tend to commit any fraud. The suppressio veri may happen by mistake, and be entirely without fraudulent intention; still the underwriter is deceived, and the policy is thus void, for the very plain reason that the risk run is really different from the risk understood and intended to be run at the time of the agreement. A concealment which is only the effect of accident, inadvertence, or mistake, is equally fatal to the contract as if it were designed. The principle is that if the party proposing insurance conceals anything which may influence the rate of premium which the underwriter may require, although he does not know that it would have that effect, such concealment entirely vitiates the policy. By a material fact is meant one which, if communicated to the underwriter, would induce him either to decline the insurance altogether, or not to accept it unless at a high premium." Ang. Ins. § 175. Within the meaning of the authorities, it was not material, even if it can have relation to the contracts of reinsurance herein involved. The decree of the circuit court in each case is affirmed.

PARDEE, Circuit Judge (dissenting). In a reinsurance policy the description of the risk reinsured is just as material as is the description of the property insured in an ordinary policy. False representations affecting the risk reinsured have the same effect as false representations affecting the property insured. There were two several applications made by the Home Insurance Company to the Royal Insurance Company upon which the policies in this suit were issued. The first, in November, 1891, was for reinsurance, wherein the exact risk insured by the Home and desired to be reinsured was precisely set forth, as follows:

"4,524,712.

"On $10,000 of their liability as Insurers under their Policy No. OUS- Issued to - VARIOUS PARTIES

VARI

For $VARIOUS for a term of 1 YR. from NOV. 12/95. Rate 1%, and covering as fol

lows: "$10,000 on cotton in bales, their own or held by them in trust or on commission, while contained in the Yd. 1, Shippers' Press.

"And it is agreed and understood to be a condition of this insurance that this policy shall not apply to or cover any cotton which may at the time of loss be covered in whole or part by a marine policy; and it is further agreed to be a condition of this policy that only actual payment, by check or otherwise, for cotton purchased, shall constitute delivery of cotton from the seller to the buyer; and it is further agreed that tickets, checks, or receipts delivered to bearer shall not be considered as evidence of ownership; and it is further agreed that this company shall be liable for only such proportion of the whole loss as the sum hereby insured bears to the cash value of the whole property hereby insured at the time of fire.

"Other insurance permitted without notice, until required.

"Attached to and made a part of policy No. of Home Insurance Company of New Orleans.

66

"This policy to be subject to the same risks, conditions, valuations, indorsements, assignments, and mode of settlement as are or may be assumed or adopted by the HOME INSURANCE CO., and the loss, if any, payable pro rata, at the same time and in the same manner as by said company. "REINSURED CO. RETAINS $25,000.

v.68F.no.7-45

H."

The other, in December, 1891, was on a different form, and called for reinsurance on various policies issued and to be issued by the Home "on cotton yard 1, Shippers' Press, subject to coinsurance clause"; the provision as to coinsurance being written in by hand.

It is conceded that these applications thus made by the Home to the Royal for reinsurance asked for reinsurance only upon risks of the Home under policies which contained the coinsurance clause. The two policies issued by the Royal on the above applications describe the risks reinsured exactly, word for word, as the risk desired to be reinsured was described by the Home in the November application. Therefore, that the policies issued by the Royal described no other risks for reinsurance than those insured by the Home in policies issued upon the specific property named, and containing the coinsurance clause, seems to be a proposition too plain for argument.

The undisputed evidence in the case is to the effect that the difference in the premium between reinsurance on policies containing the coinsurance clause and reinsurance on policies not containing the coinsurance clause was one-half of 1 per cent. To illustrate: The application in the present instance by the Home was for insurance on policies containing the coinsurance clause, and, on acceptance, the premium was 1 per cent. If the application had been made for reinsurance upon policies upon the same property, but not containing the coinsurance clause, and that had been accepted, the premium would have been 13 per cent. It is not disputed that the coinsurance clause affects the liability of the Royal about 100 per cent.; that is to say, the amount for which the Royal is liable, if the liability is not restricted to risks of the Home containing the coinsurance clause, is about twice as much as it would be if the liability should be restricted to risks of the Home containing the coinsurance clause.

