63. How is a bailment for bailor's sole benefit created? Is it a contract? Must the bailor know of it? Must the bailee consent to it? What are the bailor's obligations? What are the bailee's duties? How much care must he use? Can he use the article? Is he liable if the article is lost? When is this bailment terminated?

Problem 1. A bank undertook gratuitously to keep in its vaults a locked chest of C's containing $50,000 in gold. The bank cashier stole it together with money belonging to the bank and absconded. Is the bank liable to C? Problem 2. In the above case the directors learned that the cashier was engaged in heavy stock speculations, but took no steps to investigate his conduct. Result?

64. How is a bailment for the bailee's sole benefit created? Is a promise to lend enforceable, and why? What is the bailor's duty? What are the duties of the bailee? How much care must he use? May he lend the article to others? May he use it for a purpose not agreed upon? May the bailee deliver the article to a claimant other than the bailor? How is this bailment terminated?

65. Define a pledge. How is it created? What is essential? What warranty does the pledgor make? Can he sell the pledged article? Can the pledge be made irredeemable? What are the duties of the pledgee? What care must he use? What are the pledgee's rights? How may he sell the pledge? Can he purchase? When is the pledge terminated? What claim does the pledge secure? Who are pawnbrokers? May they charge more than the usual rate of interest?

Problem 3. B owed a bank $5000. He then borrowed of the bank $10,000 and pledged 300 shares of stock as security for the loan. B then became insolvent and all his property was transferred to a trustee for the benefit of his creditors. The bank sold the stock for $13,500, paid the loan of $10,000, and applied the surplus $3500 on the prior indebtedness. The trustee sues the bank for this $3500. Which is entitled to it?

66. How is a bailment by hiring a thing created? Is a promise by the bailor to hire it to the bailee enforceable? What does the bailor warrant? What is his duty as to defects? What are the rights of the bailee? What are his duties? How much care must he use? If a third person injures the article, is the bailee liable? Is he liable to third persons, and when? Are they liable to him? Are they liable to the bailor? Who is liable in case the article is accidentally destroyed? If the bailee uses the article otherwise than he agreed, what is the result?

Problem 4. C hires a horse and carriage of X. B negligently runs into and injures the carriage to the extent of $20. C sues B for this damage. May he recover?

Problem 5. As above. The horse falls sick while C is on a journey. C leaves him with D for care and treatment. D sues X for the expense. Result?

67. What classes of bailments of the hiring of services about a thing? What are the duties of the bailor? How is compensation fixed? May the bailee recover if he abandons the work midway? May he recover if after he has finished the work the article is destroyed? What are the duties of the bailee? How much care must he exercise? What is the bailee's lien? Who is a warehouseman? May he mix goods? Who are wharfingers? Is a safe deposit a warehouse? Does money deposited in a bank create a bailment ?

Problem 6. C deposited his goods in B's warehouse. They were stolen. C sues B. C contends it is for B to show he used due care. B contends it is for C to show that B was negligent. Which is right?

68. Who are innkeepers? Is a steamship an inn? Is a sleeping car? Who are guests? Must an innkeeper receive all guests who apply? What are his liabilities as to a guest's goods? State three holdings on this. What do statutes provide? What is the innkeeper's lien? When is an innkeeper an ordinary bailee?

Problem 7. C drove to an inn and had his horse placed in the stable connected with it. The horse was kicked by the horse of another traveler and its leg broken. C sues the landlord of the inn. The landlord offers to prove he was not negligent. Would such proof release him from liability? Problem 8. An inn is accidentally burned and a guest's clothes, jewelry, etc., are destroyed. Is the innkeeper liable?

Problem 9. While C was in a sleeping-car berth, and while asleep, he was robbed of his money and watch. Is the sleeping-car company liable to him for this loss?

69. Who are common carriers? What two things distinguish a common carrier from a private carrier? What goods must a common carrier accept? May he give special rates? What statutes govern rates? How can a common carrier escape liability for loss of goods? What is an act of God? Who is a public enemy? When is the shipper at fault? What are inherent infirmities in the goods? May a shipper contract against loss by above causes? May he contract against loss due to his own negligence or that of his servants? When does his liability as common carrier end? What is the liability of a railway when goods reach their destination and are placed in the freight house? When goods go over several railways, which is liable for damage to them? When is a common carrier excused for nondelivery? What is a bill of lading? What is a charter party?

Problem 10. B owned a sloop which he used for his own business. On two occasions he carried goods for C. On the second occasion the sloop was driven ashore (not by an act of God nor by the negligence of B) and the goods were injured. Is B liable to C?

