New Amsterdam Casualty Co. v. Hamblen

• Decision Date: 31 October 1945
• Docket Number: No. A-578.,A-578.
• Citation: 190 S.W.2d 56
• Parties: NEW AMSTERDAM CASUALTY CO. v. HAMBLEN et al.
• Court: Texas Supreme Court

190 S.W.2d 56

NEW AMSTERDAM CASUALTY CO. v. HAMBLEN et al.

No. A-578.

Supreme Court of Texas.

October 31, 1945.

Rehearing Denied November 28, 1945.

Error to Court of Civil Appeals of First Supreme Judicial District.

Action on an indemnity contract by W. P. Hamblen and others against New Amsterdam Casualty Company. Judgment for plaintiffs was affirmed by the Court of Civil Appeals, 186 S.W.2d 741, and defendant brings error.

Judgment of the trial court and the Court of Civil Appeals reversed, and judgment rendered for defendant.

Baker, Botts, Andrews & Wharton, Wm. M. Ryan, Thomas E. Mosheim, and Sam S. Minter, all of Houston, for petitioner.

J. S. Bracewell and Fentress Bracewell, both of Houston, for respondents.

HICKMAN, Justice.

This suit was instituted by the executors of the estate of H. C. House, deceased, on an indemnity contract to recover the amount expended by the deceased in defense of a suit which, they allege, should have been defended by petitioner under the terms of the indemnity contract. Judgment was rendered in favor of the executors by the trial court and that judgment was affirmed by the Court of Civil Appeals. 186 S.W.2d 741.

The indemnity contract was designated "owners', landlords', and tenants' public liability policy." It covered a building owned by the deceased, House, and occupied and used for a department store by his tenant, J. C. Penney Company. A suit for damages for personal injuries was filed against the owner and his tenant by a customer who was injured by a fall on a stairway in the building. For the reason hereinafter stated, petitioner refused to defend the suit and the owner defended it at his own expense. Final judgment in the damage suit was in favor of the owner and against the plaintiff therein and the only claim asserted against the petitioner in this suit is for the expenses incurred in the defense, the principal item of which was attorney's fees.

One of the obligations assumed by the petitioner in the policy was, "To Defend, in the name and on behalf of the Assured, any suit against the Assured, even if groundless, brought on account of any accident covered by this Policy, * * *." Following the enumeration of this and other obligations assumed by petitioner was this heading, "Subject to the Following Conditions." One of the named conditions was designated "Condition B" and was in this language: "The Assured shall give immediate written notice of any accident, and like notice of any claim or suit resulting therefrom, together with every summons or other process, to the Executive Office of the Company at Baltimore, Md., or to its authorized representative, provided, however, that the failure to give such immediate notice shall not invalidate any claim made by the Assured, if it shall be shown not to have been reasonably possible to give such notice immediately and that notice was given as soon as was reasonably possible."

The party who filed the damage suit was injured on February 13, 1937. Mr. House had no knowledge of the occurrence until suit was filed on August 4, 1937. The first notice which petitioner had of the claim or of the suit came to its agents in the form of a letter from Mr. House's attorney on or about March 8, 1938. It is not deemed material to recite here the reasons for the delay further than to state that it was brought about by unusual circumstances and not intentionally.

The case was submitted to a jury on special issues, in answer to which it was found that the owner, House, failed to give notice to petitioner of the citation within a reasonable time after receiving it, but that petitioner suffered no injury by reason of such failure, nor was it thereby prevented from making any defense in the suit. The jury further found that $1,800 was a reasonable attorney's fee and the parties agreed that $300 additional expense was incurred by Mr. House in the defense of the suit. On this verdict and agreement judgment was rendered against the petitioner for $2,100.

The decision of the principal question presented turns upon an interpretation of the notice requirement provision copied above. The courts below held, in effect, that the failure of the insured to comply with such requirement did not invalidate his claim under the finding by the jury that such failure did not result in loss or damage to the insurer. It is the theory of the insurer that it agreed to pay such claims and only such claims as those of which it had been given notice within a reasonable time, and that the finding by the jury that the insured failed to give it notice within such time entitled it to a judgment in its favor.

The notice requirement does not expressly invalidate the claim of the insured. Our question is whether or not it does so by necessary implication. It will be observed that the provision regarding notice is set out under the general heading "Subject to the Following Conditions", and is also under the subhead "Condition B". The entire provision is contained in a single sentence, the second part of which is a proviso introduced by the words "provided, however". It seems evident that the effect of the proviso is to limit the scope of the language to which it relates and except something therefrom which, but for such proviso, would be included therein. Knight v. Chicago Corp., Tex.Sup., 188 S. W.2d 564. Unless this proviso had the effect of limiting the part of the...