Germania Fire Ins. Co. v. Fort Worth Grain & Elevator Co.

• Decision Date: 13 March 1925
• Docket Number: (No. 6794.)<SMALL><SUP>*</SUP></SMALL&gt
• Parties: GERMANIA FIRE INS. CO. v. FORT WORTH GRAIN & ELEVATOR CO.
• Court: Texas Court of Appeals

271 S.W. 256

GERMANIA FIRE INS. CO. v. FORT WORTH GRAIN & ELEVATOR CO.

(No. 6794.)^*

Court of Civil Appeals of Texas. Austin.

March 13, 1925.

Rehearing Denied April 8, 1925.

Error from District Court, Tarrant County; Ben M. Terrell, Judge.

Action by the Fort Worth Grain & Elevator Company against the Germania Fire Insurance Company. Judgment for plaintiff, and defendant brings error. Affirmed.

Locke & Locke, of Dallas, for plaintiff in error.

Capps, Cantey, Hanger & Short, J. W. Stitt, and W. D. Smith, all of Fort Worth, for defendant in error.

BAUGH, J.

The Fort Worth Grain & Elevator Company sued the Germania Fire Insurance Company, in the district court of Tarrant county, Tex., on a policy for $2,000 issued by said Insurance Company to the Grain & Elevator Company on May 2, 1914, insuring it against loss by fire for a period of one year. Of this amount $800 was on the machinery and $1,200 on its stock of goods — grain, flour, feed stuffs, etc. On October 27, 1914, a fire destroyed the property insured, and suit was filed on February 15, 1915. The case was not tried, however, until May 20, 1922. For brevity and convenience the parties will be designated as the Insurance Company and the Elevator Company, and as they appeared in the lower court.

In addition to general and special exceptions and general denial, the Insurance Company defended on the ground that plaintiff was guilty of numerous breaches of warranties in the policy. By supplemental petition plaintiff pleaded waiver by the Insurance Company of all breaches by plaintiff, and conduct by the Insurance Company, which estopped it from setting up such breaches as a defense. The case was submitted to a jury on special issues, on which they found for plaintiff, and on which the court rendered judgment for the full amount of the policy. From this judgment this appeal is prosecuted.

Opinion.

The first assignment complains of the refusal of the trial court to instruct a verdict for the Insurance Company, on the ground that a change in the ownership of the property insured, without the knowledge or consent of the Insurance Company, had taken place after the issuance of the policy and before the fire, in violation of the provisions of the policy.

The policy, amongst numerous other provisions for forfeiture, contained the following language:

"This entire policy, unless otherwise provided by agreement hereon or added hereto shall be void * * * if any change, other than by death of the insured, takes place in the interest, title, or possession of the subject of insurance (except change of occupants without increase of hazard), whether by legal process or judgment, or by voluntary act of the insured, or otherwise. * * *"

The proof showed that, when the policy was issued on May 2, 1914, the Fort Worth Grain & Elevator Company was a partnership composed of M. M. Egan, J. R. Stitt, and Mrs. E. E. Payne, wife of F. W. Payne; that on June 15, 1914, M. M. Egan assigned his interest therein to D. A. Cowan; that on June 17, 1914, D. A. Cowan assigned same to Matt Harris, in whose name it appeared at the time of the fire. After the fire Matt Harris, who was the brother-in-law of J. R. Stitt and F. W. Payne, retransferred his interest in the partnership and in the policy to Stitt and Payne. The consideration for the assignment from Egan to Cowan was $2,000 cash, paid by Stitt and Payne, and the execution of six notes for $1,000, each signed by Cowan, Stitt, Payne, and Mrs. Payne. At the same time Stitt and Payne secured Cowan against any liability on his part for the payment of these notes. Harris paid no money to any one upon the assignment to him, but it was agreed between them that, when Harris could sell his stock of goods at Killeen and pay the $2,000 paid out by Stitt and Payne, he was to come in as a partner. However, this was never done. Neither Cowan nor Harris ever had anything to do with the conduct of the business of the Elevator Company, nor did they ever have possession, control, or management of any of the property insured. These paper transactions appear to have been nothing more nor less than a circuitous method of getting Egan out of the partnership. Even though the legal title to Egan's interest was in Harris, he asserted no interest in the business, and, to all intents and purposes, it was owned and controlled by and entirely in the possession of Stitt and Payne, the other two members of the partnership.

In support of its contention plaintiff in error cites, among other cases, Ins. Co. v. Davis (Tex. Civ. App.) 167 S. W. 175; Laundry Co. v. Ins. Co., 121 Tenn. 13, 113 S. W. 394, 21 L. R. A. (N. S.) 442; Ins. Co. v. Ransom (Tex. Civ. App.) 61 S. W. 144; Ins. Co. v. Bank, 18 Tex. Civ. App. 721, 45 S. W. 737. In all these cases, save that of Ins. Co. v. Davis, there was a complete change of both the ownership and the possession of the property insured. In the Davis Case the owner of the property sold a one-third interest to each of two other partners and placed one of them in possession of the property insured.

