Washington Fire Ins. Co. v. Cobb

• Decision Date: 07 January 1914
• Citation: 163 S.W. 608
• Parties: WASHINGTON FIRE INS. CO. et al. v. COBB et al.
• Court: Texas Court of Appeals

163 S.W. 608

WASHINGTON FIRE INS. CO. et al. v. COBB et al.

Court of Civil Appeals of Texas. San Antonio.

January 7, 1914.

Rehearing Denied February 18, 1914.

Appeal from District Court, Bexar County; J. L. Camp, Judge.

Action by R. S. Cobb against the Washington Fire Insurance Company and others, in which defendants filed a cross-bill impleading others. From a judgment for plaintiff, defendant named and others appeal. Affirmed as to two impleaded defendants, and reversed and remanded as to the other defendants.

Templeton, Brooks, Napier & Ogden, of San Antonio, and Crane & Crane, of Dallas, for appellants. A. L. Matlock and Butler L. Knight, both of San Antonio, for appellees.

MOURSUND, J.

R. S. Cobb sued the Washington Fire Insurance Company, Spring Garden Insurance Company, Southern National Insurance Company, Scottish Union & National Insurance Company, and J. C. Lamkin, alleging that Lamkin, on October 11, 1910, executed and delivered to Mrs. W. E. Wright two promissory notes for $1,000 each, due respectively one and two years after date, given in part payment for and secured by vendor's lien upon an undivided half interest in certain premises described in the petition and known as Park terrace, which notes were held and owned by plaintiff; that the defendant companies had executed insurance policies upon the improvements upon said premises, which policies were in force when said improvements were destroyed by fire on or about January 24, 1911, the policies being payable to Lamkin, but each of them contained a mortgage clause providing for payment to Mrs. Annie Blum as her interest might appear; that the lien held by Mrs. Blum was in the nature of a builder's and mechanic's lien executed by W. E. Wright et al. to C. T. Fincham and Beitel Lumber Company on August 6, 1908, and was therefore a prior lien to that of plaintiff; that, after the improvements were destroyed by fire, said companies paid Mrs. Blum her debt, amounting to about $6,000, thereby discharging their own debts and obligations, and each took an assignment or transfer from her of her lien proportionate to the amount paid by each, and said companies were claiming to be the owners of said mortgage indebtedness, and that the same was a superior lien to that of plaintiff. Plaintiff prayed that he have judgment for his debt, with foreclosure of his lien, and that the mortgage debt paid off by the companies be canceled, and, in the alternative, that, if the same should not be canceled, then that it be declared a second lien to that of plaintiff.

The insurance companies filed a joint answer, consisting of a general demurrer, a general denial, and a special answer admitting the issuance and payment of the policies as alleged by plaintiff, as well as the destruction of the property by fire on January 24, 1911, but alleging that each policy issued contained a mortgage clause, which provided, in substance, that the insurance should be payable to Mrs. Blum as her interest might appear, and, as to her, should not be invalidated by any act or neglect of the mortgagor or owner of the property, nor by foreclosure proceedings or notice of sale relating to the property, nor by the occupation of the premises for purposes more hazardous than permitted by the policy, and also contained the following clause: "Whenever this company shall pay the mortgagee (or trustee) any sum for loss or damage under this policy and shall claim that, as to the mortgagor or owner, no liability therefor existed, this company shall, to the extent of such payment, be thereupon legally subrogated to all the rights of the party to whom such payment shall be made, under all securities held as collateral to the mortgage debt, or may at its option pay to the mortgagee (or trustee) the whole principal due, or to grow due, on the mortgage, with interest, and shall thereupon receive the full assignment and transfer of the mortgage and of all such other securities; but no subrogation shall impair the right of the mortgagee (or trustee) to recover the full amount of her claim."

