text:
    GUARANTEE LIFE INS. CO. v. EVERT.

    (No. 8167.)
    (Court of Civil Appeals of Texas. Ft. Worth.
    April 24, 1915.
    On Motion for Rehearing, June 5, 1915.)
    1. Insubance <&wkey;665 — Life Policies — Actions — Evidence.
    In an action on a life policy, evidence held insufficient to show that insured knowingly made false answers to questions in the application, or that at that time he realized he was affected with cancer of the stomach.
    [Ed. Note. — For other cases, see Insurance, Cent. Dig. §§ 1555, 1707-1728; Dec. Dig. &wkey; 605.]
    2. Insurance <&wkey;665 — Life Policies —Actions — Evidence.
    Evidence, in an action on a life policy, held to show that false answers made in the application were not material to the risk and did not influence the issuance' of the policy, and hence, under the direct provisions of Vernon’s Sayles’ Ann. Civ. St. 1914, art. 4947, the falsity would not avoid the policy.
    [Ed. Note. — For other cases, see Insurance. Cent. Dig. §§ 1555, 1707-1728; Dec. Dig. &wkey; 665.]
    3. Insurance &wkey;>390 — Life Policies — Actions — Defenses.
    Vernon’s Sayles’ Ann. Civ. St. 1914, art. 4948, declares that, in actions upon policies, no defense based upon misrepresentations made in the application shall be allowed, _ unless the insurer shall show on trial that, within a reasonable time after discovering the falsity of the misrepresentations, it gave notice that it refused to be bound by the policy, and that 90 days shall be considered a reasonable time, The proofs of death which showed the falsity of the representations made by insured were received by the insurer about June 27, 1913. Suit on the policy was filed September 17th. The first answer presenting the defenses of misrepresentations was filed November 28th. Hold, that it came too late, and the defenses could not be urged.
    [Ed. Note.- — Por other cases, see Insurance, Cent. Dig. §§ 1087, 1038; Dec. Dig. &wkey;390J
    On Motion for Rehearing.
    4. Insurance @=>255 — Life Policies — Misrepresentations.
    Vernon’s Say les’ Ann. Civ. St. 1914, art. 4951, declared that the provisions of the foregoing articles shall not apply to life policies in which there is a clause mating such policy indisputable after two years or less, provided premiums are paid. Article 4947, which preceded this, declared that misrepresentations in the application should not affect the validity of the policy, unless material, while article 4948 prohibited such defense, unless the insurer, within a reasonable time after discovering the misrepresentation, refused payment on that ground. Acts 31st Leg. c. 108, § 22, by which the insurance law was amended, provides that no policy of life insurance shall be issued after December 31, 1909, without a provision that the policy and application shall constitute the entire contract, and that the policy after two years shall be incontestable, save for nonpayment of premiums. This section, which appears as article 4741, omits the expression “after December 31, 1909.” Section 68 of Acts of 1009, which appears as article 4959, declares that no recovery upon any life policy shall be defeated because of any misrepresentation in the application which is of an immaterial fact and does not affect the risk assumed. Held that notwithstanding article 4051 the amending act of 1909 applied to policies issued thereafter, and, unless the misrepresentations were material, they would not avoid the policy.
    [Ed. Note. — For other cases, see Insurance, Cent. Dig. § 548; Dec. Dig. @=>255.]
    5. Insurance @=>265 — Life Policies — Construction — Warranty.
    A life policy contained a provision declaring that all statements by the insured should, in the absence of fraud, be deemed representations and not warranties. A stipulation and agreement contained in the application recited that each and every statement, answer, and representation made by the insured was material to the application, and was warranted to be true, and that, if any be untrue, the policy should be void, except as otherwise provided in the policy. Held that, while no particular form of words is necessary to constitute a warranty, yet, in view of the conflict between the policy and the application, representations as to immaterial matters would not be construed as warranties, and their falsity would not avoid the policy.
    [Ed. Note. — For other cases, see Insurance, Cent. Dig. § 560; Dec. Dig. @=>265.]
    Appeal from District Court, Wise County; F. O. McKinsey, Judge.
    Action by Henry B. Evert against the Guarantee Life Insurance Company. From a judgment for plaintiff, defendant appeals.
    Affirmed.
    Lane, Wolters & Storey, of Houston, and R. E. Carswell, of Decatur, for appellant. McMurray & Gettys, of Decatur, for appel-lee.

       writ of error pending in Supreme Court.

   DUNKLIN, J.

The Guarantee Life Insurance Company issued to William I-I. Matthews a life insurance policy, by the terms of which Henry B. Evert was named as beneficiary. The insured having died, Evert instituted this suit against the company to collect the policy, and, from a judgment in his favor, the defendant has appealed.

The trial was by the court without the aid of a jury, and the following are the trial judge’s findings of fact and conclusions of law, omitting the unnecessary repetition of such expressions as “I find that,” with which nearly every sentence in the findings of fact begins:

“Findings of Fact.
“(1) The policy of insurance described in plaintiff’s petition was issued by the defendant company on July 31, 1912, insuring the life of William H. Matthews in the sum of $1,000, payable to the plaintiff as the beneficiary.
“(2) The insured William H. Matthews died on June 11, 1913; having up to that time paid all premiums on said policy that had accrued or become due thereon.
“(3) The policy of insurance in question was procured and taken out by the insured in good faith, at a time when he believed himself to be and in fact was in a state of good health.
“(4) The insured, in making the application for said insurance, answered and stated truthfully all questions and mattex-s that were material to the risk, and all questions or matters not fully or truthfully answered or stated by him in said application were not material to the risk, and did not influence the issuance of the policy. The answers and statements made by insured therein, to the effect that he had resided at Decatur, route No. 5, all his life, and that he had consulted no physician, were the only answers or statements of said insured that were in any respect not full or true. Insured was not then and had not been afilieted with any disease of a serious nature or of such na-tui-e as to affect the desirability of said Matthews as a proper and suitable risk for life insurance ; and if all the true facts had been fully and truthfully stated by the insured in said application, and a full investigation of such facts had been made by the insurer, nothing would have been disclosed affecting the suitability of said Matthews as an insurable risk. If the true facts relative to the consultation of a physician by said Matthews and his taking treatment as a result of such consultation had been thus fully disclosed, and the truth stated by all those knowing of such consultations, treatments, and physical condition of the said Matthews, for which said consultations and treatments were had, nothing would have been shown in the way of a disease of a serious nature, or of such nature as to be material to the risk; said consultations and treatments relating only to temporary ills common to humanity, and having no serious or permanent effect. If said insured had answered fully as to where he had formerly resided, and this had been followed by investigation by defendant, nothing would have been disclosed affecting the desirability of said Matthews as an applicant for insurance.
“(5) The said Matthews had not been affected with any of the diseases mentioned in said application, and he was at the time of the making of said application and the issuance of said policy, and was usually, in good health, and believed himself to be, and in fact was, physically sound.
“(6) The defendant is a life insurance company, within the meaning of article 4746, Revised Statutes 1911. It failed to pay the loss or amount due the beneficiary on said policy within 30 days after demand was made therefor. One hundred and fifty dollars is a reasonable attorney’s fee for prosecuting this suit on behalf of said beneficiary for the recovery and collection of said loss.
“Conclusions of Raw.
“It appearing to the court that no misrepresentations had been made, either material to the risk or actually contributing to the contingency or event on which said policy became due and payable, I conclude that the plaintiff is entitled to recover of the defendant the $1,000 provided for in said policy, and the defendant company having failed to pay said loss within 30 days, as required by article 4746, Revised Statutes 1911, I further conclude that plaintiff is entitled to recover the 12 per cent, damages on the amount of said loss, as provided for in said statute, together with $150, as a reasonable attorney’s fee for the prosecution of this suit for the collection of said loss, making a total recovery of $1,270, for which amount judgment is rendered herein in favor of plaintiff against the defendant.”

The application for the policy contained the following stipulation:

“I, the undersigned, do hereby certify that I am the applicant for life insurance' mentioned and described in the foregoing statements, representations, questions, and answers; that I have read and fully understand each and every of said statements, representations, questions, and answers; that said answers, statements, and representations, and each and all of them, as above written, are the answers, statements, and representations given and made by me, and were written by me or under my direction and in my presence. And I do further declare 'and agree that each and every of said answers, statements, and representations made by me as aforesaid is and are material to this application, and any action taken thereon by said the Guarantee Rife Insurance Company, and I warrant and declare each and every of said answers, statements, and representations to be full, complete, and true, and that if either or any of said answers, statements, or representations be not full and complete, or if either or any of them be untrue in any respect, then and in such case any policy issued thereon shall be null and void from the beginning, except as shall be otherwise expressly provided in this policy.”