Problem 11. B owns a vessel running regularly between two ports and carrying passengers and freight. C ships goods on the vessel. It is destroyed by fire while at sea. Is B liable to C for the loss of the goods?

Problem 12. In the above case the vessel is captured by a war vessel of another nation with which B's nation is at war, and the goods are confiscated. Is B liable to C?

Problem 13. C shipped plate glass from New York City to Marion, N.C. The glass went over four different railroads. At Marion it was found to be broken. C sues the B. Ry. which delivered the glass at Marion. The bill of lading provided that “No carrier shall be liable for loss or damage not occurring on its own road," and only for loss by negligence. When the B. Ry. received the box there was no sign of breakage, nor was there any when it reached Marion, until the box was opened. The B. Ry. contends that it is not liable unless C shows that the breakage occurred on its road. C contends that the B. Ry. must show it was not negligent. Which is right? 70. Who are public carriers? Who are passengers? What is the liabil ity of a public carrier for safety of passengers, and what for safety of baggage? What is baggage? May the carrier limit liability for its loss?

Problem 14. C, a passenger, brought action against the B. Ry. for loss of baggage. The trunk contained very valuable dress laces worth $10,000. C was a wealthy foreigner traveling in this country, and the laces were a part of her wearing apparel. Is the Ry. liable for these laces?

71. Are telegraph and telephone companies common carriers? What is their liability? May they contract against their negligence? May the addressee of a message sue for negligence? How?

CHAPTER VI

INSURANCE CONTRACTS

72. Nature and kinds of insurance. Insurance is a system for distributing the losses of a few persons among a large class of persons similarly situated. This is accomplished by raising a general fund through small contributions by many persons, each contributor being entitled to indemnity out of the fund in case a loss falls upon him. If 1000 persons having in the aggregate property valued at $5,000,000 pay annually into a common fund 1% upon this valuation, a fund of $50,000 will be raised out of which losses by fire falling upon any of these persons could be paid. If these 1000 persons live in widely separated parts of the country, it is unlikely that many of them will suffer losses by fire in the same year.

Almost every conceivable risk may now be insured. The main heads of insurance are marine insurance, fire insurance, and life insurance, but there are companies which insure against tornadoes, steam-boiler explosions, breakage of plate glass, defects in titles, defaults or embezzlements by agents, injuries to employees, injuries to one's self, and numerous other hazards. Marine insurance - that is, insurance against the risk of the loss of vessels and cargoes at sea is probably the oldest form of insurance and has been traced back to the twelfth or thirteenth century. Fire insurance came into prominence after the great London fire of 1666. Life insurance began practically in the eighteenth century.

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In marine and fire insurance the properties insured are classified according to the risk, and the premium is higher or lower as the risk is greater or less. In life insurance only those persons who are regarded as good risks are insured, and the premiums are graded according to the age of the insured. Statistics

have been accumulated upon which average results may be predicted and the premiums based.

73. Kinds of policies. The policies, or contracts of insurance, issued by insurance companies are of various kinds, but it is necessary to distinguish the valued and the open policy.

The valued policy is one that fixes the amount to be paid in case of loss. These policies are always used in life insurance, and are very generally used in the insurance of ships, though not of cargoes. In case of the death of the insured or the loss of the ship the sum specified is paid.

The open policy is one in which the amount to be paid in case of loss, not exceeding a certain sum, is left to be fixed after the loss occurs. These policies are generally used in fire insurance.

Life-insurance policies are either the "life policy," payable only at the death of the insured, or the "endowment policy," payable when the insured reaches a certain age, or upon his death at any prior date. There is also a "term policy" for a fixed number of years, payable only if the insured dies within that time.

74. Definitions. Insurance is a contract whereby for a stipulated consideration one party agrees to compensate or indemnify the other for loss on a specified subject by specified perils.

The insurer is the one agreeing to indemnify. He is sometimes called the underwriter. The insured is the one to whom the promise runs. The premium is the agreed consideration. The policy is the written contract. The risk or peril is the event insured against. The insurable interest is the subject, right, or interest to be protected; it is such an interest as will entitle the person possessing it to obtain a lawful contract of insurance (see sec. 76).

Life insurance is a contract to pay a designated or determinable person a certain sum, or an annuity, in the event of the death of the person whose life is insured. Endowment life insurance is a contract to pay a certain sum or annuity to the person whose life is insured if he lives a certain length of time, or to a designated person if he dies before this time. Tontine