Miles v. Royal Indem. Co.

• Decision Date: 30 August 1979
• Docket Number: No. 1381,1381
• Citation: 589 S.W.2d 725
• Parties: Charles MILES, Appellant, v. ROYAL INDEMNITY COMPANY and Clyde Hoke, Appellees.
• Court: Texas Court of Appeals

Page 725

589 S.W.2d 725

Charles MILES, Appellant, v. ROYAL INDEMNITY COMPANY and Clyde Hoke, Appellees.

No. 1381.

Court of Civil Appeals of Texas, Corpus Christi.

Aug. 30, 1979.

Opinion on Motion for Rehearing Oct. 22, 1979.

Rehearing Denied Nov. 15, 1979.

Melvin A. Krenek, Beckmann, Stanard & Olson, San Antonio, for appellant.

Thomas M. Andrews, Aransas Pass, for appellee; Charles W. Kelly, Ross, Griggs & Harrison, Houston (on rehearing).

OPINION

NYE, Chief Justice.

This is a suit brought by the insured boat owner, Charles E. Miles, against the insurer, Royal Indemnity Company, to recover the cost of repairs to his pleasure boat which sank at her moorings. Royal Indemnity defended under the "unseaworthiness" exclusion in the "all risks" yacht insurance policy. The jury answered special issues in favor of the boat owner, Miles. The trial judge however, granted the insurance company's motion for judgment non obstante veredicto and entered a take nothing judgment for Miles. Miles appeals.

Miles purchased a used 38 foot Chris Craft Commander cabin cruiser called "Alyson" for $12,000.00 for his family's use at their summer home in Rockport, Texas. Miles applied to Royal Indemnity Insurance Company for an insurance policy to cover the boat. The insurance company sent a marine surveyor to examine the boat and to issue a report to Royal Indemnity concerning the insurability of the boat. The surveyor found the boat in excellent condition and returned a favorable report with two minor recommendations: 1) that Miles repair the bilge blowers; and 2) tighten the port stuffing box. These repairs were made, and Royal Indemnity issued an "all risks" insurance policy to Miles insuring the boat during a one-year term commencing August 14, 1975 for a maximum sum of $26,000.00 in the event of total loss. The policy, which provided coverage "(a)gainst all risks of physical loss or damage except as may be excluded by provisions elsewhere in this policy or by endorsement hereon." The exclusion relied on by the insurance company for denying coverage was: "(l)oss, damage or expense caused by failure of Assured (Miles) to maintain the Yacht in a seaworthy condition . . ."

The boat "Alyson" was docked at Key Allegro near Rockport. Miles hired a Mr. Clyde Hoke, a boat repairman who resided in Rockport, to keep the boat in shape and to make repairs. By the time the boat was finally docked at Key Allegro, Miles had invested approximately $21,900.00 in repairing and refinishing the hull, overhauling the engine and shafts, and investing in new equipment. During the next year, Miles' total investment in the Alyson exceeded $30,000.00. On July 19, 1976, during routine repairs repairman Hoke removed the starboard engine and sent it to San Antonio for repairs. Three days later, on July 24, 1976, the boat sank.

Miles duly notified Royal Indemnity Company within three days of the loss and submitted the necessary proof of loss forms to the company. Thereafter, Miles conferred with Jerry Jordan, the independent insurance agent who had sold Miles the insurance policy; William S. Eanes, the Claim and Loss Supervisor for Royal Indemnity; and James L. Murchison, a marine surveyor who surveyed the boat on behalf of Royal Indemnity. Believing that the damage to the boat (caused by the sinking) was unquestionably covered under the "all risks" marine insurance policy in question, Miles raised the boat and employed a Mr. Lamar Fuller to proceed with the necessary repairs. Three months after the loss, the insurance company sent Miles a letter stating that coverage for the loss would be denied because someone had left the seacock open, and, therefore, the boat was not seaworthy at the time it sank.

The underlying suit was actually a consolidation of two suits. The original plaintiff, boat repairman Clyde Hoke, sued Miles to recover $1,704.37, which represented the unpaid balance due for repair work Hoke had completed on the boat prior to the time she sank. Miles then filed a counterclaim against Hoke alleging that his negligence (in failing to close a seacock) had caused the boat to sink. In addition, Miles filed a third-party action against Royal Indemnity seeking to recover his loss, under the insurance policy, caused by the sinking. In addition, Miles alleged, that Royal Indemnity was also liable for treble damages under the Texas Deceptive Trade Practices Act because the "agents" of Royal Indemnity had affirmatively represented to him that post-sinking repairs to the boat would be covered under the policy.

