Baucum v. Great American Insurance Co. of New York

BARROW, Justice. The sole question presented by this appeal is whether or not appellee, Great American Insurance Company of New York, made a valid tender under the terms of its automobile liability insurance policy .so as to successfully halt the running of interest on the full amount of the judgment rendered against its insured. Motions for summary judgment were filed by both parties and this appeal is from the trial court’s action in granting the motion of appellee. Appellant agrees that the facts are uncon-troverted but urges that a valid tender was not made. On April 1, 1960, appellant obtained a judgment for $81,636.00 against Jesus Ramirez Hernandez and Jacinto Hernandez. Great American had a liability policy covering the Hernandez brothers to the extent of $25,000.00, which provided in part as follows: “ * * * the company shall: * * * (2) pay all expenses incurred by the company, all costs taxed against the insured in any such suit and all interest accruing after entry of judgment until the company has paid or tendered or deposited in court such part of such judgment as does not exceed the limit of the company’s liability thereon.” On May 18, 1960, the Supreme Court, in a case of first impression in this State, determined that this agreement “obligates the insurer to pay interest on the entire judgment until its part of the same has been paid, tendered or deposited in court.” Plasky v. Gulf Insurance Co., 160 Tex. 612, 335 S.W.2d 581. The Supreme Court expressly provided that the insurer could pay its limits and avoid liability for additional interest without prejudice to an appeal by the insured. On June 13, 1960, before Hernandez had determined to appeal, Great American attempted to discharge its policy limits on the judgment and avoid liability for additional interest. Admittedly, it did not “pay” or “deposit in court” the amount owed by it. On this date appellee’s attorneys directed a letter to the District Clerk of Cameron County at Brownsville, Texas, and enclosed an instrument which they called a “draft” in the amount of $26,008.17, together with a copy of a partial-release. Copies of this letter were sent to appellant who lived in McAllen, and his attorneys who officed in Harlingen, Texas. The sum of $1,008.17 was the correct amount of interest on the entire judgment from April 1, 1960, through June 15, 1960. The original of the partial release was sent to appellant’s attorneys, and the clerk was instructed to deliver the “draft” to appellant in exchange for the executed partial release. No objection was made by appellant to any part of this procedure. An appeal was unsuccessfully [715] prosecuted on behalf of Hernandez, and when the judgment became final, appellant filed this suit for the policy limits plus interest on the entire judgment from date of judgment. Hernandez v. Baucum, Tex.Civ.App., 338 S.W.2d 481. It is important to determine the legal character of the instrument furnished the district clerk. It was labelled a “draft”; however, both parties assert that it does not have the legal characteristics of a draft and we agree. This instrument provides that it is payable through the First National Bank in Dallas to the order of A. T. Baucum and his named attorneys. The maker of the instrument is appellee, and it contains other identifying information for the benefit of appellee’s records. The only reference to the rights of the parties is that it is stated to be in partial payment of the identified judgment. There was no reservation in said instrument whereby appellee was required to approve payment of same. In our opinion, this instrument meets all the requirements of a “check.” Art. 5947, Sec. 185, Vernon’s Tex.Civ.Stats.; 7 Am. Jur., Bills & Notes, § 7. It is undisputed that at all times appellee had sufficient funds on deposit at this bank to discharge this check when presented. The rule is settled that a tender of payment by check is not a valid tender when objections are made to this medium of payment. Muldrow v. Texas Frozen Foods, Inc., 157 Tex. 39, 299 S.W.2d 275; Littlejohn v. Johnson, Tex.Civ.App., 332 S.W.2d 439, no writ history. It is further settled that when a tender is refused for other reasons, one may not later complain of the medium of tender. Gulf Pipe Line Co. v. Nearen, 135 Tex. 50, 138 S.W.2d 1065; Cockrum v. Underwood, Tex.Civ.App., 301 S.W.2d 953, no writ history; Cornelius v. Cook, Tex.Civ.App., 213 S.W.2d 767, no writ history. Appellant did not make any objection, and we believe that the correct rule would be to treat this silence as a waiver of objection to the medium of tender. This rule is particularly applicable here in view of the uncontroverted affidavits of the established custom of insurance companies and attorneys in this locality, of discharging judgments in this manner. Littlejohn v. Johnson, supra; 26 Ruling Case Law, §§ 17 and 18, 86 C.J.S. Tender §§ 23, 36. The partial release furnished must be examined to determine if appellant was required to compromise or surrender a legal right. A tender accompanied with conditions which the debtor has no right to impose is without effect. Collingsworth v. King, 155 Tex. 93, 283 S.W.2d 30; Wiley v. Scott, Tex.Civ.App., 229 S.W.2d 650, no writ history. However, it is proper to require execution of a receipt or release preserving the respective rights of the parties. Engelbach v. Simpson, 12 Tex.Civ.App. 188, 33 S.W. 596, no writ history. In Plasky v. Gulf Ins. Co., supra, the Supreme Court indicated the unusual problem presented by unqualified tender or payment of part of a judgment without prejudicing the right of appeal on behalf of the insured. It is to the interest of all parties in such a situation to clearly set forth their respective rights. The partial release furnished appellant would serve this purpose. It released the judgment only to the extent of $25,000.00, and interest on the entire judgment to June 15, 1960; it reserved the right of appellant to collect the excess from Hernandez; it preserved the right of appeal on behalf of Hernandez; and appellant was entitled to keep this amount of $26,018.17, regardless of the outcome of an appeal by Hernandez. Appellee represented in said release that its policy limits were $25,000. Appellant had the right to satisfy himself on this material representation, if he desired; however, he made no objection and now does not dispute this policy limit. We hold that the tender was not invalidated by the requirement of execution of the partial release. We overrule appellant’s objection now made to the delivery of the instrument to the district clerk. By this action appel-lee relinquished all control over the check [716] and placed it at the easy disposition of appellant. Johnson Mfg. Co. v. Edwards, Tex.Civ.App., 344 S.W.2d 506, ref. n. r. e.; Richey v. Stanley, Tex.Civ.App., 38 S.W.2d 1104, no writ history. Appellant and his attorneys were immediately notified of the ready availability of the check. Appellant made no complaint that the tender was not made at the proper place and therefore waived his objection. 86 C.J.S. Tender § 20. At the time of this tender, appellee could not pay the court costs, as the insured had not decided upon an appeal and therefore the costs had not been determined or adjudicated. The partial release recited this fact and provided that the partial release was conditioned upon appellee’s promptly paying same upon final adjudication, and expressly provided that it did not discharge appellee’s obligation to pay the court costs. The tender was not defeated by the failure, under these circumstances, to pay the court costs before the judgment became final. The judgment is affirmed.