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parol contracts of insurance are valid would be simply to affirm the incapacity of parties to contract, when no such incapacity exists, according to any rule of reason or of law. Perkins v. Washington Ins. Co., 4 Cow. (N. Y.) 646; Smith v. Odlin, 4 Yeates (Penn.), 468; Union Ins. Co. v. Commercial Ins. Co., 2 Curt. (C. C.) 524; S. C., 19 How. (U. S.) 318; Hamilton v. Lycoming Ins. Co., 5 Penn. St. 339. And a parol contract will be valid, although the law requires all conditions to be printed on the face of the policy, and certain officers to sign all policies and contracts. Henning v. U. S. Ins. Co., 2 Dill. (C. C.) 26; contra, Same v. Same, 47 Mo. 425; 4 Am. Rep. 332. In Prince of Wales Ins. Co. v. Harding, 1 E. B. & E. 183, where the act of incorporation provided that policies signed by the secretary should be binding on the company, it was held that the provision was for the protection of the shareholders, and imposed on the officers the duty of observing certain formalities. If they neglected these, they would be liable to the shareholders, but the contract would still be binding. Collett v. Morrison, 9 Hare, 162; Baptist Church v. Brooklyn Ins. Co., 19 N. Y. (5 Smith) 305; Constant v. Ins. Co., 3 Wall. Jr. (C. C.) 313; Perry v. Mercantile Ins. Co., 8 Up. Can. 363. In other cases the mode prescribed by the charter is regarded as exclusive. Cockerill v. Cincinnati Ins. Co., 16 Ohio, 148; Lindauer v. Delaware Safety Ins. Co., 13 Ark. 461; Ins. Co. v. McGillivray, 9 Low Can. 488; Henning v. N. Y. Ins. Co., 47 Mo. 430; 4 Am. Rep. 332. In some cases the same result may follow incidentally from other legislation. Thus it has been held that a parol contract would be an evasion of the stamp laws (Morgan v. Mather, 2 Ves. Jr. 18; Western Mass. Ins. Co. v. Duffey, 2 Kans. 347); or an express statute may require it. Croghan v. Underwriters' Agency, 53 Ga. 109. But a contract of insurance from year to year is not within the statute of frauds. Walker v. Metropolitan Ins. Co., 56 Me. 371; Baptist Church v. Brooklyn Ins. Co., 19 N. Y. (5 Smith) 308; Sanborn v. Fireman's Ins. Co., 16 Gray (Mass.), 448. The verbal contract must contain the same essential elements which are included in the written policies. By uniform practice, however, all permanent contracts of insurance are reduced to written policies. Cockerill v. Cincinnati Ins. Co., 16 Ohio, 148. But it is common to make preliminary parol contracts, by which the property is protected until the more formal policy is ready for delivery. Fish v. Cottenet, 44 N. Y. (5 Hand) 538; 4 Am. Rep. 715. In determining whether a complete and perfect contract has been made the circumstance that a policy in writing was contemplated and had not been executed would certainly be entitled to great weight. Real Estate Ins. Co. v. Roessle, 1 Gray (Mass.), 336. No particular form is necessary in a policy of insurance, provided its scope and meaning im
port an insurance. Kent v. Bird, Cowp. 583; Puller v. Glover, 12 East, 124; Roebuck v. Hammerton, Cowp. 737. A promise to pay the loss must appear from the instrument itself. Alchorne v.Saville, 6 Moore, 202, n. Where it was declared that "the society was to pay," it was held enough. Andrews v. Ellison, 6 Moore, 199. A covenant to pay out of money raised by the first installments on the shares is a general covenant. Pilbrow v. Atmospheric Railway, 5 C. B. 440. These illustrations prove the importance of an accurately drawn contract, and it has become the uniform practice to embody every permanent contract of insurance in a policy. This contract should set out the names of the contracting parties, a consideration, a proper description of the subjectmatter insured, the risk against which it is insured, the term for which it is insured, the amount of indemnity to be paid. It often, also, sets out the steps necessary to fix the liability after the loss occurs, and conditions as to the conduct of the insured toward the subject-matter insured. These provisions are not always in one paper. A part are often in the application for insurance, and the conditions are often on the back of the policy, but they are construed with the policy as one contract. Worsley v. Wood, 6 T. R. 710; Routledge v. Burrell, 1 H. Black. 254; Holmes v. Charlestown Ins. Co., 10 Metc. (Mass.) 211. Policies are divided, according to the stipulations, with reference to the amount of indemnity, into valued, and open. In a valued policy, the maximum sum to be paid as indemnity is fixed. In an open policy, it is left to be adjusted in case of loss. Under the first, the sum agreed on is conclusive, in the absence of fraud, but under the second the amount of loss insured against must be proved. Haigh v. De La Cour, 3 Camp. 319; Forbes v. Aspinall, 13 East, 323; Young v. Irving, 9 Scott N. R. 752; Alsop v. Com. Ins. Co., 1 Sumn. (C. C.) 451; Carson v. Maine Ins. Co., 2 Wash. C. C. (U. S.) 468; Holmes v. Charlestown Ins. Co., 10 Metc. (Mass.) 211; Lycoming Ins. Co. v. Mitchell, 48 Penn. St. 372; Laurent v. Chatham Ins. Co., 1 Hall (N. Y.), 40; Cushman v. Northwestern Ins. Co., 34 Me. 487. Overvaluation may be proof of fraud. Miner v. Tagert, 3 Binn. (Penn.) 204. It is a question of construction whether the policy is valued or open. In valued policies, the words "valued at" are often used, but any form which expresses the intention of the parties to fix the value will make the policy a valued one. Laurent v. Chatham Ins. Co., 1 Hall (N. Y.), 40; Wallace v. Ins. Co., 4 La. 289.
