SABINAS CLAIMS SERVICE FROM A DISTRICT COURT & MAYFLOWER, INSURANCE COMPANY, INC., APPELLANT, v. INTERSTATE FIRE & CASUALTY COMPANY, and NATIONAL COUNTY MUTUAL FIRE INSURANCE COMPANY, APPELLEE

COURT OF APPEALS
FIFTH DISTRICT OF TEXAS
AT DALLAS
NO. 05-88-01079-CV
 
SABINAS CLAIMS SERVICE                        FROM A DISTRICT COURT
& MAYFLOWER, INSURANCE
COMPANY, INC.,
 
 
        APPELLANT,
 
 
v.
 
 
INTERSTATE FIRE & CASUALTY
COMPANY, and NATIONAL COUNTY
MUTUAL FIRE INSURANCE COMPANY,
 
 
        APPELLEE.                                          OF DALLAS COUNTY, TEXAS
 
 
 
BEFORE JUSTICES WHITHAM, LAGARDE AND KINKEADE
OPINION BY JUSTICE KINKEADE
JULY 26, 1989
        Sabinas Claims Service and Mayflower Insurance Company, Inc. appeal a judgment in favor of Interstate Fire and Casualty Company and National County Mutual Fire Insurance Company. Mayflower and Sabinas contend that the trial court erred in 1) instructing a verdict against them and 2) failing to grant them a credit in the amount of a joint tort-feasor's settlement. We sustain the first point of error, reverse the trial court's judgment, and remand the case to the trial court for a new trial.
        National issued an automobile insurance policy to A-Z Wrecker Service with a liability limit of $500,000.00. Interstate provided excess insurance to A-Z wrecker for $10 million. Kirk Andrew Lacy, an A-Z Wrecker employee, was involved in a automobile accident with Bill Bullen while driving an A-Z Wrecker vehicle. Bullen sued Lacy and A-Z Wrecker for injuries which he sustained in the accident. Lacy was an insured under A-Z Wrecker's automobile insurance policy. However, Lacy never notified any insurance company or agent that Bullen had sued him.
        Mayflower and National had an agency relationship whereby Mayflower agreed to handle claims and lawsuits filed against insureds who had bought National insurance policies through Mayflower. Sabinas had contracted with Mayflower to adjust claims for insureds who had purchased National policies through Mayflower. These agreements were in effect at the time of Lacy's accident.
        A-Z Wrecker sent Sabinas a copy of the petition in the Bullen lawsuit. Sabinas hired attorney Charles M. Bradshaw to defend the suit. Bradshaw filed a timely answer on behalf of A-Z Wrecker, but did not file any answer for Lacy. Almost two years after the suit had been filed, Bullen took a default judgment against Lacy for $8.5 million. That judgment was never appealed. When Bullen demanded that National and Interstate pay the judgment, they settled with him for $1,493,800.00.
        Interstate sued National, Mayflower and Sabinas, claiming that they had been negligent in failing to provide Lacy a defense and failing to settle the Bullen suit within the primary carrier's (National's) policy limit of $500,000.00. Interstate and National settled with the attorney, Bradshaw, for $500,000.00. Interstate settled with National prior to trial and National was realigned as a plaintiff. After all parties had presented their evidence and closed, the court instructed a verdict for $1.5 million in favor of Interstate and National.
        In their first point of error, Mayflower and Sabinas maintain that the instructed verdict was improper. In reviewing an instructed or directed verdict, this Court must examine the evidence to determine if there is any issue of fact upon which a judgment in favor of the nonmovant may be predicated. A directed verdict can only be justified if no other verdict could have been rendered. In this analysis, all fact issues must be resolved in favor of the nonmovant and against the movant. Henderson v. Travelers Ins. Co., 544 S.W.2d 649, 650 (Tex. 1976); Stegman v. Chavers, 704 S.W.2d 793, 794-95 (Tex. App.--Dallas 1985, no writ).
        Mayflower and Sabinas stipulated at trial that Lacy was entitled to a defense in the Bullen lawsuit and that no answer was filed for Lacy. They further stipulated that a copy of Bullen's petition, which named Lacy as a defendant, was forwarded to Sabinas for handling. Mayflower and Sabinas argue that Bradshaw, the attorney handling the case, did not necessarily know that Lacy had been served with a citation and a copy of the petition. They contend that a mere recitation of service in the papers of a lawsuit does not prove service. They contend that Bradshaw may have thought that Lacy had not been served and thus was not actually a party to the suit. Bradshaw may have purposefully failed to answer for Lacy as part of his defense strategy. However, G.P. Hardy, a lawyer in the Bullen lawsuit, testified that the case file affirmatively showed that Lacy had been served. Mayflower's and Sabinas's contention is, therefore, without merit.
