viously artificial. If the insured reads his policy he will be aware of the conditions contained in it. The decisions above alluded to are in their spirit inconsistent with the well-settled rule that one who accepts a written contract must be assumed to assent to the terms of the writing; 81 and many courts accordingly hold that no inquiry by the insurance company is necessary

in order to enable it to avoid any implication of consenting to a breach of affirmative warranty where the facts which constitute such breach, existing at the time when the policy is issued, are unknown to it.8

82

§ 752. Waiver of condition after the issue of the policy.

If, after the policy has been issued, the insurer indicates by words or conduct, that he will not enforce o require performance of a condition which has not then been broken, and relying thereon the insured fails to perform the condition, he will not be debarred the eby from recovering on the policy. Thus where a condition requires payment of the first premium as a condition of the policy, accepting a note or giving credit to the insured excuses the condition.83 If, however, there is a further condition that any note accepted for the premium shall be paid at maturity or the policy shall be avoided, such non payment at maturity is not waived by the mere taking of the note

$2 The court so held in Parsons v. Lane, 97 Minn. 98, 106 N. W. 485, following earlier decisions of the Minnesota court, adding that this rule "is approved and applied in Syndicate Ins. Co. v. Bohn, 65 Fed. 165, 12 C. C. A. 531, 27 L. R. A. 614; Continental Ins. Co. v. Cummings, 98 Tex. 115, 81 S. W. 705; Georgia Home Ins. Co. v. Rosenfield, 95 Fed. 358, 37 C. C. A. 96; Rosenstock v. Mississippi Home Ins. Co., 82 Miss. 674, 35 So. 309; Orient Ins. Co. v. Williamson, 98 Ga. 464, 25 S. E. 560; Etna Ins. Co. v. Holcomb, 89 Tex. 404, 34 S. W. 915; Phoenix Ins. Co. v. Public Parks Amusement Co., 63 Ark. 187, 37 S. W. 959; Hebner v. Palatine Ins. Co., 55 Ill. App. 275; Dumas v. Northwestern Nat. Ins. Co., 12 App. D. C. 245, 40 L. R. A. 358; Phoenix Ins. Co. v. Searles, 100 Ga. 97, 27 S. E. 779; Barnard v. National Fire Ins. Co., 27 Mo. App. 26; Mers v. Franklin Insurance Co., 68 Mo. 127; Fitchburg Savings Bank v. Amazon Insurance Co., 125 Mass. 431; Waller v. Northern Assur. Co., 10 Fed. 232; Duda v. Home

Insurance Co., 20 Pa. Super. Ct. 244 ("The question is not whether the insured had an insurable interest, but whether he had the interest described in the policy'), distinguishing Philadelphia Tool Co. v. British-American Assur. Co., 132 Pa. St. 236, 19 Atl. 77, 19 Am. St. Rep. 596; Brown v. Commercial Fire Ins. Co., 86 Ala. 189, 5 So. 500; Liberty Ins. Co. v. Boulden, 96 Ala. 508, 11 So. 771; Hinman v. Hartford Fire Ins. Co., 36 Wis. 159; Geiss v. Franklin Ins. Co., 123 Ind. 172, 24 N. E. 99, 18 Am. St. Rep. 324; Allesina v. London Ins. Co., 45 Ore. 441, 78 Pac. 392; Weed v. London & Lancashire Fire Ins. Co., 116 N. Y. 106, 22 N. E. 229." See also Pettijohn v. St. Paul F. & M. Ins. Co., 100 Kans. 482, 164 Pac. 1096.

83 Farnum v. Phoenix Ins. Co., 83 Cal. 246, 23 Pac. 869, 17 Am. St. Rep. 233; New York Life Ins. Co. v. McGowan, 18 Kans. 300; German Ins. Co. v. Shader, 68 Neb. 1, 93 N. W. 972, 60 L. R. A. 918; Little v. Eureka Ins. Co., 38 Ohio St. 110.

as a premium.84 This is a typical case of waiver. The authorities uniformly support the rule here stated and the only difficulty is to determine what conduct on the part of the insurer will amount to a representation that performance of the condition will not be required. There can be no doubt where the insurer gives express permission to the insurer to break or fail to perform a condition, he cannot afterwards refuse to perform on account of its breach; 85 and any conduct sufficient to justify a reasonable man in believing that his breach was permitted will produce the same effect. A condition may be waived altogether or only in part.87

86

§ 753. Whether inaction by an insurer after knowledge of a breach of condition waives the breach.

