Action by Simon Greif and others, trading as that applicable where one becomes inunder the firm name and style of L. Greif & debted to an executor or administrator of an Bro., against the James H. Wright Company. | insolvent estate. Such a debt cannot be set A receiver having been appointed for the defendant company, claims of various creditors were filed, and exceptions were taken to the claim filed by Elmer E. McDaniel. The matter was heard on said claim and exceptions. Order entered, instructing the receiver to allow a set-off by the claimant.

Marvel, Marvel & Wolcott, of Wilmington, for receiver. William S. Hilles, of Wilmington, for claimant.

off against a debt which he owed the deceased, for he owes the administrator or executor, while the estate owes him. Davis v. Industrial, etc., Co., 114 N. C. 321, 19 S. E. 371, 23 L. R. A. 322 (1894).

Set-off is inadmissible, it is said, where the receiver represents the creditors in suits to recover unpaid subscriptions to capital stock, which constitute a trust fund (Davis v. Industrial, etc., Co., supra), or in suits to recover dividends illegally paid (Osgood v. Ogden, *43 N. Y. 70).

But the case under consideration is a plain one of mutual debts arising in the usual course of business, and the two claims are subject to legal as well as equitable set-off. An order will be entered instructing the receiver according to this opinion.

The CHANCELLOR. Elmer E. McDaniel Elmer E. McDaniel for several years bought goods of James H. Wright Company on credit, and the company owed McDaniel for board and care of a horse and wagon. These two running accounts were occasionally settled by allowing one against the other. On February 12, 1912, such a settlement was made and mutually discharged, and each continued to become indebted to (5 Boyce, 143) the other. Afterwards a receiver was ap- DRAPER V. DELAWARE STATE GRANGE pointed for the company on the ground of MUT. FIRE INS. CO. its insolvency. At that time McDaniel owed to the company $419.36 and the company (Superior Court of Delaware. Sussex. June owed McDaniel $472.67. McDaniel claims

PROOF.

29, 1914.)

For a party to recover on a contract of insurance, the existence of a valid contract and the occasion that fixes liability thereunder must be proved.

the right to offset the amount the company 1. INSURANCE (§ 646*)-ACTIONS-BURDEN OF owes him against the amount he owes the company, and the receiver, by petition setting forth the above facts, asks for instructions. The counsel for McDaniel voluntarily appeared to the petition, and the question was argued by him and by counsel for the receiver.

[1] Before the appointment of the receiver the mutual debts could have been set off under the statutes of this state. Revised Code, c. 106, § 21, p. 793. Did the appointment by the court of a receiver of the corporation, based on its insolvency, change this right? The statute authorizes the Court of Chancery to appoint a receiver for an insolvent corporation "on the application and for the benefit of any creditor or stockholder thereof." A receiver so appointed is not a purchaser for value without notice, but takes the assets of the company as a trustee and as a representative of the insolvent. The receiv: er acquires no greater interest in the estate than the corporation had. Its assets are subject to set-offs, liens and incumbrances as they exist at the time of the appointment. 5 Pomeroy's Equitable Remedies, § 187; High on Receivers, § 247; Van Wagoner v. Paterson Gas Co., 23 N. J. Law, 283; Scott v. Armstrong, 146 U. S. 499, 13 Sup. Ct. 148, 36 L. Ed. 1059; Davis v. Industrial, etc., Co., 114 N. C. 321, 19 S. E. 371, 23 L. R. A. 322 (1894); Steelman v. Atchley, 98 Ark. 294, 135 S. W. 702, 32 L. R. A. (N. S.) 1060.

[2] Of course a debt due to the receiver. as distinguished from a debt due to the company, cannot be set off as against a debt due from the company. The reason is the same

[Ed. Note.-For other cases, see Insurance, Cent. Dig. §§ 1555, 1645-1668; Dec. Dig. § 646.*]

2. INSURANCE (§ 124*)-NATURE OF "CONTRACT OF INSURANCE."

A "contract of insurance" against loss or and is an undertaking on the part of the indamage to property is a contract of indemnity, surer, based upon sufficient consideration, to pay the insured a certain sum of money upon the happening of a certain contingency. Cent. Dig. §§ 172, 178; Dec. Dig. § 124.* [Ed. Note.-For other cases, see Insurance,

For other definitions, see Words and Phrases, vol. 4, pp. 3674-3677.1

3. INSURANCE (§ 124*)-LIABILITY OF INSURER

-NECESSITY OF Loss.

