Hardware Dealers Mut. Ins. Co. v. Berglund

• Decision Date: 23 June 1965
• Docket Number: No. A-10418,A-10418
• Citation: 393 S.W.2d 309
• Parties: HARDWARE DEALERS MUTUAL INSURANCE CO., Petitioner, v. Clifford L. BERGLUND and Robbie Mae Berglund, husband and wife, Respondents.
• Court: Texas Supreme Court

Page 309

393 S.W.2d 309

HARDWARE DEALERS MUTUAL INSURANCE CO., Petitioner, v. Clifford L. BERGLUND and Robbie Mae Berglund, husband and wife, Respondents.

No. A-10418.

Supreme Court of texas.

June 23, 1965.

Rehearing Denied July 21, 1965.

Fulbright, Crooker, Freeman, Bates & Jaworski, Charles D. Boston, Newton Gresham, with above firm, Houston, for petitioner.

Miller & Gann, Austin Y. Bryan, Jr., Houston, for respondents.

NORVELL, Justice.

This is a Hurricane Carla case. Petitioner, Hardware Dealers Mutual Insurance Company, issued two insurance policies to respondents, Clifford L. Berglund and his wife, Robbie Mae Berglund; one contained both an 'all risks' clause and a 'named peril clause,' while the second policy contained a 'named peril' clause only. The 'named peril' clause covered direct losses by 'windstorm, hurricane, hail,' etc. On September 11, 1961, as a result of the storms, high winds and waters accompanying the hurricane, much of respondents' property was destroyed. Suit was brought upon the policies mentioned and after trial to a jury, respondents were awarded a recovery for $1,820.00 which represented the only items of damage which were not related to the excluded hazards named in the policies. This judgment was reversed by the Court of Civil Appeals and the case remanded for another trial. 381 S.W.2d 631. We reverse the judgment of the Court of Civil Appeals and affirm the judgment of the trial court.

The paramount question before us relates to the construction of the contracts between the parties. However, there is one procedural matter raised which we think is settled by cases decided prior to 1941 and the provisions of Rule 94, Texas Rules of Civil Procedure. The insurance company pleaded that the damage sustained by respondents was not covered by the policies because the causes of such damage were expressly excluded from the insurance coverage of the contracts.

One of the policies contains an 'all risks coverage clause relating to a beach house located in the Bayou Vista Addition to Hitchcock, Texas. Respondents cite Jewelers Mutual Insurance Company v. Balogh, 272 F.2d 889 (5th Cir.1959) and argue that it is authority for the proposition that when a recovery is sought under an 'all risks' policy, and the plaintiff proves that property described in the policy has been lost or damaged, the burden shifts to the insurer to show that the loss arose from a cause which is excluded from the policy coverage. In other words, when an 'all risks' policy is sued upon, the plea of loss by an excluded risk is treated as being similar to a plea of confession and avoidance. There is logic in this position and Balogh does not stand alone in support thereof. Annotation, 'All Risks' Insurance-Coverage, 88 A.L.R.2d 1122, l. c., § 6, Burden of Proof, p. 1129. However, Balogh was a Florida case tried in the federal court and our Rules of Civil Procedure preclude a shift of burden of proof from the insured to an insurer even though an 'all risks' policy is involved.

In Pelican Ins. Co. v. Troy Co-op. Ass'n, 77 Tex. 225, 13 S.W. 980 (1890) it was held that the party suing upon an insurance policy has the burden of proving that the insurance policy covered the loss and hence it was incumbent upon him to prove that the loss was not excluded from the insurance coverage. This Court said:

'The provisions of the policy above noticed are exceptions to the general liability assumed by appellant (the insurer), and the petition should have averred that the fire did not occur from one of the excepted causes. This was necessary to show a cause of action * * *.'

The use of an 'all risks' clause in stating the 'general liability' of the company calls for no change of the rule set forth. If it be necessary for a plaintiff to aver that the loss did not occur from one of the excepted causes, in order to state a cause of action, it would be necessary for him to prove the same in order to recover.

