Republic Ins. Co. v. Silverton Elevators, Inc.

• Citation: 91 A.L.R.3d 500,493 S.W.2d 748
• Decision Date: 11 April 1973
• Docket Number: No. B--3333,B--3333
• Parties: REPUBLIC INSURANCE COMPANY, Petitioner, v. SILVERTON ELEVATORS, INC., et al., Respondents.
• Court: Texas Supreme Court

Page 748

493 S.W.2d 748

91 A.L.R.3d 500

REPUBLIC INSURANCE COMPANY, Petitioner, v. SILVERTON ELEVATORS, INC., et al., Respondents.

No. B--3333.

Supreme Court of Texas.

April 11, 1973.

Rehearing Denied May 30, 1973.

Evans, Pharr, Trout & Jones, John A. Flygare, Lubbock, for petitioner.

Gibbins & Spivey, Bob Gibbins and Patrick Hazel, Austin, for respondents.

DANIEL, Justice.

This suit was brought by Respondents, Silverton Elevators, Inc. and Carl L. Tidwell, against Petitioner, Republic Insurance Company, to recover under a Texas Standard Fire Policy issued to Silverton Elevators by Republic covering a residential dwelling and household goods contained therein. In a non-jury trial, Silverton was awarded $3,000 'for the use and benefit' of Carl L. Tidwell for the loss of the household goods. The Court of Civil Appeals affirmed. 477 S.W.2d 336. We affirm.

Carl L. Tidwell was at all times material to this controversy, an officer, director and the general manager of Silverton Elevators, Inc. Silverton owned and furnished to Tidwell a house near its elevators, together with the insurance on the house and on Tidwell's household goods, as part of his compensation as general manager. Since 1964, Republic's local agent had issued and renewed insurance policies in the name of Silverton covering the dwelling and its household goods. It is undisputed that the local agent, who had authority to issue the policies and receive the premiums, knew that the household goods belonged to Tidwell and that Silverton was carrying the insurance for the benefit of Tidwell. On April 17, 1970, a tornado destroyed the house and the household goods.

On the date of the tornado there was in effect a Texas Standard Fire Policy with Extended Coverage on DWELLING & HOUSEHOLD GOODS in the sum of $10,000 issued by Republic to Silverton for the period of April 20, 1969 to April 20, 1972, insuring against loss from windstorm the specifically described 'occupied dwelling' for $7,000 and 'household goods . . . while in the described building' for $3,000.00. It is undisputed that Silverton paid the $227.00 premium, and the local agent admitted that at the time he issued the policy he knew the facts heretofore mentioned with respect to actual ownership of the insured property. He testified that he wrote the policy to cover Tidwell's household goods located in the dwelling which Tidwell and his family occupied; that he knew Silverton was carrying the policy on the household goods for the benefit of Tidwell; that when he issued the policy he did not think it made any difference that it was in the name of Silverton because 'they were paying the premium'; and that he told Tidwell that the policy covered his household goods both before and after the tornado.

Republic acknowledged coverage on the house and paid Silverton $7,000 for its damage, but it denied any liability to Silverton or Tidwell on the household goods. Thereupon, Silverton and Tidwell brought this suit against Republic claiming coverage to the limit of the policy ($3,000) on the household goods owned by Tidwell. Republic defended on the grounds that Silverton had no ownership and therefore no insurable interest in the household goods and that the policy as written was limited by its terms to household goods owned by Silverton Elevators, Inc., the named insured.

Silverton and Tidwell's pleadings asserted that they both had insurable interests; that the insurance was purchased by Silverton and extended to Tidwell as part of his compensation as manager and as 'a legal representative of Silverton Elevators, Inc.'; and that when Republic issued its policy and accepted premiums with full knowledge of the true ownership and relations between Silverton and Tidwell, it waived the right to complain about any lack of ownership or insurable interest of the named insured and was estopped from denying coverage on behalf of Tidwell. As heretofore indicated, the trial court awarded Silverton Elevators $3,000 'for the use and benefit of Carl L. Tidwell.'

Since the policy refers to and clearly purports to cover the household goods located in the specifically described dwelling, we agree with the Court of Civil Appeals that the knowledge of Tidwell's ownership of the household goods by Republic's local agent had his actions with respect thereto were imputed to and binding upon Republic. Issuance of the policy and collection of the premiums with such knowledge operates as a waiver of any requirement that the named insured own or possess a beneficial interest in the insured property. National Fire Ins. Co. of Hartford v. Carter, 257 S.W. 531 (Tex.Comm'n App.1924, jdgmt adopted); Continental Ins. Co. v. Cummings,98 Tex. 115, 81 S.W. 705 (1904); Wagner v. Westchester Fire Ins. Co., 92 Tex. 549, 50 S.W. 569 (1899); Liverpool and London and Globe Insurance Company v. Ende, 65 Tex. 118 (1885); Old Colony Insurance Company v. S. D. Messer,328 S.W.2d 335 (Tex.Civ.App.1959, writ ref., n.r.e.); Germania Mutual Aid Association v. Trotti, 318 S.W.2d 918 (Tex.Civ.App.1958, no writ).

