
    COMMERCIAL UNION ASSUR. CO., Limited, v. PRESTON.
    (No. 3783.)
    (Supreme Court of Texas.
    March 31, 1926.)
    I-. Insurance <&wkey; 133(1) — Clause or indorsement added to standard form of fire policy, without authorization or approval of state insurance commission, is void (Rev. St. 1925, arts. 4888, 4889).
    A clause or indorsement added to a standard fire insurance policy, without authorization or approval of state insurance commission, is void, under Rev. St. 1925, arts. 4888, 4889.
    2. Insurance <&wkey;t33(l) — Indorsement on fire policy, providing exemption from loss to motion picture machines caused by fire originating within machines, held void as not authorized or approved by insurance commission (Rev. St. 1925, arts. 4888, 4889).
    Clause in fire insurance policy, providing against liability for loss by fire of motion picture machines where fire originated within the machines, held void, in view of Rev. St. 1925, arts. 4888, 4889; never having been authorized or approved by insurance commission.
    3. Insurance &wkey;U33(l) — Unauthorized clause in fire policy, defeating liability for loss to motion picture machines and attachments by fire originating within machines, held controlled by approved provision fixing liability for loss or damages occasioned by such fire.
    Provision of fire policy, providing that there shall be no liability for loss by fire of motion
    <§=»For oilier cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes picture machines and attachments caused by fire ¿within the machines, held, inconsistent with and controlled by authorized • and approved form prescribed by insurance commission undertaking to fix liability for loss or damages in such case.
    4. Insurance <&wkey;539(5) — Insured cannot recover on policy when he has not complied with conditions precedent therein as to furnishing proofs of loss, if conditions have not been waived.
    When a policy makes the furnishing of proofs of loss a condition precedent to the enforcement of the policy, and the proofs of loss have not been furnished nor waived, the insured cannot recover on the policy.
    5. Insurance <&wkey;552 — Insured cannot recover for damages to property not included in pi-oofs of loss furnished, where proofs were oat waived (Vernon’s Sayles’ Ann. Civ. St. 1914, art. 4949).
    Damages to property, not included in proofs of loss furnished as required by policy, cannot be recovered, where proofs were not waived; there being nothing in Vernon’s Sayles’ Ann. Oiv. St. 1914, art. 4949, authorizing recovery therefor.
    6. Insurance <@=»49S( I) — Statute prohibiting coinsurance clauses as amended held not to forbid three-fourths value clauses (Rev. St. 1911, art. 4893-, as amended Acts 33d Leg. [1913] o. 104).
    
    Rev. St. 1911, art. 4893, prohibiting coinsurance clauses, as amended by Acts 33d Leg. (1913) c. 104, which contain no specific reference to three-fourths value clauses, held not to forbid three-fourths value clauses in fire insurance policies.
    7. Insurance <&wkey;500 — Statute, prohibiting coinsurance clauses in fire insurance policies as amended, held not intended to make all policies liquidated demands for fixed sum stated on their face (Rev. St. 1911, § 4893, as amended Acts 33d Leg. [1913] c. 104; Laws 1879, c. 73; Rev. St. 1879, art. 2971, now Rev. St. 1925, art. 4929).
    Rev. St. 1911, art. 4893, prohibiting coinsurance clauses in insurance contracts, as amended by Acts 33d Leg. (1913) c. 104, held not intended to make all policies liquidated demands for the fixed sum stated on their face, inasmuch as Legislature has never repealed Laws 1879, c. 73, re-enacted in Rev. St. 1879, art. 2971, now. Rev. St. 1926, art. 4929, giving that effect to policies only in case of total loss, and declaring no such effect shall be given to policies covering personal property.
    8. Insurance <&wkey;495(l) —Authorization of three-fourths value clause by state insurance board and state insurance commission, acquiesced in by Legislature for many years, held to show legislative intent not to prohibit three-fourths value clause under statute prohibiting coinsurance clauses (Vernon’s Sayles’ And. Civ. St. 1914, art. 4893, now Rev. St. 1925, art. 4891).
    Continued authorization of use of three-fourths value clause in policies by state insurance board and state insurance commission since enactment of statute prohibiting coinsurance clauses (Vernon’s Sayles’ Ann. Civ. St. 1914, art. 4893, now Rev. St. 1925, art. 4891), acquiesced in by state Legislature for number of years, held to show legislative intent not to prohibit three-fourths value clause under such coinsurance clause.
    9. Insurance <&wkey;495(l).
    Relief .against abuse of three-fourths value clause may be furnished by state insurance commission in prescribing forms for insurance contracts, or by Legislature.
    10. Insurance &wkey;>!46(l).
    It is beyond province of court to strike three-fourths value clause from policy freely entered into and duly authorized, in view of Complete Texas St. art. 4893.
    i@=s>For other'cases see same topic and KEY-NUMBER in all Key-Numbered Digests an’d Indexes
    Error to Court of Civil Appeals of Fifth Supreme Judicial District.
    Action by T. J. Preston against the Commercial Union Assurance Company, Limited. From a judgment of the Court of Civil Appeals (238 S. W. 32-6), affirming a judgment in favor of plaintiff, defendant brings error.
    Judgments reformed, and, as reformed, affirmed.
    Locke & Locke and Paul Carrington, all of Dallas, for plaintiff in error.
    Williford & Geppert, of Fairfield, for defendant in error.
   GREENWOOD, J.

