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Paramount Fire Insurance Company v. Aetna Casualty and Surety Company

Supreme Court of Texas
353 S.W.2d 841 (1962)


On July 17, 1957, purchasers and sellers entered into a contract of sale for a property. Under the contract, the purchasers agreed to pay $125 per month to the sellers until July 17, 1958. The purchasers could, and did, live on, and make improvements to, the property during this time. Both the sellers and the purchasers were entitled to specific performance under the contract. On October 12, 1957, the sellers obtained an insurance policy from Paramount Fire Insurance Company (Paramount) (plaintiff) covering improvements to the property. The insurance policy covered the sellers and excluded the purchasers. On June 25, 1958, the purchasers obtained an insurance policy from Aetna Casualty & Surety Company (Aetna) (defendant). On July 7, 1958, a fire on the property destroyed the improvements to the property. The closing occurred on September 3, 1958. At the closing, the purchasers paid the purchase price and received a warranty deed. The sellers assigned their rights in the Paramount insurance policy to the purchasers. The purchasers then filed suit against both Paramount and Aetna for the loss. Paramount and Aetna settled the suit with the plaintiff by agreeing to pay the loss pro rata based on policy amount. The suit then proceeded between Paramount and Aetna to determine each company’s liability against the other. The trial court granted summary judgment to Paramount. Aetna appealed. The court of civil appeals reversed and divided the loss pro rata between Paramount and Aetna. Paramount and Aetna both filed applications for writ of error to the Supreme Court of Texas. Paramount requested affirmation of the trial court’s decision. Aetna requested, in part, the affirmation of the judgment of the court of civil appeals.

Rule of Law


Holding and Reasoning (Greenhill, J.)

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