Company, 66 Vt., 439. Here the defendant made application to the company on May 7th for insurance and the negotiations were conducted by mail. On May 13th the company mailed the policy, but inclosed an "exhibit" which recommended that certain changes be made on the premises. The policy was received by the defendant on May 15th, but regarding the suggestions of the company as mandatory, which they were not, he returned the policy on June 1st. On June 5th, the company returned the policy to the defendant and insisted on the payment of the premium, amounting by this time to $100. The court was now called upon to fix the time when the policy began, and decided to the effect that "the law is now well settled that if an offer of a contract is made and accepted by letters, sent through the post, the contract is complete the moment the letter accepting the offer is posted, and this upon the ground that the post-office is regarded as an agent of the one making the proposition."

When policies cannot be delivered at once, it is common for the representative of the company to make the insurance binding in favor of the insured by issuing a socalled "binder" see page 123). While not necessary legally to make insurance binding in the absence of the policy itself, the "binder" has the advantage of affording written evidence of the contractual relation between the parties. According to its terms, however, the binder terminates upon the issue of the standard policy in place thereof, or by twelve o'clock noon of the next business day after the risk is declined. Agents may legally bind insurance orally, but when doing so should confirm the same promptly in writing and also at once notify the company or companies.

In Hallock vs. Commercial Union Insurance Company, 26 N. J., 268, we have an instance where the insurer was held liable for a loss occurring before the contract was even accepted by the company. The application provided that

Address of Mortgagee-Payee or of Representative thereof:

Amount, $.. .... Rate

*

Time...

Months.

Each of the undersigned companies, for itself only, insures the property above described for the amount set opposite its name until the issue of its Standard Policy on the same in place hereof, or until twelve o'clock noon of the next business day after the risk is declined, by notice to the insured or to the representative of the insured placing the risk; provided, however, that if the address of a mortgagee-payee or of a representative thereof is given above, such notice must also be sent to that address in order to terminate the insurance as to such mortgagee-payee. But in no event shall this insurance be in force over thirty (30) days from the date of commencement of liability hereunder.

if the risk proved acceptable the policy was to be antedated so as to be of even date with the application, namely, March 12th. On the next day the company mailed the policy to its agent to be delivered to the insured, but in the meantime, ten hours before the policy was actually written, the property was destroyed. Hearing of the loss, the company at once telegraphed its agent not to deliver the policy, which instruction was carried out, although the insured tendered the premium. The court held "that the contract was complete when the proposal was accepted, and that it became operative, in accordance with its own terms, at noon on the 12th day of March while the property was still in existence." It was further declared, "that it was competent for the parties to make contracts that should relate back, and be operative from the time of the beginning of the negotiations, or to any other period, there is no good reason for doubt." Contracts of insurance may also be made through the medium of the telegraph. An acceptance of a proposal by a telegram completes a contract and the time of completion is the time of delivery to the telegraph company.

A contract of insurance may also be issued in such manner as to cover property distantly located, although it has already been destroyed, provided the insured had no knowledge of its status.1 In marine insurance it is a very common practice to insure property "lost or not lost," the underwriter agreeing to pay the loss, if it later develops that the property was destroyed prior to the date of the policy. Retroactive insurance of this kind, although rarely met with in fire insurance to-day, because of the promptness with which news can be obtained by modern methods of communication, may serve a very useful purpose in

Illustrated by Security Fire Insurance Company vs. Kentucky, etc. Insurance Company, 7 Bush. (Ky.), 81 (1896).

protecting property in transit when the same is reported. missing or has not been heard of for some time. The words "lost or not lost" need not, however, be contained in the policy. It is sufficient if it appears that the insurance was intended to cover prior losses.

By agreement, also, the parties to the fire insurance contract need not specify the date when the policy shall terminate, but may leave this to be determined by either party at will. When the date is thus left in blank, the policy is called an "open" one. Thus in marine insurance probably 90 per cent of all ocean cargo insurance is written on the "open policy cargo form." Nearly always, the termination of such policies is left indefinite, and in many instances the insurance runs continuously for years, the understanding being that either party to the contract may cancel the same at any time, subject to 30 days' notice. The legality of such an arrangement has often been upheld by the courts. Thus in one case, it was decided that "the agreement that the risk should run from the first day of August, 1885, to a day to be named by the defendant is in law an agreement as to the duration of the risk, and is equivalent in law to a contract for a certain time, because under the terms of agreement, the time can be rendered certain."

Renewal of Contract.-Closely related to the term of the contract is the practice of renewal. Most standard policies at present make no reference to the subject, although it was customary at one time to include a clause providing "that this policy may by a renewal be continued under the original stipulations, in consideration of premium for the renewed term, provided that any increase of hazard must be made known to this company at the time of renewal, or this policy shall be void." The renewing of a

'Imboden vs. Detroit, etc., Insurance Company, 31 Mo. App., 321.

policy does not necessarily require the writing of a new policy, although this is nearly always the case to-day. The essential thing to be noted about a renewal policy is that, while in all particulars it should resemble the original contract, legally it is a new contract, which, unless expressed to the contrary, is subject to the terms of the original policy. Special privileges granted by the company under the original policy, but not a part of the contract, cannot be demanded under the renewal.

The description of the property, where a policy is renewed, must apply to the property as it stands at the time of renewal; and any increase of hazard, which is not disclosed, will work an avoidance of the new policy. The risk (description of property) insured under the original policy expires when the policy expires, and each renewal must be considered as applying to a new risk. With the exception of the description of the property, however, a renewal policy may be presumed by the holder to be in all respects like the original contract. As stated by Joyce, "the word renewal is synonymous with 'extended.' Where there is an agreement for renewal of a policy, the assured is justified in assuming premiums, terms, and conditions as of the original, unless he has notice of such change." Thus, suppose, for example, that the original policy contained no coinsurance clause, but that the renewal policy did. Suppose also that the policyholder, relying on the good faith of the company, failed to read the renewal policy. In the event of a loss, on what basis shall it be settledwith or without coinsurance? Justice would seem to dictate that in such a case the insured should be allowed to maintain an action for a reformation of the contract. In a case involving the precise facts assumed, the court per

'Palmer vs. Hartford Fire Insurance Company, 54 Conn., 488.