In commercial towns, actions on agreements to insure, against fire or perils of the sea, are not uncommon; and they are always sustained, where it appears that the terms of the agreement have been fully settled by the concurrent assent of both parties, so that nothing remains to be done but to deliver the policy.

Receipts for premiums are sometimes given, with an agreement to deliver a policy of the same date with the receipt. This gives immediate effect to the insurance, the receipt supplying the place of a formal policy till one can be prepared.

To complete and perfect the contract of insurance, it is only necessary that the minds of the parties should have met, as to the subject matter to be insured and the terms of the insurance, no matter whether the evidence of such meeting of the minds of the parties is contained in a prepared and perfected policy, or rests in words uttered by the parties and committed to no paper, or is to be found in letters which have passed between them. In either and each case it is equally effective and obligatory, though the evidence in one form may be much more convenient, as well as more clear, definite and certain, than in the other.

It is well established in this country, that the acceptance of a proposal for insurance constitutes a meeting of the minds of the parties and consummates the bargain, provided the offer is standing at the time of the acceptance.

What constitutes an acceptance? This depends upon circumstances. The writing of a letter announcing an acceptance is not sufficient, while it is in the hands of or under the control of the writer;-in some cases it has been held, that the letter must have reached the party to whom it is written, but the general doctrine is, that whenever the letter has started on its mission and passed into the post office, or is beyond the control or recall of the sender, it consummates the contract. Of course the proposition, that the writing of the letter, while it remains in the control of the writer, is insufficient, includes the lesser proposition, that the mere determination of the minds of the insurers is insufficient.

A vote of a board of directors, not communicated to the

applicant, would be insufficient; and the making of a policy in pursuance of such vote would probably be held equally inoperative, so long as it remained in the control of the company and uncommunicated to the applicant.

Each case has to be determined upon its own peculiar circumstances, and it will occur to every lawyer, and to most business men, that there are other ways of expressing an assent or acceptance of a proposition, besides writing or speaking words.

Sometimes, and under some circumstances, silence and delay are equally effective, when the proposition is made in such form or under such circumstances, as to render it the duty of the party to communicate a refusal if he does not mean to accept.

SECTION 4.

Alterations of a Policy of Insurance.

Alterations made by agreement are valid, and are, in prac-. tice, often made and endorsed on a policy. But a material alteration by the insured, without the assent of the insurer, destroys the validity of the policy and prevents the enforcement of any claim against the insurer, even though made in good faith and with the expectation of obtaining the consent of the insurer. No one may alter any instrument executed by another, in a material respect, and still claim under it. An alteration by the insurer, without the assent of the insured, has no effect at all. He is still bound to perform his contract, as he made it originally.

SECTION 5.

Mistake in Drafting Policy.

If it be clearly proved, that a material mistake has been made in drafting a policy, a court of equity will usually order it to be amended, so as to conform to the agreement of the parties. Where a memorandum for a policy on a "Grist Mill" was handed to a company, who executed a policy on a "Mill House," which was received by the insured

and carried away without examination, the policy was ordered by a court of equity to be corrected, so as to conform to the memorandum. Phoenix Fire Ins. Co. vs. Gurnee, 1 Paige

(N. Y.) 278.

So, where a policy delivered to the insured differed in its terms from the agreement for insurance, and it appeared that a clerk received it and placed it in the safe, without examination or comparison on the part of the assured, at the time it was received or at any time thereafter, till after the loss: it was held that there was no such acceptance of the policy by the assured, as would show a waiver of the original contract, or an intention to receive this particular policy as a consummation of it, and that, as they still held the original agreement in writing, they might enforce it in equity. Franklin Fire Ins. Co. vs. Hewitt, 3 B. Monroe, (Ky.), 231.

So, an error in the description of the property insured, which crept into the policy through the mutual mistake and misunderstanding of the parties, was held to be a proper subject for correction in equity. New York Ice Co. vs. North Western Ins. Co., 23 New York Reports, 357.

