135 S.W. 1165 | Tex. | 1911
On January 29, 1908, J.M. Dorroh and his son, J.M. Dorroh, Jr., were owners of a stock of merchandise situated at Big Sandy, Texas, and were negotiating with T.J. Kelly to sell to him a half interest in the said stock of goods. For the purpose of ascertaining the value of the stock, as a basis for the transaction, the parties took a partial inventory of the said stock of goods. With reference to this inventory Kelly testified substantially as follows: "The interest that I was buying was in the stock of goods at Big Sandy and also at Pritchett. I was to get a one-half interest. We made the trade on the basis that there was a $20,000 stock on hand; but invoicing the stock in the building at Big Sandy, we got up to $18,638 and some odd cents — that is to say we inventoried that much goods including the furniture and fixtures, and at the time we left uninventoried about $2000 approximately of goods. I swore on a preliminary examination that we left uninventoried $3000 or $4000 and there was probably that much uninventoried. Of the amount inventoried there was $1050 furniture and fixtures. Taking that from $18,638 leaves the actual amount of stock that we inventoried as a basis of the trade as $17,588.01. This item was entered on the stock account. When we reached that point I told them that the stock was going to be of greater value than I anticipated — that I had only $6,178.50 to put into the business and there was no use going further with it. After some conference with the elder Dorroh and the junior Dorroh, it was agreed that we should stop taking the inventory and they would sell me one-half interest in the business for the sum of $6,187.50. This sale included all the stock of goods at Big Sandy, including furniture and fixtures and some $1,900 worth of stock at Pritchett, but the Pritchett goods were not included in this inventory."
After this inventory had been completed Kelly purchased a one-half interest in the stock and the parties formed a corporation under the name of the Dorroh-Kelly Mercantile Company.
On February 7, 1908, the Orient Insurance Company issued to the Dorroh-Kelly Mercantile Company one of the policies sued upon, being No. 149,998, wherein it insured the said stock of goods to the said Mercantile Company against loss by fire for one year in the sum of $1,000.00, and, on April 1, 1908, the said Insurance Company issued to the Mercantile Company another policy on the same stock of goods, which policy is No. 330,456, whereby it insured the said stock of goods against fire in favor of the said Mercantile Company for one year in the sum of $2,300.00.
On January 9, 1909, the stock of merchandise, then valued at $22,000.00, and at the time insured for $16,000.00, was destroyed by fire, except a portion of the stock which was valued at the sum of $2,000.00. The Insurance Company denied liability upon the ground that no inventory of the goods had been taken in compliance with the terms of the contract.
At the trial the Insurance Company requested the court to give a *201 peremptory instruction to the jury to find for the defendant, which was refused, and under the charge as given a verdict was returned by the jury in favor of the plaintiff for the sum of the two policies with interest and a judgment was accordingly entered. Upon appeal to the Court of Civil Appeals of the Sixth District the judgment of the trial court was reversed and judgment was rendered in favor of the Insurance Company.
Each of the policies here sued upon contained practically the following provision:
"The following covenant is hereby made a part of this policy, and a warranty on the part of the assured:
"Section 1. The assured will take a complete itemized inventory of stock on hand at least once in each calendar year, and unless such inventory has been taken within twelve calendar months prior to the date of this policy, and is on hand at the date of this policy, one shall be taken complete in detail within thirty days after the date of this policy, or this entire policy shall be null and void from such date."
There is no conflict in the evidence with regard to the character of the inventory made nor the time at which it was made. It is uncontroverted that there was not a complete inventory of the stock taken at the time the sale was made by Dorroh Son to Kelly. No inventory was made subsequent to that time and no complete inventory had been made of the stock of goods within one year prior to the issuance of either of the above stated policies. The only question in this case is, can the plaintiff be allowed to recover upon either of these policies under the state of facts herein given? Chief Justice Wilson of the Court of Civil Appeals filed an opinion in this case in which he discussed all of the issues presented by the parties at considerable length and with ability and clearness. We will not enter into the examination or discussion of any question raised in the case except the one presented by the Insurance Company to the effect that the Mercantile Company, having failed to make such inventory, as the contract of insurance provided for, the policies were void and no recovery can be had.
The sole question in this case is, does the invoice taken by the plaintiffs in error before the issuance of the policy comply with the terms of the contract as specified in the above copied section of said policy. In determining this question we must apply the same rules of construction that would control in the interpretation of other contracts. The contract, having been prepared by the Insurance Company to express the terms of its own undertaking, must be construed most favorably to the assured, and a substantial compliance with such terms will satisfy the obligation. We come then to the question, does the inventory which was made by the plaintiffs in error before the taking out of the policy substantially comply with these terms of the policy: "The assured will take a complete itemized inventory of stock on hand at least once in each calendar year," etc. The invoice must contain a complete itemized statement of the stock on hand in order to meet the requirements of the covenant, and if it does not substantially do so, then the plaintiffs in error can have no right of action thereon. *202
In Western Assurance Co. v. Kemendo,
It being true that no inventory complying with the requirements of the policy had been taken within a year prior to its issuance and the insured having failed to take an inventory in compliance with those terms within thirty days from the time the policy was issued, the law is, that the terms of the contract must prevail and the policy was forfeited.
The judgment of the Court of Civil Appeals is affirmed.
Affirmed.