London & L. Fire Ins. Co. v. Davis

• Decision Date: 30 November 1904
• Parties: LONDON & L. FIRE INS. CO. OF LIVERPOOL, ENGLAND, v. DAVIS.<SMALL><SUP>*</SUP></SMALL>
• Court: Texas Court of Appeals

84 S.W. 260

LONDON & L. FIRE INS. CO. OF LIVERPOOL, ENGLAND, v. DAVIS.^*

Court of Civil Appeals of Texas.

November 30, 1904.

Appeal from District Court, Bexar County; A. W. Seeligson, Judge.

Action by James R. Davis against the London & Lancashire Fire Insurance Company of Liverpool, England. From a judgment in favor of plaintiff, defendant appeals. Affirmed.

Denman, Franklin & McGown, for appellant. Solon Stewart, Gordon Bullitt, and R. J. Boyle, for appellee.

FLY, J.

The house of James R. Davis was destroyed by fire, and he sought to recover the sum of $2,500 due from appellant by virtue of a policy of insurance issued by it to him. He obtained the judgment he sought.

It is admitted by appellant that James R. Davis is entitled to recover, for the use and benefit of the trustees of the estate of Thomas Pierce, deceased, who held a mortgage on the property, the sum of $2,635, with interest from May 20, 1904, at the rate of 6 per cent. per annum, unless the right to recover is defeated by the fact that a suit to foreclose the mortgage was commenced, with the knowledge of Davis, before the house was destroyed by fire. These are the facts: "On the 4th of March, A. D. 1901, James R. Davis executed and delivered a deed of trust upon the property covered by said policy of insurance to the trustees of the estate of Thomas W. Pierce, deceased, to secure them in a debt from him to said trustees, and this mortgage has since said date been, and is now, a valid, subsisting mortgage upon said property, and the debt secured by said mortgage did not mature until after the policy sued upon herein was issued. When the policy of insurance previously existing upon this property lapsed, the local agent of the defendant insurance company issued the policy herein sued upon, and delivered the same to the agent of the trustees of the estate of Thomas W. Pierce, deceased, and said agent, in accordance with the provisions of the mortgage from James R. Davis authorizing the mortgagees so to do, paid the premium of the policy herein sued upon for the account of, and charged the same to, James R. Davis, and the mortgagees retained the possession of said policy from the date of its issuance up to the present time, and the insured, James R. Davis, never saw the policy, nor has he ever had the same in his possession. The policy sued upon herein was dated December 7, 1902, and provided that, in consideration of the premium paid it, the defendant insurance company `does insure James R. Davis for the term of one year from the 7th day of December, 1902, at noon to the 7th day of December 1903, at noon against all direct loss or damage by fire except as hereinafter provided, to an amount not exceeding Twenty-five Hundred Dollars,' upon the property described in said policy of insurance and in said deed of trust from plaintiff to said trustees, being a dwelling house known as 904 East Olive street in the city of San Antonio, Tex., and upon the face of the policy it was written, `Loss, if any, payable to the trustees of the estate of Thomas W. Pierce, deceased, as their interest may appear.' Among other things, the policy sued upon provided: `This entire policy, unless otherwise provided by agreement endorsed hereon or added hereto shall be void. * * * If with the knowledge of the insured, foreclosure proceedings be commenced, or notice given of sale of any property covered by this policy, by virtue of any mortgage or trust deed. * * * If with the consent of this Company, an interest under this policy shall exist in favor of a mortgagee, or of any person or corporation having an interest in the subject of insurance, other than the interest of the insured as described herein, the conditions hereinbefore contained shall apply in the manner expressed in such provisions and conditions of insurance relating to such interest as shall be written upon, attached or appended hereto. * * * This policy is made and accepted subject to the foregoing stipulations and conditions together with such other provisions, agreements or conditions as may be endorsed hereon or added hereto, and no officer, agent or other representative of this Company shall have power to waive any provision or condition of this policy, except such as by the terms of this policy may be the subject of agreement endorsed hereon or added hereto and as to such provisions and conditions, no officer, agent or representative shall have such power or be deemed or held to have waived such provision or conditions unless such waiver, if any, shall be written upon or attached hereto, nor shall any privilege or permission affecting the insurance under this policy exist or be claimed by the insured unless so written or attached.' No subsequent agreements were indorsed upon or added to the policy of insurance herein sued upon. Thereafter, on December 27, 1902, the debt from James R. Davis, secured by the mortgage to the estate of Thomas W. Pierce, deceased, became due and unpaid, and the trustees of said estate filed suit in the district court of the Fifty-Seventh Judicial District of Bexar county, Tex., against James R. Davis, to recover the debt due by him, and to foreclose their mortgage upon the property covered by said policy of insurance, and this suit is still pending and undetermined. The defendant therein, James R. Davis, did not know of the filing of said suit by the mortgagees until he was served with citation therein on the 30th day of December A. D. 1902, and had no knowledge of the commencement of the foreclosure proceedings by said mortgagees until he was served with said citation for foreclosure. On the 21st day of April A. D. 1903, the property covered by said insurance policy was totally destroyed by fire. The defendant insurance company did not tender back to the plaintiff or the trustees of the Pierce estate any part of the premium paid for said policy of insurance, nor was any demand made on said company for the same."

The language used in the policy of insurance is that chosen by the insurance company. The insured exercised no choice in that connection, but in order to insure his property he was compelled to accept a policy whose language and conditions were dictated by the insurer. Such being the case, it is the universal rule that, if the language of any condition in the policy is of doubtful meaning or import, that construction which is most favorable to the insured is to be placed upon it. Goddard v. Insurance Co., 67 Tex. 69, 1 S. W. 906, 60 Am. Rep. 1; Bills v. Hibernia Ins. Co., 87 Tex. 547, 29 S. W. 1063, 29 L. R. A. 706, 47 Am. St. Rep. 121. An additional reason for construing a condition of doubtful import in favor of the insured is that the law does not favor forfeiture, and will always give preference to that reasonable construction which will sustain the claim of the insured. Therefore, before a forfeiture will be declared, the facts must bring the case clearly within the terms of the condition expressed in the policy. Brown v. Palatine Ins. Co., 89 Tex. 590, 35 S. W. 1060.

Again, the language employed in the policy must be construed in its ordinary sense, and according to the evident intention of the parties to it. No forced construction is permissible, but the sense in which the language is used must be arrived at in the light of the surroundings of the parties and the intention they had in using the language. It is said in May on Insurance, § 175: "No rule in the interpretation of a policy is more fully established, or more imperative or controlling, than that which declares that in all cases it must be liberally construed in favor of the insured, so as not to defeat, without a plain necessity, his claim for indemnity, which it was his object to secure in making the insurance." The construction must have for its object indemnity for the insured, and any fair interpretation of the policy that will give indemnity must be adopted, and every ambiguity must be resolved in favor of the insured. The terms of the policy are to be understood in their plain, ordinary, and popular sense, unless by usage they have acquired a peculiar sense different from the popular sense, the central idea being to arrive at the intention of the parties.

Applying these rules to the interpretation of the words, "If with the knowledge of the insured, foreclosure proceedings be commenced," we arrive at the conclusion that the words are capable of two constructions, the one which the ordinary mind would naturally place upon them, and the other a technical one which could only arise from a knowledge of the different rules as to the time when an action at law is commenced. The commencement of foreclosure proceedings would be held to mean, by any one not seeking for a technical sense in which the words are used, the first step, the initiatory proceedings, in bringing a suit or starting an...