risk, may be deemed merely to suspend, and not absolutely to avoid the policy. However that may be, we think an increase of risk entitles the insurer to avoid the policy absolutely. The contract of insurance depends essentially upon an adjustment of the premium to the risk assumed. If the assured, by his voluntary act, increases the risk, and the fact is not known, the result is that he gets an insurance for which he has not paid. In its effect upon the company, it is not much different from a misrepresentation of the condition of the property.

If the provision stood alone, that in case of any material misrepresentation as to the risk or any voluntary increase of risk afterwards the policy should be void, it could hardly be doubted that the words should be taken in their natural, obvious meaning. The fact that with this are coupled the other provisions above referred to does not change its meaning with reference to the effect and consequence of an increase of risk. An increase of risk which is substantial, and which is continued for a considerable period of time, is a direct and certain injury to the insurer, and changes the basis upon which the contract of insurance rests; and since there is a provision that, in case of an increase of risk which is consented to or known by the assured, and not disclosed and the assent of the insurer obtained, the policy shall be void, we do not feel at liberty to qualify the meaning of these words by holding that the policy is only suspended during the continuance of such increase of risk. Lyman v. State Ins. Co., 14 Allen, 329. Mead v. Northwestern Ins. Co., 7 N. Y. 530.

It follows, therefore, that the fourth instruction which was requested, or something in substance like it, should have been given. Upon the facts stated and assumed, the increase of risk, if there was one, continued for fifteen months, and could not be treated as a casual, inadvertent, or inevitable thing. Exceptions sustained.

CHAPTER XIII.

CLAUSES OF THE NEW YORK STANDARD FIRE POLICY-CONTINUED.

NEW YORK COURT OF APPEALS, 1889.

WALTON AND WIFE v. AGRICULTURAL INS. CO. (116 N. Y. 326.)

Alienation clause. Change of interest. Shifting of interest among the insured.

THIS action was brought upon a policy of insurance issued by the defendant, to recover the sum of $500 for loss sustained by the burning of a barn, a quantity of hay and grain, and two horses, covered by the policy.

Said policy contained the following condition: "If the said property be sold or conveyed, or if the interest of the parties therein be changed in any manner, whether by the act of the parties or by operation of law, . then, and in every such case and in either of said events, this policy shall be null and void, until the written consent of the company at the home office is obtained."

At the time of the application for, and issuance of the policy, William T. Walton was the owner of the premises insured. About five months thereafter he conveyed said property to a third person, who, on the same day, duly conveyed the same to Eliza D. Walton, the wife of William. Notice of these transfers was never given to the defendant, neither was the written consent of the company at the home office obtained. William T. Walton, against the objection of the defendant, testified that he told the agent, at the time the application for insurance was made, that as soon as he had finished repairing the buildings he should convey the property to his wife, and that he wanted a policy so made out as to cover his interest now and the interest of his wife after conveyance made. The agent replied that he

could accomplish that result by making the policy out to William T. Walton and wife. It was thereupon arranged that such a policy should be applied for, and he signed an application to the company.

The agent or solicitor who made out the application was not a general agent, and did not have authority to issue policies. His duty was to make out applications for insurance and forward them to the home office of the company, where they were passed upon. If rejected, the matter was at an end; if accepted, a policy of insurance was made out and forwarded to the agent for delivery on receipt of premium. Respecting the extent and limitation of the authority of the agent to represent the defendant, the policy in question provided as follows: "Agents of the company are permitted to give the consent of the company to assignment of policies. But no agent of the company is permitted to give consent of the company in any other cases required by the provisions of this policy, or to waive any stipulation or condition contained herein; but in all cases where the consent of the company is required by this policy, other than consent to the assignment of the policy, such consent must be obtained at the home office of the company."

The trial court charged the jury, as a matter of law, that the conveyance from husband to wife through a third person did not vitiate the policy, and that the plaintiffs were entitled Defendant excepted. Verdict for plaintiffs.

to recover.

PARKER, J.-The contract of insurance upon which the plaintiffs base their right to recover in this action, provided that if the property insured be sold or conveyed, or if the interest of the parties be changed in any manner, the policy shall be null and void, until the written consent of the company at the home office shall be obtained.

