Elements requisite to establish completed agreement.

SEC. 6. In this class of contracts, as in all others, the contract must be definite and certain, and the parties must have agreed upon all its

testimony with the statement that there was nothing said between me and Dearborn as to how long this insurance should run.' This is really all the evidence in relation to the several contracts set out in the complaint; and, it seems to us, it fails to show that the negotiations resulted in a valid agreement, or that the parties came to an understanding upon all the material conditions of the contract. The amount of premium to be paid, and the continuance of the risk, are not agreed upon, nor is there any stipulation in the agreement from which these important elements of the contract could be fixed and determined. The rate of premium and continuance of policy are certainly important terms in a contract of insurance. Perhaps a contract which either party could terminate at any time by a notice to the other, might be a valid contract, as intimated by COMSTOCK, J., in Trustees of the Baptist Church v. Brooklyn Fire Ins. Co., 19 N. Y. 305, until the notice was given. However this may be, the general rule is, that to constitute a valid contract of insurance, the minds of the parties must meet as to the premises insured, and the risk; as to the amount insured; as to the time the risk should continue; and as to the premium. Same case in 28 N. Y. 153. Where parties verbally agreed upon all the terms of the insurance except the rate of premium, and a previous insurance was referred to in the conversation, upon the same kind of property in the same place as the property sought to be insured, nothing being said about any change of rate, it was held to be a fair inference of fact that the rate was to be the same as that paid for the previous risk, and that the minds of the parties met upon that amount. Audubon v. Excelsior Ins. Co., 27 N. Y. 216. In Kennebec Co. y. Augusta Ins. Co., 6 Gray, 204, where, under an open policy of insurance on property on board a vessel from New Orleans to Boston, the cotton was insured for the voyage, and also, in addition, against fire from the time of its deposit in a warehouse until it was shipped, the objection was taken that the agreement fixed no certain time when the risk was to commence or terminate. But the court held that the risk commenced the day the cotton was first put in store by the plaintiffs at New Orleans, and that the termination of the whole risk, which included both the hazard of fire on shore and the perils of the sea on the voyage to be performed, was to be upon the safe arrival of the cotton at Boston, the place of its ultimate destination. In marine insurance, where a cargo is insured for a particular voyage, the policy to continue on the property until landed' (Mansur v. New England M. M. Ins. Co., 12 Gray, 520), there is no difficulty in determining when the risk terminates. In Walker v. Metropolitan Ins. Co., 56 Me. 371, where the evidence showed an application for a builder's risk, and a permanent yearly risk for a given amount, and that, though no specific premium was agreed upon, yet it was understood that the amount of premium should be deducted from the sum due the plaintiff from the defendants, the court said enough was done to make a complete contract of insurance. But all these cases, and others of the same character which might be cited, are manifestly in their features distinguishable from the one before us. Here Comstock says the rate of premium was to be 12 per cent. ; yet this, it is admitted, had reference to the annual rate. But the more serious defect in the contract is, that no time was fixed for the continuance of the risk. Suppose a bill in equity had been filed, as is sometimes done, to specifically enforce the performance of the contract to issue a policy. How conld the court determine the essential elements of the contract which it was called upon to enforce? How long was the risk to continue, one month, two months, six months, or a year? All is uncertain and indefinite upon that point. Again, suppose the company had brought an action to recover the premium due on the contract: how much could it have claimed and recovered? It seems to us it is impossible to say. The property was destroyed on the 21st of May, and it is assumed that this was the termination of the risk. But suppose the property had been destroyed a month later, or not destroyed at all, what then would have been its termination? These tests clearly show, as it appears to us, that while the parties negotiated about insurance, still they did not agree upon all the terins, and that no contract was ever completed so as to become binding upon them. For this was a case in which the duration of the risk might and

essential terms. If anything has been left open, no contract exists, because the minds of the parties have not met, and there is not an agreement that can be enforced by either party, and both parties must be bound, the one to insure, and the other to pay the premium.'