Plaintiff in error delivered to defendant in error a cei-tain policy, whereby, in consideration of $60.80 premium, plaintiff in error insured defendant in error for the term of one year from February 23, 1920, against direct loss or damage by fire, except as specially provided, in the amount of $2,000, on his moving picture machines and accessories, musical instruments, office furniture and fixtures, ticket vending machine, chairs, curtains, fans, elevated floors, light fixtures, and all other furniture and fixtures, not more hazardous, usual to a picture show, while contained in a certain building in the town of Teague, Tex.

Typewritten into the “mercantile stock form, with three-fourths Value clause” pasted on the policy, were the words:

“It being understood that this company shall not be liable for loss or damage to moving picture machines or attachments caused by fire originating within the machines, nor does this policy cover loss or damage to films from any cause.”

The three-fourths value clause appeared in print on said form in the following words:

“It is understood and agreed to be a condition of this insurance that in the event of loss or damage by fire to the property insured under this policy this company shall not be liable for an amount greater than three-fourths of the actual cash value of each item of property insured by this policy (not exceeding the amount insured on each such item) at the time immediately preceding such loss or damage; and in the event of additional insurance — if any is permitted hereon — then this company shall be liable for its proportion only of three-fourths of such cash value of each item insured at the time of the fire, not exceeding the amount insured on each such item.”

The “mercantile stock form” under the heading “Lightning and Dynamo Clause” contained these words:

“Provided further that, if dynamos, wiring, lamps, motors, switches or other electrical appliances or devices are insured by this policy, this company shall not be liable for any loss or damage to such property resulting from any electrical injury or disturbance, whether from artificial or natural causes, unless fire ensues, and then for the loss by fire only.”

The policy contained a provision that, if a fire occurred, the insured should, within 91 days after the fire, unless the time is extended in writing by the company, render a statement to the company, signed and sworn to by him, stating, among other matters, the knowledge and belief of the insured as to the time and origin of the fire, the interest of the insured and of all others in the property, and the cash value of each item thereof, and the amount of loss thereon. Th.e policy stipulated that no suit thereon‘should be sustainable in any court until after full compliance by the insured with the requirements of the policy.

Defendant in error suffered loss by fire on March 8, 1920, to certain articles valued at $355.87, and plaintiff in error admitted it became liable to defendant in error for that sum, which it tendered.

The fire also destroyed the following property of defendant in error within the building described in the policy, to wit: Two moving picture machines, of the actual cash value of $1,004; one compenarc, of the actual cash value of $80.20; one fire extinguisher, of the actual cash value of $7.50. Defendant in error had an “orchestra” in said building, which was also damaged to the amount of $50.00. The proof of loss, submitted by defendant in error, failed to show loss of the fire extinguisher or damage to the orchestra.