As I understand the opinion of the majority, they do not deny that the applications were for policies containing the coinsurance clause, or that the policies of the Royal in describing the risks reinsured describe only risks of the Home under policies containing the coinsurance clause; but, by reasoning which seems to me to be unsound, they reach the conclusion that the limitation of the risk is not material in this case. If representations affecting the amount of the premium and a stipulation restricting the liability of the reinsurer are not material in a reinsurance policy, the text-books on insurance ought to be rewritten, for now they are liable to confuse the bar and mislead some judges. It is true that the evidence shows that some insurance companies will not reinsure risks not subject to the coinsurance clause, and that some cotton men will not take insurance which contains such clause. The majority apparently deduce from this that a stipulation restricting reinsurance to risks subject to the coinsurance clause is immaterial. I do not think that the insurers and the insured would both make so much opposition on an immaterial matter.

The very ingenious brief of the learned counsel for the appellee, which seems to have compelled the judgment of the majority, and which is adopted as their opinion, has been carefully considered, but

I fail to find therein either argument or authority sufficient to overthrow the plain propositions of fact which ought to control the decision of this case. It is true, that, by reason of the blanks used, there are in the policies sued on many provisions not applicable to reinsurance; but is that any reason for rejecting those provisions which not only do apply, but which the parties were insistent in having inserted? The cases cited in the brief relate only to questions not disputed, and tend rather to cloud than enlighten the really disputed question. The fact is there are no adjudged cases which throw any light whatever upon the disputed questions in this case, and it is probably because no insurance company ever before disputed the materiality of the coinsurance clause as affecting the liability of a reinsurer who had stipulated therefor. The brief of counsel adopted by the majority further tends to confuse because it does not discriminate between the stipulation which was intended to regulate and control the adjustment between the Royal and the Home in case of loss and the stipulation describing the contract of the Home which was to be reinsured, and which pertained directly to the risk, treating the latter as immaterial in so far as they assume that there is a conflict.

It appears to be seriously contended by the learned counsel that "the Royal agreed to cover any risk that the Home might be willing to take," and they say that that is the meaning of the clause: "This policy to be subject to the same risks, conditions, valuations, indorsements, and mode of settlement as are or may be assumed or adopted by the Home Insurance Company, and the loss, if any, payable pro rata, at the same time and in the same manner as by said company." And this contention is only limited by allowing that the contract of the Royal must be applied to cotton in Shippers' Press, yard 1, and to losses by fire. The court has reformed the Royal's policy so as to excuse the Home from retaining any risk on cotton in Shippers' Press, yard 1, provided it holds risks on other property in the immediate neighborhood; and the court further holds that the coinsurance clause and differences in rates of premium were immaterial. Why not follow the argument of Messrs. Semmes and Browne to its logical conclusion, and hold broadly, as declared by them, that "the Royal agreed to cover any risk the Home might be willing to take"? Why should not the court say the contract of the Royal is reinsurance, and "it is agreed to cover any risks which the insurer might be willing to take," and "any printed stipulation having reference to the property itself, or the cash value thereof, cannot be applied to the contract between the reinsurer and reinsured, because the property is not subject-matter of their contract"? And, further, that whether the cotton insured by the Home was in one press or another really made no difference to the Royal, for the subject-matter of the reinsurance was risk, and not property, and wherever the latter was located was immaterial, because the Royal would have issued its policy of reinsurance just the same? If the opinion of the court is sound, but one good reason suggests itself for confining the liability of the Royal to cotton in Shippers' Press, yard 1, and that is that the

exigencies of the Home's case do not require that the liability should be extended to cotton elsewhere.

The result reached by the circuit court, and affirmed here, permits the Home Insurance Company to recover from the Royal Insurance Company reinsurance for which the Home Insurance Company never asked, for which it never paid, and upon risks never insured by the Royal Insurance Company, and which the Home agreed that the Royal should not insure.

The case of the Imperial Insurance Company against the Home Insurance Company presents the same questions, and should be ruled the same way.

For these reasons, I dissent from the opinion of the court in both

cases.

WESTERN ASSUR. CO. v. REDDING.

(Circuit Court of Appeals, Fifth Circuit. June 20, 1895.)

No. 372.

