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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.

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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,3 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. Ætna F. Ins. Co., 6 Cow. 673, 7 Wend. 270; Ewer v. Washington 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.

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tion, is equally a part of the policy; and so it is if it be a separate document distinctly referred to; or if it be on the same sheet as the policy when delivered, although not referred to.2 But it seems that a paper is not a part of the policy so as to constitute a warranty if it is merely fastened to it by a wafer and not referred to. And a fortiori it does not constitute part of the policy if merely folded up with it, when the policy is brought to the underwriters to be signed.4 If the facts contained in a document referred to are not material to the contract or the risk, the reference does not amount to a warranty of them. Among the rules which assist in the construction of this contract, as of others, that which seeks to ascertain and carry into effect the intention of the parties is of great importance. It must be understood, however, that it is only their intention as expressed by themselves which can thus be carried out. That is, their intention shall be enforced if their words can be made by any reasonable intendment to embrace it. But if they meant one thing and said another, the law cannot help them.

1 Routledge v. Burrell, 1 H. Bl. 254; Wood v. Worsley, 2 id. 574; Worsley v. Wood, 6 T. R. 710; Tarleton v. Staniforth, 5 T. R. 695, 1 B. & P. 471. The application for insurance, if referred to, forms part of the policy. Clark v. Manuf. Ins. Co., 8 How. 235; Murdock v. Chenango Co. Mut. Ins. Co., 2 Comst. 210; Jennings v. Chenango Co. Mut. Ins. Co., 2 Denio, 75; Burritt v. Saratoga Co. Mut. F. Ins. Co., 5 Hill, 188; Trench v. Chenango Co. Mut. Ins. Co., 7 Hill, 122; Kennedy v. St. Lawrence Co. Mut. Ins. Co., 10 Barb. 285; Kentucky & Louisville Mut. Ins. Co. v. Southard, B. Mon. 634; Brown v. Peoples' Mut. Ins. Co., 11 Cush. 280. But see Williams v. New England Mut. F. Ins. Co., 31 Maine, 219. The application is often expressly made part of the policy. Allen v. Charlestown Mut. F. Ins. Co., 5 Gray, 384. 2 Murdock v. Chenango Co. Mut. Ins. Co., 2 Comst. 210; Roberts v. Chenango Co. Mut. Ins. Co., 3 Hill, 501. In each of these cases the policy was on one half of an entire sheet, and on the other half there was a printed statement, headed "Conditions of Insurance." No reference was made to it in the body of the policy. Held, that it formed part of it. In Duncan v. Sun F. Ins. Co., 6 Wend. 488, the paper was both annexed and referred to in the policy.

3 Bize v. Fletcher, 1 Doug. 13, n.

4 Pawson v. Barnevelt, 1 Doug. 13, n.

5 Jefferson Ins. Co. v. Cotheal, 7 Wend. 72; Snyder v. Farmers' Ins. & Loan Co., 13 Wend. 92, 16 id. 481; Stebbins v. Globe Ins. Co., 2 Hall, 632. But if the policy contains the following clause, "Reference being had to the application, etc., for a more particular description, and as forming part of this policy," this is a warranty of the facts contained in the application. Burritt v. Saratoga Co. Mut. F. Ins. Co., 5 Hill, 188; Kennedy v. St. Lawrence Co. Mut. Ins. Co., 10 Barb. 285. But see, contra, Kentucky & Louisville Mut. Ins. Co. v. Southard, 8 B. Mon. 634.

See cases ante, p. 50, n. 2; 2 Parsons on Contracts, 7. In Mackie v. Pleasants, 2

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