund being found insufficient" (a). Muttial. — 3. Offices established for mutual insurance, where the policy-holders are themselves the proprietors, and where the prin cipal object of the society is ra'her the protection of iti members against loss than the acquisition of j>rofit. ''^ ^^ ~" its It was there- (a) Gramn Cane, 1 Ch. D. 821, 46 L. J. Ch. 321, .W L. T. N. S. 70G. 19 PORTER ON INSURANCE. 289 ■'ill *363 THE LAWS OF INSUBANCH. fore doubted whether such an association required registration under the Joint Slock Companies Act, 1862, but the necessity for registration has since been judicially determined (b). •Friendly societies are also for the purpose of mutual insurance. They require registration under the Friendly Societies Act, 1875. Qympanies under special statute. — 4. Ofl&ces set up by the State to encourage providence and thrift, such as the Government Insur- ance and Annuity Department, and the special modes of insurance provided by Acts of Parliament for departments of the Civil Ser-, vice, and in India (c). Kind of cmnpanies. — Except those risks that are taken by under- writers ut Lloyd's, the whole of the insurance business other than marine is carried on by companies, most, though not all, oi' [* 362] which are incorporated. The continuousness *of corporate existence is favourable to the assured (d), and the business itself being reducible to a routine and system, is especially suitable for a joint-stock partnership (e). The various companies which carry on insurance business have been constituted in different ways, and the form and mode of their constitution is still to some extent important as determining — (1) the rights inter se of the joint stock or shareholders, (2) the powers and mode of contracting given and prescribed to the company, (3) the extent of the shareholders' liability on the contracts made, (4) the manner of suing thereon, (5) the means of enforcing judgment thereon. Formation of companies. — The modes in which existing insurance companies have been formed are — A. By deed of settlement. ^. By royal chapter. c. By special statute. D. By letters patent. E. Under the various Companies Acts. These different modes of creation produced — (1) Mere common-law partnerships. (2) Corporations. (3) Quasi corporations, suing by and being sued in the name of one of their members (/) or a registered public ofl&cer. [* 363] *(4) Joint-stock companies registered and incorporated under the Companies Acts. (b) lie Padstow Total Loss Association, 20 Ch. D. 137, 51 L. J. Ch. 344, 45 L. T. N. S. 774, 30 W. R. 326. (c) Boldero v. H. E. /. C, II H L. C. 405. Undenoood's Case, 4 L R. 4 H. L. 680. Edwards v. Warden, 1 App. Cas. 281, 9 Ch. App. 496. Robertson's Case, 12 Moore P C 4000. Davies v. Trustees of Madras Fund, 12 Mooro P. C. 403 n., 7 Moore Iiid App. 364 n. (d) Sec Adam Smith's Wealth of Nations, p. 840, edn. by M'GuUocb, bk. y. c. 1, a. 1. (e) 2 Stephen Comm. 126 (8th ed.). > (/) 7 Wm. IV. & 1 Vict c. 78, 8. 8. 290 (0 COMPANIES. 364 The first charters granted to insurance companies were given un- der permission by statute. These charters were in the nature of monopolies, whence the need to apply to Parliament for authority to grant tliem. Few charters seem to have been granted to any insurance com- pany by the Crown independently of Pa^-liament {g). Royal Exchange and London Assurance. — By 6 Geo. I. c. 18, Par- liament empowered the King to grant two charters, constituting two marine insurance corporations, viz,, the Roy.il Exchange and the London Assurance (h), and forbidding all other corporations for marine insurance. The purpose of thin Act was to create two Eolvent insurance companies, to suppress all bubble companies and bodies presuming to act as corporate bodie- without legal author- ity, ara to give the two companies a monopoly ot infc>urance as a business for corporate bodies {i). ■ ConstitxUion of companies. — The corporations remain, but their monopoly has been removed ( j), while, on the other hand, they have been permitted to insure over a wider area and against more risks than those contemplated by the original charter. Special statutes. — Special statutes under which certain insurance associations are formed have the effect of charters, and clotlve such companies with all the attributes of corporations. But most of the special Acts appear to do little more than provide for the mode of suing and being sued. Very few insurance societies have actually been *formed [* 364] by a private Act; but many societies already existing, but unincorporate, have found it advantageous to apply for and to ob- tain incorporation, more especially those 'domiciled in Scotland. Letters Patent Act. — By the Letters Patent Act {k) the Crown is empowered, on the application of any company formed by deed of partnership, to grant to such a company letters patent, authorizing it to sue and be sued by an officer named for the purpose, and by such letters patent to limit the liability. of the members of the company. The company, on obtaining this privilege, comes under certain regulations as to the registration of various particulars connected with its constitution and other matters pointed out in the Act. This Act is not compulsory but permissive, granting a privilege to those who choose to apply for it. It is still in force, but applies only to companies formed before September 8, 1844, when the Joint-Stock Companies Act was passed {I). Object of JoirU'Stock Companies Act. — " The leading purpose of the (or) Clifford on PriTate Bill Legislation, vol. 2, p. 693. (h) S. 12. (i) S. 18. As to the history of this Act and 6 Geo. IV. c. 87, see Clifford on Private Bill Legislation, vol. 2, p. 670. (j) 5 Geo. IV. c. 114. (k) 7 Wm. IV. & 1 Vict. c. 72. (l) Taylor on Joint Stock Companies p. 910 (1847). 291 m 36G THE LAWS OF INSURANCE. first Joint-Stock Companies Act (m) was wO enable a permanent company, consisting of changing shareholders, to make binding contracts, and sue and be sued, and do uU the acts necessary fur carrying on a trade. The preamble expresses an intention to invest them with the qualities and incidents of corporations with soniu modifications and subject to someprovisions and regulations" (n). 7 & 8 Vict. c. 110, 8. 2 (1844). — Every assurance company or as- Bociation for the purpose of assurance or insurance upon lives, or ugainst any contingency involving the duration of human life, or against the risk of loss or damage by fire or by storm or [* 365] other casualty, or for granting or purchasing *annuities on lives, and every institution enrolled under any of the Acts of Parliament relating to friendly societies, which institutions shall make assurances on lives, or against any contingency involving the duration of human life to an extent upon one life, or for any one person to an amount exceeding £200, whether such companies, so- cieties, or institutions shall be joint-stock companies or mutual as- surance societies or both, was, if established after the commence- ment of 7 & 8 Vict. c. 110, s. 2, bound to register thereunder. Quasi corporatiom. — Insurance companies registered under 7 , 728, 11 W. 11. 152, 7 L. T. N S !150. Seo also 26 & 20 Vict. c. 89, s. 8. (r) Taylor on Joint-Stock Companies, US. 292 COMPANIES. 367 the Act could, though within the definition of a company therein avoid the need of registering thereunder by obtaining a charter, private Act, or letters p itent. In consequence of ttiis exclusion of assurance companies, many have since iiad to go to Parliament for private Acts. Companies registered under 7 & 8 Vict. c. 110, must re-register. — The Companies Act, 1862, enforces registration on those cdmpanies which have been registered under the older Act 7 & 8 Vict. c. 110 (g), and the effect of such registration is exactly the same as if the company had been formed and voluntarily registered under the later Act (0- What companies must register under Companies Act, 1862. — Every insurance company formed since Nov. 2, 1872, must be registered under the Act of 1862 («). Companies which ought to have, but have not registered as re- quired, are under the disabilities of s. 210, and cannot sue at law or in equity, nor even present a petition for their own winding up (a;). Broadly speaking, by the Companies Act, 1862, h. 22, Legislature intended that all commercial undertakings consisting of more than ten persons, started after the commencement of that Act, should be registered. And mutual insurance associations, providing that the liability should be several only, are commercial undertak- ings for the acquisition of gain *withinthe Act, and must be [* 367] registered under it ; and if not so registered are illegal asso- ciations, and cannot be wound tip s. 199 of the Act {y). Deeds of settlement open to inspection. — All companies registered under the Companies Acts, 1862, deposit with the registrar copies of their deeds of settleoient, and thereby the same are made avail- able for public inspection. An insurance company s > registered is entitled to an injunction to restrain another insurance company from using its registered name calculated to cause the one company to be mistaken for the other (z). All companies not so registered are bound to print their deeds of settlement, and to supply them on demand to every shareholder or policy-holder for not more than 2s. 6d. (a). Effect of registration. — The effect of the compulsory registration («) 26 &' 26 Vict. c. 89. s. 209. (t) Ramsay's Case. 3 Ci. D. 388, 4G L. J. Ch. 411, 85 L. T. L S. 054, 25 W. R. 279. (tt) 25 k 20 Vict. c. 80, b. 4. E.\ parte Harqruve, 10 Cli. App. M't n. Ro Padstow Association, 20 Cb. D. 137. 51 L. J. Ch. 344, 45 L. T. N. S. 774, 30 W. R. 826. (x) Re Waterlio Life Co., 41 lieav. 586, 32 L. J. Ch. 370, 11 W. R 134, 7 L. T. N. 8. 459, 9 Jur. N. S. 291. Etmis v Hooper, 1 Q. IJ D. 45, 33 L. T. N. S. b74, 24 W. It, 226. (y) Cory and Hawkslei/s Case, 3 Ch. I). 522, 32 L. T. N. S. 525, 23 W. R. 030, per Jessel, MR. (z) Accidental Insurance Co. v. Accident, Disease, and General Insurance Corporation, 54 L. J. Ch. 104, 51 L. T. 597. (a) aa&84 Vict. c.Ol. 293 i;r:;i i V.} t I. *i. *368 THE LAWS OP INSURANCE. aforesaid is to put the insurance company so registering within all the rules and regulations of the Act of 1862. What is an insurance company under Companies Act. — For the pur- pose of that Act, any company which is not concerned solely in the business of insurance, but carries on thercM ith any other \>m\- ness or businesess, is deemed an insurance company (6). What is an unregistered company. — Any company registered under other Acts antecedently to the passing of the Act of 1862, id an unregistered company withing e. 199 of that Act. In Bowes v. The Hope Life Insurance Company (c), the Act was apptied to a company formed in 1852, and registered under the Act of 1844 (7 & 8 Vict. c. 110), but which had ceased to carry on business inJS55. [* 368] * Difference between corporate and incmporate companies im- material. — The distinction between corporation and incor- poration seems now immaterial (d). Reason for incorporating by statute, per Lord Wensleydaie. — "It is obvious," (says Lord Wensleydale) " that the law as to ordinary partnership would be inapplicable to a company consisting of a great number of individuals contributing small sums to the com- mon stock, in which case, to allow each one to bind the other by any contract which he thought fit to enter into, even within the scope of the partnership business (/), would soon lead to the utter ruin of the contributories. On the other hand, the Crown would not bo likely to give them a charter which would leave the corpo- rate the only fund to satisfy the creditors. Thg Legislature then devised the plan of incorporating these companies in a manner unknown to the common law, with special powers of management and liabilities, providing at the same time that all the world should have notice who were the persons authorized to bind all the share-, holders by requiring the co-partnership deed (of settlement or articles of association) to be registered (g) and made accessible to all, and besides including some clauses as to the management. All persons have notice of contents of deed and Acts. — All i)ersons must, therefore, take notice of the deed and the provisions of the Compa- nies Acts in force for the time being. If they do not choose to acquaint themselves with the powers of the directors, it is their own fault, and if they give credit to any unauthorized persons, they must be contented to look to them only, and not to the com- pany at large. Directors'' acts ultra vires not binding. — The stipula- tions of the articles of asssociation or the deed of hettlement which restrict and regulate their authority are obligatory upon those who (6) Seo H. 3. (c) 11 H. L. C. S89. (d) Per Cotton, L.J., in Ashworth v. Munn, 15 Ch. D. 803, 875, 28 W. R. 805, 50 L J. Ch. 107. Mi/em v. Perigal, 2 Do O M. & G. 5»!). (/) Ernest v. Mcholla, H. L. C. 401, per Lord WtMisloydule. Balfour r. Ement, 5 C. H. N. 8. 001, 28 I,. J. C. P. 170. {g) Companies Act, 1802. 294 W. COMPANIES. *370 deal with the company, and directors can make make no contract *80 as to bind the whole body of shareholders, [* 369] for whose protection the rules are made, unless they arc Btrictly complied with. The contract binds the person making it, but no one else. Discretionary powers of directors. — Those provisions which give to the directors discretionary powers of marngement do not affect strangers, and the shareholders are bound by the ex- ercise of the discretion which they have consented to give. Effect of directory conditions.— Other stipulations are directory merely, and do not constitute conditions to the exercise of the powers, but they may form the subject of an action by the shareholders against the directors for their breach of covenants expressed or implied in the deed." The doctrine as above laid down by Lord Wensleydale (h) has been steadily followed, but with a tendency to treat matters as di- rectory which Lord Wensleydale would probably have considered essential. Informal affixing of company^s seal by director. — Thus in Prince of Watts Assurance Company v. Harding (i), where a policy was made, sealed, and executed by three directors, as required by the deed of settlement, but without an order for the affixing of the common seal, and was signed by three directors and the manager, as also required, the Court of Queen's Bench held that the simple omission of such a formality did not annul the instrument, the provision being merely directory. What provisions directory. — And generally all formalities which relate merely to the internal arrangements of the insurance company will be deemed directory (/t). And on this principle a policy issued by persons purporting to be directors has been neld oinding when the real directors could have obtained, but did not seek, an injunction against the ostensi- ble directors (/). ^Powers to grant policies. Invest premiums. — The chief [*•- 370] powers taken by an insurance company are — (1) to grant policies, &c., against particular risks, and accept premiums there- for, (2) to invest the premiums so received in iianner most profila- ble to the company and compatible with their obligations as in- surers. The other powers taken are merely incidental thereto, and if not contained in the deed of settlement may often be im- plied therefrom. Company^a business must conform, to its constitution. — Companies must confine themselves to business in accordance with their dc- I h) Ernest v. Nicholls.d H. L. C. 401. i) E. B. & E. 183, 27 L. J. Q. B. 297, 4 Jiir. N. S. 851. 8eo Ro Athenanm, Ex purlo Eagle Co., 4 K. & J. G49, 27 L. J. Ch. 829, \V. It. 779 Gordon v Sea Fire Co., 1 H. & N. 599, Si6 L. J. Ex. 202. Ihaumtein v. Accidental Death Co., 1 B. * S. 782, 81 L. J Q. B. 17, 5 L. T. N. 8. 660, 8 Jur. N. 8. 600. {l] Ro County Life, 5 Ch. App. 288, 39 L. J. Ch. 471, 2 L. T. N. S. 537, 18 W. R 890. 296 Vf ( 371 THE LAWS OF INSURANCE. clared purpose. For example, a proprietary coiuuaiiy being a joint- stock partnership, the whole of the profits of which are divisible amongst the shareholders, cannot grant a policy participating in profits, nor can a mutual company grant a policy creating no lia- bility (m). But by the constitution of the company or statute special means may be provided for shifting a company from one class to another. Mutual insurance company can't issue policies to non-members. — In a mutual insurance association, policies cannot bo issued to non- members at special or any rates, unless (1) the rules of the associa- tion so provide, or (2) some means of agreeing to such issue be provided by the rules, and the method there indicated be properly followed (m). Policies ultra vires do vx)t hind company. — If such policies are issued uUra vires, the policy-holders are not creditors of the association at all, since the contract, not being within the scope of the agent's authority, does not bind the association at all (m). The persons who enter into ultra vires contracts with an insur- ance company have no right to complain. They are held to have had notice of the nature of the body which was contracting with them, and of course notice of the rules and regulations which form the constitution of that company (n). How contracts made. — The contracts of an insurance com- [* 371] pany must be in *the form prescribed by its constitution (o). But cases may arise in which the direction contained in the constitutive instruments of the comi)any are not absolute ; and the courts will not be astute to prevent insurance companies from resisting claims by setting up the absence of a seal, or non-compli- ance with directions within their own special control. Thus it has been held in Canada that, if they receive premiums, they must execute and issue a valid policy (p). Contracts incidental to the management of the company need not be by writing or under seal (q). Contracts of insurance must not only be evidenced in the man- ner required by the constitution of the company ; they must also undertake permitted risks, and must be in the form prescribed, if any (r), ana contain the limitations of liability, if any, required by such constitution. In Canada absence of seal not pleadable. — In Canada all the Courts (m) Cory and Hatckaley's Case, 82 L. T. N. S. 625, 23 W. R. 039, 84 Ch. D. 522. (n) Ibid., and sec Ernest v. Nicholls, H. L. C 407. (o) Montreal Insurance Co. v. M'Gillivray, 13 Moore P. C 89, 8 \V. R. 165. ip) London Life Co. v. Wright, 5 Canada (S. C.) 400 (q) Companies Act, 1807 (80 & 31 Vict. c. 181), s. 87. Beer v. London and Paris Hotel Co., L. R. 20 Kq 412 (r) Sep in Tannion v. Royal, 2 H. & M. 185, 88 L. J. Ch. 400. 10 L. T. N. S. 160, 12 W. R. 549. Railway Passeugere' Assurauco Co-'a Act (27 and 28 Vict, cap. cxxv.), schedule. 296 1 COMPANIES. 372 held that for an insurance company to set up the want of a seal (prescribed aa necessary by its Act of incorporation) is such a fraud as a Court of Equity ought to prevent (s). Policy void, insurers bound to issue fresh one. — Tn an older case, while allowing that a certain policy wys void because not in the statutory form, the Court deemed the insurers bound to issue a valid policy of proper date (t). Manager granting policy uttra vires. — Where an insurance company is incorporated by put)lic ^statute, the power of [ *372] its manager in relation to insurance must be taken to be known by persons insuring with the company. And if he makes policies outside the scope of his authority, they will not bind the company. And if by special Act the company can only bind itself by policy, and not by parol contract of insurance, the power of the manager is restricted by this limitation of the power of the principals (u). Effect of ultra vires acts. Of informal acts. — Speaking generally, an insurance company, like any other company, is bound by any deed under its seal (v), unless fraud (x) or illegality be established iy). Illegality will include uUra vires acts, since corporations and analogous bodies, being creatures of law, cannot lawfully go beyond the four corners of their constitution. But mere informalties in the exercise of their duties by directors will not invalidate a policy (z) for a deed of settlement and a private Act of Parliament con- stituting a company are to be construed as a partnership deed. To violate them may be a breach of trust as between the directors and the shareholders, but acts not done according to them may bind the company (a). Appointment of solicitor by articles of asuociation. — Where the articles of association of an insurance company appointed a solic- itor to the company who was to transact all their legal business, and not to be removable except for misconduct, it was held not to amount to an agreement to employ him, the articles being a con- ' I i (a) London Life v. Wright, supra. Wright v Sun Mutual, 29 U. C. (C. P.) 221. (t) Perry v. Newcastle Fire Co., 8 U. 0. (Q. B.) 863. See Fowler v. Scottish Equitable, 28 L. J. Ch. 225, 32 L. T. 119, 4 Jiir. N. 8. 1169, 7 \V. 11. 5 Prince of Wales Lisurance Co. v. Harding E. B. & E. 183, 222, 27 L. J. Q. B. 297, 4 Jur. N. S. 851 (m) Montreal Insurance Co. v. NGillivray, 13 Moore P.C. 87, 125 8 W. R. 165. («) Agar v. Athenaeum Ins. Co., 3 C B. N. S.. 725, 27 L. J. C. P. 95, 6 W. R. 277. («) Athenamm Ins. Co. v. Pooley, 3 De G. & J. 294, 28 L. J. Ch. 119, 5 Jur. N, 8. 129. (y) Cary and Hawkley's Case, 8 Ch.D. 522, 82 L. T. N. S. 525, 23 W. R. 989. («) Prince of Wales Insurance Co. v. Harding, E. B. & E. 183, 27 L. J. Q B. 297, 4 Jur. N. 8. 851 («) mil V. Darenth Railway Co. 1 H. & N. 305. Bargate v. Shortridge, 8 H L. C. 297. I'rince of Wales Ins. Co. v. Harding, supra, Sperings' Appeal, 10 Am. Rep. 684, 71 Peun. St. 11. 297 W^rm ■' 'hl\ ■i> .1.. *374 THE LAWS OF INSURANCE. tract between the shareholders alone, and, so far as the [ *373] solicitor was concerned, res inter alios acta. Lord *Cairn8 doubted whether the clause was not void as against public policy (6). Solicitor cannot claim for costs as a mere creditor.— The solicitor of an insurance company cannot in respect of this bill of costs claim to be treated as an outside creditor and be paid in full, for he must be taken to have the fullest notice and knowledge of the constitu- tion of the company and the limitation placed thereby on the lia- bility of the shareholders. If he is a shareholder, the case is still stronger (c). Debentures invalid when in fraud of company. — If debentures are is- sued within the powers of an insurance company, but in fraud of the company, they will be invalid in the hands of a bona fide pur- chaser without notice, provided that the shareholders, on becoming aware of the transaction, do not acquiesce or do other ar 3 which would raise an estoppel (d). Person who is party to act vltra vires cannot claim. — Whenever any party dealing with an insurance company knowingly combines with the (lirectors to do any act ultra vires to the prejudice of the share- holders, e. g., to throw upon them unlimited liability when the di- rectors are required so to frame policies as to confine the remedy of the assured to the capital and funds in the hands of the company, the shareholders might very fairly and reasonably deny their lia- ' bility on that policy. But it would bo unjust to allow them to take advantage of an irregularity of the directors (who aro denominated their agents) in cases where they cannot show that they have been in any way prejudiced by the irregularity, and the assured cannot be charged with any fraud or impropriety (e). If risk taken ultra vires assured canH recover. — The risk un- [* 374] dertaken by a contract of insurance *mu8t be within 'iia powers given to or taken by the company. If the aour is not authorized to take the particular class of risk, the a.^^^*. ' cannot recover for a loss by that risk in any case where he hsL" (.>• notice, constructive or express, of the powers of the company. The Royal Exchange Assurance, for instance, could not under its original Act insure on vessels engaged in inland navigation, nor could the company do so until empowered by 41 Geo. III. c. 57. Misapplication of funds restrained by injunction. — The Courts have always been careful to i>revent the applicutiup of the moneys of the shareholders who contribute to joint-stock undertakings to any pur- (6) Elif V. Positive Assurance Co , 1 Ex. D. 88, 45 L J. Ex. 451, 84 L. S. 190, 24 W. R. 838. 8eo Hummers v. Eldston, 18 Jur. 21 (H. L.). Sadler's Case, 10 S. J. 571 (AH). Arb), per Lord Cairns. T N , i) Athena;um v. Poole}/ (1858), 8 Do O. & J 294, 28 L J. Ch. 110, 1 Giff. 102. And see British Mutual Banking Co. v. Charnwood Forest Railway, 18 Q. B. 1). 714. (c) Prince of Wales Ins. Co. v. Harding, E. B & E. 183, 216, 27 li. J. Q. B. 297, 4 Jur N. S. 861. Agar v. Athenaeum Ins Co., 8 C. B. N. S. 726, 72 L J. C. P. 06, W. R. 277. 298 COMPANIES. *375 pose other than that which id legitimately the purpose and object of the association; and if a case arises where the managers of such an undertaking so apply its money, any shareholder may obtain an injunction restraining them therefrom (/). Power to pay loss not within policy. — But if the company has power to grant policies against a certain risk, and a loss occurs by such risk to property on which a policy has been granted excepting such risk, it would seem that the general body of shareholders could waive such exception, and that the directions of an insurance com- pany usually have sufficient discretion given them in management to enable them to waive the exception and pay the loss, if it seems in the company's better interest to do so. To do so is, of course, a species of advertisement. The principle seems to be that what the company as a whole can do, its general agents can likewise do (g). Powers of investment. — Powers of investment provided by the con- stitution of tlie company may be varied or amended, but, until amended, cannot be exceeded. *Powers to lend on the security of shares in the company [* 375] or its own policies, or on mortgage, must be specially in- serted. And the latter, in the case of corporations, requires special provisions, owing to the Mortmain Acts, since by foreclosure they may become owners of and dealers in land (A). 'i'hus the Royal Exchange Assurance coCild not advance money on the security of freehold, copyhold, or leasehold property until empowered to do so by 6 Geo. IV. c. 36, which Act enables it also to foreclose, but not to hold for more than two years, except in case of a difficulty as to the title; and it was allowed to dispense with a licence in mortmain. An investment clause, empowering the directors of an insurance company to buy, sell, and re-sell life, reversionary, and other per- sonal estates and interests is not wide enough to include dealmgs in stock and shares in the face of controlling words, such as gen- erally to carry on the business of life insurance and of an annuity, endowment, loan, and reversionary interest society (i). Nor can an insurance company take shares in a building society. "A corporation proposing to engage in any transaction not within its express or impliea power may be restrained from so doing or so continuing" (k). Shareholder'' 8 liability affected by nature of company. — A sharehold- er's liability is afl'ected by the constitution of the insurance com- (/) Tatmton v. Royal Insurance Co., 1 H. & M. 153, P3 L. J. Ch. 40G, 10 L. T. N. S. 150, 12 W. R. 649, and cases there cited. See per Cranworth, C, in Eastern Countries Railway Co. v. Ilawkes, 5 H L. C. 331, 348. (a) Taunton v. Royal, supra. (*«) Royal Bank of Indices Case, 4 Ch (i) Athenanim v. Puoley, 28 L. J. Ch. Jiir N. 8. 129. {k) Brice Ultra Vires 1T8. App. 253, 260, per Selwyn, L. J. 119, 3 De G. & J. 294, 1 Giff. 103, 6 299 ■■-i :il i . t , *377 THE LAWS OP INSURANCE. pany in which he holds. If it is a corporation other than a com- pany incorporated under the Joint-Stock Acts, he is under no in- dividual liability beyond his liability to the corporate body of which he is a member. If it is a company under the Companies Acts, he is liable only to the amount limited by the memorandum of association. [* 376] *If a company is registered as unlimited, it may be re^ registered as limited under 42 & 43 Vict. c. 76. Where the company is not a corporation, or brought within the Companies Act, it is a common-law partnership, with the ordinary inci(^nts thereof, unless any special provisions in its deed of set- tlement or the policies restrict the liabilities, and in their absence the liability of each shareholder is unlimited. Executors of shareholder as contributories. — Executors of a deceased shareholder, who have transferred their testator's shares before liquidation, cannot, nor the survivor of them, be placed on the list of contributories (I) — (1) In respect of debts due at the time of transfer, as to which the liability of shareholders is limited to their shares in the capital — €. g., debts on policies, annuities, and indemnities given on tailing over the business of other companies. (2) In respect of debts as to which such executors are only in the position of sureties for the transferee of the shares — e. g., gen- eral debts which accrued before the transfer. Where shares in name of trustees. — (3) For the costs of the liquid- ation. Where shares stood in the joint names of two persons without beneficial ownership, and one was dead, his executors were put on the list of contributors, jointly, with the surviving shareholder, but only in respect of the liabilities up to the time of his death (m), on the ground that the testator was liable inter sodos (by signing the deed of settlement) on the joint and several covenant to pay calls therein contained. But the executors of a man who in 1846 applied for and paid the deposit on shares, and was registered in respect thereof, but never signed the deed of settlement, were held not liable to con- tribute in 1872 (n). [*377] *Secretary of company being transferee of shares in trust for company liable as contrihutory, but entitled to indemnity. — I'he secretary of an insurance company, to whom shares in the com- pany were transferred, to be held by him as trustee for the company, was held liable to contribute in respect thereof, but entitled to prove for indemnity. It would have been otherwise if the net constituting him such trustee was to hi:) knowledge vUra vires (o). {I) Clarke's Executors' Case, Reilly (Alb. Arb ) 223, 10 S. J. 752. (m) Kirby's Case^UeiWy (Alb. Arb.) CV. (n) M'Kenzie's Executor's Case, 18 S. J. 223 (Eur. Arb.). (o) Easum's Case, Reilly (Alb. Arb.) 170. 