Court Opinion

ID: 9857987
Source: CourtListenerOpinion
Date Created: 2023-09-24 16:11:14.655212+00
Date Added: 2024-06-11T10:01:20.338102
License: Public Domain

GUITTARD, Justice
(dissenting).
I cannot agree that Westchester Fire Insurance Company is subrogated to the claim of Villa France, Inc. for damages resulting from the negligence of McBroome-Bennett Plumbing, Inc. As I interpret the insurance contract in the light of applicable authorities, McBroome-Bennett was an unnamed coinsured party, at least to the extent of its tools on the premises at the time of the fire, and I do not think a property insurer should be entitled to recover from one insured party for the amount of a loss it has had to pay to another party insured under the same contract. Accordingly, I would reverse and render judgment that Westchester take nothing.
1. Insurance Coverage
The majority opinion concedes that the subcontractor’s tools were covered by the language of insurance contract to the extent of Villa France’s “liability” for such tools, because the contract by its terms “covers property of the assured or property for which the assured is liable,” consisting of the apartment house to be constructed and subcontractor’s tools located “in the building” or “on the premises.” The majority holds, however, that the subcontractor’s tools were covered only “to the extent of Villa France’s liability for their loss.” I interpret the opinion to mean that the subcontractor’s tools are not covered unless Villa France, the named assured, is liable to the subcontractor for the particular casualty which caused the loss of the subcontractor’s tools.
Although this interpretation may be plausible on first reading, it overlooks a long-established distinction in property-insurance law. If the contract merely insures the named insured’s “interest in and liability for” certain property, or uses equivalent language, then it only covers the interest of the named assured in the property described and his liability for the property of others. In re Podolsky, 115 F.2d 965 (3rd Cir. 1940); Allen v. Royal Ins. Co., 49 S.W. 931 (Tex.Civ.App.—Austin 1899, writ ref’d); Minneapolis, St. P. & S.S.M. Ry. v. Home Ins. Co., 55 Minn. 236, 56 N.W. 815 (1893). On the other hand, if the contract insures property in specified places “for which the insured is liable,” or uses equivalent language, the insurance is held to attach to the property for the benefit of unnamed owners, and does not merely indemnify the named assured against liability in tort or contract to the owner. In this context, the term “liable” is not construed as restricting coverage to the legal liability of the named asr sured for the particular loss in question, but as extending coverage to the owner of any property described in the contract for which the named assured is responsible in a general sense. Globe & Rutgers Fire Ins. Co. v. United States, 202 F.2d 696 (5th Cir. 1953); American Eagle Fire Ins. Co. v. Gayle, 108 F.2d 116 (6th Cir. 1939); Germania Ins. Co. v. Anderson, 15 Tex.Civ.App. 551, 40 S.W. 200 (Fort Worth-1897, no writ); Pacific Fire Ins. Co. v. Murdoch Cotton Co., 193 Ark. 233, 99 S.W.2d 233 (1936); Home Ins. Co. v. Peoria & P. U. Ry., 178 Ill. 64, 52 N.E. 862 (1899); Penn v. Commercial Union Fire Ins. Co., 233 Miss. 178, 101 So.2d 535 *42(1958); Rouse v. Albany Ins. Co., 257 N. C. 267, 125 S.E.2d 424, 426 (1962); Johnston v. Charles Abresch Co., 123 Wis. 130, 101 N.W. 395, 397 (1904).1 In some of these cases (including Globe & Rutgers and Germania) the unnamed owner of the insured property was permitted to recover in a suit against the insurer. In others the named assured was permitted to recover for the benefit of the owners, as against the contention that recovery should be limited to the interest or legal liability of the named assured. All of them involved bail-ments of one kind or another, and although Villa France may not have been technically a bailee, it had a duty similar to that of a bailee to use reasonable care for the protection of subcontractor’s property at the construction site.2 The majority opinion as I understand it concedes the existence of such a duty on the part of Villa France.
In my view the langage of the insurance contract now before us brings this case within the second rather than the first line of cases above cited. It covers “property of the assured or property for which the assured is liable,” to the extent that such property is described in the contract, rather than only the interest of the assured in and its liability for the property described. Villa France, as general contractor and owner, had general responsibility for the premises where the work was in progress and for equipment and supplies on the premises. Consequently, I conclude that the subcontractor’s property to the extent described in the insurance contract, including their tools located on the premises, was covered regardless of whether or not Villa France was “liable,” in the strict legal sense for this particular loss. From this conclusion it follows that McBroome-Ben-nett was, to that extent, a coinsured party and may claim the protection of the contract as a third party beneficiary to the extent of its interest in the property destroyed by the fire. See Home Ins. Co. v. Baltimore Warehouse Co., 93 U.S. 527, 23 L.Ed. 868 (1876); Cumis Insurance Society v. Republic Nat’l Bank, 480 S.W.2d 762, 766 (Tex.Civ.App.—Dallas 1972, writ ref’d n. r. e.); Southern Cold Storage & Produce Co. v. A. F. Dechman & Co., 73 S.W.2d 545 (Tex.Civ.App.—San Antonio 1903, no writ); Johnston v. Charles Abresch Co., 123 Wis. 130, 101 N.W. 395, 396 (1904).