The policy contained the following clause:

“This policy contains the entire contract between the parties, and all statements made by the insured shall, in the absence of fraud, be deemed representations and not warranties, and no such statements shall be used as a defense to a claim under this policy, unless it be contained in a written application, and a copy of such application shall be indorsed upon or attached to this policy when issued. This policy shall not take effect until the first premium is paid and the policy actually delivered during the life and good health of the insured.”

Attached to and made a part of the policy was the application therefor which was dated July 23, 1912, and the only defense made to the suit was that the statements made by the insured in the application relative to his health were false and fraudulent, and material to the risk, and that the defendant was induced to issue the policy upon the belief that those statements were true.

The assignments of error presented here ' are to adverse findings by the ■ court upon the defenses so made. Among others, the following questions and answers appear in the application:

“Q. Are you now and usually in good health, and do you believe yourself to be physically sound? A. Yes. Q. Have you ever been afflicted with any of the following named diseases or conditions (answer ‘Yes’ or ‘No’ to each): Diseases of the stomach? A. No. Cancer or tumor? A. No.”

Appellant insists that the evidence shows conclusively that the answers of Matthews to those questions were knowingly untrue; that he was at the time of his application, and at the time the policy was delivered, affected with cancer of the stomach; and upon those contentions bases an assignment of error to the fifth paragraph of the court’s findings of fact.

. Dr. C. J. Parris attended the insured during his last illness and made proofs of his death. He testified that he treated him during the years 1911-12, and up to his death in 1913. He identified a prescription he gave insured, which was dated September 30,1911, intended “for a general alterative and tonic effect,” also one dated January 27, 1912, for liver, stomach, and bowels. He also gave him a prescription June 27, 1912. Continuing, he testified:

“I think the next time I treated him was some time in October, 1912, when there was some trouble with Ms liver. Along about January or February, 1913, I treated him for possibly a week or 10 days and made 3 visits during 24 hours while he was sick that time. Stomach trouble was what was the matter with him at this time. He had cancer of the stomach, which produced his death on June 11, 1913. * * * He was attending to his business during all this time. He was running a store at Sycamore out there, and was staying and working there in and about the store. It was not until later that I found out that he liad a malignant trouble. I think I first began to suspect it some time probably in June, 1912, but did not know there was a malignant trouble until about the close of the year. * * * It was some time back toward the first part of 1912, probably about June, that I began to suspect any malignant trouble, but I was not certain of that until later in the year.”

The proofs of death by this witness, which proofs were sent in to the company prior to this suit, after stating that the insured died of cancer of the stomach, further stated that the first symptom of the disease “appeared about one year ago”; this proof being dated June 27, 1913.

Dr. J. W. Scott, medical director for the defendant, residing at Houston, testified as follows:

“I am familiar with the incipient growth and duration of cancer of the stomach. Ordinarily a person afflicted with cancer of the stomach will live about 1% years after such cancer would be discovered by a diagnosis. I hardly see how it could have been possible for Matthews to have been in good health at the time he made the application, because the disease would have manifested its symptoms, or caused some stomach trouble at least a year before his death. There are no objective symptoms in cancer of the stomach in its incipiency. It would have been too well developed before these objective symptoms would manifest themselves.”

Opposed to that testimony was the testimony of the plaintiff, Evert, of Mrs. Rula Matthews, wife of the insured, Joe McNeeley, and Joe Boydstun, the last two witnesses being neighbors and acquaintances of the insured for several years, also the testimony of L. L. Mann, the defendant’s agent who solicited and procured the insured to make application for the policy in question. Practically all of those witnesses testified, in substance, that insured was a strong, healthy man, weighing about 176 pounds, doing hard work every day, and apparently in good health and sound physical condition throughout the year of 1912, with the exception of slight attacks of biliousness or bad cold, which did not interfere with his work, and which was always relieved by taking medicine therefor. Furthermore, plaintiff introduced in evidence the written statements of Dr. T. A. Moore, the examining physician who examined the insured for the defendant at the time he made application for the policy, which statements were attached to the application for insurance and considered by Dr. Scott in passing upon and approving the application. It appears from this report that Dr. Moore made a careful and critical.examination of the insured and gave answers to numerous questions propounded to him. One of the questions so propounded reads: “Do you find the functions of the stomach and other abdominal organs to be normal? (Abdomen must be carefully palpated before answering this question.)” To which Dr. Moore answered, “Tes.”

It will he observed that Dr. Parris did not express a definite opinion that the insured was afflicted with cancer of the stomach in June, 1912; the extent of such opinion being that he began to suspect a malignant trouble about that time. But the force of that testimony is weakened to some extent, at least, by the fact that he did not begin to treat him for such trouble until some time about the close of the year 1912. The opinion expressed by Dr. Scott, the medical director of the defendant company, that cancer of the stomach with which insured died would have manifested symptoms or caused some stomach trouble at least a year before his death, and that ordinarily a person so afflicted would live about a year and a half after the disease would be discovered by a diagnosis, were expert opinions only, and would not necessarily be controlling when opposed to the testimony offered by the plaintiff and referred to above. Accordingly, appellant’s first assignment of error is overruled.

By different assignments appellant attacks, as unsupported by any evidence and contrary to the undisputed evidence, the facts recited in the fourth paragraph of the findings of fact, and reading as follows:

“The insured, in making application for insurance, answered and stated truthfully all questions and matters that were material to the risk, and that all questions or matters not fully or truthfully answered or stated by him in said application were not material to the risk and did not influence the issuance of the policy.”

In addition to the questions and answers" contained in the application for insurance and set out above, the insured further stated that he had not been afflicted with any of the following named diseases or conditions, to wit: Abscess, disease of tibe bowels, disease of heart, disease of the kidneys, disease of the liver, disease of the stomach. And the application also contained the further questions and answers as follows:

“Q. What physician did you last consult? A. None. Q. Present residence? A. Decatur, route 5. Q. How long have you lived there? A. All life.”

Appellant insists that the foregoing statements that he had not consulted a physician, that he had never been affected with any disease of the stomach or bowels, that he had resided at Decatur, route 5, all his life, that on July 25, 1912, he was then and usually in good health and believed himself (to he physically sound, were each shown by undisputed evidence to be false, and that each influenced the company in accepting the risk. In addition to the testimony of Dr. Parris and Dr. Scott already referred to, the record shows further testimony as follows: Proof of death by Dr. Parris, which was submitted to the defendant, was introduced in evidence, containing the statement that he (Dr. Parris) had been the medical attendant or advisor of the deceased about two years, and further that “Mr. Matthews was not aware of his condition until some three months before his death,” also the testimony of Dr. Inge, who had resided in Denton and practiced medicine in Denton county, Tex., for 39 years.

Dr. Inge testified that the insured formerly lived in Denton county, part of the time in the town of Denton, and a part of the time in the southwest portion of the county; that witness had attended the insured professionally January 5, and January 11, 1879, and also on July 13, 1902. At the time of such visits, the insured was living about 12 or 13 miles southwest of Denton. This witness further testified as follows:

“I prescribed medicine for him, but all I remember in reference to the remedies is that I prescribed aliments and tonics. It has been such a long period of time, and I have no notes of his case or condition, and do not remember definitely as to the diagnosis. I only remember that he suffered with some stomach, liver, or intestinal trouble, resulting in a dropsical effusion. He left the country soon after, and I lost sight of the case. He was in bad health, and remember him as being pale, and that he was not vigorous during the time I knew him. * * * It is a fact that the last time I prescribed for W. H. Matthews was about 13 years ago, and I have not seen him since that time. It is also a fact that I have not known anything of the condition of health of W. H. Matthews for the past 13 years.”

