International Ins. Co. v. Jataine

• Court: Texas Civil Court of Appeals
• Writing for the Court: BISSETT; NYE
• Citation: International Ins. Co. v. Jataine, 495 S.W.2d 309 (Tex. Ct. App. 1973)
• Decision Date: 10 May 1973
• Docket Number: No. 719,719
• Petition History: writ ref'd n.r.e.
• Parties: INTERNATIONAL INSURANCE COMPANY et al., Appellants, v. Tony JATAINE et al., Appellees.

Page 309

495 S.W.2d 309

INTERNATIONAL INSURANCE COMPANY et al., Appellants, v. Tony JATAINE et al., Appellees.

No. 719.

Court of Civil Appeals of Texas Corpus Christi.

May 10, 1973.

Rehearing Denied May 31, 1973.

Dyer, Redford, Burnett, Wray & Woolsey, J . M. Burnett, Corpus Christi, for International Ins.

OPINION

BISSETT, Justice.

Our opinion of March 15, 1973, is withdrawn, and this opinion reaching the same conclusion is substituted therefor.

This is an appeal from a judgment in favor of Tony Jataine and wife, Anne Jataine Trust, plaintiffs-appellees, growing out of the issuance of a fire and extended coverage insurance policy issued by International Insurance Company, as insurer, to the Gary Maurice Poenisch Trust, as insured, covering a commercial type building. The building was damaged by Hurricane Celia on August 3, 1970. We reverse and render.

Involved in the trial court proceedings were multiple individuals and trusts, two separate buildings that were joined together (each owned by a different person), and two separate insurance policies (each issued by a different company), with each policy covering only one of the buildings. Both buildings were situated in Corpus Christi, Texas.

Tony Jataine and Wife, Anne Jataine, the owners of one of the buildings at the time of Celia, and the Jataine Trust, the owner of the other building at that time, sued International Insurance Company (which had previously issued a policy of insurance on the building owned by Mr. and Mrs. Jataine), and Charter Oak Insurance Company (which had previously issued a policy of insurance on the building owned by the Jataine Trust), on insurance contracts to rocover for hurricane damages sustained by the two buildings. The plaintiffs also sued Ernest M. Poenisch, Jr., individually, and as Trustee for the Gary Maurie Poenisch Trust, to recover $5,795.90, the proceeds of a draft that was issued by International Insurance Company, which was deposited by the Trustee to the Poenisch Trust account. International Insurance Company filed a cross-action to recover back the said sum of $5,795.90.

The plaintiffs Tony Jataine and wife, Anne Jataine, will be referred to as 'Jataines'; Phil Massad, Trustee for the Jataine Trust, as 'Jataine Trust'; International Insurance Company as 'International'; Ernest M. Poenisch, Jr., individually, and as Trustee for the Poenisch Trust as 'Poenisch'; and Charter Oak Fire Insurance Company, as 'Charter Oak'.

Trial was to a jury which found: (1) International Insurance Company, at the time it issued the draft, knew that the building described in its policy had been sold in July to the Jataines; (2) International agreed to reopen the claim for any additional hurricane damage that was discovered after settlement; and (3) the reasonable cost of repairing such additional damage was $3,250.00.

Charter Oak Insurance Company was given an instructed verdict. Judgment was rendered on the verdict that the plaintiffs recover $3,250.00 from International Insurance Company, that they also recover $5,795.90 from Ernest M. Poenisch, individually, and as Trustee for the Gary Maurice Poenisch Trust, that they recover nothing against Charter Oak Insurance Company, and that International Insurance Company recover nothing on its cross-action.

International and Poenisch have perfected separate appeals. The Jataines and the Jataine Trust do not appeal from the take-nothing Judgment that was rendered against them in favor of Charter Oak, nor do they attack the judgment that was rendered by cross points.

Three separate controversies are presented by the pleadings. The Jataines seek to recover (from International) on a policy of insurance that did not name them as insured and which was never assigned to them. They endeavor to recover (from Poenisch) the amount of the draft. International attempts to recover (from Poenisch) the proceeds of the draft. Poenisch occupies the unique position of being appellant as to the action brought by plaintiffs and appellee as to the cross-action.

