Rushing v. International Aviation Underwriters, Inc.

• Decision Date: 24 June 1980
• Docket Number: No. 20185,20185
• Citation: 604 S.W.2d 239
• Parties: Jack RUSHING, Appellant, v. INTERNATIONAL AVIATION UNDERWRITERS, INC., Appellee.
• Court: Texas Court of Appeals

Page 239

604 S.W.2d 239

Jack RUSHING, Appellant, v. INTERNATIONAL AVIATION UNDERWRITERS, INC., Appellee.

No. 20185.

Court of Civil Appeals of Texas, Dallas.

June 24, 1980.

Rehearing Denied July 29, 1980.

John E. Collins, Irving, for appellant.

Patrick F. McGowan, Strasburger & Price, Dallas, for appellee.

Before GUITTARD, C. J., and AKIN and STOREY, JJ.

AKIN, Justice.

This is an appeal by the defendant, Jack Rushing, from an adverse judgment in a negligence suit for damages to an aircraft leased by appellant from appellee's insured, Hi-Performance Aviation. Appellant, Jack Rushing, leased a Cessna 182 aircraft from Hi-Performance Aviation for a flight to the mountainous area of Taos, New Mexico. Upon arriving at Taos, Rushing landed the airplane improperly, causing it to bounce several times. The landing gear under the nose collapsed, extensively damaging the airplane. Appellee, International Aviation Underwriters, paid for the repair of the airplane under an insurance policy with Hi-Performance and then sued Rushing to recover its loss. The insurance company's suit was based on a subrogation claim and a written assignment to it of Hi-Performance's rights contained in a proof of loss form. After the insurance company filed suit on its subrogation claim, Hi-Performance lost its right to do business in Texas because its corporate charter was forfeited for failure to pay franchise taxes. The trial judge refused to admit this fact into evidence. Acting on jury findings, the trial judge rendered judgment for the insurance company on the negligence claim for damages to the airplane, but denied its prayer for attorney's fees.

Rushing contends that the insurance company's action was barred by the forfeiture of Hi-Performance's corporate charter for failure to pay franchise taxes. Additionally, Rushing argues that the aircraft lease agreement limits his liability to $500, the amount of the deductible under Hi-Performance's insurance policy. He also complains of the exclusion of testimony as to statements made by one of Hi-Performance's employees and of the refusal of the trial judge to submit issues with respect to the negligence of Hi-Performance Aviation in failing to adequately "check out" appellant before leasing the airplane to him. We overrule these points. By cross-point the insurance company complains of the refusal of the trial court to award it attorney's fees. We sustain the cross-point and modify the judgment to include the attorney's fees found by the jury.

EFFECT OF FORFEITURE OF INSURED'S CORPORATE CHARTER

Our initial question is whether the insurance company's suit is precluded by Tex.Tax.-Gen.Ann. art. 12.14 (Vernon Supp.1980), which prohibits use of Texas courts by corporations which have had their charters forfeited. Since the insurance company's suit was based on a subrogation claim by virtue of payment to Hi-Performance, and, since Hi-Performance's corporate charter was forfeited for nonpayment of franchise taxes, Rushing contends that art. 12.14 which bars Hi-Performance from access to Texas courts also extends to the insurance company. Thus, Rushing concludes that the trial judge erred in overruling Rushing's plea that the insurance company was barred from instituting this litigation. We cannot agree.

The question before us is whether a subrogee is barred from bringing suit where the subrogor was a viable legal entity at the time the subrogation rights were obtained and at the time suit was filed by the subrogee, but where subsequently the subrogor's charter was forfeited for nonpayment of franchise taxes. We hold that because the right of the subrogee insurance company to sue was fixed prior to the forfeiture of Hi-Performance's charter, and because the subrogee is the real party in interest, article 12.14 does not apply to bar suit by the subrogee.

In support of its contention to the contrary, Rushing cites Federal Crude Oil v. Yount-Lee Oil Co., 122 Tex. 21, 52 S.W.2d 56 (1932); Rodar Leasing Corporation of Colorado v. Wholesome Dairy Inc., 442 S.W.2d 467 (Tex.Civ.App.-El Paso 1969, no writ); Real Estate-Land Title & Trust Co. v. Dildy, 92 S.W.2d 318 (Tex.Civ.App.-Austin 1936, writ ref'd); and Stanard v. Cantwell, 286 S.W. 760 (Tex.Civ.App.-Amarillo 1926, no writ). None of these cases concern the situation where a subrogee or assignee obtains its cause of action from a corporation while the corporation has the right to do business in Texas but later loses that right. Consequently these cases do not support Rushing's contention.