Appellant also introduced the further testimony of Dr. Scott, the medical director of the defendant company, as follows:

“I am the medical director of the Guarantee Life Insurance Company of Houston, Tex. I have been its medical director since its organization about 7 years ago, and was the medical director of said Guarantee Life Insurance Company on the 31st day of July, 1912. As medical director I have the general supervision of the medical department of the company in approving the appointment of medical examiners and passing upon applications for insurance and advising upon the desirability of the risks. * * * The application of W. H. Matthews was presented to me for approval or disapproval, and I approved the same. I approved it upon the statements made by the applicant and upon the examination made by the doctor contained in said application. It was necessary to have my approval before a policy would have been issued to Mr. Matthews. ,When I received Mr. Matthews’ application,' I read it over and considered it carefully and approved the same because, in my judgment, from the answers contained in the application, I considered it a good risk. If the application had disclosed that ÍV. H. Matthews had consulted other physicians prior to the time he made application, I would have investigated his troubles and passed on the case accordingly. If I had found from such investigation, or if the application had shown, that W. H. Matthews had within a year prior to the time of making the application had stomach trouble or kindred diseases, I would not have approved the application for insurance on account of his age; he being then 60 years old. A man 60 years old, in order to obtain my approval for insurance, must have a clear record, so far as his personal health goes. If the application had disclosed that, shortly prior to the date.thereof, the said W. H. Matthews had been affected with disease of the bowels, disease of the stomach, rheumatism, or any kindred diseases, I would not have approved it, for the reasons stated. * * * The answers which I claim misled me into approving the policy, and which I claim were false, are as follows: He gave a negative answer to the question, ‘Have you ever had any disease of the stomach?’ He also gave a negative answer to the question, ‘Have you ever had any disease of the bowels?’ He answered ‘None’ to question, ‘What physician did you last consult? ”

Mr. Mann, after testifying that he wrote the applicant’s answers to the questions contained in the application, testified further as follows:

“I wrote the answers myself to the questions: ‘Q. Present residence? A. Decatur, route 5. Q. Plow long have you lived there? A. All life.’ I knew that he had not lived there on route 5 out of Decatur in Wise county all of his life. I knew just how long he had lived there, and I knew he had lived in Archer county and in Denton county prior to his coming to this county, but it was my understanding that what the defendant company wanted to know in reply to those questions was the general locality of the state in which the applicant had lived. That being my idea about it, I told Mr. Matthews that was what was wanted, and, knowing the facts about his residence as I did, I wrote down the answer to the question that way. Mr. Matthews was at that time apparently in the best of health. I had seen him frequently ever since he first moved here from Archer county, covering a period of probably two years up to that time, and he always had the appearance to me of being a man in the very best of health. He was a large, heavy man, robust in appearance, and was always doing his work. * * * I had been in the business of soliciting insurance for several years, at the time I took Mr. Matthews’ application, to observe the physical condition and health of applicants. I observed Mr. Matthews’ condition and health and believed it to be good.”

By article 4947, Vernon’s Sayles’ Tex. Civ. Stat., it is provided that:

“Any provision in any contract or policy of insurance issued or contracted for in this state, which provides that the answers or statements made in the application for such contract, or in the contract of insurance, if untrue or false, shall render the contract or policy void or voidable, shall be of no effect, and shall not constitute any defense to any suit brought upon such contract, unless it be shown upon a trial thereof that the matter or thing misrepresented was material to the risk or actually contributed to the contingency or event on which said policy became due and payable, and whether it was material and so contributed in any case shall be a question of fact to be determined by the court or jury trying such case.”

The fact that Dr. Parris and Dr. Inge had both been consulted by the insured a number of times prior to the date of the application seems undisputed. It is also undisputed that the applicant had not lived on rural route S near Decatur all his life, and that he had had some stomach trouble, at least of a minor character. But, in view of the testimony offered by the plaintiff and noted above in rebuttal of that offered by the defendant, it cannot be said that the false statements of the applicant relative thereto necessarily were material to the risk of the issuance of the policy. On the contrary, we are of the opinion that there was evidence sufficient to support all the findings of fact shown in the fourth paragraph of the findings shown in the record. Am. Nat. Ins. Co. v. Fawcett (Civ. App.) 162 S. W. 10; Roedel v. John Hancock Mut. Life Ins Co., 176 Mo. App. 584, 160 S. W. 45.

Article 4948, Vernon’s Sayles’ Tex. Civ. Stat., reads:

“In all suits brought upon insurance contracts or policies hereafter issued or contracted for in this state, no defense based upon misrepresentations made in the applications for, or in obtaining or seeming the said contract, shall be valid, unless the defendant shall show on the trial that, within a reasonable time after discovering the falsity of the misrepresentations so made, it gave notice to the assured, if living, or, if dead, to the owners or beneficiaries of said contract, that it refused to be bound by the contract or policy: Provided, that ninety days shall be a reasonable time: Provided, also, that this article shall not be construed as to render available as a defense any immaterial misrepresentation, nor to in any wise modify or affect article 3096aa.”

By this statute the burden of showing such notice is placed upon the defendant. Appel-lee invokes the provisions of this statute, which, under the record in this case, he insists furnishes a complete answer to all of appellant’s assignments. The statement of facts shows that the proof of death of the insured signed by Dr. Parris was furnished to defendant company about June 27, 1913, and the statement of facts fails to show that the defendant company at any time gave notice to the plaintiff that it refused to be bound by the contract on account of the alleged falsity of statements contained in the application for insurance. But the record shows that the suit was filed September 17, 1913. The transcript further shows that defendant’s first amended original answer, presenting the defenses discussed, was filed November 28, 1913. The transcript does not show when the original answer was filed nor its contents. Ninety days from June 27, 1913, the date of proof of death by Dr. Par-ris would extend to September 27, 1913. In the proof of death were statements by Dr. Parris that he had been the medical attendant of the insured about 2 years; that insured had died of cancer of the stomach; and that the first symptom of the disease had appeared about 1 year prior to the date of the proof. And, as noted already, Dr. Scott testified, in effect, that in his opinion insured had been afflicted with cancer of the stomach for about 1% years prior to his death. Under the circumstances related, it would seem that, at all events, the defenses based upon the alleged falsity of statements made by Matthews in his application for insurance would fail, irrespective of the merits of any of the assignments of error presented by appellant and discussed above.

For the reasons noted, the judgment is affirmed.

On Motion for Rehearing.

As will be noted in our opinion on original hearing, we cited in support of the judgment in favor of the insured articles 4947 and 4948 of Vernon’s Sayles’ Texas Civil Statutes, which were quoted. Our attention is now called to the stipulation contained in the policy as follows:

“This policy is incontestable after one year from its date except for nonpayment of premiums.”

And also to article 4951 of Vernon’s Sayles’ Texas Civil Statutes, which 'Contains the following:

“The provisions of the foregoing articles shall not apply to policies of life insurance in which there is a clause making such policy indisputable after two years or less, provided premiums are duly paid.”

This provision was not cited in the briefs and, upon a former consideration of the assignments, escaped our notice. Appellant also cites the recent decision by our Supreme Court in Blackstone v. Kansas City Life Insurance Co., 174 S. W. 821. In that case it was held that articles 4947 to 4951 of our statutes had no application to the two policies involved in that suit, both of which were issued June 23, 1909. The applications by the insured for those policies contained provisions warranting the truth of statements made by him in answer to questions propounded, and upon which statements the policies were issued. The Court of Appeals held that certain statements by the insured contained in the application were untrue; and that the policies did not support a recovery by reason of such warranties. The Supreme Court concurred with the Court of Appeals in holding that such statements should be held to be warranties, and that plaintiff’s right to recover should be tested accordingly, but further held that the statements claimed to be untrue were not untrue when strictly construed, and upon that holding affirmed the judgment of the trial court in favor of the insured against the insurance company.

By the acts of 1909 our insurance law was amended. See Acts 1909, c. 108, p. 192. Articles 4741 and 4959, 3 Vernon’s Sayles’ Tex. Civil Statutes, are two sections of that act; the former being section 22 and the latter section 68. By article 4741 it is provided that:

“No policy of life insurance company shall be issued or delivered in this state, or be issued by a life insurance company organized under the laws of this state, unless the same shall contain provisions substantially as follows. * * *
“3. A provision that the policy, or policy and application, shall constitute the entire contract between the parties and shall be incontestable not later than two years from its date, except for nonpayment of premiums; and which provision may or may not, at the option of the company,_ contain an exception for violations of the conditions of the policy relating to naval and military services in time of war.
“4. A provision that all statements made by the insured shall, in the absence of fraud, be deemed representations and not warranties.”

Article 4959 reads:

“No recovery upon any life, accident or health insurance policy shall ever be defeated because of any misrepresentation in the application which is of an immaterial fact and which does not affect the risks assumed.”

The beginning portion of section 22 of the act of 1909 reads:

“No policy of life insurance shall be issued or delivered after December 81st, 1909," etc.

Article 4741 omits the words “after December 31st, 1909.” Doubtless the omission of those words in Revised Statutes 1911 was by reason of the fact that the date thus omitted had already passed at the time of the adoption of the codification of the statutes in the year 1911. The same words are contained in section 23, which are likewise omitted in article 4742 of our present statutes, doubtless for the same reason. The regular session of the Thirty-First Legislature, at which the acts of 1909 was passed, adjourned March 13, 1909, and that act took effect 90 days after that date, which would be June 13, 1909. As noted already, the policies in the case of Blackstone v. Kansas City Life Ins. Co., supra, were issued June 23, 1909. Hence they were not required to contain the provisions of article 4741. The provision in the act of 1909 that the requirements of article 4741 should apply only to policies issued after December 31,1909, clearly indicates an intention of the Legislature that the articles of the statutes (4947 to 4951) which were passed in the year 1903 should be applicable to policies issued prior to December 31, 1909, and while those statutes were in force; but that the provisions of the act of 1909 should have a controlling effect upon all policies issued after that date.

