Fredonia State Bank v. General American Life Ins. Co., D-3589

• Decision Date: 08 September 1994
• Docket Number: No. D-3589,D-3589
• Parties: FREDONIA STATE BANK, Executor of the Estate of Claytor Blake, III, Deceased, et al., Petitioners, v. GENERAL AMERICAN LIFE INSURANCE COMPANY, Respondent.
• Court: Texas Supreme Court

Page 279

881 S.W.2d 279

FREDONIA STATE BANK, Executor of the Estate of Claytor

Blake, III, Deceased, et al., Petitioners, v. GENERAL AMERICAN LIFE INSURANCE COMPANY, Respondent.

No. D-3589.

Supreme Court of Texas.

Argued Oct. 14, 1993.

Decided June 2, 1994.

Rehearing Overruled Sept. 8, 1994.

Charles B. Lord, C.L. Ray, Austin, K. Scott Brazil, Houston, and L. Giles Rusk, Nacogdoches, for petitioners.

Steven Troy Roper and Linda O. Poland, Lufkin, for respondent.

ON APPLICATION FOR WRIT OF ERROR TO THE COURT OF APPEALS FOR

THE TWELFTH DISTRICT OF TEXAS.

Justice GONZALEZ delivered the opinion of the Court, in which all Justices join.

The principal issue in this case is whether an insurance company may assert the defense of misrepresentation for statements made in an application not attached to a life insurance policy. In reversing and remanding a jury verdict in favor of an insured, the court of appeals considered evidence contained in an application for life insurance that was not attached to, or made a part of, the life insurance policies at issue. 884 S.W.2d 167. Because article 21.35 of the Texas Insurance Code prohibits reliance on an unattached application to defeat payment of life insurance proceeds, we reverse the judgment of the court of appeals and remand the cause to that court for further proceedings.

I.

Claytor Blake III, died as the result of a gun-shot wound to the head. At the time of his death, he owned two life insurance policies, each in the amount of $250,000, issued by General American. General American refused the beneficiaries' claims, and Fredonia State Bank (the "Bank"), as assignee of one of these policies and as executor of the Claytor Blake estate, sued to collect the proceeds of the policies. General American asserted two defenses to the claim, that Blake had committed suicide, and that Blake had made misrepresentations regarding his medical history which were material to the risk assumed by General American. The Bank denied that the application contained misrepresentations, and argued that the application could not, in any event, provide the basis for a misrepresentation defense because the application was not attached to the policies issued to Blake. After evidence on both of these theories was introduced at trial, the jury found that Blake did not commit suicide, that the medical portion of Blake's application was not attached to the insurance policies, and that Blake did not misrepresent his medical history in order to obtain insurance, among other findings favorable to Fredonia Bank.

The trial court rendered judgment for the Bank for the proceeds of both policies. The judgment signed by the trial court did not award all of the relief sought by the Bank, however, and the Bank appealed. General American responded with cross points attacking the sufficiency of the evidence to support the findings concerning misrepresentation. The court of appeals sustained General American's points that the great weight and preponderance of the evidence was contrary to the jury's failure to find that Blake made misrepresentations in order to obtain insurance. The court therefore reversed and remanded for a new trial.

II.

As a preliminary matter, we must consider whether General American's factual sufficiency claims were properly before the court of appeals. General American raised factual sufficiency points in a motion for new trial filed after the trial court originally rendered judgment. Later, the trial court signed a second judgment. The Bank contends that only a motion for new trial filed after the court's second judgment would preserve factual sufficiency points. We disagree.

After the jury returned a verdict generally favorable to the Bank, General American filed its motion for judgment not withstanding the verdict. The motion, filed May 3, 1990, asked the court to disregard several controlling issues, and render a take-nothing judgment.

The trial court signed a judgment on May 14, 1990. The court granted General American's motion for judgment NOV in part disregarding findings of bad faith; the court rendered judgment on the verdict on the remaining issues, however, including actual and punitive damages, and attorney fees.

On June 1, 1990, General American filed its Motion for New Trial and to Correct or Reform Judgment. The motion asked the court to set aside its judgment of May 14, 1990 and grant a new trial for factual sufficiency reasons. Alternatively, General American requested a modification of the judgment to reduce the amount of attorneys fees. The court conducted a hearing on the motion but never ruled on it.

On July 27, 1990, the trial court signed an order ruling on General American's motion for judgment NOV consistent with the prior judgment, except that the trial court disregarded the finding on attorney fees. In a separate handwritten document entitled "Order", the court recited that the judgment "should be reformed" by deleting $276,142.45 of the attorney fees, "to reflect the ruling of the court on Defendant's Motion for Judgment Notwithstanding the Verdict signed this date."

