the legitimate sequence of these facts, we readily recognize the importance of the legal propositions involved. It is contended by the appellee that, as the appellant received payment of the premium note, in consideration of which the policy was issued, after full notice that the property had become and was then vacant, it thereby conclusively waived the right to forfeit the policy on account of the alleged breach of the condition as to vacancy therein contained, and that the condition as to vacancy does not render the policy void, but voidable at the election of the company. When appellant received notice that the property was vacant, and was requested to cancel the policy and return the unearned premium, or give a vacancy permit, appellant was put to elect to forfeit the policy and return the unearned premium, or to be bound by the policy, and, having failed to exercise the right of election, was bound by the policy, and is estopped from setting up the forfeiture. The appellant, on the other hand, earnestly contends that the conditions as to vacancy of the building worked a forfeiture; that the policy was void, not voidable; and that there was no waiver. There is no doubt as to the propriety of insurance companies annexing such conditions in contracts of insurance as are contained in the contract with the appellee in the case at bar, and that such conditions may be essential and necessary to their protection and the proper and successful management of the business of insurance; but the question is whether such conditions are not for the benefit of the company, and may not be waived, and do not in such cases render the policy void, but voidable. It is held in cases of hign authority that "a continuing warranty in a policy of insurance, the breach of which, whether injurious to the insurer or not, avoids the policy, being in the nature of a forfeiture, must be construed as strongly against the insurer and as favorably for the insured as its terms will reasonably permit." This particular question seems to have been considered in the case of Association v. Beck, 77 Ind. 203. Judge WooDs, in delivering the opinion, cites with approval the case of Viele v. Insurance Co., 26 Iowa, 1, wherein the court says: "The position of defendant's counsel, which is supported by several authorities, is to the effect that upon the breach of the condition of the policy by the assured, which would defeat recovery thereon, it becomes absolutely void, as it were dead, and that nothing short of a new creation would impart vitality to it. This doctrine is certainly unsound when applied to other contracts; for, on the contrary, after default in the conditions by one party the other may waive the forfeiture, and treat the instrument of binding force upon himself. No reason can be given to except policies of insurance from the operation of this rule." The learned judge, in commenting upon this statement of the law, says: "The logical and necessary deduction from this doctrine is that a distinct act of affirmance of the contract by the party entitled to avoid it, made with knowledge of the facts, and especially such acts as the demand and receipt of premi

ums or assessments, would constitute a waiver of the forfeiture or of the right to amend the contract, and so it is held in several of the cases already cited." A large number of authorities are cited in support of the view expressed. The case of Association v. Riddle, 91 Ind. 84, declares the same doctrine.

But, returning to the agreed facts, we find that appellee paid the premium for which he had given his note due January 1, 1886, 60 days before it was due. That before payment he notified the agent to whom he made the application of insurance that the building was vacant, and asked a permit from the company for it to stand vacant until it could be occupied, which request was refused by the agent, and had before that time notified said agent that the house was vacant, and requested a permit for it to stand vacant, but none was given. That on the 20th day of November, 1885, appellee again notified the agent with whom he made the application for insurance that the house was still vacant, asking a permit of vacancy, or a cancellation of the policy and the return of the unearned premium. This letter was forwarded by the agent, with his indorsement thereon, to the general agent at Chicago, who, it is conceded, had full authority to act thereon, and was received by him on the 2d day of December, 1885, but said letter was not answered, no permit of vacancy was given, the policy was not canceled, and there was no notice to appellee of appellant's intention so to do, but appellant remained entirely silent, and did not return the unearned premium; and, although appellant had notice that said building was vacant, the appellant took no action, under the conditions in said policy and contract of insurance, towards annulling or canceling the same, but retained the unearned premium, and made no claim of the forfeiture of said pol. icy until after the appellee's loss by fire. That appellant, upon notice that the building was vacant, could have returned the unearned premium, and elected to declare the policy forfeited, is doubtless true; but having, under the facts stated, waited, without any action, until after the loss by fire, was appellant then in a condition to claim exemption from the payment of the loss by reason of the conditions named in the contract of insurance? We have given the principle arising out of these facts mature and careful consideration, and as a result the inquiry forces itself upon us: Can we declare as a principle of law that an insurance company may receive the premium for the full term of the policy under the conditions in the contract similar to those in the case at bar, having the right to return the unearned premuim for a breach in the contract, and cancel the policy, with full notice of such breach retains the premium, remains silent, takes no action, and, without notice to the assured until after loss, then claim to be exempt from payment of loss, and assume the policy is forfeited? The current of the decisions upon conditions in insurance contracts similar to those named hold that forfeitures do not exist in such cases, and do not constitute a defense to an action