The contract must be complete and perfect. All its elements must be agreed upon, and if anything is left open or undetermined, so that the minds of the parties have not met, no contract exists, and consequently no liability for a loss occurring. As where the rate of premium is left undetermined,' or the time when the policy

should have been fixed. It was not one where the period was left indefinite, as it is in a voyage policy. It is true, the parties speak of the policy as an "open policy." Precisely what meaning they attached to these words is not readily perceived. Mr. MAY, in his work on Insurance, defines an open policy to be one in which the sum to be paid as an indemnity, in case of loss, is not fixed, but is left open to be proved by the claimant in case of loss, or is to be determined by the parties. § 30; Angell on Fire and Life Insurance, § 253. In Watson v. Swann, 103 E. C. L. 755, such a policy is spoken of as a "running policy;" but we do not understand that such policies leave the duration of the risk indefinite. There are elements by which the continuance of the policy can be ascertained. The continuance of the risk is an important element in determining the rate of premium; and how can the company fix its rates when that factor is left entirely indeterminate? A parol contract of insurance indefinite as to time, and as to rate of premium, is, as it appears to us, incapable of enforcement."

1 Train v. Holland Purchase Ins. Co., 62 N. Y. 598.

* *

'Real Estate Mu. Ins. Co. v. Roessle, 1 Gray (Mass.) 336; Mutual Life Ins. Co. v. Young, 2 Sawyer (U. S.) 325; Hughes v. Mercantile Mut. Ins. Co., 55 N. Y.

265.

In Orient Mut. Ins. Co. v. Wright, 23 How. (U. S.) 401, the court held that, where the insurer imposed a condition precedent to its liability under the policy, such condition must be complied with, before a binding contract exists, and that if the assured refuses to comply with such condition, no contract exists. Therefore, where the policy covers a shifting risk, and the policy in terms, provides that the rate shall be fixed at the time of indorsement, the assured cannot recover if he refuses to pay the rate so fixed, because a new contract arises under each indorsement, and, if the assured refuses to pay the rate fixed, the minds of the parties have not met, and no contract exists. Hartshorn v. Shoe and Leather Ins. Co., 15 Gray (Mass.) 240; Sun Mut. Ins. Co. v. Wright, 23 How. (U. S.) 412. In First Baptist Church v. Brooklyn F. Ins. Co., 28 Ñ. Y. 153, an attempt was made to charge the defendants for a loss, upon the ground that they had agreed to renew the policy until notice to the contrary should be given. But it appearing that, prior to the loss, the defendants refused to renew the policy unless an increased rate of premium was paid, which was acceded to by the plaintiffs, it was held, that the variation of the contract in this respect, annulled the contract for indefinite renewal, and that a new assent of the parties thereto must be shown. Sun Mut. Ins. Co. v. Wright, 23 id. 412. In Christie v. North British Ins. Co., 3 C. C. (Sc.) 360, the plaintiff averred and offered to prove, that his assignor, one Stead, applied to the Phenix Insurance Co., for insurance on his wire mill to the amount of £2,000, £3,000 to be placed elsewhere; that the risk not being one for which there was a known rate, the determination of the rate was referred to the directors in London; and that he also applied to the defendant company for insurance upon the same risk, to the amount of £3,000, and delivered an order therefor, to the secretary. That the secretary agreed to take the risk at the same rate that should be fixed by the Phenix Co., and to make out and deliver a policy as soon as that was ascertained. That Stead offered on two occasions to deposit a sum sufficient to cover the premiums, but the secretary declined to receive it, as being unnecessary, and that afterwards a person employed by the office surveyed the

shall attach,' or the apportionment of the risk has not been agreed upon, or if the insured retains control over the premium note or any papers, the delivery of which is a condition precedent,' or if anything remains to be done by the insured as a condition precedent, as the payment of the premium,* or if the duration of the risk is not agreed upon, or if any condition precedent has not been complied with, and if, upon the whole evidence, it is left in doubt whether a binding contract was really made, a recovery will not be permitted, as the assured takes the burden of establishing all the elements requisite to make a completed agreement. The aggregatio mentium must be fully estab

