LAWS SECTIONS 1-3. Definitions and Companies. SECTIONS 4-17. Insurance Commissioner. SECTIONS -- 18–22. — Provisions Common to all Companies. SECTIONS 23-31.. General Provisions for Massachusetts Com- "Company" or "insurance company" includes all corporations, "Company." in this commonwealth, and "foreign", when used without limi- tation, includes all those formed by authority of any other state or "Foreign." "Unearned premiums" and "net value of policies" severally intend the liability of an insurance company upon its insurance contracts, other than accrued claims, computed by rules of valuation established by section eleven. "Net assets" means the funds of an insurance company available for the payment of its obligations in this commonwealth, including, in the case of a mutual fire company, its deposit notes or other contingent funds, and, in the case of a mutual marine or mutual fire and marine company, its subscription fund and premium notes absolutely due, and also including uncollected and deferred premiums not more than three months due, on policies actually in force, after deducting from such funds all unpaid losses and claims, and claims for losses, and all other debts and liabilities inclusive of policy liability and exclusive of capital. "Profits" of a mutual insurance company means that portion of its cash funds not required for payment of losses and expenses nor set apart for any purpose allowed by law. "Net assets." An insurance company for which a receiver has been appointed on the ground of its being insolvent should not be found solvent by the master in chancery if, in order to do so, he must disregard disputed claims of loss. (Cutting v. Co., 197 Mass. 131, 1908.) The "assured' is the party whose property is at risk, in whom is the insurable interest. The fact that the money is payable to another in case of loss does not make that other the assured. (Shaw, C.J., in Sanford v. Ins. Co., 12 Cush. 541, 1853.) SECTION 2. All insurance companies now or hereafter incorporated or formed by authority of any general or special law of this commonwealth, except as provided in the laws relating to "fraternal beneficiary corporations" and "assessment insurance", shall be subject to the provisions of this act. Trade unions and certain associations of wage workers are exempted from this chapter. (See 1909, chapter 514, section 30.) Companies organized under 1890, chapter 421, "An Act relating to assessment insurance," are subject to certain provisions of this chapter. (Stocker v. Boston Mutual Life Association, 170 Mass. 224, 1898; Nugent v. Greenfield Life Asso., 172 Mass. 278, 1899.) SECTION 3. A contract of insurance is an agreement by which one party for a consideration promises to pay money or its equivalent or to do an act valuable to the assured upon the destruction, loss or injury of something in which the other party has an interest, and it shall be unlawful for a company to make a contract of insurance upon or relative to any property or interests or lives in this commonwealth, or with any resident thereof, or for any person as insurance agent or insurance broker to make, negotiate, solicit or in any manner aid in the transaction of such insurance, except as authorized by the provisions of this act or the laws relating to "fraternal beneficiary corporations" and "assessment insurance." All contracts of insurance on property, lives or interests in this commonwealth shall be deemed to be made therein. Definition. "A contract of insurance is an agreement by which one party, for a consideration, promises to make a certain payment of money upon the destruction or injury of something in which the other party has an interest." (Gray, J., in Com. v. Wetherbee, 105 Mass. 160, 1870.) History. -The first insurance contracts were on marine risks. Apparently the first case on a life insurance contract was in 1815. The court considered at length whether such a contract was legal. It finally decided in the affirmative. (Lord v. Dall, 12 Mass. 115, 1815.) Contracts of reinsurance were declared to be legal and valid, apparently for the first time, in Merry v. Prince, 2 Mass. 175, 1806; see also Boston Ins. Co. v. Globe Ins. Co., 174 Mass. 229, 1899. Nature of the Insurance Contract. - It is a contract of indemnity. Also it is a personal contract; hence it does not pass with the building to the