800 COMPANIES. *378 Ececutora of aharefwlders who have issued statutory advertisement j or creditors, liable to contribute. — When executors of a shareholder claim the benefit of a statutory advertisement for creditors (by Lord St. Leonards' Act, 22 & 23 Vict. c. 35, p. 99), they will still be en- tered on the list of contributories, with a note of their claim as to fall distribution of assets. . Vendor of shares in amalgamated company liable if on register. — A mail whose name is on the register of the company which has been amalgamated with another to which he has sold his shares, is stili liable as a contributory if his name remains on the register, even though the purchasing company had undertaken to have it re- moved. He will of course have a remedy over for breach of the undertaking (p). Jo also i f he has accepted shares in the transferee couipiiny instead of his old shares, if nis name is still on the old register in respect of them (g). Executor who has sold testator's shares to some one Twt capable of being put on register, still liable. — If an executor does not sell his testator's phares to some one whoso name can be put on the register instead of the testator, but receives back from the amalgamating or transferee company the amount paid on the Bharea, and delivers up the share certificates to them, he will not be discharged from liability on those shares as a contributory to the amalgamated or transferor company, unless all outstanding creditors thereof have been settled with, or have assented to the transfer (r). . ^Contributory entitled to have bonus deducted from calls. — A [* 378] contributor when called on is entitled to have deducted from the calls made on him the amount of bonusses appropriated out of profits to his shares and credited thereon (s). Liability notwithstanding forfeiture for not paying calls. — Forfeiture of his shares for non-payment of calls will not relieve him from contributing in the winaing up ({). Transfer must be complete or shareholder must contribute. — If a share- holder has taken steps to transfer his shares before winding up, but by no fault of the directors has failed to complete them, he must contribute (u). So if they disapprove the transferee (v). Liquidating ahareholdn whose trustee disclaimed. — If the share- holder has liq^uidated, and his trustee disclaimed, neithei! can bo made a contributory if the company has proved in the liquidation for unpaid calls (a;), or could have so proved, but has failed to do (p) Lee's Case, Reilly, (Alb. Arb.) 8, Buckley 862, 863 (1st ed.). Case, Reilly (Alb. Arb. ) 40, executor of deceased shareholder. {q) PownalVs Case, Reilly (Eur. Arb.) 8 (r) Lancy^s Case, Reilly (Eur. Arb.) 18. («) Cathie's Case, Reilly (Eur. Arb.) 27. [t) Bridger'a and NeiVs Case, 4 Ch. App. 286i (w) Read's Case, Reilly (Eur. Arb) 10. Iv) Lloyd's Case, Reilly (Eur. Arb ) 85. (x) Brown's Case, Reilly (Eur. Arb.) 82. 801 NichoU'i^ it(.« W Mi m\ m ht: ::;!# - t \.\ Mm *380 THE LAWS OP INSURANCE. t 80, since their claim is not incapable of being fairly estimated within the Bankruptcy Acts (y). Promoter^a sharesfullypaid carry liability to contribute. — ^Wherefree shares fully paid up were distributed amongst the promoters of an insurance company, the recipients thereof were held liable to con- tribute in the winding up of the company, as the transaction was a fraud on the other shareholders, but without prejudice to an in- demnity from the directors who gave the shares (2), Director liable to contribute in respect of shares necessary to qualify . — Where the articles of association provide that no one shall be eligible as a director who does not hold a certain, number of shares in his own right, and that any director «rho ceases to hold [* 379] the requisite number *shaH be disqualified, any one who is electedf and acts as a director without qualifying will be liable as a contributory to the number of shares which he ought to have held, since by acting as director he enters into an implied contract to take the qualifying shares (a). And where the brother of a managing director executed the deed of settlement in respect of part of a number of shares improperly given his brother by the directors, he was held liable as a contribu- tory in respect of such part (6). Shareholder fraudulently induced to take shares. — The same princi- le applies as between an insurance company and its shareholders, "here the latter have been fraudulently induced to take shares, they will have no defence to an action for calls thereon unless they have repudiated the contract and done no act to make themselves liable as shareholders after discovering the fraud. But till the shareholder has succeeded in severing hie connection with the com- pany and has ceased to remain on the register, he will be liable with the rest to contribute within the limits prescribed in the con- stitutive instruments to the payment of claims on the company (c). Holding of land. Two questions. — With regard to the holding of land by insurance companies two questions arise— (1) Whether a company can hold land at-all? (2) Whether, having regard to the Statutes of Mortmain, shares in a company holding land can be devised or bequeathed for char- itable purposes? [* 380] *Power to hold land. — With respect to question (1), the power to hold lands may, speaking generally, be said to de- pend upon the powers conferred by the instrument constituting the company (d). Where a company is registered under the Joint* (y) Re Mercantile Mutual Marine, 26 Ch. D. 416. (z) DarneWs Case (1857), 3 Jur. N S. 803. (a) Stephenson's Case, 45 L. J. Ch. 488, per Jessel, M. R. (6) Lord Claud Hamilton's Case (;852), 8 Ch. App. 648, 42 L. J. Ch, 466. HoWs Case, 16 Jur. 869, per Crunworth, V. C. (c) Deposit and General Life v. Ayscough, 3 E. & B. 761, 26 L. J. Q. B. 29, 2 Jur. N. 8. 812. See Partridge v. Albert, 16 S. J. 199, per Lord Cairns (Alb. Arb.). (d) Brice Ultra Vires 78. 392 COMPANIES. 381 Stock Companies Act, 1844 (7 & 8 Vict. c. 110), it may bv g. 25 purchaee and liold lands, and the power of a company registered under the Act of 1862 to hold land is unrestricted (e). Shares in private partnership mthin Mortmain ^c<.— With respect to question (,2), shares in a partnership holding land, such partner- ship not being a joint-stock company, are an interest, in land under the Mortmain Act, and therefore cani; jt be disposed of by will to charitable purposes. Shares in joint-stock companies. — But shares in a joint-stock com- pany holding land, whether the company be corporate or unincor- porate, are not within the Statutes of Mortmain, and will therefore pass by will to a charity (/). Reason for the distinction. — ^The distinction between the case of a joint-stock and a non-joint-stock partnership holding land is this, that in the case of a joint-stock company the intent and meaning of the partners is that the partnership is to be in the nature of a corporation, and intended to have perpetual existence, with fluctu- ating bodies of members from time to time, just like a corporation. No partner is ever supposed to have anvthing to do with the land except as one of the society through the machinery provided by th6 Act or deed of settlement and is never intendea to have any- thing to do with the land in anv shape or form, except to get the profits from the land, or from the business of which the land is a part, and it is always intended that every share should pass in the market as a distinct thing, and in point of beneficial owner- ship wholly unconnected with the land, or *with the real [* 381] assets of the partnership property of the company (g). Policy secured on real estate of company nat within Mortmain Act. — A policy secured on the property of a company which consists partly in real estate is not so connected with land as to make a gift of the policy to a charity invalid under the Mortmain Act, whether the policy-holder is or is not a member of the company (h). All life insurance companies are under Act of 1870. — All life insur- ance associations registered or unregistered under the Companies Acts, corporate or unincorporate, except those registered under the Friend Iv Societies Acts, are within the Life Assurance Companies Act, 1870 (i). Fire insurance companies are under the ordinary law as to joint- stock companies, but the business of life insurance companies is to a certain extent regulated by special statutes. Deposit by life companies of £20000. — By the Life Assurance Companies Act, 1870, s. 3, every company commencing the busi- (e) 25 & 20 Vict. c. 89, as. 18-21. (/) Ashworthv. Munn, 15 Cli. D. 363, 50 L.J. Ch. 107, 28 W.R. 965. V. Pengall, 2 Do G M. & G. 599. 2.j & 2d Vict. c. 89, s. 22. (g) Per James, L. J., Ashworth v. Munn, 15 Ch. D. 363 at 868, 50 L. 107, 28 W.R. 965. (A) J^arch v. Attorney- Generaif 6 Beav.488. li) 83 & 84 Vict c. 61. a. 2. 803 Mysra J. Ch. *383 THE LAWS OF INSURANCTL ness of life assurjnce within the United Kidgdom, before it can get a certificate of incorporation, must pay into the Chancery Division of the High Court the sum of £20,000 (A;). Investment thereof. — This sum is to be invested in one of the se- curities usually accepted by the High Court for the investment of funds placed from time to time under its administration. Tho company making the deposit is to choose the particular security and to receive the income therefrom (I). And the said sum in court is to be returned to the company so soon as the life assurance fund accumulated out of the premium reaches £40,000 (m). [* 382] ♦Once the £20,000 is paid into court, all orders with re- spect to paying the same into or out of court, and the in- vestment or return thereof, and the payment of the dividends and interest thereof, may be made, altered, and revoked by the like authority and in the like manner as orders with respect to any other money to be paid into or out of court, but subject to any rules made or to be made by the Board of Trade ns to the payment and repayment of the deposit, the investment or dealing with the same, the deposit of stocks or securities in lieu of money, and the payment of the interest or dividends from time to time accruing due on any such investment, stocks, or securities in respect of such deposit (n). The Court will only allow investment in securities or- dinarily accepted by the Court. The deposit is part of company's assets. — The deposit may be made by the subscribers of the memorandum of association of the com- pany, or any of themj in the name of the proposed company, and such deposit upon the incorporation of the company shall be deemed to have been made by, and to be part of the assets of, the com- pany (o). Part of life funds. — The said deposits shall, until returned unto the company or the depositors, be deemed to form part of the life assur- ance fund of the company (p). Deposit by foreign companies. — ^Very few life insiirance offices seem to have been founded since 1870. Some foreign companies, how- ever, have commenced business here, and a quest ion may be raised whether their foreign assets are to be estimated in deciding whether or not they must pay into court or not. From tho wording of the statute they would seem bound in any case to make the pay- [* 383] ment as a preliminary to getting their certificate of *incor- poration, and there is no mention of dispensing with the payment. On the other hand, there seems no reason why the life (k) 88 & 34 Vict. c. 61, s. 8, as amended by 34 & 86 Vict c. 58, s. 1. (l) Ttie object of the section is to prevent bubble cumpanies being created simply for sale, and to test bona fides., 202 Hansard 1171. (m) 84 & 85 Vict, c 58, s. 1. (n) 85 k 86 Vict, c 41, s. 1. The Board of Trade Rules were made Aug. 28, 1872. (o) ,85 k re Vict, c 41. s. 1. (p) See In re Cotoniat Mutual Life Society^ 21 Gh. D. 887. 40 L.T. N. S. 282, 80 W. B. 458. 304 COMPANIES. *384 assurance fund accumulated out of the premiums should be within the jurisdiction. And this view would seem to prevail, as the New York Life Assurance Company appears not to have made any pay- ment into court, and instead thereof has invested a large sum with English trustees, to form a security for policies issued to people in the United Kingdom (9). Keeping qfcompany^a accounts. Life assurance fund a separate trust fund for^ sole security of polvcy-holder. — The funds of all insurance companies derived from life assurance annuitv contracts must be earned to a separate account and fund, callea the life assurance fund of the company ; and that fund is made by the Act as abso- lutelv the security of the life policy and annuity holders as though it belonged to a company carrying on only life business, Jind is not liable for any contracts of the .company to which it would not have been liable had the company connned itself to life assurance (r). Security where contra^is made before August 1870. — ^This enactmeiit does not diminish the liability of the life assurance fund for any contract of the company made before August 9, 1870. The holders of such contracts can still have recourse to the fund, which, so for as they are concerned, is not a trust fund for the policy-holders (s). Or where the company is mutual. — This provision as to a life assur- ance fund does not apply to companies che whole of whose profits are divided among the policy-holders, and whose policies bear on the £ice of them a distinct declaration of the liability of the policy- holders (0. Such a company is a pure mutual company, where all must contribute, and in the profits of which all *share. [* 384] There was at the passing of the Act only one such not com- ing within the Friendly Societies Acts (w). Company must lodge balance-sheet with Board of Trade. — Every company issuing or li tble on policies of assurance, or granting an- nuities on human life, within the United Kingdom, not being reg- istered under the Friendly Societies Acts, must — Annually at the end of its financial year prepare and deposit with the Board of Trade a statement ot its revenue account and balance-sheet for that year, which, if the company carry on life business exclusively, must be in the forms contained in the first and second schedules to the Act, and, if concurrently with other business, must be in the forms contained in the third and fourth schedules thereto. Any of these forms may be altered by the Board of Trade on the application or with the consent of a company for the purpose of adapting them to the circumstances of such com- pany, or of better carrying into eflTect the object of the Act, which c. 61, 8. 4, as amended by 35 & 36 Vict. c. 41, s- 2. c. 61, sched. 4, note. (q) 83 & 34 Vict (r) 88 &, 84 Vict C«) 86 & 86 Vict, c 41, s. 2, and see 202 Hansard 1178. (0 83 & 84 Vict, c 61, s. 4. (ti) See 202 Hansard 1173. 20 PORTER ON INSURANCE. WMf i'l, ;■ ■$y! 305 'iiU *386 THE LAWS OF INSURANCE. has no preamble, but is to amend the law relating to life assurance companies. Adurial investigation of companies affairs. — Companies established before the Act must every ten years, and every company established after the Act must every five years, or at such shorter intervals as may be prescribed by the instrument constituting the company, or by its regulations or b^'e-laws, cause an investigation to be made into its financial condition by an actuary, and shall cause an ab> stract of the report of such actuary to be made in the form pre- scribed in the fifth schedule to the Act. Besides the abstract of the acturial report, and within nine months after the accounts of a company are made up for the pur- poses of the actuary's investigation, each company is bound [* 385] to prepare a statement *of its life assurance and annuity business up to the date of such investigation. Statement of business. — Those companies which have an annual investigation of their financial condition need not, however, send in an annual state- ment but are left free to send it in when and how they like, at in- tervals not exceeding three years. The form in which the statement is to be made is prescribed by schedule 6 to the Act, but may be varied by the Board of Trade under the same circumstances and with the same objects as the re- quirements of other schedules may be altered. Abstracts and statements to be signed and printed. — All these state- ments and abstracts must be signed by the chairman and to direc- tors and the principal officer managing the life-insurance business, and by the managing director, if any, and must be printed. (1) The originals, with three printed copies, must be deposited with the Board of Trade within nine mbntns of the date prescribed for preparation of the original, and the Board of Trade must lay annually before Parliament the statements and abstracts of reports deposited with (v) them under the Act during the preceding year, whether or not they consider the statement, &c., to be in accordance with the Act («). (2) Printed copies must be forwarded by post or otherwise on application to every shareholder and policy-holder in the com- pany. Act of 1870 extends to a single insurer. — The Liie Assurance Com- panies Acts include life insurance by single underwriters, since by the interpretation clause (y) company is explained as applying to any person or persons or oody corporate or not incorporate, [* 386] ana this wide definition therefore makes the ^provisions of ;the )usi- !_ vfuwj auu Kuta niuo ucuijii/iuii iiuci^iv/iu uia&ro biiu 'piuvioiwuo the Act apply to any one or more persons contemplating! business of life insurance, and practically excludes from such bi («) 83 & VH Vict. c. 01, H. 24. («) 85 & no Vict. c. 41, 8. 8. (y) 83 & 84 Vint. c. 61, s. 2. 306 COMPANIES. 386 n%ss the very few cases in which life assurance would or could be Hiaue by underwriters (z). Cmtribvtwn to Fire Brigade. — The duty to contribute to the Fire Brigade rests as much on a single underwriter as on the great in- surance companies, if he too takes fire risks (a). (2) Whittingham v, Thomborough, 2 Vern. 206, Prec. Ch.20. shaw, 1 Wm. Bl. 812, 2 Park Ins. (8th ed.) 934. (a) 28 t 29 Vict. c. 90, B. 27. Rosa V. Brad- 807 (: I. *388 THE LAWS OF INSUBANCE. [*387] ♦CHAPTER XXI. RIGHTS or POLICY-HOLDERil. S3 & S4. Vict. c. 71, 3^ ik 35 Vict. c. 58, 35 & 36 Vict. c. 4i.— Un- der the Life Assurance Companies Acts (1870, 1871, 1872) the policy-holders of any company, however constituted, are en- titled— <^1) To copies of the statements of business, assets and actuarial reports required by these Acts to be made (a). (2) To copies ot the shareholders' address-book, on paying a sum not exceeding 6d. per 100 words (6). (3) To printed copies of the deed of statement, on payment of a sum not exceeding 28. 6d. (c). Further, one-tenth of the policy-holders in any insurance com- pany can stop all amalgamation or transfer or life insurance business by or to that company (d). These n^hts of knowing the constitution and controlling the dealings ot an insurance company given by statute are quite independent of those accorded to them by the constitution of the company itself. Policy-holder is creditor. — A policy-holder in a proprietary com- pany is simply a contingent creditor. He is under no liability whatever to other policy-holders or to the company itself, since he need not even continue his premiums. Ho cannot interfere [* 388] in the management of the company, *except, perhap?, to restrain a violation of the deed of settlement (d). Whether participating policy-holder liable aa partner. — In compa- nies where policy-holders are allowed to snare in the profits, participating policy-holders are not usually liable as contributories (e), since the obligation to contribute depends on other considera- tions than sharing profits, which will alone not make such persons partners (/). Policv-holdera and ahareholdera. — Even where a policy-holder might be treated by an outside creditor of an insurance company (a) 88 & 84 Vict. c. 71, h. 11. lb) Ibid., B. 12. (c) Ibid., 8. 18. id) Ibid., B. 14. Id) Aldebert v. Lec^f, 1 H. & M. 681, 10 L. T. N. S. 185, 13 W R. 462. (e) Re English and Irish Church and Universitjj Assurance Co., 1 H. A M. 86, 8 L.T.N. 8 724, 11 W. U. 081. (/) Cox Y. Hickman, 8 H. I.. C. 286. Bishop v. Scott, 7 L. T. N. 8. 670. Re English and Irish Church, Ac, Socitty, ubi supra. (AT RIGHTS OP POLICY-HOLDERS. *389 as a partner in the concern, the shareholders cannot insist on his contributing unless there is something within the four corners of the deed of settlement to make him so liable. Even where a policy-holder participates in profits, has power to vote at meetings, and on winding-up is entitled to the surplus assets after the shareholders have been paid in full, these are the only advantages to induce him to take out a policy, and he does not by so doing, nor by any ordinary deed of settlement, make any undertaking to contribute with the shareholders towards meeting the liabilities of the company (g). Non-liabUity of participating policy-holdera where claima ore to he charged on funds of company. — Where in a mutual insurance society some of the policy-holders participate and others do not participate in the profits, but a condition is indorsed on all policies issued by the societ^r, that all claims are to be limited to the stock and funds of the society, in virtue of such condition the participat- ing policy-holders, though they aie in reality the only members of the mutual society, cannot be made to contribute (A) *Policy-holdersinmutualcompany. — Under a mutual society [* 389] of the older t^pe, all policy-holders were held bound to con- tribute. Marine mutual companies are of this kind (i). Certain societies provide for gradually creating an insurance fund, and pay- ing off the original members in favour of policy-holders not liable. Omatruction of a mutual company. — It is assumed that the participa- ting policy-holders will make payments from time to time in the shape of premiums upon their policies, but the basis of the whole arrangement of this company, and of any mutual insurance com- pany, is this, that there will be, if not a legal compulsion, yet a moral compulsion on persons who have commenced insurances to keep them up and to pay the premiums which must be paid for that purpose. That is the basis of the contract and foundation of the arrangement in a mutual company. Those who join them know that they haye that security, and that only for the swelling and in- crease of the assets of the company (^k). Policy-holdera aa contributora. — Where a life insurance company was formed upon the mutual principle, and the articles of associa- tion provided that the company should consist of two classes of memoers — namely, shareholders so long as there should be any shareholders, and insurance members, defined to mean policy- holders with participation in profits, and registered as memoers of the company ; and when the shareholders should be paid off under .'.p' If;: m ill (g) Strachan'a Cate, 10 S. J. 572 (Alb. Arb.). IlummeVs Case, IG S. J. 65 (Alb. Arb). (A) HummeVa Case, 10 S. J. 06 (Alb. Arb.). (i) Reed v. Cole, 8 Burr. 1618. (k) IlummeVs Case, 10 S. J. 66, 68, (Alb. Arb.). Re Albion Life Ins. Co., 16 Ch. D. 88, 4» L. J. Ch. 698, 43 L. T. N 8. 633, 2» W R. 109. Re Oreat Britain Mutual Life, 16 Ch. D. 247, 4^ L. T. N. S 084, 29 W. R 202. Bath's Case, 11 Ch. D. 880, 48 L. J. Ch. 411, 40 T. L. N. S. 453, 27 W R. 068. 309 391 THE LAWS OF INSURANCE. the scheme provided for, then the company was to consist of assur- ance members only, it was held that the policy-holders were con- tributories, but that they could not be called upon to contribute until the shareholders had been exhausted (I). How companies' funds to be applied. Fund for payment «r [* 390] losses. — "The capital stock of an incorporated insurance *com- fany is not the primary or natural fund for the payment of ich may happen by the destruction of the property insured. The charter of the company contemplates the interest on the capi- tal fund and the premiums received for insurance as the ordinary fund out of which losses are to be paid. What are surplus profits. — And the surplus of that fund, after paying such losses, is surplus profits withm the meaning of the charter, which surplus profits alone are to be distributed from time to time among the stockholders (*). The unearthed premiums received bv the company, upon which the risks are still running, and which may therefore all be wanted to pay losses which may happen upon those risks, and not surplus profits, which the directors are authorized by the charter to distribute among the stockholders. Capital stock available for extraor- dinary losses. The capital stock of the company if a special fund provided by the charter to secure the assured against great and ex- traordinary losses which the primary fund may be found insuffi- cient to meet. Drafts on special funds to be v\ade good. — And if it be- comes necessary at any time to break in upon this special fund to pay such extraordinary losses, it must be made good from the fu- ture profits of the company before any further dividends of those profits can be declared. Whole of premiums, ). (t) Seo per Jessel, M. R., Re Accidental Death Co., 7 Ch. D. 608, 47 L. J. Ch. 396, 26 W. R. 478. (a;) Bowes v. Hope Sodety, 11 H L. C. 889, 397, per Lord Westbury. (hah- Ian' a Case, 17 S. J. 127. iy) Emm v. Coventry, b De G. M. & G. 911, 2 Jur N. S. 557, 25 L. J. Cli. 489, 4 W. R. 466, affd. 8 De G. M. & G. 885, 3 Jur. N 8. 1225, 26 L. J Ch. 4(X), 6 W. R. 436. ^2!) Hambro v. Hull and London FHre Co., 8 H. & N. 789, 28 L. J. Ex. 62. (a) Ibid. Penley v. Beacon Fire Co., 7 Grant (U. C.) 130. Wright v. Lon- don, .fcc, Co., 5 Canada (8. C) 46'}. (6) In Re Athenmim Life Co., Ex parte Eagle Co., 4 K. & J. 549, 25 L. J. Ch. 829, 5 Jur. N. S. 1140, 6 W. R. 779. 312 Iv^ I RIGHTS OF POLICY-HOLDERS. *395 394] Where no debt can be established and the contract *is [* wholly vMra vires, being on risks not allowed by the articles, policy-holders cannot claim as creditors, but only for premiums paid (c). Policy-holder cannot control property or funds. — The grantees of policies insurance bargain to receive a sum of money to be paid in a future event. Whatever may be the property possessed by the grantors, the grantees have not by this contract any immediate control over it, or lien upon it. The grantors or their trustees coi - tinue to have the entire control or management over the whole fund. The real estate or chattels real may be sold and converted into pure personalty, and pure personalty may be converted into chattels real, and this state of things may continue not only during the contingency upon which payment depends, but after the con- tingency has determined, for the grantee acquires no specific lien after the payment has become due. Even in default of payment when due, the grantee cannot by reason of such default only resort immediately and at once to chattels real, but must resort to legal process, which will not affect the land possessed by the insurers at the time of the contract, although it may in its final result affect such land as the office may have at the time when the process is executed. Ordinarily the grantee has nothing but a right of action from the date of the contract until payment (d). Policy-holder not secured creditor. — From this it results, on the one hand, that a policy is not within the Mortmain Acts, and on tho other that a policy-holder under such a policy would not be a se- cured creditor in case of liquidation. Provision in policy creating a charge from, proof of death. — But where a life policy was granted stipulating that the funds remaining at the time of any claim or demand unapplied an undisposed of, and inapplicable to prior ^demands, should bo liable to [* 395] answer the demand, and negativing individual liability on the part of the directors, it was held that this constituted a charge on tne funds, and that it took priority from the date of proof of death although not payable until three months later (e). Company not a trustee of policy money on death of assured who has assigned. — An insurance company which has granted an ordinary policy of life insurance is a debtor, and an assignee of such policy becomes, on the death of the life insured, a creditor of the company. The company is not in such case a trustee or a stake- holder, and should not pay the policy money into court under tho Trustee Relief Act (/). What amounts to covenant to pay out of particular funds. — No pre- (c) Re Phoenix Life, Burgess and Stock^s Case, 3 J. & H. 441, 31 L. J. Ch 749, 10 W. R. 810. (a) March v. Attorney General, 5 Beav. 433, per Lord Langdule. (c) Re Athenasum Life, «{rf., Co., Ex parte l*rince of Wales Co., Johnson 688, 28 L J. Ch. 8 '6, 32 L. T. 195, 7 W. R. 137, 800 (/) Matthew v. Northern, &c., Co , 9 Ch. D. 80, 38 L. T. N. S. 408, 46 L. J. Ch. 602. D&sborough v. Harris, G De G. M. & O. 489. olo i! E jl ,,-(. .,: J,i; 396 THE LAWS OP INSURANCE. cise or technical words are necessary to create a covenant ; and whether it be so or not depends on the intention of the parties, and therefore where directors had stipulated that neither of them aa directors should be liable to any demand for loss, except under the articles of the society, it was held that the instrument might be considered as a covenant to entitle the insured, in case of a loss by fire, to receive a remuneration out of the funds of the society to the extent of such funds (g). " The capital stock," " the capital stock and funds," " the stock and funds," " the capital stock and effects," with or without refer- ence to prior claims, or limitation of the charge to the amount of such capital stock funds or eflfects undisposed of and inapplicable to prior claims under the constitution of tne company, are variously made liable in the policies of unlimited companies (A). [* 396] No charge is created on the funds of a company by *the terms of a policy which makes the stock and funds of the company liable alone. Policy making funds solely liable does not create charge, and holders rank with general creditors. — Consequently the holders of such policies have no claims on the assets of the company in preference to general creditors (i). Ejfect of provision that funds shall make good specified sums. — A pro- vision in a policy, that the capital stocks and funds of the said company shall be subject and liable to make good the aforesaid sum of £ to the assured, his heirs, executors, or assignees, means that the money shall be paid — i. e., that the stock shall be applied in the payment, or that the company shall pay it out of the stock — it does not amount to an equitable assignment of the stock, but is merely a covenant to pay out of stock so far as it will go ik). Where policy restricts claims to "property of company, shareholder cant he sued. — Where a policy restricts claims under it to the property of the company remaining at the time of any claim, including unpaid capital and speciallv excepts all individual liability, the assured cannot proceed at law against an individual shareholder ; and it will not help the policy-holder that the deed of settlement con- tains (if it does) terms more favourable to the assured than the policy does, nor that the capital stock is fraudulently overstated in the policy (0- So also wiiere iho liability is imposed upon the funds remaining unapplied and indisposed of and inapplicable to prior claims (m). Idability limited by policy can't be extended by action for breach of contract. — Where the liability of shareholders in an insurance com- (wi) Ro Alhenceum Life, Ex parte Prince of Wales Life, supra, note (e). (a) Andrews v. Ellison, (i Moore (C. P.) 199. (A) Re State Fire, U L. T. N. 8. 