for loss sustained. It is a common thing for insurance policies to contain the condition: "If the assured shall have or hereafter make any other insurance on the property herein insured, or any part thereof, without notice to or consent of this company in writing indorsed hereon, this policy shall become void." The condition that the policy shall be void should the building insured become vacant is of no more apparent importance and necessity for the protection of insurance companies than the condition quoted against other insurance without consent indorsed on the policy. In the case of Insurance Co. v. Spiers, (Ky.) 8 S. W. Rep. 453, it is said: "The decided current of authority, however, is that this waiver may arise from the act or conduct of the insurer, and silence for an unreasonable time upon his part after notice or knowledge of the breach of the condition will constitute such conduct. If notice be given to the company of the additional insurance or increased risk, and no objection be made within a reasonable time, fairness and good faith should estop it from insisting upon a forfeiture, because its consent was not indorsed upon the policy according to its literal terms. The assured has a right to infer therefrom that the company will not insist upon it. It has not spoken as to a matter for its benefit when it could and should have done so, to prevent another from being misled to his probable injury. If it had done so he might have protected himself, probably, by other insurance. Its silence under such circumstances is a consent to the additional insurance. A forfeiture upon this ground is not fo fraud. It may cancel the policy by reason of it; but if it does so it must refund a proper proportion of the premium. It cannot, therefore, remain mute, with a knowledge of the existence of the grounds of a forfeiture, and if there be no loss, retain the entire premium, but, if there be one, rely upon the breach of the contract. The term void,' as used in the policy, is to be regarded as meaning that the insurer may, at his exclusive option, treat it so, and not that the contract becomes an absolute nullity as to either party. The insurer may, therefore, by his conduct, waive his right of forfeiture, and estop himself from insisting upon it." The case of Hamilton v. Insurance Co., (Mo.) 7 S. W. Rep. 261, is in accord with the above case. In Havens v. Insurance Co., 111 Ind. 90, 12 N. E. Rep. 137, it is said: "It is abundantly settled that, notwithstanding conditions in the policy, if at the time the insurance was effected or afterwards there were conditions, uses, or incidents of the risk which were in conflict with conditions in the policy, and which were known to the insurer or its agent, whose knowledge is imputable to the company, such conditions, uses, or incidents cannot be used to defeat a recovery after loss has occurred." It is further said in this case: "The tendency of the modern cases is to hold that, if notice be duly given to the company or its agent of additional insurance, or if act. ual knowledge is brought home that other insurance exists or has been obtained, and no objection is made, the company will be estopped from insisting on a forfeit

ure because its consent was not indorsed on the policy. Wood, Ins. §§ 382, 383; May, Ins. 369, 370. Having knowledge of the other insurance, the company may manifest its dissent by canceling its policy; otherwise it will be treated as having assented, and waived compliance with the condition. In the case of Wakefield v. Insurance Co., 50 Wis. 532, 7 N. W. Rep. 647, the facts and conditions in the contract of insurance are almost identical with those in the case at bar; in fact, there is no distinguishable difference. This case plainly declares the doctrine that notice to the company that the insured premises had become vacant, a failure to return the unearned premium and cancel the policy be. fore loss was, after loss, under these facts and conditions, a waiver of forfeiture, and the company would be bound for the loss. See, also, Beverly v. Insurance Co., 92 N. Y. 51; Short v. Insurance Co., 90 N. Y. 16. From the foregoing considerations we are clearly of the opinion that there was no forfeiture of the policy issued by the appellant to the appellee, but that such for feiture was waived by the appellant, and that said policy was in force when the appellee's building insured therein was destroyed by fire. There was no error in overruling the motion for new trial. The case should be affirmed, and is affirmed, at appellant's costs.

