Hochheim Prairie Farm Mut. Ins. Ass'n v. Burnett

• Court: Texas Court of Appeals
• Citation: Hochheim Prairie Farm Mut. Ins. Ass'n v. Burnett, 698 S.W.2d 271 (Tex. App. 1985)
• Decision Date: 30 October 1985
• Docket Number: No. 2-84-052-CV,2-84-052-CV
• Parties: HOCHHEIM PRAIRIE FARM MUTUAL INSURANCE ASSOCIATION, Appellant, v. James J. BURNETT and Annie P. Burnett, Appellees.
• Writing for the Court: Before FENDER; FENDER

Page 271

698 S.W.2d 271

HOCHHEIM PRAIRIE FARM MUTUAL INSURANCE ASSOCIATION, Appellant, v. James J. BURNETT and Annie P. Burnett, Appellees.

No. 2-84-052-CV.

Court of Appeals of Texas Fort Worth.

Oct. 30, 1985.

Thompson, Coe, Cousins & Irons, and Leo John Jordan, Dallas, for appellant.

Woodruff, Fostel, Wren & Simpson, and Michael A. Simpson, and Melton D. Cude, Bridgeport, for appellees.

Before FENDER, C.J., and BURDOCK and HOPKINS, JJ.

OPINION

FENDER, Chief Justice.

The appellees, James and Annie Burnett, filed suit against appellant, Hochheim Prairie Farm Mutual Insurance Association, for breach of contract. Hochheim refused to pay the face amount of its insurance policy. Hochheim denied liability on the basis that the fire, which damaged the Burnetts' rent house, was intentionally set by or at the instance of appellees and asserted other policy defenses as well. The jury found in favor of the Burnetts on all issues, upon which verdict a judgment was entered for $44,473.31 and $17,000 in attorney's fees along with $3,400 in attorney's fees in the event of an appeal. Hochheim appeals from the granting of said judgment.

We affirm.

A brief history of the underlying facts is necessary. The record reveals the following. In May, 1981, the Burnetts purchased a rent house from a family member for $12,627. Approximately three months later, Hochheim appraised and insured the house for approximately $51,000 and accepted a premium in accordance with that amount. The Burnetts rented the house to third parties. Before their eviction two weeks before the fire, these tenants went without gas, water and other utilities. When the house was recovered there were maggots, roaches, fleas and rats in the house. Human excrement filled the sinks and bathtubs. However, there was testimony that there was no structural damage to the house and the jury found that the Burnetts had not failed to keep the house in good repair. There was testimony that the cleaning and repair work could be done for under $1,000. The Burnetts testified that they were in the process of cleaning the house when it burned approximately 11 months after it was insured.

In its first point of error, Hochheim contends that the trial court erred in submitting a total loss issue to the jury. Hochheim claims to be exempt from the application of TEX.INS.CODE ANN. art. 6.13. ¹ It contends that art. 16.24 of the code requires that an article be made specifically applicable to farm mutual insurers and since art. 6.13 does not mention farm mutuals, it does not apply to Hochheim.

Article 6.13 states:

A fire insurance policy, in case of a total loss by fire of property insured, shall be held and considered to be a liquidated demand against the company for the full amount of such policy. The provisions of this article shall not apply to personal property.

On and after January 1, 1951, the provisions of the preceding paragraph of this article shall be incorporated verbatim in each and every fire insurance policy hereafter issued as coverage on any real property in this State; and it shall be the duty of the Board of Insurance Commissioners, by proper order and procedure, to compel compliance with this statute.

Id.

Article 16.24(a) states:

Unless farm mutual companies are expressly mentioned, no provision of the Insurance Code, except as contained in this chapter, shall be applicable to insurers holding a certificate of authority under this chapter and no law hereinafter enacted shall apply to such companies unless such subsequent enactment states that it shall apply. (Emphasis ours).

Id.

Paragraph (b) of art. 16.24 then lists a series of insurance provisions which do apply to farm mutual insurers.

Hochheim contends that since art. 6.13 is not specifically enumerated in art. 16.24(b), that article does not apply to it. We disagree.

We find that art. 16.08(d) specifically mentions and makes art. 6.13 applicable to farm mutual insurers. Furthermore, art. 6.13 says that it applies to "each and every" fire insurance policy issued as coverage on real property in Texas. Before setting out the case law which we believe supports the foregoing proposition, we will set out art. 16.08(d) of the Insurance Code.

Article 16.08(d) of the Insurance Code states:

The by-laws may also provide that when a loss occurs, the companies may, at their option, provide and require that all or a certain percent of the money to be paid for the loss be put back into a replacement or repair of the property damaged or destroyed, provided such provision may be equally applicable to real and personal property and property exempt from execution such as homesteads or buildings on the homesteads and exempt personal property. Provided also that farm mutual companies may in their by-laws provide that Article 6.13 of this Code shall not be applicable to their contracts of insurance. (Emphasis ours).

Id.