The majority opinion relies on Wichita City Lines v. Puckett, 156 Tex. 456, 464, 295 S.W.2d 894 (1956), and Publix Theatres Corp. v. Powell, 123 Tex. 304, 313, 71 S.W.2d 237, 241 (1934) as authority for the supposedly analogous proposition that insurance procured by a lessor does not inure to the benefit of a lessee whose negligence causes destruction of the leased premises by fire. I do not regard those decisions as controlling here because in neither of them were the provisions of the insurance contract construed or even mentioned by the court. Apparently no contention was made in either case that the insuring provision expressly covered property of other persons “for which the assured is liable.” In Wichita the negligent lessee merely asserted a claim to the protection of an insurance contract which was held to cover only the interest of the lessor. The Publix case did not involve an insurance contract with comparable language, but the decision is consistent with my view, since in it the Supreme Court held that insurance which the lessee procured for the benefit of the lessor, as required by the lease, covered the interest of the lessor as well as that of the lessee, and discharged any liability of the lessee to the lessor for negligent destruction of the *43leased property. The quotation from Public, which appears in the majority opinion, is not the language of the Supreme Court of Texas, but is a quotation by that court from Dillon v. Hunt, 105 Mo. 154, 16 S.W. 516 (1891), which the court is at some pains to distinguish. I do not see how either Wichita or Publix can be taken as casting doubt on the soundness or applicability of Globe & Rutgers, Germania, and the other decisions above cited.
The majority opinion also mentions the fact that the subcontract between Villa France and McBroome-Bennett requires McBroome-Bennett to carry its own fire and liability insurance. The opinion also shows, however, that this subcontract was not signed until nearly a month after Westchester had issued the insurance contract in question. The subcontract was not a contemporaneous document, and West-chester was not a party to it. Consequently, it provides no assistance in interpreting the insurance contract.
Moreover, since the material provisions of the insurance contract in question were printed, like most insurance contracts, and presumably were in general use, the circumstances of the parties are of little value in determining the correct interpretation. A more reliable method, and one more likely to result in consistency of interpretation, is to rely on judicial precedents interpreting similar contracts. Presumably, insurance companies draft their contracts and set their premiums in the light of such precedents. If Westchester had drawn the present contract as covering only the “interest” of Villa France and its “liability for” the property of subcontractors, I would agree that the coverage was limited as held in the first line of cases above cited. Since the contract did not use that language, but extended coverage to the subcontractor’s property on the premises “for which the assured is liable,” I would presume that Westchester, in choosing this language for its printed forms of contract, intended it to have the same construction given similar language in Globe & Rutgers, Germania, and the other cases which have construed that particular language. Consequently, I see no escape from the conclusion that McBroome-Bennett’s property on the premises was protected by the insurance contract regardless of whether Villa France was legally liable for this particular loss.
2. Subrogation Against Coinsured
A more difficult question is whether McBroome-Bennett may likewise claim the protection of the insurance contract with respect to the property of Villa France lost as a result of the . negligence of Mc-Broome-Bennett’s employefe. This question should not be affected by the fact that McBroome-Bennett was not named as a party to the insurance contract because, as I have attempted to show, McBroome-Ben-nett was an additional insured whose interest was expressly covered. Neither should the question be affected by which party paid the premiums, because if the additional insured did not pay the premium, someone paid it for his benefit, and to inquire into the consideration moving from the additional insured would be pointless if his property was clearly covered. Nor should the question be affected by the monetary value of the interest of the additional insured. Whether the interest of a coin-sured party is twenty-five dollars or twenty-five thousand dollars, the principle is the same. Simply put, the question is whether or not an insurer who pays a loss to one insured party is subrogated to the claim of that party against another insured party whose negligence caused the loss.
The majority opinion concedes that an insurer normally cannot recover on a sub-rogation claim against its own insured, but takes the position that even if McBroome-Bennett were insured under the contract in question to the extent of its tools and its work destroyed by the fire, it was not insured for the damage negligently caused to *44the property of Villa France, and, therefore, that Westchester would be subrogated to Villa France’s claim against Mc-Broome-Bennett for loss of the insured property. This view was adopted in Paul Tishman & Co. v. Carney & Del Guidice, Inc., 36 A.D.2d 273, 320 N.Y.S.2d 396 (1971), and perhaps also in Employers’ Fire Ins. Co. v. Behunin, 275 F.Supp. 399 (D.Colo.1967), although the arrangement in Behunin seems to have been equivalent to separate contracts between the insurer and each of the subcontractors. The majority holding is contrary to decisions which I consider to be based on sounder reasoning, such as Transamerica Ins. Co. v. Gage Plumbing and Heating Co., 433 F. 2d 1051 (10th Cir. 1970); Federal Ins. Co. v. Tamiami Trail Tours, Inc., 117 F.2d 794 (5th Cir. 1941), and Louisiana Fire Ins. Co. v. Royal Indemnity Co., 38 So.2d 807 (La.App.1949).