Said companies further alleged that said clause was inserted in each policy to secure Mrs. Blum in a first lien on said property, which was a builder's and mechanic's lien executed by W. E. Wright and wife and J. L. Hutchinson, and described in plaintiff's petition; that the indebtedness on August 22, 1911, amounted to $6,868.46, and on that date each company paid its proportional part of the same to Mrs. Blum, the amount paid by each company being set out; that, upon such payment being made, Mrs. Blum assigned such indebtedness and lien to said companies, whereby they became subrogated to the extent of their payments to all rights held by Mrs. Blum under said lien, as provided by the mortgage clause of said policies; that, as to Lamkin, said companies were not liable, because they contracted to insure him against loss to his building by fire while occupied as the Park Terrace Sanitarium, and that the use of such building as a sanitarium ceased prior to the destruction thereof by fire, and prior to the institution of the suit said companies tendered Lamkin the amounts of premium received by him, but he declined to accept same and surrender the policies as he was bound to do. They also alleged that each policy contained the following provisions: "This entire policy shall be void if the insured has concealed or misrepresented in writing or otherwise any material fact or circumstance concerning this insurance or the subject thereof; or in case of any fraud or false swearing by the insured touching any matter relating to this insurance or the subject thereof, whether before or after a loss. This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void if the hazard be increased by any means within the control or knowledge of the insured. If any application, survey, plan or description of property be referred to in this policy, it shall be a part of the contract and a warranty by the insured."

The breach of such provisions by Lamkin was averred, the allegations being to the effect that prior to and subsequent to the issuance of the policies threats had been made by several persons living near the sanitarium to burn the same, which threats had been communicated to Lamkin, but that Lamkin did not disclose the same to any of said companies, although he knew they would not insure the property or continue the policies in force if they knew of such threats, but, on the contrary, willfully concealed said facts from the companies and their agents; that thereby Lamkin became guilty of concealing and misrepresenting in writing and otherwise a material fact or circumstance concerning the insurance and the subject thereof, and was guilty of fraud with respect to such insurance before and after the loss, rendering the policies null and void; that during the night of the ____ of January, 1911, an attempt was made to burn up the property, but the fire was extinguished before much damage was done, but Lamkin, though knowing such attempt had been made, failed to notify the companies thereof, though knowing that they would immediately cancel the policies had they received such notice; that thereby Lamkin became guilty of fraud and concealment of a material fact and circumstance concerning such insurance and the subject thereof, and of fraud with respect thereto, rendering each policy null and void.

By way of further answer and cross-bill, the insurance companies impleaded W. E. Wright and wife, J. L. Hutchinson, R. S. Cobb, J. C. Lamkin, Roy M. Beitel, and Albert Beitel, alleging that on August 6, 1908, Mrs. Wright and J. L. Hutchinson owned the five acres described in plaintiff's petition, the metes and bounds thereof being given, and that they, joined by Mr. Wright, on said date executed and delivered to C. T. Fincham seven promissory notes aggregating $7,925, and, to secure the payment thereof, executed and delivered to him a builder's and mechanic's lien on the said premises; that said notes were indorsed by Fincham to Beitel Lumber Company, without recourse; that afterwards Beitel Lumber Company indorsed four of the notes to Mrs. Fannie Blum, guaranteeing the payment thereof, and assigned to her the builder's and mechanic's lien; that J. C. Lamkin acquired the property and assumed the payment of the notes, and, in addition, executed to Mrs. Wright the two notes for $1,000 each sued upon by plaintiff; that thereafter the insurance companies issued their policies to Lamkin, each of which contained a mortgage clause with loss payable to Mrs. Blum, and on or about January 24, 1911, the building was destroyed by fire, but, as to defendant Lamkin, the companies claimed that the policies were void for reasons heretofore set out; that they paid Mrs. Blum her debt, and the four notes, together with the lien, were transferred by her to the companies without recourse on her; that the Wrights and Hutchinson and Lamkin were each personally liable on the notes; that the notes had been declared due because of failure to pay interest due thereon as was authorized by the terms thereof. The insurance companies prayed that they have judgment for their debt against the Wrights, Hutchinson, and Lamkin; that the policies be canceled; that Lamkin recover of the companies the sums paid by him as premiums; and that they have foreclosure of their lien as against plaintiff and the defendants other than themselves.

The Beitel Lumber Company pleaded that it held the third note of the series of seven notes secured by mechanic's and builder's lien, and that there remained unpaid a balance of $177.32, for which it prayed judgment, and also asked for foreclosure of lien against all other parties to the suit. Lamkin answered the cross-bill by plea in abatement and a general denial. Subject to the plea in abatement, he filed an answer consisting of a general demurrer to plaintiff's petition and the answers of ...