*1 Staples, Tex.Civ.App., 173 S.W. Texjur. 47.” § reversed
Judgmеnt court is of the trial in favor of judgment rendered here inter- for the sum $550.59 rate of six January at the
est from sum of per the further
per cent annum and attorney’s fees.
$75 COMPANY, Inc.,
ORKIN EXTERMINATING Appellant,
v. AND
MASSACHUSETTS IN BONDING al., Appellees. SURANCE COMPANY et
No. 14673. Appeals
Court of Civil of Texas.
Houston.
Dec. 1965. Rehearing
On Motions for Feb. 1966. Rehearing
Second Motion for Denied March 1966. *2 Defense, Settlement, Supplemen-
II. Payments. tary respects insur- As ance the other terms of this afforded n shall: (a) against the insured defend *3 sickness, injury, disease alleging such seeking damages on or destruction and thereof, if such suit account even fraudulent; groundless, but the false or company may investigation, such make any claim negotiation and settlement of expedient; or suit as it deems (c) pay expenses all incurred company, against all taxed costs any all interest insured in such suit entry until judgment after accruing or сompany paid, tendered has deposited part of such Butler, Houston, Singleton, Robert H. limit judgment as not exceed the does Binion, Rice, Houston, Knapp, &Cook thereon; liability company’s of the counsel, appellant. for Houston, Kempers, Richard- D. John (e) rea- reimburse the insured for all son, Houston, counsel, appellee. expenses, sonable than loss of other company’s earnings, incurred at Cruse, Newton Sam W. Gresham and request. Houston, amicus rehearing on motion for curiae. this in- The amounts incurred under except settlements of
suring agreement, suits, payable COLEMAN, claims аnd are Justice. applicable company in addition to appellant By seeks recover policy. liability limit of of this by appel- paid amounts n n n n n n previously se- satisfy judgment a lant to ac- Mills. Accident. When an by Gulf Coast Rice 9. Notice of cured compre- notice shall on a cident occurs written The cause of action based insured policy. given by Both or on behalf of liability insurance hensive summary judg- company of its-authorized parties filed motions admissions, practicable. Such agents pleadings, as soon ment based on the suffi- particulars before the court. noticе shall contain depositions and affidavits identify insured and also appellees’ motion cient sustained The trial court re- reasonably information judgment take obtainable and entered time, circum- place and specting the nothing. accident, names and stances of the forming occurrence At the time of the and of avail- insured addresses appellant to liability of basis able witnesses. Mills, appellant carried Gulf Coast Rice Suit. If claim of Claim or comprehensive 10. Notice with a brought against the made or suit is policy, pertinent provisions of which surance immediately insured, insurеd shall read: insurance, policy of By the terms demand, every company forward money deposited certain sums notice, process re- other summons or a stand- company as the insurance with representative. or his ceived him “retrospective subject premium, ard Cooperation D,” prescribed 11. in detail Assistance Rating Plan cooperate computing Insured. The insured shall the method to be followed and, upon the com- re- premiums. the final hearings pany’s request, retrospective premi- compute shall attend quired to effecting and shall trials assist as of upon um incurrеd losses valued based settlements, giving evi- securing and after the termination date six months dence, obtaining pre- the attendance of wit- constitutes the final This nesses and in the conduct of suits. The If closed. mium if all claims have been not, except insured at own pending, shall his review claims are then a further *4 annually cost, voluntarily any payment, required make after the first review. any any obligation assume or incur ex- retrospective premium is defined pense other than such immediate premium, for be the of the basic ex- sum surgical medical and relief to others premium, losses and the modified cess imрerative as shall be at the time of applicable multi- multiplied state tax accident. plier; each of the terms with concerned premiums “Incurred Losses” is defined. This of insurance was issued as losses, in- (1) is defined as the sum all January August, 1955, appel- 1955. In actually paid, cluding medical reserves (2) employees, attempt unpaid lant’s in an to eradicate for losses determined the com- expenses. pany, (3) allocated loss pests which causing damage were “in- provision