This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
Since contracts are ordinarily construed so as to prevent forfeiture,1 a condition which tends to operate as a forfeiture of the rights of one of the parties to the contract will be construed strictly.2 A condition for forfeiture in case of sale by the lessee or by his executor, and against sale by legal process, which does not expressly include transfer by operation of the law, will be held not to apply to transfer by operation of law,3 such as a transfer by the act of the law to the trustee of the lessee upon the bankruptcy of the lessee and to a subsequent sale by the trustee.4 A agreed to bring her aeroplane to a certain place and to make two flights of thirty minutes each on three different days, in consideration of which B agreed to pay to A a certain sum of money when the machine arrived, which was to be returned if no flights were made, and a certain sum on each day of the exhibition to be paid after the exhibition was completed. The machine arrived and B made the first payment to A. A made but one flight, remaining up only three minutes. The aeroplane was then injured and no further exhibitions were given, although B demanded further performance. B then brought action against A to recover the first payment. It was held that such payment could not be recovered, since a part of one flight had been made; and by the provisions of the contract such payment was to be returned only if no flights were made.5 A provision to the effect that a policy of fire insurance should be void if the interest of the insured was any other than an unconditional ownership, was held to apply to the building which was insured, and not to the ground on which the building stood.6 A condition that a policy of fire insurance shall be void for misrepresentation of any material fact, is held not to render the policy void because of a misstatement as to the dimensions of the buildings which were insured.7 If a contract reserves to one party the right to terminate the contract if in the judgment of its engineer the work is not being prosecuted faithfully and diligently, and provides in another clause that in case of failure to complete the contract as agreed upon, the adversary party may recover damages due to such failure, the failure to perform, referred to in the latter clause, can not be regarded as equivalent to a termination at the discretion of the engineer of the adversary party; and the fact that such engineer terminated such contract is not conclusive of the fact that the contractor failed to perform.8
New Hampshire. Moore v. Phoenix Ins. Co., 62 N. H. 240, 13 Am. St. Rep. 556.
Ohio. Ohio Farmers' Insurance Co. v. Waters, 65 O. S. 157, 61 N. E. 711.
7 Canada. Liverpool & London & Globe Ins. Co. v. Agricultural Savings & Loan Co., 33 Can. S. C. 94.
Kansas. German Ins. Co. v. Russell, 65 Kan. 373, 58 L. R. A. 234, 69 Pac 345.
Maine. Dolliver v. Granite State Fire Ins. Co., III Me. 275, 89 Atl. 8.
Maryland. Reynolds v. German-American Ins. Co., 107 Md. 110, 15 L. R. A. (N.S.) 345, 68 Atl. 262.
New Hampshire. Moore v. Phoenix Ins. Co., 62 N. H. 240, 13 Am. St. Rep. 656.
8 German Ins. Co. v. Russell, 65 Kan. 873, 58 L. R. A. 234, 69 Pac. 345; Reynolds v. German-American Ins. Co., 107
Md. 110, 15 L. R. A. (N.S.) 345, 68 Atl. 262.
9 Czyhlarz, Manual of the Institutes of Roman Law, Sec. 21; Sohn, Institutes of Roman Law, Sec. 43.
1 Pyle v. Pyle, 200 Pa. St. 532, 103 Atl. 918; Warfleld v. Kelly, 262 Pa. St. 482, 106 Atl. 72; Lyke v. First National Life & Accident Ins. Co., - S. D. - , 171 N. W. 603.
See Sec. 2054.
2 Canada. Metropolitan L. Ins. Co. v. Montreal Coal & Towing Co., 35 Can. S. C. 266.
United States. First National Bank v. Hartford Fire Ins. Co., 95 U. S. 673, 24 L. ed. 563; McMaster v. New York Life Ins. Co.. 183 U. S. 35, 46 L. ed. 64; Gazlay v. Williams, 210 U. S. 41, 52 L. ed. 950; Nelson v. Continental Ins. Co., 182 Fed. 783, 31 L. R. A. (N.S.) 598.
Arkansas. Fidelity & C. Co. v. Meyer, 106 Ark. 91, 44 L. R. A. (N.6.) 493, 152 S. W. 995; Firemen's Ins. Co. v. Larey, 125 Ark. 93, L. R. A 1917A, 29, 188 S. W. 7.
California. Lucy v. Davis, 163 Cal. 611, 126 Pac. 490.
Colorado. National Mutual Fire Insurance Co. v. Duncan, 44 Colo. 472, 98 Pac. 634 [sub nomine, Duncan v. National Mutual Fire Insurance Co., 20 L. R. A. (N.S.) 340].
