Brownsville Fabrics, Inc. v. Gulf Ins. Co., 1120

• Decision Date: 31 March 1977
• Docket Number: No. 1120,1120
• Citation: 550 S.W.2d 332
• Parties: BROWNSVILLE FABRICS, INC., et al., Appellants, v. GULF INSURANCE COMPANY et al., Appellees.
• Court: Texas Court of Appeals

Page 332

550 S.W.2d 332

BROWNSVILLE FABRICS, INC., et al., Appellants, v. GULF INSURANCE COMPANY et al., Appellees.

No. 1120.

Court of Civil Appeals of Texas, Corpus Christi.

March 31, 1977.

Rehearing Denied May 12, 1977.

Richard B. Stone, Stone, Berryman & Giles, Corpus Christi, for appellants.

Paul M. Green, San Antonio, Adams, Graham, Lewis, Jenkins, Jones & Graham, McAllen, for appellees.

OPINION

BISSETT, Justice.

The insureds in this case, under a "Scheduled Property Floater Policy", seek to recover losses which resulted from a fire that damaged the stock of merchandise in one of their stores and caused a business shutdown. The plaintiffs are Brownsville Fabrics, Inc. and McAllen Fabrics, Inc. The defendants are Gulf Insurance Company and William F. Havey, Stuart S. Jennings, Leroy James Nash, and Al P. Havey, individually, and doing business as Pan American Insurance Agencies. In addition to suing the insurer, Gulf Insurance Company, for the damages caused by the fire which they contend was due them under the policy, plaintiffs also sued the other named defendants for damages because of negligence in failing to provide them with the type of coverage which would have fully protected them from all damages to their stock of merchandise.

Trial was to the court, sitting without a jury. Judgment was rendered that plaintiffs take nothing against Gulf Insurance Company for any damage sustained to their stock of merchandise; that they take nothing against any of the defendants in their action for negligence; and that they recover from Gulf Insurance Company the sum of $78,000.00 for "business shutdown" under the policy, which recovery, however, was subject to a credit of $66,000.00 that had been paid by the insurer to plaintiffs prior to the date judgment was signed. Plaintiffs have appealed the judgment in its entirety.

Appellants, Brownsville Fabrics, Inc. and McAllen Fabrics, Inc., will be called "plaintiffs"; appellee, Gulf Insurance Company, will be designated as "Gulf"; and appellees, William F. Havey, Stuart S. Jennings, Leroy James Nash and Al P. Havey, d/b/a Pan American Insurance Agencies, will be referred to as "Agents".

IN GENERAL

Plaintiffs were retailers and wholesalers of fabrics in the lower Rio Grande Valley. At all times pertinent to this appeal, they operated a store in Brownsville and a warehouse in McAllen. Agents, on or about December 12, 1969, solicited plaintiffs' business insurance. Plaintiffs then requested that Agents provide $400,000.00 coverage for the Brownsville store and $200,000.00 in like coverage for the McAllen warehouse. Because no one company would underwrite the complete coverage requested by plaintiffs and because cheaper fire and extended coverage insurance could be obtained by segregating those risks and placing them with companies authorized to deviate rates by the State Board of Insurance, Agents obtained four policies for plaintiffs. They consisted of three policies for fire and extended coverage which were written by insurance companies who are not parties to this suit, each of which provided a policy for one-third of the desired amount of fire and extended coverage; in addition, Gulf issued to plaintiffs a policy entitled "Scheduled Property Floater Policy", No. SP 4 70 46 91, which insured plaintiffs from December 12, 1969 until December 12, 1972. Attached thereto and forming a part thereof was a writing, which was denominated "Merchants Property Policy". Among other provisions, liability was limited to $400,000.00 for loss at the Brownsville store, and $200,000.00 for loss at the McAllen warehouse. It further provided for loss because of "business shutdown" at either of the locations at the rate of $6,000.00 per week, not to exceed 26 weeks.

There was also attached to Gulf's policy, No. SP 4 70 46 91, an endorsement styled "OTHER OR SPECIFIC INSURANCE ENDORSEMENT (EXISTING)". ¹

All of the policies were written on a reporting form basis with respect to plaintiffs' stock on hand. The three fire and extended coverage policies were on a monthly reporting basis. Gulf's policy provided for quarterly reporting.

On or about January 12, 1970, the fire and extended coverage for the Brownsville store was reduced from $400,000.00 to $125,000.00; the coverage on the McAllen warehouse was reduced from $200,000.00 to $60,000.00, and coverage in the amount of $90,000.00 was added because of the acquisition of a new store in McAllen. Three new policies covering fire and extended coverage in the reduced amounts for the Brownsville store, the McAllen warehouse, and the additional amount for the new store in McAllen, were issued by the same three companies who had previously issued fire and extended coverage policies for $400,000.00 coverage on or about December 12, 1969.

