Howell v. Knox

• Decision Date: 03 March 1948
• Docket Number: No. 9675.,9675.
• Citation: 211 S.W.2d 324
• Parties: HOWELL v. KNOX.
• Court: Texas Court of Appeals

211 S.W.2d 324

HOWELL v. KNOX.

No. 9675.

Court of Civil Appeals of Texas. Austin.

March 3, 1948.

Rehearing Denied March 24, 1948.

Appeal from District Court, Travis County; J. Harris Gardner, Judge.

Suit by Will G. Knox, as receiver of Texas Fire & Casualty Underwriters, a reciprocal insurance exchange, as a class action, against H. H. Howell and 29 named defendants, individually and as representatives of 4,298 unnamed defendants, for purpose of obtaining a levy and assessment against the subscribers under Vernon's Ann.Civ.St. art. 5026, subd. 4. From judgment for plaintiff, the defendant H. H. Howell, individually and in representative capacity, appeals.

Affirmed.

Looney & Clark and R. Dean Moorhead, all of Austin, for appellant.

Critz, Kuykendall, Bauknight & Stevenson, of Austin, for appellee.

RAYMOND GRAY, Justice.

Will G. Knox as receiver of the Texas Fire and Casualty Underwriters, a reciprocal insurance exchange organized under the provisions of Chap. 20, Title 78, Revised Civil Statutes of Texas, Vernon's Ann.Civ. St. art. 5024 et seq., brought this suit, as a class action, against H. H. Howell and 29 named defendants, individually and as representatives of 4,298 unnamed defendants, and alleged all defendants were subscribers of said Texas Fire and Casualty Underwriters. The suit was for the purpose of obtaining a levy of an assessment against the subscribers under the provisions of Art. 5026(4), Revised Civil Statutes, Vernon's Ann.Civ.St. art. 5026, subd. 4.

At the trial some six defendants intervened but did not participate; three filed pleas of privilege and were dismissed as named but not as unnamed defendants; twenty-one named defendants defaulted; one named defendant was in the military service; two were not served; and two were deceased; of these last five the first three were dismissed as named but not as unnamed defendants, the two deceased defendants were dismissed as named defendants, but their heirs and legal representatives were held as unnamed defendants. The defendant Howell appeared and defended the suit individually and as a representative of the 4,298 unnamed defendants. The trial was to a jury and upon the conclusion of the evidence, upon the motion of the plaintiff, the court withdrew the case from the jury and rendered judgment for the receiver against the 4,298 defendants, authorizing the assessment of an amount of money equal to one additional annual premium or premium deposit booked and earned on each policy held by each subscriber of Texas Fire and Casualty Underwriters during any portion of the period of time from December 31, 1939, to October 25, 1941, and adjudged the cost against the plaintiff, Knox.

H. H. Howell, individually and in his representative capacity, has appealed. The defendants in the trial court will be here referred to as appellant, plaintiff receiver as appellee, and the Texas Fire and Casualty Underwriters as Underwriters.

Appellant presents eighteen points of alleged errors. The first four of these are: There was no evidence, or there was insufficient evidence, to show appellants were subscribers at the Underwriters. The petition alleges the Underwriters to be a reciprocal insurance exchange, organized under Chap. 20 of Title 78, R.C.S. Art. 5025 of this Chapter provides for the execution of contracts by an attorney in fact; Art. 5026 provides:

"Such subscribers, so contracting among themselves, shall, through their attorney in fact, file with the Board of Insurance Commissioners, a declaration verified by the oath of such attorney in fact setting forth: * * *

"Such power of attorney or other authority executed by the subscribers at any such exchange shall provide that such subscribers shall be liable, in addition to the premium or premium deposit specified in the policy contract, to a contingent liability equal in amount to one additional annual premium or premium deposit * * *."

The subscribers' agreement filed with the Board of Insurance Commissioners and in evidence in this cause, contains a provision, as follows:

"5. Our Attorney-in-Fact shall pay out of our funds all expenses including our proportion of the cost of securing, issuing and exchanging insurance and all costs of reinsurance and all claims or demands as adjusted, contested, compromised, or reduced to judgment, but our liability for the payment of expenses, claims and reserves as set out above, shall not exceed one additional annual premium or deposit premium. In consideration for its service, our Attorney-in-Fact shall deduct for itself not to exceed ten per cent (10%) of all moneys received or due as a result of this Agreement. We agree to pay promptly at the offices of our Attorney-in-Fact in the city where it is located all demands of our Attorney-in-Fact for moneys to be used for the purposes set forth in this agreement. Failure to pay promptly such demands shall be cause for legal enforcement of same and our Attorney-in-Fact is specifically authorized to bring such proceedings in the name of the Texas Fire & Casualty Underwriters, or in its own name as Attorney-in-Fact, for Subscribers at Texas Fire & Casualty Underwriters."

