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Tayloe v. Merchants' Fire Insurance Company, 50 U.S. 9 How. 390 390 (1850)

Tayloe v. Merchants' Fire Insurance Company

50 U.S. (9 How.) 390


Where there was a correspondence relating to the insurance of a house against fire, the insurance company making known the terms upon which they were willing to insure, the contract was complete when the insured placed a letter in the post office accepting the terms.

The house having been burned down whilst the letter of acceptance was in progress by the mail, the company was held responsible.

On the acceptance of the terms proposed, transmitted by due course of mail to the company, the minds of both parties have met on the subject in the mode contemplated at the time of entering upon the negotiation, and the contract becomes complete.

The practice of this company was to date a policy from the time when the acceptance was made known to their agent.

The agent of the company having instructed the applicant to "send him his check for the premium, and the business was done," the transmission of the check by mail was a sufficient payment of the premium within the terms of the policy.

One of the conditions annexed to the policy was that preliminary proofs of the loss should be furnished to the company within a reasonable time. The fire occurred on 22 December, 1844, and the preliminary proofs were furnished on 24 November, 1845. This would have been too late, but that the company must be considered to have waived their being furnished by refusing to issue a policy, and denying their responsibility altogether.

The cases in 27 U. S. 2 Pet. 25 and 35 U. S. 10 Pet. 507 examined.

A court of equity, having obtained jurisdiction to enforce a specific performance of the contract by compelling the company to issue a policy, can proceed to give such final relief as the circumstances of the case demand.

A prayer for general relief in this case covers and includes a prayer for specific performance.

Page 50 U. S. 391

A decree pro forma was entered, under the agreement of the parties, dismissing a bill filed by Tayloe against the insurance company under the following circumstances.

The office of the insurance company was at Baltimore, but there was an agent at Fredericksburg, Virginia, who was John Minor.

On 25 November, 1844, this agent addressed to the company the following letter.

"Fredericksburg, Virginia, November 25, 1844"


"The undersigned, William H. Tayloe, desires to effect insurance to the amount of eight thousand dollars on his dwelling house, of stone covered with wood; main building about ninety by sixty feet, two stories; two wings, two stories, covered with wood, about fifty by fifty feet, and connected with the main building by covered ways of stone, covered with wood. The above-mentioned house is known by the name of Mt. Airy, and is situated in Richmond County, about two miles and a half from the courthouse."



"P.S. Mr. Tayloe (not Mr. Taylor) passed through this place this morning on his way to Alabama and, not having time to attend to his application, desired me to forward one in his name. The measures given are as nearly correct as I can remember, but, as the building is worth double the amount proposed, the measures are not of much importance. I have long been familiarly acquainted with the house. One thing I should state, that it is built of red sandstone, which in my opinion will not stand fire. Mr. Tayloe's family inhabits the house, and he will return in January or February; meanwhile I am to communicate to him your answer."


On 30 November, 1844, the following answer was received:

"M. F. I. Co., Baltimore, November 30, 1844"


"Dear Sir -- Yours of 25th and account of 28th are received. I have forwarded Mr. B.'s policy. Mr. Tayloe's risk

Page 50 U. S. 392

will be taken at the same rate as Mr. Bernard's, viz., 70 cts. on $8,000, $56. Policy, $1."

"Yours, respectfully,"

"GEO. B. COALE, Secretary"

When this letter was received by Minor, Tayloe was in Alabama, and Minor addressed to him the following letter, which he directed to Demopolis, Alabama, and which was sent from Demopolis to Macon, where Tayloe then was.

"Fredericksburg, December 2, 1844"

"This day I received from the secretary of the board of the Merchants' Fire Insurance Company of Baltimore an answer to your application for insurance to the amount of $8,000 on the Mount Airy house; rate 70."

Premium on $8,000 . . . . . . $56.00

Policy. . . . . . . . . . . . 1.00



"Should you desire to effect the above insurance, send me your check, payable to my order, for $57, and the business is concluded."

This letter, having been misdirected by Minor, did not reach the appellant until 20 December, 1844, and on the next day he wrote Minor the following letter.

