Johnson, Sansom & Co. v. Fort Worth State Bank

• Decision Date: 24 June 1922
• Docket Number: (No. 10017.)
• Citation: 244 S.W. 657
• Parties: JOHNSON, SANSOM & CO. v. FORT WORTH STATE BANK.
• Court: Texas Court of Appeals

244 S.W. 657

JOHNSON, SANSOM & CO. v. FORT WORTH STATE BANK.

(No. 10017.)

Court of Civil Appeals of Texas. Fort Worth.

June 24, 1922.

Appeal from Tarrant County Court; W. P. Walker, Judge.

Action by Johnson, Sansom & Co. against the Fort Worth State Bank. Judgment for defendant, and plaintiff appeals. Affirmed.

Robert Sansom and Phillips, Trammell & Caldwell, all of Fort Worth, for appellant.

Bryan, Stone & Wade, of Fort Worth, for appellee.

BUCK, J.

Plaintiffs Johnson, Sansom & Co., a copartnership composed of Americas G. Johnson and Frank M. Sansom, doing an insurance agency business in Fort Worth, Tex., on December 23, 1920, sued the Fort Worth State Bank, a corporation, for certain premiums on insurance policies issued by certain companies represented by plaintiffs on a building or buildings belonging to the Citizens' Flour & Milling Company. Plaintiffs alleged that the Fort Worth State Bank loaned the milling company some $10,000, and took a mortgage on its property to secure the bank, and that said policies of insurance were, by contract and arrangement between the milling company and the bank to be delivered to the bank and kept by it until the loan had been paid. That said policies contained the following clause:

"Mortgage clause with full contribution. To be attached only to policies covering in whole, or in part, on real property.

"Loss or damage, if any, on building items under policy, shall be payable to ____ as ____ mortgagee (or trustee), as interest may appear, and this insurance, as to the interest of the mortgagee (or trustee) only therein shall not be invalidated by any act or neglect of the mortgagor or owner of the within described property, nor by any foreclosure or other proceedings or notice of sale relating to the property, nor by any change in the title or ownership of the property, nor by the occupation of the premises for purposes more hazardous than are permitted by this policy; provided that in case the mortgagor or owner shall neglect to pay any premium due under this policy, the mortgagee (or trustee) shall, on demand, pay the same.

"Provided, also, that the mortgagee (or trustee) shall notify this company of any change of ownership or occupancy or increase of hazard which shall come to the knowledge of said mortgagee (or trustee), and unless permitted by this policy, it shall be noted thereon, and the mortgagee (or trustee) shall, on demand, pay the premium for such increased hazard for the term of the use thereof; otherwise this policy shall be null and void.

"This company reserves the right to cancel this policy at any time as provided by its terms, but in such case this policy shall continue in force for the benefit only of the mortgagee (or trustee) for ten days after notice to the mortgagee (or trustee) of such cancellation, and shall then cease, and this company shall have the right, on like notice, to cancel this agreement.

"In case of any other insurance upon the within described property, this company shall not be liable under this policy for a greater proportion of any loss or damage sustained than the sum hereby insured bears to the whole amount of insurance on said property, issued to or held by any party or parties having an insurable interest therein, whether as owner, mortgagee or otherwise.

"Whenever this company shall pay the mortgagee (or trustee) any sum for loss or damage under this policy and shall claim that, as to the mortgagor or owner, no liability therefor existed, this company shall, to the extent of such payment, be thereupon legally subrogated to all the rights of the party to whom such payment shall be made, under all securities held as collateral to the mortgage debt, or may at its option pay to the mortgagee (or trustee) the whole principal due, or to grow due, on the mortgage, with interest, and shall thereupon receive a full assignment and transfer, of the mortgage and of all such other securities; but no subrogation shall impair the right of the mortgagee (or trustee) to recover the full amount of ____ claim.

"Attached to and forming part of policy No. ____ of the ____, issued at its ____, Texas, agency.

"Dated ____. ____, Agents."

Plaintiffs alleged that the milling company had failed and refused to pay any part of the premiums charged on the policies, and had been at the time of the filing of the suit adjudged a bankrupt, and consequently was not made a party to the suit. That plaintiffs were informed and believed that there were not enough assets of said milling company to more than pay the secured creditors, and that unless they were successful in collecting said premiums from the defendant bank the plaintiffs would not be able to realize anything out of their debt.

