Pan Handle Nat. Bank v. Security Co.

• Decision Date: 26 January 1898
• Citation: Pan Handle Nat. Bank v. Security Co., 44 S.W. 15 (Tex. App. 1898)
• Parties: PAN HANDLE NAT. BANK v. SECURITY CO. et al.
• Court: Texas Court of Appeals

44 S.W. 15

PAN HANDLE NAT. BANK v. SECURITY CO. et al.

Court of Civil Appeals of Texas.

January 26, 1898.

Error from district court, Travis county; Frank G. Morris, Judge.

Two actions consolidated and tried together, one by the Security Company against the Delaware Insurance Company and others, and the other by the same plaintiff against the Merchants' Insurance Company and others. There was a judgment for plaintiff, and defendant the Pan Handle National Bank brings error. Reversed.

The statement of the nature and result of this suit, as stated in plaintiff in error's brief, is conceded by defendant in error to be correct, and is as follows:

"The Security Company brought separate suits in the district court of Travis county against the Delaware Insurance Company and the Merchants' Insurance Company upon policies of insurance for $1,000 each, issued upon certain mill property situated in Wichita Falls, Tex., joining as defendants in each case the Wichita Falls Milling Company, as the owner of the property, and the Pan Handle National Bank, also a claimant of the insurance money due, upon the destruction of the property. The two cases were consolidated, and plaintiff filed its amended petition, which is here set out at length, omitting formal parts, as follows, viz.: `Plaintiff alleges that heretofore, to wit, on the 7th day of August, 1894, defendant bank made application to each defendant insurance company herein to become insured upon a certain building situated in Wichita Falls, Wichita county, Texas, on lots one (1) and (2) two, in block No. (196) one hundred and ninety-six of said town, the same being described as a three-story, metal-roofed, flour-mill building and attachments, known as the Wichita Roller Mills, and situated on Tenth street, in Wichita Falls, Texas, in the sum of three hundred dollars, and in the further sum of seven hundred dollars on the fixed and movable machinery, bran dusters, puriners, spouting beltings, shaftings, bolting cloths, and chests, millstones, and all implements and fixtures usual to flour mills, which were situated in and attached to said mill building, and formed a part of the realty. Plaintiff alleges, further, at the time of said applications, and at the time of the issuance of the policies herein sued on, defendant bank was the owner of the property insured in said policy, and of the lots upon which the same was situated. Plaintiff further alleges that on the said 7th day of August, 1894, defendant insurance companies, for and in consideration of the sum of fifty dollars ($50.00) to each in hand paid by defendant bank to the agents of said insurance companies, Stone & Van Dyke, a firm composed of G. B. Stone and L. W. Van Dyke, made, executed, and delivered to defendant bank each its policy of insurance, numbered, respectively, 343,886 and 712,786, each duly signed by its president, attested by its secretary, and countersigned by its said agents, for the sum of one thousand dollars, in which said policies it is especially agreed and stipulated, by and between the insurers, the assured, and this plaintiff, that the loss, if any, which might occur on the said policies, should be payable to this plaintiff as its interests might appear in said property, which stipulations were entered in writing in the face of said policies at the time of their issuance, as a part thereof, and in which said policies the defendant insurance companies did insure the aforesaid property each for the sum of one thousand dollars, as hereinbefore specified, for the term of one year, commencing the 7th of August, 1894, at noon, and ending the 7th day of August, 1895, at noon, against all direct loss or damage by fire. Plaintiff alleges that it had an interest in said property at the time said policies of insurance were issued, amounting to a large sum of money, to wit, about nine thousand dollars, by virtue of a certain judgment of the district court of Wichita county, Texas, foreclosing the lien of a deed of trust in favor of plaintiff upon the property insured, and hereinbefore described, by which defendant insurance companies and their agents at that time had notice, and to secure the payment of which, in the event of loss by fire, the defendant bank, prior to and at the time of the issuance of said policy, agreed with plaintiff to keep said property insured for plaintiff's benefit in the sum of ten thousand dollars. Plaintiff further alleges that [after] the issuance of said policy the same was delivered to plaintiff by defendant the Pan Handle National Bank, as security for its debt, and defendant bank thereafter sold all of said property to its co-defendant milling company, and, with the consent of said insurance companies, conveyed said property, and assigned and transferred said policies of insurance, to said milling company, and defendant insurance companies, through