1. FIRE INSURANCE-PROMISSORY WARRANTY.

Plaintiff, the keeper of a country store, held a policy of insurance on his stock of goods, issued by the defendant company, which contained a clause providing that it was one of the conditions of the policy that plaintiff should keep a set of books showing a complete record of his business, purchases, and sales, take an itemized inventory at least once a year, keep such books and inventory in a fireproof safe, and produce the same in case of loss, and that failure to comply with such conditions should avoid the policy. Plaintiff's store and stock were destroyed by fire, and, in an action subsequently brought against the insurance company, it appeared that he kept a set of books in a primitive and unskillful manner, which books were all in the safe, and were produced, except a cash-sales book, covering 21 days before the fire, which had been inadvertently left out of the safe and burned; that such books showed plaintiff's purchases and credit sales, and some of his cash sales, as well as the result of an inventory taken a short time before the fire. Held, that the promissory warranty contained in the "safe clause" aforesaid was a condition subsequent, only, and that the facts shown were sufficient to justify a finding of compliance therewith. Per McCormick, Circuit Judge, and Bruce, District Judge.

2. SAME.

Held, that a literal fulfillment of the promissory warranty contained in such clause was requisite, and it was error to instruct the jury that a substantial compliance was all that was necessary. Per Pardee, Circuit Judge, dissenting.

In Error to the Circuit Court of the United States for the Southern District of Florida.

This was an action by Joseph H. Redding against the Western Assurance Company on a policy of insurance. Judgment was rendered for the plaintiff in the circuit court. Defendant brings error.

Affirmed.

W. A. Blount, for plaintiff in error.

J. M. Stripling, for defendant in error.

Before PARDEE and McCORMICK, Circuit Judges, and BRUCE, District Judge.

MCCORMICK, Circuit Judge. Joseph H. Redding, the defendant in error, "kept store" in a country station town in Florida. He commenced the business January 2, 1893. He testifies that he took an inventory of his stock in February, 1893, but that inventory was destroyed when the store was burned. On the 10th day of February, 1893, he insured with the plaintiff in error, the Western Assurance Company, organized under the laws of Toronto, Canada, his stock of goods and other property, taking $1,000 on the stock of goods. On the morning of the 1st of October, 1893, a fire occurred, which consumed his store and the stock of goods insured. His policy contained the clause which is known as the "iron-safe clause," and is in these words:

"It is a part of the conditions of this policy that the insured shall keep a set of books showing a complete record of business transacted, including all purchases and sales, both for cash and credit, and take an itemized inventory of stock on hand at least once every year; and it is further agreed that insured will keep such books and inventory securely locked in a fireproof safe at night, and at all times when the store mentioned in this policy is not actually open for business, or in some secure place, not exposed to fire which would destroy the house where said business is carried on. It is further agreed that, in event of loss, insured will produce said books and inventory. Failure to comply with these conditions shall render this policy null and void, and no suit or action at law shall be maintained thereunder for any loss."

Payment of the loss was refused and recovery resisted on the ground that the insured had not kept the set of books contemplated by that clause, and that one of the books he claims to have kept was left out of the safe, and was consumed by the fire. On the trial the insured and one other witness, H. T. Shackleford, gave testimony tending to prove: That the storehouse and stock of goods described in the policies were burned at 2 or 3 o'clock in the morning on October 1, 1893,-not during business hours, and when the store was closed. That the value of the stock of goods in the store at the time of the fire, and consumed, was about $4,900. That the insured had taken an itemized inventory of stock, which he had completed on the 16th of September, 1893. That he had received, between the time of the completion of the inventory and the occurring of the fire, $318.72 worth of goods, which went into the store. That he kept

in his business a set of six books, which he produced, and which, by order of the trial court, were sent up to this court. That these books showed the state of his business, and were all the books which he kept, except a cash-sales book, which he opened or began 9th of September, 1893 (21 days before the fire), in which he made daily entries of cash sales up to the time of the fire. That this book was destroyed in the fire which destroyed the stock of goods; it having been inadvertently left out of the safe, on a desk, on the night of the fire. That he began business on January 2, 1893. The cashsales book during that time shows daily receipts from cash sales for January aggregating $76.05. For February: Wednesday, 1st, $0.50; Thursday, 2d, $1.50; Friday, 3d, $0.00; Saturday, 4th, $2.50. Then the business days of the next three weeks are entered by names, and the receipts for each week are extended, showing $4.80 for the first of these three weeks, $6.75 for the second, $8.00 for the third,