Liability of Reinsuring Company.

from payment in full, by reason thereof.
Eagle Insurance Co. v. Lafayette Ins.
Co., 9 Ind. 443; Home v. Mutual Safety
Ins. Co., 1 Sandf. 137 (N. Y.)

32. The insolvency of the original insurer in no wise affects or limits responsibility of the reinsuring company. If the original assured be paid but a small dividend, the reinsurer is still liable to pay the whole amount due under its contract to the trustee of original insurer, without deducting the dividend, and the original assured has no claim in respect of the money so paid. Consol. Real Est. Co. V. Cashow, 41 Md. 59.

33.- Under a contract of reinsurance, the extent of the liability of the reinsurer is not affected by the insolvency of the reassured nor by its inability to fulfil its own contract with the original insured. Blackstone v. Allemania Fire Ins. Co., 56 N. Y. 104.

|

37. Liability of reinsuring company. A reinsurer is liable for the full amount of loss, within his contract, although a clause in his policy provides, that in case there were other insurance prior or subsequent, the reinsured should be entitled to receive only a proportionate part," etc.; such clause refers to a case of other reinsurance. Mutual Safety Ins. Co. v. Hone, 2 N. Y. 235.

38.- Plaintiffs applied to the defendants for reinsurance in sum of $10,000, on sugar and molasses, on certain plantation, saying, "We have buildings." The insurance was effected, and afterwards it was shown that plaintiffs had no insurance on the buildings. Held, that the representation, being false, and intended to influence the minds of defendants in taking the risk, was material, and therefore fatal to the contract. Louisiana Mut. Ins. Co. v. New Orleans Ins. Co., 13 La. Ann. 246.

34.- Where company is in fact in- 39.— Original company insured to solvent, although unknown to its di- amount of $6,000. Amount reinsured, rectors, it cannot reinsure a limited por-$2,000. Former paid $600 in full distion of its risks without rendering the charge of liability. Reinsurance policy directors personally liable to holders of contained clause "loss, if any, payable policies not covered by the reinsurance, pro rata at the same time and in the under provisions of statute. And such same manner as the reinsured comliability is not affected by the fact that pany." Held, that the reinsuring comthe reinsuring company is not authorized pany was bound to pay only at the same to do business in the state, it having per-rate as the reinsured, and as the latter formed the agreement on its part. Held, however, in such an action there should be credited and deducted from the sum paid for the reinsurance, the amount of losses company or its receiver would have been obliged to pay under the reinsured policies. Casserly v. Manners, 9 Hun, 695 (N. Y.)

paid only ten cents on the dollar of its insurance, the former was only liable to pay at same rate-that is, ten cents on the amount reinsured, or $200. Ill. Mut Fire Ins. Co. v. Andes Ins. Co., 67 Ill. 362; s. P. Norwood v. Resolute Ins. Co., 4 Jones & Sp. 552 (N. Y.)

40.- The meaning of clause in rein35.-A contract of reinsurance does surance policy, "loss if any payable at not create a privity between the original same time and pro rata with the ininsured and the reinsurer. If upon loss sured," is that the liability of the reinsurthe original insurer has become insolvent, ing company is to be no greater than that the reinsurance money is a fund applic- of the original company; that they are able to its debts, including, but not pre-not to be compelled to pay any faster, ferring, the claim of the original insured. and are to have the benefit of any deGoodrich's App., 1 Cent. Rep. 430; 109 fense which original company would Pa. 523.

36. It is competent for the reinsurer to effect an indemnity for the individual protection of the insured against loss. Authorities cited, Id., and see Strong v. Phoenix Ins. Co., 62 Mo. 289; Gantt v. Amer. Cent. Ins. Co., 68 Mo. 503.

have had. Any deduction, any equity, which original company would have had against the original assured, enures to benefit of reinsuring company. The company primarily liable cannot have its claim limited by its ability to meet its own obligation. Ex Parte Norwood, 3

Liability of Reinsuring Company.

Biss. 504 (U. S. Cir.) See note on liabil-being claimed that the reinsured company ity of reinsurer. Id. S. P. Cashau v.had been guilty of a breach of the above Northwestern Nat. Ins. Co., 5 Id. 476.

41.- Under the clause in reinsurance policy "loss, if any, payable pro rata, etc." the insurance being for one-half of the original amount, company is liable for only one-half of the loss. Consol. Real Est. Co. v. Cashow, 41 Md. 59.

condition. Held, that its obvious purpose was to guard against the reinsured company from further reinsuring to an extent which would lower its interest in the premises beneath that of the reinsuring company. They were to retain their insurance to an amount equal to that re42. Reinsurance policy contained insured, and they did retain it to the full clause as follows, "subject to the same amount. They did not reinsure or otherconditions and mode of settlement, paya-wise get rid of their risk, and that there ble pro rata, etc.:" held, that the com- was no breach of the condition. Canada pany was not entitled to notice of the loss Ins. Co. v. Northern Ins. Co., 2 Tupper, as prescribed by condition in the original | 373 (Can.) policy, but that it could take advantage of any want of compliance with the contract between the original parties; if company is entitled to notice it could not be held as a matter of law that a delay of thirty-one days is a violation of a condition requiring immediate notice, there being no evidence showing the proximity of the company to the fire or to the plaintiff. North Pennsylvania Fire Ins. Co. v. Susquehanna Mutual Fire Ins. Co., 2 Pearson, 291 (Pa.)

