Court Opinion

ID: 3904111
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:33:48.970402+00
Date Added: 2024-06-11T14:24:51.311299
License: Public Domain

Respondent has filed an able and vigorous motion for rehearing in this case. It again calls attention to the fact that there is no language on the first page of the policy under consideration, nor in the insuring clause, which refers the insured to the provisions of the endorsement or rider for a statement of the policy's coverage. It is contended that the coverage is provided in the words "casualty * * * while in transit or otherwise," and the endorsement does not say that it insures against only the risks listed from "A" to "K," and therefore there is no conflict between the endorsement and the general coverage. The motion again invokes the general rules applicable to the construction of insurance policies, and refers the Court to many authorities in support of the granting of the motion. The question involved is of great importance, and its final decision will have bearing on the construction to be given policies of insurance in the future.
Once an erroneous construction is made, it is very easy for the error to continue for a long time. It has recently come to my notice that the standard form of fire insurance policy now issued in this State does not conform with statutory requirements, due to an order of the Board of Insurance Commissioners. This is a striking instance showing the necessity of not relaxing in any degree the rule of construing a policy liberally in favor of the insured and strictly against the insurer, when, it is ambiguous or has a doubtful meaning; and, too, in connection with this case it may be well to consider the matter and evaluate the serious effect of the change. *Page 619 
Since 1879 the following statute, which is now Article 4929, Vernon's Annotated Civil Statutes, has been the law of this State: "A fire insurance policy, in case of a total loss by fire of property insured, shall be held and considered to be a liquidated demand against the company for the full amount of such policy. The provisions of this article shall not apply to personal property." Acts 1879, p. 83.
Prior to June 1, 1944, the form of the standard fire insurance policy which was approved by the Board of Insurance Commissioners contained the following provision:
"In case there be a total loss by fire of any real property insured by this policy, as to such real property so totally destroyed, if a liability shall exist hereunder for such loss, it shall be held and considered, subject to the terms of this policy legally applicable, to be a liquidated demand under Article 4929, Revised Civil Statutes of Texas, against this Company for the full amount hereof covering such real estate. In all other cases this company shall not be liable beyond the actual cash value of the property at the time of the loss, with proper deductions for depreciation however caused, and shall in no event exceed what it would then cost the insured to repair or replace the same with material of like kind and quality. In so far as any of the property described herein is manufactured property, owned by the manufacturer, this company shall not, as to such property, be liable beyond what it would, at the time of the fire, cost the manufacturer to replace said lost property by manufacture, with expense of delivery to the place of the loss."
The form of standard fire insurance policy which contained the above provision has been superseded by a new form which does not contain the provision. The new standard form of fire insurance policy approved by the Board of Insurance Commissioners has been effective in this State since June 1, 1944, and in lieu of the provision copied above contains the following provision:
"Liability hereunder shall not exceed the actual cash value of the property at the time of loss, ascertained with proper deduction for depreciation; nor shall it exceed the amount it would cost to repair or replace the property with material of like kind and quality within a reasonable time after the loss, without allowance for any increased cost of repair or reconstruction by reason of any ordinance or law regulating construction or repair, and without compensation for loss resulting from *Page 620 
interruption of business or manufacture; nor shall it exceed the interest of the insured, or the specific amounts shown under `Amount of Insurance.'"
The new form completely ignores Article 4929. Nowhere in the wording of the new form is this article mentioned or reference made thereto. The amount of recovery for a total loss by fire of a building as prescribed by the terms of the new form of policy is clearly at variance with Article 4929, and undertakes to curtail the amount of recovery. The changed form of policy no longer apprizes the policyholder of the rights guaranteed to him by Article 4929, as the old form of policy did. Thus it is quite obvious that a person unlearned in the law, and not knowing of the rights guaranteed to policyholders of fire insurance by Article 4929, could easily be misled as to the amount of recovery to which he is entitled under his policy. This is but another instance which shows how necessary it is for courts to construe a policy strictly against the insurer and liberally in favor of the policyholder whenever there is any obscurity or ambiguity in the wording of the policy.
The motion for rehearing should be granted, and the judgment of the Court of Civil Appeals should be affirmed.
Taylor, Associate Justice, joins in this dissent.
Opinion delivered May 19, 1948.
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