After the close of Hoke's and Miles' evidence, the trial court granted Royal Indemnity's motion for directed verdict against Miles on his cause of action under the Texas Deceptive Trade Practices Act. Thereafter, Royal Indemnity presented additional evidence and the remainder of the case was submitted to the jury. In response to special issues, the jury found, in relevant parts, as follows: 1) that "Hoke (the repairman) failed to close the through-hull fitting" on the occasion in question; 2) that such failure was not negligence; 3) that immediately prior to the boat's sinking, the boat was in a seaworthy condition; 4) that the reasonable and necessary costs of repair to restore the boat to its condition prior to the sinking was $19,894.00; and 5) that the reasonable cost for storage for the boat during the time it was repaired was $1,600.00. ¹

After the jury's verdict was received by the court, the trial judge denied Miles' motion for judgment on the verdict and granted Royal Indemnity's motion for judgment non obstante veredicto. Royal Indemnity's motion was based on the following three independent grounds: 1) The boat was in an unseaworthy condition, as a matter of law, prior to the time she sank because the seacock had been left open. 2) In the alternative, the evidence conclusively established that the boat was properly moored under normal circumstances when she sank and Miles failed to rebut the presumption that the Alyson sunk as a result of unseaworthiness. 3) There is no evidence in the record upon which the jury could have found the proper amount of damages and, therefore, the verdict of the jury was not supported by any evidence. The trial court's take nothing judgment did not specify the reason for granting Royal Indemnity's motion.

Miles' first point of error is that the trial court erred in granting Royal Indemnity's motion for judgment non obstante veredicto. In considering this point, we will keep in mind the familiar rules governing the review of cases in which the trial judge has granted a judgment non obstante veredicto. First, as a general rule, the juries are the exclusive judges of the credibility of witnesses and the weight to be given to their testimony. Leyva v. Pacheco, 163 Tex. 638, 358 S.W.2d 547 (1962). In this regard, Rule 301, Texas Rules of Civil Procedure, requires the trial court's judgment to conform to the verdict "(p)rovided, that upon motion and reasonable notice the court may render a judgment non obstante veredicto if a directed verdict would have been proper." To sustain the action of the trial court in granting a motion for judgment notwithstanding the verdict, it must be determined from the record as a whole, that there is no evidence upon which the jury could have made the findings relied upon. In considering such motion, all testimony must be viewed in the light most favorable to the party against whom the motion was sought and every reasonable intendment deduciable from the evidence is to be indulged in such party's favor. Leyva v. Pacheco, 163 Tex. 638, 358 S.W.2d 547, 550 (1962); Burt v. Lochausen, 151 Tex. 289, 249 S.W.2d 194 (1952); Ramirez v. National Standard Ins. Co., 563 S.W.2d 837 (Tex.Civ.App. Corpus Christi 1978, no writ); Newitt v. Camden Drilling Co., 552 S.W.2d 928 (Tex.Civ.App. Corpus Christi 1977, no writ).

As a general rule, an "all risks" policy creates a special type of coverage. Recovery under such a policy is generally allowed for all losses of a fortuitous nature in absence of fraud or other intentional misconduct of the insured, unless, of course, the policy contains a provision excluding the specific loss from coverage. (See Anno., Coverage Under All Risks Yacht Policy, 75 A.L.R.3d 410 (1977); Anno., Cover Under "All Risks" Insurance, 88 A.L.R.2d 1122 (1963).) Brownsville Fabrics, Inc. v. Gulf Ins. Co., 550 S.W.2d 332 (Tex.Civ.App. Corpus Christi 1977, writ ref. n. r. e.); Imperial Insurance Co. v. Ellington, 498 S.W.2d 368 (Tex.Civ.App. San Antonio 1973, no writ). Here Royal Indemnity relies upon the "unseaworthiness" exclusion. In such a situation, Miles would have the burden of proof to negative the "unseaworthiness" exclusion contained in the policy which was plead as a defense by Royal Indemnity. Sherman v. Provident American Ins. Co., 421 S.W.2d 652, 654 (Tex.1967). The relevant special issues, definitions, and instructions were to this effect.

The term "unseaworthiness" has no absolute meaning, but varies with the circumstances and the exceptional features of the case known to both the insured and the insurer. There are different degrees of seaworthiness, depending upon the character of the vessel, its construction, its navigation and service required, length and nature of the voyage, the season of the year, its trade and other factors. The degree of seaworthiness may also vary in terms of the use being made of the vessel at the particular time in question. See 37 Couch on Insurance §§ 1646-1689 (2d Ed. 1962). In order to be seaworthy, the ship and her equipment must be reasonably fit for their intended purpose. Cf. Molis v. Ore Navigation Corp., 382 S.W.2d 290, 291 (Tex.Civ.App. Houston (1st Dist.) 1964, writ ref'd n. r. e.). Seaworthiness means the ability to withstand the ordinary stress of wind, wave, and other weather which the vessel might normally be expected to encounter in other words, to stay afloat in the absence of abnormal conditions. Mathis...