108. (t) Re State Fire, U L. T. N. S. 108 ; and see Ro International Life, M" Tver's Claim, 5 Ch. App. 4M, 21 L. T. N. S. 88, i8 W. R. 794. {k) Matthew v. Northern, Ch. D 80, 84, 38 L. T. N. S. 408, 4.1 L.J. Ch. 562. {I) Durham's Case, 4 K. & J. 517 (1808.) 314 RIGHTS OF POLICY-HOLDERS. 398 m pany is by provisoes in the policy limited (in case of insolvency) to the amount then unpaid in such shares, the policy-holders cannot, by bringing action for breach of contract, in eflfect make the liability *unlimited (n). To do so would enable persons [* 397] who have contracted to seek their claims from a certain limited fund to enforce them agninst another and unlimited fund. Policy-holderfl under such policies have no personal remedy (o). Where liability limited by poliey, covenanted to indemnify is also lim- ited. — Where such is the case a covenant to indemnify is not un- limited in its scope, and does no more than bind and affect the paid and unpaid capital of the indemnifying insurer (p). Nor can the policy-holders get the costs of winding up out of contributories who have compounded under s. 160 of the Act of 1862 and the Rules of 1862, sched. iii., form 56 (g). Funds appropriated to secure policy-holders mud be reserved for them. Costs of getting in funds appropriated to policy-holders to be borne by shareholders. — If the liability of shareholders be limited by the policies (or in other manner whereof the policy-holders have no- tice) to the subscribed capital of the company, the funds thereby indicated must be kept entirely for the policy-holder (r), and the costs of getting in the unpaid capital, which is hypothecated in this manner to the claims of the policy-holders, will fall not on them, but on the shareholders, since such costs are really costs of settling the matter between the joint-stock partners themselves (s). ♦But the policy-holders cannot insist on further calls after [* 398] exhaustion of assets to recoup them for assets spent in pay- ing general creditors, neither will they be postponed to general creditors, but will rank with them (0- The deed of settlement of the Albion Insurance Company pro- vided that before any dividend was declared a reserve of not less than two per cent, of the annual interest of the sums advanced should be appropriated until the whole capital (of £1,0(X),000) should be raised as a permanent fund to provide against losses. \l (n) Lethbridge v. Adams, 13 Eq. 547, 26 L. T. N. S. 147, 20 W. R. 352. (o) Re Professional Life, 3 Ch. Anp. 167, 17 L. T. N. S. 631, 36 L, J. Ch. 442, 16 W. R. 295. Re Athenamm Life, 3 De G. & J. 660. Durham's Case, 4 K. & J. 517. BelVs Case, l) Ea. 706-712, 39 L. J. Ch. 639, 18 W. R. 784. Evans v. Coventry, 8 De G. M. & G. 8H5, 26 L J. Ch. 400, 5 W. R. 436. King V. Accumulative Life Co., 3 C. B. N. S. 161. 163, 27 L. J. C P. 57, 30 L. T. 119, 6 W. R. 12. Aldebert v. Leaf, I H. & M. 681, 10 L. T. N. S. 185. 12 W. R. 462. Hallett V. Dowdall, '8 Q. B. 2, 16 Jur. 462. (p) Frere's Case, 16 S. J. 603, per Lord Cairns, disapproving Fleming's Case, but Fleming's Case is of judicial authority. (q) Re Accidental Death Co., 7 Ch. D. 568, 47 L. J. Ch. 397, 25 W. R 473. (r) Re Professional Life Co., ubi supra. Hallett v Dowdall, ubi supra. Is) Re Aqricidturist Cattle Insurance Co., 10 Ch. App. 1, 44 L. J. Ch. 108, 31 L. T. N. S." 710, 21 W. R. 219. Re Arthur Average Co , No 2, 24 W. R. 514. Re Professional Life Co., 3 Ch. Apn. 167, 36 L. J. Ch. 442, 17 L. T. N. S. 631, 16 W. R. 295, 1867. Re London Marine Ins Co., 8 Eq. 176, 17 W. R. 784. (0 Re English and Irish Church Co., 20 L. T. N. S. 943, 8 L. T. N. 8. 724, 1 H. & M. 79, 11 W. R. 681. Re iitate Fire Co., 11 W. R. 746, 1011, 24 L. J. Ch. 486, 1 De G. J. & » 034, 8 L. T. N. S. 146. 315 ir il • ''I. « 399 THE LAWS OF INSURANCE. The funds were accumulated, though no reserve fund 'was actually set apart, and bonuses were triennially divided. Reserve fund m capital. — The Albion amalgamated with the Eagle, and each share- holder was given the option of receiving £50 a share, or having an allotment of shares and receiving a share of the surplus assets. Bonus therefrom is income, — It was held, in a question on a settle- ment comprising some Albion shares, that the share of the surplus assets was capital, since the surplus assets were a reserve fund, and not income, though the triennial bonus, coming out of the same fund, seems to have been treated as income (u). Bonus chargeable toith income tax. — And where a life insurance company issued " participating policies," according to the terms of which the gross profits of such policies were divided quinquen- nially as foUows — viz., two-thirds to the holders of such policies then in force, and the remaining third to the company, which bore the whole expenses of the business — ^the portion remaining after payment of expenses constituting the only profit available for diAdsion amongst the shareholders, the House of Lords decided (Lord Bramwell dissenting) that the two-thirds returned [* 399] *to the policy-holders were " annual profits or gains," and assessable to income tax (x). Payment must be made before winding up, to avoid fraudulent prefer- ence. — Where a claim on a policy was sent in with proofs and ad- mitted, and a day fixed for payment, but before that day a petition was presented for the winding-up of the company, upon which after several adjournments a winding-up order was seven months subse- quently made, Lord Romilly held that payment by the company of the claim must be deemed a fraudulent preference within s. 153 of the Companies Act, 1862, and that the money must be refund- ed (3/). In other words, it is not enough that the right to the policy- moneys should have accrued. Payment must be made before any winding-up proceedings (z). Annuitants are creditors from day annuity begins to run. — Holders of annuities granted by insurance companies are creditors of the company from the day when the annuity begins to run. The lia- bility of the company may be limited by ite constitution or the terms of the annuity deed : and whether the annuity is a secured debt or not depends on like considerations. They can of course prove in the liquidation of the company for the value of the an- nuity (a) which is to be computed. Fund set apart for immediate claims. — Where a trust fund is set apart by a company to meet immediate claims on policies, &g , it S^ (u) Nicholson v. Nicholson, 9 W. R. 677. («) LoHt V. London Assurance Corporation, 10 App. Cas. 438, 55 L. J. Q. B. 92, 53 L. T. 634, 34 W. R. 238. (y) Browne's Case, 16 S. J. 781 (1874). (z) Martin's Claim, 14 Eq 148. (a) Hunt's Case, 1 H. & M 79, 7 L. T. JI. S. 069, 11 W. R. 225. 316 RIGHTS OP POLICY-HOLDERS. *401 covers only those claims and demands which have so matured that immediate payment can be demanded and an action at law brought, or other immediate steps taken to obtain payment. An annuity which had matured, but en which no installments were due within the time limited for immediate payments, will not rank on such fund (fe). *Loan by office on security of land and policy, value of policy [* 400] eanH be set off against debt. — A man who borrowed irom au insurance company on the security of a policy granted by them and of a charge on land, on the liquidation ot the company was held liable to the assignees of the debt and securities for the amount of the loan, and unable to set off the value of the policy, or to claim indemnity in respect of subsequent depreciation of the policy, the assignees being ready to return all the securities given for the debt on receiving payment thereof (c). Value of policy canH be set off against loan on it in liquidaticm of com- pany. — Nor if a man borrows on his policy can he set off the value thereof against the loan in the liquidation of the insurance com- pany (d)- B'lt under the present law a policy has an ascertainable value in liquidation (e). Value of policy can't be set off on bankruptcy of policyholder against ban on security of policy. — The sum at which a policy has been val- ued in the winding-up of an insolvent insurance company is not a debt due within the mutual credit clause of the Bankruptcy Act, 1869, 8. 39 (unaltered in the Act of 1883, vide a. 38) (/), and there- fore cannot be set off under the bankruptcy of a policy-holder against a loan made to him on the policy. Limited liability to policy-holders does not affect general creditors. — A limit placed on the liability to policy-holders by the deed of settle- ment, does not in any way afiect the rights of general creditors, who will have in such a case the unlimited liability of the share- holders, and not be restricted to the capital of the company, if the company be not a limited liability (^). Rights of annuitants and non-participating policy-holders depend on their contracts. — The rights of^ annuitants and non-participating policy-holders depend on the presence or absence of limitation or qualification in the annuity contracts or policies accepted by them (h). * Questions arising on winding up. — In the winding up of [* 401] an insurance company, the important questions for consid- eration are— (6) Wi/atfs Case, Reilly (Alb. Arb.) 42. (c) BoMHieV"? Caw, Reilly (Alb. Arb) 44. (d) Parity a Case, Reilly (Alb. Arb.) 48. (e) Life Assurance Companies Act, 1870. (/) Ex parte Price, Re Lankester, 23 TV. R. 844, 88 L T. N. S. 187. ig) Re Accidental Death Co , 7 Ch. D. f>68, 47 L. J. Ch. 896, 25 W. R. 478. (A) Re Kent Xutual Company, Hummed a Caae, 16 S. J. 65, 68 (Alb. Arb.)* 817 r 1 Ifi i; «. '<:\ i > iilli'lfc *401 THE LAWS OF INSURANCE. (1) The number of matured claims or contracts on which a present liability exists. (2) The number of immature claims whereon the liability ig still contingent. (3) Whether all claims are payable out of the Rame funds. (4) If not, whether any claims are secured or come in only with claims df general creditors. How claims valued. — Under the present law in the winding up of an insurance company — (1) matured claims or policies are valued at the amount, including accrued bonus, which was payable on them at maturity ; (2) immature claims are valued in accordance with the first schedule to the Life Assurance Companies Act, 1870; (3) annuity contracts are valued under the second schedule of the same Act. Reduction of contracts in lieu of winding up. — By the Life Assur- ance Companies Act, 1870 (i), the Court, in the case of a company which has been proved to be insolvent, may, if it thinks fit, reduce the amount of the contracts of the company upon such terms and subject to such conditions as the Court thinks just, in place of mak- ing a winding up order (k). (t) 33 & 34 Vict. c. 61, s. 22. (k) Be Britoto Medical, Jkc-, Co., 54 L. T. 14. 318 tiOVATION AND AMALGAMATION. 403 ♦CHAPTER XXII. NOVATION AND AMALGAMATION. [*402] Definition.— By novation is meant a tripartite arrangement whereby a debtor or person liable presently or in future, or on a contingency or concurrence of contingencies, is released from such debt or liability in consideration of his providing another person who will undertake to satisfy such debt or liability (a). Difference between novation and mretyahip. — The creditor, by consenting to such arrangement, consents to look only to the new debtor ; and it is the criterion between novation and suretyship that in the former the creditor has no right of recourse to his original debtor (6), hav- ing accepted the new liability in complete extinction and satisfac- tion of the old, whereas in suretyship the liability of the original or principal debtor continues. Novation to be proved. — The law will not presune novation (c). It is a question of fact, and must be proved accoi din»ly bv those who aver it to have taken place (d). In the absence of such proof the new liability, if any, will be taken to be by way of guarantee (e), and not as a substitute for the old. Proof required. — Although very slight evidence is sufficient in the course of dealing between a customer and a firm, subject to change by the retirement of old partners and the introduction of new, to show that the customer continuing his dealings ac- cepts the new firm as his debtors *in lieu of the older firm [* 403] (though even when it is necessary that knowledge of the change in the firm should be brought home to the creditors), far more precise and cogent proof is required to show that in the case of two limited liability companies, formed originally under separate deeds, a creditor has abaraoned a written definite contract with one company for an unwritten engagement by a new company, to be arrived at through the medium of very special arrangements between the two companies (/). Novation not solely applicable to insurance. — The doctrine of nova- tion does not apply solely to insurance, but owing to the recent (a) 1 Pothier (Evans'), p. 881, 546. Wilson v. Lloyd, 16 Eq. 60. (ft) 1 Pothier (Evans'), p. 894, s. 568. (c) 85 & 36 Vict c. 41,8. 7. Bowring^s Case, 16 S. J. 306. id) Coghlan's Case, Reilly (Eur. Arb.) 46, 17 S J. 128. BlundelVs Case, Reilly (Eur. Arb.) 84, 17 S. J. 594. (e) Erskine's Scottish Law 425. ( f) Re Family Endowment Co. per Hatherly, C , 5 Ch. App. 118, 132-3, 89 L. i. Ch. 806, 21 L. T. N. S. 776, 18 W. R. 266. 319 f (Jv'-l';; M: *404 THE LAWS OF INSURANCE. history and peculiar character of insurance business, has been chiefly discussed of late years with reference to insurance com- panies, having been brought into prominence by the result of numerous and complicated amalgamations and transfers of busi- ness between insurance companies which were in difficulties at the time of such amalgamations and ultimately became insolvent. But many canes have arisen oat of arrangements of insurance con' panics. — A large number of companies, by a series of successive amalgamations and transfers, were ultimately merged in the Euro- jiean and Albert Companies respectively, and both failed, upon which it became necessary to decide — (1) the competency of the various companies 'jo effect the said amalgamations and transfers; (2) whether such proceedings, if competent to the company, were binding on its policy-holders and other creditors; (.3) whether, if not binding, they had been accepted and acted upon by creditors. These questions are dealt with in the following pages on nova- tion and amalgamation. Amalgamation. — By amalgamation or transfer is meant [* 404] those *arrangements between insurance companies on occa- sions when one takes to the business of the other (g). Amalgamation ultra vires. — Purchase by one insurance company of the goodwill and the whole concern of another will, ordinarily speaking, be a transaction lii which no insurance company will be justified in engaging, because it certainly cannot be said to be within the ordmary scope of the objects of any company to pur- chase the goodwill of another (h). ^uch a transaction may, how- ever, be expressly authorii,ed under the deed of settlement or other instrument constituting the company, ])ut the purchase must be carried out according to the provisions thereof (i). Capacity to amalgamate must be expressly shown, — Power to enter into a contract of amalgamation is most clearly no part of the general powers which the law would imply in directors of an in- surance company (^k). The power to insure lives and the power to .;rant annuities on lives committed to the directors of an insurance company, implying as it does skill and care on their part in select- ing lives, could not be contended to authorize the taking over in mass by the executive of one insurance company of all the insured lives and all the annuity contracts of another company selected and entered into, not by the executive of the first company, but of the other (k). In order, therefore, to maintain a contract of amal- gamation or any rights of indemnitv arising therefrom, the power to amalgamate must be shown ana strictly pursued, and general principles of law, which would show that, in the ordinary details of business in obtaining necessaries and entering into contracts for Ch (g) Indemnity Case, ReillWAlb. Arb.) 17. (h) Ernest v. Nichda, H.L. C^401, 414. Rn Era Insurance Co., 80 L. N. 8. 1834, W. R. 07 (1801). {k) Indemnity Case. Reilly (Alb. Arb.) 25 820 187. 8L. T. N. 8, 814, OJur {i) Ernest v. Nichols. H. L. C J. ''-fi^ NOVATION AND AMALGAMATION. 406 them, the directors would have power to bind their share- holders, whether *their shareholders had or had not stipu- [* 405] lated for particular limits of liability in the deed, cannot be appealed to in order to support an amalgamation or an under- taking to indemnify as part ot a contract of amalgamation (0- Amalgamation ultra vires can be ratified. — But an amalgamation which is at its outset uUra vires may be ratified and accepted by the shareholders with or without qualification ; and Lord Cairns, ai arbitrator, held that the Albert Society, in sanctioning an amalga- mation effected by its direction did not accept certain ultra vires terms in the amalgamation deed which purported to impose on them an unliuated liability in respect of the debts of the amalga- mated companies (m). When power to amalgamate not given by deed, it mny be by special resolution. — When the original deeds constituting the company do not give the power to amalgamate, such power may be given l)y general resolution, but not so as to alter the fundamental principle of the original deed as to the individual liability of shareholders (n). Therefore an amalgamation purporting to do more will be void (o), though an amalgamation not altering the nature of such liability will be good ( p). So no amalgamation could be intra vires which, in the face of a clause in the original constitution of the company, requiring that in every contract there shall be inserted a limitation of liability, purports to brin^ upon the company a liability not so limited (q). But Lord RomiUy held that where amalgamttion was ♦authorized, the covenant to indemnify made thtreon was [* 406] unlimited (r). Policy-holder accepting amalgamation can only claim on amalgama- ting company. — When a policy-holder or annuitant of one insurance company accepts an amalgamation of his compuny with another companv, he can only claim on such other company as if he had originally obtained policies or annuities from that company (s). Claim by amalgamated on amalgamating company when policy-holders will not look to amalgamating company, — And when the policy-holders and annuitants will not look to the amalgamating company, the amalgamated companies can under the deed of amalgamation and ifndemnity only claim on the assets of the other with general credi- tors, or, in other words, the indemnity will be limited. : Ki ({) Indemnity Case, Reilly (Alb. Arb.) 25. (m) Ibid, 28. In) Ibid., 29. (o) Albert Co. t. Bank of London Co., same case. Ip) Albert Co, v. Medical, p 28, sumo case. \q) Indemnity Case (No. 2), Heilly (Bur. Arb ) 8. British Provincial Co., 8 Giff. 621, L. T. N. S. 08, Barte Smith, Ilo Anglo Life Co, 8 W. 11. 170. Ex irnrto Angt ;e firitish Provincial Co., 10 L. T. N. 8 820. 12 W. R. 701. (r) Ro BHtish I'rovident Co., 18 S. J. 242 (Eur. Arb.). (ff) Indemnity Case, Reilly (Alb. Arb.) U, 16 8. 8. 141. 21 PORTER ON INSURANCE. 821 Anglo- Attstrt^ian Co. v. 517, 10 W. R. 588. Ex Innlo-AwtrcUian Co., 407 THE LAWS OF INSURANCE/ Costs of liquidation of amalgamated company through default of amal- gamating company. — The costs of liquidating the amiilgamattil cniu- |):init'8 in consequence of the default of the amalgamating companits will be treated like the costs of a surety who resists the creditoi's claim when the principal debtor fails to pay it, and they musit fsliow very strong reasons for resisting before they can be entitled to such costs (t). If the indemnity includes costs when ascertained and proved to result from breach of the covenant to indemnily, they may be charged on the company promising the indemnity (u). When policy-holder hound by transfer of liability of office. — Policy- holders can only be made to consent to a transfer of the liability on their policies — (1) when power to effect such transfer is expressly given by the constitution of the company granting the policies, and (2) if the provision regulating the mode of such transfer have been strictly complied with. But to avoid risk of acquiescence or nova- tion, it is advisable to signify dissent or protest (a;); and [* 407] wliere either is effectual, by formal ^protest (y) to pay pre- miums and do other acts needful to keep alive the claim with reference to such protest. Unless such protest be absolute, or declared to be in force until certain acts are done, or information is given by the person to whom it is addressed, difficulties may still arise, and subsequent acquiescence be alleged with some show of reason (z). Novation. Lord Caima* view. — Where persons having claims by way of policy or annuity, deed, endowments, or otherwise, allow themselves to drift into dealings and enter into relations with the new company, and to pay premiums, &c., and make no protest with regard to the footing upon which they are paying these pre- miums, &c., they, lose the security of the old company and become creditors of the new (a). Amalgamation without policy-holders losing rights against transferor company. — Where a company transfers its business to another in consideration of a covenant by the transferee company to in- demnify the transferor against all claims on policies, annuities, and other contracts, holders of annuity contracts with the transferor company, who were also shareholders, hy exchanging those shares for an equivalent number in the transferee company, do not pre- chule themselves from looking to the transferor company for the payment of the annuity (/>). i3y assenting to the exchange they do no more than agree that (0 Ilml, 84. (a) hidcmnity Case, (No. 2), R(i'\\\y {Em. Arh.) 8. (x) Wood'H Vase, Rcilly (All). Arb.) 54, 15 S. J Ctt.l (//) Wtmi's Vane, Roilly (Alb. Arb.) 54, 15 S. J. 093, for a very clear and well- drawn nrotcHt. (z) thtrninn's Vase, Roilly (Alb. Arb ) 144. Griffith's Vase, Ch. App. 874, 40 L. J. Ch. 404, 24 L. T. ,N. S. 458, 1'.) W. R. 496. (a) Dorniiiff's Vase, Roilly (Alb. Arb.) at 148. {!») Frere'a'Vase, Roilly (Alb. Arb.) 211. 322 Vl\ KOVATIOX AND AMALGAMATION. *409 the paid and unpaid portion of the transferee companj-'s capital, including their own portion thereof, shall be available to indemnify the old company in respect of the old debts. They do not merge or extinguish their own claims against the old company (c). ^ Where company dissolved, <£c., liability of partners continues, [* 408] unless specially discharged. — If a person takes shares in an in- BurancH company, and then that company is dissolved, or its business transferred to or amalgamated with that of another such companv, unless the dissolution, transfer, or amalgamation involves a dis- charge to the creditors of the dissolving, &c., company which binds them, the liability of the partners continues. Unless they accede to the transfer, however conformable it may be to the con- stitution of the companies engaged in it, they are not bound. But if they accept the indemnity of the new company, the old liability ceases (d). Rights of creditors, d'c, of transferor company preserved. — When one company transfers to another its business, the transferee company promises by the deed of transfer indemnity to the transferor against all claims of policy-holders or creditors with vested or con- tingent rights against the transferor. This of itself does not in any way debar such creditors from suing the transferors. If the trans- ferees continuH solvent, the transferor can have recourse to them, by claim over. Most of the cases on this point have arisen wliere creditors of the transferors have found the transferees insolvent. Covenants to indemnify not unlimited. — Covenants to indemnify^ made by insurance comi)anies with each other on amalgamation and transfer of business, are not unlimited in their scope. They do no more than affect and bind the paid and unpaid capital of the indemnifying company. And the assent of a shareholder to an indemnity covenant amounts to nothing more (c). Position of Shareholder. — An insurance company agreed to amal- gamate with a second company, and a deed in two parts embody- ing the terms of amalgamation was drawn up and executed, but subsequently declared void for a variation between the terms of the two parts (/). A shareholder in the ^first [* 409] company applied i<>r shares in the second, and received a letter of allotment, but no certificate of shares. As he did not ac- cept the allotment, it was held that he could not be called upon to contribute in the winding up of the second company, but must be treated as an applicant for i^hares which never had been alloted, the insertion of his name on the register being neither authorized (r) Fleming's Case, 6 Cb. App. 39«, 3!) L. J. Ch. 250, 23 L. T. N. S. 7T0, 19 W. 11. (UllJ. {(l) Lano/s Case, Roilly (Eur. Arb ) 18 per Lord Westbiiry. ' (f ) Indemnity Case, Roilly (Alb. Arb.) 17. Frere's Case, 1(1 S. J no?, Reilly (Alb Arb.) 211. Fleming's Claim, (i Ch. App. 8'.>3, 10 W. R. 603, 23 L. T. N. S. 770, 3!) L. J. Ch. 250. (/) Wj/nne'a Case, 28 L. T. N. S. 805, 21 W. R. 8%. t 323 I , liik II *410 THE LAWS OP INSURANCE. nor ratified by him (^r). Void amalgamatwn. — The amalgamation being void, there was no consideration for taking shares in the sec- ond company, since that company could not give him shares on which he was to be credited with the value of his old shares, and as a fact no agreement to take the second company's shares was proved (h). No amalgamation of life offices without coment of High Court. — Life insurance companies cannot now amalgamate or transfer their business without the assent of the High Court of Justice, to be ob- tained by petition in the Chancery Division (i). It may be stipulated that policyholder shall accept liability of transfer company. — It is quite lawful (it) to make it a term of the original contract of insurance that the holder thereof shall be obliged to accept any subsequently substituted liability created by any intra vires transfer or amalgamation. This may be done by express and apt words in the policy, or by declaring the policy to incorporate and be subject to the constitution and bye-laws of the company (/), but will in no case be implied by law (m). If (he amalgating companies are treated as separate^ novation does not occur. — Where the terms of the amalgamation do or purport to keep the two companies separate, no question of novation can [* 410] arise, and holders of contracts with the *ab8orbed company continue to be creditors of that company alone (n). The object of proving novation is to enable the old debtor to re- sist any recourse to him for payment of the debt. Amalgamation uUra vires. — An insurance company which has transferred its busi- ness ultra vires, or to a company which had not the power to take it over, or which, the transfer being intra vires on both sides, cannot by its constitution or the terms of its policies, or both, compel the contract-holders to look to the new company, is not entitled to dis- solve, and may be resusticated for purposes of winding up when its contract debts fall due, unless it can prove that the contract- holders had full knowledge or sufficient notice of the arrangement (o) between the transferor and the transferee companies, and as- sented thereto in such a manner as to agree to look to the trans- feree company onlv for satisfaction (p) of the policy or other in- surance contract when its amount became payable. (0) Beck's Ccue, Ch. App. 802, 48 L. J. Ch. 631, 29 L. T. N. S. 307, 22 W. R. 848, 460. (h) Same case. h) 88 & 34 Vict. c. 61, 88. 