
    E. H. Flint and Micah P. Flint v. The Ohio Insurance Company.
    Where there is a special understanding between an insurance office and the agent of the insured, that no insurance should be considered as effected on behalf of himself or others for whom he might act, until the premium was paid or secured, no treaty or agreement for insurance where this requisite is not performed or dispensed with, can be set up in equity to charge the office.
    This case came from the county of Hamilton.
    The bill alleges that the complainants were the owners of $7,000 worth of books, in the custody of William D. Jones, to be by him forwarded to complainants, at Alexandria, Louisiana.
    
      That they directed Jones to have the goods insured.
    That Jones, on November 10,1831, by his clerk, called upon the-officers of defendants, of which Jones was director, and made a written proposal to insure said goods, as follows-:
    “Insurance is wanted on twenty-one boxes and three stoves, shipped on board the steamboat Grenadier to Natchez, to be forwarded from thence to Alexandria, Louisiana. Amount to be insured, $1,200. Signed lor E. II. Flint & Go., W. D. Jones.”
    The president replied, that they would take the risk at one and a half per cent, to Alexandria, which was agreed to, and a policy-was actually made out, signed by the president of the company, and laid aside for said Jones. The policy was dated November 10,1831, and by the terms thereof, insured plaintiff’s goods againstr etc., in ordinary form.
    The contract was made and fully completed in equity, by the agreement of the parties, but not so as to enable plaintiffs to sustain an action at law; because the policy made out, signed, etc., by mistake, describes the property as belonging to E. II. Flint only. The goods were shipped on board, on November 10, 1831, to the-value of $7,200.
    The bill then avers the sailing of the boat, with the goods on-board, on November 11th, and afterward avers a total *loss by a peril of the river, in the same month; avers complainants made, and exhibited to the defendants, full proof of their property in the goods, of the loss thereof, and were ready, and offered to pro- - duce such lurther proof as defendants should reasonably require; but de/endants refused to pay the sum insured, and refused to receive any further proof, or to acknowledge any liability, on account of said contract of insurance, or loss, pretending they were-not liable, because they had not received payment of the premium.
    The bill charges, that the company, at the time of entering into the contract, did not insist, nor were they uniformly in the habit-of insisting, upon the immediate payment of the premium, but, on the contrary, defendants, and other insurance companies, were,, and are, in the habit ol taking the promissory notes of the insured and their agents, and are in the habit of giving credit to commission merchants and brokers for the amount duo for premiums on insurances. William D. Jones was in the habit of dealing with the defendants on these terms, and did, in fact, give defendants-•credit on his books for the amount of the premium, it the time ■of effecting the insurance.
    No discovery is sought.
    Prayer is, that defendants be decreed to pay the amount insured, •or if that can not be done, that the defendants be decreed to deliver a policy according to the agreement.
    The defendant filed an answer, although not called upon by the bill to do so.
    The defendant requires proof of ownership and kind of property destroyed.
    It is admitted that a proposition was made in the books, at their •office in Cincinnati, by Samuel McCormick, in name of William D. Jones, for E. H. Flint & Co., November 11, 1834, in sub•stance as stated in the bill.
    That the effect of this proposition, according to the usage and ■custom of the office, as understood by Jones, is to inquire at what rate a risk would be taken.
    To this proposition a memorandum was made on the answering book, signifying that the office would take the risk at one and a half per cent, premium; but they deny that Jones or McCormick ■ever assented or agreed to said answer, or accepted the insurance, -or paid the premium, or agreed to pay it, until alter information was received of the loss.
    *They deny that they ever made insurance on the goods in .any way, or on any terms.
    It is admitted a policy was filled up in the office by a young man, not a clerk in the office, who occasionally assisted the secretary in writing, dated November 10, 1834, predicated upon said proposition and answers, and prepared to be ready for delivery in case it should be called for, and the premium paid. But said policy was not valid, nor intended to be any evidence of insurance made, until the premium should be paid, and the same delivered ; .and that the policy was not, in fact, delivered.
    It is alleged that it is customary for policies to be made out, so that they may be ready when called for.
    Defendants do not admit the goods were shipped, nor the loss ■of them ; nor do they admit notice, nor that preliminary proof was furnished of the loss, nor that the premium was ever tendered.
    They insist that they have a standing rule, and it has been the «uniform usage, that risk should not be commenced until the policy was delivered, or an acceptance written and signed on the answering book, and the premium actually paid, or satisfactorily secured, as complainant, and Jones and McCormick, at the time of making the proposition, well knew.
    It was a special rule of the office, that no risk should be considered as taken, before a policy was delivered, until such written acceptance was entered on the answering book; a copy of this rule has been kept in the office, posted up, and risks are not considered as taken until the premium is paid, or written acceptance or policy delivered. That Jones has always acted on this rule, being always in the habit of writing an acceptance.
    That in this case, no acceptance was made, cither written or verbal, by Jones, or any other person.
    That it is the general rule of the office, to require payment of the premium, or a note therefor, at the time insurance is made; but the secretary of the office has 'a private understanding with some confidential mercantile houses, that he shall keep an account, .and call on them when he has occasion for it; but in these cases the same written acceptance, or the delivery of the policy, is uniformly required.
    That such an understanding existed with Jones prior to 1822 when a dispute arose between Jones and defendant, and from that period an express understanding was had, that with Jones, *no risk would be considered as taken, on his application for himself or others, until he had actually paid the premium, although a regular acceptance should be entered; and since then, business has been so conducted with Jones, he always paying .the premium at the time the contract of insurance was closed, and none being closed until such insurance was paid.
    Proofs were taken in the cage, which are sufficiently noticed in. the opinion of the court. The result of these proofs constituted the material question to be decided.
    Storer and Fox, for complainant.
    Wright and Walker, and Wright and Hodges, for defendant.
   Judge Grimke