Suit was brought to recover for the loss of the two moving picture machines, the eom-penare, and the fire extinguisher, as well as for the damage to the orchestra, and for the loss of the other articles valued at $355.87. The suit resulted in a judgment in favor of defendant in error against plaintiff in error for $1,497.57, which was affirmed by the Dallas Court of Civil Appeals. 238 S. W. 326.

The first proposition presented by the application for writ of error is that plaintiff in error should not have been held liable for any sum for the loss of the moving picture machines and the compenarc, which was an attachment to the machines, because the insurance policy expressly exempted the company from liability for loss or damage to the machines and their attachments when caused by fire originating within the machines.

It is conceded by plaintiff in error that the standard fire policy prescribed by the Texas insurance commission contained no such clause or indorsement as that embodied in the policy sued on, undertaking to exempt the company from loss or damage to moving picture machines and attachments caused by fire originating within the machines. It is further conceded that the insurance commission, up to the time of the fire, had never taken any action whatever relative to prescribing or approving any clause or indorsement which would grant exemption from liability for damage or loss to moving picture machines and attachments from fire originating with-in same. *

We agree with the Court of Civil Appeals that a clause or indorsement added to the standard form of fire insurance policy, without the authorization or approval of the state insurance commission, is void under article 4S91, Complete Texas Statutes, now articles 4888 and 4889, R. S. of 1925; otherwise true effect cannot be given to the prohibition that no other forms be used than those established or approved by the commission. First Texas State Ins. Co. v. Smalley, 111 Tex. 72, 228 S. W. 550.

The purpose of statutes such as ours is well stated in Bourgeois v. Northwestern National Ins. Co., 57 N. W. 348, 86 Wis. 609, in the following language:

“This act is broad and sweeping in its terms and scope. It aims to bring order out of chaos. Prior to its passage there were as many different contracts of insurance as there were companies. The variations and differences between the conditions of the policies issued by the various insurance companies were almost infinite in number; new clauses and conditions were being constantly inserted, generally ingeniously worded and obscurely printed; and, singularly enough, these new conditions were always in the interest of the insurer, and not of the insured. To meet this condition, the act under consideration was passed. That it is a long step in the right direction cannot be doubted. Under it there can be practically but one form of policy. When a man contracts for insurance, he knows that' he is contracting for a standard policy and for nothing else, and he knows that he will get that and nothing else.”

The indorsement relied on to defeat liability for the loss by fire of the moving picture machines and compenarc would seem not only void as never having been authorized or approved by the commission, but it appears to us that it may be inconsistent with the prescribed proviso, embodied in the policy sued upon, that the company shall be liable for loss, by fire only, to any electrical appliances or devices insured by the policy resulting from electrical injury or disturbance, occasioned by artificial or natural causes. A fire would originate within a ■moving picture machine if caused there by electrical injury or disturbance due to artificial or natural causes. The form prescribed by the commission undertakes to fix liability for loss or damage to an insured moving picture machine and attachments occasioned by such a fire. The unauthorized and unapproved indorsement undertakes to defeat such liability. Of course, if the clauses be inconsistent, that which was authorized must override that which was neither authorized nor approved.

The policy sued on, following the standard form prescribed by the state insurance commission, required as a condition to recovery on the policy, that the provision be complied with, that the insured render a statement to the company, stating, among other things, the cash value of each item of property lost or damaged by fire, and the amount of loss thereon. The decisions of this court recognize that, when the policy makes the furnishing of proofs of loss a condition precedent to the enforcement of the policy, and the proofs have been neither furnished nor waived, the insured fails to establish his right to recover on the policy. Insurance Co. v. Clancy, 83 Tex. 115, 18 S. W. 439; Insurance Co. v. Brock, 109 Tex. 431, 211 S. W. 779. Since there was no attempt to make proofs of loss or damage as to the fire extinguisher or the orchestra, and since such proofs were not waived, no recovery should have been allowed in so far as defendant in error sought to recover the value of the extinguisher or to recover for damage to the orchestra. We find nothing in article 4949 of Vernon’s Sayles’ Texas Civil Statutes of 1914 authorizing a recovery on the policy for damage or loss by fire not, included in proofs submitted, in the absence of waiver.

