of the insured, the policy will go with the property insured, either to a legatee or the next of kin, and will be held by the executor or administrator as a trustee until distribution; nor will this clause prevent the insured from making a valid assignment of his claim after a loss has happened. But whether the parties

Ins. Co., 1 Sneed, 444. In Dreher v. Ætna Ins. Co., 18 Mo., 128, it was held that a dissolution of partnership before loss, and a division of the goods, so that each partner owned a distinct portion, was a change of title within the meaning of the clause, "any transfer or change of title in the property insured shall avoid the policy."

The argument used in favor of not considering the sale by one partner to another as an alienation, is chiefly that no new party is introduced into the contract, and as the insurer was willing to trust the partnership, and to insure their property, he is not prejudiced in any way by such a sale. But the answer to this is obvious. The presence of one or more particular persons in the firm may be the reason why the insurer was willing to take the risk. He may have said, "A is an honest, trustworthy man, the other members of the firm I have my doubts about, but as long as A remains in the firm I am willing to trust it." Can it be said, then, that if A sells out to B and C the insurer is not prejudiced. Again, if one partner sells out to the others, the partnership is by operation of law dissolved, and admitting that the insurer did not, as in the case just supposed, rely upon one partner, yet it must then be said that he insured the firm, and as this has ceased to exist, he is no longer liable. On principle, if A & B are insured, and A assigns his interest to B, no action should lie in the name of A & B, for A has no interest, and the assignment has not been by consent, which is the evidence of a new contract by the insurer to pay the loss, and, except in New York, an assignee cannot sue in his own name.

1 If the insured dies intestate, his death works no alienation, because his heirs take by descent, and not by any act of his. Burbank v. Rockingham M. F. Ins. Co., 4 Foster, 550. The question has arisen whether, in case of a devise of real estate, the policy goes to the devisee, or to the administrator as personal estate. The latter seems to be the more correct view. This is shown by the case of Haxall v. Shippen, 10 Leigh, 536. The testator insured his house against fire by a policy to himself, his heirs, and assigns. He then devised the tenement to his wife for life, remainder to his two daughters in fee. After his death the house was destroyed by fire. The wife received the money, and, without the concurrence of the other devisees, expended it in a new house. She then died, leaving the new house standing, which went with the estate to the devisees in remainder. Held that the tenant for life had a right only to the use of the money during her life, it being but personal estate, and that she had no right to convert it into real estate, and that on her death the husbands of the devisees in remainder had a right to call for the whole insurance money, without any deduction being made for the value of the new building. But in cases where a trust existed, or was presumed to exist, the proceeds have been considered not as personal estate, but as "affected with a trust for the benefit of the parties interested in the real estate." Parry v. Ashley, 3 Sim. 97; Norris v. Harrison, 2 Madd. Ch. 268. See also, Mildmay v. Folgham, 3 Vcs. 471.

* Sparkes v. Marshall, 2 Bing. N. C. 761; Brichta v. N. Y. La Fayette Ins. Co., 2 Hall, 372; Dadmun Manuf. Co. v. Worcester Mut. F. Ins. Co., 11 Met. 429, . 435; Mellen v. Hamilton F. Ins. Co., 5 Duer, 101.

may, if they see fit, stipulate that such an assignment shall invalidate the policy, is, on the authorities, a matter of doubt.1

The policy may provide that not only must the insurers be notified of a change of ownership, but that they must be informed of a change of masters. And if the vessel, in such a case, is lost while under the charge of a master, of whose appointment the insurers have not been informed, the insured cannot recover, although it does not appear that there was any negligence on the part of such captain.2

SECTION IV.

OF THE CONSTRUCTION OF POLICIES OF INSURANCE.

A. Of the General Rules of Construction.

A discussion of the rules and principles applicable to the construction of contracts generally, would be out of place here; but if we confine our consideration to those which belong exclusively to policies of insurance, a few words will suffice. Perhaps the middle and the better ground will be to present those rules which have been passed upon juridically in connection with contracts of insurance.

The most important question is, whether the contract should be construed favorably to one party or to the other. And it is obvious that the answer to this question must depend, in some

1 In Goit v. National Protection Ins. Co., 25 Barb. 189, decided in April 1855, this question came before the supreme court of New York, Allen, J., Pratt, J., Hubbard, J., and Bacon, J., being upon the bench, and it was held that the clause, so far as it affected the right of the assured to transfer his interest after a loss, was void as against public policy. In March, 1857, the same question came before the same court, Strong, J., Welles, J., and Smith, J., being upon the bench, and the clause was held to be valid, no notice being taken of the preceding case. Dey v. Poughkeepsie Mut. Ins. Co., 23 Barb. 623. It will appear from the numbers of the volumes above cited, that the case of 1857, which held this clause to be valid, was published some time before the case in 1855, which declared it to be void.