So, where a mortgagee applied for insurance through the local agent of an insurance company, intending to procure an insurance of his interest as mortgagee, and so stating to the agent, but the agent drew the application as for an insurance upon the property itself, in the name of the mortgagor, and as his property, the amount to be payable in case of loss to the mortgagee, and so made the application and had the policy so issued, in the belief that such was the proper and legal mode of effecting an insurance on the interest of the mortgagee: it was held, that the mistake could be corrected by a court of equity, although it was a mistake of law and not of fact. Woodbury Savings Bank vs. Charter Oak Ins Co. 31 Ct. 517.

And in a case in Iowa, where the policy stipulated that the defendants" do insure William Longhurst, (mortgagee), Dubuque, Iowa, against loss," &c., the petition averred, that the interest of Longhurst was a mechanics' lien, that the term "mortgagee" in the policy was intended to describe that

interest, that the nature of the interest was made known at the time of the application, and was misdescribed by mistake of the agent of the defendants, who said that the description was sufficient to indicate the real interest. Issue was taken by the parties upon these averments, and an agreement was filed, signed by the parties, that any evidence to correct any mistake in the terms of the policy sued on, which could be given in a proper chancery suit, might be introduced in this proceeding. It was held, that the policy and testimony showing the facts averred were competent and admissible in evidence under the pleadings and agreement, and the mistake was ordered to be corrected, although it was in that case also objected, that the mistake was a mistake of law and not of fact. Stout vs. City Fire Ins. Co. of New Haven, 12 Iowa, 371.

To afford ground for reforming a policy on account of mistake in drafting it, the mistake must appear to have been mutual, and both the agreement and mistake must be made out by clear and conclusive evidence, showing that the contract as expressed is different from what, according to the understanding of both parties at the time it was made, it was intended to be.

The court cannot supply an agreement that was never made, but which one of the parties intended to make.

Neither can the court correct it, if it is according to what one of the parties understood it to be, although the other did not so understand it; provided no fraud existed.

In some cases, a different understanding of the matter by the parties, while it will not afford ground for a reform of the policy in equity, and while the court will not step in and attempt to make an equitable contract for the parties, will prevent the consummation of the contract.

We have stated, that the " minds of the parties must meet." We may add that, to constitute a valid and complete contract of insurance, the minds of the parties must meet as to the premises, or property, or subject matter of whatever nature it may be, to be insured, as to the amount of the insurance, as to the time the risk is to run, (or that it shall continue till

283

notice,) and as to the amount of premium to be paid. If either of these matters is left undetermined, the contract would ordinarily be deemed incomplete.

SECTION 6.

Insurable interest. What may be Insured?

And first, in Marine Insurance.

a. Subject matter insured and description thereof.

The subject matter insured must distinctly appear in the policy, and, as a general rule, the claim for indemnity upon loss is limited to the property therein described.

The assured must have a lawful, real, and pecuniary interest in the property insured, at the time of the loss, to entitle him to recover upon his policy. Such an interest, however, need not be a vested interest, or even an absolute and certain one, but one may insure a contingent interest, as if goods be consigned to "A" as a gift, conditioned that if "A" should die before they reach the port of destination, then they shall belong to and become the property of " B." Here it is plain that the interest of "B" is neither certain nor vested, but is entirely contingent upon the death of "A," and yet it is equally plain that "B" has an insurable interest. So, if one has contracted to purchase goods, to be shipped to him, he may insure them, and will recover, if the property be in him. at the time of the loss.

If a vessel is insured, it is like the insurance of a house, and must be confined to the ship specified, but the goods and cargo, described in the policy as being in a particular vessel, may be shifted from one ship to another, and if it is done for a sufficient reason the insurer will remain liable.

In the first case, the ship is the subject insured, and this may not be changed without the consent of the insurer, and is not usually done except by the cancellation and surrender of the old policy and the issue of a new one; but in the second case, the goods being the subject insured, and the vessel being named only as matter of description of the place where the goods are, and for the purposes of identification,