44.- During the term for which defendant's reinsurance policy was issued, the plaintiff indorsed upon its policy to the original assured permission to carry pressed hay, and received therefor an additional premium. Defendant knew nothing of this until after the fire. Defendant's policy contained a condition avoiding it in case of the use of the property insured for the storage of articles denominated hazardous, extra hazardous, or specially hazardous. In the class of articles denominated extra hazardous was "hay or straw pressed in bundles." Held, that defendant's policy was avoided by the carrying of pressed hay; and that this result followed whether the policy was regarded as a reinsurance of plaintiff's risk, because said risk was altered and increased by the permission so given, or whether the policy be regarded as if it were an insurance issued to the owners of the barge insured, because then the condition as to pressed hay was violated. St. Nicholas Ins. Co. v. Merchants' Ins. Co., 83 N. Y. 604.

43. Reinsurance policy provided as follows: "This reinsurance is subject to the same specifications, terms and conditions as policy No. 434,292 of the Northern Insurance Company which it reassures, it being well understood that the Northern Insurance Co. do not retain any sum or risk on the property covered by this policy, but retain an amount equal at least thereto on other parts of Hamilton & Sons' Works." On the 16th of March, 1876, when the reinsurance risk commenced, the reinsured company had three policies on different portions of the Hamilton Works; that which the reinsuring company insured was for $2,800; the other two for $2,500 each. One of the latter expired on the 1st of November, 1876. This the reinsured company were ready to renew and sent the ordinary receipt to 45. In the absence of any stipulation an agent for that purpose, but the as- providing for prorating the loss or othersured not desiring to continue the insur- wise limiting liability a reinsuring comance the receipt was returned, although pany is liable for the whole amount of its not until after the fire had occurred. policy, without reference to the proporThe reinsured company paid the whole of tion paid by the reinsured company. the $2,800 due on the other policy for that Detroit Fire & M. Ins. Co. v. Commercial amount, and claimed from the reinsuring Mutual Ins. Co., 11 Ins. L. J. 549; 38 Ohio company $2,200, being the proportion of St. 11. the loss falling under policy in suit, it

44a. In an action brought by the reinsured and their assignee, held that they could recover of the reinsurer. Fire Ins. Assoc. v. Canada F. & M. Ins. Co., 2 Ont. 481; Id. 495 (Can.)

46. Under a contract of reinsurance,

Other Special Cases.

covering" interest as insurers only," when no admission of the loss. Yonkers Fire the latter company is found to be legally Ins. Co. v. Hoffman Fire Ins. Co., 6 liable upon their contract, and the Robt. 316 (N. Y.) amount ascertained, it is not open to the 49. The 4th section of the Statute reinsuring company to inquire into the of 19 Geo. II, ch. 37, which has been merits of questions arising between the adopted and is in force in Maryland, prooriginal assured and the reinsured com-hibiting reinsurance, applies exclusively pany, in a suit brought to recover the to marine insurance, and does not proamount of the reinsurance; the arbitra-hibit reinsurance by fire companies. Contion clause in such a contract is inopera-sol Real Est. Co. v. Cashow, 41 Md. 59. tive. Jackson v. St. Paul Fire & M. Ins. Co., 14 Ins. L. J. 546; 99 N. Y. 124; rev'g, 33 Hun, 60.

50.- A court of equity has jurisdiction to entertain and enforce a bill by assignee of a reinsured company against a reinsur46a. A reinsurance contract limited ing company to enforce the latter's conliability to $5,000 in “any one building tract, and resort may be had to equity or risk." A warehouse with common before payment to the original insured; outer wall, with partition walls dividing the loss was payable pro rata at such the building into several parts designated as "stores Nos. 1, 2, and 3, respectively," but connecting and communicating by doors in each wall, and devoted to same use, and under one management constitutes only one building within meaning of above limitation. *German Amer. Ins. Co. v. Commercial Fire Ins. Co., 21 Ins. L. J. 626; 11 So. Rep. 117 (Ala.)

times and in such manner as the reinsured company may pay. Held, that the words "may pay are equivalent to liable to pay. Fame Ins. Company's Appeal, 83 Pa. 396; 9 Phil. 292.

50a. A contract of reinsurance does not come under the Fire Insurance Act, and therefore the statutory conditions can not be imported into or read with such a contract. Fire Ins. Asso. v. Canada F. & M. Ins. Co., 2 Ont. 481; Id. 495 (Can.)

