Royal Indem. Co. v. Marshall

Decision Date10 March 1965
Docket NumberNo. A-10207,A-10207
Citation388 S.W.2d 176
PartiesROYAL INDEMNITY COMPANY, Petitioner, v. Bob MARSHALL, Jr., Respondent.
CourtTexas Supreme Court

House, Mercer, House & Brock, San Antonio, for petitioner.

E. B. Fuller, Arthur Mitchell, Austin, for respondent.

GRIFFIN, Justice.

Respondent Bob Marshall, Jr., as plaintiff, sued petitioner Royal Indemnity Company, as defendant, in a district court of Travis County, Texas, upon an insurance policy for damages to three of plaintiff's used automobiles damaged by fire while in a garage owned by another and not a place of business used by plaintiff and not named in the insurance policy.

Trial was to a jury which made findings (1) that the cars destroyed were not, as contemplated by the insurance policy, in storage at 508 South Congress Avenue; (2) the cars were not on display at this address; and (3) the amount of damages was $3325.00. Upon these answers the trial court entered judgment for the plaintiff. Upon appeal this judgment was affirmed. 378 S.W.2d 364.

We reverse the judgments of both courts below and render judgment that plaintiff take nothing.

The disposition of this case depends on the proper construction of the following endorsement attached to and made a part of the insurance policy:

2. 'Named Locations-The insured represents that the specific locations named herein are all of the locations or spaces within locations owned, rented or controlled wholly or in part and used by the insured as places of display or storage of automobiles on the inception date of the policy. The company's limit of liability for each such location shall be as stated herein.

'The limit of liability stated for the main sales location shall be inclusive of the limit of liability for automobiles designated in paragraph 1, 'Property Covered,' which are made available for the use of the owner, officers or employees and privately stored at other than the named locations, and the actual cash value of all such automobiles shall be included in the monthly statements of values reported for the main sales location.

'UNNAMED LOCATIONS--

'(a) The insured shall report to the company any other location owned, rented or controlled wholly or in part by him which he commences to use as a place of display or storage of automobiles. Prior to receiving such report, the company shall not be liable for loss occurring after the first 45 days following the commencement of such use and the company's limit of liability at any such location shall not exceed $_____.

'(b) As respects automobiles at locations other than those named herein or in another policy affording the insured insurance against loss covered hereunder or described in paragraph (a) above, the company shall not be liable for loss occurring more than 7 days after liability could first attach as respects any one location and the company's limit of liability at all such other locations shall not exceed $_____.'

The location named was at 612 North Lamar Street.

Plaintiff is dealer in used automobiles. At the time the policy was issued he conducted his business at 612 North Lamar Street, Austin, Texas, as shown in the policy.

Shortly after the policy was issued plaintiff sold his lease and improvements at 612 North Lamar Street, but retained his cars and began business at West 5th Street and West Avenue, which was the location of his father's business. This change in location of plaintiff's business was communicated to defendant insurance company, and it issued a proper endorsement noting the changed location, and this endorsement was attached to the original policy held by plaintiff.

Plaintiff's father owned a building located at 508 South Congress Avenue, Austin, Texas, which he used in connection with his business for the purpose of painting and repairing cars for sale. This process is known to the trade as a 'make ready' process.

Prior to the fire, plaintiff had sent three of his used cars to this building on South Congress for painting and repair to make them ready for sale by him. The South Congress building was not a display room for the sale of cars.

Plaintiff seeks to recover on the policy because he contends that the limitation of liability set out in paragraph 2(b) whereby cars belonging to plaintiff are covered for only seven days when at locations not named in the policy and not described in paragraph 2(a) does not apply to plaintiff's cars while they are temporarily in others' shops for repair and not for storage or display. This reasoning is based on the premise that the word 'location' as used in the endorsement must be read in connection with the practices and customs of the used car business and the nature of that business, and when so construed means only a place where used cars are stored or displayed; that it does not mean a place where used cars are repaired or 'made ready.' Plaintiff says that by the issuance of the policy, defendant company agreed to insure the used car dealer and his cars in all uses relevant to his business; that in the used car business it is necessary that cars be taken from the location where they are stored or displayed for sale and taken to garages owned and controlled by others to be repaired or for other 'make ready' services; that the three damaged cars were at such a place at the time of the fire, and the limitations of liability in paragraph 2(b) of the endorsement cannot be held to relieve the company of liability.

The defendant insurance company contends that paragraphs 2(a) and 2(b) of the endorsement are exclusive of each other and describe two distinct and separate coverages; and that it is not liable for the damage to the cars, suffered more than seven days after insured began to use this unnamed location.

The policy contained provisions insuring cars at 'named' locations and also at 'unnamed' locations. The coverage afforded at named locations does not apply in our case. The language used under this heading may throw some light upon the proper construction of that portion of the endorsement having to do with coverage afforded at 'unnamed locations.'

The language used under the heading 'Named Locations' affords coverage to cars at such named locations used for 'places of display or storage of automobiles.' This portion of the endorsement also covers automobiles 'made available for the use of the owner, officers of employees and privately stored at other than the named location.' The three damaged cars do not qualify for coverage under any of the language in the paragraph entitled 'Named Locations' and plaintiff does not contend that these cars were included in the coverage provided by this part of the policy.

The next part of the policy is under the heading 'Unnamed Locations.' Paragraph (a) covers any other locations 'owned, rented, or controlled wholly or in part by him (the insured) which he commences to use as a place of display or storage of automobiles.' It further provides that a report of such locations shall be made to the insurer within forty-five days, and if no such report is made in such time, the insurer shall not be liable for loss occurring after the forty-five days reporting period. This provision does not afford coverage for the three damaged automobiles, because their location at the time of the fire damage was not 'owned, rented or controlled wholly or in part, 'by plaintiff nor was the location used by plaintiff 'as a place of display or storage of automobiles.'

Paragraph (b) under this 'Unnamed Locations' heading would afford coverage for the first seven days plaintiff had any automobiles located there.

The language is: 'As respects automobiles at locations other than those named herein * * *' or at other unnamed locations described in paragraph (a) 'the company shall not be liable for loss occurring more then seven days after liability could first attach as...

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