The policy in controversy contains the following provision:

“This policy contains the entire contract between the parties and all statements made by the insured shall, in the absence of fraud, be deemed representations and not warranties. * * * a

Aside from the provisions of article 4959, the stipulation in the policy just quoted shows a specific agreement by the company that the statements by the insured should not be deemed warranties, but should be deemed representations only. That provision is clearly in conflict with the further stipulation and agreement contained in the application for the policy signed by the insured, attached to the policy, and which is invoked by the appellant here, reading:

“And X do further declare and agree that each and every of said answers, statements and representations made by me as aforesaid is and are material to this application and any action taken thereon by said the Guarantee Life Insurance Company, and I warrant and declare each and every of said answers, statements and representations to be full, complete and true; and that if either or any of said statements, answers or representations be not full and complete, or if either or any of them be untrue in any respect, then and in such case any policy issued thereon shall be null and void from the beginning, except as shall be otherwise expressly provided in this policy, * * * and I hereby further agree that this application and everything therein contained shall be and constitute a part of any policy issued thereupon.”

It is too well settled to need the citation of authorities that independent of articles 4741 and 4959, if a contract of insurance is ambiguous, that construction will be adopted which is most favorable to the insured, and, even though the application for the policy in the present suit should be considered as a part of the contract of insurance, the contractual terms thereof at variance with those of the policy, to the effect that the statements made by the insured shall be deemed representations and not warranties, would be rejected under that rule. Reppond v. Nat. Life Ins. Co., 100 Tex. 519, 101 S. W. 786, 15 Ann. Cas. 618, 11 L. R. A. (N. S.) 981; Del. Ins. Co. v. Harris, 26 Tex. Civ. App. 537, 64 S. W. 867; 25 Cyc. 805.

The act of 1909 contains no limitation of articles 4741 and 4959, quoted above. Those articles apply to all policies issued after December 31, 1909, including the one in controversy in this suit, and such policies are not affected by the provisions in article 4951, quoted above.

Appellant has cited Phœnix Mut. Life Ins. Co. v. Raddin, 120 U. S. 183, 7 Sup. Ct. 500, 30 L. Ed. 646, and Jeffries v. Economical Mut. Life Ins. Co., 89 U. S. (22 Wall.) 47, 22 L. Ed. 836, holding that an agreement between the insurer and insured that statements made by the insured for the purpose of procuring the policy are material to the risk is enforceable, and upon those authorities insists that effect should be given stipulation contained in the application for insurance, reading:

“And I do further declare and agree that each and every of said answers, statements and representations made by me as aforesaid is and are material to this application and any action taken thereon by said the Guarantee Life Insurance Company.”

In other words, appellant insists, in effect, that, in view of that stipulation, that insured was in no position to claim that the alleged misrepresentations were immaterial to the risk assumed by the company. “No technical words or form of expression are necessary to constitute a warranty.” Banking Co. v. Stone, 49 Tex. 4. The stipulation last quoted, especially in connection with the further agreement that, if any of the representations be untrue, then the policy shall be null and void, constituted a warranty of the truth of the representations, independent of the further more specific warranty of their truth in the use of the word “warrant” in connection therewith. Bills v. Hibernia Ins. Co., 87 Tex. 547, 29 S. W. 1063, 29 L. R. A. (N. S.) 706, 47 Am. St. Rep. 121; Washington Fire Ins. Co. v. Cobb (Civ. App.) 163 S. W. 608. To give effect to that stipulation in the application would be to ignore and override the stipulation in the policy favorable to the insured, in effect, that all such statements made by the insured shall, in the absence of fraud, be deemed representations and not warranties, which would be contrary to the rule of construction of contracts of insurance and contrary also to the plain provisions of articles 4741 and 4959. Furthermore, it will be noted that the entire agreement contained in the application is qualified by its concluding language: “Except as shall be otherwise provided in this policy.”

The motion for rehearing is overruled.
      ^&wkey;Eor other eases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

      @=>For other eases see same topic ana KEY-NUMBER in all Key-Numbered Digests and Indexes


source: Caselaw Access Project

author: BUCK, J.

license: Public Domain

text:
    JAMES McCORD CO. v. REA et al.
    (No. 8176.)
    (Court of Civil Appeals of Texas. Ft. Worth.
    May 8, 1915.)
    1. Execution <&wkey;172 — Injunction — Default.
    In a suit to enjoin a sheriff and a judgment creditor from levying on property under execution, the sheriff’s default did not entitle plaintiff to judgment, for the sheriff was not a real party in interest.
    [Ed. Note. — For other cases, see Execution, Cent. Dig. §§ 519-539; Dec. Dig. &wkey;172.]
    2. Pleading <&wkey;205 — Answejr—Conclusion of Pleadek.
    In a suit to enjoin a levy under a writ oí execution, the defendant’s answer set up that his judgment was obtained against plaintiff for unlawfully levying upon and selling exempt property, that defendant had placed a writ of execution in the hands of the sheriff, and that, if plaintiff was permitted to offset its judgment against defendant, the exemption statutes would be held for naught, and that an injunction was sought only for delay. Held that, while the answer was not full, it was not, on general demurrer, bad as stating only the pleader’s conclusion.
    [Ed. Note. — For other cases, see Pleading, Cent. Dig. §§ 491 — 493, 495, 496, 498-510; Dec. Dig. &wkey;»205.]

      3. Judgment <&wkey;883 — Offset of Judgments —Right to.
    Where a judgment creditor levies upon and sells exempt property, and the debtor recovers a judgment, the creditor cannot, as against such judgment, offset his own judgment, for that would destroy the effect of the exemption laws.
    [Ed. Note. — Por other cases, see Judgment, Cent. Dig. §§ 1669-1688; Dec. Dig. &wkey;>883.]
    4. Pleading <&wkey;20o — Answer—Sufficiency.
    Though an answer was defective, and the pleader might, on appropriate exceptions, have been required to make it more certain, yet it may be sufficient'as .against a general demurrer.
    [Ed. Note. — Por other cases, see Pleading, Cent. Dig. §§ 491-493, 495, 496, 498-510 ; Dec. Dig. <&wkey;205.j
    5. Evidence &wkey;>332 — Record oe Justice’s Judgment.
    Except in certain cases enumerated in Vernon’s Sayles’ Ann. Civ. St. 1914, art. 2327, pleadings both in the justice’s court and in the county court on appeal may be oral or in writing. Article 2302 makes it the duty of the justice to keep a civil docket in which he 'shall enter a record of suits filed, with a brief statement of the nature of plaintiff’s demand; while article 2396 requires the justice upon appeal to make it an accurate copy of all entries made on his docket, and to transmit the same, with a certified copy of the bill of costs taken from his fee boook, to the county court. Article 758 declares that in cases brought from the justice’s court, where no pleadings were filed below, none shall be necessary in the county court, the issues being made up under direction of the court, and article 759 authorizes either party to set up by written pleadings new matter which was not presented in justice’s court. In a suit to restrain the levying, of execution under a judgment in an action begun in justice’s court, and appealed to the county court, the defendant asserted that the judgment was recovered on account of plaintiff’s unauthorized levying upon and sale of exempt property. To prove this allegation, the judgment rendered in justice’s court was offered in evidence, but it was not shown whether the pleadings either in the justice’s court or in the county court were oral or in writing, or that the issue tried in the county court w.as the same as the one disposed of by the justice. Held that, while the justice’s judgment is part of the record in the county court on appeal to that tribunal, it cannot serve as a pleading to either party, nor can it be treated as a part of the record of the pleadings and judgment of the county court any more than the bill of costs.
    [Ed. Note. — Eor other cases, see Evidence, Cent. Dig. §§ 1237-1246; Dec. Dig. &wkey;332J
    6. Evidence <&wkey;>178 — Best and Secondary Evidence.
    In such ease the pleadings if written are the best evidence of their contents, but, if lost or destroyed, the judgment may be received to establish their contents.
    [Ed. Note. — For other cases, see Evidence, Cent. Dig. §§ 580-594; Dec. Dig. &wkey;178.]
    7. Judgment <&wkey;951 — Evidence—Issues.
    In such case, where the pleading's in the county court presented two phases, the justice’s judgment is admissible to show the issue determined by the county court’s judgment.
    [Ed. Note. — For other cases, see Judgment, Cent. Dig. §§ 1808-1812; Dec. Dig. &wkey;951J
    8. Judgment <&wkey;©51 — Evidence—Presumb-tions — Inferences.
    As proof of an issue cannot be made by basing inference upon inference, and this rule applies to a proof of the plea of res judicata, the justice’s judgment is not admissible to show the basis of the claim in county court, it being necessary to infer that judgment was rendered upon a pleading making the same claim for damages, that this pleading was presented in the county court, and on submission to the jury verdict was rendered thereon.
    [Ed. Note. — For other cases, see Judgment, Cent. Dig. §§ 1808-1812; Dec. Dig. <&wkey;>951.]
    Appeal from District Court, Tarrant County; M. H. Brown, Judge.
    Action by the James McCord Company against W. M. Rea and another. From a judgment for defendants, plaintiff appeals.
    Reversed and remanded.
    Slay & Simon and Theodore Mack, all of Ft. Worth, for appellant. Morris Rector, of Ft. Worth, for appellees.
   BUCK, J.

