Glens Falls Insurance v. McCown

Mr. Justice Brewster

delivered the opinion of the Court.

This is a suit by Fred W. McGown, respondent, against Glens Falls Insurance Company, petitioner, to recover on an insurance policy for water damage to seven automobiles. A trial court judgment for respondent was affirmed by the Court of Civil Appeals. 228 S. W. 2d 949.

As a dealer in automobiles, respondent bought from petitioner a policy which insured him against “direct and accidental loss of or damage to the automobile, hereinafter called loss, caused by windstorm, hail, earthquake, explosion, external discharge or leakage of water except loss resulting from rain, snow or sleet.”

Respondent kept his automobiles on a lot in a lowland section of Fort Worth. In May, 1949, an unprecedented rain fell over much of the watershed of the Trinity River; the Trinity left its banks, engulfed the levees along its banks and overflowed a large part of the city, including respondent’s lot. The seven automobiles were submerged to such depth that the water covered their speedometers, panel boards, motors, transmissions and differentials. Respondent claims the resulting damage was caused by an “external discharge or leakage of water” under the policy language above quoted.

The policy showed 8 coverages designated as A, B-l, B-2, C, D, E, F, and G. Preceding these coverages, under the heading of “Declarations”, was “Item 3”, which provided: “The insurance afforded is only with respect to such and so many of the following coverages as are indicated by specific premium charge or charges. The limit of the company’s liability against each such coverage shall be as stated herein, subject to all the terms of this policy having reference thereto.” Respondent’s policy showed premium charges only on Coverages B-l, C, D and E. His claim is under Coverage E, the material parts of which are quoted above.

Coverage F, as to which no premium charge was made in respondent’s policy, was designated as “Combined Additional Coverage”' and read as follows: “To pay for direct and accidental loss of or damage to the automobile, hereinafter called *590loss, caused by windstorm, hail, earthquake, explosion, riot or civil commotion, or the forced landing or falling of any aircraft or of its parts or equipment, flood or rising waters, external discharge or leakage of water except loss resulting from rain, snow or sleet.” (Italics ours.)

As relating to the issue at bar, the language of Coverage E is identical with that of Coverage F, except that the latter includes the phrase “flood or rising waters.”

Petitioner contends that the water which damaged respondent’s automobiles was flood water; that since Coverage E, which was accepted and paid for, did not insure against flood waters whereas Coverage F, which was not taken and paid for, did insure against flood waters, respondent’s policy expressly failed to cover the damages sued for, and that respondent had notice of that fact when he received the policy.

Respondent counters that since Coverage F was not taken and paid for, it is no part of the policy and cannot be considered in construing Coverage E relating to external discharge or leakage of water.

In regard to automobile insurance, Section 5, of Art. 4682b, Vern. Ann. Civ. Stat., directs that “the Commissioner shall prescribe policy forms for each kind of insurance uniform in all respects except as necessitated by the different plans on which the various kinds of insurers operate, and no insurer shall thereafter use any other form in writing automobile insurance in this State.” (Italics ours.)

A member of the agency which issued respondent’s policy testified as a witness for petitioner: “The policies are all what we call OK’d by the Board of Insurance Commissioners at Austin and all companies use the same standard form.” He swore that the form used in issuing respondent’s policy- “has been OK’d by the Board at Austin”, and that all the several companies he represents “use this identical policy.” This testimony does not appear to have been controverted by respondent, so we may assume that his policy was what is known as a “standard form”; that is, it was in the form prescribed by the Insurance Commission of this state under the terms of the statute above quoted.

The purpose of the supervision and control of insurance in Texas by the Commission is to serve the public interest in that *591business as well as to protect the rights of both insurer and insured. As a part of, and as an aid to, that supervision and control the Commission was authorized and directed to prescribe a uniform standard automobile insurance policy so that all parties at interest may know what their respective rights and obligations are under it.

Thus every measure of protection this standard policy could possibly afford the insured under petitioner’s plan of operation is set out in eight different “coverages” following the plain and specific statement that “the insurance afforded is only with respect to such mid so many of the following coverages as are indicated by specific premium charge or charges.” So when respondent received the policy in question from petitioner’s agents the language just quoted invited him to look at his policy, and if he did so he could see that his automobiles were insured against only the risks designated by Coverages B-l, C, D and E, because only against those were premium charges made— it was only for insurance against those risks that he was undertaking to pay. Conversely, by reference to Coverages A, B-2, F and G, against which no premium charges appeared and for which he therefore knew he was not being charged, he could just as easily determine what risks petitioner was not insuring him against. By reading Coverage F he could discover that he was not insuring his automobile against damage from flood waters for the obvious and sufficient reason that he was not paying for any such insurance.

