Tex. Banking & Ins. Co. v. Hutchins

• Decision Date: 18 March 1880
• Docket Number: Case No. 887.
• Citation: 53 Tex. 61
• Parties: THE TEXAS BANKING AND INSURANCE CO. v. W. J. HUTCHINS.
• Court: Texas Supreme Court

53 Tex. 61

THE TEXAS BANKING AND INSURANCE CO.

v.W. J. HUTCHINS.

Case No. 887.

Supreme Court of Texas.

Mar. 18, 1880.

APPEAL from Galveston. Tried below before the Hon. William H. Stewart.

Suit by William J. Hutchins, appellee, upon a policy of insurance issued by the Texas Banking and Insurance Company, appellant, on the 14th of November, 1871, “to indemnify Ahrenbeck Brothers during one year thereafter against loss by fire, to the amount of $4,000, as follows: On their two-story frame shingle-roof building, $800; on their linter, huller, and shafting, $600; on their boiler and engine, $1,000; on their presses, $800; on their stock of oil and oil-cake, $800.”

The building was occupied by the assured as a cotton-seedoil factory, and the machinery and stock described were contained therein; the whole situated in the town of Hempstead, Texas; the loss, if any, payable to W. J. Hutchins.

The insurance company pleaded general denial, and specially: 1st. Misrepresentations and concealment, by the applicant for insurance, of the fact that, at the time of the application for and issuance of the policy, the building described as occupied as a cotton-seed-oil factory was occupied and used for the purpose of ginning cotton, with three gins therein, of which appellee had no knowledge, which fact materially enhanced the risk, and would have greatly enhanced the premium if it had been known, or have induced the appellant to decline it altogether, and was the direct cause of the fire occasioning the loss. 2d. That by the terms of the policy the appellee warranted that the building insured and containing the subjects of the risk was occupied as a “cotton-seed-oil factory,” but was in fact occupied and used for the ginning of cotton, with five cotton gins therein, which do not form a usual, necessary, or essential part of a cotton-seed-oil factory; that the ginning of cotton is a business of itself, distinct from a cotton-seed-oil factory, much more hazardous, and that appellant thereby broke his warranty. 3d. That, in contravention of the terms of the policy, the appellee used the property and premises mentioned, without the consent of appellant in writing, for the purpose of keeping, running, and working gins therein, which is a mechanical operation requiring the use of fire-heat, and to which fire-heat was applied, whereby the risk was increased, and by reason of the running of the gins the fire was caused which produced the loss complained of; wherefore the appellant was not liable, &c.

The answer set forth the application on which the policy sued on was issued, and averred that the fact that a cotton gin was running in the house was not therein disclosed, and was unknown to the appellant and known to appellee; that in fact one was running, and the fire occurred from it; that the gin increased the risk, and by reason of the concealment and breach of warranty and condition of the policy appellant was released from all liability thereon, and the policy was null and void.

To this answer Hutchins replied in a supplemental petition, denying all concealment and misrepresentation, and alleging that appellant made no inquiry to that effect; admitted that gins were being run at the time of the loss in connection with the operation of the oil factory in the house insured, and for the purpose of supplying seed to the latter; averred that the gins were propelled by the same engine and fire-heat that propelled the oil factory, and none other or greater; that they were so run in November, 1870, when appellant first took the risk, and had been ever since, openly and notoriously, and which fact was known to appellant and its agents; that Mohl, who was then an agent of appellant, with power to take and cancel risks, had seen the gins running, and in June, 1872, notified appellant's secretary of the fact, who declined to cancel the policy and notify appellee, notwithstanding that by the terms of the policy he had the right to terminate the risk at any time; that appellant, with this knowledge, suffered Ahrenbeck to continue his business, and did not claim that the policy was void until 26th December, 1872, two months after the destruction of the property by fire; “wherefore appellant had waived its right to avoid the policy, and is estopped by its acts.” It was also alleged in the original petition, in avoidance of appellant's reason for declining to pay the loss, that it was the general custom in Texas to run cotton gins in connection with cotton-seed-oil factories as part of the usual machinery employed in such factories, which custom was known to appellant when it took the risk sued on.