Defendant answered by way of a general demurrer, by certain special exceptions, and specially pleaded that from the time the policies herein mentioned were issued, to wit, August 26, 1919, January 21, 1920, and February 4, 1920, until about September 1, 1920, that the milling company was a solvent concern, having assets out of which the indebtedness of plaintiffs could have been made by due process of law, and had on deposit in the defendant bank moneys far in excess of the amount due plaintiff, which deposit would have been subject to any offset which the defendant might have held as the result of having paid an obligation for which said milling company was primarily liable; that about the last-named date said milling company became insolvent, and on November 5th thereafter filed its voluntary petition in bankruptcy, and was duly adjudged a bankrupt on November 30, 1920, and its assets placed in the hands of a receiver or trustee; that the defendant did not know until November 22, 1920, that the premiums had not been paid by the milling company, which was primarily liable.

The defendant denied that it was ever liable to said plaintiffs for said premiums, but pleaded that, if any liability existed on its part, by reason of the delay and failure on the part of the plaintiffs to collect the premiums from the milling company while it was solvent and a going concern, and the failure of plaintiffs to notify the defendant that said premiums had not been paid prior to the insolvency of said milling company, the plaintiffs were estopped from claiming the amount from the defendant.

Plaintiffs filed their first supplemental petition June 23, 1920, specially pleading that no facts had been pleaded by the defendant showing that plaintiffs were under any obligation to notify defendant of the failure or neglect of the milling company to pay said insurance premiums, nor showing that plaintiffs were under any obligation to make any demand upon defendant therefor within any specified time. They specially pleaded that defendant had notice and knowledge of the terms of the mortgage clauses, hereinabove set out, and attached to the policies, and that under said clauses defendant was liable for said premiums if the milling company should fail or refuse to pay them.

In the trial amendment, filed June 24th, plaintiffs pleaded that they had already remitted to the insurance companies, which they represented, and which issued the policies heretofore mentioned, the premiums due on said policies; that they were duly bound to remit said premiums to said companies, and that they thereby became subrogated in all respects to all rights which said insurance companies had in said policies and under the mortgage clause aforesaid.

Upon a trial, the court instructed the jury to return a verdict for the defendant and from a judgment entered upon such verdict the plaintiffs have appealed.

Since this is an appeal from a judgment entered upon an instructed verdict, it becomes our duty to give the strongest effect to any testimony which tends to show that the plaintiffs were entitled to recover. Mr. Sansom, one of the plaintiffs, testified that the plaintiffs wrote no policies of insurance of their own, but merely issued them as agents for insurance companies; that their services as such agents were compensated for by commissions. By plaintiffs' plea in their trial amendment, it is shown that the plaintiffs had already paid the premiums due the companies, and hence, if defendant can be held liable in this suit, it must be upon the ground that it originally either expressly or impliedly promised the insurance companies to pay said premiums, upon default of the milling company, and that plaintiffs were subrogated to the rights of said insurance companies by reason of the payment to them of such premiums.

If the appellants have any claim against the appellee by reason of subrogation to the rights of the insurance companies, then it is proper for us to consider the rights such insurance companies would have had under the facts shown. The evidence shows that the policies were delivered by plaintiffs to the president of the defendant; that the defendant's president knew that a mortgage clause was attached to the policies, but did not have actual notice that any provision was therein contained to the effect that in any event the bank would be liable for the payment of the premiums, in case the milling company failed to pay them. Nor did the bank know that the premiums had not been paid until the milling company had become insolvent. The plaintiffs charged said premiums on their books against the milling company, and tried from September 1, 1919, till the milling company filed a petition in bankruptcy to collect the amount from it, over 14 months. It is further agreed that the deed of trust contained an agreement and stipulation between the milling company, the mortgagor, and the bank, as mortgagee, that the former would at its own expense, keep the property insured and deliver the policies to the bank's custody. Under these facts, it has been held that if the bank had voluntarily paid the premiums it could not have collected said amount from the milling company. Culver et al. v. Brinkerhoff, 180...