(1 Ind. A. 317)

CUMMINGS v. PENCE. (Appellate Court of Indiana. May 12, 1891.) ACTION ON CONTRACT-WAIVER OF NON-PERFORMANCE-SET-OFF.

1. The fact that a contractor did not complete his work within the time limited therefor, and did not do all of it according to the specifications, does not preclude him from suing on the contract where the other party has, by accepting the work, waived these objections.

2. But the other party may set off the dam. ages sustained by him by reason of the contractor's failure to comply with the contract.

Appeal from superior court, Marion county; N. B. TAYLOR, Judge.

A. B. Cole, for appellant. Ritter & Ritter, for appellee.

REINHARD, J. The appellant was the general contractor for the construction of a drain in Marion county, which had been established by order of the circuit court of that county, and awarded to James F. Flack, commissioner of drainage. The appellee was a subcontractor under the appellant to do the excavating. As such subcontractor he entered into a written contract with the appellant for the performance of the work, and that contract forms the foundation of this action. The only error assigned here is that the court in general term erred in affirming the judgment of the court in special term The er. rors assigned in the superior court were: (1) The overruling by the court in special term of the appellant's motion for a new trial; (2) the complaint does not state facts sufficient to constitute a cause of action. The motion for a new trial contained the following causes: (1) That the decision of the court is not sustained by sufficient evidence; (2) that the decision

of the court is contrary to the law; (3) that the assessment of the amount of the recovery is erroneous, being too large. The cause in special term was tried by the court, and the finding was for the appellee (plaintiff below) in the sum of $176.65.

The question presented for our decision under the first assignment of errors involves the correctness of the action of the trial court in overruling the motion for a new trial. This challenges the sufficiency of the evidence to sustain the finding. The complaint was in one paragraph, and counted upon the special written contract therein set out. The appellant's contention is that the uncontroverted evidence shows that the appellee did not complete his part of the contract within the time required, or in fact at any time; and hence, if he has any remedy at all, it is upon a quantum meruit for the value of the services performed, and not the one pursued here on the special contract. The appellant insists that the evidence shows without contradiction or conflict that none of the work was done by the appellee within the time stipulated, and that, as to some of it, viz., the straightening out of a certain "double crook" in the drain, it never was done by the appellee at all. He also claims that there was a "washout" in the ditch at a highway and railroad crossing, which caused certain damages to the work; but as to this it may as well be said right here that the evidence does not prove that this came within the purview of appellee's contract.

We proceed then to dispose of the appellant's contention that the work was not done in time. The contract provides that the work was to be commenced March 31, 1885, and completed April 30, 1885, under the direction of the appellant; and that 80 per cent. of the price of the work should be paid as the same progressed, and 20 per cent. was to be retained until the completion and acceptance of the same by the commissioners of drainage. It is insisted by the appellant that the completion of the work by April 30, 1885, is a condition precedent to the payment of the price stipulated in the contract, and that, therefore, there could be no recovery on the contract unless the work was finished within that time. We do not think the contract admits of such a construction, but our ruling is not based upon this ground. We think the appellant, if he had acquired any right of rescission or forfeiture by the failure of the appellee to complete the work within the time stipulated in the contract, has waived that right by requesting the appellee to resume the work afterwards, and by promising to pay for the same, and also by accepting the work after the specified time. The appellee testified that he had stopped working in May, because appellant did not pay as he had agreed; but that in August of the same year Cummings came to see him, and said to him if he would go on with the work he would settle with him, and that thereupon he went back and worked two weeks longer. John Vanderman testified that they stopped working in May, but resumed in August, and worked two weeks, and until they had finished all but one place. Da