that There is also a further milled rice owned Gulf Coast Rice Mills amounts, curred lossess” do not include warehouse, stored in its dust con- blew expense, in ex- exclusive of allocated loss taining lindane into warehouse. This $10,000.00 cess of accident for one dust settled on and around the sacks con- property damage liability. “Modified taining the rice and small of the amounts multi- Losses” means “incurred losses” lindane through sifted the sacks onto the plied by a loss conversion factor set out rice. Soon agent thereafter an of the U. S. policy. retrospective After Food and Drug inspected Administration premium determined, is ei- the insured premises shipment barred of the part premium ther refunded of the standard ricе in interstate and foreign commerce. period Over a previously required of months he deposited, discussions were or by agents Company of the Rice with pay premium depending an additional on agents local, and federal state experience. his loss concerned, officials culminating in a de- cision to re-mill Thereafter, ap- the rice. Appellee computation first made its pellant presented was with a statement of restrospective premium during August the loss mill, sustained the rice September, September and on reported appellant to the home оffice of credited substantial May 24, on 28, 1956, 1956. On notice June premium. this making return of In damages claim for given was first up putation $1,000.00 set a reserve of representatives company. of the insurance loss. for the Rice Mill as an incurred claim Appellee’s adjuster immediately result the return credit was As a determined employees from appel- $1,000.00 than been had less it would have lant when and how damage the claimed Mill up no on the Rice reserve been set occurred and the amount of the claim and paid by ap- In claim. effect the sent this information to the Insurance Company. pеllant by the sum at this time was increased receipt $1,000.00 paid of statement up was on October because of the reserve set 31, 1958. claim. Correspondence adjuster between the September 20, On Superintend- Superintendent of Claims reflects that ent of Claims for the Insurance Company the adjuster inquired position as to the wrote a letter with reference to which the company intended to take rela- this claim requesting bag a label from a tive to liability on the claim in view the copies lindane and of literature available late notice ques- received and also raisеd a appellant concerning use of lindane. tion as to whether the incident from which In this letter these statements are found: the claim arose constituted an “accident” “We feel we very dangerous have a situ- as contemplated by the insurance ation our hands in so far as this claim During adjuster concerned, appreciate your and we will agents terviewed of the Rice Mill and had co-operation and combatting assistance in conferences with attorney representing allegations of these claimants. it from whom he received an might be settled for 50% your “For sending information we are itemized damage. you a copy signed statement se- March, In adjuster your representative, cured wrote D. Joe letter Superintendent Preston, Claims, may help you order that it *5 appeared implied which to determine what criticism the information will we cooperation which he had need to-defend this claim.” received from appellant. In reply he received a letter Appellant, reply letter, in to this sent the in which this appeared: statement “We requested information together letter with a have no reason to criticize our assured for 23, 1956, dated appeared October in which failure cooperate to us in handling this “I apologize statement: wish to for the any past claim in the and we do not feel delay answering your letter and trust they should be criticized in- now this that the information contained herein will stance.” you particular be useful to in defending this continued into the sum- claim.” 