Binder. Form. The contract of fire insurance may be a verbal contract and it will be a good contract inasmuch as property may burn at any moment, hence the contract may be completed in less than a year, very often is, and it is not necessary that the contract be in writing. As a matter of fact, it would be a rare case, and it is a rare case, where a verbal contract is made. The policy itself is very seldom made out and delivered at the time when the contract is made. There is a paper called a "binder," which is used until the policies themselves are ready for delivery, or until such time as the company may have declined to carry the risk. The binders are in common use throughout the country and throughout the world, for that matter. The one in New York State reads as follows:

Each of the undersigned companies, for itself only, insures the property above described for the amount set opposite its name until the issue of its Standard Policy on the same in place hereof, or until twelve o'clock noon of the next business day after the risk is declined, by notice to the assured or broker placing the risk. But in no event shall this insurance be in force fifteen days from the date of commencement of liability hereunder.

Necessity for Binder. In all of the States where there is a standard policy in force, that policy alone may be used in entering into a contract of fire insurance. The use of the binder, or its permitted use, would seem to be not in harmony with this provision of law in the different States. As a matter of fact, the use of the binder is based on the theory, and accepted theory, that it is merely a temporary instrument and incorporates within itself all of the conditions of the standard policy. If it were not for this accepted theory, the binder would probably not be permitted, but modern business conditions require some such convenient instrument, as it would be impossible to write the policies quickly enough to conduct the business if this were not done. In the binder quoted it will be noted— and this is the only point that has ever been brought into question

there is provision that the company insures the property until twelve o'clock noon of the next business day after the risk is declined. The standard policy itself provides for a five days' cancellation notice. This provision of the binder making a 24 hours' notice has been the subject of question.

The Attorney General of New York State in 1902 passed upon the matter and decided that the binder was a legal instrument and not in conflict with the law. This opinion is probably based on the fact that both parties recognize insurance taken out on the binder as more or less of a temporary arrangement and the insured may have notice from the time the binder is issued that it is subject to cancellation from that time. In 1911, the question of the binder was again called up by parties in interest, and the Attorney General of New York State declined to reopen the matter because it had been passed upon in 1902. It therefore stands as a document approved by the State authorities.

In the State of Massachusetts, it should be pointed out, the State has ruled otherwise in regard to the cancellation under a binder. There the requirement is five days' notice, the same as under the standard policy.

The convenience of the binder can be easily recognized when the average risk in a large city will require some seven or eight policies. The signatures of the necessary companies to cover the insurance to the binder can be secured in a little while and the policies written up at leisure generally within two weeks thereafter, so as to prevent a renewal of the binder. It does not take any stretch of the imagination to see the difficulty there would be in attempting to abandon the binder and necessitate the waiting in each case until the policies were written up.

ANALYSIS OF CLAUSES

In the Elements of Fire Insurance, pages 7, 8, and a part of 9, there have been set forth some of the physical facts in connection with the standard policy, which facts need not be repeated at this time. They should, however, be noted by the student. For convenience of reference the policy has been numbered line by line. The first six lines of the contract are usually given an alphabetical designation, however, and are so referred to here.

Line A. In consideration of the stipulations herein named and of..... dollars premium.

It should be emphasized that the contract of fire insurance has as its consideration two things, namely, the stipulations set forth in the policy and the premium. The idea is altogether too prevalent that the payment of a premium is the consideration for the contract. It should be re-emphasized that not only the payment of the premium but the carrying out of the various stipulations in the policy are as much, and oftentimes, the most important part of the consideration for the contract.

Line B. Does insure....

for the term of..

Line B calls for no special comment although passing note may be made of the fact that there were many, at the time of the adoption of the policy, who wished to drop out the word insure, and to use the word indemnify throughout. The idea back of this proposal was that the insured had perhaps too much the thought that the policy covered him under any conditions and up to the face amount of the policy, and the fact that the policy was merely one of indemnity was all too freqently lost sight of. That counsel, however, did not prevail and insure has remained in the policy. Probably there is no difference today in the meaning of the word assure and insure when dealing with insurance contracts. The tendency, however, is very strong, especially in correspondence, to use the word insurer for the party who promises the indemnity, and assurer for the person who is to be indemnified. This difference is a somewhat old one and represents the grip of the past on the present. As a matter of fact, under the standard policy in New York State, the word insure and not assure is used and hence insure and insured must be considered the proper terms.

Line C. From the.

to the..

day of.

..day of, 19.., at noon.

19.., at noon,

This line fixes by statute a time in the 24 hours when the contract takes effect and when it expires, leaving the day of the month and the other period of time to be filled in.

