66 S.W.2d 746 | Tex. App. | 1933
A short statement of the facts out of which this suit arose will aid in a ready understanding of the issues presented in this appeal. The Security Union Insurance Company, a Texas corporation, hereinafter called Security Union, issued its policy to the Burlington Basket Company, insuring it against loss by fire on certain property situated in the state of Iowa in the sum of $10,000. The Security Union had at that time a contract with the Inter-Ocean Reinsurance Company, an Iowa corporation, hereinafter called Inter-Ocean, for excess reinsurance on all such risks for all amounts over $2,500 and not exceeding $10,000. The Security Union reported the issuance of its policy to the Burlington Basket Company to the Inter-Ocean in the manner required in the contract between them, and the latter company then became an excess reinsurer of said risk to the amount of $7,500. The insured property was destroyed by fire. The Security Union failed or refused to pay the loss. The Burlington Basket Company thereupon instituted suit against it in the district court of Harris county, and on July 31, 1931, recovered a judgment against it in the sum of $10,366.48, which judgment at the time of trial remained unpaid. On the same date, appellant, Wright Morrow, was by order of the district court of Travis county appointed receiver of the Security Union, and such receivership was still pending at the time of trial. The Burlington Basket Company then filed its judgment with said receiver, and asserted in connection therewith a right to preference in payment out of any sum or sums paid by the reinsurer, Inter-Ocean, on its said contract. Such claim was allowed by the receiver, but preference in the payment thereof was denied. The Burlington Basket Company, hereinafter called appellee, then instituted this suit against the Inter-Ocean and Wright Morrow, hereinafter called appellant, as receiver, to recover judgment against the Inter-Ocean for the full amount of reinsurance carried by it in the sum of $7,500 as aforesaid, and against appellant as receiver denying him any interest therein. Appellant filed an answer denying the right of appellee to recover and a cross-action in which he sought as receiver to recover said sum of the Inter-Ocean. The Inter-Ocean filed an answer in which it on various grounds resisted a recovery against it by either appellant or appellee. Subsequently an agreement was reached between all parties to the suit that the Inter-Ocean should pay into court the sum of $5,500 in full of all claims against it by either appellant or appellee, and that an interlocutory judgment should be entered discharging it from further liability to either of them, and that such judgment of discharge should be incorporated in the final judgment entered in the cause. Such deposit having been made, the controversy between appellant and appellee as to which was entitled thereto was thereafter submitted to the court, and judgment rendered in favor of appellee therefor, denying appellant any right to or interest therein. Said judgment further provided that the amount so recovered should be applied as a credit on the judgment theretofore recovered by appellee against the Security Union.
"This excess reinsurance agreement is made by and between the Inter-Ocean Reinsurance Company of Cedar Rapids, Iowa, hereinafter called the Inter-Ocean, and the Security Union Insurance Company of Houston, Texas, hereinafter called the Security, witnesseth:
"Whereas, the Security issues policies of insurance against fire, tornado and lightning loss * * * in the United States of America, principally in the state of Texas, and desires to cede the excess liability over its net retention on all risks (not to exceed the limit hereinafter provided) to the Inter-Ocean, and the Inter-Ocean desires to accept the excess liability on each risk as hereinafter provided, deducting from any loss the amounts recovered under special reinsurance, if any, and salvages and rebates, subject to the terms and conditions hereinafter contained, it is hereby agreed by and between the Security and the Inter-Ocean as follows:
"The Security shall retain as its own net retention $2,500.00 on each risk and shall cede the excess on each risk to the Inter-Ocean to the extent not to exceed $10,000.00. * * *
"The net premium due the Inter-Ocean shall be forty per cent of the Security's premium on that portion of each risk reinsured hereunder.
"Wherever the Security writs a line which exceeds its own net retention plus the reinsurance capacity allowed herein, it agrees to purchase elsewhere pro rata reinsurance to the extent that its gross lines exceed the amount of its net retention of the reinsurance allowed herein.
"The Inter-Ocean is not liable for any loss or damage unless the Security has paid or become liable for a net amount (less pro rata reinsurance liability) at a specific location, reported hereunder, in excess of the net retention herein provided, and in no event to exceed the excess loss as provided in the class to which the location or cession applies.
"This reinsurance is excess and not pro rata insurance. * * * The Inter-Ocean shall have the right to participate in the adjustment of losses hereunder if they so elect. The Inter-Ocean shall pay its proportionate share of the adjustment and/or legal expense in event of a claim arising hereunder."
Various other provisions collateral to those quoted were contained in said contract, including an express provision for arbitration of all disputes between the parties thereto. The cession of liability by the Security and the acceptance thereof by the Inter-Ocean was consummated by the act of the former in filling out an instrument called an "excess reinsurance report" and forwarding it to the latter, and it was expressly provided that the Inter-Ocean should be liable for any reinsurance so reported notwithstanding delay or loss of such instrument in transmission.
Appellant contends and appellee concedes that an ordinary reinsurance contract operates only between the original insurer and the reinsurer, and that the original insured who owned the property cannot maintain an action thereon for the loss of such property. See Southwestern Surety Ins. Co. v. Stein Double Cushion Tire Co. (Tex.Civ.App.)
We have examined all the cases cited by the respective parties hereto in which the terms of a reinsurance contract were held to constitute such an assumption of the obligation of the reinsured to the original insured or policyholder as to authorize an action by him thereon. In Southwestern Surety Insurance *749
Company v. Anderson,
Appellee contends that, as between it and appellant, it is entitled to the $5,500 reinsurance money in the registry of the court on equitable grounds. The general rule is that, even after a loss under the original policy, the person originally insured has no equitable lien or preferable claim upon the proceeds of the reinsurance. 33 C.J. p. 58; Bradley
Co. v. Brown,
The trial court erred in awarding the reinsurance money in the registry of the court to appellee, for which error the judgment is reversed. The facts seem to have been fully developed at the trial. Judgment will therefore be here rendered awarding such reinsurance money to appellant as a general asset of the Security Union.