Effect of falsity. Materiality Applica- 2580. If a representation is false in a material point, whether affirmative or promissory, the injured party is entitled to rescind the contract from the time when the representation becomes false. NOTE. A certain class of representations in marine insurances-e. g., as to the inception of the risk-are held to be in effect warranties, and binding as much as if expressed in the policy.-2 Duer Ins., pp. 686, 716. There is, however, no apparent objection to requiring them to be inserted in the policy, if the insurer desires to avail himself of a breach of such stipulation, notwithstanding that it may prove immaterial. This section states the law as it now exists in regard to fire insurance.-Farmers' Ins. Co. vs. Snyder, 16 Wend., p. 481; Wall vs. Howard Ins. Co., 14 Barb., p. 383; 2 Duer Ins., 680. "A representation to be binding must be material, and to discharge the insurer, must be false, wholly or partially, and according to the character of the representation, false in fact or in the event." See also, Bilbrough vs. Metropolis Ins. Co., 5 Duer R., p. 587, and the review of cases on this point.-2 Duer Ins., pp. 749-769. 2581. The materiality of a representation is determined by the same rule as the materiality of a concealment. NOTE.-See Sec. 2563, ante, and note. 2582. The provisions of this Article apply as well to a modification of a contract of insurance as to its original formation. 11.5.2585 ARTICLE VI. THE POLICY. SECTION 2586. Policy, what. 2587. What must be specified in a policy. 2588. Whose interest is covered. 2589. Insurance by agent or trustee. 2590. Insurance by part owner. 2591. General terms. 2592. Successive owners. 2593. Transfer of the thing insured. 2594. Open and valued policies. 2595. Open policy, what. SECTION 2596. Valued policy, what. 2597. Running policy, what. 2598. Effect of receipt. 2599. Agreement not to transfer. what. 2586. The written instrument, in which a contract Policy, of insurance is set forth, is called a policy of insurance. NOTE.-1 Duer Ins., p. 2, "the instrument by which marine, or against fire, or on a life." ante. See Sec. 2533, 2587. A policy of insurance must specify: 1. The parties between whom the contract is made; What must 2. The rate of premium; 3. The property or life insured; 4. The interest of the insured in property insured, if he is not the absolute owner thereof; 5. The risks insured against; and, 6. The period during which the insurance is to continue. NOTE.-1 Phil. Ins., p. 217, Sub. Sec. 415. "It is necessary that the thing insured, and in some cases, also, the kind of interest intended to be protected, should be sufficiently set forth in the policy; or, that the policy should at least prescribe the way of ascertaining to what the contract is to be applied. As the contract will embrace no other subject than that described, its validity will depend upon the sufficiency of the description.-Langhorn vs. Cologan, 4 Taunt., p. 330; Cheviot vs. Barker, 2 Johns. N. Y., p. 346. Subd. 4.-This provision is contrary to the common law.-White vs. Hudson River Ins. Co., 7 How. Pr., p. 341; Crowley vs. Cohen, 3 B. & Ad., p. 478; 2 Pars. Mar. L., p. 202. Mr. Duer recommended its introduction from the French law into ours, and the recommendation being a good one (see 2 Duer Ins., p. 463) was acted on. This makes a radical change in the law as it existed previously, and should be carefully observed, in making or receiving a policy, for in many be specified in a policy. Whose interest is covered. Insurance by agent or trustee. Insurance by part owner. General terms. cases it is very difficult and may sometimes be utterly impossible to describe particularly the interest before the loss; and the former rule was said by Phil. in his 1 Phil. Ins., Sub. Sec. 438, to have arisen " from the necessity of the case."-See the case of Kewley vs. Ryan, 2 H. Blackst., p. 343, by Ld. Mansfield and associates, quoted in Phillips, 1 Sub. Sec. 438, supra. It is now necessary to describe the interest insured in the policy. See, also, Sec. 2655, post, and note, as to what is covered by certain terms inserted in a policy. 2588. When the name of the person intended to be insured is specified in a policy, it can be applied only to his own proper interest. 2589. NOTE.-Kemble vs. Rhinelander, 3 Johns. Cas., p. Co., 2 Johns. Cas., p. 329; Columbian Ins. Co., 11 Johns., p. 302. When an insurance is made by an agent or trustee, the fact that his principal or beneficiary is the person really insured may be indicated by describing him as agent or trustee, or by other general words in the policy. 2590. To render an insurance, effected by one partner or part owner, applicable to the interest of his copartners, or of other part owners, it is necessary that the terms of the policy should be such as are applicable to the joint or common interest. NOTE. When effected by a copartner.