Light v. Transport Insurance Company

• Decision Date: 24 June 1971
• Docket Number: No. 565,565
• Citation: 469 S.W.2d 433
• Parties: M. Russ LIGHT, d/b/a American Insurance Agency, Appellant, v. TRANSPORT INSURANCE COMPANY et al., Appellees.
• Court: Texas Court of Appeals

Page 433

469 S.W.2d 433

M. Russ LIGHT, d/b/a American Insurance Agency, Appellant, v.TRANSPORT INSURANCE COMPANY et al., Appellees.

No. 565.

Court of Civil Appeals of Texas Tyler.

June 24, 1971.

Rehearing Denied July 22, 1971.

Burford, Ryburn & Ford, James H. Holmes, III, Anderson, Henley, Shields, Bradford & Pritchard, L. W. Anderson, Dallas, for appellant.

Rawlings, Sayers & Scurlock, Nelson Scurlock, Fort Worth, for appellees.

McKAY, Justice.

Plaintiff, M. Russ Light(hereinafter called 'Light'), doing business as American Insurance Agency, originally brought this suit against Transport Insurance Company(hereinafter called 'Transport'), and Transport Insurance Agency(hereinafter called 'Agency'), of Dallas County, and Excess House and its partners, Epstein, Marks & Gerry, of Harris County, for damages for wrongful interference with the insurance business relations existing between Light and H. S. Anderson Trucking Company of Port Arthur, Texas (hereinafter called 'Anderson').The pleas of privilege filed by Excess House and its partners to be sued in Harris County were sustained, and that order of the trial court was affirmed on appeal.419 S.W.2d 223.Pleas of privilege filed by cross-defendants and third party defendants brought in by Excess House were also sustained.

This case was tried on Light's fifth amended petition against Transport and Agency before a jury whose verdict was favorable to Light.¹The trial court granted Transport's motion for judgment notwithstanding the verdict and entered judgment for Transport and Agency, and Light brings this appeal.It is necessary to state the facts in some detail.

Light was a licensed and recording insurance agent who had written insurance for Anderson for the years 1960, 1961, 1962 and 1963, which insurance included automobile liability and property damage, automobile material damage, general liability, workmen's compensation and cargo insurance.Anderson was in the oil field trucking business in Texas and Louisiana with permits or certificates of convenience and necessity issued by both states and the Interstate Commerce Commission, and during these years, the public liability and the comprehensive general liability coverage for Anderson, written through Light as agent, was $100,000.00 each person, $300,000.00 each accident, and $25,000.00 property damage in policies issued by Bituminous Casualty Company.The workmen's compensation was also written by Bituminous, but the cargo insurance, including marine, was placed by Light with and carried by Niagara Insurance Company.

In July, 1963, Harvey Steely, an account executive for Transport, called on Light and solicited the Anderson account for Transport as well as another trucking company account--Union City Transport.According to Light's testimony, Steely proposed that Transport write coverage for Anderson with a combined single limit policy for $10,000.00 with $990,000.00 excess placed in foreign, non-admitted companies so that Anderson could have the total $1,000,000.00 coverage desired.Steely suggested arrangements could be worked out for Light to receive commissions comparable to those he was then getting from Bituminous.Light testified that he advised Steely that it would be necessary to write $100,000.00/$300,000.00/$25,000.00 limits rather than the $10,000.00 combined single limit because an admitted company was then carrying the higher limits and wanted to continue and that he could not write any coverage in foreign companies below the 100/300/25 limits because to do so would be a violation of the orders and regulations of the Insurance Board of Texas and would likely cause him to lose his license.

Steely testified that he first contacted Anderson on July 30 or 31, 1963, to solicit the Anderson insurance account for Transport, and that Anderson asked that he come back again to further discuss the matter.From the record, it is not shown whether Steely contacted Anderson before his visit with Light.

In September, 1963, Light went to see Anderson and discussed renewal of the coverage with Bituminous Casualty, and Light told Anderson he could not write the proposal made by Steely because the State required limits of 100/300/25 written by an admitted company when there is one willing to do so on such basis.In October, 1963, Light submitted a proposal to Anderson for both the 100/300/25 and the excess desired, and Anderson then told him he'had him beat on costs,' but Anderson asked Light to see him again just before December, 1963.On November 28 or 29, Light communicated with Anderson again and was told Anderson was going to place his insurance 'with the other company.'