2 Tennessee Marine & Fire Ins. Co. v. Scott, 14 Mo. 46.

measure at least, upon the predominance given to one or the other of the two views which a general consideration of the subject of insurance at once suggests.

The practice of insurance is of vast benefit to the commercial world. It binds it together in a kind of community. It divide losses and profits. It begins with taking by way of premium a small part of the profits; and, in return, it divides all losses in such a way as to make them endurable by all. Hence, mercantile enterprises become practicable and prudent, which would never be undertaken if a disastrous issue must fall with crushing force upon the undertakers. Men of small capital are safe in carrying on a comparatively large business; and commerce generally is thus enlarged and protected by the practice of insurance.

It is easy to see this so clearly, that the desire becomes very strong to extend the benefits of insurance as widely as possible, by making it divide all losses, and provide indemnity for every disaster. And it is easy, in seeing this, to forget, as juries often, and courts sometimes do, that if by lax construction, or in any other way, the insured are always favored, either the practice of insurance must cease, or the premiums must be enlarged to cover the risks of the law as well as the perils of the sea, until insurance becomes so costly that the best men will give it up, because it will be more profitable for prudent and honest merchants to stand their own insurers.

The practical result of this should be, that contracts of insurance are to be construed accurately, and neither liberally nor severely, and without favor to either party. And this view seems now to prevail to some extent in the courts.1

1 In Hood v. Manhattan Fire Ins. Co., 1 Kern. 532, Parker, J., remarked: "Although it is said that policies of insurance are to be construed liberally for the insured, yet where the words are not ambiguous, and the expression of the intent of the parties is full, I know of no reason why they should be excepted from the general rules of law applicable to the construction of all contracts." And Lord Ellenborough, in Robertson v. French, 4 East, 130, 135, is still more explicit. He says: "In the course of the argument it seems to have been assumed, that some peculiar rules of construction apply to the terms of a policy of assurance which are not equally applicable to the terms of other instruments, and in all other cases; it is, therefore, proper to state, upon this head, that the same rule of construction which applies to all other instruments applies equally to this instrument of a policy of insurance, namely, that it is to be construed according to its sense and meaning, as collected in the first place from the terms used VOL. II.

5

It is a common rule in the interpretation of contracts that and may be read in the place of or, and or for and. In the same way if the intention of the parties requires it, the words "or either of them" may be added.1

The universal rule of common sense and common law, that evidence from without may be used to explain a written contract but not to vary it, is fully applicable to policies of insurance. This simple rule is as intelligible in itself as it is reasonable. But it has been much cumbered and darkened by Lord Bacon's ingenuities about patent and latent ambiguities, and has thus given rise to many difficult questions. It is, however, as we think, returning in the jurisprudence both of England and of this country to its original simplicity and accuracy.

Things said or written by either party or by both, while arranging for the policy, form no part of it, unless specifically referred to in the policy. But the representations and promises

in it, which terms are themselves to be understood in their plain, ordinary, and popular sense, unless they have generally, in respect to the subject-matter, as by the known usage of trade, or the like, acquired a peculiar sense distinct from the popular sense of the same words; or unless the context evidently points out that they must, in the particular instance, and in order to effectuate the immediate intention of the parties to that contract, be understood in some other special and peculiar sense." See also, Aguilar v. Rodgers, 7 T. R. 421; Mumford v. Hallett, 1 Johns. 433; Graves v. Boston Marine Ins. Co., 2 Cranch, 419; Honnick v. Phoenix Ins. Co., 22 Mo. 82. 1 Davis v. Boardman, 12 Mass. 80. The owner of the ship and cargo in this case had given orders to have them insured in England, but fearing that his letter might not have arrived, he caused insurance to be effected in this country by a policy containing the following memorandum: "Should this vessel and cargo be insured in England, in time to attach, this policy is to be cancelled." The vessel was insured in England, but not the cargo. The court held, that the insurer on the cargo here was liable, and the clause was construed to mean, "Should this vessel and cargo, or either of them, be insured in England," etc.