In my view these latter decisions rather than Tishman should be followed here because Tishman confuses the principles of property insurance with those of liability insurance. Admittedly, the .insurance contract in question here did not provide liability insurance for McBroome-Bennett. However, it did insure the property described in it, and I have already given my reasons for concluding that it covers the property of both Villa France and Mc-Broome-Bennett. One of the essential features of insurance is that the insurer assumes the risk of loss resulting from the negligence of the assured. ‘ Federal Ins. Co. v. Tamiami Trail Tours, Inc., 117 F.2d 794 (5th Cir. 1941). In my view, ownership of the covered property by a single assured or by several assureds should not affect the subrogation question. The contract should protect each insured party against its own negligence whether the property lost belongs to him or to some other insured party. The insurer, which has accepted one premium covering the entire property and has assumed the risk of the negligence of each insured party, ought not to be allowed to shift the risk to any one of them. The entire loss should be borne by the insurer, just as if all the property covered by the contract were owned by a single insured party whose negligence caused the loss. I see no justification for fragmenting the contract into separate insuring agreements between the insurer and each of the coinsured parties, and thus treating each coinsured party as a stranger to the agreement between the insurer and the other parties whose property is insured by the same contract. I would hold, therefore, that the rule that an insurer is not subrogated to a claim against its own assured applies to all claims against a party whose property is insured by the same contract and is not limited to a claim for loss of property owned by the named assured.
This result would not be contrary to the equitable principles on which the doctrine of subrogation rests. Of course, an insurer, after paying a loss, is entitled to pursue the claim of its assured against a tort-feasor who is not a party insured by the contract. Such a tortfeasor ought not to have the benefit of insurance, as he would if payment of the loss by the insurer would discharge his liability for negligence. He is in no position to assert that the insurer has assumed the risk of his negligence. Different considerations apply when the tortfeasor is also a party insured by the contract. Under elementary insurance principles, the negligence of an insured party should not create any right of recovery on the part of the insurer who has accepted the premium and assumed the risk of such negligence insofar as it results in loss of the property insured.
The majority opinion misses the point in its attempt to distinguish Louisiana Fire Ins. Co. v. Royal Indemnity Co., 38 So.2d 807 (La.App.1949) and Transamerica Ins. Co. v. Gage Plumbing and Heating Co., 433 F.2d 1051 (10th Cir. 1970), which I re*45gard as supporting the views above expressed. The majority says that in Louisiana Fire the builder’s risk policy expressly provided that it covered the property of subcontractors “when not otherwise insured,” and that no other insurance was provided. The opinion makes a similar attempt to distinguish Gage on the ground that the subcontractor in that case relied on the owner’s policy and carried no builder’s risk insurance of his own. These differences might be pertinent if these cases were cited to establish that McBroome-Bennett’s property was covered by the insurance contract in question, because, admittedly, the holding on the coverage question in those cases rests on contractual language not present here. However, I do not rely on those cases for that purpose. I rely on the language of the present contract in the light of Globe & Rutgers, Ger-mania, and the other decisions above cited to establish coverage of McBroome-Ben-nett’s property, for the reasons above explained. T cite Louisiana Fire and Gage in support of my conclusion that when the negligent tortfeasor has been determined to be a coinsured party, an insurer who has paid a loss is not subrogated to one insured party’s claim against a coinsured party. I regard the holdings on that point as applicable here, regardless of the grounds on which the negligent subcontractors were held to be coinsured parties.
The majority opinion makes no attempt to distinguish Federal Ins. Co. v. Tamiami Trail Tours, Inc., 117 F.2d 794 (5th Cir. 1941), which does not involve a builder’s risk policy, but supports my view, since it is based squarely on the principle that an insurer cannot be subrogated to a claim for negligence against a coinsured party because such negligence is one of the risks which it has agreed to assume.
For these reasons I would reverse the judgment of the trial court and render judgment that Villa France and Westches-ter take nothing against McBroome-Ben-nett and that McBroome-Bennett recover the stipulated value of its tools against Westchester.

. For an analysis of the distinction between these two lines of cases, see United States v. Globe & Rutgers Fire Ins. Co., 104 F. Supp. 632 (N.D.Tex.1952) aff’d, Globe & Rutgers Fire Ins. Co. v. United States, 202 F.2d 696 (5th Cir. 1953); and see also, Annotation, 67 A.L.R.2d 1241, 1244 (1959).

. The general contractor’s duty of care for a subcontractor’s property would be analogous to its duty of care for the safety of the subcontractor’s employees. See Pence Construction Corp. v. Watson, 470 S.W.2d 637, 638 (Tex.1971).