Error is assigned on the holding of the Court of Civil' Appeals that the district court did not err -in rendering judgment for the full value of the two moving picture machines and the compenarc, when the contract sued upon obligated plaintiff in error to pay no more than three-fourths the actual cash value of each article insured at, the time immediately preceding its (loss. The Court of Civil Appeals allowed defendant in error to recover the full value of these articles on the ground that the three-fourths value clause contained in the policy was forbidden by article 4893, Vernon’s Sayles’ Texas Civil Statutes of 1914, now article 4891 of the Revised Statutes of 1925.

Coinsurance clauses and three-fourths value clauses have appeared in fire insurance policies in Texas from the time standard companies began doing business in the state. In 1879 the Legislature provided:

“A fire insurance policy, in case of a total loss by fire of property insured, shall be held and considered to be a liquidated demand against the company for the full amount of such policy. ' [Provided] That the provisions of this article-shall not apply to personal property.” Chapter 73, p. 83, Acts of 1879; article 2971, Revised Statutes of 1879, now article 4929, Revised Statutes of 1925.

The right of the parties to contract for indemnity in accordance with the terms of the-coinsurance clause and 'of the three-fourths value clause was steadily upheld in the courts of Texas, subject to the limitation that neither clause would be enforced in case of a total loss where the policy was on real' property. East Texas Fire Ins. Co. v. Coffee, 61 Tex. 295; Queen Ins. Co. v. Jefferson Ice Co., 64 Tex. 582; Sun Mut. Ins. Co. v. Tufts, 20 Tex. Civ. App. 147, 50 S. W. 182, wherein writ of error was denied; State Mut. Fire Ins. Co. v. Cathey (Tex. Civ. App.) 153 S. W. 936; Pennsylvania Fire Ins. Co. v. Moore, 21 Tex. Civ. App. 528, 51 S. W. 878.

Coinsurance clauses in substance require-of the assured to maintain insurance on each i-tem of "property insured equal to its actual-cash value, or a certain percentage thereof, and failing to do so make the assured-an insurer to the extent of the deficiency, and require the assured as such coinsurer to bear-his proportionate part of loss on each item.

The substanee of the three-fourths value clause, when there is but one policy, is that f;he company shall in any event be liable only for three-fourths the actual cash value of each item of property insured. If there be other policies, then the company shall be liable for its proportionate part of three-fourths the actual cash value of each item insured at the time of the fire.

The Legislature must have known that both coinsurance clauses and three-fourths value clauses were commonly used in writing fire insurance in Texas, when it adopted article 4893 of the Revised Statutes of 1911. That article read:

“Coinsurance Glauses. — No company subject to the provisions of this chapter may issue any. policy or contract of insurance covering property in this state, which shall contain any clause or provision requiring the assured to take out or maintain a larger amount of insurance than that expressed in such policy, nor in any way providing that the assured shall be liable as co-insurer with the company issuing-the policy for any part of the loss or damage which may be-caused by fire to the property described in such policy; and any such clause or provision shall be null and void and of no effect: Provided, that it may be optional with the assured to-accept a policy or contract of insurance containing a coinsurance clause or provision when a reduction in the rate of insurance on the property described in such policy is the consideration named in such clause, and when so accepted, the coinsurance clause or provision shall be binding on the assured.”

