Court Opinion

ID: 9770880
Source: CourtListenerOpinion
Date Created: 2023-08-29 16:23:59.676273+00
Date Added: 2024-06-11T07:31:20.346556
License: Public Domain

BOND, Chief Justice
(dissenting).
By a carefully designed and cleverly executed fraudulent pretext, inducing the belief that the purported purchaser of insured’s automobile had made arrangements with a bank whereby a check given for the purchase price of the automobile would be paid when title cleared with the State Highway Department, one posing as James E. O’Boyle obtained possession of the insured’s automobile, and a certificate of title to it, with intent to appropriate the property to his own use and benefit, and did so appropriate it.
The insured carried with appellee a “comprehensive” policy of insurance, including “Broad Form” of theft coverage, insuring against loss by theft, except “loss due to conversion, embezzlement or secretion by any person in lawful possession of the automobile under a bailment lease, conditional sale, mortgage or other encumbrance.”
■ The majority holds that the loss was not covered by the policy because the thief obtained not only possession of the automobile, but also the title to the same, perforce of a certificate of title; and because the misrepresentations constituting the fraudulent pretext were of existing facts, as dis*445tinguished from representation as to what would happen in the future. Believing that the holding of the majority is without support in either reason or authority, I respectfully dissent, and indicate here briefly the grounds upon which I believe the loss is clearly within the terms of the policy.
First: The loss comes' squarely within the definition of theft by fraudulent pretext as defined by Art. 1413, of the Penal Code. Under Arts. 1410-13, P.C., if corporeal personal property belonging to another is taken by fraudulent pretext with intent to deprive the owner of the value thereof and appropriate the property to the use and benefit of the person taking it, the offense of theft “is complete.” “Under the statute referred to in the preceding section (Pen.Code Art. 1413), a person is guilty of theft if by false pretext he obtains possession of the property of another, intending at the time to deprive the owner of its value and to appropriate it to his own use and benefit, and does so appropriate it. The constituent elements of theft by false pretext are (1).obtaining the property.by means of a false pretext, (2) the statutory intent, and (3) the appropriation.” 41 Tex.Jur., § 46, p. 68.
There is no authority, as I view the authorities, for the holding of the majority that the misrepresentations or fraudulent pretext dealt with in this statute must be with respect to future happenings. There' are authorities holding that representations of future happenings will suffice; not that they are necessary to make out a case under this Article. 41 Tex.Jur.,. § 46, p. 68; Roe v. State, 140 Tex.Cr.R. 387, 144 S.W.2d 1104; Johnson v. State, 144 Tex.Cr.R. 392, 162 S.W.2d 980. However, it. might bp noted that the representation that the check would be honored when title cleared is a representation of what would happen in the future; so that in no event could the majority opinion be upheld on the ground that the representations dealt only with existing facts. Therefore, since the facts detailed in the majority opinion make out all of the elements of the offense of theft under Art. 1413, P.C., the issue is whether the fact of the fraudulent obtaining of the title certificate to the automobile .destroyed the case of “theft by false pretext.”
It will be observed that the statute refers merely to a taking of personal property by fraudulent pretext. And it was long ago recognized by the Court of Criminal Appeals that evidence of title obtained by fraudulent pretext did not prove that the property was not so obtained. In Anderson v. State, 77 Tex.Cr.R. 31, 177 S.W. 85, at page 88, Judge Harper said: “If, however, the facts in this case should be held to constitute swindling under article 1421, yet it cannot be gainsaid that the facts would authorize a jury to find that the possession.of the hogs was obtained by fraudulent pretext, with the intent to deprive the owner of their value, and with the intent to appropriate the property to his own use and benefit, and under such circumstances he would also be guilty of theft by fraudulent pretext”. (Emphasis .supplied.)
Notwithstanding this sound observation, the Court of Criminal Appeals many times reversed convictions wher.e the State in effect overproved its case by showing that the thief obtained both title and possession, and was, therefore, guilty of swindling. But in 1943 the Legislature amended Art. 1549 of the Penal Code, Vernon’s Ann.P.C. art. 1549, to provide that: “Where property, money, or other articles of value enumerated in the definition of swindling, are obtained in such manner that the acquisition thereof constitutes both swindling and some other offense, the party thus offending shall be amenable to prosecution at the state’s election for swindling or for such . other offense committed by him by the unlawful acquisition of said property in such manner.”