A reference to the application in which the value of the policy is set out may be enough. Nichols v. Fayette Ins. Co., 1 Allen (Mass.), 63; Phoenix Ins. Co. v. McLoon, 100 Mass. 475; Brown v. Quincy Ins. Co., 105 id. 396; 7 Am. Rep. 538. The same policy may be open as to one
article and valued as to another. Post v. Hampshire Ins. Co., 12 Metc. (Mass.) 555. With reference to the interest of the insured, policies are divided into wager, and interest policies. A wager policy is one where the insured has no interest or risk. Such policies are against public policy, and any attempt to dispense by agreement with proof of interest is prima facie evidence that the policy is a wager policy. Alsop v. Com. Ins. Co., 1 Sumn. (C. C.) 467. In an interest policy the insured has an interest and will be subjected to injury by a loss. Williams v. Smith, 2 Cai. (N. Y.) 13. This interest need not be a direct pecuniary one. Any right which may be enforced against the property, and is so connected with it that injury to it must cause the insurer loss, is insurable. Rohrback v. Germania Ins. Co., 62 N. Y. (17 Sick.) 47; 20 Am. Rep. 451.
The duration of the policy may be for a fixed term or equal to the duration of the risk, and these policies are called in marine insurance, time and voyage policies; in life insurance, time and life policies. May on Ins., § 34
§ 2. Parties to the contract. Parties competent to enter into any other contract may, in general, make contracts of insurance on either side. These parties may be either individuals or societies. In mutual insurance, the members are, at once, themselves insured, and insurers of the other members. There are some disabilities. The subjects of states at war cannot make a valid contract of insurance. This is put upon the ground that no subject can be permitted to contract to do any thing which may be detrimental to the interests of his own country, and it is considered that any contract which may foster or protect the commerce or business of an enemy is so opposed. The Hoop, 1 Rob. 196; The Emulous, 1 Gall. 571; Griswold v. Waddington, 16 Johns. (N. Y.) 438; Gamba v. Le Mesurier, 4 East, 407; Furtado v. Rodgers, 3 Bos. & Pul. 191. Although the contract was valid at its inception, yet a subsequent war will suspend it. Ex parte Boussmaker, 13 Ves. Jr. 71. The principle has been extended to life insurance, and forbids the insurer to indemnify a policy-holder who has lost his life, health, or property in the service of the enemy, whether the loss be excepted in the policy or not. Ex parte Lee, 13 Ves. Jr. 64. In such case, however, where a valid and pre-existing contract may be performed by a single act, or by periodical acts between which there is no continuity of performance, such as payment of premiums, so that supervening war does not disable them from performing their respective duties, nor defeat the object of the contract, a suspension of the remedy during the war is the only proper effect. The contract, not the performance, continues. New York Ins. Co. v. Clopton, 7 Bush (Ky.), 179; 3 Am. Rep. 290;
Hamilton v. Mutual Ins. Co., 9 Blatchf. (C. C.) 234; Manhattan Ins. Co. v. Warwick, 20 Gratt. (Va.) 614; 3 Am. Rep. 218; Semmes v. City Ins. Co., 6 Blatchf (C. C.) 445; S. C., 13 Wall. (U. S.) 159. Any intercourse inconsistent with the state of war is prohibited; and this includes any act or contract which tends to increase the resources of the enemy, and all intercourse of a commercial nature. This does not include payment to an agent of the insurer residing in the country of the insured. Kershaw v. Kelsey, 100 Mass. 561; New York Ins. Co. v. Clopton, 7 Bush (Ky.), 179; 3 Am. Rep. 290; Sands v. New York Ins. Co., 59 Barb. (N. Y.) 556; Manhattan Ins. Co. v. Warwick, 20 Gratt. (Va.) 614; 3 Am. Rep. 218. Besides the insurer and insured, there may be other parties interested in the policy. Thus fire insurance policies may be made payable to the mortgagee to the extent of his interest. Jackson v. Farmers' Ins. Co., 5 Gray (Mass.), 52; Turner v. Quincy Ins. Co., 109 Mass. 568. Other parties may gain an interest in the contract after its inception by an assignment of the policy to them. It is not necessary that both parties should be set out in the contract by name. Where the parties in interest as insured are uncertain or fluctuating, or numerous, it is common to make it for the benefit " of whom it may concern," and then any party proving an interest may recover.