delivered the opinion of the court:

This was a bill in chancery, filed for the purpose of perfecting an alleged agreement to insure. The premium was not paid; the policy, though made out, was never delivered; and it describes the goods as the property of E. H. Flint only.

There can be no doubt, that if an agreement has been made, which is binding upon the parties, a court of equity will decree a-policy to be executed and delivered. And it is equally certain, that where it is proved that a policy has, by mistake, been reduced to writing in terms which are not conformable to the real intention of the parties, that the court will compel the policy to be rectified. This, which was once considered a doubtful proposition, has been completely settled since the case of Henkle v. Ray. Exc. Ins. Co., 1 Ves. sen. 317, and the principle has been illustrated and enforced, by repeated decisions in England and the United States. The view which we have taken of the case, however, will render it unnecessary to consider whether the facts disclosed will enable the court to grant relief on this ground.

It is proved to have been a rule in this office, not to consider the insurance effected until the premium was paid or the policy delivered, or until a written acceptance was entered on the answering books; and it is also stated in the evidence, that a. copy of this rule was constantly kept posted up in the office. The legality of these special rules has boon questioned ; but I know of no principle which forbids underwriters from limiting and qualifying the general responsibility which would otherwise ^attach to them. The case has been likened to that of common carriers. But there is, in reality, the greatest imaginable difference between the two cases. A common carrier is under a common law obligation to carry goods; and the law has not»therefore, given him a general permission to exempt himself from responsibility. But the rule, even'with regard to them, is very different from what is supposed. The indulgence is afforded them, of qualifying their general liability by limitations not inconsistent with their common law obligation. Formerly a carrier might, where he had just ground for doing so, decline altogether to take goods; or, ii he consented to accept them, he might protect himself by the special terms upon which he agreed to receive them. Bodenham v. Bennett, 4 Price, 34. And the receipt of goods, upon such conditions, was considered as a special acceptance, and was usually made in each particular case. But, in recent times, a mode has arisen of effecting the same object, by means of a general notice, intimating to the public the terms upon which the carrier consents to take goods. The legality of theselioticos, in the case of common carriers, and the policy of adopfcing them, have been frequently questioned, and their introduction has been regretted by many eminent and learned persons, 4 Camp. 41; 8 Taunt. 146; but they are now established to be legal, and are constantly received and acted upon in courts of justice.

