Duncan v. United Mut. Fire Ins. Co.

• Decision Date: 24 October 1923
• Docket Number: (No. 404-3755.)
• Citation: 254 S.W. 1101
• Parties: DUNCAN v. UNITED MUT. FIRE INS. CO.
• Court: Texas Supreme Court

254 S.W. 1101

DUNCAN v. UNITED MUT. FIRE INS. CO.

(No. 404-3755.)

Commission of Appeals of Texas, Section B.

October 24, 1923.

Certified Questions from Court of Civil Appeals of Second Supreme Judicial District.

Action by W. T. Duncan against the United Mutual Fire Insurance Company. Judgment for defendant on a directed verdict was reversed by the Court of Civil Appeals, rehearing was granted, and question certified. Question answered, and ordered certified.

Chancellor & Bryan, of Bowie, for plaintiff.

Benson & Benson, of Bowie, for defendant.

HAMILTON, J.

This case is presented on a certificate from the Court of Civil Appeals for the Second Supreme Judicial District reading as follows:

"The above styled and numbered cause is now before us on motion for rehearing. The plaintiff below sued on a policy, issued July 28, 1920, giving insurance of $1,200 on plaintiff's house, $700 on the furniture in the house, and $100 on the smokehouse. The policy was for a period of three years from date. Green, the agent for the company, lived at Bowie, and Duncan, the insured, lived near Sunset, in Montague county. The premium for the three years was $83.50, of which $43.50 was paid in cash and a note given for $40.00, due October 1, 1920. Green testified that perhaps some ten days prior to the maturity of the note, he mailed Duncan, to his proper address, a notice that the note was due October 1st, but Duncan testified that he was at home the latter part of September and did not receive such notice. About the last of October Duncan left his home on a trip to Oklahoma. While he was away, Green called at his house and talked with his wife, telling her that he wanted to see Duncan about the note given for his insurance; that the note was due October 1st. Mrs. Duncan told Green that Duncan was away looking for work, and Green told her that it was all right, to tell him to come to town when he returned and see him. Green told her he was not worrying about the note. On Duncan's return home and on November 11th, Armistice Day, he went to Bowie and called at the bank where Green had agreed to leave the note, but it appears that the note was not there. He then called at Green's office three times during the day, and found no one there. Duncan then went home and did not return to Bowie again prior to the fire, which occurred on November 27, 1920, resulting in a total loss of the property insured. Duncan testified that he went to Bowie for the purpose of paying off the note. He also testified that he did not know the due date of the note before he had been informed by his wife of what Green had told her, that it was due on October 1st.

"The trial court gave a peremptory instruction for defendant. The defendant in the court below and in this court based its defense upon the following provision in the policy: `If the premium upon this policy is not paid in cash, and any part thereof remains unpaid, and is not paid when due, the company shall not be liable thereafter upon this policy for any loss or damage hereunder, during the default period, and if the company shall request payment by the insured of the deferred unpaid portion of the premium it shall not be taken or considered as a waiver on the part of the company of this provision of the policy relieving the company of any liability hereunder during the default of the insured to pay said unpaid portion of the premium to the company or its agent authorized to collect the premium.'

"In the original opinion, we reversed the lower court's judgment and rendered judgment for appellant. Our conclusion that there was error in the judgment below was based upon the fact that the evidence showed that the cash payment was more than half of the total premium for the three years and therefore more than sufficient to pay for one year at the short rate. The fire occurred about four months from the date of the policy. Supporting our conclusion, we cited the case of Nebraska & Iowa Ins. Co. v. Christiensen, 29 Neb. 572, 45 N. W. 924, 26 Am. St. Rep. 407.

"Upon its motion for rehearing appellee cites a number of decisions from states other than Texas which tend to show that a provision such as is found in this policy is strictly construed, although the insured has paid prior to the loss more than enough premium to pay for the policy beyond the date of the loss.

"The evidence, we think, is sufficient to sustain the authority of the agent, Green, to extend the time of the payment of the notes. He testified: `I write policies of insurance, deliver them myself, collecting the premiums and notes due. I am in shape to handle all these financial matters and am authorized by the company to issue and take care of these policies. When I take a note, I send it to the company. I sent this note to the company when I got back to the office. This note has been in my office for collection. I sent it back when the fire occurred.'

"The evidence shows that the policy was not in fact delivered to the defendant until after the fire, but that Green showed the policy to the defendant the day after the contract was made, when the defendant made him the cash payment.

"We are not thoroughly agreed upon what disposition to make of appellee's motion for rehearing, and deem it advisable to certify to your honors the following questions:

"1. Under the facts stated, was plaintiff's policy suspended, at the time the fire occurred, for failure to pay the $40 note when due?

"2. Under the evidence of Mrs. Duncan, above stated, is the question of an extension of the time on the note one of fact for a jury, and did the court err in giving a peremptory instruction for the defendant?"

The negotiable promissory note of a debtor does not amount to payment of the indebtedness for which it was given unless the circumstances show that such was the intention of the parties. McGuire v. Bidwell, 64 Tex. 43, 45; Johnson v. Amarillo Implement Co., 88 Tex. 509, 31 S. W. 503; Wettermark v. Burton, 30 Tex. Civ. App. 511, 70 S. W. 1030. There is nothing in the certificate to indicate that Duncan's note was intended, by the parties, to amount to payment of the balance of the premium, except the mere execution and delivery of it. This is not sufficient to show that it was so intended.

The premium was not paid in cash. Only a part of it was paid in cash. If the balance was not paid by the note, such balance remained unpaid. Under the authorities above quoted we are compelled to hold that the balance was not paid by the note. Since the note was not paid when due, a part of the...