Travelers Indemnity Company v. Edwards, 6054
| Decision Date | 04 February 1970 |
| Docket Number | No. 6054,6054 |
| Citation | 451 S.W.2d 313 |
| Parties | The TRAVELERS INDEMNITY COMPANY et al., Appellants, v. W. T. EDWARDS, Jr., et al., Appellees. |
| Court | Texas Court of Appeals |
Turpin, Smith, Dyer, Hardie & Harman, Max N. Osborn, Stubbeman, McRae, Sealy & Laughlin, Charles Tighe, Midland, for appellants.
Shafer, Gilliland, Davis, Bunton & McCollum, W. O. Shafer, Ray Stoker, Jr., Odessa, for appellees.
This is an appeal from the judgment of the trial court, sitting without a jury, holding The Travelers Indemnity Company and Mission Insurance Company provided coverage under the terms of automobile liability insurance polices issued to Norman Eugene McVean, insuring him and 'any other person using such automobile with the permission of the named insured, provided his actual operation (or if he is not operating) his actual use thereof is within the scope of such permission'. The policies were issued on July 28, 1965, the terms of the policies being for one year, and the full premiums were paid at that time, The Travelers Indemnity Company policy affording the primary coverage and Mission Insurance Company furnishing certain excess coverage only if Travelers became liable.
The case was submitted to the trial court by an agreed statement of facts as provided by Rule 263, Texas Rules of Civil Procedure. On December 17, 1965 the insured was returning for Christmas holidays to his home in Odessa from Southern Methodist University, where he was a student, and permitted another student, W. T. Edwards, III, to drive his automobile. An accident occurred when the McVean automobile struck another vehicle, causing serious injuries and two deaths to the occupants of the other car, Norman Eugene McVean also being one of the victims. Claims arising out of that accident were settled on behalf of the driver, W. T. Edwards, III, for $114,297.50, and on his behalf the present suit was brought to recover these sums from the two insurance companies, who are the present appellants.
The primary issue involved in the case concerns the validity of a Student Restrictive Endorsement issued by Travelers to form a part of its policy, which provided that the coverage provided by its policy did not extend to any student other than the named insured, Norman Eugene McVean. The facts are that when the policies were issued on July 28, 1965 the Student's Restrictive Endorsement was not attached to the Travelers policy. Upon receipt of a daily report reflecting issuance of the policy, an underwriter for the Travelers, by a memorandum dated August 6, 1965, requested that the local issuing agent in Odessa have the insured sign a Student Restrictive Endorsement Form 208. A second request for such an endorsement was sent to the local agent on September 10, 1965 and on October 14, 1965 the local agent sent the Student Restrictive Endorsement forms to L. T. Miller Jr., an officer of the company owned by the father of Norman Eugene McVean, with a request that the forms be signed and returned. On October 17th a third request was sent by Travelers to the local agent inquiring about the endorsement . On October 19, 1965 L. T. Miller, Jr. advised the local agent that Norman Eugene McVean would not be home until the Thanksgiving holidays and would then sign the requested endorsement forms. On November 3rd, the local agent wrote the underwriters for Travelers that the endorsement would be signed and returned after the Thanksgiving holdiays. Norman Eugene McVean did return to his home in Odessa during the Thanksgiving holidays and did sign the Student Restrictive Endorsement forms. On November 29th, L. T. Miller, Jr. wrote a letter to the local insurance agency advising that the forms had been signed and purported to send them in the letter, but, due to an error, the endorsements were not actually enclosed in the letter. The endorsements remained with L. T. Miller until picked up by a representative of the Travelers a few days after the accident and death of Norman Eugene McVean.
The Student Restrictive Endorsement forms provide that they shall be effective as of July 28, 1965, and states the following:
'This endorsement forms a part of the policy to which attached, effective from its date of issue unless otherwise stated herein.
Norman Eugene McVean is the only student named in the endorsement. It was agreed that no money was paid to Norman Eugene McVean for the execution of the endorsement and that the premium originally paid upon the issuance of the policy was in the same amount the premium would have been had the endorsement been attached to the policy at the time the policy was issued on July 28, 1965. Both the Travelers Indemnity Company policy and the Mission Insurance Company contained provisions giving the companies an absolute right of cancellation upon ten days written notice of cancellation with return to the insured of unearned premiums. It was also stipulated that it was not the normal practice of the Travelers Indemnity Company to afford automobile coverage for any risk involving a student operator without requiring that the Student Restrictive Endorsement Form be attached and made a part of such policy; however, as to this portion of the stipulation regarding normal company practice, it was not stipulated that this evidence regarding normal practice was admissible in evidence, the appellees reserving the right to make objections to the court's consideration of this part of the tendered evidence.
The appellee W. T. Edwards, III, as third-party beneficiary under the two policies as originally issued on July 28, 1965, contends that the Student Restrictive Endorsements as finally executed by Norman Eugene McVean are without consideration, and, therefore, ineffectual and not binding on him. The appellees contend that the policies of insurance were contracts for one year from July 28, 1965 for which the entire premium had been paid in advance, and that the term thereof could not be altered or changed except through another contract supported by valuable consideration.
The position of the appellants, as expressed by their first five points, is to the effect that there was clearly a meeting of minds of the parties, as there can be no questions but that Travelers, by requesting such endorsement, and McVean, by signing the endorsement, intended to limit the liability on the insured vehicle so as not to cover accidents while the car was being driven by any student other than Norman Eugene McVean; that as the appellants had the right, on ten days' notice to the insured, to cancel the policies and that when it was determined that the insured would execute the endorsements, no further action had to be taken by the appellants, and therefore there was ample consideration for the execution of the endorsements. Further, the endorsement recited that it was issued in consideration of the premium at which the policy was written, and the undisputed evidence established as a matter of law that the premium paid was in the amount the premium would have been had the endorsement been attached at the time the policies were issued.
Decisions on the question are annotated in 52 A.L.R.2d 826, wherein it is stated:
The cases in general consider the right of the insurer to cancel the policy in reaching the decision under the particular facts presented to them as to whether or not there was consideration in the transaction.
The appellants rely on cases such as Massachusetts Bonding & Insurance Company v. Florence, 216 S.W. 471, decided by this court in 1919, where the insured executed an instrument releasing the insurer from liability for disability due wholly or in part to hernia or rupture. Following the execution of the release, the insured suffered a disability from hernia and sought recovery on the policy. This court upheld the defense of release, stating that a valuable consideration was furnished for the execution of the release by the waiver of the insurer of its legal right to cancel the policy upon notice. This court pointed out that prior to the execution of the release, the insurer had advised the insured that it would cancel unless he would waive his right to recover for any illness he might suffer from hernia or rupture, and the agent of the company testified he would not have permitted the health policy to remain in force unless the insured had given the release. A case with similar facts and with the same conclusion is that of Federal Life & Casualty Co. v. Robinson, 28, Ala.App. 1, 178 So. 549.
Cases involving the execution of restrictive endorsements and relied on by the appellants are Casano v. Cook, 157 So.2d 616 (La.Ct . of App.1963); Ellis v. Southern Farm Bureau Casualty Ins. Co., 233 Miss. 840, 103 So.2d 357 (1958); Johnson v. Central National Ins. Co . of Omaha, Neb. 210 Tenn. 24, 356 S.W.2d 277 (1962); State Farm Mutual Automobile Ins. Co. v. Pierce, 182 Neb....
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Travelers Indem. Co. v. Edwards
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