Thereafter, the Court of Criminal Appeals in King v. State, Tex.Cr.App., 213 S.W.2d 541, 544, on motion for rehearing, sustained a conviction for theft under facts which cannot be distinguished from the facts here upon the ground that under the provisions of Art. 1549, above quoted, “ * * * the material inquiry is whether the facts show the commission of that offense, it being immaterial whether the facts .also show the cr.ime -of. swindling. *446Appellant’s argument that the instant facts show the crime of swindling is therefore unavailing.” The Court reiterated and emphasized its holding in Dixon v. State, Tex. Cr.App., 215 S.W.2d 181, 183, by this definite announcement: “In King v. State, Tex.Cr.[App.], 213 S.W.2d 541, we held that under Art. 1549, P.C., as amended, Vernon’s Ann.P.C. Art. 1549, the State may now prosecute either for swindling or theft by false pretext, under a state of facts showing both offenses.” (Emphasis supplied.)
The basis of the decisions in King v. State, and Dixon v. State, supra, show, too, that the former decisions of the Court of Criminal Appeals, cited by the majority, were not based on the theory that theft by fraudulent pretext was not made out where the intent was to pass title, but solely upon consideration of matters of criminal procedure. Hence, it is clear that a conviction for theft by fraudulent pretext under facts detailed in the majority opinion would be upheld under the present decisions of the Court of Criminal Appeals. Thus, insofar as the application of Civil Law is concerned there never was any reason for a holding that a theft by fraud was not made out, if title as well as. possession were obtained.
Second: The policy must be construed in the light of Texas Law as to what constitutes theft. As noted above, the policy is a Texas Standard Form of automobile policy. Under the “comprehensive” coverage, it insures against loss by theft (Broad Form) except “loss due to conversion, embezzlement or secretion by any person in lawful possession of the automobile under a bailment lease, conditional sale, mortgage or other encumbrance.” “Where a policy insures against theft, excepting from its coverage loss of a certain type, such as embezzlement by a mortgagor or a vendee in possession, losses not falling within that specifically excepted class are covered, so as to render the insurer liable for embezzlement by other persons.” Ap-pleman on Insurance, Vol. 5, § 3212.
Therefore, this Texas Standard Form must be considered to have been drawn to cover every species of theft defined by the statute of the State of Texas, except the risk specifically excluded. The facts here come clearly within that coverage.
The law of the state of decision on what •is theft is the basis of the -decisions cited by appellant as supporting her position, to wit: Central Surety Fire Corporation v. Williams, 213 Ark. 600, 211 S.W.2d 891; Brady v. Norwich Union Fire Ins. Soc., 47 R.I. 416, 133 A. 799; Nugent v. Union Automobile Ins. Co., 140 Or. 61, 13 P.2d 343; Champion v. Chicago F. & M. Ins. Co., 104 N.J.L. 554, 141 A. 794; Hill Howard Motor Co. v. North River Ins. Co., 111 Kan. 225, 207 P. 205, 24 A.L.R. 736, and Gaudy, Inc., v. North Carolina Home Ins. Co., 145 Wash. 375, 260 P. 257.
It is also the basis of the decisions cited by appellee to the contrary, to wit: Van Vechten v. American Eagle Fire Ins. Co., 239 N.Y. 303, 146 N.E. 432, 38 A.L.R. 1115; Royal Ins. Co. v. Jack, 113 Ohio St. 153, 148 N.E. 923, 46 A.L.R. 529; Illinois Automobile Ins. Exchange v. Southern Motor Sales Co., 207 Ala. 265, 92 So. 429, 24 A.L.R. 734; Aetna Cas. & Surety Co. v. Salyers, 294 Ky. 826, 172 S.W.2d 635, and others.
The Supreme Court of Arkansas in Central Surety Fire Corp. v. Williams, supra, analyzes the decisions cited by both appellant and appellee, and concludes that under statutes comparable to the Texas statute loss of title and possession is covered by a theft policy.
A good illustration of the effect of State statutes on the construction to be given a policy is found in a comparison of the decision relied on by appellee in Van Vechten v. American Eagle Fire Ins. Co., supra, and the decision by the same court in Block v. Standard Ins. Company, 292 N.Y. 270, 54 N.E.2d 821, 152 A.L.R. 1097. In the first case the insurer was held to have no liability for loss of a car left with a garage-man who appropriated it, because “Theft under this contract is theft as common thought and common speech would now imagine and describe it.” [239 N.Y. 303, 146 N.E. 433.] In the case decided by the same court after the enactment of the *447“joy riding” statute, the insurer was held liable, where a car was temporarily taken for such purpose, on the ground that by the enactment of such statute, such acts became larceny within “the ordinary meaning which, ‘the average policyholder of ordinary intelligence, as well as the insurer, would attach to it.’ ” [292 N.Y. 270, 54 N.E.2d 822.]
