form of the policy commonly used by the insurers.1 If an agent of a company is authorized to make an agreement to insure, but not to make out the policy, his principals are liable, on his agreeing to take the risk.2 So, if the insured has asked proposals or terms of the insurers by letter, and an answer is made by letter, and the insured replies accepting the terms, this is a valid and completed contract as soon as the letter of acceptance is mailed, although it is to be carried out afterwards in point of form, by the giving and receiving of the policy and premium. But if the postmaster is acting as the agent of the party seeking to obtain insurance, the delivery to him of the acceptance of the offer does not complete the contract, if the property on which insurance was sought to be made is destroyed before the acceptance is actually mailed. Either party may rescind, by a notice of rescission sent to and received by the other party before the contract is complete. It has been decided that where a negotiation was com on the application, "Taken at three per cent premium.” This was considered an acceptance, and the company were held liable. See also Perkins v. Washington Ins. Co., 4 Cowen, 645, 6 Johns. Ch. 485. In England, such a slip, not being stamped, cannot be received in evidence. Rogers v. M'Carthy, Park, Ins. 37; Marsden v. Reid, 3 East, 572. See post, chapter on Stamps. 1 In Oliver v. Commercial Mut. Mar. Ins. Co., 2 Curtis, C. C. 277, 291, Mr. Justice Curtis said: "Parties who contract for policies of insurance are not expected to insert in the contract every particular needful to be inserted in the policy. The underwriters, on their part, agree to effect insurance; the numerous limitations of their liability as insurers, which appear in the different memorandums and other special printed clauses in the policy, are not mentioned. Their obligation is understood to be, to make out a policy in the usual form, and containing the usual clauses adapted to the case, made by the agreement of the parties." See also Franklin Fire Ins. Co. v. Hewitt, 3 B. Mon. 231, 239. 2 Palm v. Medina Co. Fire Ins. Co., 20 Ohio, 529. The printed form of the application stated that the policy would be issued if the application should be approved of by the company, but it was held that, as the refusal to make out the policy did not proceed on the ground that the risk was objectionable, the company was liable notwithstanding the clause. See Perkins v. Wash. Ins. Co., 4 Conn. 645. Tayloe v. Merchants' F. Ins. Co., 9 How. 390; Dunlop v. Higgins, 1 H. L. Cas. 381; Duncan v. Topham, 8 C. B. 225; Mactier v. Frith, 6 Wend. 103; Neville v. Merchants & Manuf. Mut. Ins. Co. of Cin., 17 Ohio, 192. McCulloch v. Eagle Ins. 278, 281, has not been sustained by subsequent authorities. See note 2, p. 38, infra, and the cases there cited. The case of Co., 1 Pick. Thayer v. Middlesex Mut. Ins. Co., 10 Pick. 326. Routledge v. Grant, 3 Car. & P. 267, 4 Bing. 653; Payne v. Cave, 3 T. menced by letter, and in the course of the negotiation an offer made in the letter was orally rejected, the party who made the offer was relieved from his liability, notwithstanding a subsequent acceptance in writing. Thus the insured may alter his mind, and if he can get his refusal of the terms offered by the insurers into their hands before his acceptance reaches them, there is no contract. And the insurers may rescind, if they send their letter or notice thereof, and it reaches the insured before he has mailed. his letter of acceptance. But if their letter, although written and mailed before his acceptance, or before their letter offering terms had reached him, does not itself reach the insured until after the mailing of the letter of acceptance, it would seem that the contract is complete. But the acceptance, on whichever side it is made, R. 148; Boston & Maine Railroad v. Bartlett, 3 Cush. 224; Eliason v. Henshaw, 4 Wheat. 225. 1 Sheffield Canal Co. v. Sheffield and Rotherham Rail. R. Co., 3 Rail. R. Cas. 120. 2 It seems to be settled law, as shown by the authorities already cited, that one who makes a proposition by letter is presumed by the law to be making that offer continually, until the party receiving it has a reasonable opportunity to accept it; if he accepts it, the contract is complete; if he declines, expressly or by silence or neglect, the offer is at end, and no subsequent accept ance makes a contract. It is also settled that the offerer may revoke and withdraw his offer before an acceptance of it. (See cases cited in the two preceding notes.) But the question occurs, whether that is a sufficient revocation, which is made by the offerer, by his mailing the revocation before acceptance, although the acceptance is made before the revocation reaches the acceptor. This precise question has not been determined. It may be stated as the question whether the presumption that the offer continues is so far a pre sumption of law that it cannot be rebutted by showing a revocation unknown to the acceptor, or whether it is merely a presumption of fact open to rebutting evidence. We suppose that the recent decisions lead strongly to the rule, that such revocation is not complete unless it reaches the acceptor before his acceptance. This might seem to be a contravention of the rule, that the contract is complete only when the minds of both parties agree on the same thing. But that rule has necessary