With respect to the cause of action against International, it was alleged by plaintiffs that Tony Jataine and wife, Anne Jataine, were the owners of the building that had been insured by International Insurance Company under its Policy No. R 179583; that the policy was in force and effect on August 3, 1970, when the building was damaged by a hurricane; that International agreed to pay $5,795.90 of the loss sustained to that building; that a draft for said amount was delivered to Poenisch; that International knew that the property covered by the policy of insurance had been sold to the Jataines 'prior to the hurricane, but nonetheless investigated the loss, ascertained the amount of the damage and paid what it determined to be its proportionate share of the claim'; that International further agreed to pay for any additional damages to the building should such damages become evident thereafter; and, that additional damages to the building were discovered subsequent to initial investigation of the loss, which were not paid. Plaintiffs sought a recovery of $13,300.00 against the defendant International and Charter Oak.

International, in addition to denying generally the allegations of plaintiffs' petition, specially denied that it had any policy of fire and extended coverage insurance in effect that covered Mr. and Mrs. Jataine's building on August 3, 1970, when it was damaged. It admitted that it did have in effect such a policy on that building on July 1, 1970, that insured the Poenisch Trust. However, it also alleged that the building was sold to Mr. and Mrs. Jataine prior to the date of loss, that there was no compliance with the change of ownership condition of the policy, and that, accordingly, it was not indebted to plaintiffs because coverage did not exist in their favor when the building was damaged.

Facts

The Jataines purchased a warehouse building, hereinafter called 'old building' from the Poenisch Trust in July, 1970. As part of the purchase price thereof, the purchasers executed a note in the original principal sum of $47,277.50, payable to the order of 'Ernest M. Poenisch, Jr., Trustee for Gary M. Poenisch 'Trust', which was secured by a deed of trust and by a vendor's lien covering the old building and the land upon which it was situated. The note had not been paid in full at the time of the loss, when the draft was issued, or when the draft was paid, but was paid in its entirety in July, 1971, which was after the filing of plaintiffs' petition but before the trial of the case.

In or about the year 1966, the Jataines bought land that adjoined the land upon which the old building was situated and conveyed that land to the Jataine Trust. In 1969, or thereabouts, a building, hereinafter called 'new building', was constructed thereon. The new building and the old building were tied together by a common wall. An opening was left in the area of abutment of the walls between the two buildings; they were utilized as one building by the Jataines in the conduct of their business. From an inspection, both outward and inward, the buildings appeard to be a single structure. Both buildings were damaged by Hurricane Celia.

At the time the hurricane struck, the old building was owned by the Jataines, and the new building was owned by the Jataine Trust. The Jataines did not have any fire and extended coverage insurance on the old building. The new building was insured with Charter Oak under a policy that named the Jataine Trust as the insured.

On October 29, 1968, International issued its Policy No. R 179583 on the old building that named 'Gary Maurice Poenisch Trust, Ernest M. Poenisch, Jr., Trustee' as the insured. It contained the following contractual provision under 'Basic Conditions':

'Unless otherwise provided in writing added hereto, this Company shall not be liable for loss occurring . . . (d) following a change in ownership of the insured property.'

The policy was for a three year period and all premiums to October 29, 1970 were paid by Poenisch. On September 22, 1970, Mrs. Shaw, a local recording agent for International, learned that the insured property was sold by Poenisch to the Jataines in July. The policy, pursuant to a request by Poenisch, was cancelled by International on September 23, 1970, and the premium for the period September 23 to October 29, 1970 was refunded to Poenisch. Four days before trial, International tendered a refund of the premium to Poenisch which covered the period July 1 to September 23, 1970. Such tender was refused. The policy was not assigned to the Jataines nor did International execute an endorsement thereon that named the Jataines as insureds thereunder.

Following the hurricane on August 3, 1970, the Jataines reported the damage to a Mr. Bill Chapman, an agent who represented Charter Oak. Some three weeks later, Mr. Chapman and an adjuster for Charter Oak initiated an investigation of the damage to the premises . They assmed that the structure (both buildings) constituted a single building that had been insured under Charter Oak's policy. They valued the structure at over $90,000.00, and the visible damage thereto was determined to be approximately $11,000.00. Because the Jataine Trust had coverage of only $50,000.00 under the Charter Oak policy, Chapman, sometime during his investigation, told Tony Jataine that the structure, being underinsured, was subject to a penalty under the 80% Co-insurance clause which would reduce the amount payable as damages under the Charter Oak policy to an amount less than the actual damages sustained to it.

On October 2, 1970, Tony Jataine, acting for the Jataine Trust, signed a proof of loss, addressed to Travelers Insurance Company (which included Charter Oak), wherein it was stated that the total damage to the premises was $10,072.44, and the amount claimed under the Charter Oak policy was $6,648.29. According to Chapman, once a proof of loss had been...