This suit was instituted in the Sixty-Seventh district court of Tarrant county by appellant against W. M. Rea, sheriff of Tarrant county, Tex., and W. M. Breckon, for an injunction to restrain the said Rea, as sheriff, from making a levy upon the property of said appellant under an execution issued out of the county court of Gaines county, Tex., upon a judgment obtained in said county court by the said W. M. Breckon against the said James McCord Company for the sum of $181, with interest and costs, and to restrain and enjoin defendant Breckon from collecting or attempting to collect his said judgment against the appellant until a certain judgment obtained in the county court of Tarrant county by James McCord Company against W. M. Breckon for the sum of $358.44, with interest and costs, had been satisfied. Plaintiff further prayed that it bo permitted to offset the judgment against it and in favor of the defendant Breckon with its judgment against Breckon, alleging that Breckon was insolvent, and that the plaintiff had therefore, and was at the time of the suit, unable to make its said judgment, or any part thereof, out of the said Breckon; that plaintiff had had execution issued on said judgment, and the same had been returned “nulla bona”; that defendant Rea was threatening and was about to levy upod the personal property of plaintiff under said execution issued out of the county court of Gaines county, and was about to sell plaintiff’s property to satisfy the judgment aforesaid, etc.

Defendant Breckon answered: First, by setting up the judgment obtained by him against plaintiff in the county court of Gaines county in the sum of $181, with interest and costs; second, that said judgment was obtained against the plaintiff and J. M. Coker, sheriff of Gaines county, for damages for “unlawfully levying upon and selling exempt property”; third, that said defendant had placed in the hands of W. M. Rea, sheriff of Tarrant county, an execution issued on the judgment aforesaid, and that, if the plaintiff was permitted to offset its judgment against the defendant Breekon, “then the exemption statutes of the state of Texas would be held for naught, and would afford no protection, and would be of no avail”; fourth, that the injunction was obtained solely for the purpose of delay. Wherefore defendant prayed that the injunction theretofore granted be dissolved, and that the defendant Breekon be allowed his damage, etc. Upon a hearing the defendant Breekon’s motion to dissolve was granted, and it was ordered that plaintiff take nothing by way of an offset against the defendant Breekon, and that both defendants Breekon and Rea recover their costs. Defendant Rea filed no answer.

Appellant’s first assignment of error is directed against the action of the trial court in refusing to render judgment in its favor perpetuating the temporary injunction theretofore granted, because, as urged therein and limited by its first proposition thereunder, the suit being primarily against the sheriff to restrain him from making the levy, his failure to answer entitled appellant to the judgment perpetuating the injunction prayed for, as against Sheriff Rea.

We do not think the contention is sound. The injunction was primarily against the judgment creditor, Breekon, and only incidentally against the sheriff, who was the instrumentality through which the judgment creditor was seeking to have his remedy enforced. The sheriff had no personal interest in the judgment, to satisfy which the levy upon and sale of appellant’s property was sought. He was merely the agency of the law upon which the defendant Breekon was forced to rely to collect his judgment. If the law were as contended by appellant, then in an injunction suit, in which the sheriff was made a party and wherein the sheriff failed to answer, the real party at interest, in this case the judgment creditor, would be precluded from asserting his rights or having them enforced by a court of competent jurisdiction, because of the omission to file an answer by the officer over whom he had no control. Such a construction of the law would be, in our opinion, illogical and unreasonable. The assignment is overruled.

In its second assignment appellant urges error to the action of the court in failing to sustain its general demurrer to defendant Breckon’s first amended answer, for the reason, as contended in its proposition under this assignment:

“When the answer fails to set forth any facts showing a defense to the cause of action, but merely states the conclusion of the pleader that the judgment w.as obtained for wrongfully levying upon and selling exempted property, without setting forth such facts as would show the exempt character of the property levied upon, a general demurrer should be sustained.”

And in its third assignment complaint is made of the failure of the court to sustain plaintiff’s special exception directed to paragraph 2 of defendant Breckon’s amended .answer, which reads as follows:

“That said judgment was obtained against J. M. Coker, the James McCord Company, and others for damages for unlawfully levying upon and selling exempt property.”

These two assignments will be discussed together, as also the fourth assignment, which complains of the failure of the trial court to sustain a special exception directed to paragraph 5 of defendant’s amended answer, which reads:

“That, if the said James McCord Company is permitted to offset their judgment against this defendant, W. M. Breekon, then the exemption statutes of the state of Texas would be held for naught, and would afford no protection, and would be of no avail.”

We do not think that the answer of the defendant is subject to a general demurrer. While it is not as full or as definite in stating the defenses relied on as it might properly be, yet such defense is sufficiently stated, we think, to advise plaintiff of the nature thereof. It is evident from such answer that the defense relied on is that the judgment obtained by the defendant Breekon in the county court of Gaines county was for the levy upon and sale of exempt property, and we believe that would be a good defense of, and a sufficient answer to, the plaintiff’s suit for an injunction and prayer that the judgment against the defendant Breekon be permitted to offset the judgment obtained by Breekon against it. The fact that the judgment obtained by the defendant Breekon against the plaintiff was for the unlawful levy upon and' sale of exempted property would have constituted a good defense in this action. If a creditor can be permitted to seize and sell under an execution the exempt property of his judgment debtor, and if upon a recovery by* such judgment debtor for such unlawful levy and sale the plaintiff in the original action can at the same time hold the proceeds derived from such sale of exempt property, and also plead his judgment against the judgment creditor as an offset against the judgment of the judgment creditor, then, indeed, our exemption laws would become ineffectual in fulfilling the purposes for which they were passed. In an action to recover damages for the wrongful levy upon, or attachment of, exempt property, defendant cannot set off the debt on which the attachment proceedings were based. Wilson v. Manning, 35 S. W. 1079; Craddock v. Goodwin, 54 Tex. 578; Stagg v. Piland, 31 Tex. Civ. App. 245, 71 S. W. 762; Moore v. Graham, 29 Tex. Civ. App. 235, 69 S. W. 200; Dutton v. Mason, 21 Tex. Civ. App. 389, 52 S. W. 651. If one who has unlawfully attempted to subject exempt property to the payment of his debt cannot successfully urge the right of offset in a suit against him by the owner of such exempt property, certainly he cannot do so in an effort to avoid an execution under the judgment obtained by such owner of exempt property. .

We do not think that the special exception, to the failure of the trial court to sustain which the third assignment is predicated, amounts to more than plaintiffs general demurrer. That it would have been admissible for defendant Breckon to have set out in his answer the judgment obtained in the county court of Gaines county we think may be conceded, and that he could have been required so to do, at least in substance, upon proper special exception, in order to avoid the force of said exception, we think also may be conceded, but we do hot believe that appellant’s special exception invoked the authority of the trial court as to this matter. For the reasons given, appellant’s second and third assignments are overruled, and likewise the fourth, which we do not think presents material error, if any.

To sustain the allegation by defendant Breckon in the present suit that the judgment rendered by the county court of Gaines county, the collection of which the James McCord Company by the present suit sought to enjoin, was for damages for “unlawfully levying upon and selling exempt property,” Breckon, over the objection of James McCord Company, appellant, introduced in evidence a certified copy of the judgment rendered in the justice court in favor of Breckon against the James McCord Company. The grounds of objection so urged by appellant were that the judgment of the justice court constitutes no part of the record of the same case in the county court, and was irrelevant, immaterial, and incompetent to show upon what facts the judgment in the county court was based. The case in which those two judgments were rendered originated in the justice court, and after trial in that court was carried to the county court by appeal. The judgment rendered in the justice court reads:

“In the Justice Court, Gaines County, Texas, Precinct No. 1, March 17, 1913. W. M. Breckon v. J. M. Coker et al. No. 112. On this day came on to be heard the above styled and numbered cause, and plaintiff appearing by attorney, and defendant J. M. Coker appearing for himself, and James McCord Company and sureties, having been duly cited, entered an appearance by written answer in this cause, the cause being submitted to the court to decide, the court, after having heard all the evidence and the law submitted in the cause, is of the opinion that the property, namely, the iron safe, is exempt property under the laws of the state of Texas, and that plaintiff, W. M. Breckon, should recover judgment against J. M. Coker et al., defendants in this cause, for the sum of $181 costs of suit, together with 6 per cent, interest from date of judgment.
“It is therefore ordered, adjudged, and decreed by the court that the property, viz., the iron safe, is exempt property, and that W. M. Breck-on, plaintiff, do have and recover against J. M. .Coker, sheriff, the sum of $181 costs of suit, together with 6 per cent, interest from date •of judgment; and it is further ordered adjudged and decreed by the court that J. M. Coker, sheriff, do have and recover over and against James McCord Company and their sureties, •codefendants, the sum of $181 costs of suit, together with 6 per cent, interest from date of judgment, for all of which let execution issue.”

