and because of some defect of title or incumbrance against which the holder of this policy is hereby insured. But in each and every case enumerated above, the company shall not be liable unless the assured shall have given notice to it in writing of the commencement of any action or other proceeding upon the judgment in which the company's liability may depend, and the company shall have been allowed, to prosecute or defend such action or proceeding as the case may require. Where the action is such as does not necessarily involve the validity of the title insured, notice shall be given to the company within ten days, after the service of any paper or pleading, the object or result of which shall be to call in question the validity of the title, and the company shall have the right to prosecute or defend in such case as above provided. In all cases where an action or other proceeding is brought or defended as above mentioned, the company will pay the expense of the litigation including any costs recovered against the assured in addition to the amount of the loss. But in no case will the company be liable for the fees of counsel or attorney employed by the assured. In all cases the right of the company to appeal from the judgment fixing its liability must be preserved and secured to it although the loss may not yet have been paid or the amount of the claim determined; but any appeal taken by the company shall not operate to delay the payment of the loss beyond the time when it would otherwise have been payable under the terms of this contract. Every loss shall be payable within thirty days after written notice of loss to the company and presentation of proper proofs thereof, except that where the company within the said thirty days shall elect to take an appeal from a judgment adverse to the title, the loss shall not be payable until the final determination of the suit or as hereinafter provided, unless the assured shall give to the company satisfactory security for the repayment to the company of the amount of loss paid by it in case the suit shall ultimately be determined in favor of the company, or unless the assured shall consent to convey the insured estate to the company, or to some other purchaser named by it at the price at which the assured shall have contracted to sell it (if such contract shall have been made), or at the option of the company, at a valuation of the insured estate or interest to be made by three arbitrators or any two of them, one to be chosen by the assured and one by the company and the two thus chosen to select an umpire, and no right of action shall accrue until notice of such valuation shall have been served upon the company, and until thirty days after the assured shall have tendered a conveyance of the insured estate or interest to a purchaser to be named by the company at such valuation or at the price at which the assured shall have so contracted to sell the property, less in any case the amount of any incumbrance on said insured estate or interest not hereby insured against, and the company shall have failed within that time to find a purchaser for the estate upon such terms; provided, however, that in cases of insurance on the interest of a mortgagee when the company shall elect to take an appeal from a judgment in foreclosure of the mortgage which shall adjudge the same to be a lien inferior to that stated in this policy, or from any order in such action relieving the purchaser from his purchase by reason of the existence of some defect in the title, or of some incumbrance thereon not excepted in this policy, then upon the expiration of two years from the entry of such order or judgment, or upon the affirmance of such order or judgment by the Appellate Division (whichever shall first happen) the assured shall have the right to require the company, within thirty days after demand, to pay the amount due upon the mortgage and the costs and disbursements in the action upon its receiving a proper assignment of the mortgage and of all the rights of the assured under the judgment: provided that no liability on the part of the company shall exist to take such assignment unless the market value of the property described in the mortgage at the time of such demand shall after deducting the amount of any unpaid taxes and assessments thereon be at least 50 per cent more than the amount of the mortgage and provided further that no liability on the part of the company shall exist to take such assignment merely upon the lapse of said period of two years, unless the prosecution or defense of such action, if by counsel of the assured, shall have been conducted with all due diligence. If the assured shall within seven years from the date of this policy sell or mortgage the property, the title to which is insured hereby, then upon application of an examining or associate examining counsel made within thirty days after such sale or mortgage and approved by the company for a new insurance on the same title to be issued to the grantee or mortgagee and upon the consent in writing of the assured, and the surrender and cancellation of this policy a new policy or policies shall be issued, and four fifths of the sum paid as premium for this policy will be allowed as a deduction from the premium on such new policy or policies. A fee of two dollars and fifty cents shall be payable for each new policy. No further policy will be issued upon a subsequent sale or mortgage except on such terms as the company may fix. When a policy of insurance is issued to a mortgagee, all liability of the company to the assured shall cease upon the foreclosure of the mortgage, unless the assured, having become the owner by purchase under such foreclosure, shall, within thirty days from the delivery of the deed thereunder, apply to be insured as owner, stating in such application whether to his knowledge the title to the premises has been disputed or questioned. Upon such application the company shall have the option either to issue insurance to the owner subject to any estates, defects, objections, liens or incumbrances since the date of the mortgagee policy, for the same amount written therein, allowing as a rebate from the premium for such owner's policy the full amount of the premium paid on said mortgagee policy or to purchase the property for the amount due the mortgagee for principal, interest, fire-insurance premiums, costs and disbursements under the decree of foreclosure and sale, together with the amount of any taxes, assessments and water rates which may have been paid by such purchaser to complete his title under the foreclosure sale. Policies of insurance, issued as collateral security to mortgagees or others interested only as creditors in the title insured, may be transferred to assignees of the mortgage or indebtedness upon payment to the company of one dollar for each transfer, but no transfer shall be valid until it shall have been approved by the company, and such approval may be refused if not applied for within thirty days after the conveyance or assignment of the interest insured. All interest in this policy, saving that for damages accrued, shall cease by the transfer of this policy except as herein otherwise provided. All payments under this policy shall reduce the amount of the insurance pro tanto, and no payment can be demanded without producing this policy for the indorsement of such payment. If the policy is lost, indemnity must be furnished to the satisfaction of the company. Whenever the Company shall have settled a claim under this policy, it shall be entitled to all the claims and rights which the assured has in the estate or interest insured, against any other person or property, or would have had against any person or property, had this policy not been made. The assured agrees to trans、 Approved Approved Approved Approved fer to the company such rights and to permit it to use the name of the assured for the recovery or defense thereof. If the payments do not cover the loss of the assured, the company shall be interested in such rights or claims with the assured in the proportion of the amount paid to the amount of the loss not covered thereby. The assured warrants that such rights of subrogation shall vest in the company unaffected by any act of his. In all cases where the company is called upon to pay the full amount insured by this policy, it shall have the right to purchase the insured estate at an appraised value to be ascertained by arbitrators as above provided. CHAPTER XXXI CREDIT INSURANCE CREDIT insurance may be defined as that form of insurance which seeks to indemnify extraordinary losses in credits suffered by manufacturers, wholesalers, and jobbers through the insolvency of their customers. It is essential to bear in mind that this form of insurance does not insure against the expected losses occurring in any business, but covers only the unexpected losses, i.e., those in excess of the average loss. This form of insurance may be regarded as scarcely out of the experimental stage. Thus far the companies have lacked the extensive statistical data necessary to place any system of insurance upon a scientific basis. In fire insurance we have seen that risks are carefully classified, and that full records of losses exist, which serve as a guide in the charging of premiums. But in credit insurance no such attempt has been made to reduce the underwriting of risks to a scientific basis, and the companies are obliged at present to issue their policies on the policy-holder's own statement as to the losses he has suffered for the last few years. Whereas fire-insurance premiums have shown a tendency to decrease during the last few decades, the rates in credit insurance have shown a tendency to rise; until in some instances they are nearly twice as high as formerly. But whatever may be the difficulty under which credit insurance is laboring, it must be conceded that there is need for this type of insurance. Every merchant concedes the necessity of carrying fire insurance on his stock, yet the total sales of every merchant each year-sales made largely |