their agents, indorsed in writing on said policies their consent thereto. Plaintiff further alleges that, after said policies had been delivered to said plaintiff, defendant bank procured same from plaintiff, upon the representations of its agents and officers, R. E. Huff and W. M. McGregor, acting for said bank, that defendant bank had sold the property insured, and it was necessary to have the policies transferred to the purchaser, and the written consent of the insurance companies thereto indorsed on said policies; and, after so procuring possession of said policies, defendant bank, either just before or after said policies had been transferred to its co-defendant milling company, without the knowledge or consent of this plaintiff or said milling company, or without any authority from this plaintiff or any one else so to do, and in fraud of plaintiff's rights in said policies, procured and caused the agents of defendant insurance companies, without the knowledge or consent or authority of this plaintiff or said milling company, to cancel the terms of said policies in favor of plaintiff, in words as follows: "Loss, if any, payable to Security Company of Hartford, Conn., as its interests may appear;" and to insert in the face of said policies, in writing, as a part thereof, the following stipulation, to wit: "Loss, if any, payable to the Pan Handle National Bank, as its interests may appear," —all of which acts were done by said defendants without any authority from this plaintiff, and without its knowledge and consent. Plaintiff avers that, at the time of the sale of said property insured by defendant bank and defendant milling company, plaintiff agreed with said defendants bank and milling company, at the special instance and request of defendant bank, to extend the $7,000 of the indebtedness against said property in favor of plaintiff, as evidenced by the hereinbefore mentioned judgment, and agreed with them to accept the mortgage bond of said milling company for said sum, and did accept said bond for the sum of $7,000, dated September 1, 1894, payable March 1, 1901, with interest from date at the rate of seven per cent. per annum, and ten per cent. attorney's fees, if sued on or placed in the hands of an attorney for collection; and defendant milling company, to secure the payment of said bond, on the same day executed a deed of trust to A. G. Wills, trustee, upon all the property mentioned in said policy of insurance, and upon the lots on which same was situated, to wit, lots one (1) and two (2), in block No. (196) one hundred and ninety-six, of the town of Wichita Falls, Wichita county, Texas, which said deed of trust was recorded in the deed records of said Wichita county, Texas; and, by the terms of said deed of trust, the defendant milling company covenanted with the plaintiff to keep said property insured for the benefit of plaintiff, to secure the payment of the debt, according to the terms of said deed of trust. Plaintiff further avers that it was induced to extend said indebtedness, as aforesaid, upon the representations, promises, and agreements of defendants bank and milling company that the interest of plaintiff in said property would be kept fully insured, and would be fully protected by the policies of insurance already issued in plaintiff's favor, which are here sued on, and that said property would thereafter be kept fully insured for plaintiff's benefit, according to the former agreements in regard to insurance upon said property for plaintiff, wherein it was agreed and covenanted that said property should be kept insured for plaintiff's benefit in the sum of ten thousand dollars, and plaintiff would not have so extended said indebtedness, but for its reliance upon said promises to so keep said property insured, and that said amount of insurance would be provided by said defendants to secure it. Plaintiff further charges that defendant bank, acting without authority from this plaintiff, through its president, R. E. Huff, has, since the loss by fire of the property insured, procured a transfer in writing of said policies to itself from said milling company, without the knowledge or consent of this plaintiff, upon the representations to said milling company that this plaintiff had agreed to same, and said defendant bank is now setting up a pretended claim to said policies, and is wrongfully claiming the right to the proceeds of said policies, which said pretended assignment, this plaintiff charges, is without authority, illegal, fraudulent, and void. Plaintiff alleges that it is the true and lawful beneficiary in said policies, and that the amount of said policies is due and payable to plaintiff, and that all alterations, changes, assignments, and transfers attempted to be made, as hereinbefore set out, are in violation of plaintiff's rights, and are without authority, illegal, fraudulent, and void. Plaintiff would further show, in this connection, that it is the legal owner and holder of said $7,000 mortgage bond, and also of four certain promissory notes, dated September 1, 1894, executed...