rested upon the insurer was to do nothing, actively or otherwise, which would mislead the other party to the contract to his material injury. Whether it is the duty of the insurer to return the premiums is determined by various considerations. If the policy is wrongfully terminated by the insurer, it must return the premiums.95 So, when the company becomes insolvent, unearned premiums are a claim against the insolvent estate.96 If the policy is illegal the premiums cannot be recovered,97 unless the parties are not 'in pari delicto.' 98 If the policy is not illegal, and once attaches and the risk is assumed, the entire premium is earned, and if a forfeiture results from a breach of a promissory warranty or of a condition subsequent, the insurer cannot be required to return any part of the premium. It is all earned when the risk attaches.99 But if the policy never attaches because of a breach of a condition precedent, the insurer never assumes any risk of loss, and never earns any part of the premium.1 While there is some conflict of authority, we think that under such conditions the proper rule is that the insured, if he has not been guilty of fraud, is 95 Ibid., citing McCall v. Phoenix Mutual Life Ins. Co., 9 W. Va. 237, 27 Am. Rep. 558. Citing Smith v. National Credit Ins. Co., 65 Minn. 283, 68 N. W. 28, 33 L. R. A. 511; In re Minneapolis Mutual Fire Ins. Co., 49 Minn. 291, 51 N. W. 921; Clark v. Manufacturers' Ins. Co., 130 Ind. 332, 30 N. E. 212. "Citing Howard v. Refuge Friendly Society, 54 L. T. (N. S.) 644; Lowry v. Bourdieu, 2 Douglas, 468, 14 English Rul. Cas. 533. Harse v. Pearl Life Assur. Co., 73 L. J. K. B. 373; American Mutual Life Ins. Co. v. Bertram, 163 Ind. 51, 70 N. E. 258, 64 L. R. A. 935. "Citing Home Fire Ins. Co. v. Kuhlman, 58 Neb. 488, 78 N. W. 936, 76 Am. St. Rep. 111; U. S. Life Ins. Co. v. Smith, 92 Fed. 503, 34 C. C. A. 506; Todd Co. v. Farmers' Mutual Fire Ins. Co., 137 Mich. 188, 100 N. W. 442; Alabama Mutual Assur. Co. . Long, 123 Ala. 667, 26 So. 655; Fulton v. Lancaster, 7 Ohio St. 5, pt. 2; entitled to recover back what he has paid to the insurance company.2 "" 'In the case at bar the court ordered the receivers to return the premiums which had been paid, and the plaintiff thus received the full benefit of the rule. But it does not follow that it is the duty of the insurer to take affirmative action to find the insured and tender back the amount of the premiums which have been paid voluntarily before the insurer had knowledge of the breach of condition. In some States statutes have been enacted which require an insurance company to return all premiums which it has received, as a condition precedent to interposing a defence on the ground that the policy was obtained by misrepresentations. In this case the insurer is not asking 3 2 Citing Tyrie v. Fletcher, Cowp. 666; Feise v. Parkinson, 4 Taunt. 640, 14 Eng. Rul. Cas. 530; Stevenson v. Snow, 3 Burr. 1237; Foster v. United States Ins. Co., 11 Pick. 85; Clark v. Manufacturers' Ins. Co., 2 Woodb. & M. 472, Fed. Cas. No. 2,829; Insurance Company v. Pyle, 44 Ohio St. 19, 4 N. E. 465, 58 Am. St. Rep. 781; Jones v. Insurance Co., 90 Tenn. 604, 18 S. W. 260, 25 Am. St. Rep. 706; Mulvey v. Gore Ins. Co., 25 U. Can. Q. B. 424; Georgia Home Ins. Co. v. Rosenfield, 95 Fed. 358, 37 C. C. A. 96; Fowler v. Scottish Life Ins. Society, 28 L. J. Ch. 225; Delavigne v. United Ins. Co., 1 Johns. Cas. 310. See Rochester Ins. Co. v. Martin, 13 Minn. 59, and authorities cited in Taylor v. Grand Lodge A. O. U. W., 96 Minn. 441, 105 N. W. 408. 3 Citing Georgia Home Ins. Co. v. Rosenfield, 95 Fed. 358, 37 C. C. A. 96; Austin v. Mutual R. F. L. Assn., 132 Fed. 555; Houdeck v. Merchants' & Bankers' Ins. Co., 102 Iowa, 303, 71 N. W. 354. As noted in Taylor v. Grand Lodge A. O. U. F., 96 Minn. 441, 105 N. W. 408, the case of Schreiber v. German-American Hail Ins. Co., 43 Minn. 367, 45 N. W. 708, is not an authority for the rule that the mere retention of the premium paid before notice of a breach of a condition is conclusive evidence of an election to treat the policy as valid. Neither do the cases incidentally referred to by Chief Justice Gilfillan in that case sustain this proposition.. In Fishbeck v. Phenix Ins. Co., 54 Cal. 422, there was present every element of a technical estoppel. The point is not decided in Harris v. Equitable Life, etc., Society, 64 N. Y. 196. In Baker v. New York Life Ins. Co., 77 Fed. 550, it appeared that the insurance company for a full year after knowledge of all the facts treated the policy as in force. Jones v. Insurance Co., 90 Tenn. 604, 18 S. W. 260, 25 Ann. St. Rep. 706, was an action by the insured to recover the premiums. See comment upon these cases, and Home Mutual Life Assoc. v. Riel, 1 Monaghan, 615, 17 Atl. 36, in Georgia Home Ins. Co. v. Rosenfield, supra. 