But in many cases it is impossible by any reasonable construction to give the policy a meaning consistent with the intention of the parties as indicated by their oral agreement and the circumstances surrounding the making of the contract; and if the insured is to be protected, it must be on the ground that though the terms of the policy excuse the insurer, his conduct has been such as to preclude him from taking advantage of the excuse. § 749. Decisions holding that the parol evidence rule forbids enforcement of a parol waiver contemporaneous with the creation of a written contract. In the cases supposed in the previous section, it seems at first sight that the parol evidence rule forbids the insured to deny to the policy the meaning of its language when properly construed. When the policy provides that it shall be invalid if the insured is not the owner of the insured property a collateral agreement which provides that the policy shall be just as valid as if he were the owner though he is not, directly contradicts the writing, and if it is to be enforced as an admissible collateral agreement, it must be on the theory suggested in regard to bills and notes and deeds,71 that a policy of insurance is ordinarily made in a fixed form and that it is an entirely natural and probable thing for parties to make a separate oral agreement of the kind suggested rather than to revise the terms of the policy. Knowledge of existing facts by the insurer, or assent or permission in any form that such facts may exist, can amount to no more than ground for implying a parol collateral agreement and ordinarily the fact that a party to a writing has relied on an oral agreement will not make the latter binding. Such reliance is common where the parol evidence rule is invoked. The operation of that rule is not merely to exclude an oral agreement made before or contemporaneously with the necticut Life Ins. Co., 25 Conn. 207, 65 Am. Dec. 565; Bouton v. American Life Ins. Co., 25 Conn. 542; Jones v. N. Y. Life Ins. Co., 168 Mass. 245, 47 N. E. 92; Sheldon v. Atlantic Ins. Co., 26 N. Y. 460, 84 Am. Dec. 213; Washoe Tool Mfg. Co. v. Hibernia F. Ins. Co., 66 N. Y. 613; Stewart v. Union Mutual Life Ins. Co., 155 N. Y. 257, 49 N. E. 876, 42 L. R. A. 147. 71 See supra, §§ 644, 645. written contract when the oral agreement has not been relied on. It must be assumed that generally it has been relied on. The injustice thus worked is endured in order to secure the advantage which the parol evidence rule gives of added certainty in the enforcement of writings. Much authority of the highest character supports the conclusion that the oral agreement is ineffectual to vary the provisions of an insurance policy in such a case as has been supposed.72 § 750. Contrary decisions. Many decisions, however, support the right of the insured to recover,73 and to most minds these decisions will seem pref 72 In Lumber Underwriters v. Rife, 237 U. S. 605, 609, 35 S. Ct. 717, 59 L. Ed. 1140, Holmes, J., for the court said: "When by its written stipulation the document gave notice that a certain term was insisted upon, it would be contrary to the fundamental theory of the legal relations established to allow parol proof that at the very moment when the policy was delivered that term was waived. It is the established doctrine of this court that such proof cannot be received. Northern Assurance Co. v. Grand View Building Association, 183 U. S. 308, 46 L. Ed. 213, 22 S. Ct. 133; Northern Assurance Co. v. Grand View Building Association, 203 U. S. 106, 107, 51 L. Ed. 109, 27 S. Ct. 27; Connecticut Fire Ins. Co. v. Buchanan, 141 Fed. Rep. 877, 883, 73 C. C. A. 111. See Penman v. St. Paul Fire & Marine Ins. Co., 216 U. S. 311, 54 L. Ed. 493, 30 S. Ct. 312; Etna Life Ins. Co. v. Moore, 231 U. S. 543, 559, 58 L. Ed. 356, 34 S. Ct. 186. There is no hardship in this rule. No rational theory of contract can be made that does not hold the assured to the contents of the instrument to which he seeks to hold the other party." (Cf. American F. Ins. Co. v. King Lumber Mfg. Co., [U. S. Oct. Term, 1918], 39 S. Ct. Rep. 431. To the same effect are-Barrett v. Union Mutual Fire Ins. Co., 7 Cush. 175; Batchelder v. Queen Ins. Co., 135 Mass. 449; Thomas v. Commercial Union Assur. Co., 162 Mass. 29, 37 N. E. 672, 44 Am. St. Rep. 323; Franklin Ins. Co. v. Martin, 40 N. J. L. 568, 29 Am. Rep. 271; Bennett v. St. Paul, etc., Ins. Co., 55 N. J. L. 377, 27 Atl. 641; Jennings v. Chenango County Mutual Ins. Co., 2 Denio, 75. But see Robbins v. Springfield Ins. Co., 149 N. Y. 477, 44 N. E. 159. 