grantee. (Wilson v. Hill, 3 Met. 66, 1841.) That it is a contract of indemnity, see also Rice v. Nat. Credit Ins. Co., 164 Mass. 285, 1895, and 1 Op. A. G. 544, 1898. A contract of insurance is one of indemnity; hence the insured is only entitled to be put in as good a pecuniary condition as before the loss. (Tabbut v. Co., 185 Mass. 419, 1904.) Insurance is not commerce within the meaning of the United States Constitution. (Hooper v. California, 155 U. S. 648, 1895 (Cal.); N. Y. Life Ins. Co. v. Cravens, 178 U. S. 389, 1900 (Mo.).) For a contract held to come within the meaning of the statute, see Op. A. G., April 23, 1909. The liability of a Massachusetts Life Insurance Company on a policy where the insured and the beneficiary are both non-residents is an asset located within this State, and hence can be reached as such by a creditor of the non-resident insured. (Biggert v. Straub, 193 Mass. 77, 1906.) Where the plaintiff holds a policy which by its terms provides that after a term of years he shall have the option to withdraw in cash the policy's entire share of the assets and surplus, the relation between the parties is that of debtor and creditor, not merely that of member and company, and as such he is entitled to a bill of accounting against the company inquiring into its internal affairs. (Peters v. Co., 196 Mass. 143, 1907.) See also subsequent opinion, same title, 200 Mass. 579, 1909. As to what Facts make a Contract a Contract of Insurance. It is not the less a contract of insurance because the amount to be paid is not a gross sum but graduated by the number of members in the company. (Com. v. Wetherbee, 105 Mass. 149, 1870.) A contract to purchase at a fixed price the accounts which, during one year, a certain business firm should have against ascertained insolvent debtors, or judgment debtors against whom execution should be returned unsatisfied, is a contract of insurance. (Claflin v. U. S. Credit System Co., 165 Mass., 501, 1896.) A contract made under an advertisement by a newspaper to pay a certain sum to the next of kin of any person dying by accident with a copy of the paper on his person is a contract of insurance. (1 Op. A. G. 33, 1891.) The offer of a newspaper to pay a certain amount to a certain class of advertisers in case of death or disabling accident is, in effect, a contract of insurance. (1 Op. A. G. 77, 1893.) A corporation whose purpose is to register employees, and provide such as register with employment in case they are discharged or suspended, is doing an insurance business. (1 Op. A. G. 153, 1894.) A certificate whereby the company issuing it agrees to employ the holder at a fixed salary for a limited period in case he is discharged from employment is a contract of insurance. (1 Op. A. G. 164, 1894.) A contract with the owner of a bicycle to furnish him a substitute in event of his own being stolen, the bicycle to be a duplicate of the original and to be returned only upon recovery of the latter, is an insurance contract. (1 Op. A. G. 345, 1896.) A contract to keep certain machinery in such repair as is necessitated by ordinary wear and tear is not a contract of insurance, nor is the contract of a physician for his services for a fixed time and price. (1 Op. A. G. 544, 1898.) An agreement to furnish medical attendance and fill prescriptions is not a contract of insurance. (2 Op. A. G., Oct. 7, 1900.) A certificate which provides that the association will pay a stated sum of money, provided that the membership fee and the assessments have all been duly paid, upon satisfactory evidence that the member has given birth to a living child, is insurance. (Op. A. G., 1908.) A bond is substantially in effect similar to an endowment policy of insurance, where the company agrees to pay the face of the bond to the owner at the expiration of a term of years, to pay the premiums on a life insurance policy on his life during the continuance of the bond, and in return for this receives as annual payment towards the purchase of the bond a sum considerably in excess of the amount that it is required to pay as premiums on the life insurance. (Op. A. G., 1908.) As to Insurable Interest. Lack of insurable interest must be specially pleaded in the defendant's answer (Forbes v. Ins. Co., 15 Gray, 249, 1860); but the application and policy describing it as property of the