Travelers Ins. Co. v. Newsom

• Decision Date: 04 December 1961
• Docket Number: No. 7129,7129
• Citation: 352 S.W.2d 888
• Parties: The TRAVELERS INSURANCE COMPANY v. Lee E. NEWSOM d/b/a The Rib.
• Court: Texas Court of Appeals

Page 888

352 S.W.2d 888

The TRAVELERS INSURANCE COMPANY v. Lee E. NEWSOM d/b/a The Rib.

No. 7129.

Court of Civil Appeals of Texas, Amarillo.

Dec. 4, 1961.

Rehearing Denied Jan. 15, 1962.

Thompson, Knight, Wright & Simmons, Dallas, for appellant.

Grady, Johnson & Smith, Dallas, for appellee.

CHAPMAN, Justice.

Lee E. Newsom, a restaurateur in the city of Dallas, d/b/a The Rib, instituted this action against The Travelers Insurance Co. ¹ for alleged breach of the provisions of a comprehensive liability insurance policy theretofore issued to him by Travelers. He sought to recover attorney's fees and costs incurred by him in conducting his own defense of an action brought against him by a customer. The case was tried to the court and a judgment entered for Mr. Newsom against Travelers. The company appealed the case to the Dallas Court of Civil Appeals and the Supreme Court transferred the case to us for our determination.

Within the life of the subject insurance policy the above mentioned customer, Paul T. Pohley, brought suit against appellee based upon an incident which allegedly occurred in appellee's restaurant. He timely presented the Pohley pleadings to appellant and asked that the company defend him. After studying the petition appellant refused to defend the cause on the grounds that the petition alleged a claim expressly excluded from the coverage of the policy.

The policy of insurance upon which appellee sought to require appellant to defend the Pohley action against him was issued by Travelers in connection with appellee's conduct of his restaurant business at 5741 Lover's Lane in Dallas known as The Rib. Section 1 Coverage A under 'Insuring Agreements' of the policy provided the company would 'pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury, sickness or disease * * * sustained by any person and caused by accident.' ²

Section 2(a) of the policy under 'Insuring Agreements' provided:

'With respect to such insurance as is afforded by this policy, the company shall:

'(a) defend any suit against the insured alleging such injury, sickness, disease or destruction and seeking damages on account thereof even if such suit is groundless, false or fraudulent * * *.'

However, by endorsement No. 1721A (G38), amending the policy, it was provided that:

'The policy does not apply to injury caused intentionally by or at the direction of the insured.'

Section (d) of the 'Definitions' in the insurance contract provides:

'ASSAULT AND BATTERY. Assault and battery shall be deemed an accident unless committed by or at the direction of the insured.'

The customer's petition against appellee, after alleging in effect that while he and his wife were guests in the restaurant they received poor and discourteous service then alleged: 'Defendant, then and there, physically prevented plaintiff and his wife from leaving, grabbing plaintiff by his coat collar with both hands in a violent manner and commenced making threats of physical violence.'

Thus, it is readily apparent from the pleadings that actual bodily injury was not alleged except in the allegation constituting assault and battery, which the policy provides shall be deemed an accident, and therefore within the coverage, unless committed by or at the direction of the insured. The pleadings clearly allege the assault and battery was committed by the insured, constituting an exclusion provided in the policy.

It is also to be noticed that the policy provided the company would defend any suit against the insured alleging such injury, sickness, disease or destruction.

The great weight of authority both in Texas and in most other jurisdictions has consistently held that in policies wherein the insurer bound itself to defend any suit against the insured alleging damages within the terms of the policy, even though such suit may have been groundless, false or fraudulent, the test of the liability of the insurer to defend depends upon the allegations of the plaintiff's petition. ³ In an exhaustive search of all jurisdictions this writer has found but few exceptions to the rule just announced. ⁴ The only Texas case we consider completely contrary to the great weight of authority is the Bethancourt case by our court just cited, and which holds that even though the petition against the insured alleged a state of facts excluded by the policy ⁵ the insurer is under an obligation to ascertain the facts before declining to defend, and that if the investigation reveals the allegations concerning the exclusion are not true the insurer is obligated to defend regardless of the allegations of the complaint. As stated in 50 A.L.R.2d Sec. 17, p. 497, these cases contrary to the weight of authority are confined mostly to Missouri, Oklahoma and Pennsylvania. They are cited in the dissenting opinion.