Solar Time and Standard Time. Previous to the adoption of the standard time there was no debate as to what constituted noon or twelve o'clock. When, however, standard time was adopted by the railroads and there was a general conformity of business engage

ments to that time, there was opportunity for a difference. The solar time and the standard time are not one and the same thing. There is a difference of possibly fifteen minutes on an average in different parts of the country. This interval of time is sufficient to affect a fire insurance contract. If, for instance, insurance had been taken out to take effect at noon and the local time was fifteen minutes faster than standard time, and the fire commenced to destroy the building a few moments after local time, the question would arise as to whether the policy had gone into force. If standard proved to be the governing time, then the policy would not be in force. The case has arisen in three States since the adoption of standard time: Ohio, Kentucky, Iowa. The Iowa case is Jones v. The German Insurance Company, and 29th Ins. L. J., page 60. In this case the court in dealing with the question said:

"How shall the exact time of 'noon' be determined by 'common' or 'standard' time? At Creston, Iowa, the latter is seventeen and and a half minutes faster than the former, and, as the policy sued on covered the property destroyed 'for one year from the 18th day of September, 1896, at 12 o'clock at noon, to the 18th day of September, 1897, at 12 o'clock at noon,' and the fire broke out on the last day at about 11.45 o'clock a. m., common time, or at two and a half minutes after 12 o'clock, standard time, the rights of the parties depend on the correct solution of this question. The trial court instructed the jury that 'the usual means of determining time of day, when such time is referred to in ordinary contracts, is by the standard of the meridian of the sun, or sun time'. The presumption is that common, or solar, time is the time intended by the parties when reference to the time of day is made in contracts, unless a different standard is shown to have been intended. It may be taken as a presumption from the use of the language, '12 o'clock at noon,' that the parties intended to mean 12 o'clock, sun time, as that phrase is commonly understood. The exigencies of some lines of business may require the adoption of a system which shall definitely fix the same hour and minute at a particular instant at localities widely separated in longitude, so that the delay of, and occasional mistake in, computation may be avoided. Indeed, experience had demonstrated the inestimable importance to railroad companies of giving direction to employes everywhere on their lines of road with absolute certainty as to time. Without such certainty, safety would be imperiled. And it may be that, because of the relation of transportation companies to the business interests of the community, and the inconvenience of two systems of computing time, it would be

wise to use the 'central standard time' throughout the State. But, in the absence of a statutory enactment, we are not quite ready to concede that, for the mere convenience of these companies, nature's timepiece may be arbitrarily superseded. The apparent daily revolution of the celestial body, caused by the rotation of the earth, has, from the remotest antiquity, been employed as a measure of time. The successive returns of the sun do not, it is true, furnish a uniform measure of time, owing to the slightly variable velocity of the sun's motion and inclination of its orbit to the equator. Certain corrections are necessary, and therefore the imaginary mean sun has been introduced with a uniform velocity. The difference between the apparent or true solar time and the mean solar time, as shown by clocks and watches in ordinary use, is slight. These indicate the time at 12 o'clock when the sun is at meridian at any locality. The law and usage of the country have recognized this method of fixing the time for generations, and it can not be lightly set aside on the mere pretext that certain lines of business so demand. If this were not so, a purely artificial standard of time, reckoned from the ninetieth meridian of longitude, might as well have been adopted, establishing 'central time' for the whole country, instead of dividing the map into four sections, with Eastern, Central, Mountain and Pacific Standard time. Thus, Saturday night in part be turned into Sunday, and Sunday into Monday, and the period of night when the civil day begins— midnight-made to depend on locality alone. The Supreme Court of Georgia, in deciding that a verdict was returned on Sunday, when standard time was somewhat slower than common time, said: 'It seems idle to waste words in saying that the standard of time fixed by persons in a certain line of business can not be substituted, at will, by persons in a certain locality for the standard recognized by the statutes of the State, as well as the general law and usage of the country, especially when it is considered that such an arbitrary and artificial standard could as easily fix 5 o'clock for midnight as it could twenty minutes past twelve as was done in this case. Local custom can not in this way change Sunday into Saturday. To expect courts of justice, officers of the law and the public generally (especially that large class of the population who do not live in cities or at railroad stations) to go to the railroads for the time which is to guide them in the performance of their duties under the law, when they have in. the heavens above them a certain standard by which to ascertain or regulate the time, or permit them, at will, to follow two standards of time, would be highly impracticable and would be productive of great uncertainty and confusion in the administration of the law.""

Line D. Against all direct loss and damage by fire, except as hereinafter provided.