CHAPTER XI. RUNNING POLICIES. POLICIES are sometimes called by this name in which an insurance is made on goods to be afterwards specified and declared.1 They are sometimes also called open policies. We have already seen that policies also bear this last name in which the property insured is specified, but not valued, and, in case of loss, the value of the property is open to proof; open policies being in this sense opposed to valued policies.2 Running policies are also sometimes called open policies, because they remain open for the addition of subject-matters to which the insurances attach. In England this distinction between open and running policies seems to be better established than here; the name "open policies" being there now used generally in distinction from "valued policies." But what we call "running policies" are there often called "floating policies," and this seems to be the term by which they are now generally known. They are sometimes called "ship or ship's policies.' 8 The phraseology of such policies is different in different cases, and as used by different companies; but, whatever words are used, they always mean that the merchandise to which the insurance shall attach shall be afterwards specified and described in writing, and generally if not always indorsed on the policy. Sometimes the voyage or voyages, and the ship or ships, are specified in the policy itself, and sometimes the policy is merely on 1 There can be no doubt that a policy may be made and delivered which as yet covers no property; because it may provide that the property to be insured under it shall be defined and ascertained by statements to be subsequently and at various times indorsed upon the policy. Jamson v. Ralli, 6 Ellis & B. 422, 36 Eng. L. & Eq. 198; Langhorn v. Cologan, 4 Taunt. 330; Neville v. Merchants' Insurance Company, 17 Ohio, 192; New lin v. Insurance Company, 20 Penn. State, 312. 2 It was held in Crawford v. Hunter, 8 T. R. 15, n., that, in order to make a policy in this form a valued policy, the declaration of the assured of the value of the property must be made before he has intelligence of a loss. All these terms are applied to them in Hopkins's Manual of Marine Insurance, which is the latest English work of any magnitude on that subject. time, and the ships and voyages, as well as the merchandise, are to be subsequently indorsed. Policies of this kind are now very common. Merchants engaged in a certain course of trade wish to keep all their merchandise constantly under insurance. They effect this, not by a policy upon every adventure, but by one policy sufficiently general in its terms to cover all the expected shipments; and then as the insured has notice of each, he indorses it on the policy. Sometimes the policy requires that each indorsement shall be assented to by the insurers before the insurance attaches to it. In other policies the indorsement has, of itself, this effect. By indorsement of the policy is not meant that the insured may make his own indorsement at his own time and pleasure, on the copy of the policy in his hands, and then this indorsement necessarily and by its own force brings the property under insurance, without a communication of it to the insurers. For the indorsement must be made on the copy of the policy in the hands of the insurers, or at all events a communication must be made to them. If, however, the terms of the policy give to the insured the right to specify and indorse certain shipments, and the insured, in due time and manner, specify and declare such a shipment, and request of the insurers the indorsement. thereof, and the insurers refuse this without sufficient cause, they would be held as effectually as by an indorsement. We learn from a case in Burrow's Reports that this form of policy was, if not common, at least not unknown in England more than a century ago. The action was upon a policy whereby an insurance was effected on "any kind of goods and merchandises whatever," in "any of the packet-boats that should sail from Lisbon to Falmouth, or such other port in England as his Majesty should direct his packets appointed between Lisbon and England for one whole year." Nothing is said in the case of any declaration or indorsement to be made. This omission may have arisen either from the circumstance that no question concerning indorsement was in the case, or from the absence of any requirement in the policy of indorsement. This last seems, from the whole case, probable. The case was tried before Lord Mansfield, and then before the whole court. "The court agreed that this was a policy of a peculiar sort." 1 De Costa v. Firth, 4 Burrows, 1966. In modern times, many questions have arisen under these policies. Some of them relate to the indorsement. It is common for the insured to make the indorsement on their own copy of the policy, communicate this to the insurers, and ask for their confirmation. If the insured makes an indorsement which he has a right to make, and this is communicated properly to the insurers, and they, without sufficient reason, refuse their acceptance, we have seen that they would, as these policies are generally framed, be held. So, too, if the insured made an indorsement varying from the terms of the policy, and which the insurers had a right to reject, if they accepted it they would be held. But the question has arisen, What is the proof of such acceptance? 1 If the insurers did any act which indicates a recognition of the indorsement, this may mean that they accept the indorsement, or only that they acknowledge notice of it. In one case the insurers placed their initials to an indorsement inconsistent with the policy. But it was held that this was not sufficient evidence of their assent to the alteration, on the ground that the initials might be construed as intended only to acknowledge the receipt of the notice, and identify it as a declaration of the insured.2 Sometimes the policy provides that it shall not be binding until countersigned by the insurers through certain agents. In a case in Massachusetts there was a policy "on property on board vessel or vessels to, at, and from all ports and places, as by indorsements to be made hereon." No policy could be wider in its provisions. It was duly countersigned. Afterwards, the agents who countersigned it agreed with the insured to insure under this same policy, but for an additional premium, a certain quantity of merchandise then on shore. This merchandise was