Texas State Mut. Fire Ins. Co. v. Richbourg

• Decision Date: 16 January 1924
• Docket Number: (No. 486-3881.)<SMALL><SUP>*</SUP></SMALL&gt
• Citation: 257 S.W. 1089
• Parties: TEXAS STATE MUT. FIRE INS. CO. v. RICHBOURG.
• Court: Texas Supreme Court

Page 1089

257 S.W. 1089

TEXAS STATE MUT. FIRE INS. CO. v. RICHBOURG.

(No. 486-3881.)^*

Commission of Appeals of Texas, Section "A."

January 16, 1924.

Error to Court of Civil Appeals of Sixth Supreme Judicial District.

Action by R. F. Richbourg against the Texas State Mutual Fire Insurance Company. A judgment for plaintiff was affirmed by the Court of Civil Appeals (243 S. W. 590), and defendant brings error. Reversed and rendered.

Tyler, Hubbard, Monteith & Dougherty, of Belton, for plaintiff in error.

Jones & Jones, of Mineola, for defendant in error.

GERMAN, P. J.

Defendant in error sued plaintiff in error, a mutual fire insurance company, chartered under the laws of Texas, to recover upon a fire insurance policy in the sum of $3,000, covering a certain gin house and machinery, situated in Wood county, Tex. As found by the jury, the loss amounted to $2,750, for which judgment was rendered in favor of defendant in error by the trial court. This judgment was affirmed by the Court of Civil Appeals at Texarkana. 243 S. W. 590. The policy became effective October 3, 1919, and the loss occurred January 1, 1920.

Plaintiff in error sought to avoid the policy on the ground that the application for the insurance contained false representations, which were material, which had been warranted as true by the applicant, and but for which the policy would not have been issued. The representations alleged to have been false were these: That the cash value of the property was $4,040; that the gin plant cost $4,490; that 1,000 bales of cotton had been ginned during the preceding season; that the gin was located on defendant in error's own farm; that the property was unincumbered; that defendant in error did not owe anything on the gin property or the land upon which it was located; and that defendant in error had never been refused insurance upon the property.

The application for insurance contained the representations above set out. The name of R. F. Richbourg was signed thereto by his brother, J. F. Richbourg, who was authorized to act for him. The application was taken by W. O. Shopshire, local agent of plaintiff in error, whose authority was limited to soliciting the application, forwarding same, delivering the policy, and collecting the premium. The limitation on the agent's authority was expressed in the policy of insurance, but not in the written application. Only the officers of the company were authorized to execute the contract of insurance. The principal office was at Belton, Bell county. It is undisputed that the policy was issued upon the basis of the written application; that the officers relied upon the representations made therein, which they did not know to be untrue, and that the policy would not have been issued if they had known that any of said representations were not true.

It is undisputed that some, if not all, of the representations referred to above were untrue at the time the application was made. The jury found that such untrue statements were not made by defendant in error, and it follows as a result of this finding that they must have been written into the application by the agent. There is nothing to indicate that the statements were changed after the application was signed by Richbourg, and in his pleading he avers that he signed the application without reading it or having it read to him. The application contained the following agreement:

"I, or we, hereby warrant, covenant and agree that the foregoing is a just, full and true statement of all the facts and circumstances in regard to the condition, age, situation, value and risk of the property described; and I, or we, further warrant, covenant and agree that there exist no facts or circumstances material to the risk other than those herein stated and disclosed. I, or we, further covenant and agree that this application with its agreements, statements and answers and clauses and conditions shall constitute a warranty on my or our part and the basis for and a part of any policy or policies that may be issued hereon."

After the application was forwarded by the agent to the home office the policy was issued and returned to the agent, who delivered same to Richbourg and received the premium. There was attached to the policy a copy of the application which had been signed by Richbourg, and which contained the statements referred to. The policy was left by Richbourg at the bank, and remained in his possession until the fire occurred. He was in no manner prevented from reading and fully examining the policy. Among other things the policy contained the following:

"Reference is made to the application, survey, plan or description of the assured on file in this office, which hereby forms part of this policy, and is and shall be a continuing and promissory warranty by the assured."

Also the following:

"That the application made for the issuance of this policy is hereby made a part hereof, and in consideration of the statements contained in said application, which are hereby warranted to be true, this policy is issued, and would not have been issued or delivered except for the statements and representations contained in said application, and, if the statements and representations contained in said application for this policy are not wholly true and correct, then then this policy will not become operative, and the company shall only be liable in case of loss or damage to the property covered by this policy for the amount of premium paid thereon with six per cent. interest from the date of the receipt of said premium by the company."

The application being attached to and made a part of the policy, the representations contained therein, some or all of which were shown to be untrue, were thereby expressly made warranties on the part of Richbourg, U. S. Fidelity & Guaranty Co. v. Maxwell, 152 Ark. 64, 237 S. W. 710. In the absence of a statute to the contrary, false representations in an application for insurance, which the applicant warrants to be true, and which are relied upon by the company, will avoid the policy without reference to the materiality of such representations. Insurance Co. v. Pinson, 94 Tex. 553, 63 S. W. 531; Modern Woodmen of America v. Atcheson (Tex. Civ. App.) 219 S. W. 543; Insurance Co. v. Smith (Tex. Civ. App.) 157 S. W. 755. However, the representations in question are very material. The warranties here referred to are not within the purview of article 4874a, known as the anti-technicality statute. Philadelphia Underwriters' Agency v. Driggers, 111 Tex. 392, 238 S. W. 633. Neither does article 4892 apply, because this is a mutual company. The provisions contained in the rider to the policy came within article 4874a, and the Court of Civil Appeals has properly decided the case as to these.

The contention of defendant in error is that, because the false statements and representations were written into the application by the agent of the plaintiff in error, he having made truthful answers to the questions propounded to him by the agent, the plaintiff in error is estopped from claiming the policy void by reason of the misrepresentations, upon the theory that the acts of the agent were the acts of the company. The court of Civil Appeals seems to have taken this view of the matter without discussing the proposition at all. We do not find it necessary to decide whether an insurance company will be estopped from avoiding a policy where false representations have been written into the application by the agent when the agent's authority is a limited one, as in this case, there being nothing in the application itself showing the limitation on the agent's authority. The rule seems to be well settled in this state to the effect that, when the limitation is expressed in the application or in the policy in such way that the insured is charged with knowledge thereof, the company will not be estopped by the wrongful acts of the agent. Fitzmaurice v. Life Ins. Co., 84 Tex. 61, 19 S. W. 301; Insurance Co. v. Harris, 26 Tex. Civ. App. 537, 64 S. W. 867.

But, whatever may be the general rule as to...