Opinion
No. 7848.
December 21, 1927. Rehearing Denied January 18, 1928.
Appeal from District Court, Dallas County.
Action by the John E. Morris Company against the Pacific Fire Insurance Company on a tornado insurance policy, in which John E. Morris intervened as a party plaintiff. From a judgment for plaintiff and the intervener, defendant appeals. Affirmed.
Senter Strong, of Dallas, for appellant.
McCormick, Bromberg, Leftwich Carrington, of Dallas, for appellees.
John E. Morris Company, a corporation, as plaintiff, brought suit against Pacific Fire Insurance Company, a corporation, defendant, upon a certain policy of insurance covering a one-story brick and cement building in the city of Dallas, Tex., with insurance against loss or damage by tornado, windstorm, or cyclone, in the amount of $6,000. Plaintiff alleged that a windstorm occurred on the 8th day of June, 1925, which partially destroyed the property and damaged it in excess of $5,000; that there was at the time another policy outstanding of the same nature as that issued by the defendant, which policy was issued by Republic Insurance Company for the sum of $6,500. Plaintiff asked that the loss and damage should be prorated between said companies, and prayed for judgment against the defendant in the sum of $2,500.
Defendant answered by general denial and special answers as follows:
(a) It denied that it ever issued a policy to plaintiff as described in the petition.
(b) It denied that the loss and damage, if any, suffered by the plaintiff was caused by a windstorm, and alleged that it was the proximate result of a cause not insured against by the policy.
(c) It alleged that the insured was not the owner of the property.
Plaintiff, John E. Morris Company, a corporation, filed an amended petition, in which it alleged that John E. Morris, a resident citizen of Dallas county, was the owner of 98 per cent. of its capital stock.
Over the objection of defendant, John E. Morris was granted leave by the court to file a plea of intervention, and in this plea alleged that he was the owner of 98 per cent. of the capital stock of John E. Morris Company, a corporation, and entitled to recover the proceeds of the policy in accordance with the allegations of the plea of the plaintiff.
The case was submitted to the jury on special issues, which, with the answers, are as follows:
"Special issue No. 1: Did the one-story brick and cement composition building at 120-24 North Lancaster avenue in the city of Dallas, on or about the 8th day of June, 1925, suffer any direct loss or damage by tornado, windstorm, or cyclone? Answer yes or no. Answer: Yes.
"Special issue No. 2: State in dollars and cents the amount of such damage, if any? Answer: $5,000.
"Special issue No. 3: Did the rain falling upon the roof, and the accumulation thereof, cause or contribute to force the front of the building to give way and thereby cause, or contribute to cause, the injury to the building? Answer yes or no. Answer: No."
We agree with appellant in his statement:
"The question of greatest importance in this case is whether or not a policy of insurance taken out by an individual in his own name is a valid policy when the property is owned by a corporation of whose capital stock he owns 98 per cent."
We adhere to what we held in Trott v. Flato, 244 S.W. 1085, that the owner of the capital stock of the corporation did not hold the title to corporate property.
But that is not the question here. The policy contains a provision that the interest insured is "the ownership interest of the assured." The policy did not require unconditional and sole ownership, but that any ownership interest of the assured is covered. Now, then, owning 98 per cent. of the capital stock in the company did not give him title thereto, but did give him an insurable interest in the property. Clearly a stockholder has an insurable interest in the corporate property such as he may insure for his protection against loss. In Rolater v. Rolater (Tex.Civ.App.) 198 S.W. 393, insurable interest is defined as follows:
"Adopting in substance the language of another, any one has an insurable interest in property who derives a benefit from its existence or would suffer loss from its destruction, and the mere equitable title or other qualified property in the thing insured, though not the fee, may be protected by insurance in case the insured might suffer loss by the destruction of the subject matter of the insurance." Phœnix v. Deavenport, 16 Tex. Civ. App. 283, 41 S.W. 399.
In Wailes v. Davies (C. C.) 158 F. 674, it is said:
"It has frequently been held that a stockholder, merely as a stockholder in a corporation, has such an interest in the corporate property that he may take out a policy of insurance for the protection of that interest. This rule is based on the theory that the beneficial interest in the property of the corporation is in the stockholders." Warren v. Davenport, 31 Iowa 464, 7 Am.Rep. 160.
This disposes of the material question in the case and the appellant's assignments in respect to the insurable interest, and the right to insure it, are overruled. The testimony of the witnesses L. A. Donald and L. R. Doughty, complained of, was not prejudicial or immaterial, but in compliance with the policy. Likewise the testimony of John E. Morris that the corporation paid the premium on the policy was properly admitted. The sprinkler system was a part of the building and thereby covered by the insurance and the proof properly admitted.
The testimony of the witness H. A Overbeck as to the probability of the down spout being clogged was a mere opinion or conclusion of the witness. If an issue at all, based upon a conclusion, it was a matter for the jury.
The testimony was properly admitted to show what it would cost to replace the property, as the terms of the policy required, and other facts sufficient to disclose the age and extent of repairs before the damage so that the jury could make proper deduction for depreciation. These were facts for the jury to pass on.
In regard to the sprinkler, it was an equipment consisting of a network of water pipes built into the building, designed automatically to extinguish incipient fires and ramifying to the utmost parts of the building, was a part of the building. It is held in Still v. Connecticut Fire Ins. Co., 185 Mo. App. 557, 172 S.W. 627:
"Where the subject of the insurance is described as a `building' the entire structure, though composed of several parts is included if the parts are so joined as to be used as one and devoted to the same common purpose."
We have very carefully examined appellant's brief, all assignments, and propositions. We think the case has been fairly tried and substantial justice done.
The judgment is affirmed.