"Macon, Marengo County, Ala. 21 Dec., 1844"

"Dear Minor -- Yours of the 2d came to hand yesterday, and I send you my check for fifty-seven dollars, as the premium of insurance on Mount Airy house. You will please deposit the policy in the Bank of Virginia, in your town &c."

Mem. endorsed, "Mem. rec'd December 31, 1844."

"(Check Enclosed)"

"Marengo County, Ala. 21 Dec., 1844"

"$57. Bank of Virginia, Fred'g, pay John Minor, Esq. or order fifty-seven dollars, premium of insurance on Mt. Airy house."


Written across the face -- "This check not to be presented."

On 22 December, 1844, the house was burned down.

Page 50 U. S. 393

On 1 January, 1845, Minor addressed a letter to Tayloe, from which the following is an extract.

"Fredericksburg, Jan. 1, 1845"

"My dear friend -- Your letter of the 21st ultimo came to hand yesterday, unhappily too late. You have before this time, perhaps, received information that the center building of Mount Airy was burnt on Sunday week Dec. 22,"


Mr. Minor was informed of the loss by Mr. Charles Tayloe on the day after it took place.

In the summer of 1845, Tayloe called at the office of the company and had some conversation respecting the insurance and the burning of his house, and in November, 1845, furnished them with the preliminary proofs of the loss which are always required to be handed in as soon as possible after the loss by the conditions annexed to the printed policies of the company.

To the letter accompanying the preliminary proof, the company returned the following answer.

"Merchants' Fire Insurance Co., Baltimore"

"Dec. 15, 1845"


"Dear Sir -- The Merchants' Fire Insurance Company has received your letter of 24 November, 1845, containing notice of claim for loss by fire on 22 December, 1844, and I am instructed to reply that the company declines to pay the claim as thereby made by you, and that under the circumstances of the case it does not waive any grounds of defense whatever, but will avail itself of all and any that by law it may."

"Very respectfully, your obedient servant,"

"[Signed] GEO. B. COALE, Sec'y"

During the progress of the suit, the following admission was filed in the circuit court by the respective counsel.


"It is admitted that the printed advertisement marked complainant's No. 1 of John Minor, dated on 27 July, 1842, giving notice of his agency, was published by him in a newspaper published in Fredericksburg, Virginia. It is also admitted that the letter of said Minor to Wm. H. Tayloe, the complainant, dated December 2, 1844, marked complainant's No. 2, was written by said Minor, and addressed to said Tayloe, at Demopolis, Alabama, and afterwards sent from Demopolis

Page 50 U. S. 394

to Macon, Alabama, at the dates of the two postmarks thereon, where said Tayloe then was, and that the letter from said Minor to said Tayloe, dated 1 January, 1844-1845, marked complainant's No. 3, was written by said Minor. It is agreed that the charter of the said defendants act of Maryland, 1835, ch. 65, and supplements may be used by either party, and read from the printed laws as if proved, and also it is admitted that the printed blank policy, filed with the defendants' answer as an exhibit, is the form uniformly used by said defendants from its incorporation till this time, and that the exhibits G, H, and I, with the defendants' answer, are admitted, and all of said above papers may be used, at the trial of the above cause, as if the same had been regularly proved by the respective parties."

"JOHN GLENN, for Complainant"

"JOHN J. LLOYD, for Defendants"

In April, 1846, Tayloe filed his bill in the circuit court. It stated the substance of the facts above mentioned, and concluded thus:

"To the end, therefore, that he may have redress on the premises and that by a decree of this Court the said defendants may be ordered and adjudged to pay to your orator the amount of actual loss which he has sustained, to an amount not exceeding eight thousand dollars, and that he may have such further relief as his case may require, may it please your honors to order that a writ of subpoena may issue directed to said Merchants' Fire Insurance Company of Baltimore to be and appear in this Court to answer this bill and to stand to and abide by the decree in the premises, and he will ever pray &c."