In the above cases, the named insureds were not the owners or sole owners of the insured properties. In each case the true owner was known to the insurance agent and was allowed direct recovery, or recovery for his benefit, on the grounds that the insurance company had waived warranties of sole ownership or lack of insurable interest. There is no conflict between the above cases and those which hold that waiver and estoppel cannot operate to bring within the terms of a policy liabilities or benefits which were expressly excepted therefrom, such as liability from injuries due to gunshot wounds in Washington Nat. Ins. Co. v. Craddock, 130 Tex. 251, 109 S.W.2d 165 (1937); loss for injuries while in military service in time of war, as in Ruddock v. Detroit Life Ins. Co., 209 Mich. 638, 177 N.W. 242 (1920); or payment of benefits beyond a specified termination date at age 65, as in Great American Reserve Ins. Co. v. Mitchell, 335 S.W.2d 707 (Tex.Civ.App.1960, writ ref.). The latter cases recognize that waiver and estoppel may operate to avoid forfeiture of coverage and benefits stated in the policy, but not to add specifically excluded risks or to enlarge the benefits or risks therein set forth. In the present case, plaintiffs seek to recover only on the risk assumed by Republic under the terms of the written policy. Republic's policy insured against the destruction of precisely the same household goods identified in its policy and for which it collected its premiums. There is no evidence that its risk was enlarged because the household goods were owned by Tidwell rather than Silverton.

Although it is undisputed that Tidwell rather than Silverton owned the household goods in the dwelling when the policy was issued and when the property was destroyed and that they were the household goods intended to be insured, Republic contends that the description, and thus the coverage, was limited by the written policy to household goods owned by Silverton. The effect is to say that the policy covered only non-existent household goods; that even though Republic wrote a $3,000.00 policy on household goods located in the described dwelling, there was never in fact any coverage on anybody's household goods. This is inconsistent not only with the undisputed intention of its own agent but with the provisions of the policy as written. The household goods were referred to on the face of the policy as being located in the dwelling specifically described in the policy. There was no misdescription of the location of the property by the agent as in Aetna Ins. Co. v. Brannon, 99 Tex. 391, 89 S.W. 1057 (1905). Their location and identity were definitely and correctly stated. Page 1 bears a typed designation of the insured property as 'DWELLING & HOUSEHOLD GOODS.' ¹ Other relevant portions read as follows:

'REPUBLIC INSURANCE COMPANY . . . In Consideration of the stipulations and conditions herein or added hereto which are made a part of this policy, and of the premiums provided DOES INSURE SILVERTON ELEVATORS, INC. and legal representatives . . . against direct loss resulting from any of the Perils (listed below) WHICH HAVE A PREMIUM INSERTED OPPOSITE THERETO (Column 6) and only on the property described and located as provided hereon.'

Next, under 'Coverage' is listed in Column 4, TOTAL INSURANCE, the sum of $10,000.00, and in Column 6 the separate premiums for Fire and Lightning and Extended Coverage, totaling $227.00. Thereafter, under DESCRIPTION OF PROPERTY is 'Item 1, $7000.00--On the ONE story, COMPOSITION type of roof, ASBESTOS SIDING, building, LOCATION . . . SILVERTON, Texas 79257, Lot 7, 8 & 9, Block 143--OCCUPIED DWELLING,' and 'Item 2, $30000.00--HOUSEHOLD GOODS . . . Unless otherwise provided, Insurance on personal property shall cover only while in the described building.' Under the above DESCRIPTION OF PROPERTY heading, in small type are the words: 'See definitions of Building, Household Goods, Stock, Furniture, Fixtures, and, or Machinery, and Contents.'

None of the typed or printed words on the face of the policy limit or restrict the coverage or description of household goods to those owned by Silverton Elevators, Inc., unless, as contended by Republic, the reference to and terms of the small-type printed definition on page 2 have that effect. It reads: 'Household Goods: Insurance on household goods Shall include all personal property, usual to a residence, of the insured and his family.' ²

In an early case involving a dispute about the meaning of this definition, the court said 'there is ample room for such divergent views,' but concluded that the words were used 'by way of explanation' in a manner which broadened the ordinary meaning of the term 'household goods.' Dixie Fire Ins. Co. v. McAdams, 235 S.W.2d 207 (Tex.Civ.App., 1950, writ dism.). Being preceded by the words 'shall include,' there is no hint of limitation or restriction...