96
THE GREEN BAG
obtaining and delivering the desired amount of insurance to the assured, undertook to cancel or release the policy in suit and take out new ones in another company. The assured did not learn of this transaction until after the fire, and then he gave up the old policy, accepted the new one and was actu ally paid for his loss under it. After that he endeavored to collect also on the old policy as well, and of course the court held that he had ratified the unauthorized act of his agent in making the substitution. The new policy was not in suit and the only rati fication involved in the case, therefore, was that of the agent's act in cancelling or releas ing the original policy; the court merely held that the assured might at any time by rati fying his agent's acts give up and release his rights in the first policy, and no question of creating new rights by ratification came up or was considered. This question of one's power to take ad vantage after loss of a previously uncom pleted contract of insurance has been neces sarily involved in principle if not in precise terms in a number of decisions of which Stebbins v. Lancashire Insurance Company1 is the leading case. There the assured's agent had procured and delivered to assured certain policies of insurance, but later at the direction of one of the companies he undertook to give up its policy and to sub stitute that of the Lancashire in its place. The assured did not hear of the transaction till after the loss, and then believing the substitution to have been effective, he elected to stand upon it, and brought his action upon the later substituted policy. But the court held against him, and in a unanimous and careful opinion said: "The Lancashire policy never became a binding contract. When insurance on the plaintiff's building to the required amount had been secured in the Commercial Union and North British companies the plaintiff's application had been filled, and no author ity remained for placing other insurance, • 60 N. H. 65.
upon the property. The Lancashire policy, therefore, was unauthorized by the plaintiff, and, although written in good faith by the authorized agents of the company, and de signed as a substitute for the North British policy, it could have no operative force until it was accepted by the plaintiff. It was not an acceptance of a proposition for a con tract of insurance, like the case of a policy issued on a previous application, which, as in the cases cited by the plaintiff, takes effect upon the acceptance of the application. As neither the plaintiff nor his agent had any knowledge of the existence of the policy previous to the fire, it was not an existing contract of insurance when the loss happened and subsequent delivery was ineffectual to give it validity." The court did not in so many words talk about ratification, but the facts clearly show a ratification (if there ever can be one) of the previously incomplete contract, and yet the court expressly refuses to allow a recovery, and gives as the ground of its refusal the fact that the new policy had not become a binding contract at the time of the fire, and that it could not become operative through subsequent delivery by the company's agent to the assured. And to the same effect are a number of other decisions not necessary to quote, which were all in cases of attempted substitution of one policy for another by an agent who had no authority from the as sured for the purpose.1 1 Wilson v. New Hampshire Fire Ins. Co., 140 Mass. 210; Martin v. Ins. Co., 106 Tenn. 523; Partridge v. Milwaukee Mechanics Ins. Co., 13 App. Div. (N. Y.) 519, 525; Lancashire Ins. Co. v. Nill, 114 Pa. St. 248, 251. In the last named case the court, after holding that the original policy was not cancelled by the attempted sub stitution of the Lancashire policy for it, aptly summed up the situation thus: "But if the Clinton policy was still in force on the nth of August, 1882, two days after the fire, the action of Brown & Beggs (the insurance agents) in- the delivery of the Lancashire policy as a substitute for that of the Clinton company, was a mere attempt to shift the loss from the company upon whom it had fallen to the other which, at the time of the fire, had assumed no responsibility."