73 Insurance Co. v. Brodie, 52 Ark. 11, 11 S. W. 1016; Queen Ins. Co. v. Patterson Drug Co., 73 Fla. 665, 74 So. 807, L. R. A. 1917 D. 1091; Rhode Island Underwriters' Assoc. v. Monarch, 98 Ky. 305, 32 S. W. 959; Germania Fire Ins. Co. v. Hick, 125 Ill. 361, 17 N. E. 792, 8 Am. St. Rep. 384; Cech v. Firemen's Ins. Co., 201 Ill. App. 321; St. Onge v. Springfield F. & M. Ins. Co., 204 Ill. App. 139; McMurray v. Capital Ins. Co., 87 Ia. 453, 54 N. W. 354; Maxwell v. York Mut. F. Ins. Co., 114 Me. 170, 95 Atl. 877; Hartford Fire Ins. Co. v. Keating, 86 Md. 130, 38 Atl. 29, 63 Am. St. Rep. 499; Michigan Shingle Co. v. State Investment & Ins. Co., 94 Mich. 389, 53 N. W. 945, 22 L. R. A. 319; Dahrooge v. Sovereign F. Assur. Co., 175 Mich. 248, 141 N. W. 572; Simpson v. erable, if their result can be reached without wrenching legal principles. Most of the cases so deciding speak of estoppel, but it is hard to see how a promissory estoppel can be more efficacious to avoid the application of the parol evidence rule than positive contract with consideration; and certainly a contemporaneous oral modification of a written contract is not generally effectual though it was both supported by consideration and relied upon. Two other principles have been invoked to explain at least partially the conclusion of the majority of the decisions: fraud and reformation of contract. The conduct of the insurer is not generally intentionally fraudulent, but to take money as premium in return for a promise which the in Ohio Farmers' Ins. Co., 184 Mich. 547, 151 N. W. 610; Gordon v. St. Paul F. & M. Ins. Co., 197 Mich. 226, 163 N. W. 956; Liverpool and London and Globe Ins. Co. v. Farnsworth Lumber Co., 72 Miss. 555, 17 So. 445; Big Creek Drug Co. v. Stuyvesant Ins. Co., 115 Miss. 561, 76 So. 768; Rissler . American Central Ins. Co., 150 Mo. 366, 51 S. W. 755; Rochester Loan & Banking Co. v. Liberty Ins. Co., 44 Neb. 537, 62 N. W. 877, 48 Am. St. Rep. 745; Pechner v. Phoenix Fire Ins. Co., 65 N. Y. 195; Bennett v. Agricultural Ins. Co., 106 N. Y. 243, 12 N. E. 609; Wood v. American Fire Ins. Co., 149 N. Y. 382, 44 N. E. 80, 52 Am. St. Rep. 733; Robbins v. Springfield F. & M. Ins. Co., 149 N. Y. 477, 44 N. E. 159; McClelland v. Mutual L. Ins. Co., 217 N. Y. 336, 111 N. E. 1062; Blass v. Agricultural Ins. Co., 162 N. Y. 639, 57 N. E. 1104; Clapp v. Farmers' Mut. Fire Ins. Co., 126 N. C. 388, 35 S. E. 617; Union Insurance Co. v. McGookey, 33 Oh. St. 555; Springfield Fire &c. Ins. Co. v. Halsey, 52 Okl. 469, 153 Pac. 145; State Mut. Ins. Co. v. Green (Okl.), 166 Pac. 105, L. R. A. 1917 F. 663; Insurance Co. v. Hancock, 106 Tenn. 513, 62 S. W. 145; Life & Casualty Co. v. King, 137 Tenn. 685, 195 S. W. 585; Crescent Ins. Co. v. Camp, 71 Tex. 503, 9 S. W. 473; Na tional Fire Ins. Co. v. Carter (Tex. Civ. App.), 199 S. W. 507; Morotock Ins. Co. v. Pankey, 91 Va. 259, 21 S. E. 487; Mesterman v. Home Mut. Ins. Co., 5 Wash. 524, 32 Pac. 458; Workman v. Royal Exchange Assurance, 96 Wash. 559, 165 Pac. 488; Schultz v. Caledonia Ins. Co., 94 Wis. 42, 68 N. W. 414; St. Clara Academy v. North Western Nat. Ins. Co., 98 Wis. 257, 73 N. W. 767. See also Weir v. Aberdeen, 2 B. & Ald. 320; Quebec M. Ins. Co. v. Commercial Bank, L. R. 3 P. C. 234, 244; Western Assur. Co. v. Southern Cotton Oil Co., 68 Fed. 924, 16 C. C. A. 67; Supreme Lodge v. Few, 142 Ga. 240, 82 S. E. 627; Illinois Life Ins. Co. v. Kennedy, 191 Ill. App. 29; Reserve L. I. Co. v. Boreing, 157 Ky. 730, 163 S. W. 1085; Bemis v. Pacific Coast Casualty Co., 125 Minn. 54, 145 N. W. 622; Yount v. Prudential L. Ins. Co. (Mo. App.), 179 S. W. 749; Bidwell v. N. W. Insurance Co., 24 N. Y. 302; Robbins v. Springfield Ins. Co., 149 N. Y. 477, 44 N. E. 159; Thebaud v. Great Western Ins. Co., 155 N. Y. 516, 50 N. E. 284; Central Market Co. v. North British, etc., Ins. Co., 245 Pa. 272, 91 Atl. 662; Curran v. National L. Ins. Co., 251 Pa. 420, 96 Atl. 1041; Powell v. Continental Ins. Co., 97 S. Car. 375, 81 S. E. 654. surer must be held to know is invalid, may fairly be regarded as a fraud in law by a court which does not require as an invariable requisite of fraud or deceit that an actual wrongful intent should exist.74 If the transaction is fraudulent the question then arises as to the remedy of the defrauded party. He could of course rescind the transaction and recover his premium; he