Kelley v. American Ins. Co.
| Citation | 316 S.W.2d 452 |
| Decision Date | 16 September 1958 |
| Docket Number | No. 7025,7025 |
| Parties | A. J. KELLEY, Appellant, v. The AMERICAN INSURANCE COMPANY, Appellee. |
| Court | Court of Appeals of Texas. Court of Civil Appeals of Texas |
Howard S. Smith, Sulphur Springs, Woodrow H. Edwards, Mt. Vernon, for appellant.
Johnson, Guthrie & Stanfield, Dallas, for appellee.
This is a suit to collect for a loss under a fire insurance policy. The judgment of the trial court is reversed and rendered. In an effort to present the basis of this Court's judgment in a better organized manner, the original opinion in this case, dated July 15, 1958, is withdrawn and this opinion substituted therefor on motion for rehearing.
The statement of the nature of the case as contained in appellant's brief is very concise and the following portion is adopted.
'This is a suit on a fire insurance policy. Plaintiff, A. J. Kelley, sued defendant, The American Insurance Company, a corporation, in the District Court of Rains County, Texas, for the total loss of his residence by fire during the effective time of the policy issued plaintiff by defendant. The amount sued for was $3,000.00 which was the coverage provided by the policy. A jury being waived, the trial judge after hearing the case, entered a 'take nothing' judgment against the plaintiff, hence this appeal.
'Upon proper request by the plaintiff, the trial judge filed his Separate Findings of Fact and Conclusions of Law, in which he found against all the defenses pleaded by the defendant, but held against plaintiff because the evidence showed plaintiff had secured additional insurance after buying a policy of fire insurance from defendant.
'The main points presented by this appeal relate to the failure of defendant to plead specifically its defense of 'other insurance' and further that this defense is not applicable here because the policy itself does not provide for forfeiture if other insurance is secured, thus entitling plaintiff to judgment for his liquidated claim of $3,000.00.'
The American Insurance Company of the City of Newark, New Jersey, issued its fire and extended coverage insurance policy No. 82979 to A. J. Kelley on August 18, 1956, insuring Kelley's one-story composition frame dwelling house located about four miles east of Point, Texas, for the sum of $3,000, and the household goods contained in the dwelling for the sum of $500. Thereafter, on September 11, 1956, the Home Insurance Company issued its fire and extended coverage insurance policy No. 1715, covering the same property in amounts of $1,500 upon the dwelling and $1,000 on household and kitchen furniture. Both policies are on the Standard Texas Policy Form, Edition June 1944-First Revision March 1, 1949. The first page of each of the policy forms except for the name of the Insurance Company is identical in form content. In the American Insurance policy following the itemized description of the property in which $3,000 coverage on the dwelling is listed as Item 1, and the $500 coverage on household goods is listed as Item 2, there appears this stipulatin: 'If the coinsurance clause is not applied, no other fire insurance is permitted unless the total amount, including this policy, on each item is inserted in the blanks which follow: Item No. 1, $3,000; No. 2, $500; No. 3, $_____; No. 4, $_____; No. 5, $_____.' This identical stipulation appears following the description of the property in the Home Insurance Company policy wherein Item No. 1 is $1,500 coverage on the dwelling and Item No. 2 is $1,000 coverage on the household and kitchen furniture, but no amounts were inserted in items No. 1 or No. 2, in other words, Items Nos. 1, 2, 3, 4 and 5 were left blank. Also in an endorsement to the American policy, dated August 18, 1956, there appears another stipulation in this language, 'No other fire insurance is permitted on items insured hereunder unless permission is endorsed hereon.' Then in another section of each policy under the heading, 'Conditions Suspending or Restricting Insurance' there appears this provision: 'Unless otherwise provided in writing added hereto, this Company shall not be liable for loss occurring: * * * (e) while any other stipulation or condition of this policy is being violated.'
The record before this Court indicates that the trial judge concluded that procurement by Kelley of the Home policy without permission of the American Insurance Company endorsed on its policy had the effect of either voiding, or suspending for the duration of the violation of its policy terms, the coverage afforded by the American policy and as a consequence of the violation the policy did not cover and the Company was not liable for the loss occasioned by fire destroying Kelley's dwelling on October 1, 1956.
The appellant by his second point of error takes the position that the affirmative defense of other insurance is not applicable because the American Insurance Company policy does not provide for forfeiture if other insurance is secured. This point will be sustained by the entire Court.
The members of this Court have made a very diligent search to determine if a Texas court or a court of any other jurisdiction in a suit of this nature has had occasion to construe and determine the effect of the stipulations of a fire insurance policy substantially as those heretofore quoted, now appearing in a Standard Form policy. No case has been found. All cases which have come to the attention of the Court dealing with the question raised by appellant's second point of error were concerned with policies containing a provision substantially as follows:
'This entire policy, unless otherwise provided by an agreement endorsed hereon or added hereto, shall be void if the insured now has or shall hereafter make or procure any other contract of insurance, whether valid or not, on property covered in whole or in part by this policy.'
This policy provision last quoted is taken from the case of British-American Assurance Co. of Toronto, Canada v. Mid-Continent Life Ins. Co., Tex.Com.App., 37 S.W.2d 742, 744. In that case each of the policies concerned contained the quoted provision and the court said at page 744
This Court is satisfied that the statement of the law as made by Judge Leddy in that case was the prevailing view in Texas as applied to the policy provision before the court at that time. Likewise it seems such rule prevailed in the federal courts and in most of the jurisdictions of the United States, except Massachusetts, Iowa and Maryland. See Sweeting v. Mutual Fire Ins. Co., 83 Md. 63, 34 A. 826, 32 L.R.A. 570.
In comparison, it is very obvious that the limitation on concurrent or other insurance as expressed in the foregoing cases is worded in distinctly different language from the warranties of the present Standard Form. The warranty in the above cases contracts against (1) procurement of other contracts of insurance, (2) whether valid or not. The present Standard Form does not mention 'contract of insurance' in its concurrent insurance or other insurance stipulation, nor make reference to the validity of the contract. The Standard Form merely says 'no other fire insurance is permitted,' etc. Because of this distinction it is thought that the foregoing cases are not controlling under the circumstances of this case in the construction of the Standard Form contract.
The appellee, American Insurance Company, contends that the reasonable meaning and effect of the stipulations heretofore quoted from its policy is that Kelley by the terms of the policy is not permitted to procure concurrent or other insurance unless he first secures the permission of the American to do so, and the permission, if given, be evidenced by proper addendum. The contention being further that Kelley's failure to secure American's permission to procure the issuance of the Home policy resulted in the suspension of the American policy under the terms of the American contract during the period of time the warranty against concurrent or other insurance of the American policy was breached. The appellant Kelley's contention as heretofore set out is that the defense of other insurance is not applicable because the American policy does not provide for forfeiture.
In construing the American policy it is necessary to apply certain elementary rules of construction (all rooted in the same basic concept), including these: (1) An insurance policy will be construed strictly against the insurer; (2) when the terms of an insurance contract are capable of two or more constructions and under one a recovery is allowable and under the other it is denied, the construction which permits recovery will be given the policy; (3) forfeitures of insurance coverage is not favored; and (4) if a fair and reasonable construction of an insurance contract will permit, a meaning will be given to its language that effectuates a contract of insurance rather than defeats it. See 24-B Tex.Jur., Insurance, Secs. 26, 27, 28, 29, 30, 31 and 32, pp. 86-109, and authorities there listed.
No contention is made otherwise and there is no doubt but that the American policy was an enforceable binding insurance contract prior to the issuance of the Home contract and was in every...
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