dissenting.
The majority has ruled that an insurer that files a general denial after it has been sued, thereby breaches its contract and waives conditions precedent as well as the exclusions expressed in a policy. In short, the holding is that the insurer’s general denial strips it of an otherwise lawful defense.
Joan Ford was a passenger in an automobile driven by Shirley Harvey. When the Harvey car collided with a vehicle driven by uninsured Jeffrey Whitten, Joan Ford was killed. Joan Ford was insured by State Farm Insurance. The Harvey vehicle was insured by Gulf Insurance Company. The Whitten vehicle was uninsured.
Plaintiff Robert William Ford filed this suit against State Farm and Gulf Insurance on July 21, 1970, and State Farm answered by a general denial. Plaintiff filed an amended petition against the same two defendants but prayed for damages irf" the amount of 30,000 dollars. The defendant State Farm then filed an answer (1) denying that Joan Ford was either married to or a relative of Robert William Ford, the insured, (2) alleging that Shirley Harvey’s negligence was the sole cause of the accident, and (3) denying liability in the amount of 30,000 dollars or in any amount.
Joan Ford’s parents also asserted a claim against Gulf Insurance Company. Gulf then interpleaded Joan’s parents. While matters were in that posture, Gulf Insurance and plaintiffs settled the Ford claim by the payment of 10,000 dollars, its policy limits.
State Farm then amended its pleadings a second time, alleging again that Joan Ford was not Robert Ford’s wife and also that the State Farm policy contained this exclusionary clause: .
This policy does not apply under Part IV:
******
(b) to bodily injury to an insured with respect to such insured, his legal representative or any person entitled to payment under this coverage who shall, without written consent of the Company, make any settlement with any person or organization who may be legally liable therefor;
It was stipulated that neither the plaintiffs nor their representatives informed State Farm about the settlement and did not require or demand State Farm’s consent to the settlement with Gulf Insurance. The quoted provision has been enforced by all of our prior decisions, but this court has now, for the first time, held that an insurer who answers and defends against an unfounded or an excessive claim, thereby breaks its contract. However right the insurance company may be in its defense, it loses by asserting its rights.
The live pleadings upon which this case went to trial prayed for the recovery of 30,000 dollars. Under no theory, were the two defendants liable as insurers for more than 10,000 dollars each for a combined total of 20,000 dollars. The insurer had and asserted a defense to that excessive claim and actually won the case. The holding of the majority is that an insurer who actually prevails upon trial to defeat a false and excessive claim, nevertheless must lose his policy defenses. This means that an insurer is put to an election to defend against an excessive claim and lose its contract rights or save its contract rights by failing to answer or defend. By not answering, the *668insurer saves its contract rights, but a default judgment for the excessive amount may then be adjudged against it.
State Farm had a second defense. State Farm alleged that Joan Ford, the decedent, was not the wife of Robert Ford. Robert Ford was State Farm’s insured. The policy would, of course, reach Robert Ford’s wife, but it did not cover third parties. State Farm alleged that Joan Ford was not the wife of its insured Robert Ford at the time of the accident. The contention was not frivolous. The plaintiffs joined in the stipulation that:
ROBERT WILLIAM FORD, JR. and JOAN ELIZABETH FORD were married on May 13, 1962 and were divorced on May 8, 1967; JOAN ELIZABETH FORD subsequently married JIMMY LEE BURKE, which marriage ended in divorce on May 22, 1969, in Harris County, Texas.
The parties, in advance of trial, isolated three issues which needed to be determined, and then stated the first one as:
Whether JOAN ELIZABETH FORD was the spouse of ROBERT WILLIAM FORD, JR., at the time of her death on October 18, 1969, so as to qualify her as an insured under the provisions of the automobile liability policy issued by STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY to ROBERT WILLIAM FORD, JR.
Our question again is not whether the insurer succeeded or failed in its defense; it is whether an insurer can assert such a defense without forfeiting policy rights and defenses. Apparently the proof established the fact of a common law marriage. We have no statement of facts, and the trial court’s determination that Joan was in fact, the spouse of Robert Ford is not challenged and it was not attacked before the court of civil appeals. But the fact of marriage between Robert Ford and Joan Ford required a trial for its determination. That is the reason an insured is entitled to answer and defend a lawsuit.
The majority opinion deviates from past decisions which have consistently followed the contract requirements that consent in writing to “any settlement with any person or organization who may be legally liable therefor. . . . ” [Emphasis added.] The general state of the law is expressed by Widiss, A Guide to Uninsured Motorist Coverage § 5.7 (Supp.1976):
Decisions continue to hold that failure to comply with the provision in the endorsement that requires the insurer’s consent to a settlement works a forfeiture of the insured’s rights under the uninsured motorist coverage.
Faced with the argument that the prohibitions without consent to settle any claim with any person is restricted to a settlement with the uninsured motorist, Professor Wid-iss says:
However, two 1972 Texas cases reach the opposite result — holding that the language of the endorsement is plain and clear, and must be enforced. In addition, in two 1971 cases where a parent failed to secure consent for a settlement with the driver’s insurer in accidents where the children were killed while riding as passengers in an insured vehicle that collided with an uninsured motorist — the courts held that the parents were precluded by such settlements from recovering under their uninsured motorist coverage since the endorsement provision applied to settlements with any person or organization who might be legally liable. Sec. 5.10.
