Travelers Indem. Co. v. Edwards

• Decision Date: 25 November 1970
• Docket Number: No. B--2075,B--2075
• Citation: 462 S.W.2d 533
• Parties: The TRAVELERS INDEMNITY COMPANY et al., Petitioners, v. W. T. EDWARDS, Jr. et al., Respondents.
• Court: Texas Supreme Court

Page 533

462 S.W.2d 533

The TRAVELERS INDEMNITY COMPANY et al., Petitioners, v. W. T. EDWARDS, Jr. et al., Respondents.

No. B--2075.

Supreme Court of Texas.

Nov. 25, 1970.

Turpin, Smith, Dyer, Hardie & Harman, Max N. Osborn, Stubbeman, McRae, Sealy, Laughlin & Browder, Charles Tighe and James G. Noland, Midland, for petitioners.

Shafer, Gilliland, Davis, Bunton & McCollum, W. O. Shafer and Ray Stoker, Jr., Odessa, for respondents.

HAMILTON, Justice.

This is a suit by William T. Edwards, Jr. and William T. Edwards, III, plaintiffs-respondents, as third party beneficiaries to enforce contracts of insurance written by defendants-petitioners Travelers Indemnity Company and Mission Insurance Company. The case was tried before a court without a jury on stipulated facts. The trial court rendered judgment against the defendants for amounts paid by plaintiffs in settlement of claims made against William T. Edwards, III, for damages resulting from an automobile collision. Affirming, the El Paso Court or Civil Appeals reformed the amount of the judgment, taxing interest against Travelers Indemnity Company on the entire judgment from the date of the judgment in the trial court. 451 S.W.2d 313. We affirm the Court of Civil Appeals judgment against defendants for the amount there rendered but reform the judgment as to the liability for interest.

Defendants sold automobile liability insurance policies to Norman E. McVean, a student at Southern Methodist University. Travelers, in a standard Texas family automobile policy, provided coverage for bodily injury libility limited to the sum of $25,000 per person in any one accident and $50,000 total for any one accident. Property camage liability was limited to $10,000. Mission's policy was written to indemnify the insured in accordance with the insuring agreements of the Travelers policy and to cover losses in excess of those covered by Travelers up to $75,000 per person and $250,000 for one accident.

The policies were issued on July 28, 1965, and soon thereafter Travelers wired the selling agent requesting that he have Norman McVean sign a Student Restrictive Endorsement form. The purpose of this endorsement was to exclude any student as an insured except Norman McVean. Travelers made the request three times and finally the agent informed Travelers that the forms would be signed when Norman was home for the Tranksgiving holidays. Norman was away at school and the agent was acting on the promise of L. T. Miller, an officer in a company owned by Norman's father. Norman returned to his home in Odessa during the Thanksgiving holidays and signed the forms. L. T. Miller wrote the agent a letter purporting to enclose the signed forms but in fact he failed to include them.

Norman McVean was killed on December 17, 1965, when his car, driven by William T. Edwards, III, a fellow student, collided with a vehicle being driven by Mrs. Ruch Wilson. After the accident the Student Restrictive Forms were picked up by the Travelers agent from L. T. Miller's office where they had remained since they had been signed.

Claims against Edwards arising out of the accident were settled with the claimants in amounts of $100,000 for the injuries to Mrs. Ruth Wilson, $10,000 for the death of a minor child, Mary Jane Wilson, $3,000 for the death of Mrs. O. L. Stamps, and $1,297.50 for property damage to the Wilson automobile.

Edwards has brought this action against Travelers and Mission contending that he is an omnibus insured under the McVean policy since he was driving the car 'with the permission of the named insured,' Norman McVean. Travelers and Mission contend that their liability is precluded by the Student Restrictive Endorsement. Edwards contends the endorsement failed for want of consideration.

The parties stipulated that no money was paid to Norman McVean when he signed the endorsement and that the premium was the same as it would have been had the endorsement been attached when the policy was issued. Travelers claimed that it was not the normal practice to issue policies covering student operators without requiring the Student Restrictive Endorsements as part of the policies but Edwards reserved the right to object to the Court's consideration of this contention. A provision in the policy preserved the right of cancellation by the insurer after notice to the policyholder.

The entire premium for the original policy was paid in advance. The Student Restrictive Endorsement was a subsequent limitation of the completed contract provisions in the policy, and as such should have been supported by additional consideration. American Nat. Ins. Co. v. Teague, 237 S.W. 248 (Tex. Comm. App. 1922, opinion adopted); Wackerle v. Pacific Employer's Ins. Co., 219 F.2d 1 (8th Cir.), cert. denied, 349 U.S. 955, 75 S.Ct. 884, 99 L.Ed. 1279 (1955); Annot., 52 A.L.R.2d 826 (1957).

Petitioners contend that Travelers' forbearance to exercise the right of cancellation was consideration for the endorsement. Waiving the cancellation right has been held to be sufficient consideration for this type of policy alteration. See Massachusetts Bonding & Ins. Co. v. Florence, 216 S.W. 471 (Tex.Civ.App.--El Paso 1919, no writ). We agree that forbearance can be sufficient consideration as a general rule of law but we can not let the rule control a case without some related evidence to bring the rule into play. There is no evidence of forbearance in this case. All communications regarding the Student Restrictive Endorsement forms are contained in the...