could do this in any event on the ground of failure of consideration, if the policy were unenforceable, since the risk has never attached.75 By the weight of authority, however, one who claims damages for fraud is entitled not merely to be put in as good a position as he would have been had the fraud not been perpetrated, but in as good a position as he would have been had the deceitful representations been true.76 This explanation would of course not support an action on the policy as such, but it would support an action of deceit in which the face of the policy might be recoverable in a jurisdietion which admits that wrongful thought honest misrepresentation may be the basis for an action of deceit, and that the damages in such an action are not confined to such as will restore the plaintiff to his original status. The other explanation suggested for allowing the plaintiff to recover, is that the contract should be reformed in equity to express the real intention of the parties and that as a short cut an action at law on the policy is permitted on evidence being given that would warrant reformation. Undoubtedly such short cuts are sometimes taken," whatever doubt there may be as to their propriety. A court of equity requires a degree of proof before reforming a writing which is not required of a plaintiff in an action at law. In an action on the policy the question of reforming it by allowing effect to the parol evidence is necessarily left to the jury with all the other evidence in the case, and they will probably give a verdict for the plaintiff if they conceive a mere preponderance of the evidence justifies recovery. If this procedure may be allowed in an action at law where a policy of insurance is involved, why may it not equally be allowed wherever the parol evidence rule is invoked? Moreover, if, as not infrequently happens, the agent who writes the 74 See infra, § 1509. 75 See infra, § 757. 76 See infra, §§ 1392, 1524. insurance having knowledge of the breach of affirmative warranty and expressly or impliedly assenting thereto has no authority to make a contract on different terms from those provided in the policy, no suit for reformation could well be brought. Some courts which allow recovery in spite of a known breach of affirmative warranty, existing when the policy was issued, distinguish the case where a promissory warranty is broken on the assurance of the insurer or his agent that breach of the warranty will not be insisted upon.78 One who believes that even a known breach of an affirmative warranty necessarily avoids the policy and that proof of orally expressed intention to the contrary is a violation of the parol evidence rule, will not see much distinction if the warranty is promissory in character. So far as hardship upon the insured is concerned, there is not much to choose between the cases. The only satisfactory way, then, of avoiding the hardship is by limiting the parol evidence rule in accordance with the suggestion made in the preceding section. Where, however, as is often the case, the policy provides that no waiver or change of the terms of the policy shall be valid unless indorsed thereon,"9 no possible reasoning will permit recovery. § 751. Presumption of knowledge on the part of the insurer of invalidating facts at the time of issuing the policy. So far have some courts gone in enforcing policies of insurance in spite of a breach of affirmative warranty at the time of issuing the policy, that they have held that the insurer must be presumed to know and to assent to the state of affairs existing at the time when the policy was issued unless particular inquiry has been made of the insured.80 Such a view is ob Gray v. Germania Fire Ins. Co., 155 N. Y. 180, 49 N. E. 675. See also Hartford Fire Ins. Co. v. Davenport, 37 Mich. 609; Connecticut Fire Ins. Co. v. Tilley, 88 Va. 1024, 14 S. E. 851, 29 Am. St. Rep. 770; England v. Westchester Fire Ins. Co., 81 Wis. 583, 51 N. W. 954. "See infra, § 759. This view was alluded to by the court in Parsons v. Lane, 97 Minn. 98, 108, 106 N. W. 485; the court said: "A strong statement of this view is found in Manchester Fire Assur. Co. v. Abrams, 89 Fed. 932, 32 C. C. A. 426, where it is said: 'Where the insured has an insurable interest in the property, and in good faith applies for insurance upon the same, and makes no actual misrepresentation or concealment of his interest therein, and the insurance company refrains from mak |