A fire insurance contract is essentially a personal contract, and is not a contract to insure the property against fire, but one to insure the owner of the property against loss by fire; and hence a destruction of the property by fire does not render the insurer liable, unless insured has thereby sustained a loss.

[Ed. Note.-For other cases, see Insurance, Cent. Dig. §§ 172, 178; Dec. Dig. § 124.*] 4. INSURANCE (§ 630*)-ACTIONS ON POLICIES -PLEADING-INSURABLE INTEREST.

In an action on a fire insurance policy, terest in the property existing at the inception plaintiff must allege and prove an insurable inof the policy, or subsisting during the risk and existing at the time of the loss; and hence a declaration failing to allege such interest at the date of the contract and at the time of the loss was demurrable.

[Ed. Note.-For other cases, see Insurance, Cent. Dig. §§ 1582, 1583; Dec. Dig. § 630.*]

*For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key-No. Series & Rep'r Indexes

5. INSURANCE (§ 119*) - VALIDITY OF CON- [sured a certain sum of money upon the hapTRACT-NECESSITY OF INSURABLE INTEREST.pening of a certain contingency. The conAn insurance policy against loss of property in which the insured has no interest tingency, in the contract here sued upon, is amounts to a wager, and is void, as contrary to loss occasioned the plaintiff by fire to the public policy. property described in the contract.

[Ed. Note.-For other cases, see Insurance, Cent. Dig. § 165; Dec. Dig. § 119.*]

Action by Annie Y. Draper against the Delaware State Grange Mutual Fire Insurance Company. On demurrer to the declaration. Demurrer sustained.

Demurrer to declaration (No. 45, February

term, 1914).

[3] A contract of insurance is essentially a personal contract. Traders' Ins. Co. v. Newman, 120 Ind. 554, 22 N. E. 428. It is not a contract to insure property against fire, but is one to insure the owner of property against loss by fire. Destruction by fire of the property described in the contract of in

surance is not the contingency upon which sured. It is only when by fire the insured the insurer promises to indemnify the insured. It is only when by fire the insured has sustained a loss that the insurer may be called upon to perform its contract of

indemnity.

The averments of the first and third The averments of the first and third counts of the declaration are to the effect counts of the declaration are to the effect that the defendant made a contract of insurance with the plaintiff whereby it undertook and promised to "insure the plaintiff against loss or damage" resulting from de- to sustain a loss to property by fire unless [4] As it is quite impossible for the insured struction by fire or lightning of "certain prop- he has an interest in the property, and as he erty in the said agreement or policy named and described," and that thereafter "the may recover only when he has sustained a property in said policy insured was dam- loss, it is now recognized that in actions upon aged or destroyed by fire," without stating tain classes, as in marine insurance, the excontracts of fire insurance, excepting in certhat at the time of the fire as well as at the istence of an insurable interest on the part time of the making of the contract, the plain-of and the consequent loss sustained by the tiff had an insurable interest in the property insured and destroyed.

In the second count there is an averment

that the plaintiff "was interested in the insured premises,” but the relation of this averment to the context makes it apparent that the interest averred was an interest of the plaintiff at the time of the inception of the contract; this count like the other two being silent as to an interest of the plaintiff in the property at the time of its destruction by

fire.

insured, must be shown and proved before

he can recover.

The insurable interest in property of one

claiming indemnity for its loss by fire must first be shown to have existed at the inception of the policy, or to have legally subtion of the policy, or to have legally subU. S. 528, 25 L. Ed. 219), and then to have sisted during the risk (Hooper v. Robinson, 98 existed at the time of the loss.

in the property can be shown at the time of its destruction, he, of course, can show no loss, and if he shows no insurable interest at the inception of the contract or during the

[5] If no insurable interest of the insured

The ground of demurrer is that while the plaintiff has stated a contract of insurance between 'herself and the defendant and has alleged the destruction by fire of the proper-risk, he fails to disclose a valid contract of

ty described in the policy, she has failed to show a right of recovery because she has failed to disclose that she had an insurable interest in the property described therein, either at the inception of the contract or at the time the property was destroyed.

Argued before WOOLLEY and RICE, JJ.