14, 16. (k) Pollock on Contracts 190. DowBe'a Ca»e, 8 Ch. D. 884, 46 L. J. Ch. 402, 86 L. T. N. S. 653, and Cocker's Case, 8 Ch. D. 1, 45 L. J. Ch. 833, 85 L. T. N. 8. 290. Hort's Case, 1 Ch. D. 807, 46 L. J. Ch. 821, 88 L. T. N. 8. 766. (1) Brice Ultra Vires, p. Tii, ccxxxix., discussed in Pollock on Contracts, p. 100. Lancey'a Case, Reilly (Ear Arb.) 18. Re Anchor Ins. Co,, Ex parte BadtnochJS Ch. App. 682, 18 W. R. 1188. ConquetCs Case, 1 Ch. D. 334, 45 L. J. Ch. 886, 88 L. T. N. 8. 702. Ex parte Gibson, Re Smith, Knight A Co., 4 Ch. App. 662, per Oiffard, (m) SM NOVATION AND AMALGAMATION. *411 Shareholders of transferor company seek release from, tlieir policy-hold- ers. — It is consequently of equal importance lor the share-liolders of a transferring company to induce the policy-holders to release them and accept the transferee, where the policy-holders have the option of refusal, and for the latter in such a case to avoid novation and seek to preserve recourse against the original grantors of the policies. Whether novation has or has not been made, being, as already said, a question not of law or presumption, but of fact| in the very complicated circumstances attending the amalgamation already alluded to, it is not surprising that the views of the Court of Chancery and Lords Cairns, Westbury, and Romilly, sitting as arbitrators in the winding up of the Albert and European Companies, are not wholly consistent (q). ^Decisions ofar- [* 411] hit.aiors not absolvidy binding. — The views of the learned ar- bitrators, however, though entitled to the greatest regard as opin- ions of very learned men, are not binding on the Courts. Payment of premiums not evidence of novation. — Payment of pre- miums necessary lor the maintenance of the policy or other similar security to the transferee company is not sufficient to constitute novation (r). The act, being ambiguous, is not sufl&cient to raise a presumption against the policy-holders, who in cases of transfer cm only pay at the transferee's office, and payment may be made them either as agents for the grantors of the contract or as princi- pils. Payment under protest toill prevent novation. — Formal protest in writing, declaring that future premiums would be paid only sub- I'ect to and on the foot of that protest, and prevent any question of apse, is sufficient to negative novation (s). A receipt from a company other than the original insurers may be explained by payment either as accepting the new company us futurers, or as agents of the original company (<), and, being am- biguous, will not prove novation. Payment in ignorance of change. — If the holder of the receipts knew nothing of amalgamation, he cannot be held to have assented to it (w). Without authority. — And if the premium be paid to the transferee company by the bankers of the contract-holder's widow, without the executor's authority, there is no novation (a;). So i f the contract- holder cannot read, and does not otherwise learn of the amalgama- tion, he will not be held to have accepted the liability of the amal- gamating company (y). Lindley on Purtnership 463. 35 & 80 Viet, c 41, s. 7. And see BarthtVa Case, 5 Ch. App. 640 ; Hold- Case, 14 Eq. 72, 26 L. T. N. 8. 415, 20 W. R. 567. Wood's Case, Reilly (Alb. Arb.) 54, per Lord Cairns. Doming'' s Case, (Alb. Arb.) 144. How'' a Executors' Case, Reilly (Alb. Arb.) 245. Whitehaven Bank Case, Reilly (Alb. Arb.) 62 Power's Case, Reilly (Alb. Arb.) 232. Dupre's Executors'' Case, Reilly (Alb. Arb.) 236. Clegg'a Case, Reilly (Alb. Arb.) 206. 825 • '^ |.!, L.iaiiij *413 THE LAWS OF INSURANCE. [* 412] Acceptance of bonus ^evidence of novation. — But accept^nce of a bonus from t^e transferee company is evidence of an intention to accept its liability in lieu of the liability of the transferor company (o). So will the carrying in of achiim against the transferee company, whether before (6) or in the winding up, be evidence of novation (c). Indorsement of policy by transferee company. — Novation also takes place when the transferee company indorses the original policy wiih an acceptance of liability conditionally upon payment of pre- miums to it (d) «nd generally when a policy-holder lias sent in his policy to be i a\ by the transferees, or to be exchanged for one of theirs ve;> -* .^ts any voucher declaring their liability (/), novation is cieur. Verbal protest not mjjlcient to prevent. — Verbal protests by a policy- holder to an agen^ of ht" ' >mpany will not suffice to prevent nova- tion in face of othti fact* evidtncing it (g). But complete protec- tion if desired may be obtained by formal written protest and pay- ment of premium subject thereto. A good instance of such protest is Wood^s Case (h). Wiere policyholder is shareholder or party to deed of transfer, — Where a policy-holder is also a member or shareiiolder in the company whose business is transferred, and a party to the deed of transfer, novation will be held to have taken place as to his policy (i). Novation by mortgagor binds mortgagee. — Where a policy is mort- gaged, novation by the mortgagor will bind the mortgagee [* 413] (k). So also in the ^c.ise of a settled policy, if the settlor accepts the liabilities of the transferees, the trustees cannot claim against the transferors (I). Receipt of annuity n^t sufficient. — The holder of an annuity con- tract which has not matured is in just the same position as a policy-holder. But when the annuity has become due, receipt of the instalments thereof without demur from a company other than (a) Ex parte Nunndey, Re Times Life and Guarantee Co , 3D L. J. Ch. 275, 5 Ch. Ann 381, 18 W. U. ooO. Spencer's Case, 6 CU. Ann. 362, 40 L. J. Ch. 456, ?4 L. T. N. S. 455, 10 W. R. 4!tl. {b) Even's Claim, 10 Eq. 354. Knox's Case, Reilly (Alb. Arb.) 132, Allen's Case, Reilly (Alb. Arb ) 127. (e) Re National Provident Life Co., 9 Eq. 306. Re, International and Her- cules Co , Ex puito niuod. 5) Eq. 3 16, 39 L. J. Ch. 295, 22 L. T. N. S. 467. 18 W. R. 370. ' {d) Re European Co., Miller's Case, 8 Ch. App. 891. (c) GritlUh's Case, Ch. App. 374, 40 L. J. Ch. 464, 24, L. T. N. S. 458. 19 W. R. 495. ( f) Ilaiiirey's Case, Reilly (Alb. Arb) 138, 16 S. J. 713. (g) Rimz's Case, Reilly (Alb. Arb.) 104. Howell's Case, Reilly (Alb. Arb ) 117, 16 S. J. 631. German Life Co. Case, Reilly (Alb Arb.) 189. (A) Reilly (Alb. Arb.) 54. (i) Ex parte Stephens 9 Eq 694, 23 L. T N. S. 264, 18 W. R. 725. Fleming's Case, 6 Ch. App. 393. 89 L.J. Ch 250, 23 L. T. N. S. 770, 19 W. R. 668. tiar- man's Case, 1 Ch. D. 826, 45 L. J. Ch 336, 33 L. T. N. S. 700. (k) Werninck's Case. Reilly (Alb Arb.) 101. (l) Andrew's Cast, Iteilly (Alb. Arb.) 107. 326 NOVATION AXD AMALGAMATION. *41.3 the grantors will not amount to novation (m^, since accepting from B. payment of a debt due by A. is no evidence that the re- cipient considers B. his debtor (n). In certain cases, however, the annuitant cannot resist novation. Otherwise where deed of settlement provides that only funds of company /iai/e.^Thus, where tlie deed of settlement of the grantor company provides that its funds and property only shall be liable for claims on the company, and they are transferred, his claim follows them into new hands (o). Indorsement. — And if the annuitant accepts an indorsement on his contract by the transferee company, this would seem to amount to novation (p): Effect of successive amalgamations. — The effect of successive amal- gamations, if agreed to by the creditor, would be to transfer his claims on the assets of the original company to the assets of the last amalgamating company, including all that it had received from the different companies amalgamated. Thus if an annuity contract was entered into with the St. George Company, wiiich amalgamated with the Metropolitan Counties in 18G1, which in 1862 amalgamated with the Vvestern, which in 1865 amalgamated with the Albert, the claim of the annuitant would be transferred from the St. George Company to the assets of the Albert Company as well original, as those derived from amalgamation (q). (to) Re National Provident Life, 9 Eq. 306. Pott's Case, 5 Ch. Ann. 118, 18 W. K. 'Jm. (n) Re India and London Life Co., 7 Ch. App 651. Co) Dowse's Case (European), 3 Ch. D. 884, 46 L. J. Ch. 402, 35 L. T. N. S. G53. ip) DaWs Case, Reilly (Alb. Arb.) 11. See Pott's Case, supra. (q) Dale's Case, supra. I 'h 327 415 THE LAWS OF INSURANCE. [* 414] ♦CHAPTER XXIII. FOREIGN COMPANY. Domicile of company. — The domicile of an insurancp company may be of great importance to those who deal with it; for it is very common for companies constituted within and under the lawM of one jurisdiction to carry on business in another. Thus Scotch companies do a large business in England, and English companies appear in suits before the Courts of the United States and of every colony in the empire, and the colonial companies very often trade in other colonies. And usually, as a check on their agents, such companies refuse to allow any agents other than directors to grant policies (a). And also they have much if not most of their assets in some other jurisdiction. Foreign insurance companies can trade here freely. — An insurance company is domiciled where its chief registered office is (6). No special terms are in this country laid upon foreign insurance companies which are not also laid on English companies (c). Ex- isting foreign companies need not register under the Companies Acts, whether estaolished before or alter 1862, nor must they be incorporated according to the laws of their own country ((£). Rights of foreign companies. — Companies formed out [ *415] side the United Kingdom may *trade irrespectively of any convention. They cannot register under the Com- ppnifs Acts, 1862, without dissolution and re-formation. So their coming to trade in England will not alter the liability of the mem- bers of the company in any way (e). By virtue of special conventions, French, German, Belgian, or Italian insurance companies, legally constituted under the laws of their respective countries, may freely exercise all their rights under such constitution in this country, including the right of appearing before the Courts as plaintiffs or defendants (/),so far as such con- stitution complies with the laws and customs of this country, i. e., (a) Kelly v. London and Staffordshire, 1 Cab. & Ellis 47. In some colonies the Legislature has intervened, and forced foreign companies to name an agent and lodge funds within the jurisdiction : South Australia Act, No. 277 of 1878. (6) Joneay. Scottish Accident Co., 17 Q. B. D. 421 (c) Life Assurance Companies Act, 1870 (83 & 34 Vict. n. 61). (rf) Bateman v. Service, 6 App. Gas. 886, 60 L. J. P. C. 41, 44 L. T. N. S 86. (e) Bulkeley v. Schutz, L. R. 8 P. C. 764, 709, 6 Moore, P. C. N. S. i\i\. ^) See Conventions in Buckley 626. 828 NOVATION AND AMALGAMATION. 416 that they are found to comply with the conditions prescribed by the laws of this country (gr). It does not matter whether the companies were formed before or after the making of the conventions (gr). But almost the only thange effected by these conventions, as will be seen from the cases already cited, has been to admit English companies in the coun- tries named, the foreign companies having already been admitted here. American experience of foreign companies. — American reports teem with cases of insurance trading outside the State in whicii tlie com- , panics arc associated for trading purposes. But such cases, while in many respects they will illustrate the rules of English law on the subject, go to a great extent on special statutes empowering policy-holders 1o sue in the State of their domicile irrespective of the domicile of the insurers (A). Foreign contract law applicable. — The law which applies to a con- tract with a foreign country is well stated as follows :—" When a suit is brought on a policy in a State other than that where the contract is made or to be performed, the lex fori governs *the remedies for enforcing the contract, but not its con- [* 416] struction or the legal rights arising under it. These depend usually on the laws of the place where the contract is to be per- formed, although, where there is anything in the circumstances to show that parties had specially in view the law of the place where the contract is made, this law will govern though the contract is to be performed elsewhere " (i). Provision excluding foreign law. — Where the contract is foreign, by the test given above it will be, unless otherwise prqvided, governed by tho law of the foreign country in which it is made. But this will not wholly oust the jurisdiction of the Courts of the assured's domicile (^), and, if the msurers have an office within that domi- cile for the receipt of premiums, service on their agent will, it seem, be permissible (I). Where an assignment was made abroad of an English life policy, and th^ assignor and assignee were domiciled abroad, tho validity of the assignment was determined by the law of the place where the assignment was made (m). Policy of foreign company doing business here. — When a policy is granted by a foreign company carrying on business within the realm, the contract will be held to be made at the head office abroad Ibid., 625, 627. h) Cromwell V. Royal Canadian Insurance Co., 49 Maryland 366. Universal Life Co. V. Backus, 61 Maryland 28. Myer v. London, Liverpool, and Globe, 40 Maryland 596. (t) Ruse V. Mutuul Ben^t Co., 23 N Y. 616. Uc) Parken v. Royal Exchange, 8 C. S. C. (2nd series) 865. (/) M^Cullough V. Yorkshire Insurance Co., 1 Crawford & Dix (Ir. Circ. Rep.) 264 (1838). (m) Lee v. Abdv, 17 Q. B. D. 809, 84 W. R. 653; see also Mutual Life Co. v. AUen, 52 Am. Rep. 247, 138 Mass. 24. 329 rfjil ■i' w\ ::iaiiii *418 THE LAWS OF INSURANCE. of buch company if the consent to issue it must be and is there given (h), and it mav be sued on there. Consequently, where a person with English domicile takes out a policy from such a com- pany, it would seem that payment of the amount tliereof [* 417] under judgment in *the domestic forum of the company to the administrator within such forum of the assured, would be a bar to any suit for the recovery of the amount of the policy in the domicile of the insured (o). Foreign contract place of payment. — Where the policy is foreign and no provisions are made therein as to the place of payment, &c., demand must be made at the head office abroad before tlie company can be considered in default (p), since the loom contractus is locus solutionis unless expressly otherwise provided (g). But in case of insolvency, the creditor on a policy would be entitled to rank in his own forum against any funds deposited within its juris- diction (r), and generally having got judgment on his policy here or abroad, in accordance 'with the law governing it, would be en- titled to rank as a secured or unsecured creditor (according to the terms of his policy) on the assets of the company here («). Condition making it English. — If the assured wants a contract with a foreign company to be governed by the law of his own country, he should have a provision to that effect inserted in the policy, which will be eflFectual to oust the lex loci contractus (t). If he thinks the foreign law more favourable to him, he can contract ac- cordingly. In dealing with foreign companies, it is necessary, in order to avoid such an inconvenience, to see that the policy contains a pro- vision that payment on it shall be made in the domicile of the assured, since in a foreign contract the locus solutionis is foreign too unless otherwise stipulated (u). [* 418] ^Provision for policies in different jurisdictions. — Perhaps the best example of the mode in which the insurance companies can make provision for policies in different jurisdic- tions is to be found in the special Act of the Scottish Widows' Fund, a company domiciled m Scotland, wherein it is provided that every policy effected with a company having its head office in London or Dublin respectively, even though it should appear (n) Equitable Life Co. of the U. S v. Perrault, 26 Lr. Can. Jur 382. Parken V. Royal Exchange (1840), 8 C. S. C. (2nd series) at 372. Redpath v. Sun Mu- tual Co., 14 Lr. Can. Jur. 90. Von Savigny, Conflict of Laws, tr. by Guthrie (2nded ), ir)6, 215. 265, and notes. (o) Equitable Life Co. of the U. S. v. Perrault, 26 Lr. Can. Jur. 382 (1882), a very full case. (p) Ibid. \ (q) Parken v. Royal Exchange, 8 C S. C. (2nd series) 865-375. (r) Orr Ewing v. Orr Swing, 21 Sc L. R. 423, 11 C. S. C. (4th series) 600. Equitable Life Co., v. Perrault, ubi supra. (s) Thurburn v. Steward, L. R. 3 P. C. 478, 40 L. J. P. C 5, 19 W. R. 678. (t) Robinson v. Bland, 2 Burr. 1077. (»«) Parken v. Royal Exchange, 8 C. S. C. (2nd series) 365-373, per Lord Cockburu. 330 . ! NOVATION AND AMALGAMATION. ♦419 on the face of the policy that it was not in fact effected in England or Ireland (x). S. 50 of the same Act contains a further provision to the (?ame end, that assignments and discharge of policies of the eocitty executed outside the United Kingdom shall be valid and effectual if made and executed according to the usual mode of making and executing suci ducuments in the United Kingdom, or in the place where the same shall have been made and executed. Law as to deposit inefficaciom. — The statutory requirement that every life insurance company should deposit £20,000 with the Accountant-General applies equally to all companies, British or foreign; but as there is no provision insisting that companies not domiciled within the jurisdiction should keep the fund deposited after they have satisfied the test by the Act provided, the assured has no guarantee that a fu..d will remain in this country to satisfy his claims (y). In the case of large foreign companies it seems to be the practice to lodge assets with trustees within this country to answer claims there arising. This procedure provides funds upon which judgment may be executed within the domicile of the as- sured, or on which he may rank ns a creditor, but does not obviate the necessity of the provisions already mentioned as to the law which is to govern the construction of the contract (z). It mny, however, be observed that iasurance *law varies [* 419] little throughout those countries where insurance is practiced. Scotch Law. — In Scotland jurisdiction on a foreign policy can be with certainty created if doubt arises by arrestment of funds of the foreign insurer within the jurisdiction (2). An English com- pany dealing in Scotland by an agent not allowed to do more th an give interim receipts must, it seems, be sued in England (a). So also when the company was English, and a conditional policy was granted in Australia (6) ; and in a recent case suit was brought in England on a policy granted by an English company on property in Minnesota (c). Test when contract by agent is fordgn. — If the insurer's iigents in the country of the sssured have power to effect a complete contract there without reference for consent to the foreign head office, the contract will not be foreign (d),and will be valid where made, even though forbidden by a monopoly within the domestic forum (e) of the insurers. (x) The Scottish Widows' Fund Act, 188*2 (45 and 46 Vict. c. Ixxv.), s. 55. (y) 33&34 Vict. c. 01, 8. 8. (2) P. 417, supra; and see Ex parte Dever, 18 Q. B D. CGO. (z) Parken v. Royal Exchange, 8 C. S. C (2nd series) 365. \a) Mackiev. European Co., 21 L. T. N. S 102, 17 W. R. 987. {b) liossiter v. Trufalgar Life, 27 IJeav. 377. (c) Kelly V. London and Stafordaldre Co , 1 Cababe & Ellis 47. (d) Albion Insurance v. Mills, 3 Wilson & Shaw (Sc.) 218, 233 1 D. & CI. (H. L.) 242 ^ „ ^ „ (e) Same case, followed in St. Patrick Co. v. Brebner, 8 C. S. C (1st se- rics)51. gg^ 1 1^ 'r' liil^ •:::♦'! 1 420 THE LAWS OF INSURANCE. Proceedings where contract and company foreign. — Where the com- pany and the contract are both foreign, judgment may be obtained in the locus contractus^ and then proceeded on in the English courts (/), and a winding up order may be obtained against a regis- tered company even though the persons, property, management, and directorship be abroad, provided that it is a company which at the outset contemplates some description of business in this country, even although in substance all its operations may be abroad (jg). [* 420] *It has been laid down by the Irish Courts that a com- pany which holds an office in a foreign country for the receipt of premiums, where the entire contract is made and where the office is still open for future contracts, does by euch contract enter into an engagement that for all purposes of suit their office shall be deemed their dwelling-house (A). Formal completion of the contract at the head office will not make any difference, as the holding open office is an undertaking that the office is to be deemed their residence, not only for receipt of premiums, but also lor enforcing the contract (i). But as before mentioned an action has been brought in England on a policy granted by an English company (through a broker) in Minnesota (Jc)^ and in New York State on a policy there granted on property in Canada (I). Service of writ on company.— Substituted service has been allowed on an agent in Dublin of an English company who had received some of the premiums for them, the company refusing to appear in Ireland and requiring suit in England (m). But under the new Rules (n) a policy effected in England with a Scotch or Irish com- pany cannot be sued on here unless the contract is made at the company's office here ; for there is no power to allow service of a writ out of the jurisdiction in actions for breach of contract under Ord. xi. r. 1 (e), where the defendant is domiciled in Scotland or Ireland (o). (/) Which can now be done under R S. C 1883, Ord. iii. r. 6, and Ord. xiv. Grant V. Easton, 53 L. J. Q B. C8, 49 L. T. N. S. 645, 82 W. R. 239. (g) Bulkdey v. Schutz, L. R 3 P. C 764. Bateman v. Service, 6 App. Cas. 386, 50 L J. P. C 41.44 L T. N S 436. Princess of Reussv. Bos, L. R. 5 H. L. 176, 40, L. J. Ch. 655, 24 L. T. N. S. 641, reported also as Re General Land Credit Co., 6 Ch. App. 863, 2i L. T. N. S. 454, 18 W. R 50r>. (h) Moloney/ (Exor.) v. Tulloch, 1 Jones (Ir. Ex.) 114 (1835). Kelltj v. Lon- don and Staffordshire, 1 Cababu & Ellis 47. (f) Same case. And see Welsh v. Reynolds, 8 Ir. Law Rec N. S. 105. (k) Kelly v. London and Staffordshire Fire, 1 Cabab^ & Ellis 47. Lycoming Co V. Ward, 901115*5. (l) Equitable L\fe Co. v. Perrault, 26 Lr. Can. Jur. 882. (m) WCullagh v. Yorkshire Insurance Co. (1838), 1 Crawford & Dix (Ir. Circ. Rep ) 264. Kelly v. London and Staffordshire Fire, 1 Cabab^ & Ellis 74. (n) R. S. C. 1883, Ord. xi. r. 1 (e). (o) Lenders v. Anderson, 12 Q. B. D. 50, 53, L. J. Q. B. 104, 49 L. T. N. S. 637, 82 W. R. 230. Jones v. ScoUish Equitable, 17 Q. B. D. 421. 332 IP NOVATION AND AMALGAMATION. 42 *When a company with head office in England was sued [* 421] in Ireland and served in England in accordance with the Irish practice, and failed to appear, the validity of a judgment by default in Ireland was held not to be afifected by proof in English courts that the service was invalid (p). The Court will allow pro- ceedings on the foreign judgment imder Ord. xiv. of the Rules of the Supreme Court, 1883 (g). Judgments obtained by or against insurance companies in one part of the United Kingdom are enforceable in any other part of the kingdom in conformity with the provisions of the Judgment Extensions Act, 1880 (r). (p) Sheeley v. Professional Life, 27 L. J. C P. 233 (Ex. Ch 1857). (o) See R. S. C 1883, Ord. iii. r. 6. Grani t. Easbm, 53 L. J. Q. B. 68, 4d L. T. N. S. 645. 83 W. R. 239. (r) 31 & 32 Vict. c. 64. i I 888 ;■, IM *423 THE LAWS OP INSURANCE. [* 422] ♦CHAPTER XXIV. AGENTS. Agents necessary to all companies. — All insurance partnerships or corporations must, by their very nature, act through agents (a). But the powers of those agents vary considerably ('). The acts of the managers or directors or governing body of an insurance cor- poration are binding on the corporation, unless they exceed the powers of the corporation as declared by the instrument constitu- ting it, or the particular powers by such instruments accorded to the managing body. But such companies have also many subordinate agents, whose powers are variously limited, and who, while they cannot any more than the managing body bind the corporation by an infringement of the articles of its constitution, are still further disqualified from many acts by the special character of the authority given to llieiu by the managing body (6) (*). Powers of directors^ &c., presumed to be known. — Persons dealing with insurance companies will be deemed to have notice of the powers of their managers, whatever the morle in which the com- pany is constituted, so fur as the constitution of the company de- tines and limits the same. But merely directory provisions therein, which are only for the guidance of the directors, do not concern, and will not affect, persons dealing with the company (c). Authority of general agent. — And it seems to bo good law [*** 423] that ''the powers of a *general agent are pramd facie co-ex- tensive with the business entrusted to his care, and will not be narrowed by limitations not communicated to the person with whom he deals" (d), except on some such ground as the notice {a) Montreal Asmraurc v. M'Oillivarij, 13 Moore P. C. 87, 8 W. 11. l';5. Bi'ice Ultra Vires (2ii(l ed ) 42 (/>) Royal British Hank v. Turqiiand, E. & B. 327, 25 L. J. Q B. 817 (Ex. Ch ) (f ) Aqar V. Athenceum (18r)8), 8 C. B. N. S. 72:>, 27 L. J. C. P. 05, W. R. 277 Aiiirc of ]V(ilcs Co v. Some, ;U I.. T. (). S. U\). ill) Iiisurailre Co v. Wilkinson,- "iil Wall (U. S ) '2-J2. Oak v. Lewis, ^Q. B. 730, 10 L. .r. Q. B. ]\\) S/iannon v. Gore District Mutual, \i U. C. (App ) a%. Hastings Mutual Co. v. Shannon, 2 Canada 1A)\. ^ A local agent, with authoritv to receive pretninms and issue policies, has no authority, as such, to waive condition ot" policy requiring assent of company to circumstances affecting the risk. Kytc v. Commercial Union Assurance Co., 144 Mass i'd. ^ An agent, rncciving from assured application for chnn(;e in policy, and un- dertaking to procure such change, is to ho treated as agt. of assured and uot of company. Duluth Bank v. Knoxvitle F. Jna. Co., 85 Tenu. 70. 334 S. AGENTS. *424 which persons dealing with a company mu 294, 28 L. J. Oh. 110, 1 Oiff. 102, 6 Jur. N. 8. 12«. 836 Moore, («) («) {X) W. R. (y) Case, AGENTS. *427 unlimited extent within the scope of such husiness, render the American cases generally unsafe guides in this country, where powers of a much more limited character are given to the local agents of insurance companies (s). Ostensible authority not qualified by private instructiom. — Where an agent is clothed with ostensible autnoritv, no private instructions can prevent his acts within the scope of that authority from bind- ing his principal; where his authority depends, and is known by those ^dealing with him to depend, on written [* 42G] mandate, it may be necessary to produce or account for the non-production of that writing in order to prove what was the scope of the agent's authority (0. Extent of authority of agent without special instructions. — An agent who answered an ad^^ertisement for agents to represent an insur- ance society, and received a reply that the directors had appointed him agent, but got no special instructions as to the nature of his duties or the extent of his authority, and no directions as to re* ceiving or refusing notices of withdrawal, or as to transmitting in- formation thereof to head-quarters, was held by Vice-Chancellor Wood a sufficient agent for the purpose of receiving such notice, so that notice to him would be notice to the company, and the person who had given such notice was held entitled to be struck off the list of shareholders (u). Where an authorized agent to whom notice is given, is also solicitor to the party giving it, and receives the notice as such solicitor for the purpose of transmitting it as agent, the notice is effectual in both capacities, and the company are bound though the notice be not in fact sent to them by their agent («). A mere casual notice will not suffice; it must be notice to the agent as agent (x) in the course of business (y). Mistaken instructions. Company bound — An agent may bind his company by acting on instructions erroneously delivered, and a company have been held bound by an adjustment effected by an agent instructed by telegram to decline, which word was in trans- mission altered into " decide "(2)> that giving him ostensible au- thority to do what he did. ♦If a clerk of the company gives a receipt for a premium, [* 427] m (a) Western Assurance Co. v. Provincial^ 26 Grant (U. C) 561. (0 National Bolivian Navigation Co. v. Wilson, 5 App. Cas. 176, 209, 43 L T. N. 8. 60, per Lord Blackburn. Montreal Assurance v. M^Gillivray, 13 Moore, P.'C 87, 121, 8 W. 11. 106. (u) Hawthorne's Case, 31 L. J. Ch. 626. («) Gale V. Lewis, 16 L. J. Q. B. 119, 10 W. R. 572. (x) Edwards v. Martin, 1 Eq. 121, 86 L. J. Ch. 186, 18 L. T. N. S. 230, 14 W. 11. 