The parties agree that there is no Texas case in point and we have found none. However, Henry v. Dubuque Fire & Marine Ins. Co., 185 S. W. 2d, 658, by a Missouri Court of Appeals, is almost paralled with the case at bar. The opinion is not clear as to the terms of the policy. But petitioner says in its application that it got from the clerk of that court an abstract of the record in that case, and its statement as to what the abstract discloses is in no manner challenged by respondent. According to petitioner, that abstract shows that (1) the policy in suit bad 10 available coverages, including E and F; (2) Coverage E was designated as “Windstorm, Earthquake, Explosion or Hail” and bound insurer “to pay for loss of or damage to the automobile hereinafter called loss, caused by Windstorm, Earthauake, Explosion, Hail or External Discharge or Leakage of Water”; (3) Coverage F was called “Combined Additional Coverage” and by it the company agreed “to pay for loss of or damage to the automobile hereinafter called loss, caused by Windstorm, Earthquake, Explosion, Hail, External Discharge *592or Leakage of Water, Flood or Rising Waters, Riot or Civil Commotion, or the Forced Landing or Falling of any Aircraft or of its parts or equipment”; (4) that there, as in the case at bar, the insured had contracted for Coverage E but not for Coverage F; (5) that in his petition Henry alleged purchase and delivery of a policy by which the defendant company “insured this plaintiff against certain hazards in said policy set forth, and among others against loss of or damage caused by windstorm, earthquake, explosion, hail or external discharge or leakage of water, to the Chevrolet automobile described in said policy, in an amount equal to the actual cash value of said automobile” and that “on the 30th day of May, 1942, and while said policy was in full force the said automobile was damaged by the external discharge and leakage of water * * *.” (Italics ours.)

Referring now to the opinion (185 S. W. 2d, 858, 659), the court says that on the date mentioned in plaintiff’s petition he and another were fishing, when a heavy rain came and caused the river to rise; that they were unable to drive the automobile across the river to safety but were compelled to leave it in the stream; and that the automobile was completely covered by the rising water. Then the court says, “The policy in force at the time did not cover F”, and, after quoting F, as above, it adds: “In other words, the policy issued January 11, 1942, expressly failed to cover the very damage sued for.” (Italics ours.)

A closely analogous case is Witherspoon v. Lumbermen’s Mut. Ins. Co., 211 Ark. 844, 203 S. W. 2d., 185, by the Supreme Court of Arkansas. Witherspoon sued on his automobile policy for damages caused to his automobile when it went off the road and turned over in a ditch. His policy recited: “In consideration. of the payment of the premium and in reliance upon the statements in the declarations and subject to the limits of liability, exclusions, conditions and other terms of this policy, the company agrees to pay for direct and accidental loss of or damage to the automobile, * * * with respect to such and so many of the following coverages as are indicated by specific premium charge or charges”. (Italics ours.) The only premium charge shown was opposite Coverage A, which was designated as “Comprehensive — Loss of or Damage to the Automobile, Except: by Collision” and defined as “any loss of or damage to the automobile except loss caused by collision * * * or upset of the automobile * Coverage B-l for “Collision or Upset”; B-2 was for “Convertible Collision or Upset”; but no premium charges appeared opposite either of them. In that fact situation the Court said:

*593“It appears certain that the insured here did not intend to pay for, nor did the company intend to accept the risk for damages which arose from an ‘upset’ of the truck. Item 3, supra, of the insurance contract definitely limited the insurance to the ‘Coverage as hereinafter defined’, for which appellant, the insured, paid a ‘specific premium charge * *’.

“His total annual premium, as shown in Item 3, was $24.00 for ‘Coverage A’ — Comprehensive—Loss of or Damage to the Automobile, Except by Collision but including Fire, Theft and Windstorm’, and ‘Coverage A’ as ‘Defined’: ‘any loss of or damage to the automobile except loss caused by collision * * * or upset of the automobile’.

“Appellant paid no premium for Coverage ‘B-l, Collision or Upset’ or for ‘B-2, Convertible Collision or Upset.’ Since he paid no premium for ‘upset’ coverage, and since such coverage is expressly excepted from the policy coverage for which he did pay, we think it clear that the parties intended, and without ambiguity, expressed their intention that damages to the truck resulting from an ‘upset’ were excluded and not covered.”

(It will be observed that while the court gave consideration to the fact that Coverage A, which was paid for, excluded damage from upset of the insured automobile, it also gave weight to the fact that Witherspoon paid no premiums for insurance against upset as defined in Coverage B-l and B-2.)

We have concluded that these cases announce a sound rule. By using a form of policy devised and approved by our Insurance Commission petitioner offered respondent eight separate and distinct coverages for his automobile and by Item 3, above quoted, informed him that he had accepted only four of them (including Coverage E) because they were followed by specific premium charges and that he had rejected the other four (including Coverage F) because they were not followed by specific premium charges. By retaining the policy respondent accepted petitioner’s offer. The coverages offered but rejected are in the policy (under the direction of the Insurance Commission) the same as are those offered and accepted, therefore it is proper to consider all of them in determining the respective obligations and rights of the parties to the policy. Only on that basis can our public policy in prescribing uniform policies be served.

That the damage done to respondent’s automobiles was caused by a flood cannot be seriously questioned. That Covererage E’s protection against external discharge or leakage *594of water did not include, and was not meant to include, an unprecedented overflow of the Trinity River onto a large portion of the City of Fort Worth is made perfectly clear by reference to Coverage F, which offered to insure respondent not only against external discharge or leakage of water but against flood or rising water as well. Since respondent did not accept and pay for Coverage F, he “expressly failed to cover the very damage sued for” and cannot recover.

The judgments below are reversed and judgment is here rendered for petitioner.

Associate Justice Wilson not participating.

Opinion delivered January 10, 1951.