Standard Nat. Ins. Co. v. Bayless

• Citation: 338 S.W.2d 313
• Decision Date: 21 July 1960
• Docket Number: Nos. 6361,6362,s. 6361
• Parties: STANDARD NATIONAL INSURANCE COMPANY, Appellant, v. Mrs. Rosie M. BAYLESS et vir, Appellees. FIDELITY AND GUARANTY INSURANCE UNDERWRITERS, INC., Appellant, v. Mrs. Rosie M. BAYLESS et vir, Appellees.
• Court: Court of Appeals of Texas. Court of Civil Appeals of Texas

Page 313

338 S.W.2d 313

STANDARD NATIONAL INSURANCE COMPANY, Appellant, v. Mrs. Rosie M. BAYLESS et vir, Appellees.

FIDELITY AND GUARANTY INSURANCE UNDERWRITERS, INC., Appellant, v. Mrs. Rosie M. BAYLESS et vir, Appellees.

Nos. 6361, 6362.

Court of Civil Appeals of Texas, Beaumont.

July 21, 1960.

Rehearing Denied Sept. 14, 1960.

Painter & Painter, Houston, for appellant.

Helm, Jones, McDermont & Pletcher, Houston, McClain & Harrell, Conroe, for appellee.

McNEILL, Justice.

These actions were upon fire insurance policies instituted simultaneously in the district court of Montgomery County by the insureds, appellees Rosie M. Bayless and husband, S. R. Bayless, against appellant Standard National Insurance Company in one instance and in the other against appellant Fidelity and Guaranty Insurance Underwriters, Inc. The petitions in the action were identical, except for the names of the companies, and sought recovery in each suit for $7,000 under a certain fire insurance policy, $4,000 on the house and $3,000 on the contents thereof, making a total in the two suits of $8,000 on the house and $6,000 on the contents. The cases were consolidated for trial only.

In each suit appellees alleged that they held a fire insurance policy from the company for $4,000 on the house and $3,000 on the contents, which was in force and effect on July 15, 1957, at which time the house and contents were destroyed by fire and were total losses. They further alleged an insurable interest therein. Each appellant answered and filed a cross action for foreclosure of its mortgage interest held by it as hereinafter described.

Judgment upon trial before the court was for the appellees on said policies for the full amount on the house, less the mortgage as set out in the policies, and for the contents in the amount of $2,807.50 on each $3,000 policy. The next succeeding 4 paragraphs give the background of the controversy.

Appellee S. R. Bayless, while married to another Mrs. Bayless obtained a quitclaim deed dated June 29, 1954 to a tract of 20 acres of land our of the N.E. corner of the N. 1/4 of the Milton Robertson Survey in said county. This quitclaim initially recited a cash consideration of $10 and was in ordinary form quitclaiming to Bayless, his heirs and assigns all of grantors' 'right, title and interest.' However, following the description of the land and before the habendum appeared the following paragraph 'The moving considerating for this conveyance is that Grantee, by the acceptance hereof, agrees to reside as our tenant upon the North One-fourth (1/4) Milton Robertson Survey tract of land mentioned above for and during a period of Five (5) years from and after June 29, 1954, otherwise, this conveyance to become null and void.'

When the deed was made there was a 5-room frame house on the 20 acres and Bayless and first wife took possession of the premises. Divorce was granted Bayless from this first wife on September 12, 1955, and the 20 acres was awarded him as his separate property. Six days previously the 5-room house thereon burned down and Bayless, about October 29, 1955, bought a frame house in Conroe and had it moved 18 miles to the 20 acre tract where it was remodeled, rewired and new plumbing installed so that it amounted to a house 48 feet by 48 feet containing 8 rooms and a large front porch. Bayless testified that the purchase of the house, expense of moving it and remodeling, etc., cost him about $10,000. In order to finance this, on October 29, 1955, he executed a note for $3,500 secured by a M & M lien on the house and 20 acres to a contractor who assigned them to Conroe Federal Savings & Loan Ass'n. The note was then extended so that it was payable in monthly installments. As part of the transaction the grantors in the above mentioned quitclaim deed executed a subordination agreement to the interests of the holder of said note and M & M lien. This agreement recited the execution of the quitclaim deed and quoted the above tenancy paragraph thereof. The agreement then provided that the grantors 'do hereby agree that said covenant and condition in said deed--is hereby made subordinate, subject and inferior' to the M & M lien and the rights of the holder thereof and in event of foreclosure, the purchaser 'shall take title thereto without the same being encumbered by said condition or covenant, but on the contrary said conveyance shall be absolute.'

