Continental Cas. Co. v. Vaughn, 14874

• Decision Date: 20 October 1966
• Docket Number: No. 14874,14874
• Parties: CONTINENTAL CASUALTY COMPANY, Appellant, v. Walter Earl VAUGHN, Appellee. . Houston
• Court: Texas Court of Appeals

Page 818

407 S.W.2d 818

CONTINENTAL CASUALTY COMPANY, Appellant, v. Walter Earl VAUGHN, Appellee.

No. 14874.

Court of Civil Appeals of Texas.

Houston.

Oct. 20, 1966.

Rehearing Denied Nov. 10, 1966.

The Kempers, Houston, T. M. Kemper, Houston, of counsel, for appellant.

Brown, Kronzer, Abraham, Watkins & Steely, Dale Harvill, Frank T. Abraham, W. James Kronzer, Houston, for appellee.

WERLEIN, Justice.

Appellee sued his insurance carrier to recover damages for an anticipatory breach of an accident insurance policy. The policy provides for the payment of monthly indemnity for loss resultng from injury, in the sum of $100.00 for total disability for the maximum period of the insured's life. It defines 'injury' to mean 'bodily injury caused by an accident * * * and resulting directly and independently of all other causes * * *'

The jury found in answer to special issues submitted with proper definitions, that on or about March 30, 1962, appellee, Walter Earl Vaughn, sustained bodily injury caused by an accident and resulting directly and independently of all other causes; that such total disability was permanent; that appellant's denial of liability to appellee was made without just excuse; that $29,200.00, if paid now in cash, would be fair and reasonable damages for appellee to recover; and that $8,850.00 was a fair and reasonable attorney's fee . The trial court found that the amount of principal damages in the sum of $29,200.00 should as a matter of law be reduced and discounted down to the sum of $14,246.00. The court then entered judgment for appellee in the sum of $28,385.00, which included said discounted amount, plus the amount awarded for attorney's fees, 12% Penalty on 43 past due accrued monthly installments and 6% Interest thereon, and 43 monthly installments totalling $4,300.00. Appellant has perfected its appeal. Appellee has appealed only from the action of the court in discounting the amount of damages found for him by the jury.

The first question for our consideration is whether appellee has pleaded and made out a case for an anticipatory breach by appellant of its contract of insurance. It is appellant's contention that appellee's disability was not caused by an accident and that its denial of liability and refusal to pay anything whatever, past or future, based upon such contention does not constitute a repudiation of the insurance contract sufficient to entitle the insured to seek his damages. The jury found that appellant's denial of liability to appellee was made without just excuse. The court defined 'just excuse' as meaning a reasonable basis for the denial of liability in the light of the claim and proof of loss then existing to Continental Casualty Company, and such an excuse as could be reasonably given by an insurer under the facts and circumstances then existing. Appellee takes the position that where there has been a total and arbitrary rejection of liability not based on just cause, and the circumstances indicate that no proof would satisfy the insurer, and that no further clarification could be made, there has been a renunciation or repudiation sufficient to support a cause of action for anticipatory breach.

It is our view that there is ample evidence to support the jury's finding that appellant's denial of liability was made without just excuse. The evidence shows that on April 10, 1962, appellee wrote appellant a letter stating that he had sustained a back injury on March 30, 1962, and that he was in Leggett Memorial Hospital in Cleveland, Texas, and did not know how long he would be hospitalized or unable to work. Appellant sent appellee its standard preliminary claim from, which appellee returned, reporting that he had 'a back injury in the nature of a ruptured disc that occurred on March 30, 1962 while loading a load of tubing on a truck in Houston.' The same report contained a statement by appellee's doctor, Dr. W. L. Barnett, to the effect that appellee had a ruptured intervertebral disc between Lumbar 4 and Lumbar 5; that the accident occurred on March 30, 1962; that appellee first consulted the doctor on April 1, 1962; and that appellee was to have a spinal fusion. After receiving the preliminary claim form on May 22, 1962, appellant sent appellee one month's indemnity and a thirty days' hospital indemnity . Appellant sent appellee a supplementary claim form which he returned on June 4, 1962. It also had a doctor's statement attached to it. As a result of the supplemental statement appellant sent appellee an additional monthly disability benefit.