Both the Hildebrandt case from Oklahoma in the 10th Circuit and the McGettrick case in the 2nd Circuit, cited in the dissenting opinion, are contrary to the Shantz case in our own 5th Circuit. The Briscoe case by the Supreme Court of Oklahoma, cited in the dissenting opinion, wherein it holds with the minority is dictum. In the Breeding case by the Supreme Court of Oklahoma, cited in the dissent, recovery against the insurance company was denied. In the Roessler case by the Ft. Worth Court of Civil Appeals the insurance company had itself investigated and found the facts contrary to the allegations, which allegations were themselves conclusions of the pleader. No such situation exists in the instant case. Here the insured made the investigation and was asking the company to take as true his own investigations showing contrary to the allegations.

In the Baldwin Motor Co. case by our Commission of Appeals, cited in the footnote, the insurance police provided it did not cover injuries or damages caused by an automobile operated by any person under 16 years of age. The petition alleges it was being driven by a boy 15 years of age. The court held:

'The pleadings in the Rogers case did not present a cause of action which the insurance company was required to defend, under the terms of the policy.

'* * * the liability of the insurance company is not dependent upon any recovery Mr. and Mrs. Rogers might be entitled to, upon proof of any of the material facts they pleaded, but dependent upon whether the averments in the petition showed a state of facts excepted from the hazards insured against in the policy. Tested by such averments, the insurance company could not be called upon to defend a petition which upon its face alleged a state of facts not covered, but excluded, by the policy.

'The insurance company, it is true, contracted to defend all, but only, suits covered by the policy, whether groundless or not.'

There is not any statement, or even an intimation in the opinion to indicate the insurer was under an obligation to 'ascertain the facts of the alleged cause of action before declining to defend the suit,' as our court said in the Bethancourt case.

In the Moritz case cited in the footnote the Austin Court of Civil Appeals in an opinion approved by the Supreme Court with a 'writ refused' said:

'The issue involved depends * * * upon the provisions of the policy wherein the insurer bound itself to defend any suit against the insured alleging damages within the terms of the policy even though such suit may have been groundless, false or fraudulent. In such instance, in testing the liability of the insurer to defend, the proof is not material. Liability depends upon the allegations of the plaintiff's petition. But if, as stated in the Baldwin Motor Company case, such petition shows a state of facts 'excluded by the policy,' the insurer is not required to defend.'

In the Shantz case by the 5th Circuit, cited in the footnote, Justice Borah speaking for that court said:

'The policy in suit is one of indemnity. It bound appellant to defend suits for damages arising from causes and under conditions specified in the policy. It is a well established rule that the insurer under such a policy cannot be called upon to defend a suit against the assured in which the petition upon its face alleges a state of facts not caused by but excluded from the provisions of the policy.'

Cases from other jurisdictions, with the exception of those above mentioned, have consistently held with the overwhelming weight of the Texas authorities. In the Boyle case cited in the footnote the Municipal Court of Appeals for the District of Columbia held:

'The obligation of the insurance company to defend an action against insured, as distinguished from its obligation to pay a judgment in that action, by the overwhelming weight of authority is to be determined by the allegations of the complaint. This obligation is not affected by facts ascertained before suit or developed in the process of litigation or by the ultimate outcome of the suit. If the allegations of the complaint state a cause of action within the coverage of the policy the insurance company must defend. On the other hand, if the complaint alleges a liability not within the coverage of the policy, the insurance company is not required to defend. In case of doubt such doubt ought to be resolved in the insured's favor.

'In the instant case it is plain that Pine's complaint alleged a personal assault and battery committed by the insured and it is also plaint that such a claim was outside the policy coverage. Under the test above stated, it follows that the insurance company was not obligated to defend.'

In the Soper case cited the Supreme Court of Green County, New York said:

'The test of coverage is determined by the complaint in the assault action. If that complaint alleged a cause of action by reason of an accident insured against, then the defendant was required to defend the same, even if the action was groundless. On the other hand, if such complaint alleged a...