Court Opinion

ID: 9664828
Source: CourtListenerOpinion
Date Created: 2023-08-24 00:31:14.593749+00
Date Added: 2024-06-11T18:15:10.641323
License: Public Domain

KILGARLIN, Justice,
concurring.
I concur in the court’s decision to deny Continental Casualty Company the right to maintain the appeal of the trial court’s judgment against SHWC, Inc. My purpose in writing this concurring opinion is to take issue with the dissent’s position that a right to pursue the appeal exists under the doctrine of virtual representation.
It has long been the law in this state that an appeal or a writ of error “can only issue at the instance of a party to the suit, or of one whose privity of estate, title or interest appears from the record of the cause in the *431court below, or who may be the legal representative of such party.” Wood v. Yarbrough, 41 Tex. 540, 542 (1874), citing Smith v. Gerlach, 2 Tex. 424, 426 (1847).
A leading case, Gunn v. Cavanaugh, 391 S.W.2d 723 (Tex.1965), cites examples of situations in which the first Smith v. Ger-lach exception exists. Those are principally cases in which rules or statutes confer some special status to a person not a party to a lawsuit, e.g., the power of an executor or administrator to represent the beneficiaries of a will in certain instances. See Specia v. Specia, 292 S.W.2d 818 (Tex.Civ.App.-San Antonio 1956, writ ref’d n.r.e.) (non-party to a will contest permitted right to appeal pursuant to Tex.R.Civ.P. 359); Allied Drug Products Co. v. Seale, 49 S.W.2d 704 (Tex.Comm’n App.1932, judgm’t adopted) (legislature has adopted different policy in regards to probate appeals from those in ordinary civil cases).
In Mason v. Mason, 366 S.W.2d 552 (Tex.1963), while not expressly addressing the right of a non-party to appeal, this court held that a suit to cancel an instrument creating a trust could be brought against the trustee alone, without joining the beneficiaries of a trust. Again, statutory powers of the trustee served as a basis for concluding that beneficiaries of a trust, although not named in a lawsuit, could be bound by a judgment. But, in those cases allowing appeal by beneficiaries of trusts or wills who were not parties in the lawsuit below, their interest must be reflected in the record. Jernigan v. Jernigan, 677 S.W.2d 137 (Tex.App.-Dallas 1984, no writ) (beneficiaries not named as parties were entitled to appeal when trust assets were invaded, and their interest in the trust was reflected by the record of the case).
The second exception for allowing non-party appeals set forth in Smith v. Gerlach is that of legal representatives.
It is clear that, in any case in which the doctrine of representation is held to be applicable, the ‘represented’ individual is bound by a judgment rendered in a case to which he is not party. When a non-party is allowed to challenge a judgment, the decision to allow him the right to appeal is grounded on the fact that, because of the doctrine of representation, he is bound by the judgment.
Grohn v. Marquardt, 487 S.W.2d 214 (Tex.Civ.App.—San Antonio 1972, writ ref’d n.r. e.). In Grohn, a suit against an estate only did not bind heirs of the estate, because the statute required them be named as parties. Similarly, in California and Hawaiian Sugar Co. v. Bunge Corp., 593 S.W.2d 739 (Tex.Civ.App.—Houston [1st Dist.] 1979, writ ref’d n.r.e.), a wharf and grain elevator operator sued a steamship agent for wharfage fees. The sugar company, owner of a vessel for which fees were charged, sought to appeal, claiming it had been “represented” by its agent. The appeal was rejected because an agency agreement was insufficient to show that the sugar company would be bound by the judgment. California and Hawaiian Sugar Co. categorizes three exceptions to the general rule that only parties may appeal: (1) class actions; (2) will contests; and (3) suits wherein the parties come under the doctrine of virtual representation.
In its original sense, “representation,” or as it is sometimes called, “virtual representation,” was limited to situations involving class actions, where the class was represented by a named party in the lawsuit, and would be bound by a judgment in that suit. Lightle v. Kirby, 194 Ark. 535, 108 S.W.2d 896 (1937); 20 R.C.L. Parties § 9, p. 669. Also, Gunn v. Cavanaugh states “[a] person who is a party under the doctrine of virtual representation (Rule No. 42) may also appeal.” 391 S.W.2d at 725. (Tex.R.Civ.P. 42 is our rule pertaining to class actions.) Gunn utilizes Robertson v. Blackwell Zinc Co., 390 S.W.2d 472 (Tex. 1965), as an example of class actions constituting virtual representation. Obviously, the case at bar involves neither a class action nor a suit involving wills or trusts.
Therefore, if SHWC “represented” Continental Casualty, as the dissent contends, it must be under some theory other than class action or a statutorily imposed status such as a trust beneficiary or devisee of a decedent’s estate. An affirmative answer to three questions is required for Confinen-*432tal Casualty to have the right to pursue the appeal.
First, is Continental Casualty bound by the judgment against SHWC? The answer, without further litigation, is clearly “no,” as Continental Casualty openly asserts a policy defense of “non-cooperation.” Additionally, other instances exist when insurance carriers are not automatically bound by judgments against their insureds. Such devices as “non-waiver” agreements are sometimes utilized by insurance companies, whereby an insured authorizes its carrier to conduct a defense without consenting to liability. See Utilities Ins. Co. v. Montgomery, 134 Tex. 640, 138 S.W.2d 1062 (1940).
Second, does Continental Casualty’s privity of estate, title or interest appear from the record of the cause in the trial court? The answer is again “no.” A search of the three volumes of transcripts reveals no mention of Continental Casualty Company, much less any reflection of its privity of interest, such as an insurance contract. Continental Casualty has not filed a statement of facts with this court, nor was one filed in the court of appeals.
Third, is there an identity of interest between Continental Casualty and SHWC, a requirement mentioned in Industrial Generating Co. v. Jenkins, 410 S.W.2d 658 (Tex.Civ.App.—Austin 1967, no writ)? Obviously there is no identity of interest, as Continental Casualty is clearly contemplating litigation against SHWC.
The dissenting opinion relies upon three decisions as authority for the argument that Continental Casualty should be permitted to maintain SHWC’s appeal. While conceding that none of those decisions uses the term “virtual representation,” the dissent nevertheless maintains that Massachusetts Bonding & Insurance Co. v. Orkin Exterminating Co., 416 S.W.2d 396 (Tex.1967), American Indemnity Co. v. Fellbaum, 114 Tex. 127, 263 S.W. 908 (1924), and American Fidelity and Casualty Co. v. Williams, 34 S.W.2d 396 (Tex. Civ.App.—Amarillo 1930, writ ref d), would allow Continental Casualty the right to proceed. I would simply point out that each of the three cases relied upon by the dissent involved actions after the insured’s liability had been conclusively litigated, which, of course, is not the situation in this case.
Preventing Continental Casualty from continuing this appeal does not mean it is totally without right of redress. It still has its policy defense suit based on non-cooperation. Of course, were Continental Casualty a party to the lawsuit, it would have the right of appeal. However, direct actions against insurance companies must come by legislative authorization. It is the legislature that has bestowed on the Insurance Commission the power of approval of “no action” clauses in standard insurance policies. Those clauses contractually prohibit insurance companies from being named as parties in suits against their insureds. Additionally, such laws as Tex.Rev.Civ.Stat. Ann. art. 911b prevent direct actions against insurance companies in suits involving motor carriers. Any rule of procedure or rule of evidence promulgated by this court prohibiting direct actions or mention of insurance in trials is only as a result of prior legislation.