Tex. Banking & Ins. Co. v. Stone

• Decision Date: 01 January 1878
• Citation: 49 Tex. 4
• Parties: THE TEXAS BANKING AND INSURANCE CO. v. STEPHEN W. STONE.
• Court: Texas Supreme Court

49 Tex. 4

THE TEXAS BANKING AND INSURANCE CO.

v.STEPHEN W. STONE.

Supreme Court of Texas.

1878.

APPEAL from Galveston. Tried below before the Hon. A. P. McCormick.

This is an action brought by Stone, in the District Court of Galveston county, February 11, 1873, on a policy of insurance issued by the Texas Banking and Insurance Company, February 17, 1872. The policy, in the usual form, bound the appellant to insure the plaintiff against loss or damage by fire for one year from its date, February 17, 1872, on “his stock of stoves and fixtures, and such other merchandise as is usually kept in a hardware store, all contained in the one and two story metal-roof frame building, situated on Marshall street, on lot number 6, in block number 21, in Jefferson, Texas, occupied by the assured for mercantile purposes, and one room by tenant for a sleeping-room; special reference being had to assured's application, number 1421, which is his warranty and a part hereof.”

The policy contained a printed clause stipulating for the avoidance of the contract in case the premises were occupied for purposes denominated hazardous or extra-hazardous, in the memorandum of special rates annexed to the policy. Among the occupations so described as hazardous, in the memorandum referred to, was that of “taverns.”

Defendants demurred, pleaded a general denial, and specially, that the insured had warranted the occupation of the premises to be none other than was set out in the policy; that, on the contrary, it was occupied in part by Mrs. Prewitt as a boarding-house, and that thereby the risk was materially increased; and that by reason of this breach of warranty the appellant was released from the contract. There was no replication to this plea.

In October, 1871, the premises were occupied as stated in the policy sued on. At that time, Stone obtained insurance on the property destroyed, in the Georgia Home Insurance Co., from Lewis & Anderson, the local agents of said company at Jefferson. Subsequently to the issuance of this policy, and prior to the issuance of the policy sued on, a portion of the building was rented to Mrs. Prewitt as a private boarding-house, the rest of the premises being occupied as described in the policy sued on. Early in February, 1872, the Georgia Home Insurance Co. withdrew its business from Jefferson, and Lewis & Anderson cancelled Stone's policy in that company; they proposed, at the same time, to renew his insurance in another company, but the proposition was declined. On the 17th of February, 1872, Ragsdale, Stone's book-keeper, called on Lewis & Anderson, who were the local agents of the appellant at Jefferson, and duly authorized to issue policies of insurance for appellant, and applied for $2,500 of insurance on the property subsequently destroyed. The transaction was made with Lewis, who said he was very busy, and could not issue a policy just then, but he took from Ragsdale an application for insurance in the Texas Banking and Insurance Co., signed in blank by Ragsdale, for Stone, and promised to make out the policy as early as possible, telling Ragsdale he might consider the property insured from that time. He afterwards made out and delivered the policy as sued on. The application was proven to have been filled in the handwriting of Lewis; it contains no description except the material of the building. It was further proven that it was usual among insurance agents to take applications signed in blank, and for such applications to be filled by the agents in accordance with the facts, either upon an examination by the agent in person of the premises insured, or upon representations made by the applicant. No representation or description of the occupancy whatever was given by Ragsdale at the time of making the application; and Lewis testified, that, as well as he could remember, he filled the application from an application formerly made in another company represented by him. He also stated that there was no agreement between himself and Ragsdale as to how the application should be filled. There was testimony to the effect that the occupation of the premises for boarding-house purposes was notorious at the time of the issuance of the policy sued on, and some evidence to the effect that the agents had knowledge of it. Lewis made no survey of the property, that being generally done by Anderson, who was sick at the time. The occupation of the premises was not changed from the date of the policy until the date of loss, and was as described in the policy, and also in part as a boarding-house. The loss was proved, as alleged in the petition. It was proven by the appellant that the occupation as a boarding-house increased the risk.