Appellant excepted specially to the supplemental petition, because it did not appear therefrom that the knowledge which the secretary acquired of the running of the gins came through Hutchins or his agent; that the facts set up were not sufficient to create a waiver or estoppel, and also denied all the averments, except that gins were run in the factory.

This demurrer was overruled, and there were verdict and judgment for Hutchins on the facts.

The facts in evidence are sufficiently disclosed by the opinion.

Willie & Cleveland, for appellant.

I. The first assignment of error is, that the court erred in overruling defendant's demurrer to plaintiff's replication. (Insurance Co. v. Lacroix, 45 Tex., 158; Gould on Plead., ch. 3, secs. 57, 58; Story Eq. Plead., sec. 263; Sayles on Plead., secs. 12, 30, 40, 116; Livermore on Agency, 237; 30 N. Y., 164; Ripley v. Ætna Insurance Co., 2 Lead. Cas. in Eq., 164; Big. on Est., p. 480.)

II. The second assignment of error is in the court overruling appellant's objections to testimony as set forth in bill of exceptions number 1. (17 Iowa, 187; 13 Iowa, 377; 22 Mich., 471;9 Cush., 473;17 Tex., 466, 576, and authorities cited.)

[This testimony was the evidence of Mohl, an agent of the company, in regard to his conversation with Lauve, the secretary. It will be seen in the opinion.]

The following errors assigned are considered together:

“3. The court erred in refusing to give the charges numbers 1 to 16, as set forth specifically in bill of exceptions number 2.

4. The court erred in its charge to the jury.

5. The court erred in giving the fourth paragraph contained in its charge, and especially in charging the jury therein as follows: ‘Or if you believe from the evidence that at the time of the insurance the cotton gins were used openly and publicly in the plaintiff's cotton-seed-oil factory, and that at that time it was usual in Texas to run cotton gins in connection with cotton-seed-oil factories, then the plaintiff would be entitled to your verdict.'

6. The court erred in giving the charge as contained in the fifth paragraph of its general charge, and particularly in undertaking to define what constituted notice in this case, and what the duty of the secretary of the company and what the duty of the company; and the court also erred in charging the jury therein as follows: ‘Or if the proof shows that the gins did not increase the risks any more than the same number of linters would have increased it, then the plaintiff would be entitled to your verdict.’ 'DDD'

[Counsel argued at length these assignments. The whole charges, given and refused, are copied in the brief, as well as the evidence. Both are too lengthy for insertion. So much of them as is important to understand, will be inferred from the opinion.]

Baker & Botts, for appellee.

I. The first assignment of error is, that the court erred in overruling defendant's demurrer to plaintiff's replication.

There was no error in overruling said demurrer. The replication is not based on notice in the sense of that word, but upon a knowledge on the part of the insurance company, brought home to it through its own agent, that gins were being run in the house insured; and the insurance company having the right to cancel the policy on that ground, and failing to do so, it was proper to submit the facts to a jury to say whether the company had not elected to waive all legal objection to such use of the gins. (26 Iowa, 10; 72 N. Y., 117;2 Amer. Lead. Cas., 920;Pierce v. Nashua Insurance Co., 50 N. H., 297;Currier v. Continental Insurance Co., 53 N. H., 538.)

The testimony objected to was that of Mohl. It was relevant and pertinent in this: that it showed that Mohl, while an agent of the insurance company, had seen cotton gins running in the oil factory, and had made known that fact to the secretary of the company several months before the loss occurred, and in this way brought home to the company a knowledge of the fact that Ahrenbeck was running cotton gins in connection with oil manufacture.

II. The plaintiff...