Case ID: sw2d_106/html/0138-01.html
Source: Caselaw Access Project
Author: {"author": "HICKMAN, Commissioner.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

CAROLINA INS. CO. v. CHRISTOPHER.
    No. 2093—6922.
    Commission of Appeals of Texas, Section A.
    July 28, 1937.
    Thompson, Knight, Baker & Harris and Will C. Thompson, all of Dallas, for plaintiff in error.
    Nelson & Smith, of Taholca, for defendant in error.
   HICKMAN, Commissioner.

The suit is on a policy of fire insurance covering a stock of merchandise located in Tahoka, Lynn county, and consisting principally of tires, tubes, batteries, and other accessories generally carried in a service station, together with the furniture and fixtures used in connection therewith. As to the merchandise, the insured, Christopher, admittedly failed to comply with the standard record warranty clause contained in the policy. The insurance company pleaded the breach of that clause by the insured as a defense, and in reply the insured pleaded various acts of the insurer as constituting a waiver of the defense. Special issues covering the different theories of waiver were submitted to the jury and all were answered favorably to the insured. The several issues are disclosed by the opinion of the Court of Civil Appeals and need not be restated. Upon the verdict judgment was rendered in favor of the insured and the Court of Civil Appeals affirmed that judgment. 80 S.W. (2d) 774.

The fire occurred about 2:30 o’clock in the morning at a time when the place of business was closed, and the books and inventories were completely destroyed by the fire. One paragraph of the record warranty clause reads as follows:

“The books and inventories; and each of the same, as .called for above, shall be by the Assured kept securely locked in a fireproof safe at night, and at all times when the building mentioned in the Policy is not actually open for business; or, failing in this, the Assured shall keep such books and inventories, and each of them, in some secure place not exposed to a fire which would destroy said building; and, in event of a loss or damage insured against to the personal property mentioned herein, said books and inventories, and each of the same, must be by the Assured delivered to this Company for examination; or this entire Policy shall be null and void, and no suit or action shall be maintained hereon for any such loss.”

The insured never had a fireproof safe in his place of business, nor did he keep his books and inventories in a secure place not exposed to a fire which would destroy the building. On the contrary, they were left exposed to the fire in the building and, as noted, were totally destroyed.

W. S. Cathey was the agent of the insurance company in the territory in which the insured’s business was located. He was not a mere solicitor, but appears to have been a local recording agent. See Acts 1931, p. ISO, c. 96 (as amended Acts 1935, c. 83, § 1), Vernon’s Texas Annotated Civil Statutes, art. 5062a, § 2. He issued and delivered policies and collected premiums. The policy in suit was issued by him less than thirty days before the fire. A few hours after• the fire occurred insured informed Cathey thereof. According to his testimony, which in the main is not disputed, he told Cathey that his station had burned “the night be-' fore”; that Cathey then asked him i'f he' lost his books and inventories and upon being informed that he had, suggested that he. go to Lubbock and get duplicates. He further testified that he went to Lubbock and got duplicate inventories; that he returned to Tahoka the same day, called at Cathey’s office and asked him, “Does my insurance-still hold? I have not paid my-premium.”: To which Cathey replied, “Yes, it will hold if you pay me right now.” Thereupon in-; sured gave Cathey a check for a year’s premium, most of it being unearned. Cathey promptly cashed the check, and in its answer the insurance company made this character of tender thereof:

“It says further that if the plaintiff has paid to its representatives any premium 'on the policy that same was paid and accepted in ignorance of the defenses herein urged, and the defendant tenders said premium, if any, to the plaintiff, having previously requested of its agent who issued said policy not to accept said premium.”

The record warranty clause of a fire insurance policy may be waived by the insurer, and this even though the policy be in the form prescribed by the state insurance commission. Detroit Fire & Marine Insurance Co. v. Wright (Tex.Civ.App.) 273 S.W. 628 (error refused); Central States Fire Insurance Co. v. Wright (Tex. Civ.App.) 273 S.W. 629 (error refused); St. Paul Fire & Marine Insurance Co. v. Stell (Tex.Civ.App.) 20 S.W. (2d) 399; Phoenix Assurance Co. v. Bulloch (Tex.Civ. App.) 27 S.W.(2d) 571 (error dismissed).

The facts above recited clearly support the conclusion that the insurer waived its right to have a forfeiture of its policy declared. Propeck v. Farmers’ Mutual Insurance Association (Tex.Civ.App.) 63 S.W.(2d) 227; Camden Fire Insurance Association v. Yarborough (Tex.Civ.App.) 229 S.W. 336 (Error Dismissed); Phoenix Assurance Co. v. Bulloch, supra; Occidental Fire Insurance Co. v. Fort Worth Grain & Elevator Co. (Tex.Civ.App.) 294 S.W. 953 (Error Refused); German Fire Insurance Co. v. Gibbs, Wilson & Co., 42 Tex.Civ.App. 407, 92 S.W. 1068, 96 S.W. 760 (Error Denied) ; 26 C.J. pp. 287-288, § 360.

In the case of Glens Falls Insurance Co. v. Bendy (Tex.Com.App.) 58 S.W.(2d) 1, Opinion written by Justice Critz at a time when he was á member of the Commission of Appeals, it was held that the collection and retention of unearned premiums after the fire with knowledge of the breach by the insured of a condition which would render the policy void was a waiver of the breach. In that case the facts disclosed that the premiums were received and retained by the company itself and the question of whether a local agent may bind an insurance company to a waiver after the fire where his act is not ratified by the principal was expressly not-decided. We do not here decide whether a mere soliciting agent can bind his principal by a waiver after the fire, but we do hold under the authorities cited above that an agent clothed with the authority to solicit insurance, pass on the risks, issue and deliver policies) and- collect premiums may bind his principal by a waiver.

Of course, there can be no waiver without knowledge. The insurance company contends that even though Cathey may have known that Christopher’s store burned and may have known that his books burned in the fire, that no forfeiture of the policy would result unless the fire occurred at a time when the store was closed, and that without knowledge that the store was closed at the time of the fire, Cathey could not be held fo- have waived the forfeiture of the policy by the acceptance of the premium'and the suggestion to procure duplicate invoices after the fire. Cathey did -know that the fire occurred at night and that the books and inventories were destroyed. As we understand the record warranty clause above quoted, the insured was required to keep his books and inventories securely locked in a fire proof safe, or in.some secure place not exposed to a. fire which would destroy the building, at night regardless of whether his store was open for business. Knowledge that the books and inventories were not so kept at night, but were destroyed, was knowledge o.f a breach of the record warranty clause.

Having concluded that the judgments of-the trial court and Court of Civil Appeals are well supported on the grounds above discussed, it becomes unnecessary for us to consider whether they are supported by the other grounds of waiver discussed in the opinion of the Court of Civil Appeals.

The judgments of the trial court and Court of Civil Appeals are both affirmed.

Opinion adopted by the Supreme Court.