2 In Higginson v. Dall, 13 Mass. 96, it was held that a written memorandum, which was delivered to the insurance broker by the agent of the insured, but not inserted in the policy or annexed to it, was not admissible in evidence. Parker, C. J., in delivering the opinion of the court, said: "Although policies of insurance are not technically specialties, not being under seal, they have, nevertheless, ever been deemed instruments of a solemn nature, and subject to most of the rules of evidence which govern in the case of specialties. The policy itself is considered to be the contract between the parties; and whatever proposals are made, or conversations had, between the parties prior to the subscription, they are to be considered as waived, if not inserted in the policy, or contained in a memorandum annexed to it." See also, Weston v. Emes, 1 Taunt. 115; New York Ins. Co. v. Thomas, 3 Johns. Cas. 1; Mumford v. Hallett, 1 Johns. 433; Cheriot v. Barker, 2 id. 346; Vandervoort v. Smith, 2 Caines, 155; Ewer v. Washington Ins. Co., 16 Pick. 502; Whitney v. Haven, 13 Mass. 172;

made by the insured are of importance, and will be considered hereafter.

The subsequent admissions or statements of the parties cannot be offered in evidence to vary the written contract.1 And the stipulations implied by the legal constructions of the expressions of the policy are equally parts of it, as if specifically written.2

And that which is written, whether upon the face, or at the side, or on the back, if referred to in the body of the instrument, or signed by the party upon whom it imposes an obliga

New York Gas Light Co. v. Mechanics' Fire Ins. Co., 2 Hall, 108; Hogan v. Delaware Ins. Co., 1 Wash. C. C. 419; Halhead v. Young, 6 Ellis & B. 312, 36 Eng. L. & Eq. 109. The slip, or application for insurance, is not admissible to aid in the construction of the policy, except in the case of a latent ambiguity, or misrepresentation. Dow v. Whetten, 8 Wend. 160. But see contra, Norris v. Ins. Co. of North America, 3 Yeates, 84. In Urquhart v. Barnard, 1 Taunt. 450, an action was brought on a policy on goods, the vessel having liberty to touch at a place. A letter was shown to the underwriters at the time of effecting the insurance, in which it was stated that the vessel would touch at the port mentioned for the purpose of taking in salt. Lord Mansfield, C. J., held that the letter was admissible, on the ground that if a custom had been shown to stop at the port for the purpose of taking in salt, there would have been no deviation, because if the underwriters knew of the custom the insured were entitled to it. And that if the underwriters knew that the insured intended to stop there, it was the same as if they had notice by the general usage of trade. He said: "The letter is not made use of to vary or contradict the policy; it only shows that the underwriters knew the purpose of going there; it therefore shows, that there was no deviation from the course of the voyage intended and insured." We think, however, that this case cannot be supported. The doctrine, that if the assured tells the underwriter that he means to go to a place and then a policy is made out to a different place, that he can go to the place he spoke of, is absurd on its face, and is not strengthened by comparing it to the knowledge of a usage. For if there is a usage, the assured has a right to avail himself of it. But if there is not, he certainly cannot make one by declaring to the underwriter that it exists. See Astor v. Union Ins Co., 7 Cow. 202.

1 See Paine v. M'Intier, 1 Mass. 69; Leland v. Stone, 10 Mass. 459.

2 Potter v. Ontario & Livingston Mut. Ins. Co., 5 Hill, 147, per Bronson, J. Dennis v. Ludlow, 2 Caines, 111; Bean v. Stupart, 1 Doug. 11; Kenyon v. Berthon, id. 12, n. 4; De Hahn v. Hartley, 1 T. R. 343; Guerlain v. Col. Ins. Co., 7 Johns. 527; Fowler v. Etna F. Ins. Co., 6 Cow. 673, 7 Wend. 270; Ewer v. Wash ington Ins. Co., 16 Pick. 502. See also, Cochran v. Retberg, 3 Esp. 121.

+ Warwick v. Scott, 4 Camp. 62; Harris v. Eagle Fire Ins. Co., 5 Johns. 368. In this case the value of the goods was on the back of the policy, but it was referred to in the body of the instrument. In Stocking v. Fairchild, 5 Pick. 181, a paper was offered in evidence, on one side of which was a deed apparently absolute, dated and duly executed, and on the other a writing in the usual form of a condition to a mortgage without date, signature, or seal. Held, that both should be taken together. See also, Emerson v. Murray, 4 N. H. 171.