vid Darnell stated that he heard a conversation between the appellant and the appellee, in which Cummings asked Pence why he had not finished the work; that Pence said it was because he had not received his pay; that Cummings thereupon told him to go back and finish the ditch, and he would settle with him for it. A son of the appellee testified that the work was stopped because there was no money paid, but that in August or September they did more work, finishing what they did do in September. There was sufficient evidence to authorize the court to find that whatever rights the appellant may have had by reason of the work not being completed within the time agreed upon in the contract were waived by the appellant. It was not necessary that the ac tion should have been brought upon quantum meruit; it may be maintained on the special contract. It is true that generally one cannot recover on such a contract which he has himself partly failed to fulfill. But where strict performance is waived by the other party, an action on the contract may still lie, as we think it does in this case.

We pass to the determination of the next question raised by appellant, viz., that the work has not been completed by the appellee, and that hence he is debarred from recovering on the contract. The evidence does show that there was a "double crook" in the ditch at a point where it should have been straight; but it also shows that the commissioner himself had this defect corrected at an expense of five dollars; that the commissioner then accepted the ditch from Cummings, the general contractor, and paid him for it, deducting the five dollars so expended. In the act of turning over the ditch to the drainage commissioner was necessarily involved the appellant's acceptance of the work from the subcontractor, the appellee. By this acceptance he is estopped to deny that the work was done according to contract. If there was a failure of strict performance here, then the appellant, as in the other instance, by accepting the work, has waived any right which he may have had to treat the contract as forfeited, or to defend against a recovery on the same. In such a case, where there is a failure to perform according to the terms of the contract, and the breach may be compensated in damages, the action will lie on the contract; the defendant having the right to set up, by way of counter-claim, the damages sustained by such failure. Morton v. Kane,' 18 Ind. 191. See Association v. Beck, 77 Ind. 203; Insurance Co. v. Boyer, ante, 628, (at present term of this court.) We regard the evidence as amply sufficient to support a finding for appellee on the contract.

The only remaining question which is argued by counsel is as to whether or not the finding of the court was for an amount in excess of what, under the evidence, the appellee was justly entitled to recover. The finding and judgment was for $176.65. The demand in the complaint is for only $170. The contract price for the ditching was 15 cents per cubic foot. The undis

puted evidence shows that the quantity of ditching done was 2,511 cubic feet, which would amount to $376.65. The contract provides for a deduction of $25 for certain expenses, which, when done, would leave the net price of the work at $351.65. The following payments were proved without dispute: Cash, April 18, 1885, $50; cash, May 2, 1885, $30; appellee's assessment, $75 Hoover's assessment, $40; H. Wilson's assessment, $210; total payments, $215. All these payments are admitted by the appellee. This would leave a balance due the appellee of only $136.65, instead of $176, as found by the court, making an excess of $40. We also think it was the duty of the court under the evidence to deduct an additional amount of $5, that being the damage the appellant was compelled to pay to the commissioner for the appellee's failure to perform the work as the specifirations provided. This was clearly required under the counter-claim pleaded. This makes a clear excess of $45. If the appellee will within 60 days remit this excess of $45, and pay the costs of this appeal, the judgment will be affirmed; otherwise the judgment is reversed, at appellee's costs, and the cause remanded, with instructions to the court below to grant a new trial, and for further proceedings.

(1 Ind. A. 411)

HOME INS. Co. OF CITY OF NEW YORK v. MARPLE.

(Appellate Court of Indiana. May 13, 1891.) INSURANCE-WAIVER OF CONDITIONS-RECEIPT OF LETTER-PRESUMPTIONS-EVIDENCE.

1. Where an insurance company, on being informed by the insured that he had obtained auditional insurance, does not cancel his policy or return the unearned premium, it thereby waives the right to forfeit the policy on account of such additional insurance. Following Insurance Co. v. Boyer, ante, 628.

2. Where the receipt of a certain letter is a material issue in the case, and the party to whom it was addressed denies having received it, it is reversible error to instruct the jury that evidence of the mailing of the letter, properly addressed and stamped, is prima facie proof of its receipt by the person to whom it was addressed.

