Brown v. American Transfer and Storage Co.

• Decision Date: 18 June 1980
• Docket Number: No. B-8565,B-8565
• Citation: 601 S.W.2d 931,23 Tex.Sup.Ct.J. 426
• Parties: Raymond J. BROWN, Petitioner, v. AMERICAN TRANSFER AND STORAGE COMPANY, Respondent.
• Court: Texas Supreme Court

Page 931

601 S.W.2d 931

Raymond J. BROWN, Petitioner, v. AMERICAN TRANSFER AND STORAGE COMPANY, Respondent.

No. B-8565.

Supreme Court of Texas.

June 18, 1980.

Rehearing Denied July 23, 1980.

Adams & Mims, Carl David Adams, Dallas, for petitioner.

Golden, Potts, Boeckman & Wilson, Duncan Boeckman, Dallas, for respondent.

CAMPBELL, Justice.

This is a deceptive trade practices case. The trial court rendered judgment for Plaintiff Brown, based on a jury verdict. The Court of Civil Appeals reversed the trial court's judgment and remanded for a new trial. 584 S.W.2d 284. We reverse the judgment of the Court of Civil Appeals and affirm the judgment of the trial court except that part of its judgment which awarded recovery for mental anguish. The trial court's judgment is otherwise affirmed.

In July 1974, Brown contacted American Transfer to determine the services offered in a move of household furniture and goods, and automobile, from Irving, Texas, to Fairbanks, Alaska. Joe Stanton, a salesman for American Transfer, went to Brown's home, surveyed its contents and described the services offered. Stanton represented the furniture and goods would be packed securely in wooden vaults or crates in Brown's presence; the containers would not be opened or tampered with until delivered to the Browns' Fairbanks home; the automobile would be shipped separately; and, the furniture would be unpacked and placed in the Fairbanks house at Brown's direction. Relying on these representations, Brown contracted with American Transfer for shipment.

These representations were contrary to American Transfer's actual method of operation. American Transfer's employees packed the furniture and goods as represented; but at American Transfer's Dallas warehouse and without Brown's knowledge, they removed the furniture and goods from the wooden containers. The furniture and cardboard boxes containing Brown's other possessions were then packed in one sea-land container in a "Loose Pack" with the automobile.

Most of the items shipped were badly damaged or missing. The automobile had been driven 1200 miles and had been wrecked. Additionally, the practice of the terminal carrier was to set the furniture and cardboard containers in the house and not to unpack the furniture and goods and place them as directed, as was represented to Brown.

American Transfer was not an interstate carrier but served as an agent for interstate carriers and as a packer of goods for interstate shipment. Interstate authority is not required to accept goods, turn them over to a freight forwarder for shipment, and collect for all the charges up and down the A jury found American Transfer represented to Brown that the moving services of American Transfer (1) would include benefits and characteristics which they did not include; and (2) were of a particular standard, quality or grade, when in fact they were not. The jury found damage to Brown's household goods and furniture of $18,434.00; cost of repair of the car was $1,059.22 and $5,000.00 damages from mental anguish. The trial court rendered judgment against American Transfer for treble damages and attorney's fees.

line. The freight forwarder, Columbia Export Packers, Inc., issued its household bill of lading and freight bill covering the transportation of Brown's possessions. The bill of lading and the order for services signed by Brown limited American Transfer's damages to 30cents per pound of the weight of the goods shipped or $25 per article. The order for services also provided that Brown would arrange additional insurance if desired. Brown secured insurance from Insurance Company of North America (INA) and collected $11,009.22 under the policy.

We are to determine whether

(1) the collateral source rule is applicable to the INA payment;

(2) American Transfer pleaded the existence of any contract entitling it to the benefit of the INA payment or offset by reason of such insurance payment;

(3) the INA policy or the payment thereunder was admissible in evidence as an admission by Brown of the extent of his damages;

(4) American Transfer's objections to special issues were preserved for appellate review;

(5) Brown's claim for damages is controlled by the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 20, P (11) which, under the doctrine of pre-emption, proscribes application of the Texas Deceptive Trade Practices Consumer Protection Act (DTPA) to limit Brown's damages to 30cents per pound of the weight of the goods shipped; and

(6) damages for mental anguish are recoverable under the DTPA.

