Trinity Universal Ins. Co. v. Fuller
| Decision Date | 15 May 1975 |
| Docket Number | No. 18581,18581 |
| Citation | 524 S.W.2d 335 |
| Parties | TRINITY UNIVERSAL INSURANCE CO., Appellant, v. Bobby R. FULLER and Fuller & Peyton Insurance Agency, Appellees. |
| Court | Texas Court of Appeals |
Larry L. Gollaher, Thompson, Coe, Cousins & Irons, Dallas, for appellant.
Robert H. Frost, Vial, Hamilton, Koch, Tubb, Knox & Stradley, Dallas, for appellees.
This case concerns the liability of an insurance agent to his principal for failure to follow an instruction to obtain an endorsement reducing the coverage of a policy of fire insurance. The suit was originally brought by the insured. Hoover & Sons, Inc. sued Trinity Universal Insurance Company on a fire insurance policy in the amount of $25,000 for a loss occurring on December 10, 1972. Trinity admitted it was liable to the insured in the amount of $10,000 but denied any further liability on the ground that Trinity had instructed its agent, Fuller & Peyton Insurance Agency prior to the fire to reduce the coverage on the building from $25,000 to $10,000. Trinity filed a third party action against its agent Fuller for damages alleging that Fuller's failure to comply with Trinity's instruction to reduce the coverage was a breach of Fuller's contract with Trinity. This breach, Trinity contends, resulted in its loss in excess of $10,000. In the alternative, Trinity alleged that Fuller was negligent in failing to obtain the insured's signature on the reduction endorsement, thereby proximately causing Trinity to suffer the additional loss of $14,000 .
The pertinent jury findings are as follows: that the loss sustained by virtue of the fire was $24,000; that a reasonable time for Fuller to comply with Trinity's instructions to reduce coverage would have been on or before December 4, 1972; that Fuller's failure to comply with Trinity's instructions was negligence; that such negligence of Fuller was a proximate cause of the loss sustained by Trinity in excess of $10,000; that the failure of Trinity to cancel the entire policy in question prior to the fire was negligence; that such negligence on the part of Trinity was a proximate cause of Trinity's loss in excess of $10,000; and that Trinity did not waive its instructions to Fuller to obtain the insured's signature on an endorsement reducing the coverage on the building to $10,000. Based upon these findings, the trial court entered judgment in favor of the insured in the amount of $24,000 and denied Trinity recovery against Fuller on its third party action.
Trinity brings this appeal from the judgment denying it recovery against Fuller.
Two questions are presented by this appeal: (1) Is Trinity entitled to judgment under the evidence here for breach of contract as a matter of law? (2) Is Trinity barred from recovery because it failed to mitigate damages? We answer the first question in the affirmative and the second in the negative and, therefore, reverse and render the judgment of the trial court.
Without any previous knowledge by Trinity, agent Fuller issued Trinity's policy insuring the building of Hoover & Sons for $25,000. After Trinity inspected the premises, Trinity prepared an endorsement reducing coverage to $10,000 and instructed agent Fuller to obtain the signature of the insured on the endorsement. Fuller testified that he received the endorsement reducing Trinity's coverage from $25,000 to $10,000 shortly after June 30, 1972. Agent Fuller further stated that he understood upon receipt of the reduction endorsement that Trinity expected him to obtain the signature of the insured and return the signed endorsement to Trinity. Fuller admitted failure to follow these instructions and on September 20, 1972, he received the first of four letters from Trinity requesting the signed endorsement. Trinity made the same request of Fuller on October 22, 1972, November 3, 1972, and December 1, 1972, but according to agent Fuller he 'just could not find time to get the endorsement signed by the insured and return it to Trinity.' At no time did Fuller advise Trinity that he had not obtained the insured's signature on the endorsement or that he would not do so. Fuller admitted further that he did not expect Trinity to obtain the insured's signature directly, since reduction endorsements are always handled by the agent. It was not until after the fire occurred on December 10, 1972, that agent Fuller finally complied with Trinity's instructions by sending the endorsement to the insured requesting its signature. The insured, of course, did not sign the endorsement; hence, this litigation ensued.
Based upon these facts, Trinity argues that the trial court erred in failing to render judgment for it against agent Fuller because the verdict of the jury and the uncontroverted evidence established agent Fuller's breach of contract as a matter of law. The pertinent part of the agency contract between Trinity and agent Fuller provides:
The agent is authorized to solicit lines of insurance specified by the company for the territory above described, and to countersign, issue, renew and consent in writing to the transfer of insurance policies when duly authenticated, and to collect premiums for transmission to the company, and to perform generally the duties of an agent as herein outlined and in such manner as shall best promote the interests of the company, being governed in all respects by the company's manuals and subject to the rules and regulations of said company And to such instruction as may from time to time be given by its authorized representative. (Emphasis added.)
This contract clearly imposed upon Fuller the duty to carry out instructions given by Trinity. Trinity contends that agent Fuller violated this contract in failing to procure the signature of the insured on the reduction endorsement as requested. We agree. The undisputed evidence established that Fuller failed to carry out this instruction....
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