In criticising the many court cases which have been rendered with reference to the doctrine of the entirety of the contract, it seems that the nature of the property should be taken into consideration. If the several items covered under one policy are widely separated and not related to one another in such a way as to be lost in a single fire, it would seem fair to both insured and insurer that the doctrine of the inseparability of the contract should not apply. On the contrary, if the several items of the property insured, such as a building and the contents within the building, are so related to one another that a fire in the one item will imply danger to the other, then it is clear that public policy should require the enforcement of the doctrine of the entirety of the contract. Not to do so would greatly increase the moral hazard. An example may serve to illustrate the application of the doctrine of the entirety of the contract in instances of this kind. Thus let us assume that a person owns a building and stock within the building worth $10,000 each, and both are insured under the same policy for $20,000. Let us now suppose that the owner procures additional insurance on the contents of the building for an amount greater than its value and without informing the first insurer. It will be apparent that by allowing the owner to thus increase the insurance on his personalty an increased moral hazard attaches to the entire property, because there is an inherent connection between the contents of the building and the building itself; if one catches fire the other is also likely to burn. Now if the policy is held to be divisible, and that part which relates to the building could not be forfeited by disobeying the terms of the policy as regards the personalty, the owner of the property might easily secure overinsurance on the personalty with a view to running the risk of not being discovered, and feeling that even if he were discovered he would still be sure of his indemnity on the other item. This would imply a wrong to the insurance company, since it would be deprived

of the security which had been especially provided for by the terms of the policy.

3. Lastly, the standard fire policy provides (lines 45 and 46) that "if an application, survey, plan, or description of property be referred to in this policy, it shall be a part of this contract and a warranty by the insured." To give added force to the information furnished in any application, survey, plan, or description of the property, and to protect the company as fully as possible against fraud, fire-insurance policies usually declare all such information to have the effect of a warranty. This brings us to a distinction between "representations" and "warranties." In probably no busi

ness is this distinction of such a vital importance as in insurance along all lines. Again and again the life-insurance policy calls the attention of the insured, usually in large print, to the fact that his answers in the application blank shall have the effect of warranties, and are made a part of the contract. The marine-insurance policy is also literally filled with provisions and indorsements which are declared to be warranties. Now why this emphasis? If a statement given by the insured is to be construed as a mere "representation” it need only be substantially correct, and before there can be a forfeiture the company must not only show that the statement was false, but that the falsehood was of material consequence, that is to say, was a material factor in inducing the company to accept the risk or to fix the rate. If, on the contrary, all statements are declared to be warranties, as is done in the standard fire policy, it means that they must be absolutely and literally true, and that there will be a forfeiture if the company can show that the statement was false, irrespective of the materiality of the same. By declaring the application blank or any plan or survey or description of the policy a warranty, the company relieves itself of the difficult burden of proving the materiality of the same, and its burden of proof is limited to showing that the statement was not cor

rect. As is well stated in one case: "The purpose in requiring a warranty is to dispense with inquiry, and cast entirely upon the assured the obligation that the facts shall be as represented. Compliance with this warranty is a condition precedent to any recovery upon the contract. It is, therefore, that the materiality of the thing warranted to the risk is of no consequence.'

Owing to the great strictness with which warranties are interpreted, and the fact that certain companies have taken undue advantage of the use of warranties in their policies, many courts are loathe to construe statements as warranties unless expressly declared to be such in the policy. Whereever statements are not declared to be warranties, the courts give the benefit of the doubt to the insured, and will consider a statement a representation rather than a warranty. Because of the hardship and injustice which the technical enforcement of the warranty might cause, some ten states have also seen fit to enact statutes which declare warranties illegal in insurance policies. These statutes usually provide that: "Whenever the application for a policy of insurance contains a warranty clause of the truth of the answers therein contained, any misrepresentation or untrue statement in such application made in good faith by the applicant, shall not effect a forfeiture or be a ground of defense in any suit brought upon any policy issued upon the faith of such application, unless such misrepresentation or untrue statement relate to some matter material to the risk."2 In other words, these statutes declare all statements made by the insured as representations, and must be proved material before their incorrectness will lead to a forfeiture of the policy.

'Fire Insurance Co. vs. Arthur, 30 Pa. St., 315.

2 The law of Pennsylvania, 1885, p. 134. Such laws also exist in Massachusetts, Kentucky, Maine, Virginia, Ohio, New Hampshire, Missouri, Georgia, and several other states.

CHAPTER VIII

THE RISK ASSUMED UNDER THE STANDARD POLICY

SEVERAL sections of the standard fire policy prescribe the general nature of the risk which a fire-insurance company assumes. In the very first section of the policy it is stipulated that

"The

Insurance Company, in consideration of the stipulations herein named and of $...... premium, does insure for the term of against all direct

..........

loss or damage by fire, except as hereinafter provided, to an amount not exceeding $... to the following described property while located and contained as described herein, and not elsewhere, to wit:"

(Here follows a blank space for the written description of the property.)

In other words, the "consideration" for which an insurance company promises to give indemnity includes not merely the money premium, but also the insured's promise to comply with all the stipulations of the policy; and in view of this consideration the company agrees to insure any interest which is legally insurable against all direct loss or damage by fire. The policy expressly provides that the property is only insured while located and contained as described in the policy, and not elsewhere, although, as we have seen in the chapter on the "Description of the Property," this part of the policy must be interpreted with reference to the nature of the business or property which is to be insured. Lines 60 to 66 of the policy also carefully define the liability of the company in case the property is removed, in the following

words: "If property covered by this policy is so endangered by fire as to require removal to a place of safety, and is so removed, that part of this policy in excess of its proportion of any loss and of the value of property remaining in the original location shall, for the ensuing five days only, cover the property so removed in the new location; if removed to more than one location, such excess of this policy shall cover therein for such five days in the proportion that the value in any one such new location bears to the value in all such new locations; but this company shall not, in any case of removal, whether to one or more locations, be liable beyond the proportion that the amount hereby insured shall bear to the total insurance on the whole property at the time of fire, whether the same cover in new location or not."

The Doctrine of Proximate Cause.-An explanation of the meaning of the restrictive word "direct" in the foregoing provision involves a discussion of the doctrine of proximate cause. It frequently occurs that the property damaged or destroyed is situated far distant from the place where the fire originated, but is reached by the fire spreading from one property to another. In such cases disputes will frequently arise as to who shall be liable for the loss, especially where the factor of negligence is involved. A case in point is that of Atkinson vs. Goodrich Transportation Co. (60 Wisc., 141). Here the transportation company was charged with having negligently set fire to property situated a long distance from the origin of the fire, the flames having spread from building to building, until finally carried by the wind for more than a quarter of a mile to the insured premises. The court, in its opinion, gave the following rule: "The true rule is that what is the proximate cause of the injury is ordinarily a question for the jury. It is not a question of science or legal knowledge. It is to be determined as a fact, in view of all the circumstances of fact attending it. The primary cause may be the proximate cause of the disaster, though it