-See Graves vs. Merchants' Ins. Co., 2 Cranch, p. 440; Pearson vs. Lord, 6 Mass., p. 81; Turner vs. Burrows, 5 Wend., p. 541; 3 Kent Com., p. 258. When by a part owner.See Toomey vs. Bedford Ins. Co., 8 Mtc., p. 348; Finney vs. Warren Ins. Co., 1 Metc., p. 16. But see Holmes vs. United Ins. Co., 2 Johns. Cas., p. 329; and Lawrence vs. Sebor, 2 Caines, p. 203. 2591. When the description of the insured in a policy is so general that it may comprehend any person or any class of persons, he only can claim the benefit of the policy who can show that it was intended to include him. NOTE.-Newson v. Douglass, 7 Harr. & Johns., p. 451; Seaman vs. Loring, 1 Mason, p. 127. owners. 2592. A policy may be so framed that it will inure Successive to the benefit of whomsoever, during the continuance of the risk, may become the owner of the interest insured. NOTE.-This provision is new, but certainly just, and corresponds with Sections 2555, 2554, and 2556, ante. 2593. The mere transfer of a thing insured does not transfer the policy, but suspends it until the same person becomes the owner of both the policy and the thing insured. NOTE.-2 Pars. Mar. Law, p. 42. "If a person acting in behalf of the owners of a vessel, effects insurance upon it in his own name on account of whom it may concern,' and the policy is afterwards assigned, the assignee will take, subject to such rights as existed between the owners and the underwriters."-Waters vs. Allen, 5 Hill, p. 421. In these cases, the interest in the property insured remains in the original insured. The policy may, however, be made assignable with the subject of the insurance, as when the loss is made payable to the insured, “or any other person who may be the owner at the time of the loss." In this case the transfer of the property and of the policy gives the transferee all the rights of the party originally insured.-Rogers vs. Traders' Ins. Co., 6 Paige Ch., p. 583; Hooper vs. Hudson River Ins. Co., 17 N. Y., p. 428. The mere assignment, however, or sale of the property gives no right to purchaser to sue the original insured, but it suffices to destroy the claim of the original insured, subject to revival if the property returns to him.-Id. In Powells vs. Innes, 11 M. & W., p. 10, it was said: "It is certain that in England and the United States an ordinary policy of insurance does not pass to the assignee of the property insured, as an incident to the property." 2594. A policy is either open or valued. NOTE.-2 Pars. Mar. Law, p. 34; 3 Kent Comm., p. 272. Transfer of insured." the thing Open and valued policies. Open policy, what. Valued policy, what. Running policy, what. 2595. An open policy is one in which the value of the thing insured is not agreed upon, but is left to be ascertained in case of loss. NOTE.-3 Kent Com., p. 272. "An open policy is one in which the amount of interest is not fixed by the policy, but is left to be ascertained by the insured, in case a loss should happen;" or "the policy may expressly provide that it shall be defined especially as to the property insured by declarations or statements to be subsequently made."-2 Pars. Mart. Law, p. 34. This is called an open or running policy, and is mostly used by mutual companies. Open and running policies are treated of together. See Sec. 2597, post, and note. 2596. A valued policy is one which expresses on its face an agreement that the thing insured shall be valued at a specified sum. NOTE. “A valued policy is one where a value has been set on the ship or goods insured, and inserted in the policy in the nature of liquidated damages." This is the definition of 3 Kent Comm., pp. 272-3, with regard to marine insurance. Valued insurance generally. See Harris vs. Eagle Fire Ins. Co., 5 Johns., p. 368; Laurent vs. Chatham Fire Ins. Co., 1 Hall, p. 41; see, also, 1 Phil. Ins., Sub. Sec. 27. 2597. A running policy is one which contemplates successive insurances, and which provides that the object of the policy may be from time to time defined, especially as to the subjects of insurance, by additional statements or indorsements. NOTE.-See 2 Pars. Mart. Law, p. 34, as to open or running policy, and the cases of Langhorn vs. Cologan, 4 Taunt., p. 330; Neville vs. Merch. & Manuf. Mut. Ins. Co., 17 Ohio, p. 192; Newlin vs. Ins. Co., 20 Penn. St., p. 312. In the case of Entwisle vs. Ellis, 2 H. & N., p. 549, insurance was effected on rice "to be declared" warranted free from particular average. The indorsement made by the insured valued each bag separately. The Court held that the contract was to be determined as if merely the number of bags had been inserted. Channel, B., said, among other things in deciding the case, that "the parties can only fill up such particulars as were left blank, so as to be consistent with the policy." After further discussing |