Commercial Union Assur. Co. v. Preston

• Decision Date: 31 March 1926
• Docket Number: (No. 3783.)
• Citation: 282 S.W. 563
• Parties: COMMERCIAL UNION ASSUR. CO., Limited, v. PRESTON.
• Court: Texas Supreme Court

282 S.W. 563

COMMERCIAL UNION ASSUR. CO., Limited, v. PRESTON.

(No. 3783.)

Supreme Court of Texas.

March 31, 1926.

Error to Court of Civil Appeals of Fifth Supreme Judicial District.

Action by T. J. Preston against the Commercial Union Assurance Company, Limited. From a judgment of the Court of Civil Appeals (238 S. W. 326), affirming a judgment in favor of plaintiff, defendant brings error. Judgments reformed, and, as reformed, affirmed.

Locke & Locke and Paul Carrington, all of Dallas, for plaintiff in error.

Williford & Geppert, of Fairfield, for defendant in error.

GREENWOOD, J.

Plaintiff in error delivered to defendant in error a certain policy, whereby, in consideration of $60.80 premium, plaintiff in error insured defendant in error for the term of one year from February 23, 1920, against direct loss or damage by fire, except as specially provided, in the amount of $2,000, on his moving picture machines and accessories, musical instruments, office furniture and fixtures, ticket vending machine, chairs, curtains, fans, elevated floors, light fixtures, and all other furniture and fixtures, not more hazardous, usual to a picture show, while contained in a certain building in the town of Teague, Tex.

Typewritten into the "mercantile stock form, with three-fourths value clause" pasted on the policy, were the words:

"It being understood that this company shall not be liable for loss or damage to moving picture machines or attachments caused by fire originating within the machines, nor does this policy cover loss or damage to films from any cause."

The three-fourths value clause appeared in print on said form in the following words:

"It is understood and agreed to be a condition of this insurance that in the event of loss or damage by fire to the property insured under this policy this company shall not be liable for an amount greater than three-fourths of the actual cash value of each item of property insured by this policy (not exceeding the amount insured on each such item) at the time immediately preceding such loss or damage; and in the event of additional insurance—if any is permitted hereon—then this company shall be liable for its proportion only of three-fourths of such cash value of each item insured at the time of the fire, not exceeding the amount insured on each such item."

The "mercantile stock form" under the heading "Lightning and Dynamo Clause" contained these words:

"Provided further that, if dynamos, wiring, lamps, motors, switches or other electrical appliances or devices are insured by this policy, this company shall not be liable for any loss or damage to such property resulting from any electrical injury or disturbance, whether from artificial or natural causes, unless fire ensues, and then for the loss by fire only."

The policy contained a provision that, if a fire occurred, the insured should, within 91 days after the fire, unless the time is extended in writing by the company, render a statement to the company, signed and sworn to by him, stating, among other matters, the knowledge and belief of the insured as to the time and origin of the fire, the interest of the insured and of all others in the property, and the cash value of each item thereof, and the amount of loss thereon. The policy stipulated that no suit thereon should be sustainable in any court until after full compliance by the insured with the requirements of the policy.

Defendant in error suffered loss by fire on March 8, 1920, to certain articles valued at $355.87, and plaintiff in error admitted it became liable to defendant in error for that sum, which it tendered.

The fire also destroyed the following property of defendant in error within the building described in the policy, to wit: Two moving picture machines, of the actual cash value of $1,004; one compenarc, of the actual cash value of $80.20; one fire extinguisher, of the actual cash value of $7.50. Defendant in error had an "orchestra" in said building, which was also damaged to the amount of $50.00. The proof of loss, submitted by defendant in error, failed to show loss of the fire extinguisher or damage to the orchestra.

Suit was brought to recover for the loss of the two moving picture machines, the compenarc, and the fire extinguisher, as well as for the damage to the orchestra, and for the loss of the other articles valued at $355.87. The suit resulted in a judgment in favor of defendant in error against plaintiff in error for $1,497.57, which was affirmed by the Dallas Court of Civil Appeals. 238 S. W. 326.

The first proposition presented by the application for writ of error is that plaintiff in error should not have been held liable for any sum for the loss of the moving picture machines and the compenarc, which was an attachment to the machines, because the insurance policy expressly exempted the company from liability for loss or damage to the machines and their attachments when caused by fire originating within the machines.

It is conceded by plaintiff in error that the standard fire policy prescribed by the Texas insurance commission contained no such clause or indorsement as that embodied in the policy sued on, undertaking to exempt the company from loss or damage to moving picture machines and attachments caused by fire originating within the machines. It is further conceded that the insurance commission, up to the time of the fire, had never taken any action whatever relative to prescribing or approving any clause or indorsement which would grant exemption from liability for damage or loss to moving picture machines and attachments from fire originating within same.

We agree with the Court of Civil Appeals that a clause or indorsement added to the standard form of fire insurance policy, without the authorization or approval of the state insurance commission, is void under article 4891, Complete Texas Statutes, now articles 4888 and 4889, R. S. of 1925; otherwise true effect cannot be given to the prohibition that no other forms be used than those established or approved by the commission. First Texas State Ins. Co. v. Smalley, 111 Tex. 72, 228 S. W. 550.

The purpose of statutes such as ours is well stated in Bourgeois v. Northwestern National Ins. Co., 57 N. W. 348, 86 Wis. 609, in the following language:

"This act is broad and sweeping in its terms and scope. It aims to bring order out of chaos. Prior to its passage there were as many different contracts of insurance as there were companies. The variations and differences between the conditions of the policies issued by the various insurance companies were almost infinite in number; new clauses and conditions were being constantly inserted, generally ingeniously worded and obscurely printed; and, singularly enough, these new conditions were always in the interest of the insurer, and not of the insured. To meet this condition, the act under consideration was passed. That it is a long step in the right direction cannot be doubted. Under it there can be practically but one form of policy. When a man contracts for insurance, he knows that he is contracting for a standard policy and for nothing else, and he knows that he will get that and nothing else."

The indorsement relied on to defeat liability for the loss by fire of the moving picture machines and compenarc would seem not only void as never having been authorized or approved by the commission, but it appears to us that it may be inconsistent with the prescribed proviso, embodied in the policy sued upon, that the company shall be liable for loss, by fire only, to any electrical appliances or devices insured by the policy resulting from electrical injury or disturbance, occasioned by artificial or natural causes. A fire would originate within a moving picture machine if caused there by electrical injury or disturbance due to artificial or...