1957, mer 25, On 1957. Gulf Coast June 1956, 1957, August, January, Between and Rice against appellant Mills filed suit and adjuster thorough investigation made a 6,1957. citation was served July July on On periodic the claim and 22, 1957, made status adjuster brought proposed reports Superintendent of Claims. agreement appellant’s “Non-Waiver” to January again January On and on Houston office and stated that unless of insurance was renewed. signed appellee was would be unable to file an answer in the .suit on behalf of January, In computation the second appellant. manager The Houston secured retrospective premium was made and authority by telephone signed agree- the reserve for the Rice Mill claim was presented. ment as agreement This reads: $10,000.00. creased computation This hereby agreed by “It is and between the analysis was reflected in the claim received Bоnding Massachusetts and Insurance Com- by appellant By July on this 1957. pany Exterminating and the Orkin Com- analysis appellee that the “Modi- determined pany, Inc. that no action heretofore or arising fied Losses” from the claim as com- hereafter taken Bond- Massachusetts puted premium plan under the result would ing Company and Insurance be shall con- $11,- premiums in an increase in of about right, any, if strued as a waiver of the 856.00, the maximum which could be Bonding Massachusetts Insurance charged plan protection under the for full liability Company deny the Orkin against the claim. The net due Company, Exterminating delayed Appellee Inc. under a relies on this occurrence. insurance which is claimed Orkin notice a defense its on as Exterminating Company, policy. Appellee Inc. to cover further denies claims asserted or which hereafter be may accident as occurrence constituted an asserted R. L. policy. Williams and M. term is used in the J. Chumney, doing partnership business as a appellee under- undisputed that after It is under the name of Rice Mills Gulf Coast as claim, investigation of took the either the bases brought of the suit in its de- fully after informed Orkin’s it was 488,534 name as Plaintiff in Cause No. notice, charged and collected layed appellee Company, Orkin Exterminating Inc. premium for the various as Defendant therein in the District Court policies appellant carried County, Texas, of Harris or otherwise. $1,000.00 it, more premium was with which appellee been had not than it would have “It agreed is also the execution $1,000.00 incurred up a as an set reserve of agreement of this Exterminating Orkin this reserve this claim. Thereafter Company, thereby Inc. does not waive $10,000.00,which, by rea- was increased to rights policy.” under the said retrospective rating plan, re- son of the Prior to this time indi- again increasing sulted cаted to that it considering showing such charged appellant. The audit denying liability by reason of late notice or reserve, invoice together increased with an denying coverage under the terms of reflecting premium, was sent the increased previous sug- There had been no appellant. were taken These actions gestion that a agreement non-waiver appellant was advised that before required. rely intended to on its defenses denied, as coverage was well before There testimony Orkin that because pre- before the non-waiver *6 believed that Company the Insurance was appellant. sented to Part of this investigating the claim and would defend paid by appellee deposits was from behalf, on prior 22, 1957, its July to Orkin paid time after and the balance was in due it, had lawyers represent retained no to executed. agreements the non-waiver were independent had made investigation no matter; of the that it on insur- relied the asserts, Appellant pled, and here ance to defend its interests and defenses, policy appellee that waived its has prepared was not to defend the when them, by this estopped and is to assert the agreement presented. non-waiver exception the course of With conduct. testimony There was also that Orkin made coverage, fact question policy of attempt no to settle claim the because these clearly raised as to each of issues are the being by matter was handled the Bendy, questions. Falls Ins. Co. v. Glens company. surance testimony There is also Ins. Tex.Com.App., 58 S.W.2d Carolina the insurance gave never Christopher, Tex.Com.App., 130 Tex. Co. v. adjuster authority to claim settle the 245, Amer 138, opin. adopted; 106 S.W.2d and that he entered into no settlement Wiggins, Tex. ican National Ins. Co. v. negotiations. Civ.App., Trinity Universal 4 S.W.2d Martini, Tex.Civ.App., 118 Ins. Co. De v. undisputed It that notice was first 901, S.W.2d error ref. given 28, 1956, of June Lawson, the fact that applied lindane Ins. Co. v. In Southland Life 953, dust to belonging 399, the warehouse Gulf 136 A.L.R. 153 137 Tex. S.W.2d 1955, Coast Rice August, 1212, quoted approval Mills in from Court that a claim damages Supreme being opinion as- Court of by serted the Rice byMills in Mutual Ins. Co. reason of this United States Globe 26 Wolff,
