American Ins. Co. v. Maddox, 1348.

• Decision Date: 04 May 1933
• Docket Number: No. 1348.,1348.
• Parties: AMERICAN INS. CO. OF CITY OF NEWARK, N. J., v. MADDOX.
• Court: Texas Court of Appeals

60 S.W.2d 1074

AMERICAN INS. CO. OF CITY OF NEWARK, N. J., v. MADDOX.

No. 1348.

Court of Civil Appeals of Texas. Waco.

May 4, 1933.

Rehearing Denied June 15, 1933.

Appeal from District Court, Limestone County; Lex Smith, Judge.

Suit by J. F. Maddox against the American Insurance Company of the City of Newark, New Jersey. Judgment for plaintiff, and defendant appeals.

Reversed and remanded for a new trial.

Thompson, Knight, Baker & Harris and Hubert W. Smith, all of Dallas, and Lewis M. Seay, of Groesbeck, for appellant.

Mr. & Mrs. C. S. Bradley, J. E. & B. L. Bradley and L. W. Shepperd, all of Groesbeck, and W. M. White, of Mexia, for appellee.

ALEXANDER, Justice.

J. F. Maddox brought this suit to recover on a fire insurance policy in the sum of $1,500 issued by the American Insurance Company. The policy, to the extent of $1,000, covered the machinery used in a cleaning plant and the remaining $500 covered the building. The insurance company, in addition to entering a general demurrer and a general denial, sought to avoid liability on the ground that the lot on which the building was situated was not owned by the insured in fee simple, and further because the insured carried more insurance than was permitted under the concurrent insurance clause. A trial before a jury resulted in a verdict for plaintiff, and judgment was entered accordingly for the sum of $1,500. The insurance company appealed.

The policy provided that the total concurrent insurance permitted, including the policy sued on, should not exceed $4,500. It further provided as follows: "This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void if the insured now has or shall hereafter make or procure any other contract of insurance, whether valid or not, on property covered in whole or in part by this policy. * * *"

Appellant's first contention is that the court erred in refusing to give an instructed verdict in its behalf because appellee carried more insurance on the property than was permitted by the above provision of the policy. The appellee concedes that at the time of the fire he carried insurance on the property to the amount of $6,500, but contends that the company had full knowledge of the amount of such insurance at the time it issued the policy and that it is now estopped to assert the provision of the policy prohibiting such additional insurance. The facts with reference to the alleged estoppel arose in this way: On February 19, 1929, the appellant, through its agent, Tom Cox, issued and delivered to the appellee its policy in the sum of $1,500, insuring the property against loss by fire for a period of one year. That policy limited the total insurance to $2,500. The remaining $1,000 insurance was carried in another company through Mr. Karner as agent. Said policy in the sum of $1,500 was renewed by appellant in 1930 by the issuance of a new policy and again in 1931, the last renewal being the policy on which this suit is based. Shortly after the issuance of the original policy in 1929, the appellee improved the property and informed Cox and Karner that he desired to carry additional insurance on the property. It was then mutually agreed between the appellee and Mr. Cox and Mr. Karner that additional insurance in the sum of $4,000 should be taken, $2,000 with Cox and $2,000 with Karner. Accordingly, Karner issued additional policies for $2,000, and Cox, with full knowledge of that fact, issued other policies in other companies for $2,000, making the total insurance $6,500. This all occurred during the year 1929. It does not appear that at that time any indorsement was made on the policy theretofore issued by the appellant, permitting such additional insurance. It is not shown what amount of concurrent insurance was provided for in appellant's renewal policy issued in 1930, but when this policy was renewed in 1931 it was so drawn as to limit the concurrent insurance to $4,500, instead of $6,500 as was actually carried. Each of the policies issued by Karner was a one-year policy and was renewed from year to year and was in force at the time of the fire, which occurred on October 5, 1931. Two of the policies issued by Karner were renewed the last time after appellant had issued the policy sued on.

It is well settled that if at the time appellant issued the policy sued on its agent knew that appellee had taken out and was then carrying more insurance than was permitted by the terms of the policy, the appellant would be estopped to plead said provision of the policy as a defense herein. It would not be allowed to plead as a defense a provision of the policy which it knew was false at the time the policy was issued. Wagner v. Westchester Fire Ins. Co., 92 Tex. 549, 50 S. W. 569; St. Paul Fire & Marine Ins. Co. v. Kitchen (Tex. Com. App.) 271 S. W. 893; Springfield Fire & Marine Co. v. Whatley (Tex. Civ. App.) 279 S. W. 287, par. 1, and cases there cited. It is clear that in 1929 while appellant was carrying a policy on the property in question its agent had knowledge of the fact that appellee had taken out and was then carrying $6,500 insurance on the property, and that said agent consented thereto. The insurance company was charged with notice thereof at the time it executed the renewal policy in 1930. It contends, however, that at the time it executed the renewal in 1931 it was not informed that the policies theretofore issued by Karner had been renewed and that it was not obligated to assume that such policies had been renewed. It appears, however, that appellant, through said agent, renewed its policy in 1930 and again in 1931 without any request or information from appellee or any one else. Said agent issued each of said renewals for the same amount and collected the premiums therefor, but kept the policies in his possession. Appellee never saw either of said policies and never knew that either of them limited the concurrent insurance to $4,500. From these facts we think it is apparent that appellant's agent must have necessarily issued the last policy with the same understanding and on the same information that he had at the time he issued the prior policy. The general rule is that, unless the contract is shown, the renewal will be presumed to have been issued upon the same information and subject to the same conditions known by the company to exist at the time the prior policy was issued. Cooley's Briefs on Insurance (2d Ed.) vol. 2, p. 1409; 26 C. J. 110, § 109; Springfield Fire & Marine Co. v. Whatley (Tex. Civ. App.) 279 S. W. 287; Farley v. Spring Garden Ins. Co., 148 Wis. 622, 134 N. W. 1054, par. 4; Bickford v. Aetna Ins. Co., 101 Me. 124, 63 A. 552, 8 Ann. Cas. 92; McKibban v. Des Moines Ins. Co., 114 Iowa, 41, 86 N. W. 38. Since appellant's agent knew when he issued the 1930 policy that the appellee had concluded to carry and was carrying $6,500 insurance on the property, it must be presumed that he had the same information at the time he issued the policy sued on in 1931 and that it was agreeable with him for appellee to carry $6,500 insurance on the property. If appellant in the meantime had concluded to change the course previously pursued by it and to insist that appellee carry only $4,500 instead of $6,500, it should have so informed the appellee; and upon its failure to do so the appellee had a right to assume that the company was still pursuing the same course and that it had reinsured the property with the same understanding. Cooley's Briefs on Insurance (2d Ed.) vol. 2, p. 1409. The jury found that the agent knew the amount of insurance carried on the property at the time the last policy was issued, and we think the verdict is supported by the evidence. Since appellant's agent, at the time he issued the policy sued on, was charged with knowledge that the provision limiting the concurrent insurance to $4,500 was false, the company is estopped to plead said provision as a defense.

Appellant further contends that even though it be charged with notice of the execution of the Karner policies which were in force at the time it issued its last policy, yet since two of the Karner policies expired and were renewed after appellant issued its last policy, this constituted the procurement of other contracts of insurance as prohibited by the above-quoted provision of its policy and appellant has a right to urge same as a defense herein. We do not understand this to be the rule. The general rule is that the taking of a policy of insurance in renewal of a prior policy known to the company to exist is not considered the procurement of other contracts of insurance, but is merely the...