It seems settled in this state that a sale by one partner of his interest in the insured property to another partner is not such a change of title and possession as to avoid the policy or defeat a recovery. Tex. Banking & Ins. Co. v. Cohen, 47 Tex. 412, 26 Am. Rep. 298; Ins. Co. v. Hill (Tex. Civ. App.) 127 S. W. 283. This accords with the great weight of authority. 26 C. J. 236. But, even though the legal title to Egan's interest passed to Harris, he was never in possession of any of the property insured and did nothing to affect the risk. On the other hand the proprietary interest of Stitt and Payne in the property insured was increased by this transaction, their loss increased in case it burned, and their motive to protect it from fire thus increased also. As stated by Justice Greenwood, in Ins. Co. v. O'Bannon, 109 Tex. 281, 206 S. W. 815, 1 A. L. R. 1407:

"It is settled law in this state that a fire insurance policy is not violated by a change of title—`not of a nature calculated to increase the motive to burn, or diminish the motive to guard the property from loss by fire.' New Orleans Ins. Co. v. Gordon, 68 Tex. 149, 3 S. W. 720; Home Mut. Ins. Co. v. Tompkies, 30 Tex. Civ. App. 404, 71 S. W. 813."

See, also, Ins. Co. v. Fort Worth Grain & Elevator Co. (Tex. Civ. App.) 257 S. W. 273.

Under this rule announced by our Supreme Court, we think there was no such change of title as avoided the policy, and this assignment is overruled.

The second assignment and four propositions thereunder all relate to violation of the iron-safe clause, and breaches of the promissory warranties to take proper inventories and keep proper books, as specified in the policy. It is clear that these provisions were breached in whole or in part; and, unless excused otherwise, it is well settled that such breaches by the insured defeat a recovery. Camden Fire Ins. Co. v. Yarbrough (Tex. Com. App.) 215 S. W. 842; McPherson v. Camden Fire Ins. Co. (Tex. Com. App.) 222 S. W. 211; Ins. Co. v. Flewellen (Tex. Civ. App.) 221 S. W. 630; Fire Ins. Co. v. Adams (Tex. Civ. App.) 158 S. W. 231; Royal Ins. Co. v. Okasaki (Tex. Civ. App.) 177 S. W. 200; Western Assurance Co. v. Kemendo, 94 Tex. 367, 60 S. W. 661. The Elevator Company defended, however, on the grounds of waiver and estoppel. In answer to special issues submitted to them, the jury found that J. D. Buckalew, acting for the Germania Insurance Company, on or about December 19, 1914, told J. R. Stitt that the insurance would be paid according to the loss sustained; that Stitt relied upon such statement; and that Buckalew had, at that time, authority from the Germania Insurance Company to adjust this loss.

Without detailing the evidence, we think it clearly appears that, prior to December 19th, Buckalew knew of all breaches of the policy of which the insured was guilty. Plaintiff in error's chief contention is, however, that there is no evidence to show that Buckalew had any authority to represent the Germania Insurance Company. The Insurance Company claimed that it had employed the Bates Adjustment Company of Dallas to adjust this loss, and denied that it had ever employed Buckalew for that purpose. Buckalew also testified that he was not employed by the Germania. There was testimony, however, that soon after the fire Buckalew came to Stitt and procured a nonwaiver agreement on behalf of the Germania; that he also signed for it, as its adjuster, an agreement authorizing Stitt to sell the salvage; that he represented to Stitt that he was adjuster for all companies with which the Elevator Company held policies, including the Germania; that thereafter, when Buckalew took the insured's sworn written examination, he told Stitt that it was for all of said companies; that, after negotiations for adjustment were begun, one or perhaps two of the other companies carrying insurance on this property (there were six in all) were taken away from Buckalew; that he settled for three of them; that some time afterwards Buckalew told Stitt that he did not represent all of said six insurance companies, but declined to tell him which ones he did not represent; that it had been intimated to Stitt that the Bates Adjustment Company were representing the Germania, but that, in response to a long-distance call to them, they had denied such representation; that letters, both to the home office of the Germania and to the Bates Adjustment Company from Stitt, asking who their adjuster was, were never answered; that, though Buckalew denied that he made any charge against the Germania, his books showed charges against two companies, not named on his books, for services in connection with this fire, which could not be accounted for except by including the Germania; that the plaintiff in error knew that Buckalew assumed to act for it, both in the nonwaiver agreement, and in the salvage agreement; that the Bates Adjustment Company,...