The judgment rendered in the county court is as follows:

“In the County Court of Gaines County, Texas, August Term, 1913, Sept. 4, 1913. W. M. Breckon v. J. M. Coker et al. No. 36. This day came on the parties by attorneys, and thereupon came a jury of good and lawful men, who, being duly impaneled and sworn upon their oaths, do say that they find for the plaintiff, W. M. Breckon, and assess his damages at the sum of one hundred eighty-one ($181) dollars, and for all costs of suit. Judgment is accordingly rendered against all the defendants, viz., J. M. Coker, James McCord Company, a corporation of Et. Worth, Tex., U. M. Simon, W. F. Slay, and E. M. Schenecker, sureties on the indemnity bond, and J. J. Williams and John Haney, sureties on the appeal bond, for said above-mentioned sum, and all costs of suit.
“It appearing to the court from their written answer filed in this court, and their admission in open court, that J. M. Coker, in levying upon the safe of the plaintiff, was acting under instructions of the James McCord Company, a corporation, and that prior to said levy the said James McCord Company, together with U. M. Simon, W. F. Slay, and E. M. Schenecker, executed and delivered to said J. M. Coker an indemnity bond, binding themselves to save the said J. M. Coker harmless from any loss occasioned by said levy and the sale thereupon, and it further appearing to the court that the said James McCord Company, U. M. Simon, W. F. Slay, and E. M. Schenecker have prayed the court to render against them judgment for a like amount in favor of the said J. M. Coker, in case the plaintiff, W. M. Breckon, should prevail in this suit:
“It is therefore ordered by the court that the said J. M. Coker do have and recover of and from the James McCord Company, a corporation, as principal, and U. M. Simon, W. F. Slay, and E. M. Schenecker, as sureties, the sum of one hundred eighty-one ($181.00) dollars, with 6 per cent, interest thereon from the 17th day of March, A. D. 1913, and all costs of suit; for which let execution issue. And it is ordered that the sheriff or other officer executing said execution levy the same, first upon the property of the James McCord Company, as will in his opinion be sufficient to make the amount of judgment, otherwise to levy the same upon so much of the property of the said James McCord Company, principal, and U. M. Simon, W. F. Slay, and E. M. Schenecker, sureties, as will be sufficient, and the clerk directed to make a memorandum of this order upon the execution.”

Under our statutes pleadings botb in the justice court and in the county court upon appeal from the justice court may be oral or in writing, except in certain instances enumerated in article 2327, which are not pertinent to the present controversy.

By article 2302, Vernon’s Sayles’ Tex. Civ. Stat., it is made the duty of the justice of the peace to keep a civil docket in which he shall enter a record of suit filed in his court, which, among other things, shall contain “a brief statement of the nature of the plaintiff’s demand or claim, and the amount claimed and a brief statement of the nature of the defense made by the defendant, if any.”

Article 758, pertaining to trials in the county court of cases brought to that court by certiorari or appeal, provides that:

“When no pleadings have been filed in Justices’ courts, and none were ' necessary, the issues shall be made up under the direction of the court.”

And by article 759 it is provided that upon such a trial either party may, by written pleadings, set up any new matter which was not presented in the justice court, provided no new cause of action is set up by the plaintiff, nor any offset or counterclaim be set up by the defendant which was not pleaded in the justice court. The statute further provides that on appeal from the justice court to the county court the trial in the latter court shall be de novo.

By article 2396 of the statutes it is made the duty of the justice of the peace, upon appeal from a judgment in his court to the county court, to—

“make out a true and correct copy of all the entries made on his docket in the cause, and certify thereto officially, and transmit the same, together with a certified copy of the bill of cost taken from his fee book, and the original papers in the cause, to the clerk of the county court of his county.”

One of the purposes of that statute in requiring the judgment of the justice court to be shown in the transcript is to enable the county court to determine whether or not it has jurisdiction to try the case, as the appeal lies only from a final judgment in the justice court. Am. Soda Fountain Co. v. Mason, 55 Tex. Civ. App. 532, 119 S. W. 714; King Collie Co. v. Dunn, 146 S. W. 1007; Wells v. Driskell, 131 S. W. 87.

Another purpose of that requirement is to enable the county court upon the final disposition of the ease to tax the costs of the suit in accordance with the requirements of article 2046 of the statutes. At least a majority of us are unable to imagine any other purpose than those mentioned for that requirement.

The copy of the justice court judgment introduced in evidence in the present suit was certified to by the clerk of the county court of Gaines county as a true copy of that judgment appearing in the transcript from the justice court; but no proof was offered of any other matters contained in such transcript from the justice court. Furthermore, there is an entire absence from the statement of facts of any proof offered to show whether or not the pleadings of Breck-on or of the James McCord Company, either in the justice court or in the county court, were oral or in writing.

While the judgment of the justice court is properly a part of the record in the county court on appeal to that court, it cannot serve as a pleading for either of the parties in the latter court; nor can it be said to be a part of the record of the pleadings and judgment in the county court, any more so than the bill of costs shown in the transcript, and which was also a part of the record. If the pleadings of Breckon in the county court were in writing, then they furnish the best evidence of their contents, and secondary evidence of their contents would not be admissible to prove the same in any event, in the absence of any showing that such pleadings were lost or destroyed. 23 Cyc. 1302-1313; James v. James, 81 Tex. 380, 16 S. W. 1087, and authorities there cited. If proper proof had been made of Breckon’s pleadings in the county court, and such proof had shown two phases of such pleadings, to either of which the judgment rendered by the county court would be referable, then a predicate would have been established for the introduction of secondary evidence to show the issue really determined by the judgment. 2 Black on Judgments, § 624; Reast v. Donald, 84 Tex. 648, 19 S. W. 795.

It is also a well-settled rule that proof of an issue cannot be made by basing one inference upon another inference. Ft. Worth Belt Ry. Co. v. Helen Jones (Sup.) 166 S. W. 1130; G., C. & S. F. Ry. Co. v. Davis, 161 S. W. 932. And this rule applies to proof of a plea of res judicata. 2 Black on Judgments, § 612; 23 Cyc. 1297. Even though it could be said that the justice court judgment would come within the class of primary evidence of the issue determined by the county court, if admissible at all, still it was incompetent as such primary proof, since, in order to reach that conclusion, it would be necessary to infer: First, that such judgment was rendered upon a pleading by Breckon in that court that the damages were claimed against the James McCord Company for unlawfully levying upon and selling his exempt property; second, that that pleading was again presented in the county court; and, third, that it was submitted to the jury upon the trial in that court by the charge given, and that the verdict was returned upon that issue.

For the reasons indicated above, the majority of us are of the opinion that the court erred in admitting in evidence the justice court judgment, and that plaintiff’s fifth assignment of error addressed to that ruling should be sustained. And, as the justice court judgment was the only proof offered to sustain the allegation by Breckon in the present suit that the county court judgment was for damages for unlawfully levying upon and selling exempt property, it follows that appellant’s sixth assignment of error, presenting the contention that the judgment rendered in the present suit in Breckon’s favor upon the issue just noted was without competent evidence to support it, in the opinion of the majority, must also be sustained, and such judgment reversed, and the cause remanded for another trial.

Reversed and remanded.

       other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

      <§s=>For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes


author: McMEANS, J.

text:
    TEXAS & N. O. R. CO. v. HANCOCK.
    (No. 6955.)
    (Court of Civil Appeals of Texas. Galveston.
    May 28, 1915.)
    CARRIERS <&wkey;154^CARRIAGE 03? FREIGHT— Bill 03? Lading — Limitation of Liability.
    A bill of lading for an interstate shipment, which limits the liability of the carrier for loss to a stated value, is binding on the shipper, where there were two rates in force, and he paid the lower rate based on the carrier’s limited liability, and where he signed and accepted the bill of lading.
    [Ed. Note. — For other cases, see Carriers, Cent. Dig. §§ 641-645, 667; Dec. Dig. &wkey;
    Appeal from Liberty County Court; J. B. Simmons, Judge.
    Action by John Hancock against the Texas & New Orleans Railroad Company. From a judgment for plaintiff, defendant appeals.
    Reformed and affirmed.
    Baker, Botts, Parker & Garwood and Stevens & Stevens, all of Houston, for appellant. Mark M. Carter, of Dayton, for appellee.
   McMEANS, J.

