Singer v. St. Paul Mercury Ins. Co.

• Decision Date: 15 March 1972
• Docket Number: No. 15039,15039
• Parties: Robert C. SINGER, Appellant, v. ST. PAUL MERCURY INSURANCE COMPANY, Appellee.
• Court: Texas Court of Appeals

Page 579

478 S.W.2d 579

Robert C. SINGER, Appellant, v. ST. PAUL MERCURY INSURANCE COMPANY, Appellee.

No. 15039.

Court of Civil Appeals of Texas,

San Antonio.

March 15, 1972.

Rehearing Denied April 12, 1972.

Wiley, Plunkett, Gibson & Allen, San Antonio, for appellant.

Paul M. Green, Lang, Cross, Ladon, Boldrick & Green, San Antonio, for appellee.

KLINGEMAN, Justice.

Plaintiff, Robert C. Singer, sued defendant, St. Paul Mercury Insurance Co., upon a policy of fire insurance, either as written or as reformed by the court, for an alleged $3,700.00 loss to a building. In the alternative, he sought to recover $2,500.00 by an alleged compromise settlement and accord and satisfaction of his claim under such policy. The trial was to the court which rendered judgment for plaintiff in the sum of $500.00, from which judgment both parties have appealed. Findings of fact and conclusions of law were made by the trial court. ¹

Appellant was the holder of a Texas Standard Insurance Policy with defendant, St. Paul Mercury Insurance Company. The only property described in such policy is a brick building listed as located at 521--533 Meerscheidt Street, San Antonio Texas, with the amount of coverage being $25,000.00. While the policy was in effect, a frame building which was located to the rear of the brick building, about 10 to 12 feet from the rear of such building, was destroyed by fire. Defendant was notified of such fire and an insurance adjuster trainee, Mr. Bilikas, for Cravens, Dargan & Company, managing agent for a group of insurance companies including defendant, was assigned to handle such claim. Mr. Bilikas had worked for such company for approximately a year, and had handled only one previous claim, and no claims covering commercial structures. He testified that after looking at the burned structure, he noticed that it was unattached from the building, and that he assumed that it was covered under the 'Dwelling Extension' ² provision of such policy. He therefore suggested that plaintiff obtain estimates as to the cost of repairs for such burned structure. Plaintiff obtained bids or estimates, all of which were in excess of $2,500.00. Acting under the mistaken belief that there was coverage to the extent of $2,500.00, such adjuster prepared a proof of loss for such amount and plaintiff signed such proof of loss. A few days later, a draft payable to plaintiff in the amount of $2,500.00 drawn on defendant and signed by W. T. Farrell, claims manager for Cravens, Dargan & Co., was sent to plaintiff. Prior to the time that plaintiff took such draft to his bank, he was called by such adjuster and notified not to cash the draft, and that it would not be paid. Farrell testified that this was done due to the fact that in auditing the file, they realized there was coverage to out-buildings only if the insurance is on a residential structure.

Plaintiff in the trial court sought recovery on three grounds: (1) recovery on the policy as written in the amount of $3,700.00; (2) recovery on the policy as reformed in the amount of $3,700.00; and (3) recovery on the ground of compromise settlement and accord and satisfaction in the amount of $2,500.00. However, on this appeal plaintiff has abandoned the first two theories of recovery, and on this appeal he asserts that he is entitled to recover the sum of $2,500.00 by virtue of two contracts: (1) the written draft; and (2) the oral contract of compromise and settlement.

Plaintiff asserts by six points of error that the trial court erred: (a) in not granting judgment for plaintiff in the sum of $2,500.00 because as a matter of law defendant became obligated to pay such amount by issuing its written draft; (b) in not holding there was a compromise and settlement of the insurance claim in the amount of $2,500.00; (c) in not holding that under the record there was a valid accord and satisfaction; (d) in granting a recission of the contract because such was not supported by either pleadings or evidence; and (e) in not rendering judgment for plaintiff in the sum of $2,500.00 under the written draft and promise to pay because defendant cannot avoid its contract by pleading its own negligent improvidence or inattention to its own affairs.

Defendant cites Hodges Food Stores, Inc. v. Gulf Insurance Co., 441 S.W.2d 309 (Tex.Civ.App.--Dallas 1969, no writ), as being directly in point. In Hodges, Gulf had issued to Hodges its Texas Standard Form Burglary Policy, containing provisions for coverage of safe burglaries, but expressly providing that such insurance was not effective unless entry thereto was shown to have been made by actual force and violence being demonstrable by visible marks. A burglary occurred at a Hodges store and a safe in the store had been opened, and contents valued at approximately $14,000.00 taken. However, there were no marks or other signs of forceable entry to the safe. The maximum amount of recovery was $7,500.00. One of Gulf's adjusters made an investigation and told the Hodges manager, "It looks like we owe you seventy-five hundred." 441 S.W.2d at 310. The manager testified that there was no dispute between the parties, and that both the adjuster and he thought there was coverage under the policy for the loss. Such adjuster prepared a draft on Gulf in the sum of $7,500.00 payable to Hodges, and transmitted the same to Hodges. In the meantime, it was discovered that the policy did not cover the loss, and the adjuster telephoned Hodges and informed the manager of the mistake. Hodges deposited the draft and when it was presented, Gulf refused to honor it. Hodges brought suit on the policy itself, and in the alternative, upon the agreement to settle. Gulf defended on the ground that there was no coverage, mutual mistake, and no consideration for any agreement to pay the sum of $7,500.00. A take-nothing judgment was entered following a jury trial. The Court of Civil Appeals affirmed the judgment, holding that where the insurance adjuster, proceeding under a mistake of fact concerning insurance coverage, agreed to pay the maximum policy limits, and the insured also proceeding on a mistake of fact concerning insurance coverage, agreed to accept the maximum policy limits, the amount promised by the adjuster was never legally due and payable, and could not be recovered by the insured. The Court stated that there was no consideration for such agreement, and that there was no compromise and settlement or accord and satisfaction.

Plaintiff relies on the case of Bailey v. Polster, 468 S.W.2d 105 (Tex.Civ.App.--Dallas 1971, writ ref'd n.r.e.), and says it is controlling. Bailey was an attorney representing clients holding bodily injury and damage claims against a person named Thomas. Polster was an insurance adjuster representing Commercial Standard Insurance Co. Acting on a mistaken belief that it had provided automobile liability coverage to Thomas, Commercial Standard instructed Polster to negotiate a settlement with Bailey. He did so, and as a result issued drafts totaling.$5,150.00, payable to Bailey and his clients. In exchange, Commercial...