3. Where an insurance company's duly-authorized adjuster, after learning that the insured had procured additional insurance without consent of the company, causes him to procure duplicate bills of purchase and other data for adjusting the loss, the jury may find from these facts a waiver of the forfeiture occasioned by such additional insurance.

4. A statement made by the writer of a letter while writing it is not admissible as part of the res gesta in proof of the sending of the letter.

Appeal from circuit court, Fountain county; JOSHUA JUMP, Judge.

Winter & Elam and H. H. Dochterman, for appellant. Wm. Durbarrow and McCabe & Son, for appellee.

to pay the loss, and suit was brought upon the policy.. Among other provisions the policy contained the following: "If the assured shall have or shall hereafter make any other insurance on the property hereby insured, or any part thereof, without the consent of the company written thereon, then this policy shall be void." Also: "(8) This insurance may be terminated at any time, at the request of the insured; in which case the company shall retain only the customary short rates for the time the policy has been in force. This insurance may also be terminated at any time, at the option of the company, on giving notice to that effect, and refunding a ratable proportion of the premium for the unexpired term of the policy. An answer was filed to the complaint, setting up, with other defenses, the fact that about the 1st day of March, 1885, the insured took out two other policies of insurance covering the same property covered by the policy sued upon, without the consent of this company, and in violation of the condition against additional insurance; wherefore it was claimed the policy in suit became void. To this answer of forfeiture the plaintiff replied that he notified the defendant company of the fact of such other insurance at once upon procuring the same, and such company made no objection thereto, but allowed its policy to run uncanceled for seven months, until the loss occurred, and during all of that time had full notice of such other insurance, and failed to return any of the premium; and that the plaintiff relied upon the validity of the policy, and, so relying, failed to procure a sufficient amount of other insurance to indemnify him. Wherefore he claimed the forfeiture arising upon the breach of the condition against other insurance was waived. A demurrer was filed to this reply and overruled, and the cause was tried, and resulted in a verdict and judgment for the policy-holder for $500. A motion for a new trial was filed and overruled.

The first question which claims our attention is the alleged error in overruling the demurrer to the reply. It is claimed upon behalf of appellant that by the terms of the policy it became absolutely void when the subsequent insurance was taken out without consent indorsed upon the policy, and the mere silence of the appellant after knowledge of such subsequent insurance did not operate as a waiver of the forfeiture. In short, that the condition against other insurance was absolute, and ex vi termiui destroyed the validity of the policy. To declare that the law views forfeitures with disfavor is but to repeat a proposition as familiar to the lawyer as the golden rule should be to the student of moral philosophy. It must be admitted that the pronounced tendency of modern adjudications is to relieve contracting parties from the hardships resulting from technical forfeitures whenever it can be done without violating the substantial rights of the parties to the contract. Conditions against other insurance contained in policies, although coupled with clauses of forfeiture absolute and positive in terms, are now construed is

voidable only; and the insurer, with notice of additional insurance, in order to work a forfeiture on that account, must in some satisfactory manner declare his disaffirmance, or he will be presumed to have given consent and waived the forfeiture. Thus it was said by the court in Havens v Insurance Co., 111 Ind. 90, 12 N. E. Rep. 137: "Having knowledge of the other insurance, the company may manifest itself by canceling its policy; otherwise it will be treated as having assented, and waived compliance with the condi. tion." In the case of Insurance Co. v. Boyer, ante, 628, (decided at the present term of this court,) in an exhaustive opinion by ROBINSON, J., the authorities upon this question are reviewed, and the mod. ern doctrine reaffirmed with much emphasis; so we must regard the question as firmly settled in this state. It follows that no error was committed in overruling the demurrer to the reply.

