tend rather to increase the evil against which they are aimed that is, higher insurance rates-than to diminish them.

Many states have also manifested a strong desire to retain control of all litigation in connection with insurance contracts, and, as a consequence, we find that one of the conditions upon which foreign companies are allowed to do business in such states is that they shall agree not to remove any causes in which they may be parties defendant into the federal courts. Such agreements, of course, are unenforceable, and cannot operate to oust the jurisdiction of the federal courts, or to deprive the insurance companies of the right to remove their causes if they so desire; 38 but it has also been held that the failure of any insurance company to abide by its agreement to allow all litigation to remain in the state courts is sufficient ground for a revocation of the license granted to the foreign insurance company to do business in the state. So, as a result of this provision, foreign insurance companies are obliged either to forego their constitutional right to have suits against them tried in the federal courts, or to be deprived of the privilege of doing business in the state.

In the further attempt to control insurance litigation, many states have declared that any term in the insurance contract which limits the time within which suit may be brought upon the policy to a period less than the statutory limitations shall be void. The unfortunate insurance companies are further harassed by additional restrictions and limitations that grow out of various retaliatory acts. Thus, some states have enacted that any foreign corporation carrying on the business of insurance within their limits shall be subject, in addition to the specific requirements of their own statutes, to such additional limitations as may be imposed by the state of the domicile of the corporation upon foreign companies doing business there. We may further mention statutes that require the use of the standard fire policy, which are eminently wise, and can hardly be objected to by any straightforward insurer.

Just in the proportion that regular insurance companies are unpopular and considered proper subjects for all sorts of vexatious regulations that certainly tend to discourage the business, so the various mutual co-operative and benevolent societies that are organized for the double purpose of social satisfaction and financial insurance are regarded with peculiar favor, and every effort is made to encourage them and foster their growth. It will be found that in most states such benefit societies, even though doing insurance business, are exempted from the operation of the regulations imposed upon the general companies as set forth above.

88 Home Ins. Co. of New York v. Morse, 20 Wall. (U. S.) 450, 22 L. Ed. 367. 39 Doyle v. Insurance Co., 94 U. S. 535, 24 L. Ed. 148.

THE EXTENSION OF THE PRINCIPLES OF INSURANCE IN

MODERN TIMES.

13. The rapid growth and successful conduct of the regular forms of marine, fire, life, and accident insurance have in recent years stimulated the attempts to apply the principles of insurance to contracts of indemnity for numerous other kinds of loss happening under conditions making insurance practicable. These attempts have resulted in a more or less successful extension of insurance to almost innumerable conditions, among which may be noted as the most important:

(a) Workingmen's or industrial insurance against the peculiar and extrahazardous risks assumed by employés in the various kinds of industries.

(b) Guaranty insurance, by which the insurer agrees to indemnify the insured against loss or liability by reason of the lack of fidelity on the part of officials, or liability incurred by reason of default of any other person.

(c) Indemnity to employers against liability that may be incurred by reason of personal injury suffered by employés.

(d) Insurance against losses suffered on account of violence of natural agencies, such as wind, hail, flood, lightning, etc.

(e) Contracts made by benevolent and fraternal organizations for the purpose of granting indemnity to their members in case of loss by reason of sickness, accident, or death.

(f) Some unsuccessful attempts made by European governments to establish insurance under governmental control.

In General.

The beneficial results of properly managed insurance have become so well recognized by all classes of society in recent years that there is manifested a strong tendency to apply these benevolent principles to all conditions that give rise to risk of loss or injury. The forms. which the application of insurance principles to these varying conditions takes are almost innumerable, and the nature and character of the risks insured against are even more numerous, yet the principles applying to these manifold contracts of indemnity are in all cases practically the same. There are, however, some features of these differing contracts, which have received the consideration of the courts in many cases that are to be noted hereafter.

The student must observe that there is no reason why a contract of insurance shall not be made in any case where an actual loss may be suffered, and that whatever the contract may be called, or through whatever agencies it may be made, or whatever other incidents it may have associated with it, the agreement is still one of insurance, and subject to the rules of insurance law, if the requisite elements are present.

Workingmen's or Industrial Insurance.

It is manifest that no insurance company could safely grant insurance to those who are engaged in hazardous employments, upon the same rates as are paid by policy holders whose lives are subject to slighter risks. There have therefore sprung up numerous companies who issue special policies upon special premium rates to workingmen whose employment subjects them to these peculiar risks. Many of the great railroads of the country have established and are now conducting an extensive system of insurance to their employés against the risk incident to their employment. The railway companies build and equip hospitals, and agree to care for and furnish medical attendance to any employé injured in their service, and to pay certain specified sums to him during the time when he is incapable of working on account of his injury, or to his family in case of his death by accident. In return, the employé is under obligation to allow the employer to reserve a certain amount from his monthly wages, and he also agrees that the employer shall be released from any common-law liability that may exist by reason of the injury suffered. A most interesting and important phase of workingmen's insurance is to be found in the recent efforts made by the German government to establish a compulsory system among the working classes, having as its object relief to any workingman that may be disabled from earning a livelihood by reason of either accident, injury, sickness, or old age. The first introduction of the interesting experiment of government insurance was made under the act of 1884. Since this initial attempt, many experimental acts have been passed by the German government, extending and elaborating the system, which is now said to be highly efficient, and thoroughly satisfactory to the classes concerned.* These experiments in Europe are being tried

41

40 It is generally held that such relief associations do not carry on "insurance" within the meaning of the term as used in statutes regulating the conduct of insurance business, and that the railways that establish such associations are not acting ultra vires. See State v. Pittsburg, C., C. & St. L. R. Co., 68 Ohio St. 9, 67 N. E. 93, 96 Am. St. Rep. 635; Ringle v. Railroad Co., 164 Pa. 529, 30 Atl. 492, 44 Am. St. Rep. 628.