4 Citing Rev. St. Mo. 1879, § 5977; N. Y. Life Ins. Co. v. Fletcher, 117 U. S. 519, 6 S. Ct. 837, 29 L. Ed. 934; Civ. Code Cal., § 2617; and Acts Va. 1897, 1898, p. 636, c. 601 [Va. Code, 1904, 638]; Vance, Ins. 245. The court adds:-Virginia Fire Ins. Co. v. Cummings (Tex. Civ. App.), 78 S. W. 716, and Metropolitan Life Ins. Co. v. Moore, 117 Ky. 651, 79 S. W. 219, sus to have the contract rescinded. The premium came into its possession lawfully under color of what was assumed to be a valid contract, and it cannot properly be placed in a position of withholding it until repayment has been demanded. It seems to us that it would be as reasonable to require the insured, when he learns that the insurer claims that the policy is invalid, to either accept the situation and demand a return of his payments, or stand on what he assumes to be his rights and attempt to enforce them.5 If he does not do this, it should not lie in his mouth to assert that the other party cannot be heard on its defence until it has tendered to him what he asserts that he has no right to receive, and will not or cannot accept without abandoning his entire claim for indemnity. The only logical course is to leave the parties where they are until their respective rights are determined. If the defendant prevails the plaintiff should have judgment for the return of his tain the appellant's contention; but they rest upon what seems to us an erroneous theory. The rule there applied would be properly applicable in an action by an insurance company against the insured for the purpose of having the contract rescinded. [To these decisions may be added Insurance Co. & Pa. v. Indiana Reduction Co. (Ind. App.), 117 N. E. 273, and Indiana cases cited; Thompson v. Insurance Co., 63 S. Car. 290, 41 S. E. 464; Powell v. Insurance Co., 97 S. Car. 375, 81 S. E. 654.] Neither is appellant's contention sustained by Mississippi Home Ins. Co. v. Dobbins, 81 Miss. 623, 630, 33 So. 504, 506. In that case the premium was paid after the agent of the company had notice of the loss; and after notice of the additional insurance the company furnished blanks and allowed the insured to make proofs of loss. It was held that, under the circumstances and the terms of the policy with reference to the return of premiums upon cancellation of the policy, the company was estopped by its failure to return the unearned premium. Commercial Assur. Co. v. New Jersey Rubber Co., 61 N. J. Eq. 446, 49 Atl. 155, was a suit by the insurer to cancel the policy. (In Benanti v. Delaware Ins. Co., 86 Conn. 15, 19, however, the court said: "Had the defendant retained the premium prior to the loss and after it knew the breaches of these conditions, it would have waived the right to avoid the policy through them. The risk of the policy upon breach of this condition precedent never attached. It might have been given life by being adopted or ratified prior to the loss; after that event it could not be. A waiver or an estoppel predicated upon facts subsequent to the loss could not affect the rights of the plaintiff under the policy. Hence, if the knowledge of the breach came to the insurer after the loss, its retention of the premium after such knowledge did not affect the plaintiff's rights, and therefore can furnish no foundation for a waiver or estoppel.") 5 The court here adds: "A somewhat similar principle was applied in American Life Ins. Co. v. Bertram, 163 Ind. 51, 70 N. E. 258, 64 L. R. A. 935." premiums. But the insurance company must be consistent. If it claims that the contract is not in force, it must not expressly nor impliedly recognize it as effective. If the insured demands the return of what he has paid as premiums, it must comply with the demand if it claims that the risk never attached. If it refuses to return the money it places itself in a position which is inconsistent with an honest intention to avail itself of the breach of condition, and recognizes the contract as in force just as effectively as it would by