U.S. Fire Ins. Co. v. Skatell

• Decision Date: 22 January 1980
• Docket Number: No. 8715,8715
• Citation: 596 S.W.2d 166
• Parties: UNITED STATES FIRE INSURANCE COMPANY and the Home Indemnity Company, Inc., Appellants, v. Frank SKATELL, Appellee.
• Court: Texas Court of Appeals

Page 166

596 S.W.2d 166

UNITED STATES FIRE INSURANCE COMPANY and the Home Indemnity

Company, Inc., Appellants, v. Frank SKATELL, Appellee.

No. 8715.

Court of Civil Appeals of Texas, Texarkana.

Jan. 22, 1980.

Rehearing Denied Feb. 26, 1980.

Tom Alexander, Byron G. Lee, Butler, Binion, Rice, Cook & Knapp, Houston, for appellants.

Ralph Balasco, Houston, for appellee.

CORNELIUS, Chief Justice.

Frank Skatell brought this action to collect insurance benefits under two insurance policies issued by U. S. Fire Insurance Company and The Home Indemnity Company, Inc. covering certain pieces of jewelry which were allegedly stolen from his home on the night of December 15, 1973. On March 20, 1974, in the course of their investigation of the loss, the insurance companies orally examined Mr. Skatell under oath, during which examination he denied having any previous criminal record. On May 23, 1974, Mr. Skatell was again orally examined and at that time he admitted that he did have a criminal record consisting of several offenses of fraud, hot checks and theft by false pretenses. Thereafter the insurance companies denied Mr. Skatell's claim on the ground that the policies had been voided because of his false statements. Each policy contained a clause which provided as follows:

"1. Misrepresentation and Fraud. This entire policy shall be void if, whether before or after a loss, the Insured has concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof, or the interest of the Insured therein, or in case of any fraud or false swearing by the Insured relating thereto."

Trial was to a jury which found that the jewelry had been stolen as alleged and that its actual cash value was $56,200.00, but that Mr. Skatell had concealed the fact of his criminal record and that such concealment was material to the risk. The trial court disregarded the jury findings of concealment and materiality and rendered judgment for Mr. Skatell against each company for $28,100.00, plus interest from May 28, 1974, to the date of judgment. The basis of the court's disregard of the jury issues was that the insurance companies did not allege or present any evidence that the false statements were of the nature required by Tex.Ins.Code Ann. art. 21.19 in order to void a policy. Article 21.19 provides as follows:

"Any provision in any contract or policy of insurance issued or contracted for in this State which provides that the same shall be void or voidable, if any misrepresentations or false statements be made in proofs of loss or of death, as the case may be, shall be of no effect, and shall not constitute any defense to any suit brought upon such contract or policy, unless it be shown upon the trial of such suit that the false statement made in such proofs of loss or death was fraudulently made and misrepresented a fact material to the question of the liability of the insurance company upon the contract of insurance sued on, and that the insurance company was thereby misled and caused to waive or lose some valid defense to the policy."

The companies bring this appeal complaining principally of the failure of the trial court to render judgment in their favor based upon the jury findings of misrepresentation and materiality. We have concluded that the trial court correctly disregarded those issues. The insurance companies were attempting to invoke a policy provision which would relieve them of liability, and therefore they had the burden to plead and prove both that misrepresentations such as those contemplated by the policy provisions were made and those misrepresentations met the requirements of the anti-technicality statute. Fireman's Fund Ins. Co. v. Reynolds, 85 S.W.2d 826 (Tex.Civ.App. Waco 1935, writ ref'd); Fidelity-Phenix Fire Ins. Co. v. Sadau, 167 S.W. 334 (Tex.Civ.App. Amarillo 1914, no writ). There was no allegation or proof in this case that the false statements were fraudulently made, were material to the issue of liability, or caused the insurers to waive or lose any valid defense to the policies.

The companies argue, however, that the restrictions of Article 21.19 do not apply to Mr. Skatell's statements because those statements were made upon oral examination rather than in the proofs of loss which Article 21.19 specifically mentions. We disagree. The examination under oath, although not a formal proof of loss, nevertheless is an elaboration upon and partakes of the nature of a proof of loss, and therefore comes within the statute even though not specifically mentioned. Fireman's Fund Ins. Co. v. Reynolds, supra; Vernon v. Aetna Insurance Company, 301 F.2d 86 (5th Cir.), cert. denied, 371 U.S. 819, 83 S.Ct. 33, 9 L.Ed.2d 59 (1962). For an analogous conclusion concerning Article 21.16 relating the misstatements in an application for insurance, see Bowie v. Ranger Insurance Company, 563 S.W.2d 394 (Tex.Civ.App. Eastland 1978), rev'd on other grounds, 574 S.W.2d 540 (Tex.1979). As noted in Vernon v. Aetna Insurance Company, supra, if false statements in the more formal proof of loss will not void the policy unless they are fraudulent, material and harmful to the insurer, certainly the intent of the statute is that false statements of lesser consequence should not be allowed to void a policy unless they, too, meet such requirements.

The next group of points contends that the trial court erred in failing to submit certain requested special issues inquiring (1) whether Mr. Skatell concealed or misrepresented any fact material to the risk when applying for the insurance; (2) whether he misrepresented any material fact after the loss; (3) whether he failed to produce any invoices, purchase slips or other records concerning the lost property; and (4) whether the misstatements materially interfered with the investigation of the loss.

The requested issues were properly refused. The first should not have been submitted because there was no allegation or evidence that any misrepresentation was made in the application for Mr. Skatell's insurance. The second and third requested issues were adequately submitted by Special Issue No. 4 which the court gave, and the last requested issue was correctly refused because there was no pleading or evidence to support its submission.

It is also asserted that the companies' objections to the court's charge should have been sustained because the charge failed to inquire of the jury whether Mr. Skatell was the named insured in the policies and whether he owned or controlled each piece of the jewelry at the time of the loss. The contention will be overruled. The insurance policies themselves named Mr. Skatell as the named insured, and those policies were introduced in evidence. No contrary evidence was presented....