Home Ins. Co. v. Shepherd

• Decision Date: 28 September 1933
• Docket Number: No. 1409.,1409.
• Citation: 63 S.W.2d 758
• Parties: HOME INS. CO. OF NEW YORK v. SHEPHERD et al.
• Court: Texas Court of Appeals

63 S.W.2d 758

HOME INS. CO. OF NEW YORK v. SHEPHERD et al.

No. 1409.

Court of Civil Appeals of Texas. Waco.

September 28, 1933.

Rehearing Denied October 26, 1933.

Appeal from District Court, Leon County; S. W. Dean, Judge.

Suit by M. A. Shepherd and others against Home Insurance Company of New York. From an adverse judgment, defendant appeals.

Affirmed.

Neary & Rogers, of Dallas, for appellant.

Seale & Seale, of Centerville, M. L. Bennett, of Normangee, and Bowers & Bowers, of Caldwell, for appellees.

GALLAGHER, Chief Justice.

This appeal is prosecuted by the Home Insurance Company of New York, from a judgment awarding M. A. Shepherd, owner, and J. R. and H. P. Woodson, partners, doing business under the name of Woodson Lumber Company, mortgagees, a recovery against it on an agreed adjustment of a fire loss. Appellee Shepherd, on October 15, 1931, owned a house situated on certain lots in the town of Normangee and occupied the same as a dwelling. He also owned and used in that connection certain household furniture situated therein. Said house and lots were then incumbered with a mechanic's lien to secure an indebtedness owed by Shepherd to the lumber company, the amount of which indebtedness was in dispute. Appellant, on said date, issued to Shepherd a policy insuring him against loss on said building by fire in the sum of $1,500 and against loss on his furniture situated therein in the sum of $500. The premium on said policy was not paid at the time it was issued and appellant's agent retained possession thereof. Shortly after the issuance of said policy, Woodson Lumber Company instituted suit to recover its debt and foreclose its lien on said house and the lots on which the same was situated. On June 21, 1932, the lumber company recovered a judgment against Shepherd in the sum of $999, with foreclosure of mechanic's lien on said house and lots to secure the same. Shepherd, being dissatisfied, prosecuted an appeal from said judgment. On the 12th day of July, 1932, at the instance of the lumber company, appellant's agent attached a rider to said policy making any loss thereunder payable to such lumber company as interest might appear. Thereafter, on August 12, 1932, the lumber company made a payment on the premium due on said policy. On August 27, 1932, the entire building and a part of the furniture covered by such policy were destroyed by fire. Some time thereafter Mr. Burns, appellant's adjuster, took up with Shepherd the settlement of his claims under said policy. An agreement was reached between them that appellant should pay $1,500, the full amount of insurance on the house, and should pay $303 for loss on the furniture, aggregating the sum of $1,803. This agreement was made about September 15, 1932. Shortly thereafter appellant sent to Shepherd a formal proof of loss and he signed the same and delivered it to appellant's local agent. Appellant then issued its voucher, payable to Shepherd and Woodson Lumber Company jointly, for the sum of $1,803, and sent the same to its local agent. Thereafter, about the 8th of October, 1932, Shepherd paid appellant's local agent the balance of the premium due on said policy and said agent gave him a receipt in full therefor. Shepherd and the lumber company could not agree with reference to the division between them of the proceeds of said voucher.

Shepherd then instituted this suit and alleged the issuance of said policy, the loss thereunder, the adjustment of such loss, and the issuance of said voucher, and demanded that said voucher be delivered into court and that the court apportion the proceeds thereof. The lumber company joined in said demand and set out its specific contentions with reference to the disposition of the proceeds of such voucher. Appellant, on being served with citation in this cause, recalled such voucher from the hands of its local agent and same was returned to it. Appellant then filed in the cause its original answer, in which it alleged affirmatively that it had issued such policy of insurance to Shepherd as insured and to the lumber company as mortgagees; that a loss occurred; that it, through its adjuster, agreed with Shepherd and such mortgagees that the amount of loss for which it was liable was the sum of $1,803; and that pursuant to such adjustment and agreement it issued its voucher in said sum, made the same payable to Shepherd and such mortgagees, and sent the same to its local agent for delivery. Appellant, however, pleaded that said policy provided, in substance, that it should be void if before a fire occurred, the insured should obtain or receive information that foreclosure proceedings had been commenced, and that such provision was applicable both to the insured and to the mortgagees, to whom, by the terms of the rider, any loss under such policy was made payable. Appellant further alleged that both Shepherd and such mortgagees had notice of the foreclosure proceedings above recited and failed to notify appellant and obtain its consent that the policy should continue in force notwithstanding same. Appellant further alleged that the adjustment made by its representative Burns with appellees, and the issuance by it of its voucher payable to them for full settlement of their claims under such policy, were done wholly without knowledge of the institution and prosecution of such foreclosure proceedings, and that same could not therefore constitute a waiver of its right to avoid liability under said provisions of such policy. Appellees alleged affirmatively that appellant's local agent, before the fire, had notice of the pendency of such foreclosure proceedings, and that appellant's representative Burns, who made the adjustment and agreement upon the amount of the loss, had such notice before such adjustment and agreement were made.

There was a trial to the court and judgment in favor of both Shepherd...