26. Gale v. Lewis, 9 Q B. 730. (y) North British v. Hallett, 7 Jur. N. S. 1208,. 9 W. R. 880. Hawthorne's Case, surra ■ (x) Provincial Co v. Hoy, 2 Sttipheiis Quebec Digest 400. 22 POHTER ON INSURAMCB. 337 I im *428 THE LAWS OF INSURANCE. they will be bound even if no policy had been issued at the time of fire (a). Agent acting through sub-agent. — Although an agent cannot dele- gate his authority, there are many things which he may do through a sub-agent, and which are valid when so done ; for ex- ample, where a proposal for a life policy was accepted on behalf of an insurance company by their agent abroad, who acted in the transaction through the medium of a sub-agent, and the premium was paid, it was held binding on the company, although the agent had no authority to appoint a sub-agent (6). Company hound by acta of aqent where intention to insure in another office. — Where a company by its agent receives money for an insur- ance, and a fire happens before a policy is issued, the company will be liable, even though the insured intended to insure in another ofi[ice, and inadvertently accepted the receipt, supposing it to be the receipt of such other office. Thus W., as agent of the Commer- cial Union Company, accepting an insurance by M. in that ofiice, W., without M. s knowledge, ceased to be such an agent and became agent for the European Company, and, on M.'s application for a fresh policy, W. gave him a printed receipt, filled up for a policy for a month, until a regular policy should be made out. M. did not at first discover that the receipt was on behalf of the Euro- pean Company, but, when he did, ne wrote to W., saying he should require to be satisfied of their respectability and standing. Before any policy w.is made out, the premises were burnt, and the European office refused to pay, but M. was held entitled to recover (c). Credit of premium to agent, company not bound to issue policy. — Where an application is accepted by the company, but the {* 428] premium only credited to the agent in the *books of the applicant, the company cannot be made to issue a policy or pay on the footing of its issue, if prepayment of premium is an essential and there be no proof that credit was intended (d), and the sending of a receipt by the agent without actual receipt of the money will not complete such a contract. The receipt is a " mere acknowledgement in abeyance " (e). Agent to insure by policy on payment of premium cannot insure by parol or dispense with payment. Payment by cheque to agent whose banking account overdrawn n0icient. — A man who is and is known to be an a^ent only for effecting insurances by policy on payment of a premium cannot effect a parol insurance, nor dispense with prepayment of premium ; and if he does such acts they will not (a) ParS v. Scottish Imperial Co., 2 Stephens Quebec Digest 410. Duval v. Northern Co., do. 4!0. (6) Roasiter v. Trafalgar Life Co., 27 Beav. 377. (c) Mackiev. European Co., 21 L. T. N. S. 102, 17 W. R. 987. (d) Walker v. Provincial, 7 Grant (U. C) ^7, 8 Grant (U. C) 217. (e) 8 Grant (U. C) 210, per Robinson, CJ. 338 AGENTS. *429 bind the company (/), but will be ultra vires and void as notbein'g within the scope of his authority. Where a premium due was paid by cheque to B., an agent of the insurers authorized to receive premiums, and the cheque was credited to B.'s account, which was overdrawn, this was held pavment to the company, and the com- pany could not either avoid the policy or maintain an action for the premiui*:. The cheque, of course, was honoured (g), and an agent, of course, is only bound to hand over an equivalent, not the money received (h). Agent insuring himself. — An insurance agent's authority does not empower him to grant an insurance in his own favour binding on his princi;^^l8, even if it be a second insurance^and the prior policy has Deen granted with the express sanction and approval of the company. His business is to represent the insurance company in deahng with others. In insuring himself he would have to act in two capacities (t). *Agent cannot insure himself against fire beyond company's [* 429] limit. — Even where an agent is allowed to insure himself with the company for which he is agent, he cannot so insure for a sum exceeding the limit fixed by the rule of the company {k). Agent taking assignment of policy and crediting company with pre- miums aft£r forfeiiure. — If an agent takes an assignment of a policy, and credits the company with the premiums after forfeiture has oc- curred, the policy will be invalid, but an action will lie at law for their return if the forfeiture is enforced {t). ; Agent taking out policy in which he was interested without disclosing such interest, policy was void. — An authorized agent of an insurance company received and accepted an application and negotiated an insurance as agent on property of whicn he was one of the owners, and communicated the transaction to his principal without disclos- ing his interest, and on receiving the policy handed it to the person named in the policy as being assured thereby. The policy was on that ground held void, and, the contract being one, other interests fell too (m). Communicaf.ums between insurers and aaeni when privileged. — There seems to be some authority for saying that the communications be- tween the insurers and their agent are privileged if they form part of the preliminary investigation of the insurers made with reference to the case (n). (/) Montreal Assurance Co. v. ATGitlivray, 18 Moore P. C. 87, 124, 8 W. R. 166. (fl) Etna Life Co. v. Green, 88 U. C. (Q. B.) 469. (A) See Bridges v. Garrett, L. R. 5 C P. 461, 89 L. J. C. P. 231, 23 L T. N. S. 448, 18 W. R. 816. ii) White V. Lancashire Insurance Co., 27 Grant (U. C) 61. (k) Tucker v. Provincial Insurance Co., 7 Grant (U. C.) 122. (/) Busteed v. West of England Co., 6 Ir. Ch. 658. (m) Ritt V. Washington Marine, 41 Barb (N. Y.) 858. In) Pacific Mutual Co. v. Butters, 17 Lr. Can. Jur. 809. See Baker v. L. S. W. k, L K. 8 Q. B. 91, 87 L. J. Q. B. 58, 16 W R. 126. Grant v. Etna Co., 11 Lr. Cau. Rep. 128. 839 430 THE LAWS OF INSURANCE. ' Agents for two companies have power to re-insure one in the other. — An agent for I've insurance companies having authority from one to accept marine risks to an amount not exceeding $5000, accepted a manne risk for $7700 in favour of that company, but re-insured for $2700 in the other, and directed a clerk to enter a memorandum to that effect in the books of the second company, but gave no [* 430] notice to that company until after a loss *occurrtd. The re-insuring company was held not entitled to recover bade the amount of re-insurance, if paid by the agent on a loss, without proof that the agent acted mcUa fide in affecting the insurances, or did not conform to the rules of his principals known to the re-as- sured (o). Settlement of premtums in monthly account between two agents — A practice of the agents of two companies to effect re-insurances with- out immediate payment of premiums, but on a monthly balance of accounts unsanctioned by the company, and whereof they had no notice, this re-insurance account not being sent up to head-quarters, is not binding on the companies ( p). Courts inclined to support insurance, though heal agent r> " .tc% within authority. — Fire and life assurances are carried on ^^ .,». enor- mous extent tnrough local agencies, and not by direct dealings with the officers of the companies at their head-quarters ( as 0< Lis. Co. v. Van Oa., 63 Miss. 431. 341 I i' * l!il *433 THE LAWS OP INSURANCE. Where notice to be given to head offlce, notice to local agent insvffident. — Notice to a local agent will be useless when the notice ought to be given at the head office (6). Verbal notice will, however, suffice if not stipulated against (c). Verbal notice generally sufficient notice to agents. — Notice to an agent if he has power (d) to receive such notice will bind the company, even though the agent received such notice in. a different capacity, and never communicated it to his principals (e). Mere knowledge privately obtained by a party connected with the coihpany will not suffice (/). The notice as regards fire policies need not be in writing ((jr) unless so stipulated. Notice to directors. — Notice to directors must be give to them as such Qi). Waiver o^ forfeiture by receipt of premiums. — An agent, of course, cannot waive a forfeiture (i) in the face of a condition in the policy that it shall not attach until the premium is paid, and that only the president or secretary should waive a forfeiture (Jt) ('). But if the directors receive premiums through a local agent after a forfeiture, the policy will be valid (/). [*433] * Waiver of forfeiture by agent by receipt of overdue pre- mium. — Although, as a rule, an agent cannot waive a forfeiture, it may be done under special circumstances, as in the following case : — By the non-payment of renewal premium at the stipulated time a policy of life insurance became forfeited. The Eolicy j)rovided that payment, if made when overdue, would not e considered as continuing the policy unless the insured was in good health at the time, but by the practice of the company the agents might receive payment of such premiums and issue the renewal receipts within thirty days after the stipulated time, pro- vided the insured were then in good health. Meaning of proviso as to insured being " in good health." — It was held that the proviso us to the insured being in good health did not apply to his actual state, but to the general understanding of the parties and their consequent action thereon. We, therefore, at the time of paying the premium to and the giving of the receipt by the agent, (6) Hendrickaon v. Queen Insurance Co., 81 U. C. (Q. B ) 547. r«) North Brisish Insurance v. Hallett, 7 Jiir. N. S. 1263, 9 W. R. 880. \d) Ex parte Hennesei/, 1 Connor & Lawsoii (Ir.) 559. (c) Gale V. Lewis, 9 Q. B 730, 16 L. J. Q. B. 119. (/) Thompson v. Speirs, 13 Sim. 469. Ig) Gale v. Lewis, supra, where no written notice was given. (h) Hawthorne's aaim, 31 L. J. Ch 625, 6 L. T. N. S. 574, 10 W. R. 572. (i) Jacobs V. Emiitabte, 17 U. C (Q. B ) 36 18 do. 14, 19 do. 260. , (k) Calhoun v. t/jwott Mutual (1879), 3 Pugsley & Burb. (New Bruns.) 13, 28. Butterworth v. Western, 132 Mass. 49. (I) Wing V. Harvey, 6 De G. M. & G. 205, 28 L. J. Ch. 6tl, 18 Jur. 894, 23 L. T. 120, 2 W. R. 870 ^ Agent cannot waive as to matters concerning which policy distinctly states that he shall not. Enos v. Sun Ins. Co., 67 Cat. 621. Unless policy provides otherwise, insured is justified in supposing company's agent to have autuority to waive a forfeiture. Silverber v. Fnenix Ins. Co., 67 Cal. 86. 342 AGENTS. *434 the insured had in fact received an injury which soon after resulted in death, but it clearly appeared that no danger was anticipated by either the insured or his medical attendant, or by the company themselves^ who had made inquiry and had full knowledge of his condition, it was held that the payment was good and the for- feiture waived {l). Inspector cannot dispense with prohibitory condituyns. — An inspector of risks cannot dispense with conditions relating to the keeping of prohibited or highly hazardous goods either at all or largely in excess of the allowable quantities, or to a mis-description of the mode of heating or the precautions required in case of steam being used, or with respect to chimneys or stove pipes, or the deposit of ashes, or the proximity of dangerous places (m). Effect of companies of their agents filling up applications. — If in every case the proposals for a contract of insurance emanated from the would-be assured, probably no question could arise as to the dealings of insurance agents with such applications. But often, (and especially in America and the colonies) the companies' agents solicit insurance and fill in applications of the ♦assured, and much litigation has arisen and many pre- [* 434] cautions have been taken by the companies to avoid the consequences of such act on the part of the agents. In some cases it is' declared that if the agent fills in the proposal he shall be deemed the applicant's agent. In others he is privately f«)rbidden to fill in the pro{)osal. In the former case the insurer is exempted from (n) the liability for his agent's mistakes which would otner- erwise full on him (o). Even where an agent is made the agent of an applicant for the purpose of filling in the proposals, this will not in every case bind the assured to what the agent puts down. Thus where the assured, to the question of incumbrances, began to tell about a mortgage, but was stopped by the agent, who said this was immaterial, the insurances being on chattels, and the agent wrote down for an an- swer *' None," the Court of Common Pleas in Upper Canada held that the insured had made no misrepresentation and could recover (p). Effect of war on foreign agency. — The authority of an agent ap- pointed by the general agent and local board of directors in the city of New York of an English insurance company was held not revoked or suspended by the existence of the state of war arising from the (I) Campbell y. National Life Co., 24 U. C (C. P.) 133. (m) Mason v. Hartford Fire Co., 37 U. C. (Q. B.) 487, 441. (n) Naughter v. Ottowa Agency Insurance Co., 43 U. C (Q. B) 121. Sowden V. Standard Insurance Co.,44 U. C. (Q. B.) 95. Blakeley v. Niagara District Mutual IHre Insurance Co., 16 Grant (U. C.) 198. ISomers v Athenceum Co., 9 Lr. Can. Rep. 61, 8 Lr. Can. Jur. 67. (o) Parsons v. Bignold, 13 Sim. 518, 16 L. J. Ch. 879, 7 Jur. 691. Ex parte Forbes Js Co., 19 Eq. 486, 44 L J. Ch. 761, 23 W. R. 464 (p) Aahford v. Victoria Mutual Ina. Co., 20 U. C (C. P.) 434. 343 !:l;''liil *436 THE LAWS OF INSURANCE. secession of the Southern States. But this went on the ground that the insurers were domiciled abroad, and the New York board were merely their agents with a revocable authority (q). The contract of agency was with a ))rincipal of neutral domicile, and therefore unaffected by the war (r). Payments of premiums to such agents after war begun would bind the insurers (s). ['i' 435] * What indoraenients agent can make. — In England agents of fire insurance companies are usually authorized to make in- ddrsements on policies in case of ■ (a) Removal (t). (b) Transfer of the sum assured to a like risk. (c) Permission to insure in another office. (d) Alteration of the name of the assured if it be incorrectly stated in the policy. (e) Change of firm. (f) Notice of a mortgagee's interest in a policy or of a change thereon. (g) Marriage, purchase (w), or gift. In case of sale, satisfactory evidence will be required of the as- sent of the assured. Interim receipts cannot be signed by agerWs agent- — The agent of an insurance company authorized to si^zn interim receipts for premiums cannot delegate his functions, and if he engages another person to take risks for him, interim receipts signed by the latter do not bind the company, unless by the subsequent ratification on the part of the company or its agents (a;). Contracts of insurance by agents generally valid until needed. — If an agent has power to enter into contracts of insurance which may or may not be approved at head-quarters, they are valid till receipt of notice of rejection and return of premiums paid, and it seems to make no difference if the agent employs sub-agents in getting assurances. If he Joes, their receipt for premiums binds [* 436] *the agent as much as if signed by him (y). For though an agent cannot delegate his authority to " another person, he is entitled to perform and must perform a great number of his acts and functions through the aid of persons to whom he delegates his authority; and acts done by such aid, if proper and within the pcope of his authority, will be nis acts" (z). Company liable for agenCs fraud. — An insurance company may be liable for the fraud of their agents acting within the scope of their (q) Robinson v. International Life Ins. Co., 42 N. Y. 64 (/•) Ibid. Setonv. Law, 1 Johnson (N. Y.) 1. (s) Martin v. International Life, 62 Barbour (N. Y ) 181. (/) Chalmers v. Mutual Fire Co., 8 Lr. Can, Jur. 2. (m) Frost V. Liverpool, London, and Globe, 2 Hannay (New Bruns ) 378. (x) Summers v. Commercial Union, Canada (S. C) 19. But see Rossiter v. Trafalaar Life, 27 Beav. 377. (y) Rossiter \. IVafiilgar Life Co., 27 Beav. 877, aflFd. on appeal. Mackie v. European Co, 21 L. T. N. S 102, 17 W. R. 987. (2) Rossiter v. Trafalgar Life Co., 27 Beav. 377, 381. • 344 AGENTS. 437 authority, at least to the extent of the gains of the company ob- tained by the agent's act. This liability seems to be based on the ground that "every person who authorizes another to act for him in the making of any contract undertakes for the absence of fraud in that person in the execution of the authority given as much as he undertakes for its absence in himself when he makes the con- tract " (a). The agent and principal will in such a case both be liable (6), and the same would be the case if a sub-agent commits a fraud and the agent profits by it (c). Company not liable for fraud of agent outside company's budness. — But no liability falls upon an insurance company for fraud or mis- representation of the secretary or any other agent outside the busi- ness of the company or the ordinnry scope of his duties (d). Company compellable to issue prdicy' if premium, paid. — If an interim receif)t be delivered by an agent ixxhy authorized thereto (e), and containing a promise to issue a policy in so many days (/), and the insurers neither do so in the time nor refund the premium, they *will be held bound as if they had issued the policy [* 437] (g), or be made to issue the policy (k) (*). Company cannot adopt contract by ny%.nt outside its business. — An in- surance company cannot adopt contracts made by its agents which are not within the scope of the company's business. Thus a com- pany formed for life assurance cannot undertake marine assurance, and even if contracts of marine assurance are granted and for a time treated as binding, the Courts will not allow recovery thereon, but will order the premiums to be repaid or allow them to be proved for in the winding up (t). Company cannot adopt policies of another company so empowered. — Nor can one company aao[)t the policies granted by another com- pany, unless powers in that behalf are given in the deed of settle- ment and executed conformably therewith (j). Company can ratify where contract within its powers, though beyond (a) Per Bramwell, L J., in Weir v. 88 L. T. N. S. 929, 26 W. R. 746. (b) Per Cockburn. C. J ' Bell, 8 Ex. D. 288, 245. 47 L. J. Ex. 704, , in same case, p. 248. (c) Cnllen v. Thomson^ s Trustees, 4 Macqueen H. L. 424. (d) Partridge v. Albert Life Co., 16 S. J. 199. Pinchin v. Realm In.um v. G. W. R. ^upro. 851 1,1, 1 447 THE LAWS OF INSURANCE. Asmred'a righis against third pergon preserved. — But by the Rail- way Passengers' Assurance Companies Act, 1864 (e), it is enacted that no contract of the company nor any compensation received or recoverable by virtue of any such contract, either under this Act or otherwise, shall prejudice or affect any right .of action, claim, or demand which any person or his executors or administrators may have against any other company or an^ person, either at Common Law or by virtue of the Act passed m the session of the 9th and 10th years of her present Majesty, intituled " An Act for compen- sating the Families of Persons killed by Accident," or of any other Act of Parliament, for the injury, whether fatal or otherwise, in re- spect of which the compensation is received or recoverable. Nature of policy. — In some of the earlier English (/) cases of accident insurance, the policies have been drawn, to some extent at least, as contracts of indemnity. Thus in Theobald v. Railway Passengers' Assurance Company (g), where. the contract was to pay £1000 to jlhe executors of the assured on his death, or a [* 447] proportionate part to himself *in case of personal injury, and the assured was injured, the Court of Exchequer held that the insurers were bound to indemnify the assured for the costs of the medical attendance and expenses to which he was put by the accident, but not for loss of time or profits, thus following the rule of Wright v. Pole (g) that profits can be recovered under a policy unless insured in terms. And Pollock, C. B. (A), said " What the insurance company calculate on indemnifying against is the ex- pense and pain and loss immediately connected with the accident, and not remote consequences that may follow according to the busi- ness of the passenger." In this case there were clearly two distinct contracts — (1) To pay £1000 to the assured 's executors if he were killed by accident. (2) To compensate him to any amount, not exceeding £1000, for the expense and pain and loss caused to him by accident. The first contract was to pay the representatives of the insured a liquidated sum in a certain event, the second to compensate the insured him- self up to £1000 in a certain other event. And the view of Alder- son, B. (0, " that no proportion could exist between injuries short of death, and death,'*^well expresses the essential difference of the two contracts, and the impossibility of establishing a ratio between the two events provided against. Form and nature of accident pob'cy, — The private Act of the insurers ( j ) contained tho form of con- (e) 27 & 28 Vict. cap. cxxv. s 85. (/) And Bee, in America, Hill v. Harford Jna. Co., 22 Hun. (N. Y.) 187, l9Uj per Follet, J. " The central idea of such a policy is partial indemnity against accident." (a) 10 E.x. 45, 23 L. J. Ex.24g, 23 L. T. 222, Id Jur. 688, 2 W. R. 628. 12 & 18 Vict. cap. xi. ; 16 & 16 Vict. cap. o. {a) Ante, p. 41. (A) Theobald v. Railway Potaengert, dtc. Co., 10 Ex. 68. (0 Ibid, (^) 16 & 16 Viot. cap. o. 852 ACXIDENT. *449 , tract adopted in the above case. But at present the usual form of an accident rolicy is to pay a certain fixed sum per week in case of injury, arn^ a certain other fixed sum in case of death. Such poli- cies do not contemplate indemnity, and avoid the necessity of going into the assured's accounts or private aflfairs. *Asmrednotunder twelve years. — Insurance against accident [* 448] while traveling by railway may not be affected with the Railway Passengers' Assurance Company, by or on behalf of any one under twelve years of age, and every insurance ticket obtained by or on behalf of such person shall be utterly void against the company (i). Insurance by friendly societies. — Insurance by friendly societies against accidents generally is open to all over sixteen in the ordi- nary course (k), and to still younger children under certain special conditions prescribed by the Friendly Societies Act, 1875 (/). Insurable interest requisite. — ^The rules ns to its being necessary for the person effecting a policy against accidents to have an insurable interest in the health or life of the assured, are the same as for all other insurances, under 14 Geo. III. c. 48 (m), which statutes pro- vides that it shall be competent to show that the policy was in fact made on account of a person other than the person with whom it is expressed to be made (n). Accident time policies. — Accident policies, like marine policies, may be divided into time policies and voyage policies. The former, like ordinary life policies, are made by the year or for life, and only differ from them in the nature of the risk insured against. They cover all forms of accident, irrespective of the place where the as- sured is. But it is not unusual to limit the area within which the accident is to happen ; thus in a recent case the policy provided against accidents within the United Kingdom or the continent of Europe, and that it should be avoided as soon as the assured took ship to go outside those limits. The assured was killed in Jersey, *and the insurers disputed their liability, on the [* 449] ground (inter alia) that Jersey was neither in the United Kingdom nor on the continent of Europe (o). Voyage policies may or may not be limited in point of time. Thus, a railway insurance against accident is only available for so many days, and if the journey is protracted beyond those days, the policy ceases to be available. It is always limited in point of space to a prescribed journey, and a passenger insured from Lon- don to Aberdeen, with liberty to break the journey given him by the railway company, would not be insured against accidents hap- pening to him if he cnose to go to Scarborough in the time allowed i! (i) 27 & 28 Vict. cap. cxxv. b. 84. (k) Friendly Societies Act, 1875 (88 & 89 Vict, c 60), s. 8. (I) 88 & 39 Vict. c. 60, s. 8 (a), (m) Shilling v. Aicidental Death Co., 1 F. AF. 116, 2H. & N. 42,26L. J. Ex. 268, 27 do. 17, 29 L. T. 98, 5 W. R. 607. (») Same caHc. » « . (o) Stoneham v. Ocean, Ac, Co., 8 Times L. R. 096. 28 PORTER ON INSURANCE. 853 m i m !.«! 1 i *460 THE LAWS OF INSURANCE. him at York, for though traveling he would be deviating from the journey for which he was insured. It would, however, probably be otherwise if his train, through some accident? or negligence of the railway company, deviated on to a branch line and he was there injured. Railway accident definition. — Alderson, B. (p), defined a railway accident to be "an accident occuring in the course of travelling by a railway, and arising out of the fact of the journey. It does not necessarily depend upon any accident to the railway or machinery connected with it;" but Pollock, C. B. (p. 57), declined to lay do""n any general rule. He, however, in the case before the Court laid emphasis on the following facts, viz.: — (1) The plaintiff was a trav- eller on the railway. (2) Though at the time of the accident hia journey had in one sense terminated by the carriage having stopped, he had not "leased to be connected with the carriage, for he was still in it. (}\) The accident happened without negligence on his part, and wh ile he was doing an act which as a passenger he must necessarily have done, for a passenger must get into the carriage, and get out of it when the journey iii at an end, and cannot [* 450] be considered as disconnected *with the carriage and rail- way, and with the machinery of motion, until the time he has, as it were, safely landed from the carriage and got on the plat- form. The accident is attributable to his being a passenger on the railway, and it arises out of an act immediately connected with his being such passenger." Breaking journey. — Where the journey insured for is not wholly without break, and in the same conveyance, the policy will it would seem, cover passage from railway to steamer or from one convey- ance to another (p). But where the insurance is by public or pri- vate conveyance between two points, and the assured finds no con- veyance at a certain stage of his journey and tries to complete it on foot, he will, it seems, not be protected (g). Insurance ticket for particular journey. — insurances against railway accident are usually effected by ticket, purchased at a station like a railway ticket. The contract for such insurance is effected by the sale and purchase of such ticket from the proper person (usually the ticket officer of the railway company). By the Railway Pas- sengers' Assurance Company's Act, 1864 (r), s. 6, it is provided that in all cases, tickets of insurance for particular journeys shall be held to be a valid execution by the company of tne contract set out in tho schedule thereto, and that nothing further shall be required to be done by the company in order to legally bind the company to tho performance thereof. This mode of contracting is subject to a disadvantage, that the assured is not identified, and may give away his ticket without much danger of discovery, although to do • (p) Theobald v. Railway Passengers', 10 Ex. 58, supra, p) tSeo Northrup v. Raihoay Passengers' Assurance Co., 48 N. Y. 616. q) Southard v. Railway Paaaengera' Aasurame Co,^ 84 Conn. 674. r) 27 & 28 Vict. cap. cxxv. 354 (s) (s) it) (u) C. P^ Jur. ACCIDENT. *452 80 is a misdemeanour and avoids the contract made by the ticket (s). Assured must be twelve years of age.— The contract in the said sched- ule is to pay to aYiy person over the age of twelve who has duly, and for the premium demanded, obtained one of the com- pany's ^insurance tickets, and sustains an injury caused by [* 451] an accident to the train or to the carriage while travelling during the particular journey for which the ticket is issued. Amount of compensation. — The compensation payable is as follows, viz : — Where the amount payable in case of death is £1000, and the assured is not killed, but totally disabled, he is entitled to £6 per week, but if partially disabled to £1 lOs. per week. If the sum insured in case of death is £500, and the assured is not killed, but totally disabled, he is entitled to £3 per week, but if partially disabled to 15s. per week. If the sum insured in case of death is £200, and the assured is not killed, but totally disabled, he is en- titled to £1 5.