insured constitute prima facie evidence of insurable interest. (Nichols v. Ins. Co., 1 Allen, 63, 1861.) Lack of actual interest is not cured by a stipulation in the policy that the policy itself shall be considered sufficient interest. (Amory v. Gilman, 2 Mass. 1, 1806.) Where the assured had, just prior to the issuing of the policy, sold the property, the policy had no interest to support it, and the defect was not cured by an indorsement thereon simultaneous with the issuing by the assured, assented to by the company (McCluskey v. Ins. Co., 126 Mass. 306, 1879); but where the policy was taken by the assured while he still owned the property, the subsequent assignee of the policy need not have an insurable interest (Mutual Ins. Co. v. Allen, 138 Mass. 24, 1884; Dixon v. Ins. Co., 168 Mass. 48, 1897); it is not necessary that the insurer know the exact nature of the assured's interest. (Locke v. Ins. Co., 13 Mass. 61, 1816.) A man has an insurable interest in his own life. Lack of insurable interest in the consignee of the policy does not render the assignment void. (King v. Cram, 185 Mass. 103, 1903.) An adjudication in bankruptcy passes to the trustee the fire policies held by the bankrupt, and from that moment vests in him the right to collect. The trustee holds as the assignee by operation of law; hence it is immaterial whether or not by the bankruptcy the bankrupt thereby lost all insurable interest in the premises. (Fuller v. Co., 184 Mass. 12, 1903.) One partner has an insurable interest in the life of the other partner. (White v. McPeck, 185 Mass. 451, 1904.) In the absence of a provision that the policy is for the benefit of whom it may concern, or equivalent words, it does not cover the interest of third parties. (Washburn Crosby Co. v. Co., 199 Mass. 463, 1908.) As to whether under the facts in a certain case the insured really had an insurable interest, see Jenks v. Co., 206 Mass. 591, 1910. The insurer has sufficient As to Sufficient Interest to support a Policy. to support a contract of reinsurance. (Merry v. Prince, 2 Mass. 229, 1899.) A captain having a commission on the cargo has sufficient interest therein to support a policy thereon (Holbrook v. Holbrook, 2 Mass. 279, 1807); also a commission merchant who is consignee of the cargo. (Putnam v. Ins. Co., 5 Met. 386, 1843.) A part owner who has chartered the remainder has a sufficient interest in the whole vessel (Oliver v. Greene, 2 Mass. 133, 1807); but the part owner who simply has the management of the whole does not have sufficient interest to support a policy on the whole (Finney v. Ins. Co., 1 Met. 16, 1840); if, however, the part owner has purchased the rest, he has sufficient interest in the whole, even though the deed has not been delivered. (Warner v. Ins. Co., 153 Mass. 335, 1891.) Vendee has insurable interest though vendor retains title until the rest of the price has been paid (Rider v. Ins. Co., 20 Pick. 259, 1838), or until the article is delivered (Bohn Mfg. Co. v. Sawyer, 169 Mass. 477, 1897), or where the conveyance was in fraud of the vendor's creditors (9 Allen, 382, 1864); but not where the vendor had no title to convey (Heald v. Ins. Co., 111 Mass. 38, 1872); also one who has made an oral contract to purchase a vessel has an insurable interest even although, because of the Statute of Frauds, it is not enforceable. (Amsinck v. Ins. Co., 129 Mass. 185, 1879.) It is immaterial that the beneficiary has no interest (Campbell v. Ins. Co., 98 Mass. 381, 1867); conversely, a policy taken out by "A as agent for B," neither of whom has any interest, cannot be supported by showing an interest in C, for whom it was really taken. (Russell v. Ins. Co., 4 Mass. 82, 1808.) A mortgagor has insurable interest though the mortgage is for full value (Higginson v. Dale, 13 Mass. 94, 1816; Gordon v. Ins. Co., 2 Pick. 249, 1824); also even after the equity had been seized on execution (Strong v. Ins. Co., 10 Pick. 40, 1830); also the mortgagee has insurable interest even after he has assigned the mortgage if he endorsed the note to the assignee. (Williams v. Ins. Co., 107 Mass. 377, 1871.) The charterer who contracts to insure has an insurable interest (Bartlett v. Walter, 13 Mass. 266, 1816); he also has an insurable interest in the freight. (Clark v. Ins. Co., 16 Pick. 288, 1835.) One partner may have insurable interest in