New York v. 95 24 increased charging accepting U.S. L.Ed. be premiums as follows: is not action as would agreement affected non-waiver since “ waiver, as asserted ‘The doctrine only indirectly related to such actions arе companies against insurance to avoid de- and the contained strict enforcement of conditions suit, fense of the and are not such actions policies, only in name for their another reasonably con- as would within estoppel. only be It can the doctrine templation parties. compa- invoked where the conduct of nies such as to induce action has been are agreements strict Non-waiver op- upon it, and it would reliance where ly against construed the insurer and liberal they upon assured if erate as a fraud Highway Ins. ly in favor the insured. their were afterwards allowed to disavow Griffith, Tex.Civ.App., v. Underwriters ” the conditions.’ conduct and enforce ref., n. r. e. The S.W.2d no the insurer con action We are of not stitute a waiver will be construed testimony estab heretofore summarized up setting bar the insured the actions lishes, testimony absence invoking the insurer as a basis estoppel. contrary, the elements of estoppel. doctrine of settled, however, cov It is well party as A will be allowed to erage an cannot under positions sume the inconsistent of affirm be created reason of or broadened part by accepting or ing a contract contractually as estoppel beyond risk benefits, disaffirming claiming its sumed under the terms of the Great its part avoiding burdens. repudiating Mitchell, American Ins. v. Reserve Co. Goesl, 490, 341 Daniel 161 Tex. S.W.2d v. ref.; Tex.Civ.App., 335 error S.W.2d 892. Craddock, Washington Ins. National Co. v. 109 S.W.2d 113 A.L.R. Tex. agree At the non-waiver the time 854; White v. Great Reserve American ment had debited was executed Co., Tex.Civ.App., Ins. 793. S.W.2d be with an increased terms of cause this claim. Under the under consid- of insurance insuring in agreements, indemnify agrees eration insured cluding ground to defend obligation *7 by liability' property caused damage suits, of to conditions subject less are thе Appellee contends that there accident. policy concerning notice of accidents the since the coverage no this instance un are forwarding and of claims. We damage foreseeably resulted from the flow- agree able to that a claim could constitute warehouse, into ing of the lindane dust the policy, where an under the incurred loss consequences ordinary and the natural and given eight notice the of accident was an negligent of a do not constitute act occurred, the com months after it unless accident. pany requiring waived the condition con practicable. authority notice soon We to the con as as there While agree trary, appears the to that language majority strue the non-waiver rule be of the Appleman, here ment that “no action to effect stated Insurance Law 7A, by Practice, 4492, 7, p. tofore hereafter taken” as follows: or Vol. Sec. right, “Injuries ordinary negli of its from resulting shall be construed as waiver any, deny liability policy, acci gence if under are to have been to considered investiga though in the to mean no taken dental as has been the case even action рarticular shown, gross negligence tion of claim or defense where there this were by injure.” brought reason thereof. no to was actual intent suit
27 Am- support This was made in New this statement contention The Texas cases Hamblen, Indemnity Casualty v. 144 Tex. Co. sterdam Co. v. of the law. American 197; 306, Jamison, Tex.Civ.App., Supreme 62 190 and the Court S.W.2d S.W.2d Co., Reed Tex.Civ. of held if insured failed Travelers Ins. Co. v. Texas that dism., judg. App., give corr. as soon notice of an accident suits S.W.2d possible, invali- reasonably
as
the failure
court
indemnity.
dates the claim for
the lin-
is no evidence that
There
where
was al-
further held that
the claim
applied
purpose
in
dane
was
ready invalid on the
date notice
warehouse,
juring the rice located in the
insurer,
claim was
the insured
given to
damage to
or with the intent
cause
right
require pay-
no
at that time to
Rice
Gulf Coast
Mills.
the claim
Since
quoted
lan-
ment
insurer so that the
predicated
Gulf
Rice
Coast
Mills was
pre-
guage
agreement
not
could
negligently,
committed
even in
acts
viola
right
serve such a
insured.
law,
tion
hut not with the intent
“rights
poli-
said
that
under the
injury,
inflict
such
was within
cy”
not
right
did
include the
to limit the
Bundy
coverage
the insurance
agreement.
effect
the non-waiver
Company Royal
Tubing
Indemnity Com
v.