«., but if partially disabled to 68. M. per week. But the Act provides different rates for excursion trains. If there be contributory negligence in the assured he cannot recover, and if anv claim is fraudulent the company may recover back the money paid (s). This form of contract by ticket issued on demand and tender of the proper premium is possible for the insurer, because the risk to be run is calculable beforehand, and the occupation, age, and habits of the assured can very seldom increase the probability of an acci- dent happening while the assured is traveling. But where drunk- enness or an affliction increasing liability to accident is apparent in the applicant, the railway company would have a right to refuse to issue an insurance ticket to him ; the words of the statute are permissive, not obligatory (t) Time policy against accident. Insurer not obliged to continue. — Time policies against accident are effected in the same way as ordinary time policies, on the basis of a proposal and declaration signed by the applicant, containing such information as the insurers deem necessary and good faith requires. But there is no obliga- tion in *the insurer to continue an accident policy, as there [* 452] is in the case of a life policy (w). What must be stated in proposal for accident policy. — A man seeking insurance against accident will be bound to disclose any circum- stances of which he is aware which he thinks would make the insurers decline to insure him or charge a higher premium, as for an increased form of risk. The applicant is required to declare that he is in good health at the time of application ; that he has never had a fit of any kind, or (s) Ibid. (s) 27 & 28 Vict. cap. cxxv., s. 3, and sched. (0 Ibid, 8.4. (m) 27 & 28 Vict. cap. cxxv., s. 4. Simpson v. Accidental Death, 20 L. J. C. C. P 280, 30 L. T. 31. For form of such, see 2 C. B. N. S. 257, 6 W. R. 807, 8 Jur. N. S. 1079. 865 • £; ,1 ■ iiiiiii'lii !lil» < !! *453 THE LAWS OP INSUBAXCE. / paralysis, or gout, or delirium tremens; that he has no rupture physical defect, or deformity ; that his habits are at the time of ap^ plication, and have always been, sober and temperate, and that there is nothing in his occupation, mode or habits of life rendering him peculiarly liable to accident, and that he knows of nothing which he thinks' would make the insurers unwilling to take his risk ; and this declaration, with certain specific answers, is made the basis of the contract, and if they are not in all respects true, the policy will be voidable, and all premiums paid thereunder subject to forteiture. Questions put to proposed insured. — ^The particular questions put are of the following kind. (1) As to occupation. (2) As to pre- vious accidents (if any) requiring medical or surgical attendance, with particulars (if any). (3) As to previous or subsisting assur- ances against accident. (4) As to refusal to accept proposals or renew policies. (5) As to compensation (if any) received for per- sonal injury. Even if this declaration were not made, nor these questions asked, mosl of the information warranted therein would be requisite under the general principles of insurance law, especially that relat- ing to his physical condition. For certain ailments and [* 453] accidents diminish *a man's control over his movements, and inciease his liabilities to accidental injuries. The risk also varies to some extent according to the trade or calling of the insured, and the insurers divide occupations into several classes, according to the greater or less liability to ac- cident found on the average to be attendant on such occupation?. Assured must truly state occupation. — ^The person seeking insurance is, as has been said, usually asked to state his profession or oc- cupation. If he state it falsely, the policy will be void by its terms under the rule in Anderson v. Fitzgerald (x), whether the profession or occupation stated be more or less hazardous than or as hazardous as the real occupation of the assured (j/). Ironmcmger described as esquire. — Description by the assured of himself as an esquire is no answer to a question as to profession or occupation (z), but a mere representation that the assured is in that position of life in which people are usually styled esquires (a). Where a man being engaged m trade as an ironmonger calls him- self an esquire, and says nothing about the trade, Uiis does not amount to a statement false in fact. At most he has not stated all he might have stated. But this only makes his statement imper- fect, not untrue (6), and the Court will not deem such an omission to be a sujypressio veri or suggestio falsi. (x) 4 H. L. C. 484, 17 Jur. 995. (w) See Perrins v. Marine, tfrc , 2 E & E. 817, 29 L. J. Q. B. 17, 242, 2 L. T. N. S. (138, 6 Jur N. S 69, 627, 8 W. R. 41, 568. (x) Per Hill. J., in Perrins v. Marine, Jcc^ 2 E. & E. 817, at 821. la) Per Williama, J., in bame case, 824 {(Jam scac.). {h) Per Wightman, J., in same case, 828. 356 (c) {d) J. Q. («) (/ 1 ACCIDENT. *455 Cockburn, C. J., however, dissented from the decision, and con- sidered by calling himself esquire the ironmonger virtually de- . scribed himself as of no occupation, and conveyed the impression that he was not in trade (c). Accident definiiUm. — Many of the questions on accident policies arise concerning the true meaning of the word accident, and *it is difficult so to define the word as to include the [* 454] innumerable mishaps which happen in the daily course of human life ; and it is often equally difficult to decide whether a mishap comes within the risk taken, or the exceptions made, by the terms of a particular policy. In North American Life and Accident Co. v. Burroughs (c) acci- dent is defined as " an event that takes place without one's fore- sight or expectation ; an event which proceeds from an unknown cause, or is an unusual effect of a known cause, and therefore not expected ; chance, casualty, contingency." Sunstroke. — In Sinclair's Ckise (d) accident was defined as includ- ing violence, casualty, and vis major, but not as including sun- stroke, which the Court classed with injuries from malaria, exposure to the weather, &c. It is a known consequence of undue exposure to the full heat of the sun, and in no way to be classed with the unforseen, though it operates ab extra. Accident and resulting injury distinct. — ^The injury and the acci- dent causing it are distinct, and must not be confounded. A man may be accidentally poisoned, and his death in that case results from something unforseen in the course of nature, which does not operate externally, but the introduction of which into the system is ex hypothesi a pure accident. If such a case happened, unless death by poison were excepted, the insurers woula j)robably be liable. The accident would be the fortuitous reception of the poison into the body. The injury would be the natural result of the poison when so received, and would thus be the effect of which the accident would be the cause. Rupture by jumping from train. — American decisions go some- what far in restricting the definition of accident, following out the distinction already indicated between the accident and injury. Thus it has been held that rupture caused by jumping *from a railway train before it had stopped was not a [* 455] bodily injury effected through violent and accidental means, on the ground that the rupture was the result and not the means, and that the injured man meant to jump down and did so, and that nothing unforeseen happened in jumpmg down (e). Injury jram putting arm out of window. — In Kentucky (/) a man (c) P. 821. (c) 8 Am. Rep. 216. . „ „ „ . (d) Sinclair v. Maritime Passengers^ 3 E. & E. 478, 4 L. T. N. S. 15, 80 L. . Q. B. 77, 9 W. R. 342, 7 Jur. N. 8 867. («) Southard v. Railway Passengers' Assurance, 34 Conn. 674. (/) Morel V. Mississippi Valley Lif^, 4 Bush. (Ky.) 536. 367 :!;/:r: I'r ! i iill i !'!mS i '■;' ;M i'iiil *466. THE LAWS OF INSURANCE. who put his arm out of window and got it injured against a post was held disqualified by negligence (gr). The true question would be rather whether the act was necessarily connected with the trav- elling, and negligence would have nothing to do with the matter (A), Putting out the arm to close a door inadvertently left unfastened by the company, or to catch something blown by the draught out of the carriage, would seem to be acts arising out of the journey. But it might be otherwise where a man put his arm out merely to feel the air or the rain. Negligence of assured. — Such an act, wh ether negligent or not, would not arise out of any act immediately con- nected with the journey. Fatal fall whilst running to caich train. — ^Where a man ran to catch a train, and missing a step fell and was killed, in America, it was held that actual travelling included the necessary getting into the train (i). Drowning. — Drowning is an accidental injury (k) within a policy providing that no claim should be made in respect of any injury unless the same should be caused by some outward and visible means of which satisfactory proof could be supplied to the direc- tors. [* 456] ^Assured found in water. — When a man is found dead in the water, he may be presumed to have come to his deatli by drowning and not by fits. Even if he fell into the water in a fit und got drowned, the insurer would be liable, as death would be caused by the action of the water and not by the fit (I). Presumptimi against suicide. — If a man might have come to his death by accidental drowning or suicide, the presumption will be in favour of accident rather than intention im). Falling on railway. — If a man is seized with a fit and falls on to a railway line on which a train is coming, and is so run over, the cause of death will not be the fit, but the being run over (*i). Sprain. — The assured sprained the muscles of his back in lifting a heavy weight, and was held entitled to recover under a pr*)viso that the injury must be due to a material or external cause opera- ting upon the person of the insured (o). Policy against death by accident whilst travelling. — The assured left a (g) Railway Passengers' Assurance Co.'s Act, 1852 (15 & 16 Vict. cap. c, s. 133), provides that negligence may be insured against by that company. (A) See ChampUn v. Railway Passengers', Lansing (N. Y ) 7i, holding that contributory negligence is no defence on a policy of accident insurance. (i) Tooley v. Railway Passengers^ Assurance Co., 3 Bliss. (U. S. Circ. Ct) 399. (k) Trew v. Railway Passengers', 6 H. & N. 830, 30 L. J. Ex. 317, 4 L. T. N. S. 833, 9 W. R. 671, 7 Jur. N. S. 878. Reynolds v. Accidental, 22 L. T. N. S. 820, 18 W. R. 1141. It) Winspear v. Accidental, 6 Q. B. D. 48, 43 L. T. 459, 29 W. R. 116. (m) Mallory v. Travellers', 47 N. Y. 52, 7 Am. Rep. 410 In) iMwrence v. Accident Co., 7 Q. B. D. 216, 50 L. J. Q. B. 522, 29 W. R. 802 (1881). (o) Sinclair v. Maritime Passengers' Insurance Co., 4 L. T. N. S. 16, 80 L. J. Q. B. 77 3 E. & E. 478, 7 Jur. N. S. 367. Martin v. Travellers' Co., 1 F. & p. 606. 358 iigv .ACCIDENT. * AT^ 457 steamer to walk home, and while so doing was injured by an acci- dent from which he died. The Supremo Court of the United States held that his own legs were not a conveyance, public or privutf, within the meaning of a policy against death by accident whilst travelling by public or private conveyance (p). Exercise with dubs, rupture of blood-vessel. — In America, death caused by rupture of a blood-vessel while exercising with Indian clubs is not accidental death if the clubs were used in the ordinary way, and no unforseen accident, unusual circumstance, or involuntary movement of the body occurred which in '"^con- [* 457] nection with the movement of the body brought about the injury (r). Rupture of blood-vessel, inflammation of lungs. — If death is due to inflammation or abscesses on the lungs, consequent upon the rupture of a blood-vessel by over-exertion, such rupture will be held the proximate cause of death and the death accidental, unless indepen- dent lung disease supervened before the rupture, or slumbering disease was brought into activity by the rupture (s). Death must be caused solely by accident to entitle assured. — It is usu- ally stipulated that death must be caused solely by accident to en- title the representatives of the assured to recover under the policy. If death is caused by peritonitis due to a violent and unintentional blow in the stomach, this has been in America held to be death by accident {t). So also in the case of hernia due to an accidental fall (w) C). But where erysipelas sjipervened upon a wound, the death that followed was considered to be the result of the disease rather tlian of the wound, and it was held that the insurers were not liable (v) under the special terms of their policy. But gangrene from a cut has lately been held an accident within the meaning of a policy against accident (w). But death by dislodgment of a gaul-stone consequent on a fall has been held not within a policy against death by acci- dent (x). Death under doctors^ hands. — Death under surgeons' or physicians' hands is excepted in most if not all accident policies. In America it has been held that death caused by taking accidentally an over- dose of opium, a proper dose having been prescribed, is within this exception (y). {p) Ripley v. Insurance Co., 16 Wall. (U. S.) 336. (r) See McCarthy v. Travellers', 8 Bias. (C. Ct. U. S.) 362, U. S. Dig. 1883, p. 496. (s) Same case. h) N- Am. Life, &c., v. Burroughs, 69 Penn. 43, 8 Am. Rep. 212. («) mton V. Accidental Death, 17 C. B. N. S. 122, 34 L. J. C P. 28. («) Smifh V. Accident, Jkc, Co, L. R. 6 Ex. 802, 39 L. J. Ex. 211, 22 L. T. N. S. 861, 18 W. R. 1107. (w) Waller v. Northern, ifcc, Co., Times, Jan. 26, 1887. («) Cowley V. National Employers' Co., 1 'limes L. R. 255. (y) See May Ins. (Ist ed ) 784. 1 Death from bodily injury may mclude death from apoplexy caused by bodily injury. National Benefit Aaan. v. Grauman, 107 Ind 288. 369 !' f i m iiii i i|ii ill '■mi *469 THE LAWS OF INSURANCE. [* 458] *Uisual exception in accident policy. — These policies usually contain a clause to the following effect, "but it does not in- sureagainstdeathordisability arising from rheumatism, gout, hernia, erysipelas, or any other disease or secondary cause arising within the system, before, or at the time of, or following such accidental injury, whether causing such death or disability directly or jointly wilh such accidental injury." In the case of Smith v. Acddental Death Company, which has just been cited, the Court of Exchequer held (.Kelly, C. B., dissenting:), in construing such a policy, that erysipelas resulting from, and caused solely and exclusively by, an accidental injury in the foot of the insurea came expressly within this exception, and that therefore the insurers were not liable on the policy. Hernia — operation. — But where hernia caused solely by eternal violence was followed immediately by a surgical operation which was intended to relieve the patient, but caused death, the Common Pleas held that such a case did not come within the exception (2/), and therefore the insurers were liable. Overdose of medicine by mistake not uoilhin condition. — Death from an overdose of medicine by mistake is within a policy against death by accident " conditioned to be void if he die by his own hand or act voluntary or otherwise," the aim of the condition being merely to cover the varieties of suicidal self-destruction (z). Taking ah overdose of laudanum to relieve pain is not within such clause (a). Driving in vehicle. — Driving the assured out in a vehicle is not, a voluntary exposure to an obvious risk (6). Own negligence covered by policy. — The consequences of a man's own negligence may be insured against, and are insured against unless expressly excepted. [* 459] '-^Standing on joist which broke. — Where the policy required that the assured should use due diligence, and he stood on a joist on the second floor of a building which was being erected lor him, and it broke, and he fell and was killed; in America this has been held no want of due diligence (c). Consequences of wilful exposure to unnecessary danger, or peril, are by some policies excepted from the risk. Fatal fall by engine-dnver putting on brake. — Where an engine- driver slipped, fell, and was killed while going into the tender to put on the brake, which is the stoker's business, he was held not tq nave been needlessly exposing himself (d). Attempting to mjount carriage in motion. — In America the Courts (y) Htton V. Accidental Death Co., 17 C. B.N. S. 122, 84 L. J. C P. 28, dis- cussed in previously cited case. (z) Penfold. v. Universal Life Co., 85 N. Y. 817, 89 Am Rep. G60. And see Pollock V. U. S. Mutual Co., 48 Am. Rep. 204. (a) Mutual Life Co. v. Laurences Illinois (App.) 488. (6) Shilling v. Accidental Death, 1 F. & F. 116, 2 H. & N. 42, 20 L. J. Ex. 266, 27 do. 16, 29 L. T. 98, 6 W. R. 507. (c) Stone V. U. S. Casualty Co., 34 N. Y 871. (d) Providence Life v. Martin, 32 Maryland 810. 360 ACCIDENT. *460 have gone BO far as to hold that an attempt to get into a railway carriage whilst in slow motion is not wilful and wanton self-ex- posure to unnecessary danger (e). Assured took a ticket from A to B.; when the train reached B. he got out, and the signal was given for it to proceed to C, and the train had begun to move Assured then attempted to get in whilst the train was in motion and was killed. It was held natural and prudent for a man who wanted to go in the train, to get in ^"h Je it was moving, and that the insurers were therefore liable (j). Jumping on omnibus in mo- tion.— An assured who jumped on the step of an omnibus in mo- tion, intending to travel by it, fell, and was injured, and he was held entitled to recover on a policy against accident while travel- ling by public or private conveyance (gr). A policy of insurance against death or injury issued by a railway passenger assurance company provided, — (1) No claim for insurance shall be made when death or injury may have happened in consequence of *voluntary [* 460] exposure to unnecessary danger, hazard, or perilous adven- ture (g). (2) Standing, riding, or being upon the platform of moving railway coaches, or entering, or attempting to enter, leaving or at- tempting to leave, any public conveyance, having steam as a motive Eower, while the same is in motion, are hazards not contemplated y the contract. Passing from car to car is exposure to unnecessary danger. — This con- dition (2) will not include mere passing from one part to another of a train through which a passage was possible and contemplated, but such passing is exposure to unnecessary danger within condi- tion (1), especially if it be done at night (h). Meaning of ^^ wholly disabled." — Where -insurance is effected against an accident wholly disabling the assured, the necessary condition for compensation thereunder is proof that an accident has so far disabled the assured that he can no longer follow his occupation, business, and pursuits in the manner in which he usually carried it or them on before (i). It is not necessary to prove that the as- sured cannot do any part of his business ('). The American policies, to avoid these questions, seem to insert total disability from all business. In England, loss of both eyes, or of both legs, or of both arms, or of one of each, are by certain accident insurance companies treated as total disability. What notice to be given of accident. — Notice of an accident must be i: (e) Schneider v. Provident Life, 24 Wise 28. (/) Tooley v. Railway Passengers', &c., Co., 8 Bias. (U. S.) 399. {g) Champlin v. Railway Passengers', G Lansing (N. Y.) 71. (o) Burkhard v. Travellers' Co., 48 Am. Rep 205. (h) iSawteU' v. Railway Passengers' Assurance Co, 15 Blatch. (C Ct. U. &.) 216. (i) Hooper v. Accidental Death Co , 3 L T. N. S. 22, 5 h. & N. 557, 29 L. J Ex. 484, 7 Jur. N. S. 74 ; eame case, per Wilde, B., at 6 H. & N. 646. - See Saveland v. Fiddily & Casualty Co., 67 Wisconsin 174. 361 If.' ■ !t 111 lii^iiiilii *462 THE LAWS OF irsURANCE. given as stipulated in the policy, usually to the head office within fifteen days of its occurrence {k), even when tiie assured is [* 461] killed instantaneously (l). But unless this notice is *made a condition precedent to liability under the policy, the Courts will not hold delay fatal to all claim, but merely visit the claimant with the costs (if any) occasioned by delay (A). Notice of instant death. — And where a policy against accident was made subject to a condition that, in the event of any accident to the assured, he or his representatives should give notice tiiereof in writing to the company within ten days after its occurrence, and that unless the condition were complied with no person should be entitled to claim under the contract, it was held that notice must be given within the prescribed time even of instantaneous death, and that such notice might be given by any person appointed by the assured for the purpose (0, or even by any person acting on be- half of the persons interested in the policy (»i). Where accident eventually results in death, and weekly payments made, balance after deducting them is payable. — Where an accident happens disfi,bling for some time, and finally resulting in death within the period mentioned in the policy, only the balance remaining due on the policy after paying the weekly allowances for the period of sur- vival after the accident will, it seems, be payable. Death must ensue within specified time. — When the policy insures against fatal accidents, to entitle the representatives of the insured to recover, death must ensue within the time mentioned in tlie policy, usually three calendar months after the accident (w). Proof must be given of the death (•) to satisfy (i. e., which ought to satisfy) the directors (o), and the claim is usually made payable within one month after such satisfactory proof (*). Evidence on which the Court may deem a tenant for life to be dead is not neccd- [* 462] *sarily satisfactory proof of his death to an insurance com- pany with whom his life was insured (j)). (k) Gamble v. Accident Ins. Co., 4 I. R. C. L. 204. {I) Patton V. Emploi/cru' Liablliti/ Co., 20 L. 11. Ir. 93. Casscl v. Lancashire and Yorkshire Co., 1 Times L. R. I'JG. i {k) Stoaeham v. Ocean Co., 3 Times L. R. (593. (l) Palton V. Kmploycrs' Liability Assurance Coi joration, supra. (m) IbiS., per Murphy, J. (w) Lochjer v Offlcji, 1 1. R. 2'!'), per Willes, J. Perry v. Provident Life, 99 Mass. 102. Same v. Hamc, 103 Muss. 242. (o) London Guarantee \, Fearnley, 5'App. Cas. 910, 43 L. T. R. S. 390, 28 W. R. 893. ( «) Doyle V. City of Glasgow, d;c., Co., 53 L. J. Ch. 527, 50 L. T. 323, 32 W. It. 47(1. " Denial of all liability is n waiver of the right to require proofs of death. Kan- sas Protective Union v. Whitt, 3(1 Kuii. TfiO. * The ngent who acteJ in effecting insurance, assured to act as the agent in re- ceiving i)ro()fs of death. The conipaiiv, hy its acts, recognized the agency. Held, that agents' acts bound company, 'rravcllers Ins, Co. \, Edwaida, 122 U< 8. 302 467. ACCIDENT. *463 Allowance for disablement twenty-six wee^s.— Allowance for disable- ment is usually limited to twenty-six weeks for any one accident and in respect of any one year's premium. True construction of accident policy.— Where an accident policy in- sures against two classes of injuries, namely, those which occasion loss of life within a certain period, and those which shall not be fatal, and contracts to pay in the former case an agreed lump sum at death, and in the latter case a certain sum per week, the two pro- visions are to be construed together, and the evident intent is that if an injury happens within the meaning of the policy it is insured against as coming within one class or the other. If it were other- wise construed, an injury which should not prove fatal within the specified time would lurnish no ground of action till it should be made to appear that it would never prove fatal. This would render the insurance nugatory in such cases ((/). A policy runs for fifteen days after the renewal premiums become due, and the insurers are liable for that period. But, unlike life policies, accident policies may be discontinued, and, if notice to do BO be given before the end of the year, the assured will not be en- titled to tlie days of grace any more than in fire policies (r). Proof of accident to satisfy directors. — Where the policy requires that such proof of the accident alleged as ground of claim shall be given as the director shall deem necessary to establish the chim, it will be construed . demandiug what they shall deem reasonably necessary (s). * Employers^ Linbility Act. — Employers of labour are [*''• 463] now by statute {t) made liable lor accidents of certain kinds to their servants. In respect of such liability they have an insurable interest in the life of even employ^ up to the limit of compensation provided by that Act. The Railway Passengers' Assurance Co. has by a private Act (u) taken special powers to insure the liability of employers against their liability under the Employers' Liability Act, and other com- panies have been constituted for the same purpose under the Companies Acts. < Insurers against employ( rs' liability require to know the nature of the business in which the liability is to be incurred, the number of })erson8 employed, the mode of conducting the business, and the amount of wages paid (on which the premiums are calculated). In a very recent case a question has arisen as to which a difference of opinion exists. The case was as follows : — Unusual operation by ivorkmen performed by employe's' direction. — An unexploded shell brought from Alexandria, mistakenly be- {q) Perry v. Pi'ovident Life, flO Mass. 102. Same v. Same, 103 Mass. 243. (>•) See Salvin v. James, (J ICast 571. (a) Bnwntitein v. Amdental Jh-ath. CI L. J. Q. B. 17. 6 L. T. N. S. 550, 1 H. A; 8. 782, H .hir. N. 8. 500. 8f;9 Maiihi/ v. Gre.sham Life, i L. T. N. S. 347, W. R. 547. 31 L. J. Ch. 04, 2\, lieiiv. 43i>, 7 .liir. N. S. 3H3. (0 KiiiplovcfH' biubility Act, lb80 (43 & 44 Vict. c. 42). (u) 44 & 46 Vict., cup. xli. ^ 363 I m >;•' % ' t : I 1, ♦464 THE LAWS OF INSURANCE. lieved to be spent, was sent to a gun-making company for the purpose of cutting it with machinery which they had made for other purposes, but which was the best for the purpose desired. Before the shell was cut it was discovered to contain gunpowder. A workman was told to clear out the powdt r, and while he was po doing the shell burst and injured him, and he recovered compen- sation from his employers, who were insured in respect of their gunmaking business and their statutory liability to their employes. The policy contained a warranty against explosives, and when the employers sued the insurers for the indemnity the insurers pleaded this breach of warranty, and, further, that the man was not when injured engaged in the ordinary work of the employers as described in the policy. The employers obtained judg- [* 464] ment at the *trial, but the Divisional Court was divided on the question whether the particular accident was within the policy (x). The Court of Appeal, however, unani* mously held that the accident was covered by the policy (y). Insurers may exclude risk arising from change of trade. — Apart from the circumstances of the particular case, it is clear that the insurers are not bound to take the risks of a change in the trade, or t'le mode of conducting it, and can by apt words exclude such risk. Contract of indemnity. — It may be observed that this form of in- insurance, though on human life, is merely a contract of indemnity against a legal liability. Employer mitst defend if required by insurer to do so. — The employer will be obliged to defend an action by the workman if the insurer requires, and if he does so on the request of the insurer, or other- wise reasonably, he will be entitled to recover all the cost which such defence has putj him to, as in the case of re-insurnnce (2). " Manual labour, English and Scotch opinion divergent. — But pay- ing without liability will not entitle the employer to indenmity unless the insurers advised payment. And the liability, to be en- forceable iigainst the insurers, must be not only one which falls on the emjjloyer within the statute (otherwise the employer would have insurable interest), but also within the policy. Thus, in con- sequence of the dififerent interpretation put by English (a) and Scotch (6) Courts on the words ''manual labour" in the statute, which applies to both countries (c), a Scotch omnibua-owner has both liability to and insurable interest in his conductors, whereas an English owner has neither. (x) Henri/ Rifle Barrel Co. v. Employers' Liability Co., (Q. B. D. March 1884.) (»/) The Times, 18th July 1884. (z) Siipia„ pp. '225 et seq. (. Phillips v. Fuxall, L. \L 7 (r) Guardians Mannfield Union \ Wright, Q. K D. r,Hn. (s) lienham v. Uaiitd Guarankc, 7 F.x. 744, Ki .lur «!M, 21 L. J. Ex. 317. (t) Towle V. National Guardian 30 L. J. Ch. .mk), 7 Jur. N. S. 1109, r» L. T. N. S. 193, 10 W. R. 49, rcverHing 9 W. H. (14!)^ (tt) Fanning v. London Guarantee Co , 10 Victorin L. K. h mf^ ■1-h: *471 THE LAWS OF INSURANCE. of like nature and conditions (v). The efifect of this is merely to continue the contract for a second term. At the end of that term, if no notice to continue is given, or other arrangement made, the policy drops. Alterations in the rules of the company, on the faith of which the assured took the guarantee (w), will not, however, have the efifect of determining su a renewed contract if no notice to terminate has been given by ether party (x), and the insurers will be entitled to the renewal premium. Amalgamation. — Amalgamation with another company [* 470] wiJl not aflfect *the validity of the renewal, whether it be within the powers of the company or not (y). Where one of the conditions indorsed was that all guarantees, whatever might be the original term, should from the expiration of such original term be treated as a renewed contract of the like na- ture and conditions, unless either the member interested therein, or the board of directors, should give two calendar months' notice of an intention not to renew the same, it was held that the renewed contract was not itself to be deemed to contain this particular con- dition as to renewal, and that therefore even in the absence of no- tice the contract did not extend beyond one renewal. "A" renewal is one renewed contrac* (z). Retirement of partner from guaranteed firm. — Guarantees on grops annual 'eturns (a), floating risks or rent, are sometimes granted. When they are made to a partnership with a provision that tlie guarantee shall cease on death or retirement from business of any member, the retirement of a partner will avoid the guarantee, an^ the company cannot, it seems, affirm it and sue for the premium (a). Subrogation of company. — A guarantee company issuing these policies is as a surety entitled to all the ways and means of the per- son guaranteed against the principal debtor (6). Liquidator and receiver. — Liquidator under the Companies Acts may give, in lieu of the two sureties usually reqiuired. the guaran- tee of any society established by charter or Act of Parliament (c). Receivers in the Court of Chancery have been, after [* 471] *8ome diflference of opinion and practice, allowed to do the same {d). No case on the point seems to have occured in the Queen's Bench Division, and the aew Rules (e) prescribe that unless otherwise (v) Solvency Mutual (Guarantee Co. v lYoane, 7 H. & N. •">, 31 L J. Ex. 139. Iw) Solvency JUutual Guarantee v. Freeman 7 H. & ?