Subsequent to the issuance of the policy the property was conveyed by Walton, through a third person, to his wife without the written consent of the company. Thus, by the terms of the contract, the policy of insurance became of no effect. Upon the trial the plaintiffs sought to relieve themselves from the effect of the violated condition by the introduction of oral evidence tending to show that Walton informed the defendant's solicitor of his intention to convey to his wife after a few

months, and requested that the policy be so drawn as to cover his interest before conveyance and that of his wife afterwards, and that the solicitor informed him that he could accomplish that result by issuing the policy to William T. Walton and wife. The evidence upon that subject was seasonably objected to by the defendant, but was received by the court; and the jury, in a special finding, found the fact to be as contended for by the plaintiffs.

The question presented, therefore, is, can the plaintiffs be permitted to show, in contradiction of the express terms of the contract, that it was orally agreed before its making and delivery that they should be permitted thereafter to do an act which the contract forbids?

This is not an action brought to so reform a contract as that it shall be made to voice the agreement which the parties intended to make. On the contrary, it is based on the policy as it was written, and cannot be maintained by evidence that the contract was intended to be a different one. For a policy of insurance is presumed to embrace the entire agreement of the parties. The precedent oral agreement cannot be regarded as a part of the policy or in any wise effective as a contract. Like other written contracts, the oral agreement, preceding its execution and delivery, is presumed to have become merged in it, and its terms cannot be controlled or varied by parol evidence. Pindar v. Resolute Fire Ins. Co., 47 N. Y. 114; Ripley v. Etna Ins. Co., 30 id. 136; Alston v. Mechanics' Mutual Ins. Co., 4 Hill, 329.

The cases of Van Schoick v. Niagara Insurance Company, 68 N. Y. 434; Woodruff v. Imperial Insurance Company, 83 id. 135, and Short v. Home Insurance Company, 90 id. 16, are not in conflict with this rule. True, oral evidence was received in each of those cases. It was not received, however, for the purpose of contradicting the written agreement, or to show that the parties made a different contract than the one expressed, but to demonstrate that the insurer, at the time of the issuance of the policy, had knowledge of the facts, the existence of which were asserted upon the trial, to constitute a breach of warranty. Upon such proof was predicated an estoppel against the insurer. It was held, in effect, that if the insurer receive pay for a policy of insurance, knowing it to be

invalid when issued, he shall be deemed to be estopped from insisting upon its invalidity. The object of this rule is to prevent fraud and to render it impracticable for insurers to attempt the acquisition of premiums upon policies known to be invalid when issued. The principle of those cases cannot be applied here. The act which the contract declares shall vitiate the policy had not been performed when the policy was issued. It was not an existing fact. The policy was, therefore, valid at the time of its issuance, and so remained until the property was conveyed without the consent of the defendant. Certainly, the facts here disclosed fail to suggest a fraud which will estop the defendant from interposing as a defense the warranty against a conveyance of the property. As the defendant is not estopped and the action is brought upon the contract as it was written, it follows that the admission of parol testimony to vary or contradict one of its provisions was

error.

The judgment should be reversed and a new trial granted, costs to abide the event.

BRADLEY, J. (dissenting).—The main question is whether there was a breach of the provision of the policy that "if the said property shall be sold or conveyed, or if the interest of the parties therein be changed in any manner, whether by act of the parties or by operation of law . . . this policy shall be null and void until the written consent of the company, at the home office, is obtained," and, if so, whether such breach is available to the defendant as a defense. When the policy was made and the property by it insured, the title to the property was in the plaintiff, William T. Walton, and afterwards, before the loss, it was conveyed by him, through a third party, to his wife the plaintiff, Eliza D. Walton, who had the title at the time of such loss. The policy was made to both of the plaintiffs, and by it the defendant undertook to make good to the insured, their heirs, executors, and administrators, such loss or damage, not exceeding in amount the sum insured, as should happen by fire to the property during the term of the insurance. This contract was made by the defendant to plaintiffs jointly, apparently for the purpose of indemnifying both of them against loss or damage as to all the property, as