accepting and retaining assessments or premiums after it has acquired knowledge that there had been a forfeiture. Having thus made its election, it will be held to have subjected itself to all the liabilities which attach thereto. Even when knowledge of the breach of a condition is acquired before a loss occurs, the company is not, under our decisions, required to do any affirmative act. There is even stronger reason for holding that this is the rule when the insured does not learn of the breach of conditions until after a loss. The rights of the parties have then been determined and fixed by the occurrence of the event insured against. It is essentially a matter of intention; and when the only proof of that intention rests in what a party does or forbears to do his acts or omission to act relied upon should be so manifestly consistent with and indicative of an intention to voluntarily relinquish a then known particular right or benefit that no other reasonable explanation of his conduct is The court here adds: "In Johnson v. American Ins. Co., 41 Minn. 396, 43 N. W. 59, where the insured procured other insurance in violation of a condition which provided that the policy should be void if other insurance was obtained 'without notice to and consent of this company in writing thereon,' the court, through Justice Dickinson, said: 'By the plain terms of the policy, other insurance without the consent of this company would ipso facto void the contract; and in the case of a contract thus avoided it would not be obligatory upon the insurer to repay any of the unearned premium, nor would he be required to give notice that he should insist upon and avail himself of the proper legal effect of the agreement. It required no affirmative act of election on the part of the company to make operative the clause avoiding the contract whenever the specified conditions should occur. Its obligations ceased, unless, being informed of the fact, it consented to the additional insurance, or in some manner waived the forfeiture.' To the same effect is Betcher v. Capital Fire Ins. Co., 78 Minn. 240, 80 N. W. 971." 7 Berman v. Accident Association, 107 Me. 368, 373, 78 Atl. 462. possible. Unless one is shown to have full knowledge of all the material facts that establish his right he cannot be held to have waived it." § 758. No affirmative action on the part of the insurer is generally necessary in order to avoid a policy for breach of condition. Even though the insured has no right to recover any portion of the premium if the policy is avoided for breach of condition, it is, nevertheless, held or assumed by some courts that affirmative action on the part of the insurer is necessary in order to terminate the rights of the insured under the contract. The supposed analogy of a lease or other deed granting a conditional estate in land, has probably contributed to this idea. A lease either for life or for years creates an estate in land. When the estate has once been created, it cannot be terminated except by reëntry. This is an inheritance of the modern law illustrating the importance which possession of tangible property had, and still has in the law. The obligation of an insurer, however, does not create an estate which exists until it is determined, nor a general obligation to "insure" which the insurer might on certain contingencies take away from the insured. From the outset there was merely a conditional promise imposing on the promisor only such liability as its conditional terms indicate. It is true that a policy of insurance may give in terms to the insurer a right to cancel it in a certain event, or at the option of the company, and to take advantage of its right the insurer must take active steps; 10 but such a provision is not, strictly speaking, a condition qualifying the insurer's promise, and any attempt to give a similar construction to warranties and conditions generally is an error. It should be observed, however, that even after breach of condition, the contract still exists, but it exists as a conditional contract. Even though the condition can no longer be performed, the situation is not the same as if no contract Smith's L. Cas. (8th Am. ed.) 102. 'See supra, § 746. 10 Patterson v. Equitable Life Assur. Soc., 112 Ark. 171, 165 S. W. 454, 457; Lockwood v. Middlesex Mut. Assur. Co., 47 Conn. 553; Hansell-Elcock Co. v. Frankfort &c. Ins. Co., 177 Ill. App. 500. |