^ 17. (a;) Solvency Mutual Guarantee v. rork, 3 H &. N. -588, 27 L. J. Ex. 487. (y) King v. Accumulative Life, 3 C. B. N. S. 151, 6 W. R. 12, 30 L. T. 110, 27 L. J. C. P. 57, 3 Jur. N. S 1264. 0) (6) (c) id) ners v Solvency Mutual, dkc, v. Froane,Sl L. J N S. Ex. 198, 7 H. & N. 5. Solvency Mutual Guarantee v. Freeman, 7 H. & N. 17. Mercantilt Law Amendment Act. Companiea Act, 1862, General Rule 10. Colmore v. North. 27 L. T. N. 8. *05, 48 L. J. Ch. 4, 21 W. R. 48. Man- Furze, 11 Beav, SO. (e) Ord. 1. r. 16. 368 GUARANTEE INSUItANCE. *471 ordered the person to be appointed receiver shall first give security to be allowea by thelCourt or a judge; such security to be by recog- nisance in the Form No. 21 in Appendix L. unless otherwise or- dered. Administrator pendente lite. — But there is little reason to doubt that the Chancery practice would be followed in the whole of the High Court, and in the Probate Division an administrator pendente lite who is a mere receiver has been allowed to offer this form of security, on the Court being satisfied that the bond proposed was in accordance with the rules prescribed by the constitution of the society. The security is certainly better than that of a private person (/). (/) Carpenter v. Queen's Proctor, 7 P. D 235, 51 L. J. Prob. 91, 46 L. T. 821, 31 W. R. 108. I T n f if 24 I'OUTKK <►!« T\8UKANCK. 3(>9 ,i si *473 THE LAWS OF INSURANCE. [* 472] *CHAPTER XXVII. BANKRUPTCY. Must vu>tice of aaeignment have been given to defeat claim of trustees in bankruptcy? — Prior to the Bankruptcy Act, 1869, where the assured affected to assign a policy of life assurance for valuable considera- tion, the assignee for value would not have a good title as against the assignee in bankruptcy, unless he had given notice of the as- signment to the insurance office, as the policy would in the absence of such notice be deemed to be in the order and disposition of the bankrupt, and pass to the assignee in bankruptcy accordingly, un- der the order and disposition clause of the statute (a), nor would the giving of notice be rendered unnecessary by the practice of the particular office not to take notice of assignments (6), and the no- tice must have been actual and not merely constructive (c). Now, however, it is not necessarjr for the assignee for value of a policy of life assurance to give notice to the office in order to pre- vent the policy passing to the trustee in bankruptcy; because poli- cies of assurance, being choses m action, are excepted from the operation of the order and disposition clause of the Bankruptcy Act, 1869 (d), and also from the like section of the Bankruptcy Act, 1883 (e). Can claims arising out of insurance be proved in bankruptcy f [* 473] — Under the older Bankrupt Laws, demands payable *on a contingency could not be proved against the estate of the bankrupt, and this risk was held to apply to money assured by a policy of insurance ; but a provision was inserted in the Bank- ruptcy Act, 1849, s. 174, enabling the assured in a policy of insur- ance to make a claim, and after the loss or contingency happened to prove and receive dividends, in like manner as if it had hap- Eend before the bankruptcy. Proof in a similar case would now ave to be made under s. 31 of the Bankruptcy Act, 1869, the cor- responding section in the Bankruptcy Act, 1883, being s. 37. Proof for future premmms. — Proof for unpaid premiums must be made under s. 81 of the Bankruptcy Act, 1869, or under s. 37 of the Bankruptcy Act, 1883. is la) Williams v. Thorp, 2 Sim. 268. (6) Went V. RHd, 2 Ha. 249. Ic) Thompson v. Spim, 13 Sim. 469. (a) Bankruptcy Act, 1869. s. 16, sub-s. 6. Ex parte Ibbetaon, 8 Ch. D. 619 89 L. T. 1, 26 W. R. 848. Ex parte Barry, L. R. 17 Eq. 118, 48 L. J. Bkcy. 18. (e) 46 & 47 Vict, c 52, 8. 44, sub-s. 8. 370 BANKRUPTCY. *Ar4 Proof by trustees.— Where policies were settled, proof by the trustees, after payment of the moneys assured, was allowed againfit the settlor's estate, for the premiums which the trustees liaroved in the bankruptcy (o). Avoidance of voluntary settlement of policy — Any settlement ctf property made by a trader — not being a settlement made before and in consideration of marriage, or made in favour of a purchaser or incumbrancer in good faith and for valuable consideration, or a settlement made on or for the wife or children of the settlor of Eroperty which has accrued to the settlor after marriage in right of is wife — shall, if the settlor becomes bankrupt within two yeaiip after the date of the settlenient, be void as against the trustees in the bankruptcy ; and shall if the settlor becomes bankrupt at any subsequent time within ten years after the date of the settlement, be void as against such trustee unless the parties claiming under the settlement can prove that the settlor was at the time of making tiie settlement able to pay all his debts without the aid of , the *property comprising in such settlement ( p). The [* 477j word " property " includes a policy of life assurance, the same being a chose in action (r/). • The new Bankruptcy Act, 1883, contains a similar provision to the foregoing, but ot a more extended operation, inasmuch as it apr plies to all settlements by whomsoever made, and not merely to those of a trader (r) 570, doubted in Leslie v. French, 23 Ch D. 552. See Xorris v. Caledonian. 8 Eq. 127, 20 L. T. N. S. 930, 17 W. R. 054, and Foster v. Roberts, 'J W. R. 605, 7 Jur. N. S. 400. , , . (o) Saunders v. Best, 13 W. R. ICO, 17 C B. N. S. 731. Bankruptcy Act. 1869 s. 31 : Bankruptcy Act, 1883, s. 37. « p) Bankruptcy Act, 1869, s. 91. q) Ibid,, s- 4. (r) 46 & 47 Vict c«52, s. 47. i ft-j f)', ■\rU i< I It I m ..i 37o ill m IMAGE EVALUATION TEST TARGET (MT-3) 1.0 1.1 UilU 12.5 ■50 *^^ MHH ■ii Itt 12.2 m 1.25 1 1.4 IIIJ4 ^ ^// — ► Photographic Sciences Corporation ^- %K^^ ^ ^. 33 WIST MAIN STRUT WnSTIR.N.Y. MSIO (7U)I73-4S03 '<* i^ <^ 4^ ^ 479 THE LAWS OF INSURANCE. t*478] ♦CHAPTER XXVIII. THELLUSSON AND SUCCESSION DUTY ACTS. Direction to pa? premiuma noiaccumulatUm within Act. — A direction or discretion i^* •. will or deed to pay out of the testator's or settlor's property the i re ninms on a poney of insurance made or to be made upon the i'le of another is valid for the whole life insured, and is not an accumulation within the meaning of the Thellusson Act (39 & 40 Gt-< . III. c. 98) (a). That Act only aims at dispositions for the accumulation of rents and profits as such, and not at dit^positions having reference to bar- gains and contracts entered into for other purposes than the mere purpose of accumulation. ^ The benefit, if any, arising to an o«itate from a policy on which premiums have been paid for over tweiitv-one years arises not from ■ccumulaiion, but from application and expenditure of income in obtaining a contract (6). To insist that the policy must be dropped at the twenty-first year would be to say that what is construed for that purpose as an accumulation shall operate as a vain casting away of money. For a policy is evidence of a contract enforceable bv forfeiture of pre- vious payments, and the premiums could not be got back at the end of the twenty years. [*479] *A testatrix empowered her trustees, if they should Bee cause, to make insurances on the life of a nephew in such a way as to enable them to receive a sum or sums at his denth, to be then applied for the purpose of the trust. *She died in 1841. In 1845 the^ trustees insured the life of the nephew largely, and paid premiums out of the income of the estate till 1878, when lie died. The next-of-kin claimed repayment of these premiums so far as paid after twenty-one years from testatrix's death as accumu- lations of income forbidden by the Thellusson Act, but the claim was refused (c). Relation, o^ predeceasor and succeaaor does not arise rm policy. — By the Succession Duty Act (d), s. 17, "No policy of insurance on the life of any person shall create the relation of nredeeessor and suc- cessor between the insurers and the insured, or between the in- (a) Bassil v. Liater, Hare 177. Ilalford v. CUm, W. N. 7th May 1888, p. 8U Cathcart'a Trmtees, IOCS. C. (4th sories) 1206. (ft) CathcarVa v. Ueneage'g Tnisteea^ supra. But see Jartnan on Wills, vol. 1 (4th od.), 810. (r) CathcarVa Truateea v. Heneage'a Truateea, 10 G. S. C (4th nories) 1206. (rf) 16 & 17 Vict. c. 61, 8. 17. 874 THELLUSSON AND SUCCESSION DUTY ACTS. 480 surers and the assignee of the assured." Upon this section Sir George Jessel said (e): "No doubt there may be a gratuitous policy of insurance. But the words in s. 17 mean a policy eflfeoied in the ordinary way in consideration of a premium or premiums. If soj that is a contract for money, a purchase of a reversionary sum m consideration of a present payment of money, or, as is gen- erally the case, on the payment of an annuity during the lite of the person insuring, it is clearly a contract which could not be fairly described, as I read it, as a disposition of property at all, be- cause a mere covenant to pay money is not a disposition of property in the ordinary sense. The insurance company does not die, and therefore a covenant to pay money on the death of some other person is a mere covenant to pay money. It is no disposition of the property of the insurance company or of any one else." The reason for the exception suggested by Sir George* I'Jessel is that it was inserted ex abundarUe eatUekt to ^uiet [* 480] the fears of persons interested in insurance companies ex cauteld (/). The clause extends to all policies, whether for the lives of the assured or not, including policies taken out by pur- chasers in reversion, but not policies so far as they were dealt with as property (g). No duty on aaai^ed policy. — No succession duty is due on policies of insurance assigned inter vivos, even where the assignment is made to a son as a means of liquidating a' large amount of debt undertaken by him for his father (h). hiii \ll (e) Frver v. Morland, 8 Ch. D. 685. (/) ^ryer v. Morland, « Ch. D. 676, 686 Ch. D. 676. a) 128 Hansard, 401, 1898. A) Lord Advocate v. Earl of Fife, 21 Sc. L. R. 151. Fryer v. Morland, 8 876 ACC A< A • m INDEX. [The paging refers to the [*] pagew.] ABANDONMENT- Tho doctrine of, 4-5 ACCIDENT— Policy against, nature of, 19, 445 Policy against, within statute as to interest, 70, 448 Policy against, whether contract of indemnity, 445 Whether amount of insurance deducted from damages, 446 Age for insuring against, 448-450 Friendly society, insuring against, 448 Definition of railway, 449 Whilst breaking journey, 450 Insurance against, by railway ticket, 450 By railway, amount '^f compensation, 451 Contributory negligence, effect of, on claim for, 451 Insurance against, need not be Continued, 451 Definition of, 453-454 Sunstroke, whether it is, 454 Rupture by jumping from train, whetlier it is, 454 Putting arm out of window, injury from, 455 Fall when catching train, 455 Drowning, whether an, 453 Presumption against suicide and in favor of, 45t] Sprain trom lifting weight, whether it is 456 Rupture from using clubs, whether it is, 45tf Inflammation from ruptured blood-vessel, 457 Peritonitis from blow 457 Erysipelas from wound, 457-458 Doctor's hands, death under, 457 Overdose, deatn from, whether, 457 Usual exception from policy against, 457 Death must be solely caused by, to be within policy, 457 Falling from joist, whether an, 458 Whilst mounting carriage in motion, 450 "Wholly disabled" by, meaning of, 460 Notice to office of, 400 Allowance for disablement by, 461 Construction of policy against, 401 Proof of what requisite, 4til-462 • ACTUS DEI— Excepted from risk taken, 178 ADMINISTRATION- Has insurable interest, 07 Not bound to insure, 07 (377) 482 INDEX. [The paging refers to the [*] pages.] AGE— Proof of, 139, 204 Misstatement of, 204 AGENT- Relainer of premiums by, not failure of company to repay, 26 Authority ot, must be followed, 78 Receipts of, company bound bpr, 78 Debitmg premium to, effect of, 79-95 Uatiticatiou by receipt of premium from, 90 Delay in paying premium through change of, 91 Days of grace, receipt of premiums after, by, 94 To pay premium, promise by, 96 Concealment by, 155 Misrepresentation by, 156 Insurance vitiated by misrepresentation or concealment of agent, although policy effected by another, 165 "The life" insured may of the insured be, 166 Notice to, of change of business, 170 General, authority of, 422-428 Policy not to bo granted by, 423, 481 Representations of, whether binding, 423 Del credere, insuring, 428 Writing answers for assured, 423 Extending time fur paying premium, 4'24 Commissiou to, agreement by directors for payment after agency ceased, 424 Authority of, varied by private instructions, 426 Without instructions, 420 Notice to, what suilicient, 426, 432 Mistaken instructions to, company bound by, 426 Authority of sub, 427, 436-436 Insuring in wrong company, 427 Credit to, of premium, 427 Credit by, of premium, 428, 429-431 Payment of premium cannot be dispensed by, 428 Payment of premium by cheque to, 428 Insuring himself, 428, 429 Privileged communications between company and, 429 For two companies re-insuring one in other, 429 Cross account of, with a^ent of other company, 480 Not acting within authority, yet company uound, 4h0 False representation by, where assured told truth to, 480 SpeciKc performance of contract of, 431 Powers of local, 431 Company not bound to grant policy where preminm paid to, 481 Appncations received but not accepted by, 431, 482 Forfeiture, waiver of, by, 482, 433 To dispense with conditions, power of, 432 Filling up proposal, effect of, 432-4ii4 War, effect of, on acts of foreign, 4IJ4 Indorsement of policy by, 436 Fraud of^ effect of, on company, 486 Contracting outside company's bUsinesB, 487 Contracting outside his authority, 437 Insuring for another does not warrant interest, 489 Insuring for another without authority, 489 To effect policy caimot ai^ust loss, 440 Negligently insuring, liable to assured, 441-442 878 INDEX. 483 (The paging refers to the [•] pagOH.] AGENT— ( Continued). Commission not receivable from insurer and insured by, 442 Discount does not belong to, 442 Assured affected by fraud of, 442 Principal bound by knowledge of, 442 When "the life " is of insured the, 443 Whether medical man in of insured the, 443 Employed to procure assurance, authority of, 443 AlyTERATIONS— Of premises, whether covered by policy, 109 AMALGAMATIONS— What it is, 403 Ultra vires, 404, 410 Power to contract for, not implied, 404 Ratification of, when ultra vires, ^5 Power of, how given, 406 Policy-holder's claiui utler, 406 Costs of liquidating companies ail'T, 406 Policy-holders, when found bv, 40(i-410 Effect of on creditorsj 407 -4('« Effect of covenant to indemnify on, 408 Effect of, on sbarehoiders, 408-410 Of life offices, leave ot Court requisite, 409 Effect of successive, il'i AMBIGUITY— In policy may be cleared by cus om, ri-32 ANNUITANTS— Are creditors of ccmpany, 399 Whether receipt by, amounts to novation, 418 ANNUITY— Policy effected by grantee of, 340 Policy effected by mortgagee of, 340 Insurance of arrears of, o41 , APPOINTMENT— Of policy to executors of settlor, 883 APPORTIONMENT— Of premiums, not within Apportionment Act, 97 Of premiums, not if risk attached, 98 Of insurance-money, where insurance by mortgagor oad mortgagee in differ ent offices, 293 APPURTENANCES— Recovered for, as part of freehold, 61 ARBITRATION— Ouster of JuriBdiction of Courts by, 209-212 Common Law Procedure Act, 1864, as to, 212 Ascertaining amount before action by, 218 When all liability disputed, 218 Condition to refer to, 214 When iVaud charged, 214-216 879 484 INDEX. [The paging refers Ui the [•] pages.] ARBITRATION— ( CoMf/Hwed). Question of law, whether referable to, 210 Waiver of right to, 216 Specific performance of agreement to refer to, 216 Regarding Railway Passengers' Assurance, 217 Whether assured's refusal to submit to, is an answer to his claim, 253 ARSON— Whether within fire risk, 1 15-116 Danger of, to be disclosed, 117 By assignor of policy, 1 15 By mortgagor, effect of. on mortgagee's policy, 119 By wife or relation, 119 Proof of, 119-201 Defence of, 201 ASSIGNEE— Takes assignor's title, 316 Affected by fraud of assignor, 317 Insurer's knowledge of fraud upon, 317 Whether company trustee for, 396 ASSIGNMENT— Effect on, of arson by assignor, 1 15 Effect on, of suicide by assignor, 133-134 Of fire policy by one partner to another, 181 Of claim after loss, 183 After breach of condition, 183 Owner may give carrier benefit of insurance without breach of condition against, 231 Of property, whether assignor can recover on policy after, 297-300 Of life and fire policies different, 298 n (./) Of fire policy, whe -her legal, 298- 00 Of fire policy, whether insurer's consent necessary, 298, 800-302 Of fire policy must accompany property, 800 Pledge of flre policy no breach of condition against, 810 Of life policy, »y what law construed, 310, 415-41tt Of life policy, notice of, 810-813 Of life policy, effect of, 810-815 • Of life policy, how made, 810-317 Of life policy, right to sue under, 311 Of life policy, form of, under Policies of Assurance Act, 812 Of life policy, effect of under Policies of Assurance Act, 813 Of life policy, effect of Judicature Act, 314 Agreement for, without delivery of policy, 814 Of life policy, what does not amount to, 815, 81C Before winding up relieves assignor, B 8 Validity of, not affected by length of time between uotlce of, to company and death of as.>iured, 319 Of policy enforceable by specific performance, 319 Of policy carries bonus, 820 Of policy, proper covenants in, 820-821 Whether authority to hold policy amounts to, 824 Of policy otherwise void good as charge, 824 By bankrupt secretly, 324 By felon, 825 Inchoate settlement amounting to, 8'.'5 Of policy for benefit of wife, whether her consent necessary, 828 By married women of trust polity, 886 380 INDEX. [The paging refers to tlip [ • ] pages.] ASSURED— Cunnot make profit, 2-3, 4-3 Cannot release third parties to insurer's prejudice, 5 His nedigence within policy, G Not oldiged to run the risk, 7 Must f\i\\y disclose risk, 9 Duty of, in case of fire, 10-11 Cost of performing such duty, 11-12 May rescind contract induced by insurer's fraud, ;J2-33 Where policy obtained by fraud of, course open to insurer, 33 Infant may be, 35 Married woman may be, 35 Cannot evade law by insuring nominally for himself, 39 Has insurable interest in own life, 39 Interest of, in subject of insurance must be lawful, 44 Need not have legal interest, 47-48 Any one wi h interest may be, 49 Death of, within days of grace, 104 Going beyond limits, 106 Neglii;ence of: loss from, 116 Wilful act of, loss from, 116 Duty of, to save property, 126 Death of, caused by person entitled to policy-money, 131 Material facts must be disclosed by, r")2-163, 159-161 Material facts must be disclosed by every agent of, 155 Statement of '' the life " as agent of, 165 What need not be disclosed by, 164 Defence to action by, when insurance paid, 227-229 Assignment by insurers of subrogated rights, defence to action by, 229 Not to prejudice insurer's rights, 231 Re-insurance discharged by payment to, 280 Has no lien on re-insurance poliry, i 60 Character of, to be disclosed on re insurance. 2i'.5 Interest of, not defeated by mortgage, 303 Going abroad, whether policy avoided, 3"il. Presumed to read answers written for him by agent, 428 Affected by agent's fraud, 442 Notice to broker of, not notice to insurer, 442 Correct description of, 462 AVERAGE— Condition as to, 246 Two-thirds clause 248 Clause in fire policy as to, 249 When goods in lighters, 250 Difference in fire ond marine assurance of, 240 BAKER— " Stock-in-trade of," what covered by policy on, 82 HAILEES— As to ineuring for full value, 52, 65-67 Goods held in trust by, 56, 181 Insurance bv, and by bailor, 240 Insuring owii and bailor's goods without authority, 440 BAILOR— Insurance by, and by bailee, 240 381 485 I' 1 486 INDEX. [The paging refern to the [ * ] pageM.] BANKRUPT— Insurable interest of creditors in esmte of, 67 Whether insured can sue when a, 182 Policy of, passes to trustee. 820, 472 * Procuring renewal of policy to creditor, 320 Secret assignment of policy by, 824 Premiums paid by mortgagor when a, ^89 Whether policy iiasses to trustee of, 472 Proof for amount of policy where company is, 473 To whom policy-moneys faielong when premiums paid by, 475 Disclaimer by trustee of, 476 Surety for payment of premiums due from, 4T6 Voluntary settlement of policy by, 470 BILL OF SALE— Whether holder of, entitled to proceeds of policy, 284 BILLS OF LADING— With direction to insure, 64 BONUS— Whether it passes by contract to assign policy, 820 Whether trnsts of policy include, a28 Deduction of, from calls, 378 Whether income or capital, 39'< Novation by acceptance of, 411 broker- As to insuring full value, 52-54 Lien of. on policy, 3o0 Employed to obtain policy, authority of, 430 BROTHER— Sister's insurable interest '"n life of, 40 BUILDING— « Is insured qua building, 252 "BURNT OR NOT BURNT"— Insurance as, 28, 46 CANCELLATION— Of policy, notice of, for agent for procuring insurance, 448 CARRIER— Insuring for full value, 52, 55-56 Insuring goods held iu trust by, 50 Risk of, when it begins and ends, 100 Negligence of, causing loss, 1 16 Insurer has subrogation against, 230 Owner of goods may give oenefit of insurers to, 231 CERTIFICATE— Of loss, by magistrate Ac, 192 CHILD - Insurable interest m parent's life, 40 382 INDEX. [The paging refers to the [ ♦ J pages.1 CLAIM— Condition as to fraud in, 197 False statement in, 198 Excessive, whether fraudulent, 199-200 Mistake in, 200 Application of funds set apart to answer immediate, 397 How valued on winding up of company, 401 COFFEE-HOUSE— Whether hazardous trade, 110 COMMISSION— Whether insurable, 41 Not payable to agent by insurer and insured, 442 COMMISSION AGENT - Insurance for full value by, 57-58 COMPANIES FOR INSURANCE— Varieties of, 360 How formed, 862 Registration of, 366-372 Deeds of settlement can be inspected, 367 What are, under Companies Acts. 307, 379 Beason for incorporating, 368 Contracting tiftra »irc», 368-371 Using seal informally, 369 Business of, must conform to constitution of, 870 Form of contracts of, 371 Appointment of solicitor by, 372 Debentures in fraud of, 373 Powers of investment of, 374 Holdingoflandby, 379 Deposit of £20,000 by, 381 Keeping accounts of, 383 Life assurance funds of, to be separate, 383 Balance-sheet of, to be lodged with Board of Trade, P84 Actuarial investigation of affairs of, 384 Contribution to hre brigade, 386 Whether policy-holder creditor of, 387, 894 Whether policy-holder can interfere in management of, 387, 394 Whether policy-holder a contributory of, } 89 Funds of, how liable for loss, 390 Surplus profjts of, what are, 390 How liability of. limited, 392 Funds of, include unpai INDEX. [The paging refers to the [ • ] pagei.] DAMAGES— In action for negligence not reduced by insurance, 19 Secus, if death occurs through the negligence, 20 Indirect, not recoverable, 22SJ For breach of covenant to insure, 275 keep policy on foot, 348 repay premiums, 848 ,, _ „ not to go out of Europe, 349 Whether insurance money deducted from, 445 DAYS OF GRACE— What are, 9:^ Premium unpaid and loss during, 93 Insurer cannot terminate contract during, 93-94 Whether insurer bound to receive premium during, 93-94 Payment of premium after death, but during, 95 „ „ after, 95 „ ,, within, and death within, 104 DEATH— Campany liable though policy not issued before, 101 If not within period of insurance, company not liable, 108 By law, whether within policy, 129 By suicide, whether within policy, IRO By unlawful operation, whether within policy, 130 By drowning, whether within policy, 130 By duelling, whether within policy, 130 By own hands, 130, 133 Caused by person eifectin^ insurance, 131 Onus of proof where suicide cause of, 133, 456 Deduction of insurance from damages where negligence cause of, 446 From fall when catching train, whether accident, &5 In water, drowning presumed, 455 By train running over when seized with fit, 456 From ruptured blood-vessel by using clubs,^4o6 From inflammation after rupturing blood-vessel, 457 Within accident policy when solely from accident, 457 From erysipelas caused by wound, 457'458 From overaose, 457-458 From operation for hernia, 458 From fall from joist, 458 From fall from engine, 459 From fall from mounting carriage, 459 Amount of compeusation in case of, by railway accident, 450, 461 Proof of, 461 DEBENTURE— Intra vires, but in fraud of company, 873 DEBT- ^ Gaming, gires no interest, 69 Incurred during minority may give interest, 69 Paid since policy does not avoic insurance, 70 Statute barred before drooping of life, 70 When fully secured givts Intereet, 70 Creating liea gives interest, 70 887 491 492 INDEX. DEBTOR— [The paging refers to the [ * ] pages.] Interest in creditor's life of, 69-70 Interest of creditor in life of, 69 Wife of, securing debt, creditor may insnre her life, 70 Interest of one joint debtor in life of another, 70 Insurance by creditor on life of, 341-344 Whether charging with premiums makes policy belong to, 342 Not compellcbJe to insure for creditor's benefit, 346 DEPOSIT— Of policy as security, 298, 810, 855 Of policy by person out of jurisdiction with one within jurisdiction, 357 Of £20,000 by life companies, 881, 418 DESCRIPTION— Of property must be accurate, 104, 160 Partially true, 168 Substantially true, 160 DEVIATION— From route, effect of, on insurance, 100 DIRECTORS- - Ultra vires acts of, not binding, 868 Discretionary powers of, 869 Informal use of seal by, 369 Policy issued by ostensible, 869 Power of, to pay loss not within policy, 874 Must contribute for qualifying shares, 878 Powers of, presumed to be known, 422 Payment of commission by, after agency determined, 424 Appointed to select agents at commission, 436 Vacate office when participating in profits, 425 Fraudulent contract of, void against assignee for value, 425 Notice to, 482 DISCOUNT— Belongs to principal, not to agent, 442 DISEASE- Must be disclosed, 189 Predisposition to, 189 Requiring confinement, 189 "Local,'^wbat it is, 189 Fits, meaning of, 140, 149 Oout, meaning of, 140 Spitting blood, meaning of, 141 Drinking habits, meaning of, 142 Furiiishnig particulars of; 161 Insiu-pd unconscious of, 158 DOMICILE— Of company, where it is, 414 DONATIO MORTIS CAUSA— Life policy, subject of, 808 888 INDEX. IMJTXT17- ^^* paging refer" to the [ • ] pages.] DRINK.— Meaning of "under influence of," 167 DRIVING— Not exposure to unnecessary risk, 458 DROWNING— Whether death by, within life policy, 130 *' " " accident policy, 456 Where death in water, presumption of, 465 DRYING- Eiln used for, 110 DUELLING- Death by, 130 DWELLING— Gaol described as, 169 Room described as, 162 ELECTRICITY- Whether fire risk, 115 EMPLOYERS- Liability of, to workmen insurable, 462 ENTRY- Of premises by insurer, 202 EQUITABLE CHARGE— On policy, how created, 855 ERYSIPELAS— From wound, whether within accident policy, 467 EXCEPTION— Words of, to be taken against insurer, 30, 180 EXECUTION— Effect of, on right to policy, 182 Whether policy can be tahien in, 859 EXECUTOR— Insurable interest of, 67 De son tortf interest of, 68 Not bound to insure, 68 Should keep up policy, 349 As contributory, 876 EXPECTANCY— Whether insurable, 48 EXPLOSION— Whether fire risk, 118 EXTINGUISHING FIRE— Damage from, 120 493 889 494 INDEX. [The paging refers to the [*] pages.] factor- As to insaring full value, 68 As to his interest, 58 PALL- When catching train, whether accident, 456 On railway in fit, 456 From joist of floor, 458^ By engine-driver applying brake, 459 Whilst mounting moving carriage, 459 Whilst passing from car to car, 560 FELON— Assignment of policy by, 825 FIRE— Assured's dnty to avert, 10 Duty of assured in case of, 10-11 Cost of performing such duty, how borne, II-I3 Whether insurance on ship marine risk, 12 Insurer liable for loss caused by, not exceeding amount of policy, 16 Before date of policy, 27 Does not include explosion, 31 Policy npt issued before, company yet liable, 100 Whether more than one, covered, 100 To a^'acent property, disclosure of, 105 Date of ascertainment of property protected from, 107 Property in transitu not protected, 107 What the word includes, 112 Heat without, 112 Without ignition, 112 Case of, immaterial, 113 By friction, 113 By chemical action, 118 By vegetable fermentation, 113 By lightning, 115 To a^acent property, disclosure of danger of, 117 By incendiary, 118 By master of'^ship, 120 Extinguishment of, damage from, 120 Removal of goods to escape, 123 Saving property from, cost of, 122-125 Thefl during, 128 Usual conditions in policy against, 163-169 Connivance at condition as to, 198 Through accident, tenant's liability for, 270 „ negligence, tenant's liability for, 270 „ „ tenants may insure against, 271 ,, ,, covered by ordinary policy, 271 Whether rent payable in case of, 273 loss from, falls on purchaser, 801 policy passes with beneficial interest, 801 „ against runs with lands, 801 ,} „ „ passes on sale of property, 802 Notice nf assignment of policy against, 811 FIRE BRIGADE— Companies' contribution to, 886 890 ft »» INDEX. 