The rule of the Pelican case insofar as pleading is concerned was modified in 1941 by the adoption of Rule 94 as a part of the Texas Rules of Civil Procedure. The rule provides that when a suit is brought upon a policy 'which insures against certain general hazards, but contains other provisions limiting such general liability, the party suing on such contract shall never be required to allege that the loss was not due to a risk or cause coming within any of the exceptions specified in the contract, nor shall the insurer be allowed to raise such issue unless it shall specifically allege that the loss was due to a risk or cause coming within a particular exception to the general liability; provided that nothing herein shall be construed to change the burden of proof on such issue as it now exists.' (Italics supplied)

Here the insurance company pleaded specific exclusions which were set forth in the policy and thus raised issues of contract coverage. The burden of producing evidence to demonstrate that their losses were not attributable to the pleaded excluded hazards rested upon respondents. Shaver v. National Title & Abstract Co., 361 S.W.2d 867 (Tex.Sup.1962); T. I. M. E., Inc. v. Maryland Casualty Co., 157 Tex. 121, 300 S.W.2d 68 (1957). See 8 Texas Bar Journal 36 (1945). As the matter is specifically covered by Texas decisions and our Rules of Civil Procedure, cases based upon the practice rules of other jurisdictions have little or no application here.

One of the policies sued upon covers a beach house and certain unscheduled personal property. Insofar as the beach house was concerned, the contract insured Mr. and Mrs. Berglund against loss from 'all risks of physical loss except as otherwise excluded.'

This policy also covered certain unscheduled personal property and insured Mr. and Mrs. Berglund against loss from certain named perils, including among others, 'Windstorm, Hurricane and Hail.'

A second policy covered a boathouse and under the heading, 'Extended Coverage,' insured Mr. and Mrs. Berglund against loss from, 'Windstorm, Hurricane, Hail, Explosion, Riot, Civil Commotion, Smoke, Aircraft and Land Vehicles.'

The first policy contains the following exclusion (which was pleaded by the company) viz.:

'D. Loss caused by or resulting from:

'(1) Flood, surface water, waves, tidal water or tidal wave, overflow of streams or of other bodies of water, or spray from any of the foregoing, all whether driven by wind or not; * * *.'

The second policy contains a similar exclusion (which was pleaded by the company) viz.:

'Unless specifically named herein, this Company shall not be liable for loss * * * caused by * * * tidal wave, high water, or overflow, whether driven by wind or not; * * *.'

The parties stipulated that: 'The amount of damage to the dwelling (the beach house) in question was $6,000 and the applicable amount of deductible is $100. The amount of damage to the contents in question was $2,400. The amount of damage to the boathouse in question was $450 and the amount of deductible is $100.'

The trial court submitted the case to the jury upon issues inquiring as to the percentage of loss relating to each item which was occasioned by specifically excluded perils. As to the percentage of damage which was caused by or resulted from 'flood, surface water, waves, tidal water or tidal wave, or spray from the foregoing, whether driven by wind or not,' the jury found 70 per cent as to the beach house, 95 per cent as to the unscheduled personal property and 100 per cent as to the boathouse. Judgment wass accordingly rendered for 30 per cent of $6,000, less $100, plus $120, making a total of $1,820.00.

The general theory of submission employed by the trial court is supported by Coyle v. Palatine Insurance Company, Tex.Com.App., 222 S.W. 973 (1920) in which the judgment recommended by the Commission of Appeals was adopted by the Supreme Court in an opinion written by Chief Justice Phillips setting forth the Supreme Court's views with reference to the case. It appeared that a building situated in Galveston, Texas, owned by B. A. Coyle and J. H. Langbehn and insured by Palatine Insurance Company was damaged by a coastal storm which was attended by high winds and wind-driven water. The policy insured against damage by 'tornado, windstorm or cyclone,' but expressly excluded loss "occasioned directly or indirectly by or through and * * * tidal wave * * * high water, overflow, or cloudburst;' * * * whether driven by wind or not * * *.' The company admitted liability for the damage caused solely by the wind. The parties stipulated that the remainder of the damage was caused by the combined action of wind and water and that the extent to which each was a factor could not be determined from the evidence. In approving the judgment for the insurance company recommended by the Commission, Chief Justice Phillips, speaking for the Supreme Court, said:

'It may be admitted, as the plaintiffs in error urge, that the wind was the cause of the action of the water. But, as related to the loss in dispute, the contract expressly provided that the insurer was not to be responsible for any damage, whatever, due to the action of water caused by the wind. All part of the loss caused by water, though the water's action was due to the wind, is thus eliminated. Therefore, the rule invoked, that where there is no order of succession in time and there are two concurrent causes of a loss in which the damage done by each cannot be distinguished, the predominating cause will be deemed the proximate cause, can have no application. The water as a concurrent cause, or as any element in the cause, which produced the loss, is by the contract put out of the case.'

The opinion of the Commission of Appeals refers to Newark Trust Company v. Agricultural Insurance Company, 237 F. 788 (3rd Cir. 1916). This was a case involving a hurricane loss and an insurance policy which expressly mentions 'hurricanes.' The policy insured against 'all direct loss or...