premises, and the Phenix and defendant company exchanged notes of the terms of insurance; that the defendant company made an entry of the insurance in its order book, and in its ledger, the number of the intended policy and its date, the columns for the intended premium being left blank. That prior to the loss, on the 30th of May, there had been two meetings of the directors of the defendant company, and that although no premium had been paid, or policy issued, the Phenix Co. paid its proportion of the loss. It was held, upon these facts, that there was no completed contract, and no liability on the defendants' part for the loss "If," said Lord Justice CLERK, "the premium in this case had been agreed on, the insurance would have been effected, although no policy was delivered; but the premises cannot be held to have been insured, the premium never having been determined on, and never having been fixed by the Phenix office. The pursuers (plaintiffs) rest very much on Stead having been told by the Secretary that he might hold himself insured; but, without inquiring whether this may warrant a claim in another form of action, it clearly cannot establish a contract of insurance with the company, which is the ground of the present process, nor can the subsequent action of the Phenix Co. affect the question with the North British." As to the latter point, relative to the action of the Phenix Co., see Buffum v. Fayette Ins. Co., 3 Allen (Mass.) 366; 4 Bennett's F. I. C. 582. In Train v. Holland Purchase Ins. Co., 3 T. & C. (N. Y.) 777, where a policy of insurance was never delivered and accepted, nor received by the insured until after the loss, and no premium paid or rate agreed upon, and the court held that the contract was never consummated between the parties, that the delivery of the policy to the insured without payment of the premium, and after the premises insured had been destroyed by fire, was unauthorized and the insurance void by the terms of the policy. The complaint alleged that the premium upon a policy of insurance was paid, and the answer denied that the plaintiff was insured by the defendant, and alleged that the policy was not delivered: Held, that this was sufficient to make an issue upon the question whether the premium was paid. 'Mutual Life Ins. Co. v. Young, ante.

2 Sandford v. Trust F. Ins. Co., 11 Paige Ch. (N. Y.) 547.

'Thayer v. Middlesex Mut. Ins. Co., 10 Pick. (Mass.) 326; Belleville Mut. Ins. Co. v. Van Winkle, 12 N. J. Eq. 333.

4

Buffum v. Fayette Mut. F. Ins. Co., 3 Allen (Mass.) 360; Bremer v. Chelsea Mut. Fire Ins. Co., 14 Gray (Mass.) 203; Mulvey v. Shawmut Mut. Ins. Co., 4 Allen (Mass.) 116; Walker v. Provincial Insurance Co., 7 Grant's Ch. (Ont.) 137 ; Wallingford v. Home Ins. Co., 30 Mo. 46.

5

Strohn v. Hartford Fire Ins. Co., 37 Wis. 625.

• Graham v. Barras, 5 Barn. & Adol. 101; Rose v. Medical Invalid Life Association Soc., 11 C. C. S. 151; Walker v. Provincial Ins. Co., 7 Grant's Ch. 137; Chase v. Hamilton Ins. Co., ante; Winneshiek Ins. Co. v. Halzgrafe, ante; Phlato v. Merchants', etc., Ins. Co., 38 Mo. 248; Wallingford v. Home, etc., Ins. Co., 30 Mo. 46; Rogers v. Charter Oak Life Ins. Co., 41 Conn. 97; Schaefler v. Baltimore Marine Ins. Co., 33 Md. 109; Myers v. Keystone, etc., Ins. Co., 27 Penn. St. 268.

lished, and nothing must remain to be done but to deliver the policy. The details of the contract must be fixed, and if the agreement or understanding of the parties in reference thereto are not mutual; that is, if one party understands the matter one way, and the other another, the minds of the parties have not met, and no contract exists that can be enforced either at law or in equity.'

Where an agreement to insure was entered into, and the president of the company made a memorandum thereof upon the applicationbook of the company, but the assured gave notice to the company that he desired to have the risk differently apportioned, and the premium was not paid, and no policy made because of such notice, it was held that no contract existed, and the premises having been burned before the apportionment of the risk was determined, no recovery for the loss could be had. So, where the risk is not substantially as represented, as where the application was for insurance upon a stone house, when in fact it was part stone and part wood. So where the plaintiff applied for insurance upon "his house," and the agent knowing that he resided the previous year in a house on the Cornwall road, and supposing that he still resided there, and that that was the house intended to be covered by the insurance, made the policy to cover that house. In fact, the plaintiff had removed to another house, which he then owned, and the latter house was the one which he desired to have insured. In an action to reform the policy it was held that there was no contract to reform, because the parties labored under a mutual mistake and their minds had not met.*

'In Hughes v. Mercantile, etc., Ins. Co., 55 N. Y. 265, the policy covered “a bark called the Empress, or by whatever other name or names the vessel is or shall be called." The plaintiff claimed to recover upon the policy for the loss of the bark St. Mary, but the court held that, unless the insurer intended to take the risk upon that bark, no recovery could be had, because the minds of the parties had not met, and therefore no contract existed. Watt v. Ritchie, F. D. (Sc.) 43; Chase v. Hamilton Ins. Co., ante; Mead v. Westchester, etc., Ins. Co., post.

'Sandford v. Trust Fire Ins. Co., 11 Paige Ch. (N. Y.) 547.

'Chase v. Hamilton, 20 N. Y. 52.

