Aetna Insurance v. Klein

Mr. Justice Calvert

delivered the opinion of the Court.

This is a suit on an insurance policy brought by respondents to recover for loss sustained by them by reason of damage to their building caused by lightning. The case was submitted to a jury on special issues, in response to which the jury found that lightning was the proximate cause of the damage to the building in question and that the loss sustained by respondents was $20,000.00. Judgment was rendered by the trial court that respondents recover that sum. The judgment was affirmed by the Court of Civil Appeals. 318 S.W. 2d 464.

The insurance policy on which recovery was allowed by the courts below was not introduced in evidence. The record does not reflect whether this omission was through oversight or was by design. Petitioner admitted the delivery to respondents of its policy insuring respondents against loss caused by fire, lightning and other hazards and that the policy was in force at the time of the alleged loss, but no admission was requested or made and no testimony was introduced establishing the amount of coverage provided by the policy. In other words, there is in the record no direct proof that petitioner by its contract promised to pay up to $20,000.00 or any other sum for loss sustained by respondents.

Respondents seek to fill the apparent gap in their proof by utilization of certain procedural devices. They first assert that they pleaded a coverage of $40,000.00 and a loss of $20,893.30 or $25,000.00, and that under Rule 94, Texas Rules of Civil Procedure, petitioner lost its right to controvert coverage of the amount of the loss by not pleading as “matter constituting an avoidance” that the coverage was for less than the amount of the loss alleged. They next assert that petitioner’s cross-examination of one of the respondents who appeared as a witness supplied the necessary proof. Finally, they assert that the proof was supplied by their introduction in evidence, without objection, of a sworn proof of loss executed by them. We hold that the absent proof cannot be supplied by any of these devices.

Respondents’ right to recover rests in contract. They alleged that petitioner had by its insurance contract obligated itself to pay up to $40,000.00 for loss sustained by them by reason of damage to their building caused by lightning. Petitioner’s general denial put in issue “all of the material facts asserted by the plaintiff except those which are required to be denied under oath.” Trevino v. American Nat. Ins. Co., 140 Texas 500, 168 S.W. 2d 656, 659; Rule 93, Texas Rules of Civil Procedure. The amount of the coverage provided in the policy is a material fact asserted by respondents which they must established by proof or admission, and Rule 94 requiring petitioner to plead affirmatively any “matter constituting an avoidance” of respondents’ claim does not contemplate an affirmative pleading that the coverage provided is for a lesser sum than that sought. T.I.M.E., Inc. v. Maryland Casualty Co., 157 Texas 121, 300 S.W. 2d 68, is not in point. That case dealt with the necessity for affirmative pleading of exceptions limiting an insurer’s general liability for loss caused by the general hazards covered by a policy.

1 The cross-examination which respondents assert supplies the necessary proof occurred while Edward J. Klein, one of the respondents, was being questioned with respect to the proof of loss furnished by respondents and rejected by petitioner’s attorney. The attorney asked: “Mr. Klein, you yourself as a layman were figuring the value of the building at $48,000.00 to satisfy the 80% co-insurance clause in that policy, weren’t you?” The witness answered: “No sir.” Even if the question included an inference that the coverage in the policy was 80% of $48,000.00 the inference would appear to be destroyed by the negative answer of the witness.

The Court of Civil Appeals held that the necessary proof was made by the introduction into evidence of the proof of loss mailed to petitioner by respondents. In the upper left-hand corner and in the body of the printed form proof of loss completed and executed by respondents was a space for showing the amount of coverage provided by the policy. Respondents placed in the respective blank spaces the figure “$40,000.00.” One of petitioner’s defenses to the suit was that no proper proof of loss had been executed and furnished as required by the policy. The proof of loss was offered in evidence by respondents. Petitioner did not object to its receipt in evidence. An objection to its receipt would not have been tenable because it was admissible as evidence that it had been properly completed and executed, American Central Ins. Co. v. Wellman, Texas Civ. App., 5 S.W. 2d 550, 552, no writ history; 8 Couch, Cyclopedia of Insurance Law, Sec. 2225, p. 7213; 29 Am. Jur. 1115, Insurance, Sec. 1488, but its admission did not make its recitations evidence of the facts recited. The rule is thus stated in Couch, supra:

“As a general rule, supported by the weight of authority, proofs of loss are admissible in evidence only for the purpose of showing a compliance with the requirements of the policy, since such proofs are declarations or statements by the insured in his own behalf, and cannot be admitted as evidence against the insurer of any fact stated therein.”

There is authority for the view that when proofs of loss are admitted in evidence without objection the recitations in them are evidence of the facts recited. Moore v. Protection Ins. Co., 29 Me. 97, 48 Am. Dec. 514; Farmers’ Mutual Protective Ass’n. v. San Luis State Bank, 86 Colo. 293, 281 P. 366, 66 A.L.R. 1166. The contrary view seems to us to be founded upon sounder reasoning and more in keeping with our practice. See Hiles v. Hanover Ins. Co., 65 Wis. 585, 27 N.W. 348, 56 Am. Rep. 637, in which some of the decisions are reviewed and the view is expressed that Moore v. Protection Ins. Co., supra, “rests on no authority and very poor reasons.” 27 N.W. 351.

2 The recitations contained in a proof of loss are ex parte statements of the insured claimant and are thus incompetent as proof of facts which must be established as a predicate to the insurer’s liability. It is a rule of general application in this state that incompetent evidence, even when admitted without objection, has no probative force and will not support a judgment. Dallas Railway and Terminal Co. v. Bankston, Texas Com. App., 51 S.W. 2d 304, 309 (holding approved by Supreme Court); 17 Texas Jur. 922, Evidence in Civil Cases, Sec. 416. There can be little reason for relaxing the rule to permit proof of the provisions of an insurance contract by ex parte statements in a proof of loss since the contract itself may readily be offered in evidence.

3 Petitioner’s motion for an instructed verdict should have been granted. The judgments of the Court of Civil Appeals and the trial court must therefore be reversed. Under the provisions of Rule 505, Texas Rules of Civil Procedure, we are authorized to remand a case for retrial instead of rendering the judgment the trial court should have rendered “when it shall appear that the justice of the case demands another trial.” It so appears to us in this case. Accordingly, the judgments of the Court of Civil Appeals and the trial court are reversed and the cause is remanded to the trial court for retrial.

Opinion delivered April 15, 1959.