The answer of the appellees admits that John Minor was the agent of the appellees at Fredericksburg, Virginia, "to receive and forward to appellees proposals for insurance against fire"; that said agent did, on 25 November, 1844, in behalf of the appellant, send a proposal for insurance, which was answered on 30 November, 1844, but that no reply was received from appellant till 31 December, 1844, by a letter enclosing appellant's check for the amount of the premium. That immediately on the receipt of said reply, the appellant was informed that it came too late; that the dwelling proposed to be insured had been burnt on 22 December, 1844, and that the check had not been and would not be presented

Page 50 U. S. 395

for payment, and that said check was cancelled. The answer further exhibits a copy of the printed from of the policy uniformly used by the appellees in 1844 and before and since that time, and avers that it contains the terms and conditions on which the appellees insured, and that all answers of the appellees to applications for insurance against fire have always been with reference to the terms of said policy and the printed conditions thereto annexed, and it further avers that the reply of the appellees to the application on behalf of the appellant, in this instance, was made with reference to said terms and printed conditions, and that except on those terms and conditions, the appellees would not and did not offer to insure the appellant. The answer further denies that any contract of insurance was at any time made by appellees with the appellant, or that any premium of insurance was paid by appellant or received by appellees, or that the appellant had a right to demand a policy of insurance, or payment for loss by fire. It also denies that the appellant, before filing his bill, required appellees to furnish him with a policy of insurance, or that any demand of payment for the loss by fire was made, except as therein specified, in the summer of 1845, and after that time, as particularly set forth in the answer. The answer further insists that if it should be held that the transactions relating to said application did amount to a contract of insurance, yet it was a contract on the terms and conditions specified in the policy, and that the appellant never complied therewith, and particularly never complied with the seventh printed condition which is set forth in the answer, the therefore he is not entitled to demand payment.

The blank policy which, it is admitted -- see Admission, supra -- "is the form uniformly used by the appellees from their incorporation till this time" provides

"that the amount of such loss or damage as the assured shall be entitled to receive by virtue of this policy shall be paid within sixty days after notice and proof thereof made by the assured in conformity to the conditions of this corporation subjoined to this policy."

It also provides that the

"insurance is made and accepted in reference to the conditions which accompany these presents, and in every case the said conditions are to be used to explain the rights and obligations of the parties except so far forth as the policy itself specially declares those rights and obligations."

The fifth condition is -- "No insurance will be considered as made, or binding, until the premium be actually paid."

The seventh condition provides that

"All persons insured by this company sustaining any loss or damage by fire are

Page 50 U. S. 396

forthwith to give notice to the company, and as soon thereafter as possible to deliver in as particular an account of their loss or damage, signed by their own hands, as the nature of the case will admit, and make proof of the same by their oath or affirmation,"

&c., "And until such affidavits and certificates are produced, the loss shall not be payable."

The appellant examined several witnesses under a commission issued to Fredericksburg, Va. John Minor, the agent, proves that the appellant authorized and requested him to apply to the appellees to effect the insurance, and that in consequence thereof the application was written by him. That on 31 December, 1844, he received a letter from appellant enclosing his check for $57, which the appellant directed to be applied to the payment of the insurance on the property, but that the check was never presented for payment, because the property on which the insurance was to have been effected was destroyed on 22 December, 1844. That soon after the receipt of said letter and check, the deponent wrote to appellant that his check had been received, but too late. And on his cross-examination he proves that he held said check subject to appellant's order, and wrote across its face, "This check is not to be presented," of all which he duly advised the appellant by letter written, as he thinks, immediately after the receipt of the check, and that when the appellant returned to Virginia, deponent told him he was ready to return the check, and tendered it to him &c.; that he kept it, by appellant's direction, but always subject to appellant's authority. He also proves, in answer to the sixth cross-interrogatory, that if there had been no fire before the receipt of the check and a policy had been issued, the insurance, according to the custom and practice of his agency, would have begun, in ordinary cases, on the day on which payment of the check was made, but that in this particular case, as deponent was willing to cash the appellant's check, it would have begun on the day the check came to hand.

In November, 1847, the cause came on for trial, when the circuit court passed a decree, which it has already been stated was pro forma under the agreement of the parties, that the bill should be dismissed, with costs.

The complainant, Tayloe, appealed to this Court.

Page 50 U. S. 398

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