in consideration of the payment of a sum of money, undertakes to make good any loss or damage by fire, not exceeding a named amount, which may occur during a specified period. The contract is, as we have pointed out, one of indemnity— the sum named in the policy is not the measure of the loss, but the limit of what can be recovered. The insured must As a rule, any have an interest in the subject matter. subsisting right or interest in the property insured is an insurable interest. A trustee, for example, may insure the trust-estate, and so can the person entitled to the income of such estate. An insurance company in which property is insured has a sufficient "interest" to enable it to reinsure. A mere agent who has no possession of the property nor any claim upon it cannot insure on his own account. But any one who has possession and is responsible in case the property is destroyed by fire can insure, e.g. the pawnbroker. A factor, a warehouseman, or a wharfinger, as well as a common carrier, has an insurable interest in the property that comes into his possession in the ordinary course of trade. § 180. The Risk undertaken.-An insurance company that undertakes the risk to property through fire usually inserts stipulations in the policy with the object of defining the risk more clearly. By "fire" is meant ignition of the property itself or some substance near it not used to create heat. Damage arising from excessive heat, the property not igniting, is not damage due to fire within the meaning of a policy. Something must catch fire, but so long as this occurs any resulting loss, e.g. by smoke or by water used to put out the fire, is recoverable though the insured property has not itself caught fire. In case a fire is due to an explosion, the company is liable, but not where the explosion of itself causes the damage. Clauses are frequently inserted in a policy with the object of defining the company's liability where there is an explosion, e.g. "The policy does not cover loss or damage by explosion, except loss or damage by explosion of gas in a building not forming part of any gas works, or by explosion of domestic boilers and domestic heating apparatus." Gas works are excepted as a specially hazardous risk. Loss due to the natural heating that occurs sometimes in hay, corn, seeds, and other property is usually excluded, e.g. "The policy does not cover loss or damage by fire to property occasioned by or happening through its own spontaneous fermentation or heating." It is also usual to except any loss by fire due "to invasion, foreign enemy, riot, or civil commotion." § 181. The Property insured. Certain kinds of property are not included in the policy unless specifically mentioned. The following is a usual clause :— "The policy does not cover china, glass, looking-glasses, jewels, clocks, watches, trinkets, medals, curiosities, manuscripts, government stamps, prints, paintings, drawings, sculptures, musical, mathematical, or philosophical instruments, patterns, models, or moulds, unless specially mentioned." Certain other forms of property are completely excluded e.g. "deeds, bonds, bills of exchange, promissory notes, money, securities for money, or books of account." Care should be taken to see that the ownership of the property is correctly described. As a rule, "property held upon trust or upon commission" is excluded unless expressly described as such. An insurance by a husband of his own property does not cover the property of his wife or of his servants or his visitors. § 182. The Proposal.-Where it is desired to effect an insurance against fire, it is necessary to make a proposal stating particulars of the risk to be insured. In drawing up this proposal care should be taken (1) to describe accurately the property to be insured and the building, if any, in which it is contained; (2) not to make any misstatement; (3) not to omit any known fact material in estimating the risk. Not only does non-disclosure of material facts known to the proposer vitiate the policy at law; but a clause in the policy itself usually declares that it is to be void if such non-disclosure exists. Misrepresentations have a similar effect. § 183. Conditions that are to avoid the Policy.— A fire policy, as a rule, enumerates certain matters which if they occur are to avoid the policy. The more important of these are as follows: 1. Misdescription or omission of material facts in the proposal. This has been already referred to. 2. Increasing the risk subsequent to the policy by doing anything to the property or to any building in which it is contained. 3. Removing the property without the consent of the company. 4. Assigning the property otherwise than by will, unless the policy be assigned as well. § 184. The Premium.—The premium is usually payable at the time the insurance is effected; the policy not being issued until such premium is paid. Subsequent premiums are payable yearly, a certain number of days of grace being allowed by some offices. A clause is sometimes inserted to the effect that the policy is not to become void notwithstanding the occurrence of a loss by fire within the days of grace allowed, provided the premium be duly paid on or before the expiration of such days. Where no such clause is inserted, inquiry should be made as to the position of an insured during the running of the days of grace. § 185. Occurrence of a Loss.-A policy requires the insured when the loss occurs to give notice to the company and to deliver within a certain time a statement of the articles destroyed, with an estimate of their value at the time of fire, and to support such statement, if required, by proofs and explanations. A statutory declaration as to the truth of the statement may also be necessary. Any fraudulent claim, as a rule, vitiates the policy. An insurance company usually reserves to itself the right to reinstate or replace the property injured instead of paying the value of the damage sustained. § 186. Concurrent Policies. An insurer may effect insurances on the same property in several offices. In such a case, apart from any stipulations in the policies, he might recover from any one office, but if one office pays, it is entitled to a contribution from the other offices. A clause is usually inserted in a policy to restrict the liability of each office to a proportionate amount of the loss, e.g. "If at the time of any loss or damage by fire happening to any property hereby insured there be any other subsisting insurance or insurances, whether effected by the insured or by any other persons, covering the same property, the company shall not be liable to pay or contribute more than its rateable proportion of such loss or damage." The apportionment of the loss between several companies is a difficult matter. As a rule, it is undertaken by the insurance offices concerned or is referred to arbitration. § 187. Authorities.—The Law of Insurance, by Mr. Porter, covers all forms-marine, fire, and life. Marine insurance is treated at length by Mr. Arnould, life insurance by Mr. Bunyan and Mr. Crawley, and fire insurance by Mr. Bunyan. Short chapters on the subject will be found in Smith's Mercantile Law, and in Mr. Williams' and Mr. Goodeve's works on Personal Property. CHAPTER V GUARANTEES § 188. Nature of a Guarantee. - A guarantee is a contract by which one person undertakes to be answerable for the payment of a debt or the performance of an act, in case another person who is primarily responsible fails to pay the debt or to perform the act. The person primarily liable is called the "principal," and the person who gives the guarantee the "surety." As there cannot be an accessory without a principal, a guarantee implies that there is a contract on which a principal is primarily liable, the liability of the guarantee. being secondary, i.e. arising only on the principal's default. The proper form of a guarantee is, "If A. will not pay you, I will." Here the writer clearly indicates that payment must be sought from A., and resort is to be had to himself only in case A. makes default. Expressions such as, "If you supply goods to A., I will pay you," are equivocal, since the words may mean either a guarantee or that a primary liability is undertaken. All the circumstances must then be examined in order to see to whom credit was really given. If, for example, the goods were debited to A., then it is clear that A. was treated as principal. § 189. Form of Guarantee. - -The Statute of Frauds requires a guarantee to "answer for the debt, default, or miscarriages of another person " to be in writing, signed by the guarantor or his authorised agent, otherwise no action can be brought upon it. Verbal guarantees are not, how |