Robert G. Houston and Robert C. White, both of Georgetown, for plaintiff. John B. Hutton, of Dover, and Andrew J. Lynch, of Georgetown, for defendant.

insurance. A contract of insurance is a contract of indemnity, and its object is to avert a loss rather than to allow a gain. A policy of insurance against loss of property in which the insured has no interest, therefore, amounts to a wager, and wager policies are void upon the ground that they are contrary to public policy.

It becomes necessary, therefore, in an action upon a contract of fire insurance, for the insured to prove as facts, that he had an insurable interest in the property injured or destroyed, at a time when under the terms of the contract, the insurer was legally bound to indemnify the insured for loss when it happened, and that he also had an insurable interest in the property at the time of the loss. As these facts must be proved before recovery may be had, they must be averred before proof of them is allowed. Cooley's Briefs on the Law of Insurance, 85, 87, 135, 137, 138, 139, 141, 143; 19 Cyc. 583, 591, 920; Freeman v. Fulton, etc., Co., 38 Barb. (N. Y.) 247; Harness v. National Fire Ins. Co., 62 Mo.

WOOLLEY, J., after making the above statement, delivered the opinion of the court. [1, 2] In order for a party to recover on a contract of insurance, two things are necessary to be proven: First, the existence of a valid contract; and, second, the occasion that fixes liability thereunder. A contract of insurance against loss or damage to property is a contract of indemnity. It is an undertaking on the part of the insurer, based upon sufficient consideration to pay the in*For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key-No. Series & Rep'r Indexes

erty made by Winifred Cottingham in her lifetime, it being claimed that the transfers were made through fraudulent influences and that Winifred Cottingham was then mentally incompetent to make the transfer. The suit was by grandchildren of Winifred Cottingham after her death. See Mahoney v. Healy, 9 Del. Ch. 273, 81 Atl. 583.

App. 245; Quarrier v. Peabody Insurance THE CHANCELLOR. The bill was Co., 10 W. Va. 507, 27 Am. Rep. 582; Scott brought to set aside certain transfers of propv. Phoenix Ins. Co., 65 Mo. App. 75; German Ins. Co. v. Everett (Tex. Civ. App.) 36 S. W. 125; Davis v. New England Ins. Co., 70 Vt. 217, 39 Atl. 1095; Vernon Ins. Co. v. Bank, 29 Ind. App. 678, 65 N. E. 23; Hardwick v. State Ins. Co., 20 Or. 547, 26 Pac. 840; Chrisman v. State Ins. Co., 16 Or. 283, 18 Pac. 466; Prussian National Ins. Co. v. Peterson, 30 Ind. App. 289, 64 N. E. 102; Bryan v. Farmers' Mutual Ins. Ass'n, 81 App. Div. 542, 81 N. Y. Supp. 145.

[1] As the mental capacity of Winifred Cottingham was in question, Mr. Biggs was asked whether he had visited Winifred Cot

The demurrer is sustained to all counts of tingham respecting the making of a will by the declaration.

(10 Del. Ch. 311)

MAHONEY et al. v. HEALY et al. Court of Chancery of Delaware. June 23, 1914.)

her, and he declined to answer because his knowledge was gained while acting as her legal adviser. No objection seems to have been made by counsel for the defendant to the questions, or to their being answered. It was apparent that the purpose of the ques

1. WITNESSES (§ 198*) - PRIVILEGED COMMU-tions was to elicit evidence as to the mental NICATIONS-ATTORNEY AND CLIENT.

condition of Winifred Cottingham. At the hearing of the rule the question was argued as one of privileged communication between attorney and client. It seems to be well settled, however, that the rule of privilege does not apply in litigation instituted after does not apply in litigation instituted after the death of the client where all the parties. claim under the client. Russell v. Jackson, 9 Hare, 387, 392, 68 Eng. Reprint, 558; Glover

Upon a bill brought by the grandchildren of a decedent to set aside certain transfers of property made by her in her lifetime, on the ground of undue influence and mental incapacity, an attorney was competent to testify whether he had visited deceased as to the making of her will, as bearing upon her mental condition, since the rule of privilege does not apply in litigation instituted after the death of the client, and where all the parties claim under the client. [Ed. Note. For other cases, see Witnesses, Cent. Dig. §§ 747, 748, 753; Dec. Dig. § 198.*1. Patten, 165 U. S. 394, 17 Sup. Ct. 411, 41 2. WITNESSES (§ 202*)-PRIVILEGED COMMUNI CATIONS TESTAMENTARY INSTRUCTIONS TO ATTORNEY.