qualifications. If a party made an offer by mail, no one would suppose that offer revoked by a mere change of will on the part of the offerer, however certainly made known to others, in conversation or otherwise, if not made known to him to whom the offer was made. If the rule were carried so far as this, it would be difficult to know when any contract was made. The rule must mean, therefore, that the law presumes that A's mind remains what it was, as long as B, by A's act, has the right to presume that it so remains. And, therefore, we should say that a revocation did not operate when mailed, just as it would not operate when communicated must conform exactly - so far as its substance is concerned - to friends; but that it did operate when known to the acceptor, unless he had then completed the bargain by his assent; and that he did this by mailing his assent. It seems to us that this rule of law is required by a practical necessity. We have said that this is an open question, and it will be found to be so upon a careful examination of the authorities. In order to present the exact existing state of the law, we shall be obliged to make a more extended review of the decisions than we should, were the question not one of so much importance and yet undetermined. The case of McCulloch v. Eagle Ins. Co., 1 Pick. 281, has been much commented on in the cases, and by textwriters. The facts of the case are very simple. A wrote to B inquiring on what terms he would insure his vessel. On the 1st of January B wrote that he would insure it at a certain rate. On the 2d B wrote another letter retracting. A, before he received the last letter, but after it was mailed, wrote and put into the post-office an answer to B's first letter, accepting the terms proposed. The court held, that the proposal was revoked and the contract was not complete. This case is generally cited as being utterly inconsistent with Adams v. Lindsell, 1 B. & Ald. 681; but the facts of the two cases are not the same. In Adams v. Lindsell an offer to sell certain goods was made on the 2d of the month. The letter accepting was mailed on the 5th and received on the 9th. On the 8th the offer was revoked by the sale of the goods to another party. It will be seen, therefore, that in this case the retraction of the offer was subsequent in point of time to the mailing of the letter of acceptance, while in case. McCulloch v. Eagle Ins. Co. it was prior. In Adams v. Lindsell, the court said: "The defendants must be considered in law as making, during every instant of the time their letter was travelling, the same identical offer to the plaintiffs, and then the contract is complete by the acceptance of it by the latter." This has been supposed to imply, that after a person has accepted an offer by mailing a letter to that effect, he is obliged to remain of the same mind unless notice of his change of intention can be brought to the knowledge of the party making the offer, before the first letter of acceptance is received. That the court did not necessarily mean this is evident from an examination of the facts of the It had been argued, on the authority of Cooke v. Oxley, 3 T. R. 653, that the contract was not complete till notice of the acceptance arrived, because as the meeting of the minds of the parties constitutes the essence of the contract, the person offering should be proved to be of the same mind. But the court said that the law presumed that a person making an offer, or accepting one, continued of the same mind until his letter (or other information of the change in his mind) reached the other party. If the remark meant more than this, it has not been followed either in England or in this country. See cases cited ante, p. 37, n. 5. Having seen, then, that the two cases are quite distinct, let us examine how far they are inconsistent with each other. The case of McCulloch v. Eagle Ins. Co. may be considered as deciding, 1st, that a letter accepting does not bind the party accepting, till it is received by the party making the offer, and that until that time, the party offering has a right to retract his offer; and, 2d, that if the For it with the proposal, or there is no assent and no contract. is a universal principle, that there is no valid contract unless the letter accepting takes effect, not from its reception, but from the time it was mailed, the letter of retraction must take effect from the same point of time, namely, when it was mailed and not when it was received. Though the first proposition was the one chiefly relied on by the court, yet the second was also considered. The counsel for the plaintiff contended that the putting the letter of the third into the post-office was a delivery to the defendant. "If so," said Mr. Justice Wilde, interrupting him, "why was not the putting of the defendant's letter of the second into the post-office a delivery to the plaintiff?" The first proposition must now be considered as contrary to the general current of authorities, and it is settled that offers are to be considered as made and accepted at the time the letters containing them are respectively mailed. Mactier v. Frith, 6 Wend. 103; Adams v. Lindsell, supra; Potter v. Sanders, 6 Hare, 1; Dunlop v. Higgins, 1 H. L. Cas. 381; Duncan v. Topham, 8 C. B. 225; Kufh v. Weston, 3 Esp. 54; Stocken v. Collin, 7 M. & W. 515; Tayloe v. Merchants' Ins. Co., 9 How. 390; Averill v. Hedge, 12 Conn. 