        A court may find negligence as a matter of law. Castro v. Hernandez - Davila, 694 S.W.2d 575, 578 (Tex. App.--Corpus Christi 1985, no writ). The record shows that Mayflower and Sabinas had a duty, because of their relationships with National and each other, to ensure that an answer was filed for Lacy. The record demonstrates that they failed to perform that duty. It also shows that the failure to file an answer caused the rendition of the $8.5 million default judgment. National and Interstate settled the default judgment with Bullen for close to $1.5 million, the limits of their liability under their policies with A-Z Wrecker. They received assignments for Bullen's rights against Mayflower and Sabinas. Even without the assignment, an insurer who pays a claim becomes subrogated as to the insured's claim against another insurer. Liberty Mutual Ins. Co. v. General Ins. Corp., 517 S.W.2d 791, 798 (Tex. Civ. App.--Tyler 1975, writ ref'd n.r.e.).
        Mayflower and Sabinas claim that National and Interstate were also negligent in failing to ensure that an answer was filed for Lacy. They contend that National, the primary insurer, certainly had a duty to defend Lacy, and that Interstate, as the excess carrier, may have had a duty to defend when National failed to do so. Mayflower and Sabinas claim that the trial court erred in failing to submit jury questions on the issues of National's and Interstate's contributory negligence.
        At trial, it was stipulated that National and Mayflower had an agency relationship. A principal is bound by the acts of his agent when those acts are within the ordinary course of the business entrusted to the agent. Ames v. Great Southern Bank, 672 S.W.2d 447, 450 (Tex. 1984); Lucas v. Whiteley, 550 S.W.2d 767, 769 (Tex. Civ. App.--Amarillo 1977, no writ). Mayflower was National's agent and its business was to handle claims and lawsuits for certain of National's insureds. If Mayflower was liable for its actions in handling Lacy's lawsuit, then there is a jury question as to National's liability as a principal. TEX CIV. PRAC. & REM. CODE ANN. §§ 33.001 et seq.; see also State Dept. of Highways & Pub. Transp. v. Pruitt, 752 S.W.2d 598, 600-01 (Tex. App.--Tyler 1988, no writ). The trial court, therefore, should have submitted a comparative negligence issue to the jury. We sustain the first point of error as to National.
        Interstate carried excess insurance for A-Z Wrecker. Interstate did not offer its insurance policy into evidence. An excess insurance carrier may have the same duty to defend an insured as the primary carrier. St. Paul Ins. Co. v. Rahn, 641 S.W.2d 276, 280-82 (Tex. App.--Corpus Christi 1982, no writ). There was testimony at trial that both Interstate and National had a duty to defend Lacy. Interstate claims that it had no duty to defend. There is a fact question as to Interstate's duty to defend, and it must be resolved in favor of Mayflower and Sabinas. Henderson, 544 S.W.2d at 650. Assuming Interstate had a duty to defend, there is a jury question as to its liability as a joint tortfeasor. The trial court should have submitted a comparative negligence issue to the jury regarding Interstate. TEX. CIV. PRAC. & REM. CODE ANN. §§ 33.001 et seq.; see also Pruitt, 752 S.W.2d at 600-01. We sustain the first point of error as to Interstate. We reverse the trial court's judgment and remand the case for a new trial. Because of our disposition of the first point of error, we do not reach the second point of error.
 
 
 
 
                                                          
                                                          ED KINKEADE
                                                          JUSTICE
 
DO NOT PUBLISH
TEX. R. APP. P. 90.
 
88-01079.F
 
 
File Date[01-02-89]
File Name[881079]