"* * * The reciprocal or inter-insurance exchange is a creature of the statutes (Arts. 5024-5033a, R.C.S., Vernon's Ann. Civ.St. arts. 5024-5033a) and its powers, duties, responsibilities and methods of operation are regulated by statute Its contracts are therefore referable to the provisions of such statutes, and it is now well settled law that the requirements of such statutes are read into and become a part of such insurance contracts. It is also now settled that policy holders in such reciprocal exchange are both insurer and insured, and not only as contemplated by the statutes, but under the provisions of the policies issued, the insurance contract consists of the `subscribers agreement,' or `power of attorney,' and the policy issued, and that the two are inseparably interrelated." Mercer v. Knox, Tex.Civ.App., 193 S.W.2d 885, 886.

The forms of policies used by the Underwriters were admitted in evidence, and stipulation was made by the attorneys that the same were the forms so used. In plaintiff's petition demand was made of the defendants to produce the policies of insurance issued to them by the Underwriters, with notice that upon failure to so produce said policies secondary evidence would be offered to show the terms and conditions thereof. The policies were not produced, but at the trial Miss Frances McMillan testified she worked as a bookkeeper for the Underwriters from 1938 to 1941; that she recalled a number of the large policyholders, and H. H. Howell was one of these; she recalled having seen policies issued to him and had gotten checks from him; she was not familiar with H. H. Howell's signature, and her evidence does not suggest she personally knew H. H. Howell. The following from Kelly v. Consolidated Underwriters, Tex.Civ.App., 300 S.W. 981, 984, affirmed on other grounds, Tex.Com. App., 15 S.W.2d 229, is ascribed therein to Robertson v. DuBose, 76 Tex. 1, 13 S.W. 300: "Similarity of name is held to be sufficient to establish the identity of the person, when there is no evidence to the contrary, and no suspicion cast upon the transaction by the evidence."

H. H. Howell, who defended the suit individually and as a representative of a class, did not testify. We hold the evidence sufficient to show him to be a subscriber.

Howell did file a verified answer containing a denial that he had executed the subscribers' agreement, and further: "* * * that if any reciprocal or inter-insurance contract or agreement such as was alleged in plaintiff's original petition was entered into for him by any agent of the Texas Fire and Casualty Underwriters, or by any other person, such action was taken without his knowledge or consent, and he has not since ratified or confirmed the same."

This pleading does not change what we have said. "In order to put in issue the execution by it or by its authority of an instrument `upon which a pleading is founded,' the defendant is required to deny such execution or authority under oath. This means a specific, categorical denial, usually referred to as a plea of non est factum. A general denial is not such plea." Century Ins. Co., Ltd. v. Hogan, Tex.Civ.App., 135 S.W2d 224, 228.

It is to be noticed in the above denials the defendant denied only that he had executed the subscribers' agreement, and that he had not authorized any person to execute for him any reciprocal or inter-insurance contract; that if any such agreement or contract was entered into for him it was without his knowledge and consent, and he has not since ratified or confirmed the same. These denials amount to no more than denials of the provisions of the law.

"The subscribers are both insurers and insured and the rights and liabilities of such subscribers are fixed and determined by their applications, the policies issued and the governing laws, all of which enter into and become parts of their contracts." Glenn H. McCarthy, Inc. v. Southern Underwriters, Tex.Civ.App., 192 S.W.2d 469, 471, Error Refused NRE.; Mercer v. Knox, supra.

The books and records of the Underwriters were made available to the defendants. There was introduced in evidence carbon copies of letters sent to the subscribers, and carbon copies of letters sent to the named defendants. Also, a copy of a mineographed letter sent to all subscribers, which advised these parties the records of the Underwriters showed such parties to be subscribers. There were 256 replies to this letter. This evidence in its entirety, being both direct and circumstantial, is sufficient to show the defendants were subscribers. The relief prayed for is the levy of an assessment of liability against the subscribers, the judgment is a class judgment which does not name the members of the class and does not determine the amount of liability against any member of such class. These are issues to...