Piper, Stiles & Ladd v. Fidelity & Deposit Co. of Md.

• Decision Date: 21 November 1968
• Docket Number: No. 15376,15376
• Citation: 435 S.W.2d 934
• Parties: PIPER, STILES & LADD et al., Appellants, v. FIDELITY AND DEPOSIT COMPANY OF MARYLAND, Appellee. . Houston (1st Dist.)
• Court: Texas Court of Appeals

Page 934

435 S.W.2d 934

PIPER, STILES & LADD et al., Appellants, v. FIDELITY AND DEPOSIT COMPANY OF MARYLAND, Appellee.

No. 15376.

Court of Civil Appeals of Texas.

Houston (1st Dist.).

Nov. 21, 1968.

Rehearing Denied Jan. 9, 1969.

House, Mercer, House & Brock, R. L. House, San Antonio, for appellants.

Fulbright, Crooker, Freeman, Bates & Jaworski, Russell Talbott, Houston, for appellee.

COLEMAN, Justice.

This suit was brought by Fidelity and Deposit Company of Maryland, appellee against Piper, Stiles & Ladd, Charles F. Ladd and Lola Ladd, appellants, for premiums on bonds alleged to be due to appellee from appellants by reason of a written contract between said parties, dated January 1, 1962, which contract provided that the 'agent' (Piper, Stiles & Ladd) 'shall be responsible for the payment of original premiums upon all bonds * * * written through the agent.'

The case was tried before a jury. Both parties filed motions for instructed verdicts based in part on the premise that the contract was unambiguous; the court refused both motions and submitted the case to the jury. Based on the verdict of the jury and the evidence, the court entered judgment for appellee in the amount of $8,108.74, together with interest and costs.

The principal point on which appellants base their appeal is that the trial court erred in failing to sustain their motion for an instructed verdict for the reason that the undisputed evidence established that premiums for which suit was brought were for bonds not 'written through the agent'.

In the petition on which appellee went to trial recovery was sought for the original premiums due on three bonds issued by appellee to Martin Brothers General Contractors, Inc., and for the premium due on one bond issued to Jean T. Stitt, liability for which appellants admitted. It is agreed that these bonds were written by appellee pursuant to an application made by Sam Martin, an agent of the corporation, directly to appellee at its San Antonio office. There is no evidence that in these instances Mr. Martin discussed the bonds with appellants, or any of its sub-agents or brokers, prior to the issuance of the bonds. Two of these bonds were dated February 4, 1965, and the other was for an overrun on a contract for which a bond had been issued February 5, 1962. Thereafter appellee included these bond premiums in bills to appellants. Appellants rendered monthly statements to appellee showing the premiums on these bonds due to appellee from appellants. Appellants billed Martin Brothers General Contractors, Inc. for the premiums, but did not collect from Martin Brothers and did not pay appellee.

Over the objection of appellants that any contract between appellee and appellants prior to the current contract would be irrelevant and immaterial, appellee introduced into evidence the agency contract entered into in 1954, which was identical to the present contract with the exception of the percentage of commissions to be paid to appellants. Appellee proved that appellants were an agent of Fidelity and Deposit Company of Maryland for some years prior to 1954 continuously to the dates of the occurrences on which this suit was brought. Appellee proved that there were no oral or written changes negotiated between the parties in the terms of the 1962 contract.

Mrs. Lola Ladd, a partner in the agency, testified in response to questions by the attorney for appellee, that Sam Martin first started doing business with the agency either in 1953 or 1954. In 1955 he wanted to secure a contract bond as surety and came to the agency for that purpose. A secretary working for the agency directed him to appellee, and appellee executed the bond he desired. Thereafter for a period of nearly ten years Martin Brothers General Contractors, Inc., or one of its predecessor companies, individuals or partnerships, went to appellee in the San Antonio office and obtained many bid bonds and performance bonds from them. On each of those bonds appellee sent the agency a premium billing similar to those introduced into evidence in this case, and, after receiving such premium billing the agency rendered its monthly account, or account current, to appellee showing as premiums due appellee those premiums on which they had received such a billing, less 30% Due to the agency as commissions.