John Hancock brought this suit in the justice court of Liberty county to recover from the Texas & New Orleans Railroad Company the sum of $162 as the value of a box of household goods and a box of tools alleged to have been lost by defendant in course of transportation; and, a judgment having been rendered in his favor for said amount, the defendant appealed to the county court, where, upon a trial before the court without a jury, a judgment was again rendered in plaintiff’s favor for the amount sued for, from which judgment the defendant has prosecuted an appeal to this court.

On June 27, 1913, the plaintiff delivered to the Nashville, Chattanooga & St. Louis Railway Company at Nashville, Tenn., a box of household goods and a box of tools, weighing 260 pounds, to be transported to Dayton, Tex. A bill of lading, evidencing the contract of shipment, and which was signed by both the plaintiff and the agent of said railway company, contained the following stipulation:

“The value of the shipment covered by this contract is fixed by the shipper at $10 per hundredweight, which is accepted by the carrier as the real and true value thereof, and the rate-of freight is charged in accordance therewith, and the carrier assumes liability only to the extent of such valuation and no further.”

It contained the further stipulation that the shipment was received “subject to the classifications and tariffs in effect on the date of issue of this original bill of lading.”

Plaintiff paid $3.98 as freight charges at the time of shipment; there being nothing said at the time concerning the real value of the shipment. The tariffs in force and on file and approved by the Interstate Commerce Commission at the time of this shipment provided a rate of $1.53 per hundredweight for household goods when they were shipped at a valuation of $10 per 100 pounds, and for a rate of $3.06 per 100 pounds when no valuation was fixed in the contract of shipment.

The evidence, we think, was sufficient to justify the trial court in finding that the shipment came into the possession of defendant, and that it was thereafter lost and never delivered to the plaintiff.

Defendant specially pleaded in the justice court and in the county court the stipulation limiting liability to $10 per hundredweight.

By its second assignment of error appellant contends that:

“The evidence having shown that the shipment of goods out of which this controversy arose was an interstate shipment from Nashville, Tenn., to Dayton, Tex., by railroad, and that the contract of shipment stipulated that the value of the shipment ordered by the contract, as fixed by the shipper, was $10 per hundredweight, which was accepted by the carrier as the real and true value thereof, and the rate of freight was charged in accordance therewith, and the carrier only assumed liability to the extent of such value, and no further, and the proof having shown that the shipment consisted of household goods weighing 260 pounds, and the proof having further shown that the schedule of the rate of freight under the rules of the Interstate Commerce Commission, as arranged for said railroads operating in that territory, covering said shipment, was $1.53 per hundredweight for household goods, where the same were valued at $10 per hundredweight, and said rate was fixed at $3.06 per hundredweight where no valuation was stipulated for said goods, and the proof having shown that the plaintiff paid $3.98 to the Nashville, Chattanooga & St. Louis Railway Company, with which he signed a written contract for the shipment of said goods, the court erred in rendering judgment for the plaintiff for a greater amount than $26, the same being the value of said goods of $10 per hundredweight, in accordance with the stipulations and agreement in said contract of shipment.”

By its proposition under the above assignment it urges that:

“A stipulation in the bill of lading governing and controlling an interstate shipment, and limiting the liability of the carrier for loss to a fixed and stated value, is valid, where there are alternative rates based on value.”

Upon the authority of the following eases the assignment must be sustained: Pac. Ex. Co. v. Ross, 154 S. W. 340; Railway Co. v. Hailey, 156 S. W. 1119; Pac. Ex. Co. v. Krower (Sup.) 163 S. W. 9; Adams Ex. Co. v. Croninger, 226 U. S. 491, 33 Sup. Ct. 148, 57 L. Ed. 314, 44 L. R. A. (N. S.) 257; Railway Co. v. Carl, 227 U. S. 639, 33 Sup. Ct. 391, 57 L. Ed. 683; Railway Co. v. Harriman, 227 U. S. 657, 33 Sup. Ct. 397, 57 L. Ed. 690; Railway Co. v. O’Connor, 232 U. S. 508, 34 Sup. Ct. 380, 58 L. Ed. 703; Railway v. Hooker, 233 U. S. 97, 34 Sup. Ct. 526, 58 L. Ed. 868; Railway v. Thompson, 55 Tex. Civ. App. 12, 118 S. W. 618.

In the case first cited it was held by this court, in an opinion by Justice Reese, that a stipulation in a shipping contract covering goods consigned from Detroit, Mich., to Houston, Tex., limiting the liability of the carrier to the sum of $50, was valid and binding. In the opinion it is stated:

“If the shipper impliedly or expressly agrees with the carrier, or represents to the carrier, that the property offered for transportation is of a certain value, for the purpose of getting the benefit of a lower rate, the carrier being ignorant of the true value, there is no principle of law nor rule of public policy that forbids that recovery, in case of loss by negligence, be limited to such value, if in fact less than the real value.”

And again, citing with approval from Adams Express Co. v. Croninger, 226 U. S. 491, 33 Sup. Ct. 148, 57 L. Ed. 314, 44 L. R. A. (N. S.) 257:

“That no inquiry was made as to the actual value is not vital to the fairness of the agreement in this ease. The receipt which was accepted showed that the charge made was based upon a valuation of $50, unless a greater value should be stated therein. The knowledge of the shipper that the rate was based upon that value is to be presumed from the terms of the bill of lading and of the published schedule filed with the Commission.”

Citing from Hart v. Penn. R. Co., 112 U. S. 331, 5 Sup. Ct. 151, 28 L. Ed. 717:

“It would be unjust and unreasonable, and would be repugnant to the soundest principles of fair dealing and of the freedom of contracting, and thus in conflict with public policy, if a shipper should be allowed to reap the benefit of the contract if there is no loss, and to repudiate it in case of loss.”

In the Hailey Case, the Court of Civil Appeals at Dallas held that a limitation of liability to the amount of $100 on a trunk, in an interstate shipment, was valid and binding, following the Croninger Case, after careful consideration.

The Supreme Court of this state has also passed upon the exact point involved in the above proposition; the opinion in the Krower Case deciding that a provision limiting the liability of the express company in the event of loss or damage to $50, unless a higher value was placed by the shipper, was valid in the case of an interstate shipment.

The Croninger Case points out the sound reason for allowing a carrier, under certain conditions, to limit its liability as an insurer:

“The inherent right to receive a compensation commensurate with the risk involved, the right to protect himself from fraud and imposition by reasonable rules and regulations, and the right to agree upon a rate proportionate to the value of the property .transported. It has therefore become an established rule of the common law, as declared by this court, in many cases, that such a carrier may, by a fair, open, just, and reasonable agreement, limit the ¡ amount recoverable by a shipper in case of loss or damage to an agreed value made for the purpose of obtaining the lower of two or more rates or charges proportioned to the amount of the risk. * * * That such a carrier might fix his charges somewhat in proportion to the value of the property is quite as reasonable and just as a rate measured by the character of the shipment. The principle is that the charge should bear some reasonable relation to the responsibility, and that the care to be exercised shall be in some degree measured by the bulk, weight, character, and value of the property carried. Neither is it conformable to plain principles of justice that a shipper may underestimate the value of his property for the purpose of reducing the rate, and then recover a larger value in case of loss. Nor does a limitation based upon an agreed value for the purpose of adjusting the rate conflict with any sound principle of public policy.”

The facts in the Carl Case were very similar in all essential particulars to the facts of this case. An interstate shipment of household goods was made, being released to a valuation of $5 per 100 pounds. There was in existence two valid rates at the time of the shipment, and the released valuation took the lower rate. The shipper did not know of the existence of two rates, did not read the release bill of lading, and was allowed to testify that if he had known of the difference between the two rates, and the effect of accepting the lower, he would have paid the higher rate. The United States Supreme Court held:

“The valuation declared or agreed upon as evidenced by the contract of shipment upon which the published tariff rate is applied must be conclusive in an action to recover for loss or damage a greater sum. * * * To permit such a declared valuation to be overthrown by evidence aliunde the contract, for the purpose of enabling the shipper to obtain a recovery in a suit for loss or damage in excess of the maximum valuation thus fixed, would both encourage and reward undervaluations and bring about preferences and discriminations forbidden by the law. Such a result would neither be just nor conducive to sound morals or wise policies.. The valuation the shipper declares determines the legal rate, where there are two rates based upon valuation. He must take notice of the rate applicable, and actual want of knowledge is no excuse. The rate, when made out and filed, is notice, and its effect is not lost, although it is not actually posted in the station.”

The Hooker Case is an extreme application of the foregoing principles; it being held that, where the tariffs contained provisions limiting the liability of the carrier for the loss of baggage, the passenger was bound by such limitation, although she was not actually aware of such limitation, or in any other way than by the fact that it was contained in the carrier’s tariffs.