Appellees S. R. and Rosie Bayless became man and wife November 2, 1955. This Mrs. Bayless had been married previously, her first husband having died intestate in 1951, leaving several children of the marriage, a home place of 12.3 acres with residence and household furnishings therein.

On August 29, 1956 appellees opened a beer tavern in their home, turning over for this purpose the living and dining rooms, a bedroom or two and a bath. They purchased for this business two large electric ice boxes and other paraphernalia.

After their agent had checked the above property and premises, appellants issued the policies sued upon on September 25, 1956 for a 5-year term. As stated above, a fire occurred about 3 or 4 o'clock a. m., July 15, 1957, completely destroying the house and contents. While appellees had two teenage daughters living with them, on this night they happened to be visiting friends or relatives, and only appellees were in the house. Pop Bolen, an old man who worked upon the premises for appellees, spent the night in his accustomed place in a structure to the rear of the house.

Appellees made proof of loss under the policies and having asked appellants' agent in September, 1957 when they would pay the losses were told appellants denied liability under the policies. Appellants purchased the balance of $3,290.12 then owing to the Savings and Loan Association on the Bayless note and it, together with the M & M lien, were assigned to them. The accompanying loan documents, including the insurance policies involved were also delivered to appellants. Upon being sued by appellees, appellants' cross action sought establishment of the balance owing on the note and foreclosure of the M & M lien. The trial court filed extensive findings of fact and found that appellants were entitled to recover the balance on the note offsetting this sum against the amount awarded appellees, and rendered judgment for the difference in appellees' favor.

Appellants first assail that part of the judgment allowing recovery for loss of the building, contending that title to the property under the above quoted provision of the quitclaim deed had not vested in appellees at the issuance of the policies nor at the time of loss, and therefore no insurable interest was shown. Under this contention appellants urge that since the quoted provision made Bayless a tenant on the premises, both at the date of the policies and at time of the loss, the provision had the effect of suspending the passage to Bayless of any title to the 20 acres until after the 5-year period of tenancy required was concluded, the paragraph created a condition precedent to the vesting of title. We are inclined to agree to this proposition for two reasons. First, because the sole consideration for the deed was performance of the condition. In such instances conditions are usually construed as precedent. Manton v. City of San Antonio, Tex.Civ.App., 207 S.W. 951; Hall v. Barrett, Tex.Civ.App., 126 S.W.2d 1045, 1047; 19 Am. Jur. 529. Second, because the immediate vesting of all grantors' interest in the 20 acres described in the deed is inconsistent with the relationship of landlord and tenant immediately springing from the quoted paragraph of this deed.

While arguing the provision is a condition subsequent, appellees also assert that they had an insurable interest in the building if only the relationship of landlord and tenant existed by virtue of the quoted provision of the deed. Although no one under the tenancy agreement appears to have been obligated to replace the original house destroyed by fire, replacing a building thereon would no doubt be in appellee S. R. Bayless' interest and aid him to use and occupy the premises as required under the quoted provision, so that he might mature his title to the 20 acres. No one else signed the note with him to the Savings and Loan Association. And the subordination agreement executed by the grantors in the deed affirmed Bayless' right to execute the M & M lien to secure the replacement of the original house on the premises. Under the circumstances appellee S. R. Bayless had, as tenant, an insurable interest in the house. Springfield Fire & Marine Ins. Co. v. Republic Ins. Co., Tex.Civ.App., 262 S.W. 814; Insurance Company of N. A. v. O'Bannon, 109 Tex. 281, 206 S.W. 814, 1 A.L.R. 1407; Maryland Cas. Co. v. Davenport, Tex.Civ.App., 323 S.W.2d 615; 24-B Tex.Jur. 227.

Appellees also having occupied the premises as their homestead, they had insurable interests therein. East Texas Fire Ins. Co. v. Crawford, Tex.Com.App., 16 S.W. 1068; State & County Mut. Fire Ins. Co. v. Kinner, Tex., 319 S.W.2d 297. While the policies provided that no recovery could be had thereon beyond the insureds' interest the record does not show that the amount of insurance provided therein exceeded appellees' interest. Newsome v. St. Paul Mercury Ins. Co., Tex.Civ.App., 331 S.W.2d 497.

Appellants next contend that recovery may not be allowed for the contents or personal property for the reason that the children of Mrs. Bayless by her first husband inherited a half interest therein from their father. We have perused the entire statement of facts and have concluded that the trial court's findings to the effect that the contents 'were owned by one or both plaintiffs and were used by them in the maintenance of their domestic relation and home' was justified. It should be mentioned in this connection that appellees requested, and the trial court found that they were entitled, to have the recovery on the...