One of the most common grounds upon which the insured rests his assertion that a breach of condition cannot be insisted upon is that the insurer knew of the breach and yet took no action; that because of this conduct the insured supposed his policy was enforceable; and, only after a loss had incurred did he learn the contention of the insurer that the policy had been rendered invalid. The force of this contention can best be determined by first considering whether the situation presents a possible case of election, or whether it is necessary to establish what is more properly called waiver.3

88

It is not a mere election unless the insurer will acquire or retain rights by virtue of keeping the policy in force, which he could not acquire or retain by its termination. As the only benefit the insurer derives from the insurance contract is pay

84 Iowa Life Ins. Co. v. Lewis, 187 U. S. 335, 23 S. Ct. 126, 47 L. Ed. 204; Mutual Life Ins. Co. v. French, 30 Ohio St. 240.

85 Viele v. Germania Ins. Co., 26 Ia. 9, 96 Am. Dec. 83; Mudd v. German Ins. Co., 22 Ky. L. Rep. 308, 56 S. W. 977; Ætna L. Ins. Co. v. Hartley, 24 Ky. L. Rep. 57, 67 S. W. 19, 68 S. W. 1081; Tighe v. Maryland Casualty Co., 218 Mass. 463, 106 N. E. 135; Pindar v. Kings County Ins. Co., 36 N. Y. 648, 93 Am. Dec. 544; Farmers', etc., Assoc.

v. Williams, 95 Va. 248, 28 S. E. 214. 86 Lusk v. American Cent. Ins. Co. (W. Va.), 91 S. E. 1078.

87 In Jaqua v. Shewalter, 10 Ind. App. 234, 36 N. E. 173, 37 N. E. 1072, the plaintiff executed a bond on condition not to enter a competing business. Subsequently the defendant authorized him to enter into a particular competitive business, and he did so. To this extent the condition of the bond was held waived.

88 See supra, § 679.

ment of the premium or premiums, the inquiry resolves itself into this will the insurer acquire or retain payments of premiums by continuing the policy in force, to which he would not otherwise be entitled?

§ 754. Insurer's right to premiums after a breach avoiding a policy.

It may be supposed under the contract of insurance:

(1) That the premium is payable in instalments, as is usual under a life insurance policy;

(2) That it has already been paid in full for the entire term of the policy, as ordinarily happens under fire insurance policies; or,

(3) That a note has been given or a debt incurred for a premium already due.

755. Life insurance.

In the first case it is evident that it may be for the advantage of the insurer to continue the policy. He will not thereby acquire a legal right to further premiums since the insured may drop the insurance at any time, but there is a chance that continued payments will be made, and the insurer profit thereby. There is here, therefore, on opportunity for election, and any conduct manifesting an unmistakable choice by the insurer to continue the insurance in force, should be binding upon him without any consideration or estoppel." Whether mere inaction amounts to such a manifestation of election is akin to the question whether silence may amount to an acceptance of an offer.90 If under the circumstances a reasonable person in the position of the insured would be justified in believing that the insurer had chosen to continue the policy having knowledge of the facts, there is an election; otherwise not.91

756. Cases where the premium has been already paid. If a premium already paid can be retained by the insurer,

"See National Life Ins. Co. v. Clayton (Okla.), 173 Pac. 356, and cases cited.

*See supra, § 91.

91 See also supra, § 739, as to the effect of silence in estopping the owner of land.

even though the policy is forfeited, and no further premiums will accrue, the insurer is obviously giving something up and getting no advantage if the policy is continued in force. Unless, therefore, the insurer must surrender all or part of the premium on avoiding the policy, even his express statement to the insured that the policy would not be avoided, can impose liability only if there are circumstances of promissory estoppel or if it is assumed that the promise is one of the exceptional class which is binding without either consideration or such estoppel. It is important therefore to determine what are the insurer's rights in reference to retention of the premium, or the collection of a note given therefor.

§ 757. Right of insurer to retain the premium when the policy is avoided.

"When a man acts in consideration of a conditional promise, if he gets the promise he gets all that he is entitled to by his act, and, if, as events turn out, the condition is not satisfied, and the promise calls for no performance, there is no failure of consideration." 92 If, therefore, the risk once attaches, the insured has received consideration for his premium, and if by his own fault, or by chance, the conditional promise of the insurer calls for no performance, no part of the premium can be recovered.93

Where the risk never attaches, there is more apparent reason for requiring a surrender of the premium by the insurer in order to prevent his retention of it (when the consideration for it has failed if the conditions of the policy are enforced) operating as a waiver of those conditions. But though the premium is recoverable, the rule is still that surrender of it is not essential to avoiding the policy. In an elaborate opinion,94 the Supreme Court of Minnesota has said: "The facts which prevented it [the risk] from attaching were at all times known to the insured, and when they became known to the insurer it was not called upon to do anything to invalidate the policy. The only duty which then

92 Holmes, J., in Gutlon v. Marcus, 165 Mass. 335, 336, 43 N. E. 125; and see supra, § 112.

93 See cases cited infra, n. 17.

94 Parsons v. Lane, 97 Minn. 98, 106 N. W. 485.