Cir.,
pany (6th
Mich.), 298 F.2d
language
Since the
of the non-waiver
Maryland Casualty
Mitchell,
F.
Co. v.
agreement,
as
as well
that of
Cir.,
(5th
Tex.);
2d 37
Zurich
Cross v.
conditions,
substantially
case
are
Liability
General
(7th
Accident
Cir.
&
Co.
case,
the same as in this
it is
decisive
Ill.),
tract be modified *8 opinion are appel of the Newman, We that agreement. Canfield v. Tex.Civ. right plead 1052; lant’s contention that their App., 265 S.W. Stadtler v. Southern prove by and policy waiver of Co., conditions Surety Tex.Civ.App., 253 S.W. pre reason of Matthews, actions of the insurer was United Bankers Life Ins. Co. v. by served to them the in the non- Tex.Civ.App., 179, ref.; clause S.W.2d n. e. r. reading: waiver also cases, however, “It is In each of these there was agreed by Agrеe that testimony execution of this agreements which be could undersigned thereby ment does not recognized found under well of con rules any rights waive policy.” under the said tract law. writing the cases the line of insurance to which each
This case is determined
es-
coverage
adopted
applicable
formula
shall
holding
heretofore cited
that
such
policy
compliance
be-
therewith.
insurance
cannot he extended
tablish reserves
policy by estoppel.
Leg.
yond
language
of the
52nd
ch.
Acts
Acts
Leg., p.
(Emphasis
ch.
52.”
54th
§
a motion
While
also filed
supplied)
summary judgment,
of thе trial
the action
denying
court
its' motion
If, therefore, in
insurer
this case the
Gulf,
before this
Colorado
brought
Court.
on the
required by
up
reserve
law to set
a
McBride,
Railway
Fe
Co. v.
& Santa
against their
claim made
the Rice Mill
Tex.
29 liability proval: damage mium be or to based on claims for which of the “Destruction insured; of subject injury not The word not de- or death or is conceded. “loss” is the person perils in Dic- by fined the In Black’s Law an the insured insured tionary, Ed., “loss”, applied charge in against 4th word such a as to the the as manner insurance, insurer a liability defined: with under the terms policy.” of (Emphasis added) the liability insurer, Michel of
“Ascertained Co., Casualty v. American Fire and C.C.A. phrase unpaid The for “reserves * * * Fla., 583, 586; injury 82 F.2d by Company” losses as determined the must damage by conse sustained insured in be held to mean in an reserves amount de quence happening of one or more by adequate termined company to be in against accidents or misfortunes which company cover all claims for which the in indemnify surer has undertaken liability. company concedes If the is re sured, 1 pecuniary Bouv.Inst. No. quired by law to maintain reserves on injury resulting occurrence claims for which the denies liabil contingency against, Acci insured Ocean ity, policy require nevertheless the does not Corporation & Guaranty dent South v. or authorize that such reserves be consid C.C.A.Mo., Co., Telephone western Bell computing premiums. ered in liability If * * * 441, F.2d 100 li Loss from subsequently established, policy provides ability liability is loss which arises when recomputation premium. for a The fixed, Hudson, becomes v. 284 Cormier policyholder required pay pro 231, 625, 627; Boney Mass. 187 N.E. v. tection which he does not obtain. Chicago, Central Mut. Ins. N.C. Co. 213 470, 196 S.E. A.L.R. [117 231].” follows, therefore, It in that the up clusion of the Rice reserve set for the Stubbs, In Manhattan Life Ins. Co. v. by appellee Mill an as “incurred loss” Com.App., 1921, 234 S.W. retrospective premium computing pany penalties attorney’s was sued for charged appellant constitutes an admission delay fees reason was liable under the paying after “loss” demand loss, any, indemnify appellant if sured. The court said: might sustain reason “Plaintiff in error also contends the Rice Mill claim. 15-year maturing of a endowment life premium for which policy, period, at end of said charge was made insured ‘loss,’ is not a in meaning article said many oper- different risks and covered its the statutes. We cannot concur However, ations in a number of states. this view. policy, The maturing of the prior to the time non- secured the whether death of the insured or the ar- agreement charged waiver col- rival period end of the cumulation premium $1,000.00 in lected a excess of during the insured, lifеtime of the that it would have entitled been to collect have the same effect. at- had not claim been considered “in- event, taches in either and a oc- loss has eighteen At curred loss”. the end of (Emphasis curred.” added) months after the termination the first