495 [The paging referM to the [ • ] pages.] HTS— What meant by, 140-149 Death in water, whether caused by drowning or, 455 Falling on railway in, 456 FIXTURES— Reinstatement of, 284 FOREIGN CONTRACT— , Law applicable to, 415-416 FOREIGN INSURANCE COMPANY— Need not be re^isiered, 414 Trading here, liability of members of, 416 Trading here under conventions, 415 Law applicable to, 415-419 ' Provision of policies of, in different jurisdictions, 418 As to deposit of £20,000 by, 418 How to proceed against. 419 Agents of, when contract foreign, 419 Judgments against, in one part of the United Kingdom enforceable in othar parts, 42 1 General agent's authority, 424 FORFEITURE— Of premium when policy wager, 45 Of policy not favoured, 75 Insurers may be estopped from setting up, 75 Payment of overdue premium after death will not prevent, 79 By delay in paying premium, 91 Of premium, condition as to, 144, 196 Of policy waived, 165 Not cured by antedating receipt, 276 When not enforceable, 276 Waiver of, by accepting rent, 277 Relief against, 277 Mortgage of leaseholds may oppose, 296 Of shares does not exempt from contributing, 878 Credit of premium by agent after, 429 Waiver by agent of, 43^ FRAUD— Of assured, cancellation of policy for, 31 In obtaining policy, refusal of insurer to pay, 81 Waived bjr accepting premiums, 81 Course of insurer where policy obtained by, 81, 88 Of insurer contrary to contract, effect of, 81-82 Cancellinif policjyr for, 81-32, 162 Return of premiums in case of, 87 Delivery up of policy for, 162 Compromise in ignorance of, 166 In claim, condition as to, 198 Excessive claim not conclusive of, 200 Arbitration where charges of, 214, 215 _ Of assignor, and recove-y by insurer of money paid to assignee, 817 Duty of insurer aware that assignee deceived by, 817 Of ageot, assured affected by, 442 391 !l li i 496 INDEX. ■ [The paging refers to the [ • ] pagea.1 FREIGHT— Whether insnrable, 41 FRIENDLY SOCIETY— Insurance by, 131, 823 FURNITURE— During removal not within fire risk, 107 GAS- Whether fire risk, 114 . GAMBLING ACT— Makes insurable interest necessary, 36 Only value of interest recoverable, 87 Not in force in Canada, 87 ' In force in Ireland, 37 Not to be evaded, 89 GAMBLING INTERESTS— Not insurable, 44, 45 GIFT— Of policy, 825 GOODS— Sold but not delivered, insurance of, 46, 60-61 Held in trust, insurance b^ carrier, 66 Held in trust or on commission, insurance by forwarding agent, S6 ,« t, „ insurance by wharfinger, 67 „ ,. „ meaning of, 58, 59, 60 With vender at buyer's risk, 60, 61 Not separated from bulk, 62 Test of interest on sale of, 66 Specific description, whether necessary, 107 What, within policyj 107 Loading, whether within risk, 107 GOUT— Answer to question as to having had, 140, 149 GUARANTEE INSURANCE— Whether writing necessary for, 465 Not limited to fraud. 465, 469 What to be disclosed on effecting, 465-466 > Nature of, 465-466 Rights of surety in case of, 466 Contents of policy of, 467 Whether continuing, 469 Bv guardians of poor, 468 Change of mode of business, effect of, on, 409 Amalgamation, effect of, on, 460 Renewal of contract of, 469 Partner's retirement, effect of, on, 470 > Subrogation applies to, 470 Liquidators may avail themselves of, 470 Receivers may avail themselves of, 470 392 I INDEX. 497 GUNPOWDER - [The paginK refers to the [ • ] pogM.] I Not covered by policy on hardware, 32 Whether fire risk, 1 14 HARDWARE- Gunpowder not covered by policy on, 82 HAZARDUOUS TRADE- Whether coffee-house is, 110 Whether inn is, 1 10 Extra risk from, 169-170 Whether liquor-selling is, 170 ,, use of kiln is, 170 As an experiment, 171 Whether use of oven is, 172 ,, u;e of engine is, 172 ^ HEALTH— Non-disclosure of change of, before issue of policy, 155, 816 Meaning of "being in good," 433 HIRING AGREEMENT— Insurable interest under, 46-47 HOT WATER— Whether policy covers damage by, 115 HUSBAND— May insure for wife and children, 36 ,, wife's separate estate, 51 ILLEGAL INSURANCE— Void, 82-44 Insurance on unlicensed premises may be, 83 Gambling interests are, 44-45 Insurance of seamen's wages is, 44 Separation of legal from illegal interests in same policy, 44 Notice to abandon, 85 Whether premium returnifble, 85-86 INCOME TAX- What profits chargeable with, 898 INDEMNITY— Fundamental principle of insurance, 1-2, 221 Not always complete, 2 Not applicable to life insurance, 2 Consequences of principlcj 4-5, 234 Whether creditor s policy is, 15-17 la against loss not accident, 221 Insurance on property is, 221-223 What is, 222 Rule, " new for old " is, 223-257 Whether valued policy is, 221-226 Subrogation part of law of, 227-230 Money received by insured in excess of, is insurer's, 283 Explained on insurance by mortgagee, 284 Insured not to receive more than, 239 Whether accidental insuraace, contract of, 446 > 3 893 498 INFANT- May insure, 85 INDEX. [The paging refers to the [ • ] pages.] INFLAMMATION— From ruptured blood-vessel, whether within policy, 457 INJUNCTION— Misapplication of funds restrained by 374, 891 To restrain use of name, 367 INN— Whether hazardous trade, 110 INSURABLE INTEREST— Always necessary, 13, 14, 36 Assured cannot recover beyond, 13 Must exist at time of insurance and loss, 13, 15 Any one with, may insure, 35, 49, 50 Wife presumed to have, in husband's life, 35 Husband not presumed to have, in wife's life, 85 Except in Scotland, 35 Only value of, recoverable, 37, 50 Definition of, 37-39 Precise nature of, need not be stated, 87 Consignee has, 37 Prize agent has, 37 Insurer has to re-insure, 38 Any person has, in his own life, 89 Whetner relationship gives, 40 Parent in child's life, 40 Son in father's life, 40 Moral certainty of having property does not give, 40 Bankrupt has, 42 Execution debtor has, 42 When must exist, 42 Theatrical manager in actor's life, 42 Heir of person non compus, 42 Borrower from insurer, 42 • Employed in employer, 43 Railway company, in houses exposed to sparks from engine, Employer in employed, 43 Must be an enforceable one. 43 Value of, at date of policy recoverable, 48 Must be lawful, 44 Kinds of, deed not be specified, 46 Qualified interest may amount to, 46 Right of property, not necessary to constitute, 47 Tortious disseisor may have, 46 In goods sold but not delivered, 46 In house built on wrong laud, 47 In substituted goods, 47 Stockholders in a corporation none in corporate body, 48 Risk alone may constitute, 47, 49 Legal interest not necessary to constitute, 47-48, 68 Equitable interest gives, 48-49, 68 Does not depend upon quantum of, 50 Landlord has, 60 Tenant has, 60-51 394 INDEX. , [The paging refers to the [ ♦ ] pages.] INSURABLE INTEREST-(eo«1 notice- To pay premium, 92 Of change of business, 169 Of loss, 180, 190 Of loss, condition as to, 188 Of mortgage of life policy, 312 Of assignment of policy, 311, 313 ,, ,, must be acknowledge, 313 „ ,, given by first incumbrancer informally, 312 „ ,, not to be delayed, 318 ,, ,, inquiry as to previous, 313 Whoso duty to give, where policy settled, 32ft Of companies' statutes and deeds presumed, 368 To agent, what sufficient, 426, 432 To directors, what sufficient, 482 To solicitor, who is also insurer's agent, 426 To assured' s broker not notice to insurer, 442 Of cancellation of policy, 444 Of assignment, whether necessary to prevent policy passing to bankruptcy trustee, 472 NOVATION— What it is, 402-407 Proof of, 402 When creditors bound by, 408-408 When policy-holders bound by, 406 None where companies' distinct, 409 Whether payment of premiums is evidence of, 411 Whether acceptance of bonus is evidence of, 412 Claim against transferree company is evidence of, 412 Whether verbal protest will prevent, 412 When policy-holder is sharenolder, 412 Whether by mortgagor binds mortgagee, 412 Whether by settlor binds trustee, 413 Whether receipt of annuity omounts to, 413 OCCUPATION— Disclosiu'e of, 143 • Description of, 143 Change of, 1G9-173 OCCUPIER- Insuranco beyond own interest, 50-61 OVERDOSE— Whether within accident policy, when death from, 457, 458 OWNER— Insurance beyond own interest, 50-52 Equitable, may for insuring be sole, 63, 04 402 •: u INDEX. 507 [The paging refers to tl»o [ • ] pages.] PARENT— Insurable interest iu child's life, 40 PARTNER— Has insurable interest in capital of co-partner, 69 Whether assignment by one to another avoids policy, 181 Amount of policy-money recoverable by, 48 Insurance by, iu firm's name, 73 PAWNBROKER— Itisurance of full value by, 53, 69 PAYMENT— Of premium, policy not binding until, 76 Of premium, who to make, 92 Of premium, during days of grace, 92 Of premium, by cross accounts, 95 Of premium, delivery of policy without, 70, 100, 101 Of policy money, by mistake, l»v> Into court by insurers, 318, 5358 By insurer, to trustee of uolicy, 369 Under order of court, indemnifies insurer, 369 Of policy money, after winding up order, 399 Of premiums, nut evidence of novation, 411 PERITONTIS— From blow, whether within accident policy, 457 PLf:DGE- - Of fire policy not an assignment within the condition, 310 PLEDGEE— Insurable interest of, 69 POLICY— Attaches when risk begins, 8 When it does not attach after risk determined, 8 Whether fire policy on ship murine risk, 13 On life, not indemnity, 17 On life, is contract to pay sum certain, 17 On life, definition of, 18 Meaning of word, 20 Verbal promise to grant, 20 Whether necessary, 20-21 Objects of, shown by parol, 31 Not delivered may support action, 22 May be rectified, 23-24 Issued after loss, 23 Person interested is person to sue on. 28 Agreement to grant, how enforced, 23 Not according to agreement, 22-24 Want of seal to, not pleadable, 28 Mistake in, waived, 24 , Alteration ofj 24 Rescission of, where mistake not rectified, 24 • Cannot be added to, 25 Luas of, company indemnified on payment, 25 408 508 INDEX. [The paging refers to the [ • ] pages.] FOLIC Y—( Continued). Dated after fire, 27 "Open," 28 "Floating," 28, 69 Written words in, govern printed, 29 Rigid construction of, not favoured, 29-30 Words of, supersede custom, 31-32 Ambiguity in, custom may control, 31-32 Course ojien to insurer where policy obtained from him by fraud, 33 Cancellation of, for fraud of assured, 31 Refusal of insurer to pay where fraud in obtaining, 31 Cancellation of, for insurer's fraud, 32 Failure to cancel for fraud will not prevent insurer pleading want of inter- est, 32 Title to, not determined by payment of premiums, 39 Assignee of, need not have insurable interest, 40 Only value of interest at date, of recoverable, 48 "Blanket," 59 Trust policy legal, 66 Name of person for whom effected must appear, 71 By one partner in firm's name, 72 "W'hether to be under seal, 72 Forfeiture of, not favored, 75 Receipt for premium in, 76 Not binding until premium paid, 76 Assigned, return of premium, 84 Invalid, return of premium, 85, 86 „ whether insurer must grant another, 86, 88 Obtained by fraud, whether premium returnable, 87 Alteration, effect of, 87 Fraudulent, order to deliver up, 87, 88 Cancelled, return of premiums, 88 Condition in, as to forfeiting premium, 89, 150 Differing from proposals, return of premium, 91 Voidable where premium in arrear, 91 Renewal by agent's remittance of lapsed, 96 "Lost or not Tost," no return of premium, 97 - Bpecific performance of, agreement to grant, 97 * Ultra vires, jpremium returnable, 98 When it expires, 99 Time policy, 99 Whether property protected from date of, 108 Death before issue, 101 Risk begun before granting of, 10i>-101 Fire before delivery of, lOO-lOl Covers all losses up to amount of, 101 Date of, whether inclusive, 102-103 Duration of, 102 Strict compliance with terms of, 104, 166 On life local, 106 Whether date of, time for accertaining what, covered by, 107 Whether it operates if house vacant, 108 Whether avoided by increase of risk, 109 Purchaser of, affected by concealment, 161 Forfeiture of, by misrepresentation, 161 Delivery up of, for fraud, 162 New granted on old proposal, 162 Voidfuble for non-performance of condition, 166 404 INDEX. 509 [The paging refers to the [ * ] pages.] VOLICY— {Continued). Waiver of forfeiture of, 165-166 Void means voidable, 105 Against fire, usual condition in, 165, 175 Ou removal ceases to attach, 168 Suspended during forbidden user, 168 Not issued, whether within conditions as to other insurance 178 Against lire, what covered by, 1 78 ' . „ whether it passes to real or personal representatives, 181 ,, assignable, 181 „ bankruptcy, effect of, on right to, 181 ■ ,, execution, effect of, on right to, 181 On life condition in, 205 Void for going beyond limits, 205-206 Sur autre vie avoided by suicide, 207 Without benefit of salvage illegal, 230 Whether contributir - ''idence as to, 244-245 * Specific, what it is, 2:''l Whether vendor can recover on, after sale of property, 299 Assignment of, must accompany property, 301 Against tire, whether itriins with land, 301 ,, whether it passes on sale of property, 302 ,, whether it passes with beneficial interest, 302 Ou own life, how it may be dealt with, 306 „ assignable, 306, 310, 315 ,, may be bequeathed, 307 ,, subject of aona, in mutual company, 389 Claim of, on company's funds, when it begins, 391 Whether right to reel ver, 891 ' No priority over other creditors, 891 In mutual society, how loss of, recoverable, 892 Company's liability to, how limited, 392 Covenant to pay claim of, out of special funds, 395, 897 Appropriation of funds for, 897 Liniited liability to, does not affect creditors, 400 • . Claim of, after amalgamation, 406 POLICIES OF ASSURANCE ACT, 1807— ' (30, 81 Vic. c. 144), 808-316 Passed for protection of companies, 813 Not to regulate priority of incumbrances, 812 406 >r PREMIUM- INDEX. [The paging refers to tho [ » ] pages.] 511 Paid before attachment of risk, is .subject thereto, 7 Keturn of, where risk not di.sclosed, 'J „ ., ri.sk not run, •,>. l.'iO >» ,. pobey rescinded for mistake. 24 RepavTTKMit of, when risk rejected, 2.') Repayment ot, when further premium (h-munded and refused by assured, 2r, Retainer of, liy agent may not constitute faihire of company to repay, 25* Acceptance of, after discovery of f -and, ; H Comjjany niay refu.se to take, wliere policy obtained by fraud, 33 Return of, were jjolicy cancelled for fraud, .'53 Payment not conclusive an to title to policy, 39 ' Forfeited when policy a wager, 4.5 Nature of, 74 • . Whether prepayment necessary, 75 , Waiver of non-{)ayment, 7(5, 79 . ' ,, by acceptance of, 75, 79 Credit for, 76, 77 . Receipt for, in jiolicv. 76 Payment of, by bill, '77 Company bound by agent's receipt, 78 ,, ., du-ector"s n^ceipt, 78 Debiting to agent, no waiver, 7 i> Paymelit of, overdue after death, 79 Acceptance Ijy company after death, 79 Health of assured when overdue, paid, 80 ' Returnable where no risk, 80, 82 Not returnal)le if risk Ijcgins, 80, 82 Not apporti()nal)le if risk begins, 80 Return of, where in excess of interest, 81, 82, 87 ' ,, ,, several policies, 81 „ ,, at time of insurance life dead, 83 H , »> n )) house burnt, 83 Apportionable where risk partially attached, 83 Not returnable in case of suicide, 83 Returnable where risk nev(;r attached, 81, 82, 85 Not apportionable in time ]>olicy, 84 Not returnable where fire not covered by policy, 841 Not returtmble on assignment of imlicy, 84 Whether returnabh; in life insurance, 84, 85 Parties in pari ilclirto, where returnable, 85, 89 Where risk run not returnable!, 8't Whether returnable where illegal insuratiee, 45, 85, 86 Effect of breach of warranty on return of, 150 Whether returnai)le where name of person interested not in policy, 86 Whether returnable where over insurance, 87 " fraudulent insurance, 87 policy ordered to be delivered up, 87 policy cancelled, 88 misrepresentation regarding policy, 88 concealment regarding the msurauce, 8S WMiere fraud of insurer, wliethor return of, 89 Forfeited according to condition, 89, 204 Additiotml insurer not obliged to accept 89 Tender of usual, after loss, 90 Amf»unt ot evidence as to materiality of misrepresentation, 90 Payment to agent without authority, 90 Receipt from ageut, ratification by insurer, 90 •407 I '«i f. »> t» ' M . »» H 512 INDEX. [The paging refers to the [*] pages.] PREMIUM— ( Continued). Returnable by agreement, 91 Where policy differs from proposals, return of, 91 Punctuality m payments, 91 Delay in paying through change in agent, 91 Belay in paying through change of company's office, 91 Who to pay, 92 Notice to pay, whether necessary, 92 -Dayslof Grace,"92, 94 Debiting agent with, effect of, 95 Promise ot agent to pay, 96 Cross accounts, payment by, 95 Delivery of policy without paying, 96 Renewal of lapsed policy by remittance of, 96 Unpaid, and policy money paid by mistrke, 90 No return where insurance "lost or not lost," 97 Not within Apportionment Act, 97 Effect of refusal to receive, 97 Returnable where policy tiltra vires, 98 Not apportionable if risk has attached, 101 Installments of, to be punctually paid, 101 Payment and death within days of grace, 104 'vVhether returnable if warranty disproved, 160 Not returnable where term of contract, 150 • Forfeiture by misrepresentation, 161 Payment prevented by war, 206 Paid by mortgagee added to security, 291, 339 Received after insurer aware that policy invalid, 818 Not paid by settlor, trustee may sell policy, 327 Whether trustee must pay, 327 Paid by mortgagee, whether mortgagor liable for, 339 Paid by mortgagor after bankruptcy, 339 Whether charging debtor with, makes policy his, 339, 340 Whether payment by mortgagee divests mortgagor's right to policy, 343 Allowed to mortgagee-insurer as just allowances, 349 Whether iJayment of, by stranger gives lien, 853 „ „ by part-owner ^ives lien, 353 ,, „ by mortgagor gives lien, 354 ,, ,, under voidable assignment gives lien, 354 What divisible as profits, 390 Payment of, not evidence of novation, 411 Credit of, to agent, 427 Credit of, by agent, 428 Agent cannot dispense with payment of, 428 Payment by cheque to agent of, 428 Returnable where policy not granted, 431, 436 Overdue waiver of forfeiture by receipt oi, 433 Payment of, to foreign agent after war begun, 434 If retained, policy must be granted, 4S'6 DirectioQ to accumulate, whether within Tbellusson Act, 478 PRIZE— Whether insurable, 42 PROFIT— Assured not to make, 2-8, 4, 13 PROFITS— Whether insurable, 41 408 r^ 3 ■ \ INDEX.' 513 (The paging refers to the [*! pages.] PROFITS-( Conimued). What are surplus, 390 All premiums not divisible as, 390 What are annual, 398 ,, „ chargeable with income tax, 398 PROOFS— Of arson, 118, 201 Preliminary, 187 Of loss, 186, 189, 193 „ waiver of, 193, 194 „ time for payment alter, 194 ,, where needless, 194 ,, mistake in, 195 „ what required, 195, 196 What ih satisfactory, 197 Of accident, what requisite, 461 Of death, 461 PROPERTY— Adjacent, cost of saving, 11-12, 120, 122, 125 ,, disclosing danger to, 1 1 7 „ damage to, in extinguishing fire, 120 Removal of, to escape fire, 122, 128 Insured's duty to preserve, 122 Stolen, during fire, 123 Lost, during fire, 123 In transitu^ 126 Out of place, where insured, 127-128 Amount payable where deficient insurance of, 129 Misdescription of, 160, 166 Misrepresentation as to part of, 167 Over-valuation of, 200 Sold, recovery by vendor of insurance, 180-181 Life policy is, 345 PROPORTION— " , Of loss payable where under insurance, 129 PROPOSAL— ^ ' Declined by other office, 167 Not answering question in, as to claim on other office, 158 Mistake of agent filling up, 434 Accident insurance, what must be stated in, 452 PURCHASER— Whether fire loss fall on, 301 Of policy how affected by assured's concealment on change of health, 316- 317 QUESTIONS - Answers to general, must state all material facts, 160 RAILWAY PASSENGERS' INSURANCE— Arbitration in relation to, 219 Rights against third persons preserved, 446 409 I ' n 514 INDEX. [The paging refers to the [*] pages.] RATIFICATION— By receipt of premium, 90 Ut" agent's contract outside company's business, 437 „ his authority, 437 By company after loss, 438 General principle as to, 438 Of insurance for another, 439 RECEIVER— Appointed by mortgagee whether to insure, 293 Power of mortgagee to appoint, 347 Right of policy-holder to, 391 May effect guarantee insurance, 4(0 REINSTATEMENT— Condition as to, 203, 255 Statute as to, 203, 262 Right to, 203,252 , , Election as to, 203, 252, 257, 258 > By insurer gives right to old materials, 22o Option for, *.J51 Metropolitan Building Act, as to, 252 ■_ To what applicable, 253 Obligation of insurers as to, 2u3 Notice to company as to, 254 Enforcing duty as to, 254 ,,,„,. Where required by tenant and insurer sued by landlord, insurer can inter- plead, 256 By landlord, insurer not to pa^ for, 25;) By tenant, insurer not to pay for, .65 How done, 255 When to be done, 255 Fire during, 257 " New for old," allowance on, 257 Landlord and tenant, agreement as to, 257 Insurer's right to, not affected by assured, 257 Tenant can require, 271^ 274, 278 Landlord can require, 278 Not of chattels, 284 ^ _. oor By mortgagor on request of mortgagee, 285 By lessee under covenant for insurance and, 287 Under bill of sale uo right of, 288 REINSURANCE- What may amonnt to, 27 • Misrepresentation on, 161 Insurer has insurable interest for, 259 Nature of, 269-260 Where insurance ultra vires, 259 Not after winding-up order, 260 Assured not privy to, 260 Discharged by payment to assured, ZW Whether solvency of re-insured affects sum payable on, *.bO Assured no lien on policy of, 260 What re-insurer undertakes by, 201 Where several policies, 261 Where condition to pay as may be paid, 262 „ ,. pro rata, 262 410 RE U •^■ INDEX. [The paging refers to the [ * ] pngcsi.} RE-INSURANCE— (Con Time for recovery under policy of runs from loss, 260 Of one company in another by agent of both, 421) By two agents keeping cross accounts of premiums, 430 llEMOVAL— Of goods to escape firo, 121, 123 To other residence, insurer's consent to, 120 ,, ,, whether property protected during, 127 Temporary, 128 Insurance ceases on, 108 RENEWAL RECEIIPT— 78 «o3urer right to damages lecoverable by assured, 229 As.signment by insurer of, rights l)y defence to a.ssured action, 229 337 Defences against assured good against subrogated insurer, 230 ' Insurer entitled to, against carrier, 230 Re-insurer entitled to, 230 Assured recovering damages as trustee for insurer, 231 Ofinsurer where loss through negligance, 232 Of insurer to mortgagee's rights, 235 Condition as to, 237 Valued policy, how it affects, 238 ContribnJon, ;^ifference between it and, 230 Ofinsurer to mortgagee's rights against morrgagor, 291, 2% SUCCESSION DUTY— • Whether payable on life policy, Si'i, 479 SUE AND LABOUR CLAUSE— In fire policies, 124 SUICIDE- Premium not returnable in case of, 81 Whether within policy, 130, 132 Meaning of, 130, 132 ^ Not mentioned in policy, liil Presumption against, 133, 456 Whilst insane, 133 Effect of, on assgnment of policy, 133, 134 Usual condition as to, 133 Wheu'company mortgagee of policy, 135 , When covenant to keep up policy, 15^6, 821 Policy sur autre vie, whether avoided by, 207 SUNSTROKE— Whether an accident, 454 SURETY— Interest of creditor in life of, 69 Interest of co-surety in life of, 69 Interest of surety in life of principal debtor, C9 Paying debt, whether entitled to policy, 345, 367 Whether ho may require discharge of employee makmg default, 466 SURETYSHIP Difference between insurance and, 8 TEMPERANCE— Statements aa to, 142, 156 Disproof of warranty as to, 157 Meaning of, 187. 157 TENANT— ' Insurance bpyond own interest, 60 Insurance of rent by, 51 In common can insure full value, 51, 62 Joiut>teuaut can insure full value, 51, 63 416 I 520 INDEX. [The paging refers to Jhe [ * ] pages.] TENANT- (Con^mwcrf). Policy avoided through increase of risk by, 169 For life, whether bound to insure, 267 In tail, whether bound to insure, 267 In tail, whether entitled to policy money, 267 For life, whether entitled to jjolicy money, 267 For years, whether bound to insure, 269 Liability for accidental lire, 270 Liability for fire through negligence, 270 When bound to reinstate, 271 Covenant by, to pay extra premiums, effect of, 271 For life, when bound to rebuild, 273 Insurable interest of, when under covenant to repair, 272 And landlord separately insuring, effect of, 266, 267, 272 Covenant by, to repair and insure for fixed sum, 272 ,, to repair excluding fire, 272, 273 ,, to insure runs with land, 273 Cannot compel landlord to rebuild, 278 Can require insurer to reinstate, 274, 276 Whether liable for rent in case of fire, 274 Damages for breach of covenant by. to insure, 275 Relief against breach of covenant by, to insure, 276, 277 Brench by, of covenant to insure not cured by ante-dating receipt, 276 Effect of covenant by, to insure in landlord's name, 278 Bound to insure, having option to purchase, 279 Insurable interest of, in rent, 279 For life, paying policy money to mortgagee, 286, 287 THEFT- During fire, 123, 124 THELLUSSON ACT— Direction to pay premiums whether within, 478 TITLE— Of insured property, whether material, 111 Condition aa to change of, 180, 183 rONTINE— Policy not gaining contract, 45 TRADE- Diaclosure of hazardous nature of, 108, 110 TRUST— Validity of policy on, 06 Name of person for whom effected must appear in policy on, 06, 71, 72 Of policy construed like other trusts, 827 Where no fraud for premiums, sale of policy on, 828 Of policy includes bonus, 828 TRUSTEE - May insure, 6 Insurance by, presumed to be qua tnistee.OO Policy must contain name of C. Q. T. and of, 66, 827 Enabling settlor to dispose of jiolicy liable, 887 May Hellpolicy, settlor not pacing premiums, 827 ^, Whether premium must be paid by, 827 416 TI u, U. Ui INDEX. [The paging refers i<> iho [ * ] pages.] TRVSTEE— {Continued}. Lien on policy for advances bv, 327 Appointment under Married Women's Property Act of, 230 Insurers paying to, 859 Secretary holding shares for company as 377 Of shareholder in liquidation, disclaimer by, 378 For assignee of policy, whether company is, 396 Bound by novation of settlor, 412, 413 UBERRIMA FIDES— Whether insurance contracts require, 8, 159 ULTRA VIRES— How re-insurrnce affected where insurance is, 257 Directors' acts where, 368, 870 Company's business must not be, 370, 373, 375 Policies do not bind where, 870 Third persona and company contracting, 370, 378 Manager granting policies, 371, 872 Whether nlegal acts are, 372 Whether informal acts are, 872 Dealings with funds restrained when, 374, 376 Claim on policy which is, 393 Batiticatiou of amalgamation which is, 406 USER— Disclosure of, 108-110 Whether to be as descriced, 108-110 Of house, 108 Of steam-engine, 109 ' Increase of risk by, 109, 110, 169, 171 Change of, 109, 110 Of paper-mill, 110 Of kiln, 110 For experiment, 171 Of oven, 172 By non-occupation, 1 72 VALUATION- Of loss, 195, 197, 198, 200 VALUED POLICY— May be on land risk, 3, 27 Where value conclusive, 8, 4 Proof of loss necessary, 4 Interest necessary for, 221 Whether contract of indemnity, 226 Subrogation iu case of, 238 VENDOR— Insurable interest of, unpaid, 64 Interest of, paid, who has not conveyed, 64, 65 When interest of, ceases, 65, 181 Whether lire loss falls on, 299, 801 Whether right of, to stop in trandtn gives title to insurance, 867 Of shares, a contributory if on register, 377 27 PORTER ON INSURANCE. 417 521 I 522 INDEX. [The paging refers to tlio [ * 1 pages.] VEKBA FORTIUS ACCIPIUNTUR CONTRA PROFERENTUM,-30 WAGER- Difference oetween insurance and, 7, 45 Policy illegal if a, 44-45 Premiums not recoverable if policy a, 44 WAGES- Of seamen not insurable, 44 WAIVER— Of delay in paying iireminm, 91 Of breach of condition, 165, 183 Of breach of policy, 166 By resolution to pay, 166 Of non-disclosure of other insurance, 178, 177 Of forfeiture by assignment, 183 Of proof of 10.-8, 193, 195 When inferred, 194 Of condition as to forfeiting premiums, 204 By affirmance of contract, 20 "i Of right to arbitration, 216 Of forfeiture by acceptance of rent, 277 By agent of forfeiture, 432, 433 WAR— Payment of premium to foreign agent after commencement of, 434 WARBHOUSEMAN— Insurance for full value by, 58 Insuring own and another's goods without authority, 440 WARRANTY— Different on marine and other policies, 144 Part of the contract, 144, 146, 147 Materiality of, 144, 147 Must be true, 144, 145, 147 Must be performed, 144, 146 Express or implied, 144, 145 In, or incorporated in policy, 144, 147 That mill ''worked by dav only," 141, 146, 147 Mere opinion, and not, 147 Not necessary to state facts covered by, 147 Insurers may require special, 148 True "bo far as known," 148 Of "^ood health," 149 That msured not subject to fits, 149 Whether premiums returned were breach of, 150 Evidence of, 150 Effect of transfer of insurer's business on, 151 Declarations of insured, whether evidence to prove breach of, 160 As to temperance, 157 WHARFINGER— Insurance of full value by, 68, 58 His liability to owner of goods for fire, 57 Goods held " in trust or on commisaion " by, 68 418 Wl INDEX. 523 [The paging refers U> the [ * ] pages.] WINDING UP— EflFect of assignment of iiolicy before, 318 Payment of assurance after order for, 399 How claims valued in, 401 Resuscitation of company for, 410 ^M m Phila. : Blackstone Pub. Co. O 1/ (420) ^ f ■^Wpfspi fli^iWA' - -■; ^ ;- • -: ;■ r i s 1 '^ ■1