John P. Miller, employee of Excess House, testified he was first contacted in late August or early September of 1963 by one Colvin of Pan American Insurance Company who put him in touch with B. P. Stansbury Insurance Agency of Beaumont who had been in touch with Colvin about writing the Anderson risk.Miller met with Stansbury and his salesman, McGee, to discuss coverage for Anderson, and Miller, Stansbury, McGee and Steely communicated with each other several times about Transport writing the primary coverage and Excess House placing the excess with foreign companies.Transport decided to limit the risk on Anderson's coverage to the $10,000.00 combined single limit policy.Excess then had extensive communications with British underwriters of London concerning the conditions, rates and terms for the $990,000.00 excess coverage.Communications were also had between Excess and Transport, and Anderson and Anderson's attorney.Proposals were made to Anderson and changes were made in the proposals to meet Anderson's requirements or those of his attorney.

In early December, 1963, these policies were issued and delivered to Anderson, and H. S. Anderson, President of Anderson, and executed an Excess Insurance Affidavit on December 10, 1963, which affidavit stated:

'* * * after diligent effort, to procure from any licensed company or companies the fully amount of insurance required to protect the property, liability or risk desired to be insured, and that he now desires insurance with EXCESS HOUSE of BELLAIRE, Texas, who holds a license to place excess lines of insurance in companies not licensed in Texas, in accordance with the provisions of Chapter 21.38, THE INSURANCE CODE, V.A.T.S.

'The insured further states that the amount of insurance procured from non-licensed insurer or insurers in only the excess over the amount so procurable from licensed companies.'

The record shows that Benckenstein, Anderson's attorney, in the presence of a Transport representative, had informed Anderson some time prior to the date of his affidavit, that the excess affidavit would be required of him under the proposal as submitted by Transport and Excess House.Transport's representative at that time verified this was correct.

Transport executed certificates of insurance, as required, to the Railroad Commission of Texas certifying that it had issued to Anderson a policy of insurance with limits of liability of not less than $10,000.00 for each person, not less than $20,000.00 for each accident, and not less than $5,000.00 for property damage.These were the minimum limits set by the Railroad Commission order.Transport also issued certificates of insurance to the Louisiana Public Service Commission and the Interstate Commerce Commission, but neither shows certified limits upon its face.The record shows that the policy limits written by Transport provided for a $10,000.00 combined single limit which was the coverage for Anderson but the required limits of Louisiana and the Interstate Commerce Commission were apparently provided by endorsements providing Transport would be liable to the public for the required limits.This is difficult to determine from the record.It is apparent, however, the certificates to the regulatory bodies did not correspond to the liability Transport had to Anderson.

It is shown by the record that by placing the coverage with Transport and Excess House for the year 1964, Anderson effected a savings of $12,846.73 for that year.It was also shown that the Insurance Board controls premium rates for admitted companies but that it has no control of rates charged for foreign or non-admitted companies.It follows that the rate for the excess coverage was less than the rate as would be required by the Insurance Board of Texas to write 100/300/25 in an admitted company before placing the excess with a foreign company.Anderson had a debit experience with Bituminous which would also have affected its rates for 1964.

After having seen the certificates of $10,000.00 which Transport was writing, Light complained to the Insurance Board of Texas and an investigation was made by the Board which resulted in Transport being required in January of 1964 to raise its limits to $100,000.00/$300,000.00/$25,000.00, effective January 1, 1964, which was done by endorsements issued by Transport.The result was that Transport's limits were the same as the Bituminous limits had been the previous year (1963), and the same as Bituminous had proposed for the year 1964.Excess House advised the British underwriters of the change in limits required of Transport and such rate adjustments were made as became necessary.

Article 21.38, section 2(c) of the Insurance Code, V.A.T.S., then provided that when a Texas agent is licensed to write insurance in a nonadmitted or unauthorized company, and he procures a policy or certificate of insurance under such license '* * * there shall be executed by the Insured an affidavit setting forth facts showing that such insured was unable after diligent effort to procure from any licensed company or companies the full amount of insurance required to protect the property, liability or risk desired to be insured, and further showing that the amount of insurance procured from nonlicensed insurer or insurers is only...