Hartford Fire Ins. Co. v. King

• Decision Date: 18 March 1903
• Citation: 73 S.W. 71
• Parties: HARTFORD FIRE INS. CO. v. KING.
• Court: Texas Court of Appeals

73 S.W. 71

HARTFORD FIRE INS. CO. v. KING.

Court of Civil Appeals of Texas.

March 18, 1903.

Appeal from District Court, Dallas County; Richard Morgan, Judge.

Action by W. O. King, as trustee, against the Hartford Fire Insurance Company. From a judgment in favor of plaintiff, defendant appeals. Reversed.

Finley & Knight and F. M. Etheridge, for appellant. Crane, Greer & Wharton, for appellee.

NEILL, J.

On the 28th day of October, 1900, the appellee, W. O. King, as trustee of Mrs. F. K. Hurley, sued the Hartford Fire Insurance Company on two insurance policies for $1,000 each, issued by appellant respectively on October 7 and October 12, 1896, to Mrs. M. K. Hurley, on a certain one-story, metal-roofed building situated in the town of Belcherville, Montague county. The first policy covered the building to the amount of $500, and the store and office furniture and fixtures in the same sum. The second covered the building alone. All the property described in the policies was that of Mrs. Hurley, and the insurance on it was effected for her. The appellee based his right to sue as trustee upon a certain deed of trust executed to him by the assured on the 24th day of December, 1897, which will be more fully described in our conclusions of fact. He alleged the issuance of the policies, the total loss by fire of the property on October 29, 1896, which was during the term of its insurance under the policies sued upon. The insurance company answered by a general denial and a plea of res judicata in which the matters pertaining thereto, stated in our conclusions of fact, were averred. By a supplemental petition the appellee pleaded in reply to appellant's plea of res judicata that the judgment upon which the plea is based was procured as a compromise between the plaintiff in the suit wherein it was rendered and the appellant in this case, who was the defendant; that it was entered by agreement between said plaintiff and defendant without a trial, and without the introduction of evidence, for a mere normal sum, without the authority of the assured or of Mrs. M. A. King, nor from appellee to agree to said compromise or make the same. The case was tried before a jury, and the trial resulted in a judgment in favor of the appellee for the sum of $2,428.12, from which this appeal is prosecuted.

Conclusions of Fact.

The two policies were issued by the appellant at the time stated in our statement of appellee's pleadings. The property covered by the policies was entirely destroyed by fire on October 29, 1896. The property was also covered by policies issued by other companies. At the time the insurance was effected and the property burned, Mrs. F. K. Hurley was engaged in the mercantile business, which was carried on in the building insured, under the management of her brother, the appellee, as her agent. At the time Mrs. King, as a merchant, was indebted to several parties, among whom W. A. Orr Shoe Company, of St. Louis, Mo., which company she owed about $1,500. The indebtedness to her other merchant creditors was about $2,465. Besides this indebtedness, it is claimed she owed her mother, Mary A. King, $7,600. When the fire occurred the appellee was in Kingsville, Mo., and on the next day received information of it by telegram from Mrs. Hurley. Upon receipt of this information he immediately went to St. Louis, and transferred the policies sued upon, as well as the others covering the property, to the Orr Shoe Company, as collateral for all of Mrs. Hurley's creditors except Mrs. M. A. King; and after he returned to Belcherville he sent the policies to said company, with a written assignment of them indorsed on each to the shoe company; signed, "Mrs. F. K. Hurley, per W. O. King, Attorney." On the 24th day of December, 1896, Mrs. F. K. Hurley, by an instrument in writing of that date, conveyed to W. O. King, trustee, seven certain fire insurance policies, among which are the two sued on in this case, to secure the payment of indebtedness to certain creditors, among whom the name of W. A. Orr Shoe Company appears first and of Mary A. King last in the order in which creditors are named in said instrument. The instrument directs that the trustee proceed at once to collect the policies, and apply the proceeds to the payment in full to said creditors in the order in which they are named, and, after paying the indebtedness and costs of collecting the policies, if any balance should be left, that it should be paid by the trustee to her. This is the instrument upon which the appellee bases his right to prosecute this suit as trustee.