Our holding is supported by Deveny v. Success Co., 228 S.W. 295 (Tex.Civ.App.-San Antonio 1921, writ ref'd), in which case the court held that a corporation could proceed with a suit on a sworn account even though its corporate charter had been forfeited for nonpayment of franchise taxes. In that case, the cause of action on the sworn account had accrued and suit had been filed more than six months before the charter was forfeited. The court reasoned that the right to sue became irrevocably fixed at the time suit was filed and that the suit could be maintained even though the charter was forfeited six months later. In this case, the payment which is the basis of the subrogation action was made, and suit was filed, almost a year before the forfeiture of Hi-Performance's charter. Consequently, the insurance company's right to sue was fixed prior to the forfeiture of Hi-Performance's charter. Indeed, under Deveny, even Hi-Performance could have maintained this suit against Rushing under these facts. Thus, clearly Hi-Performance's subrogee could maintain such an action. We need not pass on whether the subrogee could maintain suit in Hi-Performance's name where the subrogor's charter was forfeited before suit was filed or before payment was made to it by the subrogee.

Our holding does not defeat the purpose of article 12.14, which is to protect the state's revenue by encouraging the payment of franchise taxes. Isbell v. Gulf Union Oil Co., 147 Tex. 6, 209 S.W.2d 762, 765 (1948). Obviously an assignee cannot sue on a claim obtained from the corporation after it loses the right to do business in Texas because such a rule would encourage assignment of claims rather than payment of franchise taxes. Generally where a claim is sold to, or paid by, a third party, the corporation retains no interest in that claim. Thus, application of article 12.14 under those circumstances will not serve to encourage the corporation to pay its franchise taxes but will serve only to punish the assignee or subrogee, contrary to the intent of this statute.

Rushing also argues that the lease agreement limits his liability for damage to the aircraft to the amount of Hi-Performance's deductible, which was $500. Alternatively, he contends that the lease was at least ambiguous as to the limits of his liability for damage to the airplane and thus the trial court erred in excluding his testimony with respect to the meaning of the lease. The pertinent paragraph of the lease provides:

I (Jack Rushing) agree to pay the owner/operator for any deductibles or loss or damage to the aircraft caused in whole or in part by my failure to comply with the above or by my negligence. And I agree to and do hereby indemnify owner against any liability to other persons, and any costs, damages, loss or attorney fees, arising in connection with this agreement or with my use of the aircraft. (Emphasis added.)

Nothing in this paragraph purports to limit Rushing's liability. Rather it makes him liable "for any loss or damage to the aircraft." Consequently, we cannot agree with Rushing's contention that this language limits his liability to the amount of Hi-Performance's deductible. Neither can we accept his alternative contention that this language is ambiguous. In order for an ambiguity to exist, a contract must be susceptible of two reasonable yet different constructions. International Investors Life Insurance Co., Inc. v. Utrecht, 536 S.W.2d 397 (Tex.Civ.App.-Dallas 1976, no writ); Coker v. Traveler's Insurance Co., 533 S.W.2d 400 (Tex.Civ.App.-Dallas 1976, no writ).

Rushing asserts that the lease is ambiguous because it may be construed as providing no limits on appellant's liability for damage to the aircraft, the construction adopted by the trial court, or it may also be construed as limiting appellant's liability to the $500 deductible set forth in the insurance contract between Hi-Performance and its insurer, the appellee here. We cannot agree that the lease, when read in its entirety, may be reasonably susceptible to the latter construction. The third paragraph of the lease requires Rushing to return the plane in the same condition as he received it, normal wear and tear excepted. The language quoted above makes Rushing liable for any loss caused by his failure to comply with the other lease provisions, or by his negligence. In light of these provisions, we cannot say that the reference to "deductible" gives rise to a reasonable construction that Rushing's liability was limited to the $500 deductible amount under Hi-Performance's insurance policy. Since the lease was not susceptible to two reasonable yet different...