47. Other special cases. Where property, shipped from New Orleans to Liverpool, insured by the owners in London about the time of the shipment, and soon after relanded, and stored, and insured by the factors in New Orleans against fire" for all of whom it may concern, was destroyed by fire, and the London office paid on the first policy; held, that the latter could not claim indemnity from the New Orleans office, unless the transaction amounted to a reinsurance; that it was not a reinsurance, because no special authority had been given, nor had there been any subsequent | Fireman's Fund Ins. Co., 77 Iowa, 155. ratification of their acts by the plaintiffs before the loss happened. Alliance Marine Assur. Co. v. Louisiana State Ins. Co.. 8 La. 1.

51.- When a reinsured company transfers to the reinsuring company the right to consent to an assignment of the policy, the agents of the latter company can give such consent so as to be binding in a subsequent suit by the insured against the reinsured company. Chauncy v. German Amer. Ins. Co., 60 N. H. 428.

52. Reinsurance contract is not within the statute of frauds, as requiring writing, as assuming payment of a debt, or on default of another. Bartlett v.

53.- A policy of reinsurance originally made to cover half the value of all cargoes shipped by a certain firm and insured by the company to which the policy was 48. The plaintiffs had reinsured the issued, changed by an indorsement to original company, and the defendants cover half the amount of each risk equal had reinsured the plaintiffs. Held, the to or exceeding in value a specified sum, plaintiffs must do more than show a pay- which such company may have on any ment; it is of no importance that the one cargo under open policies issued to plaintiff is itself a reinsurer; the validity several firms named, and on cargoes of a of the original claim must be shown. The certain value to cover the excess of half preliminary proofs are not evidence of that value, not exceeding a specified sum, loss, but only of compliance with a condi--covers only such cargoes as are actually tion, and the defendant receiving them of the value specified, and not those which without objection to their sufficiency is are made so by an arbitrary valuation of

Miscellaneous.

Subd. X. Usage and Custom. No. 11. with provision for allowance of depreciaSection four.

Section twenty-one. Limitation. No. 92. in reduction of taxes or liabilities. L.,

SECTION XX,

If this company shall claim that the fire was caused by the act or neglect of any person or corporation, private or municipal, this company shall, on payment of the loss, be subrogated to the extent of such payment to all right of recovery by the insured for the loss resulting therefrom, and such right shall be assigned to this company by the insured on receiving such payment.

New York Standard Form. New in phraseology and arrangement.

I. SUBROGATION.

General rules.

primary, that of the insurer secondary.
*Louisville & N. R. Co. v. Manchester
Mills, 88 Tenn. 653; 8 R. R. & Corp. L. J.

Formal assignment not necessary. 302; 14 S. W. Rep. 314.
Vendor's interest.

Mortgagee interest.

Liability of railroad company.
As affected by insured's contract
with carrier or wrongdoer.
Stipulations in policy affecting
carrier or insurance of carrier.
When release by insured no defense
to wrongdoer.

3.- An insurer, upon paying a loss to the assured, can take nothing by subrogation but the rights of the assured; and if the assured has no right of action, none passes to the insurer. *St. Louis I. M. & S. R. Co. v. Commercial U. Ins. Co., 139 U. S. 223; 35 L. ed. 154; 11 Sup. Ct. Rep. 554.

4.- An insurer of property, upon payEffect of release by insured on right ing the loss, is entitled to subrogation to

to recover on policy.
Insured entitled to recover entire
loss without regard to insur-

ance.

Remedy of insurance company.
Right of company when it has re-

fused to join insured in action.
Other special cases.
Cross references.

Statutory provisions.

1. General rules. The relation of a common carrier to the insurers of the goods he carries, is not that of double insurer, and the insurers after paying the loss by accidental burning, are subrogated to the assured's rights, and can bring a suit in his name against the carrier without showing the latter's negligence, it being conclusively presumed. Hall & Long v. Railroad Companies, 13 Wallace, 367 (U. S.)

2.-An insurer who pays a loss caused by a carrier's negligence is subrogated to the assured's rights against such carrier. The carrier's liability, in such case, is

the right of the owner to recover from a carrier or bailee primarily liable for such loss. *Deming v. Merchants' CottonPress & S. Co., 13 L. R. A. 518; 17 S. W. Rep. 89; 90 Tenn. 306.

5. Formal assignment not necessary. Policy on a church, which took fire from sparks from a steamboat having no grille on the chimney. The company paid the loss and took from the cure and one of the Marguilliers en charge a transfer of the claim against the owners of the boat, and brought an action against the owners in their own name. Held, 1st, that the proper officers of the church had cause of action against the owners of the boat; 2d, that though there was no legal assignment of the claim, this was a valid act of subrogation, and the company might bring the action. Quebec Fire Assurance Co. v. St. Louis, 7 Moore, P. C. 286 (Eng.); below, 1 Low. Can. 222.

6.- Payment of a total loss by the insurance company works an equitable assignment to it of the property and all the remedies which the insured had against