On the 8th day of June, 1898, a suit was instituted in the district court of Montague county, Tex., in the name of W. A. Orr Shoe Company against appellant, the Hartford Fire Insurance Company, on the same two policies upon which appellant is sued in this case. While said suit was brought in the name of said shoe company, it was in fact inaugurated, participated in, and controlled by the appellee, W. O. King, who employed counsel of his own selection to institute and prosecute the suit for his own benefit, as trustee, as well as for the benefit of Mrs. M. A. King. On the 5th of July, 1898, defendant, Hartford Fire Insurance Company, appeared in the case, and answered to the merits. On the 10th day of July, 1899, final judgment was entered in the case, in which it was adjudged and considered by the court that the plaintiff, the W. A. Orr Shoe Company, a corporation, take nothing by the suit, and that the defendant, Hartford Fire Insurance Company, go hence without day. This judgment recites that both parties appeared by their attorneys, and filed in the case an agreement in writing to the effect that the parties to the suit had settled and compromised the matters involved, and agreed that judgment should be rendered that plaintiff take nothing by the suit, and that defendant go hence without day, and that all costs be paid by the defendant, and that the judgment was rendered in accordance with such agreement.

We base our conclusion that the suit was inaugurated, participated in, and controlled by W. O. King, trustee, by and through counsel of his own selection, for his benefit, as well as for the benefit of Mrs. M. A. King, upon the following testimony: W. O. King's testimony upon this point is: "Myself, as trustee, and Mrs. F. K. Hurley employed Mr. Chambers [who was the attorney who brought the suit] to file the suit in Montague county in the name of the Orr Shoe Company against the defendant. My connection with said suit was as trustee. That suit was filed by Mrs. Hurley, Mrs. King, and myself in the name of the Orr Shoe Company, and the Orr Shoe Company was indemnified against costs of suit. Mr. Chambers had full control over the suit. He was my lawyer, and advised me of the settlement of the suit." J. M. Chambers, the attorney who brought the suit, testified: "I represented all parties interested in the recovery. The suit was brought in the name of W. A. Orr Shoe Company, which was in the hands of W. E. Fisse, receiver. All parties at interest in the policies knew of and authorized the bringing of the suit. W. O. King, Mrs. F. K. Hurley, and Mrs. Mary A. King all knew of the bringing of said suit, for they employed me to bring it."

The agreement upon which the judgment was entered was in writing, and signed: "J. M. Chambers, Attorney for Plaintiff, W. A. Orr Shoe Company, and Harris, Etheridge & Knight, Attorneys for Defendant Hartford Fire Insurance Company." Neither W. O. King, Mrs. F. K. Hurley, nor Mrs. Mary A. King agreed personally to the compromise. Their attorney, J. M. Chambers, notified both Mrs. Hurley and W. O. King of the agreement and settlement before the judgment was entered. Neither of them made to the attorney any protest against the agreement and settlement. No suit was ever filed against the shoe company by either King or Mrs. Hurley for a breach of the alleged trust. Long after the compromise judgment was rendered, W. A. Orr Shoe Company received $400 or $500 out of moneys realized from other insurance companies in full settlement of its debt, with the full knowledge and consent of Mr. King and Mrs. Hurley. In the compromise the insurance company paid the shoe company $166.66 in settlement and discharge of the former's liability on the policies sued on, and on each policy was indorsed a receipt and cancellation and surrender of the policy to the insurance company, which was signed, "W. A. Orr Shoe Company, per W. E. Fisse, Receiver."

These facts relating to the suit, compromise, and judgment pleaded as res judicata by appellant in this case are undisputed, and are shown by appellee's own testimony.

In deference to the verdict, we find that, before the judgment in the district court of Montague county was rendered, the Hartford Fire Insurance Company had notice that the transfer of the policies sued on was made to the W. A. Orr Shoe Company simply to secure the payment of Mrs. Hurley's indebtedness to said company and others, and that Mrs. Hurley did not consent to the rendition of said judgment, and has not since ratified it.

Under our view of the law, which will be presently stated, the facts thus found in accordance with the verdict are not necessary to a proper disposition of this appeal. They are simply made for the purposes of enabling the Supreme Court to finally dispose of the case should it differ with this court upon the law applicable to it.

Conclusions of Law.

The only assignment of error which we deem necessary to consider is the first. It complains of the court's refusal to give, at appellant's request, the following special charge: "Under the...