Instructions to an attorney as to drawing a will are not privileged communications, in a

contest to establish the will.

[Ed. Note. For other cases, see Witnesses, Cent. Dig. §§ 756, 757; Dec. Dig. § 202.*]

Bill by Teresa C. Mahoney and others against Margaret A. Healy and others. Petition for rule requiring a witness to appear and show cause why he should not be ordered to answer certain questions. Rule made absolute.

See, also, 9 Del. Ch. 273, 81 Atl. 583.

L. Ed. 760; Kern v. Kern, 154 Ind. 29, 55 N. E. 1004; Downing's Will, 118 Wis. 581, 95 N. W. 876; Norton v. Clark, 253 Ill. 557, 565, 97 N. E. 1079; Coates v. Semper, 82 Minn. 460, 85 N. W. 217; Layman's Will, 40 Minn. 371, 42 N. W. 286; Phillips v. Chase, 201 Mass. 444, 87 N. E. 755, 131 Am. St. Rep. 406; Doherty v. O'Callaghan, 157 Mass. 90, 31 N. E. 726, 17 L. R. A. 188, and note, 34 Am. St. Rep. 258; Wilkinson v. Service, 249 Ill. 146, 94 N. E. 50, Ann. Cas. 1912A, 41.

In the case of Glover v. Patten, 165 U. S. 394, 406, 17 Sup. Ct. 411, 41 L. Ed. 760, the court said:

"In a suit between devisees under a will, statements made by the deceased to counsel respecting the execution of the will, or other similar munications might be privileged, if offered by document, are not privileged. While such comthird persons to establish claims against an estate, they are not within the reason of the rule requiring their exclusion, when the contest is between the heirs or next of kin."

This was an action by children to establish their rights as creditors of the estate of their

During the taking of testimony before the examiner appointed in this cause, John Biggs, Esq., an attorney at law, was produced as a witness and declined to answer certain questions because his knowledge of the matter inquired about was obtained while acting in a professional capacity. Upon certification by the examiner to the Chancellor of the testimony of the witness, the solicitor for the complainants presented a petition In Russell v. Jackson, 9 Hare, 387, 68 Eng. for a rule of this Court requiring the witness to appear and show cause why he should not Reprint, 558, the court held that in testamenbe ordered to answer the questions. The wit-tary dispositions the very foundations on ness appeared gratis and assigned the above stated reason for declining to answer the questions and stated that he desired to be instructed as to how far his testimony should

go.

Charles W. Bush, of Wilmington, for complainants. Hugh M. Morris, of Wilmington, for defendants.

deceased mother.

which the rule protecting confidential dis-
closures proceeds, seems
seems to be wanting,
where the contest is between parties, all of
whom claim under the testator.

In Phillips v. Chase, 201 Mass. 444, 449, 87 N. E. 755, 131 Am. St. Rep. 406 (1909), it was said:

"Where the controversy is not between an estate and persons claiming against it, but is

*For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key-No. Series & Rep'r Indexes

to determine who shall take by succession the | Washington Railroad Company. Demurrer property of a deceased person, and both par- to declaration overruled. ties claim under him, the reason for the privilege [of a communication made to an attorney] does not exist, and neither can set up a claim of privilege against the other."

BOWDEN et al. v. PHILADELPHIA, B. & such averments they are insufficient in law,

and for authority for this contention cites a Sussex. June part of the amendment of section 20 of the Interstate Commerce Act (Act Feb. 4, 1887, c. 104, 24 Stat. 386 [U. S. Comp. St. 1901, p. 3169], as amended by Act June 29, 1906, c. 3591, § 7, 34 Stat. 593 [U. S. Comp. St. Supp. 1911. p. 1307]), which is as follows:

[Ed. Note.-For other cases, see Carriers, Cent. Dig. §§ 131, 165-167; Dec. Dig. § 53.*] Action by James E. Bowden and others, trading in the firm name of J. E. Bowden &portation company issuing such receipt or bill "That the common carrier, railroad or transCo., against the Philadelphia, Baltimore & of lading shall be entitled to recover from the

*For other cases see same topic and section NUMBER in Dec. Dig. & Am Dig. Key-No. Series & Rep'r Indexes 91 A.-14

1

*For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key-No. Series & Rep'r Indexes