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DUVAL COUNTY RANCH COMPANY v. ALAMO LUMBER COMPANY (12/21/83)

December 21, 1983

DUVAL COUNTY RANCH COMPANY, APPELLANT
v.
ALAMO LUMBER COMPANY, APPELLEE



FROM THE DISTRICT COURT OF DUVAL COUNTY; 229TH JUDICIAL DISTRICT; NO. 10,969; HONORABLE HAROLD THOMAS, JUDGE.

COUNSEL

Mr. Pat Maloney, Attorney at Law, 239 East Commerce Street, San Antonio, Texas 78205, Mr. Thomas H. Veitch, Attorney at Law, 9200 Broadway, Suite 117, San Antonio, Texas 78217, for Appellant.

Mr. Homer E. Dean, Jr., Dean & Hunt, P.O. Drawer 150, Alice, Texas 78332-0150, Mr. George Spencer, Attorney at Law, 1805 NBC Building, San Antonio, Texas 78205, for Appellee.

John T. Boyd, Associate Justice.

Author: Boyd

John T. Boyd, Associate Justice

This suit arises out of a fire which occurred on the night of February 4, 1979. The fire totally destroyed a ranch house built by the Alamo Lumber Company (herein Alamo) and located upon property belonging to Duval County Ranch Company (herein Duval). At the time of the fire Alamo had obtained fire insurance policies covering the house with St. Paul Insurance Company and Federal Insurance Company (herein Intervenors). As a result of the fire, Intervenors paid Alamo $330,610.20.

Prior to the fire, a dispute arose between Alamo and Duval as to the amount owed by Duval for the construction of the house. As a result of that dispute, litigation arose between the parties which, on August 2, 1978, resulted in a judgment in favor of Alamo in the amount of some $443,418.05. The judgment also provided for foreclosure of a mechanic's lien upon the tract of land upon which the dwelling was located. Appeal from that part of the judgment relating to prejudgment interest and attorney's fees was taken by Duval, resulting in an affirmance of the trial court judgment on March 27, 1980. See Duval County Ranch Co. v. Alamo Lumber Co., 597 S.W.2d 528 (Tex. Civ. App.--Beaumont 1980, writ ref'd n.r.e.).

In the instant suit, Duval asserts, inter alia, it is entitled to a credit on Alamo's judgment against it equal to the amount paid by Intervenors to Alamo by virtue of an asserted agreement by Alamo to carry insurance for it. In the alternative, Duval pleads it is entitled to the credit sought on equitable principles. Intervenors assert subrogation rights in Alamo's judgment against Duval to the extent of the amount paid by them to Alamo.

Trial was to a jury and issues were submitted to them concerning promissory estoppel. The jury returned a verdict finding that there was no agreement between Duval and Alamo as to the insurance policies and proceeds in question. On the strength of those answers, the trial court rendered judgment against Duval on its claim and also found that intervenors were subrogated to Alamo's judgment against Duval in an amount of $165,305.14 each. Hence, this appeal. In the appeal Duval asserts it was entitled to a credit of the insurance proceeds as a matter of law. It also claims reversible evidentiary errors were committed as more fully set out below. Alamo maintains the court erred in decreeing the subrogation rights to intervenors. For reasons hereinafter expressed, we affirm the judgment of the trial court.

Duval attacks the judgment in seven points of asserted error alleging (1) the evidence establishes as a matter of law that it is entitled to a credit of the insurance proceeds; (2) Intervenors are not entitled to equitable subrogation; (3) the trial court erred in admitting a telegram from Duval's former attorney to Alamo's attorney as it was not authorized and therefore hearsay; (4) the telegram was sent during settlement and compromise negotiations and was therefore inadmissible; (5) deposition testimony of Duval's former attorney should not have been admitted since it contained conversations which were privileged communications; (6) testimony concerning a "secret agreement" between Alamo and Intervenors should have been admitted; and (7) the jury's finding that no agreement existed was so against the great weight and preponderance of the evidence as to be manifestly unfair.

In argument under its first point of error, Duval asserts a paucity of Texas case law argues secondary authority, and asserts the existence of strong public-policy reasons for not permitting Alamo to receive, what it characterizes as, a double recovery. Duval reasons that if it is not given its credit, Alamo, will have received over a million dollars on a contract which was worth only $670,000.00 (by virtue of receipt of money received before the dispute arose which resulted in Alamo's initial judgment, receipt of the insurance proceeds, receipt of the money tendered into the registry of the court and the amount still due on the judgment in question). Duval contends the effect of this would leave it with a house burned to the ground and a substantial debt owed to Alamo, while Alamo obtains a windfall double recovery.

This double recovery, Duval reasons, is analogous to unjust enrichment and the case law concerning unjust enrichment is applicable. Duval cites case law characterizing unjust enrichment as "the result of failure to make restitution of benefits received under such circumstances as to give rise to an implied or quasi-contract to repay" and "a right of recovery under unjust enrichment is essentially equitable and does not depend upon the existence of a wrong." See Fun Time Centers, Inc. v. Continental National Bank, 517 S.W.2d 877, 884 (Tex. Civ. App.--Tyler 1974, writ ref'd n.r.e.). Duval asserts there existed a quasi-legal relationship between the parties and Alamo has received a benefit, the retention of which would be unconscionable. Therefore, Duval says, to allow its recovery of the credit sought by Duval from Alamo would result in an equitable solution to an otherwise unfair result. We do not agree.

For the purpose of discussion of this point, Duval assumed, arguendo, that no agreement existed between the parties as to the acquisition of the policies in question, an assumption which we accept in discussion of the point. The record also establishes that Duval had obtained its own insurance from Aetna Life & Casualty Co. (herein Aetna) on the dwelling in question in the amount of $350,000.00 and received the proceeds of this coverage. It further ...


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