Idaho. Allen v. Phoenix Assur. Co., 12 Ida. 653, 8 L. R. A. (N.S.) 903, 88 Pac. 245; Rasicot v. Royal Neighbors, 18 Ida. 85, 29 L. R. A. (N.S.) 433, 108 Pac. 1048.
Illinois. Spence v. Central Acci. Ins. Co., 236 III. 444, 19 L. R. A. (N.S.) 88, 86 N. E. 104.
Indiana. Glens Falls Ins. Co. v. Michael, 167 Ind. 659, 8 L. R. A. (N.S.) 708, 74 N. E. 964.
Iowa. Lakka v. Modern Brotherhood of America, 163 Ia. 159, 49 L. R. A. (N.S.) 902, 143 N. W. 513.
Nebraska. Merriman v. Grand Lodge, 77 Neb. 644, 8 L. R. A. (N.S.) 983, 110 N. W. 302; Walker v. Burtless, 82 Neb. 211, 117 N. W. 349 [modified on rehearing, 82 Neb. 214, 118 N. W. 113]; Goff v. Supreme Lodge Royal Achates,
90 Neb. 578, 37 L. R. A. (N.S.) 1191, 134 N. W. 239.
New Jersey. Smith v. Prudential Ins. Co., 83 N. J. L. 719, 43 L. R. A. (N.S.) 431, 85 Atl. 190.
Oklahoma. Nance v. Oklahoma F. Ins. Co., 31 Okla. 208, 38 L. R. A (N.S.) 426, 120 Pac. 948.
Pennsylvania. Pyle v. Pyle, 260 Pa. St. 532, 103 Atl. 918; Warfield v. Kelly, 262 Pa. St. 482, 106 Atl. 72.
Rhode Island. Harrington v. Law (R. I.), 90 Atl. 660.
South Dakota. Lyke v. First National Life & Accident Ins. Co., - S. D. -, 171 N. W. 603.
Texas. Reppond v. National L. Ins. Co., 100 Tex. 519. 11 L. R. A. (N.S.) 981, 101 S. W. 786; Insurance Co. of N. America v. O'Bannon, - Tex. - , 206 S. W. 814.
West Virginia. Scott v. Dixie F. Ins. Co., 70 W. Va. 533, 40 L. R. A. (N.S.) 1152, 74 S. E. 659.
Wisconsin. Cady v. Fidelity & C. Co., 134 Wis. 322, 17 L. R. A. (N.S.) 260, 113 N. W. 967; French v. Fidelity & C. Co., 135 Wis. 259, 17 L. R. A. (N.S.) 1011, 115 N. W. 869.
3 Gazlay v. Williams, 210 U. S. 41, 52 L. ed. 950.
4 Gazlay v. Williams, 210 U. S. 41, 62 L. ed. 950.
A provision in a policy of insurance will not be construed as a warranty, unless it appears to be the intention of the parties that it shall have such effect,9 and unless the language shows clearly that no other construction can fairly be given to the language used.10 A warranty against the suppression of any facts which would tend to influence the insurance company in issuing the policy, makes the statements to which reference is made representations and not warranties.11 A warranty by the insured that he is in good health to the best of his knowledge and belief, is in effect a representation; and it is not broken because of his bad health if he believes in good faith that his health is good.12 If the provision is a warranty, it is construed as strictly as possible in favor of the insured and against the insurer.13 The so-called condition precedent in a policy of fidelity insurance, to the effect that the acts of the insured would be examined and checked each week, is complied with if ordinary care is used in so doing.14
5 Harrington v. Law (R. I.), 90 Atl. 660.
6 Tebean v. Globe & Rutgers Fire Ins. Co., 271 Mo. 626, 2 A. L. R. 1041, 197 S. W. 130. (In the policy in question this result may be justified because of the fact that another clause made express provision for the location of the building on ground not owned by the insured in fee simple. The defect in title relied upon in this connection -was an outstanding contingent dower interest.)
7 National Mutual Fire Ins. Co. v.
Duncan, 44 Colo. 472, 98 Pac. 634 [sub nomine, Duncan v. National Mutual Fire Ins. Co., 20 L. R. A. (N.S.) 340].
8 United States v. O'Brien, 220 U. S. 321, 55 L. ed. 481.
9 Goff v. Supreme Lodge Royal Achates, 90 Neb. 578, 37 L. R. A. (N.S.) 1191, 134 N. W. 239.
10 Spence v. Central Acci. Ins. Co., 236 III. 444, 19 L. R. A. (N.3.) 88, 86 N. E. 104.
11 Reppond v. National L. Ins. Co.,
100 Tex. 519, 11 L. R. A. (N.S.) 981,
101 S. W. 786.
The rule that a condition is construed strictly if it will operate as a forfeiture, applies both to conditions precedent,15 and to conditions subsequent.16