§ 3. Construction of the contract. The contract of insurance is governed by the same rules of construction which are used in the interpretation of other contracts. Aurora Ins. Co. v. Eddy, 49 Ill. 106; Wells v. Pacific Ins. Co., 44 Cal. 397. As contracts of insurance are essentially commercial contracts, usage has always been of great weight in their interpretation. They are, however, to be construed according to the sense and meaning of the terms used. If these are clear and unambiguous, the courts will not admit parol evidence of any kind to control them. The terms used are to be understood in their plain, ordinary, and popular sense, unless by some usage of trade acquired in respect to the subject-matter, a peculiar sense is given to them, or unless the connection in which they are used plainly indicates that the intention of the parties requires some special and peculiar meaning. Crowsillat v. Ball, 3 Yeates (Penn.), 375; Robertson v. French, 4 East, 135. The language is to receive a reasonable interpretation. Its intent and substance, as derived from the language used, should be regarded. Turley v. North American Ins. Co., 25 Wend. 374. The difference in the rules of interpretation, as applied to insurance, has its grounds in the nature of the contract and the relative situation of the parties, matters which are regarded in the interpretation of every contract. Thus it is said that it is to be construed largely for the benefit of trade and for the insured. Tiernay v. Ethrington, 1 Burr. 348. Having indem
nity for its object, the contract is to be construed liberally to that end, and it is presumably the intention of the insurer that the insured shall understand that, in case of loss, he is to be protected to the full extent to which any fair interpretation can carry the contract. Dow v. Hope Ins. Co., 1 Hall (N. Y.), 174; Riggin v. Patapsco Ins. Co., 7 Harr. & J. (Md.) 279. In the end it is the interest of both parties that the greatest indemnity shall be given, and that technical defenses shall not prevail. The rule then is that where two interpretations equally fair may be given, that which gives the greater indemnity shall prevail. So conditions and provisos will be strictly construed against the insurer, because they tend to impair the protection sought by the principal contract. Hoffman v. Etna Ins. Co., 32 N. Y. 405; Ins. Co. v. Wright, 1 Wall. (U. S.) 456; Montgomery v. Fireman's Ins. Co., 16 B. Monr. (Ky.) 427. The whole instrument must be read together, and clauses apparently inconsistent must be moulded to support the main end in view. Merchants' Ins. Co. v. Edmond, 17 Gratt. (Va.) 138. Any interpretation is to be shunned which will conflict with that end. The rule is fully established that the policy must in all cases be construed in favor of the insured. Westfall v. Hudson River Ins. Co., 2 Duer (N. Y.), 490. As the insurers have the power to choose their own language, and to insert all conditions and provisos needed to protect themselves against fraud or unjust claims, the language actually used will be construed against them. Cropper v. Western Ins. Co., 32 Penn. St. 351; Nicoll v. American Ins. Co., 3 Woodb. & M. (C. C.) 529. The words of a promise with its exceptions and qualifications are to be considered as those of the promisor, but the language used in any statement or representation on which such promise is founded are those of the promisee. Where such statement is made in answer to questions proposed by the promisor, these questions are to be construed against him. Cropper v. Western Ins. Co., 32 Penn. St. 351; Etna Ins. Co. v. Jackson, 16 B. Monr. (Ky.) 242; Bartlett v. Union Ins. Co., 46 Me. 500; Wilson v. Conway Ins. Co., 4 R. I. 141; Ins. Co. v. Wilkinson, 13 Wall. (U. S.) 222. If notice of additional insurance, and the written assent to it of the insurers be required, an acknowledgment in writing that notice has been received, without more, will be construed as an approval. Potter v. Ontario Ins. Co., 5 Hill (N. Y.), 147; Robertson v. French, 4 East, 130. Where a proposal for insurance is made part of the policy, and is affirmed to be "correct and true throughout," and stipulates that any fraudulent concealment or designedly untrue statement shall avoid the policy, the court held that an untrue statement honestly made did not avoid the policy. Fowkes v. Manchester Ins. Co., 3 Best. & Sm. 917.