On August 27, 1990, the trial court rendered its "Reformed Final Judgment" which was substantially the same as its prior judgment, except that the trial court deleted the award of attorneys fees. Without further motion in the trial court, General American filed its appeal bond on September 4, 1990.

In its initial opinion, the court of appeals invited the parties to address whether the August judgment was the final judgment and consequently, whether the court of appeals had jurisdiction. Despite the Bank's position to the contrary, the court of appeals correctly held that because the trial court changed its judgment during the period of its plenary power, the time for perfecting appeal started over with the August judgment. Since the appeal bond was filed less than 30 days later, the court of appeals properly exercised jurisdiction. 884 S.W.2d 167; accord, Old Republic Ins. Co. v. Scott, 846 S.W.2d 832, 833 n. 2 (Tex.1993).

In this court, the Bank shifts the emphasis of its argument from jurisdiction to preservation of error. The Bank contends the final judgment signed on August 27, 1990, was not challenged by a motion for new trial, therefore General American has waived any complaint about the factual sufficiency of the evidence supporting the jury's verdict.

General American asserts in part that its motion for new trial preserved error in the subsequent modified judgment under Rule 58(c) of the Texas Rules of Appellate Procedure which states:

(c) In civil cases, if the trial court has signed an order modifying, correcting, or reforming the order appealed from, or has vacated that order and signed another, any proceedings relating to an appeal of the first order may be considered applicable to the second....

TEX.R.APP.P. 58(c). To complain on appeal that a jury finding is not supported by factually sufficient evidence, or is against the overwhelming weight of the evidence, a party must have first raised the matter in a motion for new trial. TEX.R.CIV.P. 324(b)(2), (3).

The Bank contends that Rule 58(c) does not apply for two reasons. First, the Bank argues the motion for new trial should not be considered because it expressly assailed only the first judgment, not the second judgment. ¹ Second, the Bank claims the motion for new trial was overruled by operation of law, and therefore was not a viable pleading at the time the August 27 Judgment was signed.

We conclude that under Rule 58(c) a motion for new trial relating to an earlier judgment may be considered applicable to a second judgment when the substance of the motion could properly be raised with respect to the corrected judgment. See, e.g., Gill v. Rosas, 821 S.W.2d 689, 690 (Tex.App.--El Paso 1991, no writ); Alford v. Whaley, 794 S.W.2d 920, 922-23 (Tex.App.--Houston [1st Dist.] 1990, no writ); Syn-Labs, Inc. v. Franz, 778 S.W.2d 202, 203-04 (Tex.App.--Houston [1st Dist.] 1989, no writ); Clark v. McFerrin, 760 S.W.2d 822, 825 (Tex.App.--Corpus Christi 1988, writ denied); Miller v. Hernandez, 708 S.W.2d 25, 26-27 (Tex.App.--Dallas 1986, no writ) (construing the predecessor to Rule 58, TEX.R.CIV.P. 377a (repealed 1986)). Our holding does not fully resolve the Bank's arguments, however. The Bank asserts that a motion for new trial that has been overruled by operation of law is no longer a viable motion, and therefore is not effective to challenge a subsequent judgment. The Bank contends that General American's motion for new trial was overruled by operation of law on July 28, ignoring the trial court's order on July 27. Assuming the Bank is correct that the motion for new trial was overruled, we do not agree that it failed to preserve error on the later judgment.

The Bank relies for authority on the case of A.G. Solar & Co., Inc. v. Nordyke, 744 S.W.2d 646 (Tex.App.--Dallas 1988, no writ). In Solar, the court held that a motion for new trial was inadequate to assail a second judgment rendered after the motion had been overruled by operation of law. Id. at 647. The motion for new trial in that case had been overruled by operation of law before the trial court rendered a changed judgment. The court of appeals held that a motion for new trial that has already been disposed of "can no longer 'assail' a subsequent judgment under rule 306c of the Texas Rules of Civil Procedure, and can no longer 'be properly applied' to that judgment under rule 58 of the Texas Rules of Appellate Procedure." Id. at 647-48. The issue in Solar, however, was not whether the motion for new trial preserved error, but whether it was effective to extend the appellate time table.

Rule 58 is not limited by its language to motions that are "live" when the final judgment is rendered, although for jurisdictional purposes, the Solar court and a number of other courts of appeals have engrafted such a requirement onto the rule by judicial interpretation....