41 By the weight of authority such releases are valid. See Beck v. Railroad Co., 63 N. J. Law, 232, 43 Atl. 908, 76 Am. St. Rep. 211; Chicago, B. & Q. R. Co. v. Curtis, 51 Neb. 442, 71 N. W. 42, 66 Am. St. Rep. 456; Clements v. Railway Co. (1894) App. Cas. 482. Contra, Miller v. Railroad Co. (C. C.) 65 Fed. 305. Pittsburgh, C., C. & St. L. R. Co. v. Montgomery, 152 Ind. 1, 49 N. E. 582, 71 Am. St. Rep. 301, was decided under a local statute prohibiting such releases.

* The following interesting statement is taken from the Outlook for August 13, 1904 (volume 77, p. 870): "The way in which the German government regulates insurance partly accounts for the ability of the working people to bear the burden of military and other taxation which weighs on them so heavily, and in some measure removes the fear of poverty from many thousands for whom no other means of financial assistance would be available, and who

along the same lines as those pursued by the larger corporations spoken of above in this country, and may well be watched by us with great interest, with a view to their extension by corporate employers, and possibly to the ultimate adoption of such insurance as a governmental function.

Guaranty Insurance.

The necessity for insuring the fidelity and integrity of persons placed in positions of trust has long been recognized and accomplished by taking bonds for the faithful performance of duty by such persons, with private sureties thereon. There are now, however, numerous and important companies that have been formed for the purpose of granting insurance against official infidelity. These companies not only furnish bonds for all persons in positions of trust, but also agree to indemnify against loss by reason of the dishonesty of employés, or the insolvency of debtors, or against loss in trade, or from nonpayment of obligations, and against other breaches of contract. Under this general class of contracts fall also those that guaranty title to real estate, which are now frequently made, and have given rise to numerous large and influential title guaranty companies. Other insurances of this same general sort are such as are granted against loss by burglary.

Employers' Insurance against Injury to Employes.

No inconsiderable item of expense connected with the conduct of a large industrial enterprise, having in its employ large numbers of laborers, is made up of the sums that must be paid out to those employés who have suffered injury in the course of their employment, and in some cases such employers deem it advisable to secure insurance against loss by such accidents to their employés, and the companies granting such indemnity carry on a business of very considerable volume.

Insurance against Loss by Reason of Violence of Natural Agencies.

While loss by reason of the violence of the elements is not so frequent as that by fire, yet it is extensive enough to justify the forma

would otherwise be thrown on charity. The insurance is chiefly against accident, sickness, and infirmity due to old age. The number of working people, of whom over 2,000,000 were women, thus protected in 1902 was 17,582,000, and is now, judging by the present rate of increase, probably in excess of 20,000,000. In 1902 there were 711,330 cases of accident indemnified, and in the present year 663,140 pensions for disability are in force, besides 14,186 pensions for illness and 156,618 pensions for old age. The total income of workingmen's insurance funds in 1901 was $131,648,430, and the total expenses were $106,043,003 in that year. To the total income the employers contributed 45.20 per cent., the employees 37.64 per cent., and the government 6.43 per cent., while the balance of 10.73 per cent. was derived from interest and earnings. More than $250,000 per day was paid out that year in benefits to working people."

tion of companies for the purpose of insuring against such loss. The most frequent risks of this character insured against are those from wind, hail, and lightning. It has been decided that destruction by lightning, in the absence of conflagration, is not covered by a policy insuring against loss by fire, but in modern times most fire policies. include a clause insuring against destruction by lightning. Contracts somewhat similar to these are granted against the explosion of steam boilers. This last kind of insurance has become of great importance, and the business of a company granting such insurance also usually includes the inspection of the boilers insured at certain specified periods. Contracts granting indemnity against loss by reason of the breaking of plate glass have also become of frequent oc

currence.

Insurance by Benevolent and Fraternal Organizations.

Associations of men living in the same community, and under similar conditions, for mutual aid against disaster, as well as for social pleasure, have been known from the earliest times. The guilds in the Middle Ages were well organized, and were administered under carefully drawn regulations. It is probable that even at that early time these voluntary associations may have possessed some of the features resembling mutual insurance, but it is only within the last two decades that these voluntary associations of laboring men have engaged in the practice of insuring their members against sickness, injury, and death, to any considerable extent. The natural gregariousness of laboring men, and the rapid growth in popularity of the trades union, have resulted in the establishing of great numbers of benevolent associations, organized for the double purpose of social pleasure and mutual aid in time of distress. In carrying out this latter purpose a most extensive form of life and accident insurance on the co-operative and mutual assessment plan has grown up. This kind of insurance will be further considered in a later chapter.42 Attempts to Establish Government Insurance against Fire.

As early as the sixteenth century the government of Portugal attempted to promote its commerce by providing certain regulations for insuring all maritime ventures by the government. The premiums, however, that the government required to be paid exceeded those that were demanded by private insurers in other countries at the same time, and this effort on the part of the Portuguese government to carry on governmental insurance seems to have been early abandoned.

Within comparatively recent times the city of Zurich, in Switzerland, attempted to institute a system of municipal insurance on the property

42 See post, p. 58. Guaranty, liability, and other special kinds of insurance are discussed in chapter 17, post, p. 590.