CHAPTER IV. OF THE PROPOSAL AND THE POLICY-GENERAL RULES OF CONSTRUCTION. insurance. WHEN it is desired to effect an insurance against fire the The mode of first thing that is necessary is to make a proposal to that effecting an effect to the insurance office. This is done sometimes by filling up a formal proposal-and in certain special cases, such as the insurance of cotton or woollen mills, or farming stock, this is absolutely required-sometimes by an informal memorandum or letter, and oftener still by word of mouth, the particulars being entered in the office books by a clerk as "a policy order." When an agent of the office receives the particulars from the proposer, and forwards them to his principals, in so doing, so long as he does not deviate from the instructions, and simply communicates the information given him, he will be considered as the agent for the proposer (a). It may be noted that when an agent is employed to effect an insurance he will be responsible for negligence in so doing, and especially, if he has not followed the instructions given him, for not getting the policy effected with responsible assurers (6); and the measure of his responsibility will be that of the assurers under a valid and sufficient assurance (c). The agent of an insurance office cannot in general bind his principals so as to compel them to issue a policy (d). On making the proposal, the amount of the premium, or The deposit some part of it as an earnest to ratify the provisional bargain, receipt. is usually paid by the proposer, who thereupon receives "a (a) Parsons v. Bignold, 15 L.J. c. 379. (b) Hurrell v. Bullard, 3 F. & S. 445. (c) Smith v. Price, 2 F. & F. 748. (d) Linford v. The Provincial Horse Insurance Company, 10 Jur. N. S. 1066. Acceptance of the proposal and delivery of the polity. A contract to grant a policy in equity. deposit receipt," or acknowledgment, helling him secure for a definite period, until his proposal is accepted or declined by the directors of the office. The receipt is, by the Act of 1965. required to be upon a penny stamp. A term of 25 days is usually allowed, giving time for the insurers to institute such inquiries as they may think fit, and, if necessary, for their surveyor to inspect the premises. If, in the meantime, a fire should occur, they will be responsible for the loss. When the terms have been agreed upon the policy is prepared, and, if the premium has been paid, it is forwarded to the assured; if the premium be not wholly paid, it is handed over upon the payment of what is due. The policy usually contains a proviso that, until the payment of the premium, or a deposit on account thereof, the insurance shall not commence; but this condition may be avoided by issuing the policy before payment (a). Where there has been a distinct acceptance of the proposal in writing, there may be a complete contract; but the mere execution of a policy by the insurers, although under seal, is not conclusive so long as it remains in their custody (b). They have, therefore, a locus pœnitentice, and may decline the transaction at any time, until they have done some further act amounting to an actual agreement to undertake it. When there is a clear agreement with the insurers for may be enforced an insurance, and a deposit has been paid on account of the premium, a court of equity will, it is said, compel the company to grant a policy, notwithstanding that a fire has happened (c); but if there is not a clear contract it will leave the sufferer to his remedy at law (d). To file a bill to compel the execution of a policy is certainly a somewhat roundabout proceeding, when the only object is to recover upon a particular loss. In the case of a marine insurance (a) Newcastle Fire Office v. Mac Morran, 3 Dow. 255. (b) Xenos v. Wickham, 14 C. B. N. S. 452. (c) Mead v. Davidson, 3 Ad. & El. 303; Motteaux v. The Lon don Assurance, 1 Atk. 544; Parry v. The Great Ship Company, 10 Jur. N. S. 295. (d) The Morocco Land Company v. Fry, 11 Jur. N. S. 76; Arn. M. Ins. 52, 3, 2nd Ed. the reason may be found in the rule that insurance cases are in general only cognizable in courts of law, and in the statute (a) which provides that no insurance, nor any contract for such an insurance, is to be available unless duly stamped, and the commissioners are not allowed to stamp the document after execution, but this statute does not apply to insurances against fire or upon life. Hence, when the agreement for the insurance is clear, there is no reason why a bill should not be filed in equity at once to recover the money (b). the fire. When a proposal is made to insure property at a Insurance after distance, it may happen that at the time it has actually been destroyed, although neither party may be aware of the disaster. If the proposer was aware of the fact, and concealed it, that would of course be a fraud, but there is no reason why both parties should not contract on equal terms for an antedated