'In Mead v. Westchester, etc., Ins. Co., 64 N. Y. 454, RAPALLO, J. said: "The power of courts of equity to reform written instruments is one in the exercise of which great caution should be observed. To justify the court in changing the language of the instrument sought to be reformed (except in case of fraud), it must be established that both parties agreed to something different from what is expressed in the writing, and the proof upon this point should be so clear and convincing as to leave no room for doubt. Losing sight of these cardinal principles, in the administration of this peculiar remedy, would lead to the assumption of a power which no court possesses, of making an agreement between parties to which they have not both assented. We think that the General Term were right in holding that the proofs in the present case failed to come up to the required standard. is reasonably clear that the plaintiffs intended to obtain an insurance upon the

It

Both parties must be bound; the one to insure, and the other to pay therefor. If the contract is not so far perfected that the insurer, upon delivery of the policy, could maintain an action for the premium, no perfect agreement exists, and the insurer is not liable.' Thus, if the

building which was afterwards burned. But the question is, whether it is shown that the defendant intended to insure that building. The policy was issued on the 1st of July, 1871, to Thomas Foley, on his own application, loss, if any, payable to Mead and Taft, the plaintiffs. The property insured was described in the policy as his two-story frame dwelling, situate,' etc. The policy was issued by Mr. Dales, the agent of the defendant. It appeared in evidence that Foley had occupied this dwelling-house for four years prior to the 1st of April, 1871; and that the furniture therein had been insured by Mr. Dales on the application of Foley. Foley owned the adjoining building, which had also been insured by Mr. Dales, in the office of the Home Insurance Company, for $2,000, and this policy was outstanding when the insurance now in question was effected. In April, 1871, Foley removed from the dwelling-house into this building, but Dales testified that he supposed that Foley owned the dwelling-house also, though, in fact, he did not. Dales had on his books the descriptions of both buildings. The dwelling-house was described as a two-story frame dwelling, situate,' etc., and the adjoining building as a two and a-half-story frame building, and the additions attached, occupied as a dwelling and paint shop, with stable in the basement,' situate, etc. The established rate of premium upon this building, and that which was then being paid thereon, was two and a-half per cent. per annum; that upon the dwelling adjoining was one and a-half per cent. These were the circumstances existing at the time of the application for the policy in question. The application was made in writing by Foley to Mr. Dales, and was in the following words: I would like you to make me out a policy of $800 on my house, in favor Mead & Taft, in case of loss, in the cheapest company.' Thereupon, Mr. Dales made out a policy for $800 on the dwelling-house, charging premium at the rate of one and a-half per cent., which policy he delivered to one of the plaintiffs, who paid the premium. The adjoining building, in which the paint shop was kept, was afterwards burned, and the object of this action is to have the policy reformed so as to describe that building.

"The only direct evidence to establish that the defendant intended to insure the building which was afterwards burned is the testimony of Mr. Dales, who, on his direct-examination, was asked: To what property do you understand this letter of Foley's referred?' To which he answered: To the property which he occupied, which has since been burned, and described in my book.' On his crossexamination he was asked: 'At the time of issuing this policy, and before it was issued, did you not suppose the application referred to the building Foley formerley occupied? A. I was in doubt about it; the simple question was, if it was on the building in which he lived, it was two and a-half per cent., and if on the one he formerly occupied, one and a-half per cent. Question. You issued it for one and a-half, which was it on? Answer. My idea was on the one he formerly occupied.' The purport of this evidence, taken as a whole, is, we think, that at the time of the trial, and in view of the facts which had then been developed, the witness was satisfied that Foley intended by his letter, to refer to the building in which the paint shop was; but that, at the time of issuing the policy the witness concluded that the dwelling-house was the one desired to be insured, and that he intentionally made out the policy to cover this building, charging the lesser rate of premium. These facts do not justify the reformation of the instrument. * * We cannot make a contract for the defendant which it did not in fact, make, even though the failure to make the insurance which the plaintiffs desired was owing to the plaintiffs' misapprehension of the application." See also, Hughes v. Merchants' Ins. Co., 55 N. Y. 265; First Baptist Church v. Brooklyn Fire Ins. Co., 28 id. 161; Ledyard v. Hartford Fire Ins. Co., 24 Wis. 496; Kent v. Manchester, 29 Barb. (N. Y.) 595; Goddard v. Monitor Ins. Co., 108 Mass. 56; Watt v. Ritchie, Faculty Dec. (Sc.) 43.

'Wood v. Poughkeepsie, etc., Ins. Co., 32 N. Y. 619.