Appellant then sent an inquiry to Leggett Memorial Hospital to examine the record as prepared during appellee's confinement beginning April 1, 1962. In response thereto appellant received a history stating 'patient was lifting a joint of pipe and felt sudden pain in lower back with radiation to left leg.' Following the receipt of such communication a request was made to appellee 'for a detailed description of the circumstances surrounding the incident.' Appellee's return report was that he was injured 'while unloading my truck with a load of tubing. I picked up a joint of tubing, rupturing a disc in my back. It happened about 4 p.m.'

Appellant did not question at any time that appellee had a back injury. Its question was 'Was it an accidental injury?' Its definition of 'injury' according to its representative was 'an abnormal, localized condition of the body that is not caused by an existing illness or disease process'; whereas the policy defines 'injury' as a 'bodily injury caused by an accident and resulting directly and independently of all other causes, in loss * * *'

On July 13, 1962, a representative of appellant wrote appellee explaining that his description of how his disability occurred indicated that such disability was not the result of an accident, and that benefits were, therefore, not payable. Thus, appellant denied liability on the basis that what had happened to appellee could not be considered an accident. Appellant's representative testified that appellee's description of how the accident occurred was the basis of appellant denying liability. It not only denied liability but asked that the benefits previously paid be refunded. Appellant took the position that appellee's bodily disability was not caused by an accident, and this was still the position of the company at the time of the trial. Appellant's representative testified that he doubted that the testimony of five eminent physicians declaring the occurrence in question to be an accident would have much effect on the company. In this connection it should be noted that appellee's medical witness, Dr. David, testified that as a result of the accident appellee sustained a ruptured disc and possibly some other pathology . Dr. Donovan, who examined appellee for appellant, testified by deposition that in his opinion appellee's disability was caused by the accident in question independently of all other causes. At the trial he testified that that was still his opinion. Appellant's final position was that the incident or the manner in which appellee described what happened to him was not and could not be considered an accident. Said representative testified that appellee did what he intended to do when he picked up the piece of pipe and that nothing untoward happened to him, that is, 'nothing accidental as far as the description we were given could be considered an accident .'

It seems obvious that appellant took the position that the occurrence in question was not an accident since appellee in lifting the pipe was doing what he intended to do, and hence any bodily injury sustained by him was not the result of an accident. After receiving appellant's letter of July 13, 1962, denying liability, appellee wrote a letter to appellant on July 20 stating that he 'would like to know why my accident was not for bodily injury.' To such letter appellant replied on August 3, 1962, as follows:

'Your policy defines injury as 'bodily injury caused by an accident occurring while this policy is in force and resulting directly and independently of all other causes.'

'Mr. Vaughn, your description of how your disability occurred as well as other correspondence we have received indicates that your disability was not the result of an accident as defined by your policy. Therefore, the $500 which you have received was paid in error.

'We are sure you will agree that it is in the best interests of the B. F. Walker Company, this Company, and your own integrity to return this money as soon as possible. Your money order or check in the amount of $500 should be made out to the Continental Casualty Company and sent directly to this office.

'Your prompt cooperation will enable us to clear up this matter with a minimum difficulty. May we expect to hear from you within the next ten days?'

In Pollack v. Pollack, Tex.Com.App.1931, 39 S.W.2d 853, which involved repudiation of a contract providing for monthly payments and a specified amount in case the purchaser of property died before the seller, the Court said:

'In this connection we hold that Henry, having not only failed and refused to meet the monthly payments due on the contract, but, on the other hand, having absolutely repudiated the obligation, all without just excuse, has breached the contract, and therefore Charles is entitled to maintain his action in damages at once for the entire breach, and is entitled in one suit to receive in damages the present value of all that he would have received if the contract had been performed, and he is not compelled to resort to repeated suits to recover the monthly payments. (Citing authorities)'

In the case of Universal Life & Accident Insurance Co. v. Sanders, Tex.Com.App.1937, opinion adopted, 129 Tex. 344, 102 S.W.2d 405, the Court held that the petition contained sufficient allegations of an anticipatory breach. The petition alleged that plaintiff was totally and permanently...