Opinion ID: 1514858
Heading Depth: 1
Heading Rank: 1

Heading: collateral source and double recovery

Text: The order for moving services, provided by American Transfer, limits its liability to 30¢ per pound per article and to $25 total claim per article. The order further provides I will arrange additional insurance if desired. Brown desired additional insurance and provided in the order for $26,100.00 of coverage at a premium of $552.00. Brown's wife signed the order, paid the premium, and was issued a Transit-Pak certificate of insurance by American Transfer, as agent for INA. The INA certificate excluded subrogation against American Transfer. The bill of lading and freight bill issued by American Transfer as agent for Columbia Export Packers, Inc., also limits the carrier's liability to 30¢ per pound and states additional insurance is available to the shipper in the event he desires it. However, Brown did not sign this document until the goods were delivered in Alaska. Brown filed a written claim with INA and was paid $10,000.00 for loss and damage to furniture and goods and $1,009.22 for damages to the car. American Transfer contends it should receive the benefits of the insurance payment and the Court of Civil Appeals agreed. We disagree. The theory behind the collateral source rule is that a wrongdoer should not have the benefit of insurance independently procured by the injured party, and to which the wrongdoer was not privy. Texas & Pacific Ry. Co. v. Levi & Bro., 59 Tex. 674 (1883). Levi's cotton, stored in the Levi yards adjacent to the tracks, was destroyed by fire caused by negligence of the railroad. Levi collected insurance on the cotton under a policy secured by it and on which it had paid the premiums, and then sued the railroad for damages. The railroad's defense was Levi had been compensated for the loss under a fire insurance policy. The court held: If the cotton had been fully paid for by insurance companies under policies which had been paid for by the [Levis], it is not perceived how that could in any manner affect the liability of the [railroad]. Such payment would be the result of contract with which [the railroad] has no privity, and to which, in no respect, had it made any contribution. The insurer and the defendant are not joint tort-feasors or joint debtors so as to make the payment or satisfaction by the former operate to the benefit of the latter; nor is there any legal privity between the defendant and the insurer so as to give the former the right to avail itself of a payment by the latter. The policy of insurance is collateral to the remedy against the defendant, and was procured solely by the plaintiff at his expense, and to the procurement of which the defendant was in no way contributory.... It cannot be said that the plaintiff took out the policy in the interest or behalf of the defendant, nor is there any legal principle which seems to require that it be ultimately appropriated to the defendant's use and benefit. The Levi opinion is controlling. Payment to Brown by INA was the result of a contract to which American Transfer had made no contribution and was not privy. INA and American Transfer were not joint tortfeasors or joint debtors. The INA policy was procured solely at Brown's expense. American Transfer did not aid in the procurement of the policy except to issue the policy, as an insurance agent, and collect the premium. The provision in the order stating additional insurance is available to the shipper in the event he desires it is not contractual. It advises Brown of a right which he already has and is no more than a warning. There is nothing to indicate that Brown obtained the policy for American Transfer's benefit. There is no legal principle to require the proceeds be appropriated to American Transfer's benefit for violations of the Deceptive Trade Practices Act (DTPA). The collateral source rule was not applied in Publix Theatres Corporation v. Powell, 123 Tex. 304, 71 S.W.2d 237 (1934). Powell, lessor, by written contract required Publix, lessee, to keep the property insured, for at least $20,000.00, with loss, payable to lessor. Fire destroyed the building, and lessor, after payment of $20,000.00 by the insurance company, sued lessee for the loss of the building. This Court held to permit the lessor to keep the insurance money and also collect from the lessee would be a double recovery not sanctioned by law. The lessee is liable for the result of his negligence but when he has provided for those damages, either by personal payment or insurance payment, the damage claim has been satisfied. The contract required insurance, which was to be paid by lessee, and the parties were in privity with each other by reason of the contract. The facts in Publix are distinguishable from Brown; however, the reasoning is helpful in demonstrating the application of the rule. In Wichita City Lines v. Puckett, 156 Tex. 456, 295 S.W.2d 894 (1956), a lease agreement provided Lessor agrees to carry his own insurance against loss by fire, etc., on the entire building. The Bus Lines, lessee, contended the insurance purchased by Puckett was for the benefit of both, and that Puckett could not recover from the Bus Lines after receiving the insurance payment. This Court held the collateral source rule applied because the insurance provision did not impose an obligation on the lessor to protect himself, or the lessee, by insurance; an amount of insurance was not specified; and, there were no specific terms designed to protect the lessee. The Court stated, To be given the effect of exonerating the lessee the contractual provision must be clear and unambiguous and will be strictly construed against such effect if any other meaning may reasonably be ascribed. The collateral source rule applies to the INA payment to Brown. If payment is within the collateral source rule, the principle forbidding more than one recovery for the same loss is not applicable.