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As is well stated in one case: 1 "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."

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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.

1 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

may operate through successive instruments, as an article at the end of a chain may be moved by the force applied at the other end, that force being the proximate cause of the movement.... .The question always is, was there an unbroken connection between the wrongful act and the injury, a continuous operation? Did the effects constitute a continuous succession of events so linked as to make a natural whole, or was there some new and independent cause intervening between the wrong and the injury? It must appear that the injury was the natural and probable consequence of the negligence or wrongful act, and that it ought to have been foreseen in the light of the attending circumstances." Again, as summarized by Ostrander, "the proximate cause is not the one which is nearest in time to the result, unless such cause be independent. That must be regarded as proximate which is primary, efficient, the one which is the cause of causes. That which is only incidental and contributing is in no sense responsible for the disaster. "'1 If, in such cases, the insurance company pays the claim, it becomes subrogated to the rights of the original insured, to reimburse himself through the collection of damages from the party whose negligence caused the loss. The company, however, must prove that the proximate or real cause of the loss was the negligence of the party from whom they wish to collect damages.

Numerous cases arise, however, where the doctrine of proximate cause is not connected with the subject of subrogation, but must be used to determine the liability of the insurance company itself. This is well illustrated in the case of The Lynn Gas and Electric Co. vs. The Meriden Fire Insurance Company (158 Mass., 570). Here the plaintiff was insured for a large amount under the Massachusetts standard fire-insurance policy, against direct loss or damage

1 D. Ostrander, "Law of Fire Insurance," p. 365.

by fire, and the policies of the several companies covered all the machinery and other property of the plant. It so happened that all the wires transmitting power from the building to other parts of the city emanated from a single wire tower, near which stood a waste-paper basket. In some way this basket caught fire, which fire was immediately extinguished, but not until the flames had come in contact with the mass of wires, thus producing a short circuit, which in turn affected certain pulleys and belts, until all the machinery in the building was severely strained or wrecked.

The fire had

done little or no damage directly, although the indirect damage reached large proportions. The companies, in a test case, denied liability, but the court held that the policies insured everything in the building. "The defendants when they made their contract understood that the building contained a large quantity of electrical machinery, and that electricity would be transmitted from the dynamos, and would be a powerful force in and about the building. They must be presumed to have contemplated such effects as fire might naturally produce in connection with machinery used in generating and transmitting strong currents of electricity."

The Meaning of "Loss or Damage by Fire."-Loss or damage by fire has reference only to losses which are the result of the actual ignition of the insured premises or of property near by. It is not necessary, however, that fire should actually have come in contact with any part of the insured property. Thus where the insured property is damaged by water used in extinguishing a fire in an adjacent building, or where, because of fire in a neighboring building, the damage is caused by the falling of a wall, insurance companies have again and again been held liable, even though no part of the insured property was ever reached by the fire. On the other hand, fire does not include "heat of a degree too low to cause ignition," and insurance companies

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