Houtz v. General Bonding & Insurance Co., 5263.

• Decision Date: 13 July 1956
• Docket Number: No. 5263.,5263.
• Parties: Kenneth HOUTZ, individually, and as administrator of the Estate of Sheryl Houtz, deceased; and Ray Ellis, individually, and as administrator of the Estate of Anna Ellis, deceased, Appellants, v. GENERAL BONDING & INSURANCE CO., a corporation, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

235 F.2d 591 (1956)

Kenneth HOUTZ, individually, and as administrator of the Estate of Sheryl Houtz, deceased; and Ray Ellis, individually, and as administrator of the Estate of Anna Ellis, deceased, Appellants, v. GENERAL BONDING & INSURANCE CO., a corporation, Appellee.

No. 5263.

United States Court of Appeals Tenth Circuit.

July 13, 1956.

COPYRIGHT MATERIAL OMITTED

Morris K. Udall, Tucson, Ariz. (Udall & Udall, Tucson, Ariz., J. D. Weir and L. J. Maveety, Las Cruces, N. M., were with him on the brief), for appellants.

Carl H. Gilbert, Santa Fe, N. M. (John B. Dudley, Jr., Oklahoma City, Okl., William W. Gilbert, Dudley, Duval & Dudley, Oklahoma City, Okl., Gilbert, White & Gilbert, Santa Fe, N. M., were with him on the brief), for appellee.

Before HUXMAN, MURRAH and PICKETT, Circuit Judges.

HUXMAN, Circuit Judge.

Appellants, as plaintiffs below, filed this action in the District Court for New Mexico against appellee, General Bonding & Insurance Company, alleging that appellee had entered into a contract of liability insurance with one Walter Royer on or about September 10, 1953, providing coverage for liabilities arising out of his operation of the Chevron Cafe near Las Cruces, New Mexico. It was further alleged that on the following September 13, an explosion occurred in Royer's place of business, killing Sheryl Houtz and Anna Ellis, and that appellants, as individuals and administrators of the decedents' estates, had reduced statutory death claims to judgments against Royer, which were unsatisfied. Appellants prayed that the court determine appellee-insurer's liability under the alleged policy of insurance and render judgment for them in the amounts of the judgments held against Royer.

Appellee answered denying the existence of any contract of insurance between it and Royer, and further alleging that a policy of liability insurance had been issued by it on February 20, 1953, to one Lois Franklin and Hugh B. Smith, jointly, covering liabilities arising from their operation of the Chevron Cafe. Appellee further alleged that Royer was not a named assured in the policy issued by it and that such policy had not been transferred to Royer by the original assureds, or, if it had been so transferred, that appellee had not consented thereto and was not bound thereby. Appellee also alleged that following the explosion at the cafe on September 13, the named insured, Lois Franklin, had called upon it to defend her in actions arising from such casualty, and that appellee had done so at considerable expense to it. Appellee prayed that complainants take nothing, and in the alternative prayed that any recovery be limited to the sum of $5,000 for each claimant and a total of $10,000 for the casualty, all as provided by the policy in question.

A jury sat in an advisory capacity. Six special interrogatories were submitted to the jury. It answered all of them favorable to appellants. It answered (1) that Floyd Coleman executed an endorsement transferring the policy to Walter Royer before the explosion of September, 1953; (2) that Coleman had actual authority himself to effect a transfer of insurable interest in the insurance policy from Lois Franklin to Walter Royer; (3) that Coleman had apparent authority to execute a valid and binding transfer of Lois Franklin's insurable interest to Royer; (4) that Lois Franklin had surrendered all of her rights under the policy and had assigned the same to Royer before the explosion; (5) that Coleman made a positive statement to Walter Royer, or to an agent of Walter Royer, which was conveyed to him before the explosion, that Coleman had made and secured a transfer of the policy to Royer; (6) that Lois Franklin, with no reservation on her part, surrendered all her rights to the policy including the right of possession to Royer.

The trial court declined to enter judgment in accordance with the special interrogatories of the jury and subsequently granted appellee's motion for judgment n. o. v. and in the alternative granted a new trial if on appeal the judgment n. o. v. should be reversed on the grounds that the jury verdicts were against the "great weight and preponderance of the evidence."