Mrs. Ladd further testified that the agency paid appellee the net premiums on all of the bonds that it collected from Sam Martin or Martin Brothers or subsidiary or affiliated companies, but that there were some bonds written for which the agency did not collect the premiums and 'those bond premiums were sent back as uncollectible to the Fidelity and Deposit Company.' Mrs. Ladd identified a number of such bonds written by appellee for the Martin Companies and testified that the agency received a commission of 30% Of the premium on each of such bonds, and that all of these bonds were written based on applications made by Martin Brothers direct to appellee's San Antonio branch office and that the agency did not know that the bonds were written until it received the billing. She testified that in each case the agency received premium billings from appellee, rendered accounts current showing the amounts of those premiums and the agency's commissions, billed Martin Brothers, and, after the premium was collected from Martin Brothers, remitted to appellee its portion of the premium. She testified that the procedure followed in these instances was the same as that followed in the case of the three items involved in this suit except that they were not able to collect these premiums from Martin Brothers and rendered them back to the company as uncollectible items.

Appellants were not authorized under its power of attorney with appellee to execute contract bonds in excess of a certain amount, and, even in those cases, had to secure appellee's prior approval. Mrs. Ladd testified that the Martin Brothers business was an agency account handled by the agency on all matters except for the contract bonds, and that the agency handled a great deal of insurance for them including liability insurance, workmen's compensation insurance, automobile insurance, fire and windstorm insurance, and equipment floaters.

The attorney for appellee stipulated that Mrs. Ladd did not have anything to do with writing the bonds with which this case is concerned and didn't know they were written until March of 1965.

Mrs. Ladd was asked by her lawyer if she knew how many of the bonds, about which she had been questioned by appellee's attorney, written over the period of years, were turned back and the company stood the loss. Appellee's attorney objected that 'the contract itself is plain, unambiguous, speaks on the question of the liability for these premiums and that no amount of custom, practice or activities of the parties in the past can affect the plain and unambiguous terms of the contract, * * *'

Thereafter Mrs. Ladd testified that neither she nor the agency had anything to do with the writing of the three bonds involved in this suit; that the company had stood the loss on other contract bonds, and that the agency had not where the party securing the bond went directly to the company. On cross-examination, however, she testified that, with one exception, the agency had collected all premiums on payment or performance bonds, and that the exception was a claimed overrun, but that the contractor contended that the additional work was not performed under the bonded contract. No further attempt was made to produce evidence as to the custom and practice of handling items other than contract bonds.

Sam Martin testified that his first contact with appellee was in 1955. He went to appellant for a bid bond and a secretary arranged an appointment for him with an employee of appellee. After checking his references appellee wrote the bid bond. Thereafter he dealt directly with appellee on bid bonds and later performance and payment bonds. Mr. Martin identified the application for a performance bond and the bond subsequently issued, being bond number 5645004, one of the bonds involved in this controversy. These instruments were admitted into evidence. He testified that he did not know whether there was an application for bond No. 5645032 because he frequently signed application forms in blank at appellee's office and they would fill in the blanks with the necessary information when he went over to get a bond. He testified that he did not remember any time that he went to appellants for a bid bond or a bond. He identified a list of jobs which he did for which bonds were furnished by appellee, and testified that he did not know that appellants billed his companies for the premiums.

By the agency contract between the parties, appellee authorized appellants, 'but not exclusively', to receive applications for certain bonds and insurance policies in San Antonio, Texas and vicinity and to 'collect, receive and recipt for premiums on bonds and policies tendered by the agent to and accepted by the company and to retain out of premiums so collected as full compensation on business so placed with the company commissions at the following rates.' The rates on the bonds and insurance policies were set out, including a rate for contract bonds.

The company, appellee, reserved the right to accept business on risks, 'attaching in but submitted by agents or brokers located outside of the territory specified,' and to determine the commission, if any, to be allowed the agent on such business.

The provision specifically to be construed reads:

'Sixth--The agent shall be responsible for the payment of original premiums upon all bonds and policies written and of all annual, renewal and continuation premiums on all cancelable bonds and policies written through the agent or any of the sub-agents or brokers of the agent, and shall remit for the same to the Houston Branch Office Office of the Company as...