other no one was living. Both properties were destroyed. The insurance company acknowledged its liability on the building that was inhabited and paid the loss, but claimed that the policy was void with respect to the vacated building. The insured, on the other hand, took advantage of the doctrine of the entirety of the contract and maintained that the two dwellings were insured under one indivisible contract, and that if the company acknowledged liability for the loss of one of the buildings it therefore was also liable for the loss of the other. This was the view taken by the court. In all probability, if the company had refused payment on both of the buildings, it would have been absolved by virtue of this same doctrine from liability on both risks.

Again, in the case of Gottsman vs. Pennsylvania Insurance Company, 56 Pa., 210, the policy covered two items of property, namely, a building and the personalty within the building. The policy contained a provision to the effect that the company must be informed of certain incumbrances on the property. It happened that, in this connection, the owner of the property had incumbrances on the building unknown to the company, but had not violated the policy with reference to the personalty insured. Both items were destroyed, and the insured, while admitting that he was not entitled to any indemnity for the building, attempted to collect the value of the personalty, arguing that he had not violated the policy with respect to this item. The court, however, did not allow the claim, holding that the contract was a unit, and that if violated in respect to any one item it was also violated as regards all the others.

In recent years certain courts have emphasized the view that a policy of insurance should be interpreted with reference to the purpose of the contract. Thus, in the case of the Connecticut Fire Insurance Company vs.

Tilley, 88 Va., 1024, the court did not permit the application of this doctrine. In this instance, the policy covered sixteen tenement houses and contained the usual vacancy clause. At the time of the fire, eight of the houses were vacant and eight were occupied. The company claimed that, since the policy was inseparable, and since its provisions had been violated as regards some of the items insured, there was a forfeiture of the policy as to all the items. The court thought differently, however, and held that the indemnity was good as to those buildings which were occupied and void as to the others. "We think," said the court, "this decision substantially just to both parties, and in nowise conflicting with legal rules. There were sixteen different and distinct risks, all written as a matter of convenience in one policy. Under any other ruling the court would have been obliged to settle one. way or the other, and this would have involved a gross injustice to one party or the other, and in no way have. given legal effect to the well-understood intention of the fire insurance contract."

In criticizing the many court cases that have been rendered with reference to the doctrine of the entirety of the contract, it seems that the nature of the risk should be taken into consideration. If the several items covered under one policy are widely separated and not related to one another in such a way as to be lost in a single fire, it would seem fair to both insured and insurer that the doctrine of the inseparability of the contract should not apply. On the contrary, if the several items of property insured, such as a building and the contents within the building, are so related to one another that a fire in the one item will imply danger to the other, then it is clear that public policy should require the enforcement of the doctrine of the entirety of the contract. Not to do so would greatly increase the moral hazard. An example

may serve to illustrate the application of the doctrine of the entirety of the contract in instances of this kind. Thus let us assume that a person owns a building and stock within the building worth $10,000 each, and that both are insured under the same policy for $20,000. Let us now suppose that the owner procures additional insurance on the contents of the building for an amount greater than their value and without informing the first insurer. It is apparent that by allowing the owner to thus increase the insurance on his personalty an increased moral hazard attaches to the entire property, because there is an inherent connection between the contents of the building and the building itself; if one catches fire the other is also likely to burn. Now if the policy is held to be divisible, and that part which relates to the building could not be forfeited by disobeying the terms of the policy as regards the personalty, the owner of the property might easily secure overinsurance on the personalty with a view to running the risk of not being discovered, and feeling that even if he were discovered he would still be sure of his indemnity on the other item. This would imply a wrong to the insurance company, since it would be deprived of the security which had been especially provided for by the terms of the policy.

Warranties and Representations. Fire insurance policies sometimes contain words to the effect that if any application, survey, plan, or description of property be referred to in the policy, it shall be a part of the contract and be regarded as a warranty by the insured. This is done to give added force to the information furnished in any application, survey, plan, or description of the property, and to protect the company as fully as possible against fraud. The practice brings us to a distinction between "representations" and "warranties.' In probably no business is this distinction of such vital

importance as in insurance along all lines. Again and again the life insurance policy calls the attention of the insured, usually in large print, to the fact that his answers in the application blank shall have the effect of warranties, and are made a part of the contract. The marine insurance policy also abounds with provisions and endorsements which are declared to be warranties. Now why this emphasis? If a statement given by the insured is to be construed as a "representation," it need only be substantially correct, and before there can be a forfeiture the company must not only show that the statement was false, but that the falsehood was of material consequence, that is to say, was a material factor in inducing the company to accept the risk or to fix the rate. If, on the contrary, all statements are declared to be warranties, it means that they must be absolutely and literally true, and that there will be a forfeiture if the company can show that the statement was false, irrespective of the materiality of the same. By declaring the application blank or any plan or survey or description of the policy a warranty, the company relieves itself of the difficult burden of proving the materiality of the same, and its burden of proof is limited to showing that the statement was not correct. As is well stated in one case: "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."

1

Owing to the great strictness with which warranties are interpreted, and the fact that certain companies have

1 Fire Insurance Co. vs. Arthur, 30 Pa. St., 315.

taken undue advantage of the use of warranties in their policies, many courts are loath to construe statements as warranties unless expressly declared to be such in the policy. Wherever statements are not declared to be warranties, the courts give the benefit of the doubt to the insured, and will consider them as representations rather than warranties. Because of the hardship and injustice which the technical enforcement of a ranty might cause, a considerable number of 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." In other words, these statutes declare all statements made by the insured to be representations. They must, therefore, be proved material before their incorrectness will lead to a forfeiture of the policy.

2

The law of Pennsylvania, 1885, p. 134.