destroyed by fire, and the insurers were held, on proof that the merchandise was to have been shipped, and that there was no unreasonable delay in shipping it.3 1 See the case of Dounville v. Sun Mut. Ins. Co., 12 La. Ann. 259, in note 1, p. 326, infra. Entwhistle v. Ellis, 2 H. & N. 549. Kennebec Co. v. Augusta Ins. & Banking Co., 6 Gray, 204. The defendant corporation did business in Boston, through its agents, P. & B. On the 9th 66 of February, 1865, it duly insured the plaintiffs, to the amount of $ 30,000, “ on property on board vessels, &c., to, &c., as per indorsements to be made hereon." On the 21st of the same month, the plaintiffs having purchased 400 bales of cotton, of which 115 were on board ship, and the remainder in store at New Or In another case the policy was indorsed, " open, cargo, steamboat, and canal"; the policy declared that the insurance was against "the perils of the seas, rivers, fire, and overpowering leans, applied to the defendants' agents to effect insurance thereon under this open policy. B., one of the agents, agreed to effect the insurance upon both parcels, on board vessels from New Orleans to Boston, taking also, in reference to the 285 bales not shipped, the additional "risk of fire on shore, until shipped, from date of storage"; charging therefor one eighth of one per cent beyond the premium paid for the hazards of the voyage. Merrick, J., in delivering the opinion of the court, said: "The policy which was issued by the defendant was, in its term, restricted to such property only as should be on board vessel or vessels bound on voyages from one port to another. Unless, therefore, the express stipulations contained in the policy were in fact, and could lawfully be, changed and enlarged by the subsequent agreement made by the plaintiffs with P. & B., as the agents of the defendants, the latter were and could be under no liability for the cotton destroyed by fire in the storehouse at New Orleans. But it is now a perfectly wellsettled doctrine that a written contract may be materially varied and changed by subsequent agreements orally entered into by the parties at any time before there has been a breach of its stipulations. This is very fully and emphatically stated by Lord Denman, in Goss v. Lord Nugent, 5 B. & Ad. 65, and 2 Nev. & Man. 33, 34. He there says: 'After the agreement has been reduced into writing, it is competent to the parties, at any time before breach of it, by a new contract not in writing, either altogether to waive, dissolve, or annul the former agreement, or in any man ner to add to, or subtract from, or vary or qualify, the terms of it, and thus to make a new contract, which is to be proved partly by the written agreement, and partly by the subsequent verbal terms ingrafted upon what will thus be left by the written agreement.' This principle of law, thus stated and explained by Lord Denman, has been distinctly sanctioned and adopted by this court. 486. Cummings v. Arnold, Met. And Mr. Justice Wilde, in giving the opinion of the court in that case, refers to numerous authorities, which are considered by him as fully upholding and sustaining it." The opinion then considers the point as to whether the defendants were authorized to insure in the manner they did; concludes that they were, and that it was a good and sufficient contract, and continues: "In the view we have taken of the character and effect of the contract between the parties, it is obvious that an indorsement upon the policy of the property to be insured against the peril of fire while it was on shore was not essential to subject the defendants to legal liability under the new or modified contract. Such omission, therefore, to indorse it till after the loss, though urged as an insuperable objection to the maintenance of this action, is immaterial. . . . . Nor is it a sufficient foundation for the further objection of the defendants, that the agreement to insure fixes no certain time when the risks were either to commence or be determined, as it appeared that the property were destroyed in nine days after it was insured, when ready to be shipped.” thieves." An indorsement was made on the policy of a certain sum on cargo on a canal-boat, and it was held that the policy, by force of the indorsements, covered the cargo so indorsed against the ordinary risks of canal navigation.1 By far the most difficult question which has arisen under policies of this kind relates to the obligation of insurers to indorse shipments declared to them by the insured, as made under the policy. The adjudication upon this question does not enable us to give with certainty a rule which would always answer it. It is obvious, that, if the insurers are bound to accept or make an indorsement, their refusal to do so cannot discharge them from their liability. But it is equally obvious that the terms of the policy may make any indorsement ineffectual until the insurers do accept or indorse it, and that they have a right of election on this point. We should doubt very much whether the common policies of this kind give, or are intended to give, this right to the insurers. By the policy itself a bargain is made by which the insurers agree to insure certain merchandise. They may describe this merchandise as precisely as they please by name, or character, or voyage, or ship; but when a shipment comes distinctly within this description, we cannot doubt that they should be held. These running policies are now sometimes made with a further reservation as to the premiums, it being provided that they should be fixed at the time of indorsement. In a recent case on such a policy, the Circuit Court of the United States for the district of Maryland held that the contract was complete and binding as soon as the vessel was reported; and that, if the parties could not agree as to the additional premium, the question was for the courts to settle. But, the case going by writ of error to the Supreme Court, the decision was there reversed. We give this case at length in our note, because, by the comparison it draws between common marine policies and such as this, it illustrates much of the law of these policies.2 1 Protection Ins. Co. v. Wilson, 6 laden or to be laden on board the Ohio State, 553. "good vessel or vessels" from Rio de Janeiro to any port in the United States, to add an additional premium, if by vessels lower than A 2, or by foreign vessels. The policy contained the following clause in respect to premiums: |