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107 Tex. 256

172 S.W 1100

Diamond v. Duncan

Texas Supreme Court

Decided June 26, 1915

Texas Supreme Court · decided 1915-06-26

<p>1. —Agency—Insurance Broker—Failure to Reinsure.</p> <p>An insurance broker who has undertaken to keep the property of another insured for the latter’s protection is liable for loss incurred through his failure to reinsure when it becomes unprotected by reason either of expiration of the term of the policy or of the insolvency of the company insuring, in case the fact of expiration or insolvency was known to him and unknown to his principal who relied on him to keep it insured. (Pp. 259, 260.)</p> <p>2. —Same—Damages—Cost of Reinsurance—Pleading.</p> <p>An insurance broker held liable for damages from his failure to perform his undertaking to keep insurance in force upon the property of another destroyed by fire, must plead as offset to such claim the cost of effecting such insurance in order to be entitled to credit therefor. (Mr. Justice Hawkins dissenting.) (P. 260-263.)</p> <p>3. —Same—Burden of Proof.</p> <p>Even if the insurance broker was entitled, without pleading such defense, to offset the cost of reinsurance against the damages recoverable against him for failure to effect it, the burden was upon him to prove such cost, especially as it was peculiarly within his knowledge, he issuing the policies as agent of the insurance companies. (Mr. Justice Hawkins dissenting.) (Pp. 261-263.)</p>

Good law ✅— No negative treatment on recordhow we know

Decided 1915-06-26

How this case has been cited

Cited by 35 later decisions — most recently June 2019 · most notably Burroughs v. Bunch (1948), Dalton v. Norwich Union Fire Ins. Soc. (1919)

34 state decisions

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Later decisions citing this case, by decade. The current decade is in progress, and our corpus holds fewer opinions from the most recent years, so the latest bars are undercounted — not a real decline.

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¶1DISSENTING OPINION ON MOTION EOR REHEARING.

Mr. Justice HAWKIHS

¶2delivered the following dissenting opinion:

¶3Plaintiff in error complains that the charge to the jury assumed, as a matter of law, that Diamond was under the affirmative duty of notifying Duncan of the insolvency of Traders Insurance Co., or of procuring for Duncan new and solvent insurance. I find no merit in that contention, inasmuch as “renew” in the charge was apparently used by the trial court and understood by the jury as including keeping up the insurance, in a solvent company. And it seems to have been so treated by the Court of Civil Appeals.

¶4However, the charge of the court on the measure of damages was clearly erroneous in permitting recovery of the full amount of insurance which, under the jury’s finding, Diamond should have had kept in force for Duncan. From that sum should have been deducted the amount of the premiums which such substitute insurance would have cost Duncan. His recoverable. damages, if any, should be merely compensatory.

¶5The amount of such premiums was not established by the evidence; consequently, the amount which Duncan was entitled to recover was not established; wherefore plaintiff failed to make out his case. Logically, then, defendant’s requested special charge Ho. 1, directing a verdict for defendant, should have been given. This point was duly presented in the motion for new trial, and in the assignments of error filed in the trial court, and in appellant’s' brief in the Court of Civil Appeals, at p. 54, et seq., under “Second Assignment of Error” (Ho. 5; in Tr.), and four distinct propositions thereunder, and was also duly presented to this court. The establishment of the proper measure of damages being an essential and affirmative part of Duncan’s case, there rested upon Diamond no duty of pleading or proving what the cost of the premium for such substitute insurance would have been. I do not consider the cost thereof a matter so peculiarly within the knowledge of Diamond as to constitute an exception to the general rule, nor as bringing this case within the rule which this court announced in Right-of-Way Oil Co. v. Gladys City Oil, Gas & Mf’g Co., 106 Texas, 94, 157 S. W., 736, 51 L. R. A. (N. S.), 268, in which this court said:

¶6“If, however, the person who produced the oil acted in good faith, he would be entitled to have deducted the cost of bringing it to the surface and to the market. The contention of plaintiff in error is in effect that the owner must concede the good faith of the trespasser and prove that which is known only to his adversary, the cost of producing the oil.” (Italics mine.)

¶7*263Emphasis was there laid on the fact that the cost of producing the oil was known, to the trespasser only.

¶8Here, it seems to me, it would have been easy for the plaintiff to have proved what the substitute insurance would have cost Duncan.

¶9My present strong conviction is that the rule announced in the cited case ought not -to be applied to the facts of this case—although I confess that, since this motion was filed, I have been unable to find opportunity for going thoroughly into that question. I think that, at least, the motion for a rehearing should be granted.

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