Appellants contend on appeal that there is competent evidence in the record justifying the jury's findings that the policy in question had been transferred from Franklin to Royer on September 11, 1953, by an endorsement prepared by appellee's agent, who had actual or apparent authority to effect a transfer of the policy binding on appellee. In the alternative, appellants contend that the conduct of appellee's policy-writing agent was such as to raise an estoppel against appellee, precluding it from denying insurance coverage to Royer in accordance with the terms of the Franklin policy.

On appeal, appellee concedes that the evidence is sufficient to sustain the jury's findings that its agent, Floyd Coleman, had apparent authority to effect a transfer of the policy to Royer, and that the endorsement for such purpose was executed by Coleman prior to the loss in question. It is urged, however, that the record is barren of evidence to support the finding that Lois Franklin assigned, or consented to the assignment of her policy to Royer prior to the explosion of September 13, or at any time. Appellee also denies that it is bound by the transfer endorsement executed by its agent in disregard of an express policy limitation as to the form required for such a transfer of interest under the policy. It is further contended that, under New Mexico law, an assignment of an insurance policy must be in writing by the assignor, which admittedly was not done in this case. In connection with the claimed coverage by estoppel, appellee contends that the record affirmatively shows that one of the essential requisites for an estoppel is not present in this case, in that no possible reliance on the part of Royer on any representation of appellee's agent has been shown by the appellants.

We think there was sufficient evidence to sustain the jury's answer to interrogatory No. 1 that the endorsement was executed before September 13, 1953. The endorsement carries the date of September 11, 1953. Coleman gave direct and positive testimony that he executed and mailed the endorsement prior to the explosion. In fact, appellee concedes the right of the jury to believe the endorsement was executed before the explosion. It is not necessary to determine whether the jury correctly answered that Coleman had actual authority to transfer the policy because the Bonding Company concedes there was sufficient basis for the jury's answer that Coleman had apparent authority to transfer the policy from Mrs. Franklin to Royer. The jury's answer to questions No. 4 and No. 6 in which it answered that Mrs. Franklin surrendered all her right to the policy, consented to its assignment, and surrendered all her rights as an insured including the right of possession is a contested issue of fact.

The 6th question is somewhat equivocal. It is without dispute that Mrs. Franklin did not surrender physical possession of the policy and that she had it in her possession at all times up to the date of the explosion. The jury was, however, asked whether she had surrendered her "right of possession." This may call for somewhat of a conclusion depending upon other facts, especially those set out in question No. 4. For the purpose of this opinion, the jury's answer to question No. 6 is not too vital.

The crux of this appeal so far as her consent to an assignment of the policy is concerned depends upon the jury's answer to question No. 4, in which it answered that she consented to a surrender of her interest in the policy and an assignment thereof to Royer. The evidence on this question is in conflict. The evidence favorable to appellants on this question is substantially as follows. A few days before the change of ownership, Coleman discovered that a sale was pending. At that time about one-half of the year's premium on the policy had been paid. Coleman asked Mrs. Franklin "if Mr. Royer wanted to continue with the insurance," to which she answered that "she didn't know, that I could talk to him about it." In other conversations with her, she voiced no objection to the transfer of the policy and said he could talk to Royer to see if Royer wanted it. Royer testified that in his discussions with Mrs. Franklin she suggested "that I take the insurance that she had, because it was adequate to cover the requirements under the terms of the lease and that, since there was a balance due on it, that would relieve her of having to pay any further amount on the premium, and that I would just assume the balance of the premium, of the insurance transferred over, as it was." He stated that at that conversation "I agreed to do that." Mrs. Franklin testified that she did not authorize a transfer of the policy until what she claimed was due her on the premium she had paid was paid to her. It is clear from the undisputed evidence that Royer did pay the unpaid balance due on the policy premium. It is our conclusion that there is ample testimony to support the jury's answer to question No. 4 and the ruling of the court to the contrary was erroneous.

Neither was the physical surrender of the policy necessary to effect a valid assignment of the policy from Mrs. Franklin to Royer.¹ While most of the cases cited in footnote 1 have dealt with some form of written assignment, the law is not different when the question of an oral assignment is present. The important thing is whether an actual assignment can be proved by other evidence, without depending upon physical delivery of the policy. In Fidelity Mutual Life Ins. Co. v. City National Bank, D.C., 95 F.Supp. 276, 281, the court said: "Any language, however informal, if it shows the intention of the owner of the chose in action to at once transfer it, so that it will be the property of the transferee, will be sufficient to...