Upon the trial the only evidence adduced tending to prove that the appellant was notified of the other insurance was the testimony of the appellee to the effect that the day after procuring such other insurance he wrote a letter to Messrs. Ducat & Lyons, the general managers of the appellant's business at Chicago, Ill., informing them of the fact, which letter he inclosed and sealed in an envelope, properly addressed to said managers, giving their street and number, and that he stamped such letter with sufficient United States postage, and mailed it at the post-office at State Line City, Ind. No answer was ever received to the letter, and the appellee had no knowledge that it had been received, except what he might infer from having so written and mailed the letter. The general managers of the appellant, to whom the letter was addressed, denied ever having received it, or any other no. tice or intimation of the procuring of other insurance until after the loss. Upon the question of notice the court instructed the jury as follows: "If the jury find that plaintiff, next day after taking out such other insurance, wrote a letter to Ducat & Lyons, general managers of defendant's insurance business at Chicago, Illinois, notifying then of such other insurance, and that said letter was properly inclosed in an envelope, which was properly addressed on the back of said envelope to said Ducat & Lyons, Chicago, Illinois, giving the street and number where their said office was then situate in said city, where they did defendant's insurance business, and that said letter was duly stamped with the necessary U. S. postage stamp or stamps, sealed and deposited in the post office at State Line City, Indiana, on said day by said plaintiff, then the presumption of fact from the known course of business in that department of public service is that said letter reached said office of Ducat & Lyons at the regular time, and was received by the persons to whom it was addressed." Exceptions were duly taken to this instruction by the appellant, and the question arising upon the exceptions is properly before us for decision. It is argued with much force and energy by appellant's counsel that the instruction

undertakes to direct what inferences may be drawn from certain facts in evidence, and in what respect it invades the province of the jury and was erroneous. Where the evidence is undisputed upon an essential fact in a case, and but one inference may properly be drawn from it, the court may so instruct the jury, and to that extent control the verdict; but where the evidence is conflicting, or is of such a character that different inferences might be drawn from it, the question must be submitted to the jury without interference on the part of the court, except to instruct generally upon the law of the case. It is solely the function of the jury to determine the truth of all disputed facts, and draw inferences of fact from items of evidence, and it is error for the court to assume to direct the jury in this regard, by invading their province, and directing the application of the evidence, or what inferences may be drawn from it. This cannot be regarded as a debatable question in this state. Railway Co. v. Falvey, 104 Ind. 409, 3 N. E. Rep. 389, and 4 N. E. Rep. 908; Insurance Co. v. Buchanan, 100 Ind. 81; Stanley v. Montgomery, 102 Ind. 102, 26 N. E. Rep. 213; Unruh v. State, 105 Ind. 117, 4 N. E. Rep. 453; Woollen v. Whitacre, 91 Ind. 502; Dodd v. Moore, Id. 522; Canada v. Curry, 73 Ind. 246; Greer v. State, 53 Ind. 420; Carver v. Louthain, 38 Ind. 530. It was necessary, in order to establish a waiver of the breach of condition against other insurance, to prove actual notice to the appellant, and silence under such circumstances as to imply its assent to the additional insurance. Proof of such notice was sought to be made by evidence of the writ. ing and posting of the letter duly addressed and stamped. The appellant denied the receipt of the letter, so the question whether or not it was received was clearly one of fact to be determined by the jury. Depositing a letter in a post-office, properly addressed and stamped, is prima facie proof that it was received by the person to whom it was addressed in due course of mail; but where its receipt is disputed the court would not be justified in instructing the jury that the receipt of the letter might be inferred from so mailing it. In the case of Huntley v. Whittier, 105 Mass. 391, the court said: "The depositing of a letter in the post-office, addressed to a merchant at his place of business, is prima facie evidence that he received it in the ordinary course of the mails; and where there is no other evidence the jury should be so instructed. The presumption so arising is not a conclusive presumption of law, but a mere inference of fact, founded on the probability that the officers of the government will do their duty, and the usual course of business; and, when it is opposed by evidence that the letter was never received, must be weighed with all the other circumstances of the case by the jury in determining the question whether the letter was actually received or not, and the burden of proving its receipt remains throughout upon the party who asserts it." This doctrine is founded upon business experience and sound principle, and is strongly supported by the following authorities: Rosenthal