The facts in this case are such as to bring it fairly within the principles above enunciated. There was in existence two rates under which the shipment in question could have moved; the lower rate being based on a valuation of $10 per 100 pounds, and the higher rate twice as much, being based on no valuation. The bill of lading signed and accepted by the shipper set forth clearly that the liability of the carrier was limited to $10 per 100 pounds, and the rates charged and paid were fixed on that basis. We think, therefore, that the plaintiff was entitled to a recovery of $26, and no more, and that the court erred in rendering judgment in his favor for any greater amount.

The judgment is reformed so as to permit a recovery in plaintiff’s favor for $26, and, as reformed, it is affirmed.

Reformed and affirmed.
      ©ns>For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes


text:
    LUTCHER & MOORE LUMBER CO. v. SMITH et al.
    (No. 6853.)

    (Court of Civil Appeals of Texas. Galveston.
    May 4, 1915.)
    Master and Servant <&wkey;170 — Fellow Servants — Competency — Master’s Dtjty and Liability.
    Where a master’s foreman or vice principal employed as plaintiff’s fellow servant a winch-man incompetent for that position, as known to the foreman, and plaintiff, in the course of loading lumber on a vessel, was injured as a result of the winchman’s negligence while himself in the exercise of due care, the master was liable, since a master owes to a servant the duty of exercising ordinary care to employ reasonably competent fellow servants, which duty is nondelegable.
    [Ed. Note. — For other cases, see Master and Servant, Cent. Dig. § 830; Dec. Dig. &wkey;> 170.]
    Appeal from District Court, Orange County; A. E. Davis, Judge.
    Action by Lee Smith and another against the Lutcher & Moore Lumber Company. Judgment for plaintiffs, and defendant appeals.
    Affirmed.
    Holland & Holland, of Orange, for appellant. Jas. A. Harrison, of Beaumont, and Bisland, Adams & Bruce, of Orange, for ap-pellees.

       Rehearing denied June 10, 1915.

   McMEANS, J.

Lee Smith, claiming to have received personal injuries, while a minor, through the negligence of the Lutcher & Moore Lumber Company, a corporation, while in the service of the corporation, brought this suit to recover damages therefor. His father, John F. Smith, also brought suit against the corporation for the loss of the services of his son during his minority, on account of said injuries. These suits were consolidated in the court below, and on a trial before a jury a verdict and judgment was rendered for each of the plaintiffs, that in favor of Lee Smith being for $5,355, .and that in favor of John F. Smith being for $416. Ftom this judgment the defendant has appealed.

The Lutcher & Moore Lumber Company was engaged in the manufacture and sale of lumber, and had many persons in its employment. On February 22, 1910, for the purpose of getting its lumber to market, it chartered the steamship Nicarauga for three consecutive voyages, it being understood that the contract might be fulfilled by the substitution of any first-class steamer. in place of the Nicarauga. It was further agreed and contracted that the Lutcher & Moore Lumber Company should have the cargo in readiness upon the arrival in port of the steamship and should load the same at the rate of 100,000 feet per day, or as fast as the steamer could take the lumber at Orange (where the lumber company’s plant was located), for that portion of the cargo to be loaded there, for which the steamship would pay to the lumber company, for loading, 70 cents per thousand superficial feet. The lumber company agreed to furnish a full cargo of 350,000 feet for each trip, of which about 200,000 feet was to be taken on at Orange, and the balance to be barged by the lumber company to Sabine, and there delivered alongside the vessel when she was ready to take same on. On October 18, 1910, the steamship Nicarauga being otherwise engaged, the steamship Disa was substituted for it, and was docked at Orange to be loaded in part by the lumber company under the agreement; and, there being no regular stevedore at Orange, the lumber company directed one of its employés, Joe Goodyear, who had had some experience in loading ships, to take charge of the loading and to obtain for that purpose such hands as might be necessary, and conferred upon him the authority to employ and discharge such hands, to assign them their respective duties, and direct them in the performance thereof. Among the other hands employed by Goodyear was the plaintiff Lee Smith, who was then a minor, but who attained his majority before the suit was tried. He was employed by Goodyear without the consent of his father, John F. Smith.

The manner of loading the steamer was this: The lumber was run alongside the ship on a tram or dollyway, and a chain or sling would be placed around three or four pieces at a time, and then hoisted by means of a wire cable suspended from the end of the arm of the derrick crane on the ship, and then the crane was swung around until the lumber came over an open hatch, and it was then lowered into the hold, where it would be properly placed and stacked by employés wdrking below. The wire cable was controlled by a winch operated by steam, located on the deck of the ship, and the winch was tended by an employé, known as the “winchman” who, by proper manipulation of the machinery applied the steam and directed the movement of the derrick or crane. The tram or dollyway was higher than the deck of the ship, and when the lumber was hoisted by the cable, its progress toward the hatchway was immediate and rapid. The duty assigned to Lee Smith was placing the chain or sling around the lumber to be hoisted. These duties were to be performed entirely on the shore, and at no time required his presence on the ship. However, the lumber company had placed drinking water on the ship for all of its employés engaged in the loading, and Lee Smith and others had free access thereto, and would go upon the ship for water whenever they so desired. Sometimes in the course of loading, lumber would be loaded through the hatchway faster than those' working in the hold could move it out of the way and stack it, and on such occasions further operation of the cable and crane would be suspended until the hatchway could be cleared. On one of these occasions Lee .Smith, taking advantage of the lull, went on the ship for a drink of water, passing by the open hatch in going to where the water was kept and, after getting a drink, started to return the way he had come, and when he was near the hatchway he heard some one call out from below to know the time of day, whereupon he stepped to. the side of the hatchway and informed the inquirer that it was three minutes to 12. To do this he placed himself directly in the path that the lumber would follow in passing from the tram to the hatchway. The foreman, Goodyear, was standing at the hatchway at the time Lee Smith approached it to answer the question of the man below, and Smith, as he walked up, laid his hand on Goodyear’s arm, and just as he answered the inquiry the winchman, although seeing the position occupied by Smith and Goodyear, suddenly applied the steam to the winch, which immediately hoisted the sling load of lumber attached to the cable, causing it to swing with great rapidity to the hatchway, striking Smith before he could get out of its way, knocking him through the hatchway into the hold, and inflicting damages to his person to the extent and in the amount found by the verdict of the jury. Smith was not expecting the sling load to be raised at the time it was, for the reason that the hatchway was blocked with lumber already lowered through it, nor was he warned of this movement in time to remove himself to a place of safety before being struck.

The proper operation of a winch requires both skill and experience. On the morning Smith was injured Goodyear had employed one Antone Dyson to operate the winch in question. Dyson had never before operated a winch, and was unskilled and inexperienced in such work, and this was known to Goodyear at! the time he employed him. Some of the employés, other than Smith, protested to Goodyear about giving Dyson this employment, telling him that Dyson was green and inexperienced and was likely to hurt somebody, notwithstanding which Goodyear continued him in the work and refused to remove him.

Among other acts of negligence alleged by plaintiff in his petition as a basis for a recovery, it is substantially charged that it was through the negligence of Dyson in operating the winch that plaintiff was injured, that Dyson was incompetent and his ineompetency known to defendant, and that defendant was negligent in employing him, and that such negligence was the proximate cause of the plaintiff’s injury.

The court submitted the ease to the jury upon special issues, there being 34 special issues submitted, notwithstanding which we still think the judgment should be affirmed. The jury in answer to certain of these issues found, in substance, that Goodyear was the vice principal of the defendant; that he employed Dyson as a winchman; that Dyson was incompetent for that position, and that this was known to Goodyear; that plaintiff was injured as the result of Dyson’s negligence ; and that he ■ himself was free from negligence contributing to his injury. All these findings were warranted by the evidence. It is too well settled to require citation of authority that the master owes to the servant the duty of exercising ordinary.care to employ reasonably competent fellow servants, and that this duty is nondelegable; and that when the master fails in this duty,, and as a result thereof the servant without fault on his part, is injured by the negligence of the incompetent fellow servant, the master-is liable.

Appellant has presented in his brief 45 assignments of error, many of which assail the form in which the special issues were submitted by the court, and many others are based upon the refusal of the court to submit the issues in the form requested by it. Many of the objections to the charge are hypercritical, and a great many of them contain objections to the submission of issues that were wholly immaterial. We have carefully examined all of them, however, and are-of the opinion that reversible error is pointed out in none of them. The case as made by the plaintiffs’ pleadings referred to is supported by the material facts proved, and the verdict is not questioned as being excessive-either as to the amount awarded to Lee-Smith or his father.

The judgment of the court below is affirmed.

Affirmed.
      other oases see same topic and KEY-NUMBER, in all Key-Numbered Digests and Indexes