Therefore, since by Texas Statutes and decisions the instant defrauder was guilty of theft, the policy written with reference to those statutes was obviously designed to cover the loss sustained.
Third: Whether an innocent third party purchaser of the automobile would be protected is not determinative of whether a theft was committed. Appellee urged by argument on motion for rehearing that under the circumstances, here an innocent third party would be protected in his purchase of the car from the wrongdoer; and, therefore, that the transaction could not be a theft. The aifect of such contention is to say that the statute defining the transaction as a theft is void or inoperative as violative of the doctrine of innocent purchaser.
It is clearly within the province of the Legislature to say what acts shall constitute theft. It may" say, as it has in some states, that the temporary taking for “joy riding” shall be larceny; and if it does, such acts are covered by a theft policy. Block v. Standard Ins. Co., supra. It may say, as it has in Texas, that a'taking by fraudulent pretext is theft; and, if it does, an insurance policy written with reference to such a statute covers such acts, regardless of what rights the insurance company may have against third parties. As applicable to this situation, the doctrine of innocent purchaser is one of equitable estoppel, involving the question of whether or not the owner has put himself in a less equitable position before the court than the innocent purchaser. See McKinney v. Croan, 144 Tex. 9, 188 S.W.2d 144. The doctrine was not designed for the protection of insurers, and cannot be invoked by insurers as grounds for holding that what the statute defines as theft for the purpose of convicting thieves is not a theft within the meaning of an insurance policy.
It is the contention of appellee that the certificate of title to the automobile in question which the evidence shows was obtained (by the same fraudulent pretext, passed title; hence the loss to the owner does not come under the statute of theft.' The Ceritficate of Title Act, as amended, and now Article 1436-1, Vernon’s Texas Statutes 1948, Penal Code, deals with motor vehicles only, and its scope and purpose are disclosed in the many sections-thereof and in the emergency clause. Section 1, in part, reads: “This Act shall be referred to, cited and known as the ‘Certificate of Title Act,’ and in'the enactment hereof it is hereby declared to be the legislative intent and public policy of this State to' lessen and prevent the theft of motor vehicles * * *, and the provisions hereof, singularly and collectively, are to be liberally construed to that end.” In the case of Bank of Atlanta v. Fretz, Tex.Sup., 226 S.W.2d 843, 849, our Supreme Court tersely said: “The spirit and purpose of this law is to prevent fraud; not to encourage it. It was not the intention of the Legislature by this Act to invalidate liens validly acquired in States which do not have a similar law, and this is especially true in the event a vehicle covered by a lien is wrongfully, without the knowledge or consent of the lienholder, removed from the State where the lien was acquired and brought to this State, and the owner by false and fraudulent representations obtains a certificate of title showing that no lien exists against the vehicle, so that he is thereby enabled to transfer the vehicle to an innocent purchaser for, value without notice of the lien.” Manifestly, if the certificate of title fraudulently acquired would not deprive the lienholder of his valid subsisting lien on the automobile, under what reason and authority may such certificate deprive the owner in fee of his title and possession, when both title "and possession were acquired by the same fraudulent pretext? Fraud vitiates the entire transaction,— the title and possession — and constitutes the element of theft by false pretext, com*448ing under the terms of the policy’in question. "No other conclusion could reasonably be given to the transaction in question. In Deahl v. Thomas, Tex.Civ.App., 224 S.W.2d 293, 294 (ref. n. r. e.), the Amarillo Court of Appeals held (Syl. 8) : “In action to try title to an automobile, evidence sustained finding that sale of automobile by plaintiff to dealer was conditioned on payment of draft for purchase price and that, since purchase price was never paid by dealer, title to automobile did not pass out of plaintiff.” So, in the case here title never passed out of the appellant by the fraud and deception inducing the execution of the certificate df title and - delivering possession of the automobile.
Appellant’s motion for rehearing should be sustained; the judgment of the trial court should be reversed and judgment here, rendered for appellant.