COLLATERAL SOURCE AND DOUBLE RECOVERY

The order for moving services, provided by American Transfer, limits its liability to 30cents per pound per article and to $25 total claim per article. The order further provides "I will arrange additional insurance if desired." Brown desired additional insurance and provided in the order for $26,100.00 of coverage at a premium of $552.00. Brown's wife signed the order, paid the premium, and was issued a "Transit-Pak" certificate of insurance by American Transfer, as agent for INA. The INA certificate excluded subrogation against American Transfer.

The bill of lading and freight bill issued by American Transfer as agent for Columbia Export Packers, Inc., also limits the carrier's liability to 30cents per pound and states "additional insurance is available to the shipper in the event he desires it." However, Brown did not sign this document until the goods were delivered in Alaska.

Brown filed a written claim with INA and was paid $10,000.00 for loss and damage to furniture and goods and $1,009.22 for damages to the car. American Transfer contends it should receive the benefits of the insurance payment and the Court of Civil Appeals agreed. We disagree.

The theory behind the collateral source rule is that a wrongdoer should not have the benefit of insurance independently procured by the injured party, and to which the wrongdoer was not privy. Texas & Pacific Ry. Co. v. Levi & Bro., 59 Tex. 674 (1883). Levi's cotton, stored in the Levi yards adjacent to the tracks, was destroyed by fire caused by negligence of the railroad. Levi collected insurance on the cotton under a policy secured by it and on which it had If the cotton had been fully paid for by insurance companies under policies which had been paid for by the (Levis), it is not perceived how that could in any manner affect the liability of the (railroad). Such payment would be the result of contract with which (the railroad) has no privity, and to which, in no respect, had it made any contribution.

paid the premiums, and then sued the railroad for damages. The railroad's defense was Levi had been compensated for the loss under a fire insurance policy. The court held:

The insurer and the defendant are not joint tort-feasors or joint debtors so as to make the payment or satisfaction by the former operate to the benefit of the latter; nor is there any legal privity between the defendant and the insurer so as to give the former the right to avail itself of a payment by the latter. The policy of insurance is collateral to the remedy against the defendant, and was procured solely by the plaintiff at his expense, and to the procurement of which the defendant was in no way contributory. . . . It cannot be said that the plaintiff took out the policy in the interest or behalf of the defendant, nor is there any legal principle which seems to require that it be ultimately appropriated to the defendant's use and benefit.

The Levi opinion is controlling. Payment to Brown by INA was the result of a contract to which American Transfer had made no contribution and was not privy. INA and American Transfer were not joint tortfeasors or joint debtors. The INA policy was procured solely at Brown's expense. American Transfer did not aid in the procurement of the policy except to issue the policy, as an insurance agent, and collect the premium. The provision in the order stating "additional insurance is available to the shipper in the event he desires it" is not contractual. It advises Brown of a right which he already has and is no more than a warning. There is nothing to indicate that Brown obtained the policy for American Transfer's benefit. There is no legal principle to require the proceeds be appropriated to American Transfer's benefit for violations of the Deceptive Trade Practices Act (DTPA).

The collateral source rule was not applied in Publix Theatres Corporation v. Powell, 123 Tex. 304, 71 S.W.2d 237 (1934). Powell, lessor, by written contract required Publix, lessee, to keep the property insured, for at least $20,000.00, with loss, payable to lessor. Fire destroyed the building, and lessor, after payment of $20,000.00 by the insurance company, sued lessee for the loss of the building. This Court held to permit the lessor to keep the insurance money and also collect from the lessee would be a double recovery not sanctioned by law. The lessee is liable for the result of his negligence but when he has provided for those damages, either by personal payment or insurance payment, the damage claim has been satisfied. The contract required insurance, which was to be paid by lessee, and the parties were in privity with each other by reason of the contract. The facts in Publix are distinguishable from Brown; however, the reasoning is helpful in demonstrating the application of the rule.

In Wichita City Lines v. Puckett, 156 Tex. 456, 295 S.W.2d 894 (1956), a lease agreement provided "Lessor agrees to carry his own insurance against loss by fire, etc., on the entire building." The Bus Lines, lessee, contended the insurance purchased by Puckett was for the benefit of both, and that Puckett could not recover from the Bus Lines after receiving the insurance payment. This Court held the collateral source rule applied because the insurance provision did not impose an obligation on the lessor to protect himself, or the lessee,...