International Ins. Co. v. Medical-Professional Bldg. of Corpus Christi

• Decision Date: 04 August 1966
• Docket Number: MEDICAL-PROFESSIONAL,No. 218,218
• Citation: 405 S.W.2d 867
• Parties: INTERNATIONAL INSURANCE COMPANY et al., Appellants, v.BUILDING OF CORPUS CHRISTI, Appellee. . Corpus Christi
• Court: Texas Court of Appeals

Page 867

405 S.W.2d 867

INTERNATIONAL INSURANCE COMPANY et al., Appellants, v. MEDICAL-PROFESSIONAL BUILDING OF CORPUS CHRISTI, Appellee.

No. 218.

Court of Civil Appeals of Texas.

Corpus Christi.

Aug. 4, 1966.

Rehearing Denied Aug. 31, 1966.

Hubert L. Stone, Jr., Corpus Christi, for appellants.

W. M. Lewright, of Lewright, Dyer & Redford, James Cowden, of Cowden & Cowden, Corpus Christi, for appellee.

OPINION

GREEN, Chief Justice.

This is an appeal from a summary judgment rendered for the defendant in a subrogation suit. Appellant insurance companies, as insurers of Joseph Leon, Inc., the lessee of certain premises owned by appellee, paid lessee, their insured, the amount of its loss within policy limits resulting from an explosion in the premises allegedly caused by the negligence of appellee-lessor, and/or its independent contractor. Insurers by reason of such payments claim to be subrogated to the rights of their insured, and seek to enforce as against the appellee the asserted rights of the lessee to the extent of appellants' payments under the policies. The cause against the defendant other than appellee was severed, and is not before us. The trial court granted appellee's motion for summary judgment based on the following provision of the written lease between appellee as lessor and insured as lessee:

'Lessee hereby waives any claim it might have against Lessor for loss or damage to it caused by Lessor in connection with Lessee's occupancy of the above described premises and storage of goods, wares and merchandise therein to the extent that Lessee is fully compensated for such loss or damage by actual receipt of proceeds from insurance policies covering such loss or damage.'

Lessor originally leased the premises to Joseph Leon, Inc., in 1949. The original lease was amended in 1958, and the provision above copied was added. A similar provision whereby lessor waived any claim it might have against lessee for loss or damage to the premises caused by lessee, to the extent that lessor is fully compensated by actual receipt of proceeds from insurance policies covering such loss or damage was likewise added to the lease contract in this amendment.

In the Spring of 1962, about four years after the execution of this amended lease contract, the lessee Leon took out the three insurance policies here involved. These policies were in effect at the time of the explosion. Pursuant to the terms of the policies, appellant insurance companies paid their insured Leon the amounts which they here seek to recover from appellee.

The explosion occurred December 3, 1963, in the equipment room of appellee's building, where the building steam boiler was located. This was a portion of the building which remained under the control of appellee. In October, 1963, appellee had employed a local engineering firm to inspect the boiler and its appurtenant equipment, and relied upon said company to conduct such tests and inspections as should have been conducted in the exercise of ordinary care. The lease required appellee to keep the building in a good state of repair and in a generally clean and reasonable condition. It is not questioned on this summary judgment proceeding that in the absence of the above quoted provision of the lease an issue of fact would be present of appellee's liability to lessee-insured, and consequently in subrogation to appellant insurance companies, for lessee's loss proximately caused by the explosion.

Appellants' first and second points of error are to the effect that (1) the lease provision relied upon does not destroy the subrogation rights of the insurance companies who have paid the loss, and (2) said lease provision is applicable only to claims which lessee has over and above the amount of insurance proceeds received. Appellees, in support of the trial court's ruling, answer (1) that appellants have no cause of action because their insured had no cause of action by virtue of the waiver provision relied on, and (2) the plain language of the waiver provision applies to any claim which the tenant has against the landlord, to the extent of the tenant's receipt of insurance proceeds.

Where the insurance policy is regarded as one of indemnity, as is admittedly the case here, the company on payment of the loss is subrogated to any rights which the insured may have against the person alleged to be responsible for causing the loss. 46 C.J.S. Insurance § 1209, p. 152 et seq.; 32 Tex.Jur.2d, Insurance, § 466, p . 697 et seq.; Wichita City Lines v. Puckett, 156 Tex. 456, 295 S.W.2d 894. The right of subrogation is not dependent upon an express stipulation in the policy or upon an actual assignment of the cause of action by the insured; the fact of payment of the loss operates as an equitable transfer of the claim. Wilson v. G. A. Stowers Furniture Co., Tex.Civ.App., 297 S.W. 352, writ dis. w.o.j.; Magnolia Pipe Line Co. v. Security Union Insurance Co., Tex.Civ.App., 37 S.W.2d 1062; Frye v. Janow, Tex.Civ.App., 212 S.W.2d 883; Borel's Estate v. Moody, Tex.Civ.App., 273 S.W.2d 673.

The insurer's right of subrogation is derived from the rights of the insured, and is limited to those rights, and there can be no subrogation where the insured has no cause of action against the defendant. If the insured, having a claim against a tort-feasor at the time when payment of insurance is made...