On this state of facts the judge charged:

1. “That if the jury believe, from the evidence, that at the time of effecting the policy of insurance sued on the defendant's agent, acting in the usual course of his agency, undertook to examine and describe the risk to be covered, the plaintiff making no representation as to the facts, the defendant cannot now set up in avoidance of the policy any facts affecting the risk, and not embraced in the policy, if such facts existed at the time of the issuance of the policy; and it is immaterial whether the agent examined the property or not, if his actions were such as to induce the plaintiff to think he had done so.

2. When a party applying for insurance undertakes to describe the property and the facts affecting the risk, he is bound to represent all facts material to the risk; but if the insurers, through their agent, undertake to examine and state the facts, the insured is not responsible for an omission or mistake, even though it be material to the risk, and the insurers are estopped from saying the risk is not properly described.

3. If the jury believe, from the evidence, that it was the custom of insurance agents to receive applications from persons desiring insurance, signed in blank, and afterwards to fill up the applications and policies themselves for their companies, and that the agent of the defendant did, in pursuance of such custom, so receive the application of plaintiff in this case,--plaintiff concealing nothing and making no false representations,--and the same was actually thereafter filled up by the said agent, without further communication with plaintiff, and upon it the policy issued, then plaintiff cannot be held responsible for any misrepresentations or omissions of said agent, and defendant is not relieved of responsibility on account of any such misrepresentation or omission, you will find for the plaintiff; otherwise you will find for the defendant.”

Defendant requested the court to charge, substantially, “that the description of the risk, as made in the policy, was a warranty on the part of Stone, and that if there was any variance therein from the facts, it amounted to a breach of warranty by Stone, and he would not be entitled to recover”; which was refused.

Verdict and judgment for plaintiff for the amount sued for.

Defendant appealed.

[No briefs for appellant came to the reporters.]

Flournoy, Sherwood & Scott, for appellee.--The particular description of the property, as ascertained in the policy sued on, may be construed from two points of view. It may be intended as merely for the purpose of identifying the property which is covered by the policy, or it may be intended as a description of the risk. Under the first supposition, it is evidently immaterial whether it stated the occupation of the premises fully, or whether so much of the description as related to the occupancy was true or not. In any event, the purpose of the description would be accomplished if it pointed to property with sufficient certainty to enable any one to find it by reference to that part of the description which was true.

If, on the other hand, it be construed as a warranty, the truth and fullness of the description as to occupancy, as set out in the policy, becomes of essential importance; for it touches the risk itself, which is of the essence of the contract. The appellee contends that it is not to be construed as a warranty, and in support of this view refers, first, to the policy itself; second, to the circumstances of its issuance as indicated by the evidence; third, to the two taken in connection with each other. The policy, it will be remembered, is the act of the insurer, and its terms will be construed most strongly against him in all cases where any contest is made upon the construction of doubtful clauses. (1 Pars. on Cont., 506.)

In this instance, the warranty of the appellee is expressly stated in the policy to be contained in the application of the assured, number 1421, to which special reference is made, as the act of the assured. The application is made part of the policy, and the two together constitute the contract of insurance on the one side and warranty on the other. The application constituting the warranty contains full questions as to every feature of the risk that can be considered material as affecting the action of the insurer in accepting or rejecting it. No statement is made in answer to the question of occupation, nor, indeed, to any of the many others, except to that concerning the material of the building. We think that the policy, being the act of the insurer, and therefore to be construed against him in case of doubt, shows clearly what is to be regarded as the warranty of the assured, viz., application number 1421 of assured; that this application being silent as to the mode of occupancy, the assured will not be held to have warranted any particular mode, and that the special defense to the contrary is proven to be false by the very instruments on which the action is brought.

In the next place, the circumstances of its issuance show that the parties did not intend the description in the policy to be considered as a warranty as to mode of occupancy. Here arises a preliminary...