424; Vassar y. Camp. 14 Barb. 341; Brisban v. Boyd, 4 Paige, Ch. 17; Levy v. Cohen, 4 Ga. 1, 13; Chiles v. Nelson, 7 Dana, 281. And in Thayer v. Middlesex Mut. F. Ins. Co., 10 Pick. 326, Shaw, C. J., said: "It may well be conceded, that, where notice is to be given by mail, a notice actually put into the mail, especially if forwarded and beyond the control or revocation of the party sending it, may be good notice." It has also been decided, that, after the letter has been mailed, the sender is not responsible for any fault or negligence on the part of the post-office. Dunlop v. Higgins, supra; Duncan v. Topham, supra; Stocken v. Collin, 7 M. & W. 515. In Tayloe v. Merchants' Fire Ins. Co., 9 How. 390, 400, it is said by Mr. Justice Nelson, that an offer cannot be withdrawn unless the withdrawal reaches the party to whom it is addressed before his letter of reply announcing the acceptance has been transmitted. If this doctrine is correct, then McCulloch v. Eagle Ins. Co. was wrongly decided. But it must be admitted that this expression of opinion is, to some extent, a dictum. This appears by a reference to the facts of the case. The letter proposing the terms of insurance was sent on the 2d of December, the reply accepting was dated and sent on the 21st, and the house was burned on the 22d. There was no pretence that the offer was not in full force on the 21st. The ground of defence was, that as the letter was not received till the 31st, the contract was not complete till then. The head-note in the case of Hamilton v. Lycoming M. Ins. Co., 5 Barr, 339, is to the same effect as the remarks in Tayloe v. Merchants' Ins. Co. above cited, and “ per Gibson, C. J.," is attached to it. And although Gibson, J., does not use the very words of the head-note, we think it fairly expresses his opinion, as that may be gathered from the decision; but this opinion must be regarded as obiter, the precise question not arising in the case. It has been recently settled in Massachusetts that where the party making the offer gives a certain time to the other party in which to accept, he has minds of the parties meet; that is, agree together about the same thing, in the same sense.1 a right to retract his offer within the time, provided he does so before the other accepts. Boston & Maine Railroad v. Bartlett, Cush. 224. And in Eliason v. Henshaw, 4 Wheat. 225, the court said: "It is an undeniable principle of the law of contracts that an offer of a bargain by one person to another imposes no obligation upon the former, until it is accepted by the latter according to the terms in which the offer was made." Now, if no obligation was imposed it would seem to follow that the party making the offer has the right to retract it any time before the letter of acceptance is mailed. And this is not disputed, but it is contended that the retraction must reach the other party before the letter of acceptance is mailed. This proposition may be, however, open to the objection that it makes the letter of retraction date from the time when it is received, while the others date from the time when they are sent; and that if this be the law, a party has a right to retract, but not the power to make that retraction immediately effectual. But we think it a sufficient answer to this objection, that, while the party has a perfect right to change his mind when he will, he has no right to 1 Routledge v. Grant, 3 Car. & P. 267, 4 Bing. 653; Ocean Ins. Co. v. Carrington, 3 Conn. 357; Eliason v. Henshaw, 4 Wheat. 225; Hutchison v. Bowker, 5 M. & W. 535. In the late case of Myers v. Keystone Mut. Life Ins. Co., 27 Penn. State, 268, the party was already insured, but wished to effect another insurance with the same company on the same subject-matter on different terms. He agreed with the agents of change the rights of the other party, except by an expression of his change of mind. If the offer be made by conversation, whatever be the change of mind, if it be silent it is ineffectual, nor has it any legal force until that change of mind is expressed and there be an uttered withdrawal. And if the bargain be made by letter, the reception of the letter by the person to whom it is sent is the best and indeed only equivalent of the expressed retraction by words spoken and heard. There is certainly much want of unanimity, not only as to the rule of law, but as to the meaning and effect of the cases. In Falls v. Gaither, 9 Porter, 605, the following case is put by the court: "Suppose A offers to sell B a slave, B accepts the offer by addressing a letter to A, assenting to his terms; if the latter did not, previous to the date of B's letter, recall the offer, he is bound by the contract, but if he withdrew it by a letter sent to B before B's letter was written, the acceptance of the letter would be unavailing for any legal purpose, and this too though the letter of withdrawal was not received." The court reviewed the two cases of McCulloch v. Eagle Ins. Co., and Adams v. Lindsell, and gave the the company on the terms, subject to the ratification by the company. A policy differing from what was agreed on was sent him with the request that he would return the first, and pay the balance due, if he wished to accept the second policy, or else to return the second. He retained the second, but did not return the first or pay the balance. Held, that this was not evidence of his acceptance of the terms proposed. |