In Southland County Mutual Ins. Co. v. Denson, 276 S.W.2d 562 (Tex.Civ.App.--Texarkana, 1955, writ ref'd n.r.e.), the court found that art. 6.13 applied to county mutual insurers. At the time the policy in Denson was written, a provision analogous to art. 16.24 pertaining to county mutuals was in effect, now art. 17.22, which stated:

County mutual insurance companies shall be exempt from the operation of all insurance laws of this State, except as herein specifically provided.

County Mutual Insurance Company Act, ch. 99, sec. 23, 1937 Tex.Gen.Laws, Gen. & Spec. 184, 191, amended by Act of April 29, 1955, ch. 117, sec. 37, 1955 Tex.Gen.Laws 413, 431; Act of June 12, 1981, ch. 561, sec. 1, 1981 Tex.Gen.Laws 2298.

Also, a provision analogous to art. 16.08(d) which pertained to county mutual insurers was in effect, now art. 17.06, Texas Insurance Code, which stated:

Provided also that county mutual companies may in their by-laws provide that the requirements of Article 4929, Revised Civil Statutes 1925, shall not be applicable to their contracts of insurance.

County Mutual Insurance Company Act, ch. 99, sec. 6, 1937 Tex.Gen.Laws, Gen. & Spec. 184, 186, amended by Act of April 29, 1955, ch. 117, sec. 33, 1955 Tex.Gen.Laws 423, 430.

The court in Denson, said:

Appellant [insurance company] did not plead or prove that it had provided by its by-laws that the requirements of Article 4929, now Article 6.13, Insurance Code, did not apply to the policy sued upon as it was authorized to do under article 4860a-20, sec. 6, R.C.S., now Article 17.06, Insurance Code. Apparently it had not so provided or it would not have issued the policy subject to Article 4929. Having issued the policy subject to Article 4929, it is bound thereby.

Denson at 565.

The Court of Appeals in Waco followed Denson in a case involving the same issue. The court, in State and County Mutual Fire Ins. Co. v. Kinner, 314 S.W.2d 871 (Tex.Civ.App.--Waco), aff'd, 159 Tex. 290, 319 S.W.2d 297 (1958), also held that art. 6.13 applied to county mutual insurers by way of art. 17.06, even though art. 6.13 does not specifically mention county mutual insurers.

Hochheim contends that prior to the 1973 amendment to art. 16.24, art. 6.13 applied to farm mutual insurers. However, the 1973 amendment to the Insurance Code incorporated art. 16.28 which said substantially the same thing as art. 16.24 does now. Therefore, if 6.13 applied before 1973, it surely applies afterwards.

Hochheim next contends that the trial court read the last sentence of art. 16.08(d) "in a vacuum" and misconstrued the meaning of the statute. Hochheim alleges that the "provided also" terminology of the last sentence of art. 16.08(d) "can only relate to the preceding description of an optional by-law discussed above to the effect that some or all of the insurance proceeds shall be used for repair or replacement, and has no sense or reference standing alone."

However, the courts in Denson and Kinner read art. 17.06, the statute for county mutuals, which is comparable to art. 16.08(d), the statute for farm mutuals, the same way the trial court read art. 16.08(d) in this case. We agree with these courts' interpretation of the statute. We overrule appellant's first point of error.

In its second point of error, Hochheim contends that the evidence was insufficient to support the jury's finding that the house was a total loss.

Where the challenge to a jury finding is framed as an "insufficient evidence" point, we are to consider all the evidence in the case, both that in support of and that contrary to the finding, to determine if the challenged finding is so against the great weight and preponderance of the evidence as to be manifestly erroneous or unjust. See Garza v. Alviar, 395 S.W.2d 821, 823 (Tex.1965). If the court so determines, the finding should be set aside and a new trial ordered. Id.

In considering an "insufficient evidence" point, we must remain cognizant of the fact that it is for the jury, as the trier of fact, to judge the credibility of the witnesses, to assign the weight to be given their testimony, and to resolve any conflicts or inconsistencies in the testimony. See Taylor v. Lewis, 553 S.W.2d 153, 161 (Tex.Civ.App.--Amarillo 1977, writ ref'd n.r.e.). This Court may not substitute its judgment for that of the jury if the challenged finding is supported by some evidence of probative value and is not against the great weight and preponderance of the evidence. See Alford, Meroney & Co. v. Rowe, 619 S.W.2d 210, 213 (Tex.Civ.App.--Amarillo 1981, writ ref'd n.r.e.).

The test for whether a structure is a total loss is whether a reasonably prudent owner, uninsured, desiring a structure like the one in question before the fire, would use the remnants of the structure to rebuild. Glens Falls Insurance Co. v. Peters, 386 S.W.2d 529 (Tex.1965); Royal Ins. Co. v. McIntyre, 90 Tex. 170, 37 S.W. 1068 (1896). The jury answered that a reasonably prudent owner would not so use the remnants.

The statement of facts contains several pages of testimony concerning...