Fireman's Fund Insurance Co. v. Wilburn Boat Co., 16945.

• Decision Date: 17 October 1958
• Docket Number: No. 16945.,16945.
• Citation: 259 F.2d 662
• Parties: FIREMAN'S FUND INSURANCE COMPANY, Appellant, v. WILBURN BOAT COMPANY et al., Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

259 F.2d 662 (1958)

FIREMAN'S FUND INSURANCE COMPANY, Appellant, v. WILBURN BOAT COMPANY et al., Appellees.

No. 16945.

United States Court of Appeals Fifth Circuit.

September 18, 1958.

Rehearing Denied October 17, 1958.

Edward B. Hayes, Chicago, Ill., Joe A. Keith, Sherman, Tex., for appellant.

T.G. Schirmeyer, Houston, Tex., Alexander Gullett, Denison, Tex., Hobert Price, Dallas, Tex., Gullett & Gullett, Denison, Tex., T.G. Schirmeyer, Houston, Tex., for appellees.

Before HUTCHESON, Chief Judge, and TUTTLE and BROWN, Circuit Judges.

JOHN R. BROWN, Circuit Judge.

When this case was first here, Wilburn Boat Co. v. Fireman's Fund Ins. Co., 5 Cir., 201 F.2d 833, 1953 A.M.C. 284, we held that federal maritime rules were applicable to the Hull policy on the Motor Yacht Wanderer. Her destruction by fire on February 25, 1949, is the subject of this protracted litigation. The Supreme Court reversed, 348 U.S. 310, 75 S.Ct. 368, 99 L.Ed. 337, 1955 A.M.C. 467, holding that the law of some state applied, and remanded the cause to the District Court for the determination of which state that would be, and whether under the laws of that state the claimed actions¹ by the Assureds amounted to breaches or would otherwise constitute a defense under the policy.

Inevitably this involved the basic question whether this was a Texas or an Illinois² contract, for it seems quite clear, if not conceded, that under Illinois law one or more of the acts, note 1, would be an absolute defense. However, under Texas law the anti-encumbrance statute³ would make the breach of the anti-mortgage clause (see, (a), note 1, supra) inconsequential, and other specific Texas statutes⁴ and their judicial interpretation might permit a determination that the other asserted actions did not constitute defenses.

This basic question turned on whether, at the time this policy was issued to these Assureds, the Insurer was "doing business within" Texas. If it was, Art. 5054, whose validity can no longer be open to serious question, Griffin v. McCoach, 313 U.S. 498, 61 S.Ct. 1023, 85 L.Ed. 1481; Watson v. Employers Liability Assur. Corp., 348 U.S. 66, 75 S.Ct. 166, 99 L.Ed. 74, by its terms⁵ and judicial application, Metropolitan Life Insurance Co. v. Wann, 1937, 130 Tex. 400, 109 S.W.2d 470, 115 A.L.R. 1301, made the policy a Texas contract. This was, of course, a question of fact for proof.

But on the remand to the District Court, no further formal trial (before a successor Judge) was had. The cause was submitted under an express stipulation of October 31, 1955, that the case should be tried solely on the evidence admitted and judicial admissions of fact theretofore made on the initial trial resulting in the judgment of December 13, 1951, subsequently reversed by the Supreme Court.

That stipulated record did not contain evidence on which the Court could base a finding of doing business in Texas. Two years later when the Judge filed his memorandum opinion he recognized this yet went on to say "* * * but the Plaintiffs, through their attorneys, have now exhibited to the Court a certificate⁶ from the Board of Insurance Commissioners of the State of Texas certifying that the defendant Insurer was authorized to pursue the business of certain types of insurance, including fire and marine insurance, in the State of Texas from June 1, 1948, to May 31, 1949, and contend that this Court must take judicial notice of the fact that the Defendant was doing an insurance business in the State of Texas from June 1, 1948, to May 31, 1949. This contention of the Plaintiffs is correct * * *."

But the fact that this certificate was "exhibited to the Court" long after the stipulated record had been closed with no record indication that the adverse party was given an opportunity either to object or to refute it in fact, did not constitute the admission of it into evidence.⁷ Nor was it, as the District Court stated, a matter on which the Court, in this posture, could take judicial notice.

Since the District Court's whole opinion rested on the foundation that this was a Texas contract, it is clear that the resulting judgment cannot stand in view of the absence of legally-admitted evidence on the crucial point of doing business in Texas.

This does not mean, however, that we are compelled or ought to reverse and render the cause in the Insurer's favor. The certificate of the Insurance Commissioner, while not legally received in evidence, reflects in a convincing way that there is a substantial probability that the actual fact accords with the certificate, and that evidence is available to establish this point in the proper way. In view of that, and the general approach to do substantial justice, Fed.Rules Civ.Proc. rule 61, 28 U.S.C.A., 28 U.S.C.A. § 2111, we think that, as in similar situations before, this is a case in which the interests of justice require that the case be reversed and remanded for a new trial. M.M. Landy, Inc. v. Nicholas, 5 Cir., 221 F.2d 923, 53 A.L.R.2d 1385; Associates Discount Corp. v. United States, 5 Cir., 200 F.2d 537; City of Fort Worth, Tex., v. United States, 5 Cir., 188 F.2d 217.

Since the cause is being remanded to permit proof on this point, it would be manifestly unfair to allow the case to be opened up to supply deficiencies in the Assureds' proof without according to the Insurer a full and unrestricted opportunity to offer other or further evidence on this and all other phases of the case. The trial tactics and strategy of the Insurer were undoubtedly tailored to the stipulated record which was, we have held, inadequate. The result is that to enable this protracted case to be put in shape where a final decision can be reached, the cause must again be tried. On that retrial the former records may continue to be used, but both parties should be given the fullest liberty to replead, to utilize all facilities of the Rules of Civil Procedure in preparation for trial and, on the trial, offer such further evidence and testimony as each may deem...