In Miles v. policy year recomputed United Services it had Automobile Ass’n, Tex.Civ.App. required by 149 S.W.2d because all claims aff’d settled, United Service retrospective been Automobile Ass’n v. had not Miles, Com.App.1942, 139 Tex. did not exceed the maximum. quoted S.W.2d computation appel- follow- This was furnished to “loss”, ing definition of found in Webster’s lant before the non-waiver New Dictionary, ap- presented pre- International and reflected an additional *10 estoppel ment of a fact that the of even absence charge
mium reason agreement. Rice non-waiver reserve the Mill for included in “incurred losses”. creased and opinion ap remain of the that We no basis for the inclusion of We find policy, they pellant’s rights under expense the estimated of an time of execution of the existed at liability to determine of preserved by agreement, non-waiver were a under a policy to furnish defense to re of instrument. On tеrms that its insured as an “incurred ap we find that examination of record loss.” can Nor do we think the pellant properly presented in this its Court an, loss” the estimated include as “incurred point denying that the trial erred in making cost of without ad- a defense summary judgment. its for motion Since a mitting liability secured unless it estopped we held that is have first agreement. non-waiver policy and insist on its defenses have by appellant is that loss sustained opinion that We remain of at coverage policy, within the time the non-waiver was exe- in being dispute, we amount of the not a of estopped cuted as matter appellant’s are of the that motion deny provi- law to had waived summary judgment for should been have prompt policy requiring sions of the notice sustained the trial court. of accidents and immediate forward- Appellees’ de rehearing motion for is ing to it claims. of is Appellant’s rehearing nied. motion granted. judgment of the trial court curiae are in un- Amicus concerned judgment and is here rendered reversed original opin- der their construction of the appellant, Exterminating Orkin Com companies ion of this Court pany, Inc., against appellee, judgment have premium chargе upon could a based a not Company, in of Hanover Insurance the sum liability expense contingent reserve and Fifty Twenty Four Thousand Hundred being Six in situation where a claim Dollars, One to and ($54,621.00) agreement. handled under a non-waiver No/100 per gether rate with interest at the of opinion might in language Certain our 6% Twenty (1) annum sum of Six holding so our construed. We restrict Twenty Thousand Hundred and Seven 2½oo It respect the facts in this record. day ($26,720.21) Dollars from 8th is our this holding light that in record 1963; July, Twenty Six (2) on the sum of question not authorize a did Ninety Thousand One Hundred Two charge based on a reserve for day from the 3rd ($26,192.50)Dollars 6%oo contingеnt claim under the where of September, the sum of Nine (3) on point further was not conceded. We Eighty ($983.98) Hundred Three and acts on waiver es- 98Aoo out that the October, day Dollars from the 30th predicated toppel matter of as a law were Twenty (4) on the sum Hundred Seven prior to the execution the non- occurred Four Dollars from ($724.31) waiver 3¼ n agreement. If an insurance day November, 20th until the date pany terms of a authorized together entry judgment, charge premium on a reserve for based from date judgment on the total interest contingent liability, probable that the it is entry trial paid, all costs until charging of such this Court. court and constitute an ele- amount to a waiver or