In Nicholson v. Willan, 5 East, 507, an objection to their validity came formerly before the court, and Lord Ellenborough observed that “ inasmuch as carriers were deemed fully competent to limit their own responsibility in all cases by special contract, and as there is no case in the books in which the right of a carrier thus to-limit, by special contract, his own responsibility, has ever been, by express decision, denied, we can not do otherwise than sustain such right, however liable to abuse it may be.”

Nothing is more common than to post up rules (as was done by these defendants) for the purpose of giving information to the public. It is said that the notice should be fixed in some conspicuous part, that persons delivering goods may have ample means of seeing the terms on which the business is conducted, 2 Camp. 415; 3 Camp. 28 ; and there does not appear to be any objection on this ground to the notice in this instance.

Admitting, therefore, as a general rule, that the agreement to insure is complete, although the premium has not been paid, yet that rule has been varied by the notice in this case, and by the ^particular terms upon which the underwriters agreed to insure. But I apprehend that no case can be found in the English books during the last fifty years, in which the premium has not been paid by the insured, and yet the contract considered complete, either at law or in equity. The actual state of the law in England absolutely forbids that this should be the case. By statute, the premium is required to be inserted in the policy, and the acknowledgment contained in the policy of the receipt of the premium by the insurer is conclusive as between him and the insured, except in a case of fraud. The case is not like a deed of conveyance, where, although the receipt of the consideration money is acknowledged in the deed, an action may be brought to recover it, if it has not been really paid. The cases which are found in the books, where actions have been brought to recover the premium, are never against the insured, but against the broker. As between the underwriters and the insured, the acknowledgment in the policy stands in the place of the actual payment of the money, and is conclusive evidence of that fact. The former are, in the absence of any fraud, precluded from recovering it against the insured. 1 Camp. 532.

It is, I imagine, in consequence of this state of tho law, in Great Britain, that the insurance offices in the United States have generally adopted the practice of framing particular rules, for the conduct of their business, and as a guide to those who transact business with them. Tho policies in the United States are framed after the model of those in England; they generally acknowledge the reeoipt of the premium, although we have no statute like the British requiring such a clause to be inserted, and drawing after it the consequences which I have mentioned.

The case of Perkins v. Wash. Ins. Co., 4 Com. 645, has been referred to by the complainant’s counsel; and yet it is impossible not to see that it is very strong authority on behalf ol the defendants. For although the letters from the underwriters in New York to their agent in Georgia express that the policy should take effect .from the time the premium is paid and received at New York, yet rthe company, in their answer, admit that, they sent printed proposals to him at Savannah, in which the words “and received at .New York,” were left out. These proposals were actually hung up in the office, and the premium had been paid to the agent, who was quoad hoc, the insurer; and it was very naturally decided that these proposals should govern the contract. Tho agreement to insure was considered complete *in equity, because the premium had been received in compliance with the proposals, and ¡there appears to have been no question of the right of the company or their agent to frame particular rules for the conduct of their business.

It was, then, a rule in this office not to consider the insurance ■ effected, until the premium was paid, or the policy delivered, or until a written acceptance was entered on the books; and not one .of these conditions has been complied with.

But there are other circumstances which show that the complainants are not entitled to relief. The deposition of McCormick proves that in consequence of a previous misunderstanding between Jones (the agent) and the company, the former was particularly notified that no insurance should be considered as effected, ■whether he acted for himself or on behalf of others, until the ¡premium was actually paid.

The complainants have¡not complied with the general rules of the office, nor with the particular agreement between their agent and the defendants; the contract to insure was not completed in equity, and the complainants are not entitled to relief.  