Chapter 104, Acts 33d Legislature, approved April 2, 1913, amended, the foregoing-article so as to thereafter read as follows:

“Coinsurance Clauses. — No company subject to the provisions of this chapter shall issue any policy or contract of insurance covering property, real or personal, situated in this state which shall contain any clause or provision requiring the assured to take out and maintain a larger amount of insurance than that expressed in such policy, nor in any way providing that the assured will be liable as a coinsurer with the company issuing the policy for any part of the loss or damage which may be caused by fire to the property described in the policy, and any such clause or provision shall be null and void and of no effect, whether written with or without the consent of the assured; and any company issuing a policy with such provision or provisions therein shall nevertheless be liable to the assured for the full amount of the damage and loss sustained by the property holder, not exceeding the face of the policy, notwithstanding such provision or provisions: *• * * Provided that oil in tanks, wool, mohair, grain, rice, cotton, cotton seed oil mills and products attached thereto, are hereby exempted from the provisions of this act.”

Tbe emergency clause -to this act declared that tbe necessity' for its immediate enactment was due to tbe fact that— -

“There is no adequate law in the state of Texas protecting the assured against tiie issuance of policies requiring the assured to maintain a larger amount of insurance than expressed in the policy and also requiring them to become coinsurers with the company or companies issuing the policies for any part of the loss or damage caused by fire to the property insured.”

It is to be noted that both the statute of 1911 and tbe amendment of 1913 contain no specific reference, either in tbe body of tbe act or in the emergency clause, to three-fourths value clauses, but deal specifically with coinsurance clauses. Considering the purpose and operation of the two kinds of clauses, we do not believe the conclusion can be maintained that the statute of 1911 or its amendment was designed to forbid the continuance of three-fourths value clauses.

Speaking of the three-foufths value clause, Gephart says, on pages 184 to 186 of his book on Principles of Insurance:

“The prime purpose of this clause is to prevent over insurance, jus.t as the coinsurance clause is intended to encourage a reasonable amount of insurance. * * * Pire not only destroys the property with over insurance on it, but it may also spread to adjoining property and occasion losses both on insured and uninsured property. The three-fourths value clause thus makes it to the interest of the insured to care for his property. It has a significance not only for all insured property owners, but also for other property owners and the public at large. It reduces the moral hazard among holders of insured property, and this contributes to producing a fair burden in the charge for each. It reduces the hazard for those whose property is not insured, and it is in harmony with good public policy, because it is in opposition both to criminal acts and undue carelessness in the use of property:”

It would be unreasonable to hold that the statute of 1911 or its amendment was intended to make all policies liquidated demands for the fixed sums stated on the face of the policies. For the Legislature has never repealed but has continually re-enacted the statute of 1879 giving that effect to policies only “in case of a total loss,” and declaring that no such effect shall be given1 to policies covering personal property.

The action of the officials charged with the administration of our insurance laws has been such as to repel the conclusion that the Legislature intended by the statute of 1911 or of 1913 to prohibit the three-fourths value clause. The state insurance board and the state insurance commission have, since the enactment of these statutes, continued to prescribe and authorize the use of the three-fourths value clause in policies insuring cei’tain risks, and have fixed and maintained rates in view of the limitation on the insurer’s liability which the clause specifies. Surely the Legislature would not have acquiesced in this construction of the statutes for- all these years, and re-enacted them, without change in this respect, had such construction been divergent from the legislative intent.

If there be abuse in the- use of this clause, relief may be furnished by the state insurance commission in prescribing forms for insurance contracts or by the Legislature. But, since we conclude that the Legislature has used language to prohibit coinsurance clauses, which does not forbid parties contracting with each other in the terms of the three-fourths value clause, when authorized so to do by the action of the insurance commission in fixing rates and in prescribing forms of insurance policies, it is beyond our proyince to strike down the three-fourths value clause in a policy freely entered into and duly authorized. Milwaukee Mechanics’ Ins. Co. v. West Development Co., 282 S. W. 562,' this day decided.

It is ordered that the judgments of the district court and of the Court of Civil Appeals be reformed, so as to deny any recovery for the items omitted from the proofs of loss, and that defendant in error’s recovery be limited to the $355.87, tendered by plaintiff in error, and to three-fourths the cash value of the two moving picture machines and the compenarc, with interest on the total recovery from ,Tune 25, 1920, at the rate of 6 per cent, per annum, and that said judgments as reformed be affirmed, with the costs of the Court of Civil Appeals and of the Supreme Court taxed against defendant in error.  