insurance; and this would follow from the rule in marine insurance where policies are effected during the voyage upon vessels "lost or not lost," and it is held sufficient if both parties are ignorant of the loss at the time (c). Perfect good faith must be displayed; and, in an old case, when an order for an insurance was given by letter, but during the interval, before it was posted, the property was burnt to the knowledge of the writer, an acceptance by an insurance office, in ignorance of the fact, was held void (d). Where no objection of this kind can be raised, the single question in any case will be, "What was the contract, and when was it intended "that the insurance should commence?" When the property was actually destroyed before the term at which the policy commenced, the contract would be void, and the insurer entitled to the return of the premium (e). Up to the present year the forms and conditions of fire policies have been as various as the number of offices, but (a) 35 Geo. III. c. 63, s. 14. (b) Rossiter v. The Trafalgar Life Office, 27 B. 377. (c) Mead v. Davidson, 3 Ad. & Ell. 303. (d) Fitzherbert v. Mather, 1 T. R. 12. (e) Strickland v. Turner, 7 Exch. 208. The adoption. form by the of a common fire offices. E it is understood that it is now proposed that the principal London and Country offices should agree to adopt a common form for all fire insurances. When it is considered that in the case of large mercantile risks, it generally happens that there are insurances at several offices, and that a divercity of conditions may render the settlement of a loss very difficult, it is surprising that this uniformity of practice should have been so long delayed. This remark is, moreover, suggested by the fact that in marine insurances the form of policy has long remained with little alteration common to all insurers (a), and the clause is invariably inserted that the policy shall be "of as much force and effect as the "surest writing or policy of assurance heretofore made in "Lombard Street, or in the Royal Exchange, or elsewhere "in London." In considering de novo the conditions that are proper to be inserted, it will be remembered that they fulfil a double office, in the first place in determining the rights and liabilities under the policy, and, secondly, in explaining them to the assured, on the ground that in this as in all other legal documents it is not desirable nor usual to use strictly technical language alone, which, however clear to a lawyer may prove quite the contrary to a layman. A form of policy and conditions will be found in the appendix, with references to the pages in which the points of law, on which each particular clause depends, are discussed in the body of this work. Should a common form have been agreed upon and published while these sheets are passing through the press it will be adopted. In referring to the proposal for a common form of policy and conditions, the author thinks it necessary to remind the reader that even after its adoption its amendment is very probable, and that in every case in practice the particular policy will need careful examination, and that, however great may have been the care with which its clauses may have been prepared, it can never be predicted of any written instrument (a) Marshall, p. 361. that its meaning is legally certain until it has received a at the instance of A court of reform the with the When the policy issued is not in accordance with the terms of the proposal as accepted by the company, but is drawn up in a different form, varying the right of the assured, a court of equity will interfere and deal with the case upon the footing of the proposal and not of the policy, or will compel the issue of an amended policy in the terms agreed accepted upon. And the court will act the more readily, in that the proposal. preparation of the policy is the duty of the company (b). But the mistake must be evidenced by undoubted proof (c); and in a late case, where the court was of opinion that the parties had never agreed upon the terms of the policy, the real proposal not having been accepted, it dismissed the bill and ordered the return of the premium (d). tion. As will be hereafter particularly seen, it is essential The descripthat the property should be rightly described, and the assured will therefore do well to comply with the memorandum which is generally indorsed upon the policy, requesting him to read his policy, and if there is any error or misdescription, return it to the office for correction. In like manner, he will do well to examine the conditions of the policy, and ascertain that they are fully complied with, (a) Anderson v. Fitzgerald, 4 H. L. C. 484. (b) Collett v. Morrison, 9 Hare, 162; Henkle v. The Royal Exchange Insurance Company, 1 Ves. Sen. 317; Motteux v. The London Assurance, 1 Atk. 545; Law of (c) Parsons v. Bignold, 15 L.J. (d) Fowler V. The Scottish Equitable, 4 Jur. N. S. 1169. |