Gulf, pursuant to Agents' request, then executed and delivered a writing to plaintiff, which was also denominated "Merchants Property Policy". It was dated January 12, 1970 and limited liability on the Brownsville store to $125,000.00, limited liability on the McAllen warehouse to $60,000.00, and further provided for coverage on the new store in McAllen in the amount not to exceed $90,000.00. The "writing" constituted a rider to the original policy No. SP 4 70 46 91. Its only effect was to reduce the limits of liability on the Brownsville store and on the McAllen warehouse from $400,000.00 and $200,000.00 to $125,000.00 and $60,000.00, respectively, and to add coverage for the new McAllen store in an amount limited to $90,000.00.

On March 15, 1971, a fire occurred at the Brownsville store, which caused considerable damage to plaintiffs' stock of merchandise (stock) and to the building which housed the store. The building was repaired. Plaintiffs reopened the store for business on September 10, 1971.

Plaintiffs demanded that Gulf pay them $104,000.00 as damages for loss of stock, and $156,000.00 because of "business shutdown". The demand was refused. Suit was then filed.

The last report by plaintiffs on the Brownsville store prior to the fire was made on November 30, 1970, when they reported $75,000.00 worth of stock on hand. In the loss adjustments between plaintiffs and the three companies who issued the fire and extended coverage policies, plaintiffs, in their proofs of loss, claimed $25,000.00 due under each policy; they were paid $25,000.00 by each company for a total of $75,000.00. Plaintiffs also received a net of $32,192.18 at a salvage sale for the damaged stock. Gulf, prior to judgment, paid plaintiffs (pursuant to an agreement between them) the sum of $66,000.00 as damages for "business shutdown".

STOCK COVERAGE POINTS OF ERROR

The trial court found: Gulf's policy was designed to provide coverage in the full amount desired at each location for all risks and hazards other than those included within the three fire and extended coverage policies; plaintiffs did not, at any time, "object to the means employed to provide the desired coverage nor to any of the provisions, terms and conditions of the policies"; no premium was charged by Gulf to plaintiffs for fire loss coverage to plaintiffs' stock; a short time after delivery of the policies, plaintiffs advised Agents that they desired to reduce the coverage on the Brownsville store from $400,000.00 to $125,000.00, and on the McAllen store from $200,000.00 to $60,000.00, and to add coverage of $90,000.00 on a new store at McAllen.

The trial court concluded: Gulf's policy did not provide coverage on the loss by fire to stock, as claimed by plaintiffs; there is no evidence of any agreement between plaintiffs and either Gulf or Agents for stock coverage in excess of $125,000.00 on the Brownsville store as of the date of the loss; there was no consideration paid to Gulf by plaintiffs for coverage of the stock loss due to fire under the policy in question; and, there is no evidence that any representation was made to plaintiffs by either Gulf or Agents that excess stock coverage would be provided for the Brownsville store.

The above findings of fact and conclusions of law are attacked by plaintiffs on points 1, 2, 3, 4, 5, 6A, 6B, 7, 9A, 9B, 10 and 13. They argue, in substance, that under the evidence, as a matter of law, Gulf's policy at the time of the fire on March 15, 1971 was a valid "all risk" policy, which, by its express terms provided insurance coverage for the fire damage and loss to the stock; that the undisputed evidence shows that Agents proposed to plaintiffs that they take out Gulf's policy in addition to the $125,000 underlying fire coverage, and Agents did, in fact, request the policy from Gulf, and Gulf did, in fact, issue and plaintiffs did, in fact, accept such written agreement, "dated January 12, 1970, to provide excess all risk stock coverage of $125,000.00 for loss at the Brownsville location above the underlying insurance coverage of $125,000.00 which existed at that time"; that under the undisputed evidence, an agreement was made between plaintiffs and Agents for stock coverage in excess of $125,000.00 on the Brownsville store; that they paid premiums for the coverage which they say covered the stock loss; and that consideration was paid to Gulf for the issuance of a policy that did insure them against loss to their stock by fire.

In addition to the foregoing findings of fact, about which plaintiffs complain in this appeal, the trial court found (Findings 13-15) that all policies were revised in accordance with plaintiffs' desires and requirements which reduced the coverage as requested by plaintiffs, and that such policies, as revised, were delivered to and accepted by plaintiffs. The trial court further found in finding 17:

"17. The means initially employed by Gulf to exclude fire and extended coverage from the ambit of the insurance protection provided by the policy in question was the attachment of an endorsement styled "Other or Specific Insurance Endorsement (Existing)". The policy, as initially delivered to P...