the building purchased with firm funds but standing on land of the other partner. (Converse v. Ins. Co., 10 Cush. 37, 1852.) Owner of land may have insurable interest in building of tenant on that land. (Oakman v. Ins. Co., 98 Mass. 57, 1867.) A judgment creditor who has begun but not finished levy has insurable interest in the premises. (International Tr. Co. v. Boardman, 149 Mass. 158, 1889.) A tenant by the curtesy initiate has insurable interest in the buildings on his wife's land. (Doyle v. Ins. Co., 181 Mass. 139, 1902.) A man has an insurable interest in his own life (Campbell v. Ins. Co., 98 Mass. 383, 1867); also a father in the life of his minor son (Loomis v. Ins. Co., 6 Gray, 396, 1836); and an unmarried sister in her brother, on whom she is dependent for support and education (Lord v. Dall, 12 Mass. 115, 1815); also a firm creditor in the life of one partner, though the other is entirely able to pay the debt and the firm is solvent. (Morrell v. Ins. Co., 10 Cush. 282, 1852.) Piano dealer has insurable interest in piano sold on installment plan and not fully paid for. (Op. A. G., 1914.) As to Extent of Interest. The vendee under a conditional sale who has not yet paid all the installments and who is not responsible to the vendor for the full value in case of fire, can recover only the amount of the installments paid (Tabbut v. Co., 185 Mass. 419, 1904); but where the contract of sale stipulates that the vendee is "to be held liable for loss by fire or otherwise," he may recover not only the amount of the installments he has paid, but the amount of his liability in consequence of the destruction of the chattel by fire. (Ryan v. Co., 188 Mass. 11, 1905.) A policy is illegal if issued by an unauthorized foreign company on property in this State, and no action can be maintained on the premium note (Reliance Mutual Ins. Co. v. Sawyer, 160 Mass. 413, 1894); also a statute prohibiting an agent from acting for such unauthorized company is constitutional. (Com. v. Nutting, 175 Mass. 154, 1890; see same case on appeal in 183 U. S. 553.) Employer's Liability. · An employee was injured by a defect in a building owned not by the employer, but by a third person. The employer, however, was under a special contract with the owner of the building by which the employer was responsible for this defect. Held, on the strength of this, the employer was liable to his injured employee, and hence could recover on the policy. (Cashman v. Co., 187 Mass. 188, 1905.) Where the policy expressly stipulates that no action thereon can be had unless brought "to reimburse for loss actually paid in satisfaction of a judgment," payment of the judgment is a condition precedent to liability on the policy. Hence before such payment there is no vested right of the assured which a creditor by bill in equity can reach and apply. (Connolly v. Bolster, 187 Mass. 266, 1905.) See Acts of 1914, chapter 464, for law which was designed to render company liable for injury. Where the contract is not described fully in a surety bond, it is competent for the defendant to prove by oral evidence the terms of the contract between the plaintiff and its agent, to show the nature and extent of the defendant's liability. A surety on a bond is discharged from further liability by a substantial change in the conditions to which the bond relates, made without his knowledge and consent, and is discharged from liability for any breaches of the bond that occurred after the change was made. (Germania Fire Ins. Co. v. Lange, 193 Mass. 67, 1906.) In a suit in equity to compel the insurance company to deliver to the plaintiff a policy of insurance, and to pay for the loss of the property alleged to have been insured, it was held that the negotiations had not reached the contractual stage. (Quill v. Boston Ins. Co., 197 Mass. 216, 1908.) On a policy limiting the company to $5,000 and costs if the verdict is just $5,000, but, because the company, against the insured's request, took the case to the higher court which affirmed the judgment, the delay thereby causing interest to accrue on the judgment, the insured and not the company must pay this interest, it being in excess of the $5,000. (Davidson v. Co., 197 Mass. 167, 1908.) Where the policy gives the company the option to defend or to pay whatever judgment is rendered, and they elect the latter |