As in the case at issue, the plaintiff in McClelland v. United Services Automobile Association, 525 S.W.2d 271 (Tex.Civ.App.1975, writ ref’d n. r. e.), was a passenger who was suing her own insurer, U.S.A.A. McClelland was riding in a car owned by Charles Coulter which was insured by Allstate Insurance Company. The Coulter car ran into a vehicle of an uninsured motorist. The plaintiff McClelland settled with the insurer of the host vehicle (Coulter) without notice or consent to her own insurer. These facts exactly parallel those of our present case. The court in enforcing the consent to settle provision held that the passenger’s settlement with the driver’s insurer defeated the subrogation right of the passenger’s *669insurer to sue the driver of the host vehicle. A potential target for recovery by the passenger’s insurer was thus eliminated.
Jessie v. Security Mutual Casualty Company, 488 S.W.2d 140 (Tex.Civ.App.1972, writ ref’d n. r. e.), for the same reason reached the identical conclusion. That case, when it was presented to this court in 1972, squarely presented the question which is now before us. That opinion on its face is contrary to our present decision. It holds that the consent is required in order to protect an insurer’s subrogation rights not only against the uninsured driver but of all other possibly liable persons whether insured or not. The Jessie opinion cited the same legal authority which is now cited by the majority opinion for a directly contrary result. In Jessie, the court determined that the view expressed by Widiss, cited above, was the better one. Our order refusing the writ, no reversible error, could only have been made if we approved the judgment denying relief to the plaintiff because he settled his cause without obtaining prior consent of his own insurer who held a valuable subrogation right.
The cases upon which the majority relies for its holding that the insurer had waived its policy provision which required “consent to settle” are cases in which there was an arbitrary withholding of consent by the insurer. In fact, that is the title under which those cases are discussed in the annotation which collects them. 23 A.L.R.3d 1289, Uninsured Motorist Clause — Settlement (1969). In the face of the stipulation between the parties, rather than an arbitrary refusal to consent, there were some very valid issues concerning State Farm’s liability. As one example, the parties in advance of trial filed the stipulation which isolated three distinct issues, the first being:
Whether JOAN ELIZABETH FORD was the spouse of ROBERT WILLIAM FORD, JR., at the time of her death on October 18, 1969, so as to qualify her as an insured under the provisions of the automobile liability policy issued by STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY to ROBERT WILLIAM FORD, JR.
The issue was not a spurious one. The issue existed continuously from the time of the accident in question, and yet, State Farm has been charged with breaching its contract for insisting upon proof that the divorced decedent was nevertheless the common law spouse of its insured.
The majority places its main reliance upon Stephens v. State Farm Mutual Automobile Ins. Co., 508 F.2d 1363 (1975). Mr. and Mrs. Stephens were the plaintiffs. They were both riding in Mrs. Stephens’ car. She was driving when it collided with an uninsured motorist’s vehicle. Mrs. Stephens was insured by Royal Indemnity Company; Mr. Stephens was insured by State Farm Mutual Automobile Insurance Company. Mr. Stephens sued both insurers, then settled with Royal for its full limits of the policy. State Farm, the insurer for the driver, did not consent to the settlement, but the Fifth Circuit predicted that Texas would hold that State Farm by denying the claim had waived its right to rely upon its “consent to settlement” provision. The court cited the Texas cases which have actually respected the validity and stated the reasons for the “consent to settlement” exclusion. It also cited Magness v. State Farm Insurance Co., an unreported case from the Houston Fourteenth District Court of Civil Appeals which honored the policy defense. The same Houston Fourteenth District Court of Civil Appeals decided the present case consistent with its earlier Magness opinion. We now have two consistent decisions from the same court of civil appeals. But, the Texas Supreme Court has now inconsistently gone both ways.
The difference between the two directions our cases now send us is said to be that the insurer in this case waived'the exclusion by filing a general denial to a lawsuit. That was a waiver? This is a new kind of a waiver. “Waiver has been frequently defined as an intentional relinquishment of a known right or intentional conduct inconsistent with claiming it.” *670Massachusetts Bonding & Ins. Co. v. Orkin Exterm. Co., 416 S.W.2d 396, 401 (Tex.1967). The rule is an old one. Texas & P. Ry. Co. v. Wood, 145 Tex. 534, 199 S.W.2d 652 (1947); Rolison v. Puckett, 145 Tex. 366, 198 S.W.2d 74 (1946).
The insurer in the present case relied upon the right. It pleaded it. It defended upon it. It hired a lawyer to insist upon it. At no point, and by no proof, was it even contended that the insurer intentionally relinquished that right. The insurer is now in trouble, not by reason of its intentional surrender, but by reason of its insistence upon the right. That is not a waiver.
The insurer did not take a position inconsistent with its policy. The policy required its consent to settle and it insisted upon that right. The policy insured only certain persons, not including a divorced wife of the insured, and it insisted upon that. The policy insured only for 10,000 dollars, and the insurer insisted that it was not liable for 30,000 dollars. Insisting upon compliance with the terms of the policy cannot be called “conduct inconsistent” with the policy. There was no waiver.
I respectfully dissent.
REAVLEY, J., joins in this dissent.